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Alberta Electric System Operator Application regarding Critical Infrastructure Protection Alberta Reliability Standards (Decision 3441-D01-2015)

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Reliability Standards

The Alberta Electric System Operator (“AESO”) applied, pursuant to section 19 of the Transmission Regulation, for approval of 11 recommended new Critical Infrastructure Protection (“CIP”) Alberta reliability standards related to cyber security (the “CIP Standards”). The application was accompanied by two additional applications by the AESO:

(a) One application for 22 new reliability standard definitions; and

(b) One application pertaining to whether the costs to be incurred by a particular generating unit owner to comply with the new CIP Standards are the responsibility of the generating unit owner or the AESO.

The 22 new reliability standard definitions were considered in Decision 3442-D01-2015, discussed below. The latter application regarding costs would be considered at a later date in Proceeding 3443.

The AESO submitted that the CIP Standards were adopted from the North American Electric Reliability Corporation (“NERC”) Version 5 CIP reliability standards, with modifications made by the AESO to ensure that the CIP Standards were applicable to Alberta. The AESO submitted that the proposed CIP Standards were in the public interest, as Alberta did not have any standards in place for protecting critical infrastructure from cyber attacks. The AESO proposed a two-year transition period to implement the standards as reasonable, appropriate and in the public interest.

TransCanada Energy Ltd. (“TCE”) objected to the CIP Standards on the basis that they were technically deficient in satisfying the requirements of Section 19(6) of the Transmission Regulation. With respect to public interest matters, TCE objected to the two-year effective date in that the AESO provided no factual basis for a two-year effective date. The two-year period was inappropriate in the circumstances, since CIP Standards are new to Alberta, whereas other jurisdictions had earlier versions of CIP Standards in place, and used three-year implementation periods for new standards.

TCE further submitted that the CIP standards were inconsistent with section 21(3) of the Transmission Regulation, since the two-year implementation period did not reflect the circumstances of adopting the CIP Standards as compared to other jurisdictions. Section 21(3) requires the AESO to consider whether the proposed CIP Standards are capable of applying in Alberta.

The AESO stated that delaying the implementation of the CIP standards would be contrary to the public interest given the lack of protection to Alberta’s bulk electric system (“BES”) from cyber attacks, even if TCE could demonstrate a cost savings for delaying implementation. Incremental costs or lost opportunity costs may be avoided if TCE applied for a variance in accordance with the CIP-SUPP reliability standard.

The AUC acknowledged that the submissions of TCE in respect of compliance costs for reliability standards, noting that as a PPA buyer, it may be adversely impacted by the implementation of the CIP Standards. The AUC further noted that such costs and increased outages may affect the market as a whole, but ultimately dismissed these submissions as speculative in nature.

The AUC determined that the AESO was in the best position to determine the risks facing the Alberta electrical system, and agreed that the proposed two-year implementation was reasonable and necessary. The AUC held that TCE did not provide cogent evidence of how the CIP Standards were technically deficient or not in the public interest in this regard, thereby dismissing the objection.

The AUC held that section 19 of the Transmission Regulation did not require the AESO to carry the onus of proving the public interest of the two-year effective date. Section 19(6) creates a statutory presumption that the AESO’s recommendation to implement a reliability standard was in the public interest, without requiring any evidence from the AESO. The AESO’s modifications in and of themselves were evidence that the AESO gave substantial consideration to the capability and applicability of the CIP Standards in Alberta. The AUC accordingly found no contravention of the CIP Standards with the Transmission Regulation.

In accordance with the reasons set out in the decision, the AUC ruled that:

(a) No interested party satisfied the AUC that the AESO’s recommendation was technically deficient or not in the public interest; and

(b) No contravention of Section 21(3)(a) of the Transmission Regulation was proven that might render the AESO’s recommendation to approve the CIP Standards not in the public interest.

The AUC approved the CIP Standards to become effective on the dates proposed by the AESO.

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