Item E-1 is a draft Notice of Proposed Rulemaking, or NOPR, that would revise the Commission’s regulations to provide incentive-based rate treatments for the transmission of electric energy in interstate commerce and the sale of electric energy at wholesale in interstate commerce by utilities for the purpose of benefitting consumers by encouraging: (1) investments by utilities in advanced cybersecurity technology; and (2) participation by utilities in cybersecurity threat information sharing programs. By issuing this NOPR, the Commission is taking steps to implement section 40123 of the Infrastructure Investment and Jobs Act of 2021, which calls for a final rule by May 2023.
First, under the draft NOPR incentive-eligible cybersecurity expenditures must: (1) materially improve cybersecurity through either an investment in advanced cybersecurity technology or participation in cybersecurity threat information sharing programs; and (2) not already be mandated by Critical Infrastructure Protection (CIP) Reliability Standards, or local, state, or federal law. Further, the draft NOPR proposes to use a list of pre-qualified investments to identify the types of cybersecurity expenditures that the Commission may find eligible for an incentive. The draft NOPR also seeks comment on use of a case-by-case approach to incentive requests.
Second, the draft NOPR proposes two potential incentives: (1) a return on equity adder of 200 basis points for eligible cybersecurity investments; and (2) deferred cost recovery for certain cybersecurity-related expenditures that enables utilities to defer expenses and include the unamortized portion in rate base. The NOPR proposes that certain incentives would be subject to sunset provisions.
Finally, the draft NOPR proposes that a utility that has received cybersecurity incentives proposed in this draft NOPR must make an annual informational filing on June 1, provided that the utility has received Commission approval for the incentive at least 60 days prior to June 1 of that year. The annual informational filing should describe the specific investments, if any, as of that date.
In the draft NOPR, the Commission also terminates its earlier cybersecurity incentives rulemaking in Docket No. RM21-3.
Initial comments are due 30 days, and reply comments 45 days, after the date of publication in the Federal Register.
Thank you, this concludes our presentation. We would be happy to address any questions.
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