APPA Urges FERC to Engage With Policymakers, Industry Partners on Transformer Challenges

by Paul Ciampoli
APPA News Director
February 27, 2023

The Federal Energy Regulatory Commission should engage with other policymakers and industry partners on distribution transformer supply chain constraints to support reliability, security, resilience, affordability, and economic development, the American Public Power Association said in recent comments filed at FERC.

The Feb. 17 comments address a number of issues covered at the December 7, 2022 technical conference on supply chain risk management convened by the Federal Energy Regulatory Commission and U.S. Department of Energy.

APPA was represented at the technical conference by Adrienne Lotto, APPA’s Senior Vice President of Grid Security, Technical and Operations Services.

In its post-technical conference comments, APPA noted that Lotto highlighted the current lack of availability of transformers, particularly distribution transformers, as a significant supply chain challenge facing the electric industry. 

“It is vital that government understand that this issue is not about the associated costs of transformers, which has certainly gone up significantly during this supply chain shortage, but rather about the actual availability of these components due to extremely constrained supplies,” APPA said.

Lotto urged DOE and the Commission to engage on this issue, and to encourage its government partners to do the same.

Utilities Taking Extraordinary Measures

APPA noted that in order to help prevent supply chain constraints from adversely impacting reliability, utilities are taking extraordinary measures to meet current demand with limited supply.  These measures include refurbishing older equipment and swapping equipment in the field to generate spares from underutilized equipment. 

“These are necessary, last-ditch efforts to protect the safety of electric customers and sustain other sectors that depend on electricity, but they also move the industry further away from clean energy, efficiency, and affordability goals. Even with a strong mutual aid program in place, for the first time, public power utilities are raising concerns that they may not have the stocks to assist,” APPA said.

The industry is also working collectively to help respond to the distribution transformer shortage. The Electricity Subsector Coordinating Council has established a Supply Chain Tiger Team to address resiliency and security concerns arising from supply chain constraints. This team has identified labor and material availability as the greatest needs for manufacturers to immediately increase transformer production. 

“The ESCC is an extremely important forum for responding to the distribution transformer shortage, and APPA encourages DOE to prioritize this effort and work with industry to develop a cohesive actionable plan to address the shortage.”

APPA has also urged other federal policymakers to act to help address the transformer supply-demand imbalance. “Notwithstanding these efforts, effective solutions have been difficult to achieve,” it said.

While acknowledging that the Commission does not have direct jurisdiction over the distribution transformer supply chain, APPA’s comments applauded “FERC and DOE for using their convening power to help highlight this critical industry concern. Consistent with Ms. Lotto’s preconference statement, APPA urges the Commission to engage with other policymakers and industry partners on this issue to support reliability, security, resilience, affordability, and economic development.”

FERC Does Not Need to Revisit Current Supply Chain Risk Management Reliability Standards

A panel at the technical conference addressed the current supply chain risk management reliability standards, and a portion of the discussion during this session (and others) related to whether the Commission should revisit the current SCRM standards. 

Among the issues raised was whether the Commission should rethink the current approach of classifying Bulk-Electric System Cyber Systems as high, medium, or low impact based on the potential grid impacts that could result from a compromise of the asset.

Consistent with Lotto’s remarks, the consensus of the technical conference panelists was generally that the current SCRM standards are working effectively, with some suggesting that more prescriptive revisions to the standards could be counterproductive, APPA said.

Lotto noted that NERC and its stakeholders have been responsive to emerging risks and have revised the reliability standards where warranted. A number of panelists also highlighted the merits of the current NERC standards’ approach of classifying BES Cyber Systems as high, medium, or low impact.

Panelists emphasized the need for a layered, defense-in-depth approach to cybersecurity that emphasizes coordination between government and industry, including robust sharing of actionable information.

“APPA agrees with these sentiments, which caution against the Commission requiring additional mandatory security control requirements for the SCRM reliability standards at this time,” it said.