FERC Issues NOPR Proposing Incentives for Cybersecurity Investments

On September 22, 2022, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in Docket No. RM22-19-000, Incentives for Advanced Cybersecurity Investment.


The NOPR states: [FERC] proposes to revise its 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 investments by utilities in advanced cybersecurity technology and participation by utilities in cybersecurity threat information sharing programs, as directed by the Infrastructure Investment and Jobs Act of 2021 (Infrastructure and Jobs Act). This notice of proposed rulemaking (NOPR) also terminates the NOPR proceeding in Docket No. RM21-3-000 (December 2020 Cybersecurity Incentives NOPR).


FERC’s News Release states:


Under today’s NOPR:


· Cybersecurity expenditures would be eligible for an incentive including both expenses and capital investments associated with advanced cybersecurity technology and participation in a cybersecurity threat information sharing program.

· Eligible cybersecurity expenditures would be voluntary and have to materially improve the utility’s cybersecurity posture. FERC proposes to establish a pre-qualified (PQ) list of cybersecurity expenditures that are eligible for incentives that would be publicly maintained on the FERC.gov website.

· The incentives would take two forms: a return on equity adder of 200 basis points, or deferred cost recovery that would enable the utility to defer expenses and include the unamortized portion in its rate base.

· Approved incentives, with certain exceptions, would remain in effect for up to five years from the date on which the investments enter service or expenses are incurred.


Comments are due 30 days after publication in the Federal Register.


See FERC’s News Release here: https://www.ferc.gov/news-events/news/ferc-proposes-incentives-voluntary-cybersecurity-investments


See NOPR here: https://www.ferc.gov/media/e-1-rm22-19-000