This report summarizes a selection of legislative and regulatory developments at the federal and state level in the areas of Smart Grid and demand-side resources during 2012.*
I. SMART GRID DEVELOPMENTS
A. Federal Activity
On February 14, 2012, FERC Chair Jon Wellinghoffwrote letters to the Congressional Appropriations Committees providing "a second statement of actions taken in response to the U.S. Government Accountability Office (GAO) report ELECTRICITY GRID MODERNIZATION: Progress Being Made on Cybersecurity Guidelines, but Key Challenges Remain to be Addressed (GAO-11-117)." 1 The Chairman noted that since the FERC's "initial statement of action prepared in March " the agency had "issued an order declining to institute a rulemaking proceeding to adopt specific interoperability standards."2 "Applying the 'sufficient consensus' test specified in the relevant statute, the Commission determined that there was insufficient consensus to institute such a proceeding at that time."3 He noted that "[since] then, Commission staffhave continued meeting with state regulators and other stakeholders to discuss the interoperability framework process."4
2. Department of Energy (DOE)
The Federal Smart Grid Task Force, led by the DOE's Office of Electricity Delivery and Energy Reliability, announced that it would convene a stakeholder process to develop and implement enforceable privacy policies based on the White House's Consumer Privacy Bill of Rights Report, which was released in February 2012.5 The proposed Smart Grid data privacy code would apply solely to utilities and their customers.6
The White House Report set forth a Consumer Privacy Bill of Rights based on the following principles:
* Individual Control: Consumers have a right to exercise control over what personal data companies collect from them and how they use it.
* Transparency: Consumers have a right to easily understandable and accessible information about privacy and security practices.
* Respect for Context: Consumers have a right to expect that companies will collect, use, and disclose personal data in ways that are consistent with the context in which consumers provide the data.
* Security: Consumers have a right to secure and responsible handling of personal data.
* Access and Accuracy: Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate.
* Focused Collection: Consumers have a right to reasonable limits on the personal data that companies collect and retain.
* Accountability: Consumers have a right to have personal data handled by companies with appropriate measures in place to assure they adhere to the Consumer Privacy Bill of Rights.7
The White House Report proposes that "individual companies, industry groups, privacy advocates, consumer groups, . . . academics," and state and federal officials "participate in multistakeholder processes to develop [specific industry] codes of conduct that implement these general principles."8 Once a company has signed on to a code of conduct, its commitment "will become enforceable under Section 5 of the FTC Act."9 Moreover, even those companies which had not signed might be subject to FTC enforcement action under existing law for "[failing] to use reasonable security measures to protect personal information about consumers."10
The Stakeholder process is to begin after January 1, 2013.11
In its Universal Service Fund Contribution Methodology Further Notice of Proposed Rulemaking (Notice), the Federal Communications Commission (FCC) raised the question of whether Smart Meter/Smart Grid "Machine-to-Machine Connections" should continue to be exempted from being assessed Universal Service Fund (USF) fees.12 The USF contribution system pays for rural Telco subsidies and other USF programs such as the Schools and Libraries Fund and the Lifeline program. …