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INGAA Priorities: Cybersecurity, Gas-Electricity Coordination

Outgoing Interstate Natural Gas Association of America (INGAA) Chairman Greg Ebel and the pipeline group's members "worked tirelessly" to ensure that legislation signed into law by President Obama earlier this year would "truly take pipeline safety and integrity management to a higher level," according to incoming Chairman Greg Harper.

Now INGAA is focused on ensuring that the law "is implemented in a way that ensures pipeline safety while minimizing customer disruptions and accomplishes Congress' intent of being prudent and cost effective," Harper told reporters during a wide-ranging discussion last Tuesday in Washington, DC.

The federal legislation empowered the secretary of the Department of Transportation (DOT) to impose a civil penalty on operators that obstruct or prevent safety inspections or investigations, and it requires the use of automatic remote-controlled shut-off valves on pipelines constructed or entirely replaced after the date on which the DOT secretary issues a final rule (see NGI, Jan. 9). Canada and California also passed pipeline safety laws in 2012 (see NGI, Oct. 1a; Oct. 1b).

Over the next year INGAA will continue to focus on cybersecurity issues, Harper said. INGAA and its member companies "have a long-standing working relationship with the Department of Homeland Security [DHS]" and other security agencies, and the organization has created a standing committee to coordinate with government agencies and industry organizations, including the American Gas Association, he said.

"Our position on cybersecurity is that we work very well with the Homeland Security and Transportation Security agencies, as well as other agencies, [and] we'll cooperate with FERC as well," Harper said. "We find it's got to be a very collaborative effort; that's the best way to work in the cyber community world. Obviously, it is a very dynamic issue, moving at the speed of the Internet, so we need to make sure we have the collaboration/cooperation, as opposed to legislative solutions that are dictated, because I think those will kind of fit you in a box."

The DHS in May reported that there had been an "active series" of cyber attacks on gas pipeline companies' computer networks since last December (see NGI, May 14). At the time, DHS said it was working with the FBI and other federal agencies, as well as pipelines, to identify the cyber intruders.

"The collaborative trust relationship that has grown up between the energy industry -- and specifically the pipeline industry -- and the federal authorities on these cyber issues is something that has been very valuable and, I think, recognized by them," said INGAA CEO Don Santa. "One of the things we look to is the ability to collaborate more, the ability to have access to more information, since as you know this is a terribly complex issue where obviously the intelligence authorities [and] the law enforcement authorities have a lot greater capabilities than our members do, and so that ability to collaborate, to have the information, we think is one of the things that will lead to improvements in cybersecurity."

The Federal Energy Regulatory Commission last month established a unit to address cyber threats to energy infrastructure (see NGI, Sept. 24), and growing reports of the nation's energy infrastructure's vulnerability to cyber attacks (see NGI, Sept. 10). Wellinghoff recently expressed his exasperation with the lack of a federal system for reporting threats to energy infrastructure.

And taking matters into his own hands after Congress failed to pass the Cybersecurity Act of 2012 this summer, President Obama reportedly is preparing an executive order aimed at protecting critical national infrastructure, including power plants, and natural gas and crude pipelines, from cyber attacks (see NGI, Sept. 17). A group of six Senate Republicans last week called on Obama to not issue such an executive order, arguing that the legislative process is a better way to enhance cybersecurity. A number of Senate Democrats and Sen. Joe Lieberman (I-CT), the sponsor of the blocked cybersecurity bill, have called on the president to issue an executive order. Homeland Security Secretary Janet Napolitano said at a recent congressional hearing that the executive order was "close to completion," according to The Hill newspaper.

"While the Senate has yet to reach an agreement on the best way to enhance cybersecurity, we firmly agree on the need to maintain congressional prerogative when dealing with broad and challenging issues like cybersecurity," wrote the coalition, which was led by Sen. John McCain of Arizona in its letter to the president.

Other legislative goals for INGAA in the coming year include facilitating a better understanding of gas supply and transportation requirements needed to meet the growing natural gas-fired electric generation market, Harper said. FERC sponsored five technical conferences this summer to explore coordination issues between the gas and electricity markets in the Mid-Atlantic, New England, Southeast, West and Midwest regions (see NGI, Sept. 3; Aug. 27). Some power generators opposed a suggestion that they be mandated to commit to firm pipeline capacity for the delivery of natural gas.

The takeaway from those meetings, according to Santa, "was that in most of the regions things are working quite well today. However, I think there is a recognition, not only on the gas side but on the electric power side, that as you see increasing reliance on gas for electric generation, retirements of coal-fired generation and therefore even a greater reliance on gas that we do need to be looking ahead and saying 'even where it's working well today, will you get to a point where the available capacity in the pipeline system gets exhausted and you're probably going to need some new capacity to meet those markets?'

"The region that I think stood out was New England, and I think there there very much is a recognition that there is a reliability issue there, that the market is capacity constrained and that probably there need to be some fundamental changes to the market rules to value reliability, and that if in the market rules and the pricing you value reliability appropriately, then the pieces should fall into place in terms of market participants having the incentives to subscribe the pipeline services and capacity that are needed to ensure reliability."

INGAA will also "continue to highlight the importance of having FERC and tax policies that promote investment in our infrastructure," Harper said. A 2011 INGAA Foundation study found that more than $200 billion in pipeline investments are expected to be needed over the next 25 years for new supply opportunities and to meet consumption growth, he said.

"In addition, we will need considerable investment dollars to inspect, upgrade or replace existing infrastructure to comply with new safety, integrity and environmental regulations. We will be advocating for prompt and reasonable recovery of these mandated costs."

Harper, who is senior vice president and group president of CenterPoint Energy's Pipelines and Field Services businesses, was elected chairman by INGAA's board of directors Wednesday. Harper follows Spectra Energy CEO Gregory L. Ebel as INGAA chairman. The board also elected Gary L. Sypolt, CEO of Dominion Resources' Dominion Energy operating segment, as first vice chairman, and David Devine, president of Kinder Morgan's Natural Gas Pipe Line Co., as second vice chair. INGAA officers are elected for one-year terms.

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