Welcome Ruben Arredondo, New Expert in the Utility Management Community- [an Energy Central Power Perspectives™ Interview]
- Sep 22, 2021 5:35 pm GMT
The future of the utility sector is being written today. From public policies and regulations to advancements in cyber technologies and more, the landscape today is setting up the power sector of tomorrow in a very impactful way. As we chart these fairly unnavigated waters, looking to experts and leaders who are not just watching, but are actually creating that change will be the best way for us to prepare as an industry.
Seeking always to keep the most trusted expert voices in this landscape in front of you, I’m happy to present our latest member of the Network of Experts with a specialty in the Utility Management Community, Ruben Arredondo. Ruben is a man with many hats, all hats that will be critical to the shaping of the energy sector in the coming years: cybersecurity attorney, expert in FERC and NERC CIP compliance; subject matter expert on energy to do with utility regulation, and more. We’re excited to welcome him into the community, and to highlight the perspective he’ll bring we decided to invite him to participate in our Energy Central Power Perspective ‘Welcome New Expert Interview Series.’
Matt Chester: This interview is one of the most direct ways we have to introduce you to the Energy Central Community so they know to keep you in mind as they have questions on your topics of expertise or to know why they should pay attention to your posts. So, can you give a quick background on what your background is in the utility industry and what your areas of expertise are today?
Ruben Arredondo: Hi Matt, it’s a pleasure to be with the community! I’ve been in practice for 18 years. My last ten years have been working on the regulator side of the electrical energy industry, working with everything to do with NERC reliability standards; entity registration, certification, and enforcement proceedings; generation, transmission, and planning matters; FERC and regional matters; energy litigation and generally working with a significant part of the entire life cycle of power users, owners, and operators in North America. Previous to that, I was the sole administrative law judge for a state utility commission and worked with the typical caseload in the public utilities arena, including certificates of necessity, tariff matters, ratemaking, siting, and other related matters. I’ve been fortunate in that I have been able to see both the distribution and bulk power system side of electrical power regulation. I help developer, generators, municipalities, cooperatives, public utilities and more navigate the complex web of regulation across North America, including Mexico and Canada. Having worked for “the enforcers” for the past 13 years, I have unique insights into how regulated entities can best prepare and protect themselves as they seek to navigate the sometimes-complex web of regulations across the nation.
MC: I’m interested to hear more about your experience serving as counsel at both FERC and NERC and WECC, and dealing with FERC matters as well. Can you share any key highlights there in terms of cases or experiences?
RA: There was never a dull moment working there, and I was at the forefront of some of the most critical litigation and helped solve some of the most pressing problems related to the regulation of the bulk electric system. I saw a wide range of mistakes, solutions, and best practices that helped inform the way I assist clients now. Comparatively speaking, the NERC regulatory regime is young (implemented in 2007) compared to other regulatory regimes, e.g. banking, finance, aviation, environment, data protection, etc. During the first few years, we saw general growing pains amongst the regulator and the regulated, learning how to implement and navigate this new regulatory regime.
Now however, the litigation is rarer but more high stakes; enforcement proceedings are rare, but more expensive and drawn-out; there is greater maturity within the industry, but regulators are much less forgiving with violations and harsher with monetary penalties. Here are three common-sense tips I’ve gleaned from working on the regulator’s side. First, companies should plan to build an effective relationship with the regulator. Plan to develop relationships where no proposed regulation or enforcement is occurring. Build relationships when a proposed rule, process or law is being implemented. Despite the high-stakes involved, build a constructive relationship when you are the subject of an examination or enforcement proceeding. I can’t tell you how many times companies pulled out a PowerPoint slide, video, handouts, etc., extolling the excellence of their compliance program---the very program that landed them in hot-water with the regulator. How serious do you think the regulator will take your claims of strong “culture of compliance” if they only see you when you’re being investigated? Take the time to build a constructive relationship. Second, understand and play by the rules of the game. You need to take the time and spend the resources necessary to understand the regulations and laws you’re subject to. That may involve intentionally planning for outside vendors to help train your staff and ensure that mission-critical staff are being trained regularly on the rules of the game, from beginning to end. I’ve seen many entities of all sizes, create a faulty baseline and then build their compliance or operations programs on this faulty baseline and pay a high price for their mistake. Playing by the rules means not trying to take short-cuts, not trying to “game” the system. I promise you, the regulator has eyes on hundreds of compliance programs, operations, violations, solutions, best-practices, etc. Chances are very high that they won’t have seen your situation and won’t know way more than you do about it. About 20 years ago, the Harvard Business Review published an article on how Intel avoids antitrust litigation by playing by the rules, contrasting its approach to Microsoft, who was often mired in high-stakes, expensive litigation, and enforcement actions by regulators. Here’s a key takeaway for any company operating in a highly regulated industry: “Intel’s success is not a matter of luck. It’s a matter of painstaking planning and intense effort. The company’s antitrust compliance program, refined over many years, may not receive a lot of attention from the press and the public, but it’s been an integral element in the chip maker’s business strategy. In an age increasingly characterized by global markets that are dominated by a few huge companies, Intel’s approach to compliance provides a valuable model for any enterprise that may come under regulators’ scrutiny.”
Third, whatever compliance programs you operate, ensure that the person responsible for compliance has a direct line to the person or corporate body ultimately responsible for oversight. An effective compliance program starts at the top, and without visible commitment from the governing body and or executive leadership, it can never be fully effective. This direct line reporting means that the person tasked with building and implementing compliance programs will have the ear of those with the power to make things happen if needs be, to solve bottlenecks, assign resources, monies, etc. Some companies have given direct-line reporting from the compliance head to the CEO, a senior VP, the entire executive leadership, the Board or a member of the Board, etc. Whatever you choose, make sure the organization structure shows a top-down commitment to compliance not just on paper, but in actuality.
MC: Cybersecurity has long been an important area for utilities, but recent attacks and events have pushed it even higher into the general consciousness. Do you think the utility sector as a whole is doing enough to protect its cyber assets? And if not, what changes (whether regulatory, technologically, or otherwise) would you like to see?
RA: Most entities are doing much that is improving cybersecurity industry-wide. However, most companies manage cybersecurity, especially CIP cybersecurity, as one of any silos within the company. This leads to gaps and silos leading to serious, systemic issues within entities, from large to small. Entities manage compliance programs with components of NERC CIP, NIST, SOX, and various other regulatory regimes. Usually, these are operated separate and independent, with little alignment between program commonalities. However, to truly transform their approach to cybersecurity, entities need to view their cybersecurity program as one whole, recognizing that each regulatory regime has very similar components, and that protections and processes they implement can satisfy more than one compliance regime. They need to do the hard work up front to align these, ensure their policies and procedures focus on similarities, and then implement these in practice to ensure compliance is focused on maintaining and preventing cybersecurity risks in a wholistic manner, not in a piecemeal manner, program by program, or business unit by business unit.
MC: The utility industry is no doubt in a state of evolution and transformation. Is there a coming change that you anticipate that perhaps isn’t getting enough attention from industry stakeholders?
RA: Although I think most entities are aware of the challenges posed by Battery Energy Storage Systems (BESS ), and scaling their use to utility applications, more could be done to deal with the risks inherent in their rising use. More needs to be done to adapt to their usage and risks. Regulators could do more to work with industry to ensure more consistency from manufacturers as far as standardization, to ensure greater safety, loss prevention, reliability in installation and maintenance. Regulators and industry could cooperate more on how BESS will be viewed as a resource, used in supplementing power systems, used in protection schemes, etc. There could also be more outreach between regulators and industry on one side and manufacturers and insurers on the other side. I think the more communication and cooperation there is, the more likely we will be able to meet the challenges faced with the rise in BESS.
MC: What motivated you to get more involved with the Energy Central Community—what’s in it for you? And as an expert on Energy Central, we’re definitely looking forward to the insights you’re going to be able to bring—so what value are you hoping to impart to your fellow community members?
RA: While working for the regulator was rewarding, I realized that there was more opportunity for creativity and cooperation outside of the regulator. The energy industry can present a complex web of regulatory and technical challenges for stakeholders bringing energy into world markets. My hope is that my 18 years of experience will help bring unique insights to the work we all do to power our society and “keep the lights on.” I firmly believe that the solutions to the challenges we face can be overcome by the best of us working together to share solutions and best practices that will help us meet the growing demand for electrical energy. I look forward to talking and meeting with community members both in private and within the industry communities where we meet.
I encourage anyone that would like to chat further about the issues raised in this interview to reach out to me. I would love to know your thoughts about how you have overcome the challenges discussed here.
Thanks to Ruben Arrendondo for joining me for this interview and for providing a wealth of insights an expertise to the Energy Central Community. You can trust that Ruben will be available for you to reach out and connect, ask questions, and more as an Energy Central member, so be sure to make him feel welcome when you see him across the platform.
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