Rule: Electric Utilities (Federal Power Act) : Bulk-Power System Mandatory Reliability Standards

Wednesday,
April 4, 2007
Part II
Department of
Energy
Federal Energy Regulatory Commission
18 CFR Part 40
Mandatory Reliability Standards for the
Bulk-Power System; Final Rule
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16416 Federal Register / Vol. 72, No. 64 / Wednesday, April 4, 2007 / Rules and Regulations
DEPARTMENT OF ENERGY Commission’s regulations. However, EFFECTIVE DATE: This rule will become
although we believe it is in the public effective June 4, 2007.
Federal Energy Regulatory interest to make these Reliability FOR FURTHER INFORMATION CONTACT:
Commission Standards mandatory and enforceable, Jonathan First (Legal Information),
we also find that much work remains to Office of the General Counsel, Federal
18 CFR Part 40 be done. Specifically, we believe that Energy Regulatory Commission, 888
many of these Reliability Standards First Street, NE., Washington, DC 20426,
[Docket No. RM06–16–000; Order No. 693]
require significant improvement to (202) 502–8529.
Mandatory Reliability Standards for the address, among other things, the
Paul Silverman (Legal Information),
Bulk-Power System recommendations of the Blackout
Office of the General Counsel, Federal
Report. Therefore, pursuant to section
Issued March 16, 2007.
Energy Regulatory Commission, 888
215(d)(5), we require the ERO to submit
First Street, NE., Washington, DC 20426,
AGENCY: Federal Energy Regulatory significant improvements to 56 of the 83
(202) 502–8683.
Commission, DOE. Reliability Standards that are being
Robert Snow (Technical Information),
ACTION: Final rule. approved as mandatory and enforceable.
Office of Energy Markets and Reliability,
The remaining 24 Reliability Standards
SUMMARY: Pursuant to section 215 of the
Division of Reliability, Federal Energy
will remain pending at the Commission
Federal Power Act (FPA), the Regulatory Commission, 888 First
until further information is provided.
Commission approves 83 of 107 The Final Rule adds a new part to the Street, NE., Washington, DC 20426,
proposed Reliability Standards, six of Commission’s regulations, which states (202) 502–6716.
the eight proposed regional differences, that this part applies to all users, owners Kumar Agarwal (Technical
and the Glossary of Terms Used in and operators of the Bulk-Power System Information), Office of Energy Markets
Reliability Standards developed by the within the United States (other than and Reliability, Division of Policy
North American Electric Reliability Alaska or Hawaii) and requires that each Analysis and Rulemaking, Federal
Corporation (NERC), which the Reliability Standard identify the subset Energy Regulatory Commission, 888
Commission has certified as the Electric of users, owners and operators to which First Street, NE., Washington, DC 20426,
Reliability Organization (ERO) that particular Reliability Standard (202) 502–8923.
responsible for developing and applies. The new regulations also SUPPLEMENTARY INFORMATION: Before
enforcing mandatory Reliability require that each Reliability Standard Commissioners: Joseph T. Kelliher,
Standards. Those Reliability Standards that is approved by the Commission will Chairman; Suedeen G. Kelly; Marc
meet the requirements of section 215 of be maintained on the ERO’s Internet Spitzer; Philip D. Moeller; and Jon
the FPA and Part 39 of the Web site for public inspection. Wellinghoff.
TABLE OF CONTENTS
Paragraph
I. Introduction ........................................................................................................................................................................................... 1
A. Background ................................................................................................................................................................................... 3
1. EPAct 2005 and Order No. 672 ............................................................................................................................................. 3
2. NERC Petition for Approval of Reliability Standards ......................................................................................................... 12
3. Staff Preliminary Assessment and Commission NOPR ....................................................................................................... 15
4. Notice of Proposed Rulemaking ............................................................................................................................................ 17
II. Discussion ............................................................................................................................................................................................ 21
A. Overview ....................................................................................................................................................................................... 21
1. The Commission’s Underlying Approach to Review and Disposition of the Proposed Standards .................................. 21
2. Mandates of Section 215 of the FPA .................................................................................................................................... 23
3. Balancing the Need for Practicality with the Mandates of Section 215 and Order No. 672 ............................................ 29
B. Discussion of the Commission’s New Regulations ..................................................................................................................... 34
1. Applicability .......................................................................................................................................................................... 34
2. Mandatory Reliability Standards .......................................................................................................................................... 40
3. Availability of Reliability Standards .................................................................................................................................... 44
C. Applicability Issues ...................................................................................................................................................................... 50
1. Bulk-Power System v. Bulk Electric System ........................................................................................................................ 50
2. Applicability to Small Entities .............................................................................................................................................. 80
3. Definition of User of the Bulk-Power System ...................................................................................................................... 110
4. Use of the NERC Functional Model ...................................................................................................................................... 117
5. Regional Reliability Organizations ........................................................................................................................................ 146
D. Mandatory Reliability Standards ................................................................................................................................................. 161
1. Legal Standard for Approval of Reliability Standards ........................................................................................................ 161
2. Commission Options When Acting on a Reliability Standard ........................................................................................... 169
3. Prioritizing Modifications to Reliability Standards ............................................................................................................. 193
4. Trial Period ............................................................................................................................................................................ 208
5. International Coordination .................................................................................................................................................... 226
E. Common Issues Pertaining to Reliability Standards ................................................................................................................... 234
1. Blackout Report Recommendation on Liability Limitations ............................................................................................... 234
2. Measures and Levels of Non-Compliance ............................................................................................................................ 238
3. Ambiguities and Potential Multiple Interpretations ............................................................................................................ 264

4. Technical Adequacy .............................................................................................................................................................. 282
5. Fill-in-the-Blank Standards ................................................................................................................................................... 287
F. Discussion of Each Individual Reliability Standard ................................................................................................................... 304
1. BAL: Resource and Demand Balancing ................................................................................................................................ 305
2. CIP: Critical Infrastructure Protection .................................................................................................................................. 446
Federal Register / Vol. 72, No. 64 / Wednesday, April 4, 2007 / Rules and Regulations 16417
TABLE OF CONTENTS—Continued
Paragraph
3. COM: Communications ......................................................................................................................................................... 473

4. EOP: Emergency Preparedness and Operations ................................................................................................................... 542
5. FAC: Facilities Design, Connections, Maintenance, and Transfer Capabilities ................................................................. 678
6. INT: Interchange Scheduling and Coordination .................................................................................................................. 796
7. IRO: Interconnection Reliability Operations and Coordination .......................................................................................... 889
8. MOD: Modeling, Data, and Analysis .................................................................................................................................... 1007
9. PER: Personnel Performance, Training and Qualifications ................................................................................................. 1325
10. PRC: Protection and Control ............................................................................................................................................... 1419
11. TOP: Transmission Operations ........................................................................................................................................... 1568
12. TPL: Transmission Planning ............................................................................................................................................... 1684
13. VAR: Voltage and Reactive Control .................................................................................................................................... 1847
14. Glossary of Terms Used in Reliability Standards .............................................................................................................. 1887
III. Information Collection Statement ...................................................................................................................................................... 1900
IV. Environmental Analysis ..................................................................................................................................................................... 1909
V. Regulatory Flexibility Act ................................................................................................................................................................... 1910
VI. Document Availability ....................................................................................................................................................................... 1947
VII. Effective Date and Congressional Notification ................................................................................................................................ 1950
Appendix A: Disposition of Reliability Standards, Glossary and Regional Differences
Appendix B: Commenters on the Notice of Proposed Rulemaking
Appendix C: Abbreviations in this Document
I. Introduction System within the United States (other Pursuant to Order No. 672, the
1. Pursuant to section 215 of the than Alaska or Hawaii) and requires that Commission certified one organization,
Federal Power Act (FPA), the each Reliability Standard identify the NERC, as the ERO.5 The ERO is required
Commission approves 83 of 107 subset of users, owners and operators to to develop Reliability Standards, which
proposed Reliability Standards, six of which that particular Reliability are subject to Commission review and
the eight proposed regional differences, Standard applies. The new regulations approval.6 The Reliability Standards
and the Glossary of Terms Used in also require that each Reliability will apply to users, owners and
Reliability Standards (glossary) Standard that is approved by the operators of the Bulk-Power System, as
developed by the North American Commission will be maintained on the set forth in each Reliability Standard.
Electric Reliability Corporation (NERC), ERO’s Internet Web site for public 5. Section 215(d)(2) of the FPA and
which the Commission has certified as inspection. the Commission’s regulations provide
the Electric Reliability Organization that the Commission may approve a
(ERO) responsible for developing and proposed Reliability Standard if it
enforcing mandatory Reliability A. Background determines that the proposal is just,
Standards. Those Reliability Standards reasonable, not unduly discriminatory
1. EPAct 2005 and Order No. 672 or preferential, and in the public
meet the requirements of section 215 of
the FPA and Part 39 of the 3. On August 8, 2005, the Electricity interest. The Commission specified in
Commission’s regulations. However, Modernization Act of 2005, which is Order No. 672 certain general factors it
although we believe it is in the public Title XII, Subtitle A, of the Energy would consider when assessing whether
interest to make these Reliability Policy Act of 2005 (EPAct 2005), was a particular Reliability Standard is just
Standards mandatory and enforceable, enacted into law.2 EPAct 2005 adds a and reasonable.7 According to this
we also find that much work remains to new section 215 to the FPA, which guidance, a Reliability Standard must
be done. Specifically, we believe that requires a Commission-certified ERO to provide for the Reliable Operation of
many of these Reliability Standards develop mandatory and enforceable Bulk-Power System facilities and may
require significant improvement to Reliability Standards, which are subject impose a requirement on any user,
address, among other things, the to Commission review and approval. owner or operator of such facilities. It
recommendations of the Blackout Once approved, the Reliability must be designed to achieve a specified
Report.1 Therefore, pursuant to section Standards may be enforced by the ERO,
5 North American Electric Reliability Corp., 116
215(d)(5), we require the ERO to submit subject to Commission oversight or the
FERC ¶ 61,062 (ERO Certification Order), order on
significant improvements to 56 of the 83 Commission can independently enforce reh’g & compliance, 117 FERC ¶ 61,126 (ERO
Reliability Standards that are being Reliability Standards.3 Rehearing Order) (2006), order on compliance, 118
approved as mandatory and enforceable. 4. On February 3, 2006, the FERC ¶ 61,030 (2007) (January 2007 Compliance
Commission issued Order No. 672, Order).
The remaining 24 Reliability Standards 6 Section 215(a)(3) of the FPA defines the term
will remain pending at the Commission implementing section 215 of the FPA.4
Reliability Standard to mean ‘‘a requirement,
until further information is provided. approved by the Commission under this section, to
2 Energy Policy Act of 2005, Pub. L. No 109–58,
2. The Final Rule adds a new part to provide for reliable operation of the Bulk-Power
the Commission’s regulations, which Title XII, Subtitle A, 119 Stat. 594, 941 (2005), to System. This term includes requirements for the
be codified at 16 U.S.C. 824o. operation of existing Bulk-Power System facilities,
states that this part applies to all users, 3 16 U.S.C. 824o(e)(3). including cybersecurity protection, and the design
owners and operators of the Bulk-Power 4 Rules Concerning Certification of the Electric of planned additions or modifications to such
Reliability Organization; Procedures for the facilities to the extent necessary to provide for the
1 U.S.-Canada Power System Outage Task Force, Establishment, Approval and Enforcement of reliable operation of the Bulk-Power System, but
Final Report on the August 14 Blackout in the Electric Reliability Standards, Order No. 672, 71 FR the term does not include any requirement to
United States and Canada: Causes and 8662 (February 17, 2006), FERC Stats. & Regs. enlarge such facilities or to construct new
Recommendations (April 2004) (Blackout Report). ¶ 31,204 (2006), order on reh’g, Order No. 672–A, transmission capacity or generation capacity.’’ 16
The Blackout Report is available on the Internet at 71 FR 19814 (April 18, 2006), FERC Stats. & Regs. U.S.C. 824o(a)(3).
http://www.ferc.gov/cust-protect/moi/blackout.asp. ¶ 31,212 (2006). 7 Order No. 672 at P 262, 321–37.
reliability goal and must contain a to the effect of a proposed Reliability differences’’ (which can include an
technically sound means to achieve this Standard or proposed modification to a exemption from a Reliability Standard)
goal. The Reliability Standard should be Reliability Standard on competition.11 for a particular region or subregion,
clear and unambiguous regarding what 9. The Commission’s regulations resulting in eight regional differences.
is required and who is required to require the ERO to file with the NERC stated that it simultaneously filed
comply. The possible consequences for Commission each new or modified the proposed Reliability Standards with
violating a Reliability Standard should Reliability Standard that it proposes to governmental authorities in Canada.
be clear and understandable to those be made effective under section 215 of The Commission addresses these
who must comply. There should be the FPA. The filing must include a proposed Reliability Standards in this
clear criteria for whether an entity is in concise statement of the basis and rulemaking proceeding.15
compliance with a Reliability Standard. purpose of the proposed Reliability 13. On November 15, 2006, NERC
While a Reliability Standard does not Standard, a summary of the Reliability filed 20 revised proposed Reliability
necessarily need to reflect the optimal Standard development proceedings Standards and three new proposed
method for achieving its reliability goal, conducted by either the ERO or Reliability Standards for Commission
a Reliability Standard should achieve its Regional Entity, together with a approval. The 20 revised Reliability
reliability goal effectively and summary of the ERO’s Reliability Standards primarily provided additional
efficiently. A Reliability Standard must Standard review proceedings, and a Measures and Levels of Non-
do more than simply reflect stakeholder demonstration that the proposed Compliance, but did not add or revise
agreement or consensus around the Reliability Standard is just, reasonable, any existing Requirements to these
‘‘lowest common denominator.’’ It is not unduly discriminatory or Reliability Standards. NERC requested
important that the Reliability Standards preferential and in the public interest.12 that the 20 revised proposed Reliability
developed through any consensus 10. Where a Reliability Standard Standards be included as part of the
process be sufficient to adequately requires significant improvement, but is Final Rule issued by the Commission in
protect Bulk-Power System reliability.8 otherwise enforceable, the Commission this docket. The proposed new
6. A Reliability Standard may take approves the Reliability Standard. In Reliability Standards, FAC–010–1,
into account the size of the entity that addition, as a distinct action under the FAC–011–1, and FAC–014–1, will be
must comply and the costs of statute, the Commission directs the ERO addressed in a separate rulemaking
implementation. A Reliability Standard to modify such a Reliability Standard, proceeding in Docket No. RM07–3–000.
should be a single standard that applies pursuant to section 215(d)(5) of the 14. On December 1, 2006, NERC
across the North American Bulk-Power FPA, to address the identified issues or submitted in Docket No. RM06–16–000
System to the maximum extent this is concerns. This approach will allow the an informational filing entitled ‘‘NERC’s
achievable taking into account physical proposed Reliability Standard to be Reliability Standards Development Plan:
differences in grid characteristics and enforceable while the ERO develops any 2007—2009’’ (Work Plan). NERC stated
regional Reliability Standards that result required modifications. it was submitting the Work Plan to
in more stringent practices. It can also 11. The Commission will remand to inform the Commission of NERC’s
account for regional variations in the the ERO for further consideration a program to improve the Reliability
organizational and corporate structures proposed new or modified Reliability Standards that currently are the subject
of transmission owners and operators, Standard that the Commission of the Commission’s rulemaking
variations in generation fuel type and disapproves in whole or in part.13 When proceeding.
ownership patterns, and regional remanding a Reliability Standard to the 3. Staff Preliminary Assessment and
variations in market design if these ERO, the Commission may order a Commission NOPR
affect the proposed Reliability Standard. deadline by which the ERO must submit
Finally, a Reliability Standard should 15. On May 11, 2006, Commission
a proposed or modified Reliability
have no undue negative effect on staff issued a ‘‘Staff Preliminary
Standard.
competition.9 Assessment of the North American
7. Order No. 672 directs the ERO to 2. NERC Petition for Approval of Electric Reliability Council’s Proposed
explain how the factors the Commission Reliability Standards Mandatory Reliability Standards’’ (Staff
identified are satisfied and how the ERO 12. On April 4, 2006, as modified on Preliminary Assessment). The Staff
balances any conflicting factors when August 28, 2006, NERC submitted to the Preliminary Assessment identifies staff’s
seeking approval of a proposed Commission a petition seeking approval observations and concerns regarding
Reliability Standard.10 of the 107 proposed Reliability NERC’s then-current voluntary
8. Pursuant to section 215(d)(2) of the Standards that are the subject of this Reliability Standards. The Staff
FPA and § 39.5(c) of the Commission’s Final Rule.14 According to NERC, the Preliminary Assessment describes
regulations, the Commission will give 107 proposed Reliability Standards issues common to a number of proposed
due weight to the technical expertise of collectively define overall acceptable Reliability Standards. It reviews and
the ERO with respect to the content of performance with regard to operation, identifies issues regarding each
a Reliability Standard or to a Regional planning and design of the North individual Reliability Standard but did
Entity organized on an Interconnection- American Bulk-Power System. Seven of not make specific recommendations
wide basis with respect to a proposed these Reliability Standards specifically regarding the appropriate Commission
Reliability Standard or a proposed incorporate one or more ‘‘regional action on a particular proposal.
modification to a Reliability Standard to 16. Comments on the Staff
be applicable within that 11 18 CFR 39.5(c)(1), (3).
Preliminary Assessment were due by
Interconnection. However, the 12 18 CFR 39.5(a). June 26, 2006. Approximately 50
Commission will not defer to the ERO 13 18 CFR 39.5(e). entities filed comments in response to
14 The filed proposed Reliability Standards are

or to such a Regional Entity with respect
not attached to the Final Rule but are available on 15 Eight proposed Reliability Standards submitted
the Commission’s eLibrary document retrieval in the August 29, 2006 filing that relate to cyber
8 Id.at P 329. system in Docket No. RM06–16–000 and are security, Reliability Standards CIP–002 through
9 Id.at P 332. available on the ERO’s Web site, http:// CIP–009, will be addressed in a separate rulemaking
10 Id. at P 337. www.nerc.com/filez/nerc_filings_ferc.html. proceeding in Docket No. RM06–22–000.
the Staff Preliminary Assessment. In II. Discussion the Commission, the ERO, the Regional
addition, on July 6, 2006, the Entities, and the owners, users and
A. Overview
Commission held a technical conference operators of the Bulk-Power System.20
to discuss NERC’s proposed Reliability 1. The Commission’s Underlying First, section 215 specifies that the ERO
Standards, the Staff Preliminary Approach To Review and Disposition of is to develop and enforce a
Assessment, the comments and other the Proposed Standards comprehensive set of Reliability
related issues. Standards subject to Commission
21. In this Final Rule, the Commission
review. Section 215 explains that a
4. Notice of Proposed Rulemaking takes the important step of approving
Reliability Standard is a requirement
the first set of mandatory and
approved by the Commission that is
17. The Commission issued the NOPR enforceable Reliability Standards within
intended to provide for the Reliable
on October 20, 2006, and required that the United States in accordance with the
Operation of the Bulk-Power System.
comments be filed within 60 days after provisions of new section 215 of the
Such requirement may pertain to the
publication in the Federal Register, or FPA. The Commission’s action herein
operation of existing Bulk-Power
January 2, 2007.16 The Commission marks the official departure from
System facilities, including
granted the request of several reliance on the electric utility industry’s cybersecurity protection, or it may
commenters to extend the comment date voluntary compliance with Reliability pertain to the design of planned
to January 3, 2007. Several late-filed Standards adopted by NERC and the additions or modifications to such
regional reliability councils and the facilities to the extent necessary to
comments were filed. The Commission
transition to the mandatory, enforceable provide for reliable operation of the
will accept these late-filed comments. A
Reliability Standards under the Bulk-Power System.21
list of commenters appears in Appendix
Commission’s ultimate oversight 24. Second, the reliability mandate of
A. through the ERO and, eventually, the section 215 of the FPA addresses not
18. On November 27, 2006, the Regional Entities, as directed by only the comprehensive maintenance of
Commission issued a notice on the 20 Congress. As we discuss more fully the reliable operation of each of the
revised Reliability Standards filed by below, in deciding whether to approve, elements of the Bulk-Power System, it
NERC on November 15, 2006. In the approve and direct modifications, or also contemplates the prevention of
notice, the Commission explained that, remand each of the proposed Reliability incidents, acts and events that would
because of their close relationship with Standards in this Final Rule, our overall interfere with the reliable operation of
Reliability Standards dealt with in the approach has been one of carefully the Bulk-Power System. Further, section
October 20, 2006 NOPR, the balancing the need for practicality 215 seeks to prevent an instability, an
Commission would address these 20 during the time of transition with the uncontrolled separation or a cascading
revised Reliability Standards in this imperatives of section 215 of the FPA failure, whether resulting from either a
proceeding.17 The notice provided an and Order No. 672, and other sudden disturbance, including a
opportunity to comment on the revised considerations. cybersecurity incident, or an
Reliability Standards, with a comment 22. In addition, our action today is unanticipated failure of the system
due date of January 3, 2007. informed by the August 14, 2003 elements. In order to avoid these
blackout which affected significant outcomes, the various elements and
19. The Commission issued a notice portions of the Midwest and Northeast components of the Bulk-Power System
on NERC’s Work Plan on December 8, United States and Ontario, Canada and are to be operated within equipment
2006. While the Commission sought impacted an estimated 50 million and electric system thermal, voltage and
public comment on NERC’s filing people and 61,800 megawatts of electric stability limits.22
because it was informative on the load. As noted in the NOPR, a joint 25. Third, section 215 of the FPA
prioritization of modifying Reliability United States-Canada task force found explains that the Bulk-Power System
Standards raised in the NOPR, the that the blackout was caused by several broadly encompasses both the facilities
notice emphasized that the Work Plan entities violating NERC’s then-effective
was filed for informational purposes policies and Reliability Standards.19 20 Generally speaking, the nation’s Bulk-Power
and NERC stated that it is not requesting Those violations directly contributed to System has been described as consisting of
‘‘generating units, transmission lines and
Commission action on the Work Plan. the loss of a significant amount of substations, and system controls.’’ Maintaining
electric load. The joint task force Reliability in a Competitive U.S. Electricity
20. On February 6, 2007, NERC
identified both the need for legislation Industry, Final Report of the Task Force on Electric
submitted a request for leave to file System Reliability, Secretary of Energy Advisory
to make Reliability Standards
supplemental information, and included Board, U.S. Department of Energy (September 1998)
mandatory and enforceable with at 2, 6–7. The transmission component of the Bulk-
a revised version of the NERC Statement penalties for noncompliance, as well as Power System is understood to provide for the
of Compliance Registry Criteria particular Reliability Standards that movement of power in bulk to points of distribution
(Revision 3). NERC noted that it had needed corrections to make them more for allocation to retail electricity customers.
submitted with its NOPR comments an effective in preventing blackouts. Essentially, transmission lines and other parts of
earlier version of the same document.18 the transmission system, including control
Indeed, the August 2003 blackout and facilities, serve to transmit electricity in bulk from
the recommendations of the joint task generation sources to concentrated areas of retail
16 Mandatory Reliability Standards for the Bulk customers, while the distribution system moves the
force helped foster enactment of EPAct
Power System, Notice of Proposed Rulemaking, 71 electricity to where these retail customers consume
FR 64,770 (Nov. 3, 2006), FERC Stats. & Regs., Vol
2005 and new section 215 of the FPA. it at a home or business.
IV, Proposed Regulations, ¶ 32,608 (2006). 2. Mandates of Section 215 of the FPA 21 16 U.S.C. 824o(a)(3).
17 The modified 20 Reliability Standards are: CIP– 22 ‘‘The term ‘reliable operation’ means operating
001–1; COM–001–1; COM–002–2; EOP–002–2; 23. The imperatives of section 215 of the elements of the Bulk-Power System within
EOP–003–1; EOP–004–1; EOP–006–1; INT–001–2; the FPA address not only the protection equipment and electric system thermal, voltage, and
INT–003–2; IRO–001–1; IRO–002–1; IRO–003–2; stability limits so that instability, uncontrolled
IRO–005–2; PER–004–1; PRC–001–1; TOP–001–1;
of the reliability of the Bulk-Power
separation, or cascading failures of such system will
TOP–002–2; TOP–004–1; TOP–006–1; and TOP– System but also the reliability roles of not occur as a result of a sudden disturbance,
008–1. including a cybersecurity incident, or unanticipated
18 See NERC comments, Attachment B. 19 NOPR at P 14. failure of system elements.’’ 16 U.S.C. 824o(a)(4).
and control systems necessary for 27. Similarly, in considering whether familiarize themselves not only with the
operating an interconnected electric to forward a proposed Reliability new reliability obligations under section
energy transmission network (or any Standard to the Commission for 215 of the FPA and the Reliability
portion thereof) as well as the electric approval, the ERO must rebuttably Standards that we are approving in this
energy from generation facilities needed presume that a proposal from a Regional Final Rule, but also any proposed
to maintain transmission system Entity organized on an Interconnection- Reliability Standards or improvements
reliability.23 Further, section 215 wide basis for a Reliability Standard or that may implicate them that are under
explains that the interconnected modification to a Reliability Standard to development by the ERO and the
transmission network within an be applicable on an Interconnection- Regional Entities.34 We have taken these
Interconnection is a geographic area in wide basis is just, reasonable, and not and other considerations into account
which the operation of Bulk-Power unduly discriminatory or preferential, and have tried to reach an appropriate
System components is synchronized and in the public interest.28 The balance among them.
such that the failure of one such Commission may also give deference to 30. First, we have decided, as
component, or more than one such the advice of a Regional Advisory Body proposed in our NOPR, to approve most
component, may adversely affect the organized on an Interconnection-wide of the Reliability Standards that the ERO
ability of the operators of other basis in regard to whether a proposed submitted in this proceeding, even
components within the system to Reliability Standard is just, reasonable though concerns with respect to many
maintain reliable operation of the and not unduly discriminatory or of the Reliability Standards have been
facilities within their control.24 A preferential and in the public interest, voiced. As most of these Reliability
Cybersecurity Incident is explained to as it may apply within the region.29 Standards are already being adhered to
be a malicious act that disrupts or 28. Finally, the Commission is further on a voluntary basis, we are concerned
attempts to disrupt the operation of instructed to remand to the ERO for that to remand them and leave no
programmable electronic devices and further consideration any standard or standard in place in the interim would
communication networks including modification that it does not approve in not help to ensure reliability when such
hardware, software or data that are whole or part.30 We may also direct the standards could be improved over time.
essential to the reliable operation of the ERO to submit a proposed Reliability In these cases, however, the concerns
Bulk-Power System.25 Standard or modification that addresses highlighted below merit the serious
26. Next, as to the reliability roles of a specific problem if we consider this attention of the ERO and we are
the Commission and others, section 215 course of action to be appropriate.31 directing the ERO to consider what
of the FPA explains that the ERO must Further, if we find that a conflict exists needs to be done and how to do so,
file each of its Reliability Standards and between a Reliability Standard and any often by way of descriptive directives.35
any modification thereto with the function, rule, order, tariff, rate 31. We emphasize that we are not, at
Commission.26 The Commission will schedule, or agreement accepted, this time, mandating a particular
consider a number of factors before approved, or ordered by the
34 Section 215(b) of the FPA provides that, for
taking any action with respect thereto. Commission applicable to a
purposes of approving Reliability Standards and
We may approve the Reliability transmission organization,32 and if we enforcing compliance with such standards, the
Standard or its modification only if we determine that the Reliability Standard Commission shall have jurisdiction over those
determine that it is just, reasonable, and needs to be changed as a result of such entitles that had previously been excluded under
not unduly discriminatory or a conflict, we must order the ERO to section 201(f) of the FPA. Section 201(f) excludes
the United States, a state or any political
preferential and in the public interest to develop and file with the Commission a subdivision of a state, an electric cooperative that
do so. Also, in doing so, we are modified Reliability Standard for this receives financing under the Rural Electrification
instructed to give due weight to the purpose.33 Act of 1936, 7 U.S.C. 901 et seq., or that sells less
than 4,000,000 megawatt hours of electricity per
technical expertise of the ERO 3. Balancing the Need for Practicality year, or any agency, authority, or instrumentality of
concerning the content of a proposed With the Mandates of Section 215 and any one or more of the foregoing, or any corporation
standard or a modification thereto. We Order No. 672
which is wholly owned, directly or indirectly, by
must also give due weight to an any one or more of the foregoing, or any officer,
29. In enacting section 215, Congress agent, or employee of any of the foregoing acting as
Interconnection-wide Regional Entity such in the course of his official duty, unless such
with respect to a proposed Reliability chose to expand the Commission’s provision makes specific reference thereto. 16
Standard to be applicable within that jurisdiction beyond our historical role U.S.C. 824(f).
Interconnection, except for matters as primarily an economic regulator of 35 In Order No. 672, we decided, in response to
the public utility industry under Part II some commenters’ suggestions that a Reliability
concerning the effect on competition.27 Standard should address the ‘‘what’’ and not the
of the FPA. Many entities not previously ‘‘how’’ of reliability and that the actual
23 16 U.S.C. 824o(a)(1). touched by our economic regulatory implementation should be left to entities such as
24 16 U.S.C. 824o(a)(5). oversight are within our reliability control area operators and system planners, that in
some limited situations, there may be good reason
25 16 U.S.C. 824o(a)(8).
purview and these entities will have to to do so but, for the most part, in other situations
26 ‘‘The Electric Reliability Organization shall file
the ‘‘how’’ may be inextricably linked to the
each Reliability Standard or modification to a Reliability Standard to be applicable within that Reliability Standard and may need to be specified
Reliability Standard that it proposes to be made Interconnection, but shall not defer with respect to by the ERO to ensure the enforcement of the
effective under this section with the Commission.’’ the effect of a standard on competition. A proposed standard. Since leaving out implementation features
16 U.S.C. 824o(d)(1). standard or modification shall take effect upon could sacrifice necessary uniformity, create
27 ‘‘The Commission may approve, by rule or
approval by the Commission.’’ 16 U.S.C. 824o(d)(2). uncertainty for the entity that has to follow the
order, a proposed Reliability Standard or 28 16 U.S.C. 824o(d)(3). standard, make enforcement difficult, or increase
modification to a Reliability Standard if it 29 16 U.S.C. 824o(j). the complexity of the Commission’s oversight and
determines that the standard is just, reasonable, not 30 16 U.S.C. 824o(d)(4).
review process, we left it to the ERO to reach the
unduly discriminatory or preferential, and in the appropriate balance between reliability principles
31 16 U.S.C. 824o(d)(5).
public interest. The Commission shall give due and implementation features. Order No. 672 at P
32 Under section 215, a transmission organization

weight to the technical expertise of the Electric 260. We also decided that the Commission’s
Reliability Organization with respect to the content is a RTO, ISO, independent transmission provider authority to order the ERO to address a particular
of a proposed standard or modification to a or other Transmission Organization finally reliability topic is not in conflict with other
Reliability Standard and to the technical expertise approved by the Commission for the operation of provisions of Order No. 672 that assigned the
of a regional entity organized on an transmission facilities. 16 U.S.C. 824o(a)(6). responsibility for developing a proposed Reliability
Interconnection-wide basis with respect to a 33 16 U.S.C. 824o(d)(6). Standard to the ERO. Order No. 672 at P 416.
outcome by way of these directives, but that particular Reliability Standard which entities must comply with
we do expect the ERO to respond with applies. particular Reliability Standards.
an equivalent alternative and adequate
a. Comments 2. Mandatory Reliability Standards
support that fully explains how the
alternative produces a result that is as 36. NERC agrees with the 40. The Commission proposed to add
effective as or more effective that the Commission’s proposal to add the text § 40.2(a) to the Commission’s
Commission’s example or directive. of § 40.1(b) to its regulations to require regulations. The proposed regulation
32. We have sought to provide enough that each Reliability Standard identify text would require that each applicable
specificity to focus the efforts of the the subset of users, owners and user, owner and operator of the Bulk-
ERO and others adequately. We are also operators to which that particular Power System comply with
sensitive to the concern of the Canadian Reliability Standard applies and Commission-approved Reliability
Federal Provincial Territorial Working believes this requirement is currently Standards developed by the ERO, and
Group (FPT) about the status of an established in NERC’s Rules of would provide that the Commission-
existing standard that is already being Procedure. approved Reliability Standards can be
followed on a voluntary basis. The FPT 37. TANC supports proposed § 40.1. It obtained from the Commission’s Public
suggests, for example, that instead of states that requiring each Reliability Reference Room at 888 First Street, NE.,
remanding an existing Reliability Standard to identify the subset of users, Room 2A, Washington, DC 20426.
Standard, the Commission should owners and operators to whom it 41. The Commission further proposed
conditionally approve the standard applies, thereby limiting the scope of to add § 40.2(b) to its regulations,
pending its modification.36 We believe the broad phrase ‘‘users, owners and providing that a modification to a
the action we take today is similar in operators,’’ is a critical step to removing Reliability Standard proposed to
many respects to this approach. ambiguities from the Reliability become effective pursuant to § 39.5 shall
33. We have also adopted a number of Standards. According to TANC, the not be effective until approved by the
other measures to mitigate many of the proposed text of § 40.1 would eliminate Commission.
difficulties associated with the electric ambiguities with regard to the entity
utility industry’s preparation for and responsible for complying with each a. Comments
transition to mandatory Reliability Reliability Standard. In this way, 42. NERC concurs with the
Standards. For instance, we are Regional Entities and other interested Commission’s proposal to require NERC
directing the ERO and Regional Entities parties will be allowed to weigh in to provide to the Commission a copy of
to focus their enforcement resources during the Reliability Standards all approved Reliability Standards for
during an initial period on the most development process on the breadth of posting in its Public Reference Room.
serious Reliability Standard violations. each standard and may urge NERC to NERC agrees with the Commission that
Moreover, because commenters have accept any necessary regional variations neither the text nor the title of an
raised valid concerns as discussed that are necessary to maintain adequate approved Reliability Standard should be
below, our Final Rule relies on the reliability within the region. codified in the Commission’s
existing NERC definition of bulk electric 38. APPA believes that the regulations.
system and its compliance registration Commission’s proposal to add § 40.1
process to provide as much certainty as and 40.2 to its regulations is generally b. Commission Determination
possible regarding the applicability and appropriate and acceptable, but the 43. For the reasons discussed in the
responsibility of specific entities under regulatory language should be amended NOPR, the Commission generally adopts
the approved standards. This approach to make clear the exact universe of the NOPR’s proposal to add § 40.2 to the
should also assuage the concerns of users, owners and operators of the Bulk- Commission’s regulations.37 However,
many smaller entities. Power System to which the mandatory after consideration, the Commission has
Reliability Standards apply. It determined that it is not necessary to
B. Discussion of the Commission’s New
recommends that the regulations have the approved Reliability Standards
Regulations
provide that determinations as to on file in the Commission’s public
1. Applicability applicability of standards to particular reference room and on the NERC Web
34. In the NOPR, the Commission entities shall be resolved by reference to site. Therefore, we will require that all
proposed to add § 40.1(a) to the the NERC compliance registry. Commission-approved Reliability
regulations. The Commission proposed Standards be available on the ERO’s
b. Commission Determination
that § 40.1(a) would provide that this Web site, with an effective date, and
39. The Commission adopts the revise § 40.2(b) to remove the following
Part applies to all users, owners and
NOPR’s proposal to add § 40.1 to the language: ‘‘Which can be obtained from
operators of the Bulk-Power System
Commission’s regulations. The the Commission’s Public Reference
within the United States (other than
Commission disagrees with APPA’s Room at 888 First Street, NE., Room 2A,
Alaska and Hawaii) including, but not
suggestion to define here the exact Washington, DC, 20426.’’ Further, to be
limited to, the entities described in
universe of users, owners and operators consistent with Part 39 of our
section 201(f) of the FPA. This
of the Bulk-Power System to which the regulations, we remove the reference to
statement is consistent with section
mandatory Reliability Standards apply. NERC and replace it with ‘‘Electric
215(b) of the FPA and § 39.2 of the
Rather, consistent with NERC’s existing Reliability Organization.’’
Commission’s regulations.
approach, we believe that it is
35. The Commission further proposed 3. Availability of Reliability Standards
appropriate that each Reliability
to add § 40.1(b), which would require
Standard clearly identify the subset of 44. The Commission proposed to add
each Reliability Standard made effective
users, owners and operators to which it § 40.3 to the regulation text, which
under this Part to identify the subset of
applies and the Commission determines requires that the ERO maintain in
users, owners and operators to whom
applicability on that basis. As we electronic format that is accessible from
36 FPT letter to Chairman Kelliher (submitted on discuss later, we approve NERC’s the Internet the complete set of effective
July 10, 2006) (placed in the record of this current compliance registry to provide
proceeding). certainty and stability in identifying 37 NOPR at P 37.
Reliability Standards that have been NOPR’s proposal to add § 40.3 to the 52. In the NOPR, the Commission
developed by the ERO and approved by Commission’s regulations; however the proposed that, for the initial approval of
the Commission. The Commission Commission has further clarified the proposed Reliability Standards, the
stated that it believes that ready access proposed regulatory text.39 We clarify continued use of NERC’s definition of
to an electronic version of the effective that the ERO must post on its Web site bulk electric system as set forth in the
Reliability Standards will enhance the currently effective Reliability NERC glossary is appropriate.43
transparency and help avoid confusion Standards as approved and enforceable However, the Commission interpreted
as to which Reliability Standards are by the Commission. Further, we require the term ‘‘bulk electric system’’ to apply
mandatory and enforceable. We noted the effective date of the Reliability to: (1) All of the ≥ 100 kV transmission
that NERC currently maintains the Standards must be included in the systems and any underlying
existing, voluntary Reliability Standards posting. transmission system (< 100 kV) that
on the NERC Web site. 49. In response to EEI, the could limit or supplement the operation
45. While the NOPR discusses each Commission anticipates that it will of the higher voltage transmission
Reliability Standard and identifies the address most, if not all, new Reliability systems and (2) transmission to all
Commission’s proposed disposition for Standards proposed by NERC through a significant local distribution systems
each Reliability Standard, we did not rulemaking process. However, we retain (but not the distribution system itself),
propose to codify either the text or the the flexibility to address matters by transmission to load centers and
title of an approved Reliability Standard order where appropriate, consistent transmission connecting generation that
in the Commission’s regulations. Rather, with the statute and our regulations.40 supplies electric energy to the system.
we proposed that each user, owner or In Order No. 672, the Commission The Commission proposed that, if a
operator of the Bulk-Power System must stated that it would provide notice and question arose concerning which
comply with applicable Commission- opportunity for public comment except underlying transmission system limits
approved Reliability Standards that are in extraordinary circumstances and, on or supplements the operation of the
available in the Commission’s Public rehearing, clarified that any decision by higher voltage transmission system, the
Reference Room and on the Internet at the Commission not to provide notice ERO would determine the matter on a
the ERO’s Web site. We stated that this and comment when reviewing a case-by-case basis.
approach is consistent with the proposed Reliability Standard will be 53. The Commission solicited
statutory options of approving a made in accordance with the criteria comment on its interpretation and
proposed Reliability Standard or established in section 553 of the whether the Regional Entities should, in
modification to a Reliability Standard Administrative Procedure Act.41 the future, play a role in either defining
‘‘by rule or order.’’ 38 the facilities that are subject to a
C. Applicability Issues
Reliability Standard or be allowed to
a. Comments 1. Bulk-Power System v. Bulk Electric determine an exception on a case-by-
46. NERC states that it can System case basis.
successfully implement the 50. The NOPR observed that, for 54. Further, the NOPR explained that
Commission’s proposal to require NERC purposes of section 215, ‘‘Bulk-Power continued reliance on multiple regional
to maintain in electronic format that is System’’ means: interpretations of the NERC definition of
accessible from the Internet the bulk electric system, which omits
complete set of Reliability Standards (A) facilities and control systems necessary significant portions of the transmission
for operating an interconnected electric
that have been developed by the ERO system component of the Bulk-Power
energy transmission network (or any portion
and approved by the Commission. thereof) and (B) electric energy from System that serve critical load centers,
NERC currently maintains a public Web generating facilities needed to maintain is not appropriate. Thus, the NOPR
site displaying the existing, voluntary transmission system reliability. The term proposed that, in the long run, NERC
Reliability Standards for access by does not include facilities used in the local revise the current definition of bulk
users, owners and operators of the Bulk- distribution of electric energy. electric system to ensure that all
Power System. Once the proposed 51. The NERC glossary, in contrast, facilities, control systems and electric
Reliability Standards are approved by states that Reliability Standards apply to energy from generation resources that
the Commission, NERC will modify its the ‘‘bulk electric system,’’ which is impact system reliability are included
Web site to distinguish which defined by its regions in terms of a within the scope of applicability of
Reliability Standards have been voltage threshold and configuration, as Reliability Standards, and that NERC’s
approved by the Commission for follows: revision is consistent with the statutory
enforcement in the United States. term Bulk-Power System.
As defined by the Regional Reliability
47. EEI states that the approval of Organization, the electrical generation a. Comments
Reliability Standards should be through resources, transmission lines,
a rulemaking rather than an order, interconnections with neighboring systems, 55. Most commenters, including
except in very rare circumstances, and associated equipment, generally operated NERC, NARUC, APPA, National Grid,
because of the open nature of the at voltages of 100 kV or higher. Radial EEI and Ontario IESO, believe that the
rulemaking process. Where the transmission facilities serving only load with Commission should only impose
Commission decides to proceed by one transmission source are generally not Reliability Standards on those entities
included in this definition.42 that fall under NERC’s definition of bulk
order, EEI states that the Commission
should give notice and an opportunity electric system as it existed under the
39 NOPR at P 39–41.
to comment on any proposed Reliability voluntary regime. They state that, by
40 See 16 U.S.C. 824o(d)(2) (‘‘the Commission
Standards. extending the definition of bulk electric
may approve, by rule or order, a proposed
Reliability Standard or modification * * *’’); 18 system, the Commission goes beyond
b. Commission Determination CFR 39.5(c).

41 See Order No. 672 at P 308; Order No 672–A 43 NOPR at P 66–70. The Commission explained
48. For the reasons discussed in the
at P 26. in the NOPR that regional definitions had not been
NOPR, the Commission adopts the 42 NERC Glossary at 2. All citations to the submitted and it would not determine the
Glossary in this Final Rule refer to the November appropriateness of any regional definition in the
38 See 16 U.S.C. 824o(d)(2). 1, 2006 version filed on November 15, 2006. current rulemaking proceeding. Id. at n. 56.
what is necessary to protect Bulk-Power underlying transmission system (less local transmission facilities unless
System reliability, creates uncertainty than 100 kV) that could limit or otherwise ‘‘necessary for’’ (i.e., material
and will divert resources from supplement the operation of the higher to) the reliable operation of the
monitoring compliance of those entities voltage transmission systems is a interconnected grid. Further, NRECA
that could have a material impact on significant expansion over what the states that the definition of ‘‘Reliable
Bulk-Power System reliability. industry has historically regarded as the Operation’’ in section 215(a) focuses on
56. Entergy, however, agrees with the bulk electric system, both in terms of the reliable operation of the Bulk-Power
Commission that NERC’s definition of the facilities covered and the entities System and not the protection of local
bulk electric system is not adequate and involved. While NERC agrees with the load per se.
agrees with the Commission’s proposed Commission that Congress intended to 62. Certain commenters assert that
interpretation. ISO-NE does not oppose give the Commission broad jurisdiction expanding the scope of the
the NOPR’s approach on how to over the reliability of the Bulk-Power Commission’s jurisdiction and the scope
interpret the term ‘‘Bulk-Power System, it does not believe this is the of the Reliability Standards in this
System,’’ but it states that this broader right time for the Commission to define proceeding would be an unanticipated
scope justifies a delay in the date civil the full extent of its jurisdiction or that expansion of the reach of the existing
penalties take effect, to January 1, 2008, the approach proposed in the NOPR is Reliability Standards implemented with
to provide the industry sufficient time the right way to do so. In addition, insufficient due process and may cause
to review the Commission’s Final Rule NERC does not believe it is legally jurisdictional concerns.45 They state
and to adjust to the expanded reach of necessary for the Commission to extend that the Reliability Standards under
the Reliability Standards. its jurisdiction to the limits in a single consideration were developed and
57. NERC, APPA and NRECA step. approved through NERC’s Reliability
maintain that there was no intentional 60. NERC states that the Commission Standards development process with
distinction made by Congress between should make clear in this Final Rule the intention that they would apply
‘‘Bulk-Power System’’ (as defined in that its jurisdiction is at least as broad based on the industry’s historical
section 215) and the ‘‘bulk electric as the historic NERC definition of ‘‘bulk conception of the bulk electric system
system’’ (as defined by the NERC electric system’’ and that the and that the outcome might have been
glossary). NERC asserts that recent Commission will use that definition for different using the Commission’s
discussions with stakeholders confirm the near term. NERC asserts that the proposed definition. NERC therefore
NERC’s belief that there was no Commission should also make clear that argues that it would be inappropriate to
distinction intended. Moreover, NERC is it is not deciding in this docket the full assume that the requirements of the
not aware of any documentation that scope of its jurisdiction and is reserving existing Reliability Standards would be
suggests a distinction was intended. its right to consider a broader definition. relevant to an expanded set of entities
NRECA argues that legislative intent Instead, NERC states that the or an expanded scope of facilities under
and prior usage do not support the Commission should focus on approving a broader definition of the Bulk-Power
Commission’s approach to defining the an initial set of Reliability Standards for System. NERC also asserts that there is
Bulk-Power System. NRECA concedes the core set of users, owners and no reasonable justification for subjecting
that no conference committee report operators that have the most significant ‘‘thousands of small entities’’ to the
accompanied EPAct 2005, but it notes impact on the reliability of the Bulk- costs of compliance with the Reliability
that the Congressional Research Service Power System. NERC maintains that this Standards when there is no reasonable
specifies in its manual on statutory core set has been defined through its use justification to do so in terms of
interpretation that ‘‘[W]here Congress of the terms ‘‘bulk electric system’’ and incremental benefit to the reliability of
borrows terms of art in which are ‘‘responsible entities’’ provided in the the Bulk-Power System.
accumulated the legal tradition and NERC Glossary, the ‘‘Applicability’’ 63. NRECA, APPA and others argue
meaning of centuries of practice, it section of each Reliability Standard and that the Commission’s interpretation
presumably knows and adopts the substantive requirements of the would undermine, rather than promote,
cluster of ideas that were attached to standards themselves, and NERC’s reliability. According to these
each borrowed word in the body of registration of specific entities that are commenters, the Commission’s
learning from which it was taken.’’ 44 responsible for compliance with the interpretation would require new
58. TAPS states that the Commission Reliability Standards. definitions, such as one for ‘‘load
cannot lawfully ‘‘interpret’’ the bulk 61. NRECA argues that the definition center,’’ and otherwise creates
electric system definition contrary to its of ‘‘Bulk-Power System’’ contained in confusion. For example, Small Entities
terms. According to TAPS, the section 215(a)(1) reflects Congressional Forum states that it is concerned with
Commission cannot include facilities intent to codify the established the inclusion of ‘‘transmission
below 100 kV ‘‘that could limit or materiality component because connecting generation that supplies
supplement the operation of the higher Congress limited the definition of Bulk- electric energy to the system’’ because
voltage transmission systems,’’ in the Power System to facilities and control that could include any transmission
bulk electric system, even if they are systems necessary for operating an connected to any generation of any size.
‘‘necessary for operating’’ the bulk interconnected electric energy 64. APPA objects to the Commission’s
system, because these facilities are not transmission network and electric statement that ‘‘[t]he transmission
included in NERC’s definition of bulk energy from generation facilities needed system component of the Bulk-Power
electric system. to maintain transmission system System is understood to provide for the
59. NERC states that the reliability. NRECA argues that these movement of power in bulk to points of
Commission’s proposal that NERC’s limiting terms mean that not all distribution for allocation to retail
‘‘bulk electric system’’ should apply to transmission facilities are included. In electricity customers.’’ APPA states that
all of the equal to or greater than 100 kV NRECA’s view, the definition of the it does not believe there is an industry
transmission systems and any Bulk-Power System within the meaning ‘‘understanding’’ that the bulk electric
of section 215 cannot extend to radial system or the Bulk-Power System
44 NRECA, citing Morissette v. United States, 342 facilities to ‘‘significant local
U.S. 246, 263 (1952). distribution systems,’’ ‘‘load centers,’’ or 45 See, e.g., NERC, TAPS and NRECA.
necessarily encompass all transmission the Commission, the states, and all other system, it cannot expand the boundaries
facilities that connect major generation stakeholders would benefit of its jurisdiction farther than the bulk
stations to distribution systems or that tremendously from a deliberate dialogue electric system. It maintains that
there is a bright line between on these matters. NERC asks that the Congress did not give the Commission
transmission and distribution facilities. Commission not directly define the jurisdiction to mandate and enforce all
APPA interprets these terms as outer limits of its jurisdiction under Reliability Standards, especially those
describing the backbone facilities that section 215, but requests that the related to the long-term adequacy of
integrate regional transmission Commission direct NERC to undertake generation resources; therefore, the
networks. certain activities to reconcile the Commission may not delegate to an ERO
65. NERC’s approach to moving definitions of bulk electric system and authority that it does not have. APPA
forward with the enforcement of Bulk-Power System and report the also states that the Commission
mandatory Reliability Standards is to results back to the Commission. expanded the definition of the bulk
register the specific entities that NERC 68. Similarly, TAPS, APPA, Duke and electric system so that it may affect
will hold accountable for compliance MidAmerican state that, if there is a facilities subject to state reliability
with the Reliability Standards. The problem with NERC’s current definition jurisdiction, such as low-voltage
registration will identify all entities that of the bulk electric system, the transmission systems that affect only the
are material to the reliability of the Commission should require NERC to local areas served by those facilities,
Bulk-Power System. NERC maintains its revisit it using the ANSI process to give which do not cause cascading outages,
most important role is to mitigate ‘‘due weight’’ to NERC’s technical without explaining why it is necessary
noncompliant behavior regardless of an expertise. AMP-Ohio, TANC, Georgia to federalize reliability responsibility for
entity’s registration. Further, NERC Operators and Entergy state that outages on these facilities.
asserts that all that it and the Regional Entities should play a primary 71. NARUC and New York
Commission give up by using the role in defining the facilities that are Commission maintain that the
registration approach is, at most, ‘‘one subject to a Reliability Standard because Commission’s proposed interpretation
penalty, one time’’ for an entity. That is, the Regional Entities will have more of what facilities constitute the Bulk-
if there is an entity that is not registered detailed system knowledge in their Power System is inconsistent with
and NERC later discovers that the entity regions than NERC or the Commission. section 215 of the FPA. They state that
can have a material impact on the 69. The Connecticut Attorney the ability of a facility to ‘‘limit or
reliability of the Bulk-Power System, General, the Connecticut DPUC and the supplement’’ the transmission system
NERC has the ability to add the entity, New England Conference of Public does not automatically mean that a
and possibly other entities of a similar Utilities Commissioners maintain that facility is necessary for operating an
class, to the registration list and to NERC’s definition of the ‘‘bulk electric interconnected transmission system, as
direct corrective action by that entity on system’’ exceeds the Commission’s required by the FPA, or for maintaining
a going forward basis.46 Thereafter, of jurisdiction by including generation that system reliability. According to NARUC,
course, the entity would be subject to is not needed to maintain transmission Congress only authorized the
sanctions. APPA, TANC, AMP-Ohio and system reliability and therefore intrudes Commission to approve Reliability
NPCC support this approach. While into state jurisdiction over generation Standards necessary for operating an
SoCal Edison believes that there can be resource adequacy matters and is interconnected electric energy
no single definition of Bulk-Power unlawful. According to Connecticut transmission network. Although the
System, it states that NERC’s registry is DPUC, section 215(a)(1) of the FPA NOPR interpretation includes these
a good starting point to developing excludes from federal regulation (1) underlying facilities, it also covers
general criteria for what facilities should facilities that are used in local others that are not required to operate
be subject to the Reliability Standards. distribution, (2) facilities and control an interconnected transmission
66. AMP-Ohio supports NERC’s systems that are not necessary for network.
proposal to include any additional operating an interconnected electric 72. Moreover, NARUC and New York
entities or facilities that it believes energy transmission network or part of Commission state that the NOPR
could have a detrimental effect on the a network and (3) electric energy from proposal to define Bulk-Power System
reliability of the bulk electric system on generating facilities not needed to as all facilities operating at or above 100
a case-by-case basis over time. Further, maintain transmission system kV exceeds the Commission’s
Ontario IESO suggests that if the reliability. Connecticut DPUC maintains jurisdiction. According to NARUC and
Commission believes that NERC’s that, in contrast, NERC’s definition New York Commission, there is
definition of bulk electric system replaces the FPA definition with criteria generally a layer of ‘‘area’’ transmission
excludes facilities that should be subject based on voltage thresholds for facilities below the ‘‘Bulk-Power
to Reliability Standards for reasons transmission facilities and electric System’’ and above distribution
other than preventing cascading energy from generating facilities. facilities that move energy within a
outages, the Commission could submit a According to Connecticut DPUC, service territory and toward load
detailed request through the ERO NERC’s definition does not comply with centers. However, NARUC and New
Reliability Standards development section 215(a)(1) because it includes York Commission claim that only a
process. facilities and equipment that are neither small subset of these underlying
67. NERC and EEI believe that, in the ‘‘necessary’’ for operation of the facilities assists in maintaining the
long run, NERC should be directed to transmission network nor ‘‘needed’’ to reliability of the Bulk-Power System.
develop, through its Reliability maintain transmission system 73. Several commenters, including
Standards development process, a single reliability. The Connecticut Attorney New York Commission, NYSRC,
process to identify the specific elements General and Connecticut DPUC, Massachusetts DTE, NPCC, TANC and
of the Bulk-Power System that must therefore, urge the Commission to reject Ontario IESO, support a functional,
comply with Reliability Standards this definition. impact-based approach to applying
under section 215. According to NERC, 70. Further, in Connecticut DPUC’s Reliability Standards. According to
view, because the Commission cannot NPCC, neither NERC nor section 215 of
46 See Rules of Procedure, § 500. adopt NERC’s definition of bulk electric the FPA provide a rigorous approach to
determining which elements play a role Reliability Standards in the start-up bulk electric system and any regional
in maintaining reliability of the bulk phase of a mandatory Reliability documents that identify critical
electric system. These commenters Standard regime.48 facilities to which the Reliability
generally state that an impact-based 76. However, we disagree with NERC, Standards apply (i.e., facilities below a
approach would define those elements APPA and NRECA that there is no 100 kV threshold that have been
necessary for Reliable Operation and intentional distinction between Bulk- identified by the regions as critical to
ensure that compliance and Power System and bulk electric system. system reliability).
enforcement efforts concentrate on those NRECA states that ‘‘[W]here Congress 78. The Commission believes that the
facilities that materially affect the borrows terms of art in which are above approach satisfies concerns raised
Reliable Operation of the interconnected accumulated the legal tradition and by NARUC and New York Commission
Bulk-Power System, while at the same meaning of centuries of practice, it that the proposal to interpret Bulk-
time balancing the costs imposed by presumably knows and adopts the Power System exceeds the
mandatory Reliability Standards with cluster of ideas that were attached to Commission’s jurisdiction. When the
the reliability improvement realized on each borrowed word in the body of Commission addresses this matter in a
the interconnected Bulk-Power System. learning from which it was taken.’’ 49 In future proceeding, it will consider
74. Ontario IESO maintains that this instance, however, Congress did not NARUC’s and New York Commission’s
reliability impact is a process of borrow the term of art—bulk electric comments regarding the ‘‘layer of ‘area’
assessing facilities to determine if, due system—but instead chose to create a transmission.’’
to recognized contingencies and other new term, Bulk-Power System, with a 79. We disagree with commenters
test criteria, they represent a significant definition that is distinct from the term claiming that the ERO’s definition of
adverse impact beyond a local area. This of art used by industry. In particular, the bulk electric system is broader than the
assessment will be the basis of a statutory term does not establish a statutory definition of Bulk-Power
consistent test methodology the ERO voltage threshold limit of applicability System. Connecticut Attorney General,
must develop to define the facilities or configuration as does the NERC Connecticut DPUC and others argue that
included within the overall Bulk-Power definition of bulk electric system. the ERO’s definition of bulk electric
System to which a Reliability Standard Instead, section 215 of the FPA broadly system exceeds the Commission’s
would apply. Ontario IESO states that defines the Bulk-Power System as jurisdiction by including generation that
the Commission should direct the ERO ‘‘facilities and control systems necessary is not needed to maintain transmission
to take the lead in developing the for operating an interconnected electric system reliability and, therefore,
impact assessment procedure to provide energy transmission network (or any intrudes into state jurisdiction over
a consistent and uniform methodology portion thereof) [and] electric energy generation resource adequacy. First,
that can be applied by any Regional from generating facilities needed to none of the Reliability Standards
Entity. Ontario IESO does not support maintain transmission system submitted by the ERO set requirements
the Commission’s proposal to limit case- reliability.’’ Therefore, the Commission for resource adequacy. Moreover,
by-case determinations to underlying confirms its statements in the NOPR commenters have not adequately
transmission systems operating at less that the Bulk-Power System reaches supported their claim that the
than 100 kV. farther than those facilities that are ‘‘threshold’’ in the NERC definition of
included in NERC’s definition of the bulk electric system that includes
b. Commission Determination facilities ‘‘generally operated at 100 kV
bulk electric system.50
75. The Commission agrees with 77. Although we are accepting the or higher’’ is broader than the statutory
commenters that, at least initially, NERC definition of bulk electric system phrase ‘‘electric energy from generation
expanding the scope of facilities subject and NERC’s registration process for facilities needed to maintain
to the Reliability Standards could create now, the Commission remains transmission system reliability.’’ As
uncertainty and might divert resources concerned about the need to address the stated explicitly in the NERC definition,
as the ERO and Regional Entities potential for gaps in coverage of this is a ‘‘general’’ threshold and allows
implement the newly created facilities. For example, some current leeway to address specific
enforcement and compliance regime. regional definitions of bulk electric circumstances. On its face, the NERC
Further, we agree with commenters that system exclude facilities below 230 kV definition is not overbroad; as applied,
unilaterally modifying the definition of and transmission lines that serve major it must be interpreted and applied
the term bulk electric system is not an load centers such as Washington, DC consistent with the statutory language in
effective means to achieve our goal. For and New York City.51 The Commission section 215. Finally, as stated above, we
these reasons, the Commission is not intends to address this matter in a future believe that the ERO definition of bulk
adopting the proposed interpretation proceeding. As a first step in enabling electric system is narrower than the
contained in the NOPR. Rather, for at the Commission to understand the reach statutory definition of Bulk-Power
least an initial period, the Commission of the Reliability Standards, we direct System.
will rely on the NERC definition of bulk the ERO, within 90 days of this Final 2. Applicability to Small Entities
electric system 47 and NERC’s Rule, to provide the Commission with
registration process to provide as much 80. The NOPR discussed NERC’s plan
an informational filing that includes a
certainty as possible regarding the to, in the future, identify in a particular
complete set of regional definitions of
applicability to and the responsibility of Reliability Standard limitations on
specific entities to comply with the 48 See Section II.C.2., Applicability to Small
applicability based on electric facility
Entities, infra. characteristics.52 The Commission
47 ‘‘As defined by the Regional Reliability 49 Citing Morissette v. United States, 342 U.S. agreed that it is important to examine
Organization, the electrical generation resources, 246, 263 (1952). the impact a particular entity may have
50 NOPR at P 66. For these same reasons, the

transmission lines, interconnections with on the Bulk-Power System in
neighboring systems, and associated equipment, Commission rejects the position of those
commenters that suggest the statutory definition of
determining the applicability of a
generally operated at voltages of 100 kV or higher.
Radial transmission facilities serving only load with Bulk-Power System is more limited than the NERC specific Reliability Standard. However,
one transmission source are generally not included definition of bulk electric system.
in this definition.’’ 51 See id. at P 64–65 & n.53–54. 52 Id. P 49–53.
the Commission stated that a ‘‘blanket applying the methodology for Commission to either approve NERC’s
waiver’’ approach that would exempt determining critical facilities. registry criteria, or send them back to
entities below a threshold level from 84. According to MEAG, because the NERC for further consideration, with
compliance with all Reliability Commission has already determined mandatory application of Reliability
Standards would not be appropriate that it is not bound by the NERC Standards deferred until NERC submits
because there may be instances where a compliance registry,53 the NOPR’s waiver criteria the Commission finds
small entity’s compliance is critical to approach leaves small systems, which acceptable. According to TAPS, these
reliability. The Commission also do not appear on the compliance criteria do not constitute a blanket
proposed to direct NERC to develop registry, confused about whether the waiver because they allow NERC and its
procedures that permit a joint action Reliability Standards apply to them. Regional Entities to go below the general
agency or similar organization to accept MEAG asks the Commission to either: threshold requirements where they
compliance responsibility on behalf of (1) Grant a temporary, size-based determine it is necessary.
their members. exemption to those small entities that 88. California Cogeneration states
NERC omits from its preliminary that, while focusing on entities that
81. In addition, the Commission
compliance registry; or (2) direct NERC have a material impact on the Bulk-
solicited comment on whether, despite
to develop and file with the Power System is a possible approach to
the existence of a threshold in a
Commission an appropriate size-based applying the Reliability Standards, the
particular standard (e.g., generators with
exemption for small entities. proposed rule does not define how
a nameplate rating of 20 MW or over),
85. Several commenters suggest ‘‘material impact’’ may be
the ERO or a Regional Entity should be
thresholds for applying Reliability demonstrated. According to California
permitted to include an otherwise
Standards. MEAG states that an Cogeneration, material impact will vary
exempt facility, e.g., a 15 MW generator,
appropriate threshold level for an among Interconnections and it may vary
on a facility-by-facility basis, if it
exemption, on either an interim or more among individual transmission systems.
determines that the facility is needed for
permanent basis, should at least provide Therefore, California Cogeneration
Bulk-Power System reliability and, if so,
that a LSE or distribution provider states that the task of defining ‘‘material
what, if any, process the ERO or
should generally be omitted from the impact’’ should be remanded by the
Regional Entity should provide when
compliance registry if it meets the Commission to NERC for resolution
making such a determination.
following criteria: (1) Its peak load is through an inclusive stakeholder
a. Identifying Applicable Small Entities less than 25 MW and it is not directly process. Until that process is completed,
i. Comments connected to the Bulk-Power System; (2) California Cogeneration maintains that
it is not designated as the responsible the Reliability Standards should not be
82. While certain commenters, entity for facilities that are part of a finally adopted as mandatory and
including EEI, FirstEnergy, SERC, Xcel required underfrequency load shedding enforceable.
and Entergy, agree with the Commission (UFLS) program designed, installed, and 89. Various Georgia cities, which are
that a blanket waiver to exempt small operated for the protection of the Bulk- all member systems of MEAG, state that
entities from compliance is not Power System; or (3) it is not designated the Commission should place
appropriate because there may be as the responsible entity for facilities reasonable limits on the applicability of
instances where a small entity’s that are part of a required undervoltage the proposed Reliability Standards.55
compliance is critical to reliability, load shedding (UVLS) program Each maintains that the Final Rule
APPA, ELCON, Process Electricity designed, installed, and operated for the should include a rebuttable
Committee, MEAG and South Carolina protection of the Bulk-Power System. presumption that their distribution
E&G advocate a blanket waiver. STI Capital states that there should be system facilities have no material effect
a rebuttable presumption that any on Bulk-Power System reliability unless
83. APPA notes that none of the
generation facility below 50 MW does established otherwise. They suggest that
entities that contributed to the August
not pose a threat to reliability. such a rebuttable presumption approach
14, 2003 blackout were ‘‘small entities’’
Moreover, more data intensive would fairly establish the ‘‘reasonable
within the meaning of the Regulatory
standards are beyond the ability of small limits on applicability’’ of the
Flexibility Act. APPA and MEAG
generators. Reliability Standards based on their
believe that the Commission’s refusal to
86. SERC states that exemptions respective sizes. Similarly, Small
provide for a blanket waiver to small
should be granted through the Entities Forum supports a rebuttable
entities is counterproductive to
Reliability Standards development presumption that any LSE or
maintaining reliability, as it will distract
process. The ERO and the Regional distribution provider with less than 25
compliance staff at NERC and the
Entities can provide guidance in that MW of load would be excluded unless
Regional Entities from identifying and
process, and stakeholders have an a Regional Entity decides that a reason
monitoring those with a material impact
opportunity to comment on that exists to include it.
on reliability, and gives insufficient
guidance. 90. California Cogeneration states that
deference to NERC as the ERO. APPA
87. A number of commenters, qualifying facilities (QFs) are exempted
recommends that the methods and
including APPA, NRECA, TANC and from section 215 of the FPA. It claims
procedures used to identify critical
TAPS, ask the Commission to adopt that, after passage of EPAct 2005, the
facilities that impact the bulk electric
NERC’s registry guidelines and make Commission modified its regulations to
system, regardless of size, should be the
clear that issues of applicability will be provide that QFs are exempt from all
subject of a specific set of NERC
determined with reference to the NERC sections of the FPA except sections 205,
Reliability Standards. Objective,
compliance registry.54 TAPS asks the 206, 220, 221 and 222.56 Further,
transparent study criteria and
California Cogeneration states that the
assumptions and due process for

53 SeeERO Rehearing Order at P 108.
affected entities are essential to 54 NERC Attachment B; NERC’s February 6, 2007
has developed a Statement of
implement such standards properly. Compliance Registry Criteria that provides guidance supplemental filing.
Regional Entities should take advantage on how NERC will identify organizations that may 55 See NOPR at P 1175–76.
of industry expertise in developing and be candidates for registration. See NERC comments, 56 18 CFR 292.601(c).
Commission should set limits on load shedding program or a required compliance with particular Reliability
whether a Reliability Standard undervoltage load shedding program. Standards.
applicable to a generator owner or For generators, NERC plans to register 96. In sum, the ERO will identify
operator also applies to operators of individual units of 20 MVA or greater those entities that must comply with
cogeneration facilities. According to that are directly connected to the bulk Reliability Standards in three steps: (1)
California Cogeneration, the electric system, generating plants with The ERO will identify and register those
Commission has clearly determined that an aggregate rating of 75 MVA or entities that fall under its definition of
the impact by a cogenerator on the greater, any blackstart unit material to a bulk electric system; (2) each registered
reliability of the system is limited to its restoration plan, or any generator entity will register in one or more
net load on the system.57 Therefore, ‘‘regardless of size, that is material to appropriate functional categories and (3)
California Cogeneration maintains that the reliability of the Bulk-Power each registered entity will comply with
the Reliability Standards should reflect System.’’ those Reliability Standards applicable to
this limitation. the functional categories in which it is
94. The compliance registry identifies registered.
91. Finally, Small Entities Forum and
specific categories of users, owners and 97. In response to MEAG’s concern
Entergy state that, despite the existence
operators that correlate to the types of that the Commission previously
of a threshold in a particular Reliability
entities responsible for performing determined that it was not bound by the
Standard, the ERO or a Regional Entity
specific functions described in the NERC compliance registry process and
should be permitted to include an
otherwise exempt facility, on a facility- NERC Functional Model.59 These same that there thus was uncertainty, the
by-facility basis, if it determines that the functional types are also used by the Commission is modifying the approach
facility is needed for Bulk-Power ERO to identify the entities responsible proposed in the NOPR and, as noted
System reliability. South Carolina E&G for compliance with a particular above, will use the NERC compliance
states that exceptions to an exemption Reliability Standard in the Applicability registry to determine those users,
threshold should sufficiently improve section of a given standard. Thus, each owners and operators of the Bulk-Power
reliability so as to justify the registered entity will be registered under System that must comply with the
administrative costs and other burdens. one or more appropriate functional Reliability Standards. Each individual
However, SMA and MidAmerican categories, and that registration by Reliability Standard will then identify
oppose allowing the ERO or its designee function will determine with which the set of users, owners and operators of
to include otherwise exempt facilities Reliability Standards—and the Bulk-Power System that must
by making exceptions. Requirements of those Reliability comply with that standard. While the
Standards—the entity must comply. In Commission may take prospective
ii. Commission Determination other words, a user, owner or operator action against an entity that was not
92. The Commission believes that, at of the Bulk-Power System would be previously identified as a user, owner or
the outset of this new program, it is required to comply with each Reliability operator through the NERC registration
important to have as much certainty and Standard that is applicable to any one process once it has been added to the
stability as possible regarding which of the functional types for which it is registry, the Commission will not assess
users, owners and operators of the Bulk- registered. penalties against an entity that has not
Power System must comply with previously been put on notice, through
95. We believe that NERC has set
mandatory and enforceable Reliability the NERC registration process, that it
reasonable criteria for registration and,
Standards. NERC, as the ERO, has must comply with particular Reliability
thus, we approve the ERO’s compliance Standards. Under this process, if there
developed an approach to accomplish registry process as an appropriate
this through its compliance registry is an entity that is not registered and
approach to allow the ERO, Regional NERC later discovers that the entity
process. The Commission has Entities and, ultimately, the entities
previously found NERC’s compliance should have been subject to the
responsible for compliance with Reliability Standards, NERC has the
registry process to be a reasonable mandatory Reliability Standards to
means ‘‘to ensure that the proper ability to add the entity, and possibly
know which entities are responsible for other entities of a similar class, to the
entities are registered and that each initial implementation of and
knows which Commission-approved registration list and to direct corrective
compliance with the new Reliability action by that entity on a going-forward
Reliability Standard(s) are applicable to Standards. Further, based on
it.’’ 58 basis.61 The Commission believes that
supplemental comments of APPA, this should prevent an entity from being
93. NERC has provided with its NOPR TAPS and NRECA, it appears that there
comments, and in a subsequent subject to a penalty for violating a
is support among many of the smaller Reliability Standard without prior
supplemental filing, a Statement of entities for the NERC compliance
Compliance Registry Criteria that notice that it must comply with that
registry process.60 Thus, at this juncture, Reliability Standard.
describes how NERC will identify the Commission will rely on the NERC
organizations that may be candidates for 98. As stated in the NOPR, NERC has
registration process to identify the set of indicated that in the future it may add
registration and assign them to the entities that are responsible for
compliance registry. For example, NERC to a Reliability Standard limitations on
plans to register only those distribution applicability based on electric facility
providers or LSEs that have a peak load
59 The Statement of Compliance Registry Criteria,
characteristics such as generator
as well as the Functional Model, identify, inter alia, nameplate ratings.62 While the NOPR
of 25 MW or greater and are directly the following functions: Balancing authority,
connected to the bulk electric system or distribution provider, generator operator, generator explored this approach as a means of
are designated as a responsibility entity owner, load serving entity, planning authority, addressing concerns over applicability
as part of a required underfrequency
purchasing-selling entity, transmission owner, to smaller entities, the Commission
transmission operator and transmission service believes that, until the ERO submits a
provider. An entity may be registered under one or
57 California Cogenration at 6–7, citing California more of these functions. Reliability Standard with such a
Independent System Operator Corp., 96 FERC 60 See Supplemental Comments of TAPS
¶ 63,015, at P 7, 24–25 (2001). (February 13, 2007), APPA (February 14, 2007), and 61 See NERC Rules of Procedure, § 500.
58 ERO Certification Order at P 689. NRECA (February 15, 2007). 62 NOPR at P 49.
limitation to the Commission, the NERC b. Ability To Accept Compliance on allow flexibility in how joint action
compliance registry process is the Behalf of Members agencies and their members allocate
preferred method of determining the i. Comments responsibility. TAPS states that joint
applicability of Reliability Standards on action agencies should be allowed to
an entity-by-entity basis. 102. APPA, NERC, ELCON, APPA, achieve compliance with a standard at
TAPS and Small Entities Forum support the joint action agency level rather than
99. A number of municipalities and the Commission’s proposal to allow a to simply stand in the shoes of their
generation owners ask that the joint action agency, generation and individual members. TAPS states that
Commission review their particular transmission (G&T) cooperative, or other this is necessary to ensure comparable
circumstances and provide an entities to accept responsibility for treatment for small entities in relation to
individual waiver from compliance with compliance with Reliability Standards large utilities. Where a joint action
the mandatory Reliability Standards. In on behalf of their members and also may agency accepts compliance
light of our above discussion, the divide the responsibilities for responsibility and a standard is
Commission declines to determine compliance with its members. APPA susceptible to joint action agency-level
whether any individual municipality, states that this should also be extended assessment of compliance, the
generation owner or other entity is to RTOs, vertically integrated utilities, Commission should ask NERC to adopt
subject to a specific Reliability and other wholesale power suppliers such assessment to avoid an adverse
Standard. Rather, NERC and the that perform substantial reliability impact on competition.
Regional Entities should determine such functions on behalf of their full 105. MEAG finds the Commission’s
applicability in the first instance requirements wholesale customers, proposal with regard to joint action
through the registration process. including public power distribution agencies problematic. MEAG asserts that
100. We agree with California systems and other entities that currently the proxy approach is not a universal
Cogeneration that the Commission’s fulfill reliability functions for approach to small municipal systems.
regulations currently exempt most QFs customers. APPA, TAPS and Small For example, this option would be
from specific provisions of the FPA Entities Forum state that the procedure fundamentally inconsistent with
including section 215.63 The should allow for this responsibility to be MEAG’s role as a G&T cooperative
Commission is concerned, however, assigned on a standard-by-standard serving its member systems because
whether it is appropriate to grant QFs a basis. MEAG has no authority to plan,
complete exemption from compliance 103. In response to the Commission’s physically operate, modify, maintain or
with Reliability Standards that apply to proposal to direct NERC to develop test the local distribution system
procedures that permit a joint action facilities of the member systems.
other generator owners and operators. It
agency or similar organization to accept Second, MEAG states that if it were to
is not clear to the Commission that for
compliance responsibility on behalf of assume the role of the proxy compliance
reliability purposes there is a
its members, NERC proposes the agent for the member systems and incur
meaningful distinction between QF and
following procedure, and has updated a fine for the failure of a few to comply
non-QF generators. While such an issue
its entity registration criteria to reflect with the requirements of the Reliability
is beyond the scope of the current Standards, then the imposition of fines
rulemaking, we note that, concurrent these changes.66 NERC states that each
‘‘central’’ organization should be able to would lead to a rate increase to all
with the issuance of this Final Rule, the systems, an improper and unjustifiable
register as being responsible for
Commission is issuing a notice of cost shifts among the member systems.
compliance for itself and collectively on
proposed rulemaking that proposes to Third, if MEAG were to err in its role
behalf of its members. Each member
amend the Commission’s regulation that as a proxy compliance agent for the
within a central organization may
exempts most QFs from section 215 of member systems, MEAG could be sued
separately register to be accountable for
the FPA. and there is nothing that presently
a particular reliability function defined
101. Finally, the Commission agrees by the standards. Under NERC’s limits its liability or provides
that, despite the existence of a voltage proposal, if the central organization and indemnification to MEAG in that
or demand threshold for a particular a member organization cannot agree that circumstance. Moreover, MEAG states
Reliability Standard, the ERO or one organization or the other is that the compliance-by-proxy option
Regional Entity should be permitted to responsible, or if the parties agree that will not mitigate the economic impact
include an otherwise exempt facility on the responsibilities for a particular on many small distribution-only entities
a facility-by-facility basis if it reliability function should be split, then because many are not members of joint
determines that the facility is needed for NERC would register both entities action agencies.
Bulk-Power System reliability.64 concurrently. NERC and the Regional 106. Several commenters, including
However, we note that an entity that Entities will then have the authority to EEI, PJM and FirstEnergy do not oppose
disagrees with NERC’s determination to find either organization or both the Commission’s proposal to allow
place it in the compliance registry may accountable for a violation of a organizations to accept compliance
submit a challenge in writing to NERC Reliability Standard, based on the facts responsibility on behalf of members so
and, if still not satisfied, may lodge an of the case and circumstances long as compliance responsibility is
appeal with the Commission.65 surrounding the violation. clear and responsible entities are held
Therefore, a small entity may appeal to 104. AMP-Ohio states that the accountable. FirstEnergy and PJM state
the Commission if it believes it should Commission should clarify that a joint that some Reliability Standards appear
not be required to comply with the action agency should not be required to to have duplicate accountability in
assume compliance responsibility for its different organizational entities, which
Reliability Standards.
members for all reliability-related could create confusion and complicate
63 18 functions. It asks that the Commission operational authority and thus

CFR 292.601(c).
64 Demand
undermine the transmission operator
resources deemed critical by the ERO
to Bulk-Power System reliability should be 66 See NERC comments at 53–55; NERC chain of command required to respond
included in the registry. supplemental filing, Statement of Compliance quickly and decisively to system
65 See ERO Certification Order at P679. Registry Criteria (Revision 3) at 9. operational events. Further, FirstEnergy
states that some Reliability Standards that a central organization can register ‘‘user of the Bulk-Power System’’
obligate an entity to perform reliability for all functions that it performs itself definition, all such entities regardless of
functions when that entity may not be and, in addition, may register on behalf size or their impact on the Bulk-Power
able to perform its reliability function of one or more of its members for System, must review every proposed
due to other legal constraints. functions for which the member would Reliability Standard and protest every
FirstEnergy states that one effective otherwise be required to register.68 time they have a ‘‘concern in the context
approach to resolving this problem 109. NERC, in developing its of the specific Reliability Standard.’’
would be to establish a ‘‘priority’’ of procedures relating to joint action They must also retain permanent staff or
control between entities. FirstEnergy agencies and similar organizations, consultants to evaluate new or revised
adds that entities that are subject to should consider the concerns of EEI, standards. Rather, APPA, as does TANC,
legal control by ISOs and RTOs should PJM and FirstEnergy regarding the need urges the Commission to support
be afforded a ‘‘safe harbor’’ under the for ensuring clear lines of responsibility. NERC’s registry criteria to make the
Reliability Standards if, during an While we agree with FirstEnergy in the definition of ‘‘users of the Bulk-Power
emergency, they perform as directed by abstract that an entity implementing the System’’ co-extensive with the users on
the ISO or RTO, whether under the ISO/ legal directives of an ISO or RTO should NERC’s compliance registry.
RTO’s OATT or under the ISO/RTO’s not be penalized for following an ISO or 112. SMA is concerned that not
authority as reliability coordinator. RTO directive during an emergency, we specifically defining who is a ‘‘user of
ii. Commission Determination will not mandate a safe harbor provision the Bulk-Power System’’ will not
for such circumstances. Rather, these provide timely notice to entities that are
107. The Commission directs the ERO and other matters should be considered not the parties historically responsible
to file procedures which permit (but do by the ERO or a Regional Entity when for implementing NERC’s prior
not require) an organization, such as a deciding the appropriate enforcement reliability standards. SMA states that
joint action agency, G&T cooperative or action in response to an event where a NERC must identify the subset of users
similar organization to accept violation of a Reliability Standard may that must comply with any given
compliance responsibility on behalf of have occurred. Reliability Standard at a sufficiently
its members. The Commission believes
3. Definition of User of the Bulk-Power early stage for all such affected parties
that NERC’s proposed procedures
System to have an opportunity to raise
described above are reasonable, and
objections to the sweep or content of the
directs the ERO to submit a filing within 110. In the NOPR, the Commission Reliability Standard while approval of
60 days.67 In allowing a joint action did not propose a generic definition of that Reliability Standard is under
agency, G&T cooperative or similar the term ‘‘User of the Bulk-Power consideration. SMA also argues that
organization to accept compliance System.’’ Rather, the Commission stated
responsibility on behalf of its members, NERC’s Rules of Procedure must require
that it would determine applicability on actual notice to an entity before it is
our intent is not to change existing a standard-by-standard basis.69 The
contracts, agreements or other placed on the compliance registry.
NOPR explained that § 40.1(b) of the 113. Southwest TDUs urges the
understandings as to who is responsible proposed regulations would require the
for a particular function under a Commission to clarify that ‘‘users’’ are
ERO to identify in each proposed entities that have more involvement
Reliability Standard. Further, we clarify Reliability Standard the specific subset
that there should not be overlaps in with it than merely receiving power
of users, owners and operators of the from it. Since these Reliability
responsibility nor should there be any Bulk-Power System to which the
gaps. Standards will become mandatory and
proposed Reliability Standard would violation of any of them can be
108. In response to concerns raised by apply, which is NERC’s current practice.
AMP-Ohio and MEAG, the Commission accompanied by economically
The NOPR also stated that entities significant penalties, Southwest TDUs
clarifies that an organization is not concerned that a particular proposed
required to assume compliance urges the Commission to make every
Reliability Standard would apply more effort to be specific about what
responsibility for its members for any broadly than the statute allows may
reliability-related functions and all constitutes a ‘‘user.’’
raise their concerns in the context of the
Reliability Standards. Moreover, under 114. California Cogeneration states
specific Reliability Standard.
NERC’s proposal, a member within a that the Commission has not provided
central organization may separately a. Comments any detail as to how a ‘‘user’’ will be
register to be accountable for a 111. APPA disagrees with a standard- identified. The NOPR and the NERC
particular reliability function so the by-standard approach to defining the Reliability Standards it proposes to
responsibility for reliability functions term ‘‘user of the Bulk-Power System’’ adopt rely on the broad entities
can be split. The Commission believes because it would go beyond those identified in the NERC Functional
that this will provide flexibility and will facilities that are required to maintain Model. According to California
not require an entity to assume the reliability of the high-voltage, bulk Cogeneration, using only the NERC
responsibility where it is not possible to transmission system and intrude into Functional Model provides no detail
do so. We also believe that NERC’s state and local matters and trespass on and no differentiation in the
proposal adequately addresses TAPS’ state jurisdiction. According to APPA, applicability of each Reliability
concern that a joint action agency the Reliability Standards themselves Standard. While a single definition of
should be allowed to achieve state their applicability in terms of the ‘‘user’’ may not be appropriate,
compliance at the joint action agency Functional Model, which does not California Cogeneration maintains that
level. Specifically, the Statement of include size limitations in the various using only the fixed designations within
Compliance Registry Criteria provides functional categories included in it. the NERC Functional Model does not
Without some type of outer limit on the provide sufficient specificity. The terms
67 Section 39.10(b) of the Commission’s
‘‘Generator Owner’’ and ‘‘Generation
regulations, 18 CFR 39.10(b), provides that the Operator’’ also must be qualified so that
68 See NERC Supplemental Filing, Statement of
Commission, upon its own motion or upon
complaint, may propose a change to an ERO or Compliance Registry Criteria (Revision 3), at 8–9. they only apply to generation operations
Regional Entity Rule. 69 NOPR at P 43. that utilize the grid and exclude
generation output dedicated to on-site modifications to the Functional Model Model is so closely interrelated with the
consumption. that may affect the applicability of the applicability of each Reliability
Reliability Standards. Standard.
b. Commission Determination
115. The Commission’s determination a. Filing the Functional Model With the 124. APPA, TAPS and ReliabilityFirst
above to rely on the ERO’s compliance Commission maintain that any modification to the
registry process to identify users, NERC Functional Model should be
i. Comments
owners and operators of the Bulk-Power reviewed and approved through the
120. NERC states that, while it Reliability Standards development
System that must comply with new
believes that the Functional Model process. According to ReliabilityFirst,
mandatory and enforceable Reliability
should be filed for informational any change to the Functional Model is
Standards should resolve the concerns
purposes only, it will submit any essentially an amendment to the
expressed by APPA, SMA and others
regarding the need to identify and changes to the Functional Model to the Reliability Standard made outside the
provide timely notice to those users of Commission for approval as requested. ERO process. TANC asserts that a
the Bulk-Power System that are While NERC states that the Functional Reliability Standard will only be
expected to comply with specific Model will not function as a legally complete if the definitions of the
Reliability Standards. binding document like a Reliability Functional Model are developed
116. While we recognize the desire of Standard, the Commission’s approval of through the Reliability Standards
some commenters for a concise, generic this reference document and of any development process just like any
definition of ‘‘user of the Bulk-Power changes to the Functional Model will Reliability Standard. APPA would allow
System,’’ we are concerned that any support the development of high NERC to issue interpretations of the
attempt to define the term at this time quality, enforceable and technically Functional Model, but these
will either be overly broad so as not to sufficient standards. interpretations should then be
provide any helpful guidance or overly 121. Several commenters, including
confirmed through NERC procedures.
narrow so as to exclude entities that NERC, EEI, APPA, MidAmerican,
National Grid and MRO state that the 125. TAPS cautions that, because the
should be covered. The Commission
Functional Model is not part of the Functional Model includes no express
believes that it has employed a
Reliability Standards and should be size limitations, NERC and the
reasonable approach by endorsing
filed with the Commission for Commission can rely on the Functional
NERC’s compliance registry process and
informational purposes only. They Model to define applicability of
requiring that each Reliability Standard
generally state that the Functional standards only if such limits are
identify the subset of users, owners and
operators to whom that particular Model is not a definitive guide to the imposed by NERC’s compliance registry
Reliability Standard applies. ‘‘users, owners and operators’’ of the criteria and its bulk electric system
Bulk-Power System and should not be definition. The Small Entities Forum is
4. Use of the NERC Functional Model used to establish obligations under concerned because smaller entities have
117. NERC has developed a section 215, which should be historically performed only a subset of
‘‘Functional Model’’ that defines the set established within each individual functions. For example, it states that
of functions that must be performed to Commission-approved Reliability some joint action agencies invest in
ensure the reliability of the Bulk-Power Standard. transmission facilities that are operated
System. The Functional Model 122. Northeast Utilities is concerned by others, but that these joint action
identifies 14 functions and the name of with the Commission’s proposal to use agencies, under the Functional Model,
a corresponding entity responsible for the NERC Functional Model to identify would have to verify that these
fulfilling each function. applicable entities. It believes that the facilities, operated by others, are being
118. In the NOPR, the Commission Functional Model can be useful in operated and maintained according to
proposed to use the NERC Functional drafting standards, but it is not a applicable Reliability Standards.
Model to identify the applicable entities substitute for having clear definitions of
126. Several commenters argue that
to which each Reliability Standard the entities responsible for compliance
with the requirements for each the Functional Model contains a
applies.70 The Commission explained
Reliability Standard within a region. number of ambiguities. MISO argues
that focusing on the functions an entity
The entities responsible for meeting the that the definition of the term planning
performs to identify what entities are
standard may vary depending on how coordinator is circular and may lead to
users, owners and operators of the Bulk-
the Bulk-Power System is operated. one subset of the transmission system
Power System, and thus what entities
FirstEnergy states that the Functional having multiple Planning Coordinators.
are subject to the Reliability Standards,
provides a useful level of detail and Model may not clearly or correctly MISO recommends that the Commission
appears to be more practical than identify the entities to which a direct NERC to survey the industry to
simply identifying an applicable entity Reliability Standard applies and identify the planning roles that actually
as a user, owner or operator. In addition, maintains that the Functional Model exist in the industry and clarify the role
the NOPR recognized concerns that the should be applied only where all of the of the wide-area Planning Coordinator.
Functional Model may contain affected stakeholders agree on the final MISO and Wisconsin Electric note that
ambiguities and proposed to require classifications of each Registered the proposed Reliability Standards do
NERC to specifically address these Entity’s roles and responsibilities. not specify who fulfills the Interchange
concerns. 123. In contrast, TANC and ISO–NE Authority or Planning Authority roles,
119. The Commission proposed that, state that the Commission should and there is no common industry
because the Functional Model is linked require that any future modification to understanding of those roles. Finally,
to applicability of the Reliability the Functional Model that could affect California Cogeneration states that the
Standards, the ERO should submit for the categories of entities that must definition of LSE is too inclusive and
Commission approval any future comply with a particular Reliability should be modified to exclude entities
Standard be approved by the providing service only to loads on-site
70 NOPR at P 46–48. Commission because the Functional or pursuant to private contract.
ii. Commission Determination typically makes decisions for the operational tasks while maintaining
127. The Commission accepts the transmission operator and, to a lesser single entity accountability for the
characterization offered by numerous extent, the generation operator, while reliable performance of those
commenters that the Functional Model actual implementation is performed by operational tasks.
is an evolving guidance document that either local transmission control centers 133. ATC states that Regional Entities
is not intended to convey firm rights or independent generation control should be given the flexibility to allow
and responsibilities. Further, we agree centers. The NOPR proposed that ‘‘all some ‘‘tasks’’ within a ‘‘function’’ to be
control centers and organizations that performed by one entity, with the
that the applicability section of a
are necessary for the actual remaining tasks to be performed by
particular Reliability Standard should
implementation of the decisions or are another entity. According to ATC, this
be the ultimate determinant of
needed for operation and maintenance would provide entities—particularly
applicability of each Reliability
made by the ISO or RTO or the pooled smaller ones—with the flexibility to
Standard. In light of this, we will not
resource organizations are part of the transfer their responsibility for a
require the ERO to submit revisions of
transmission or generation operator reliability task or function to another
the Functional Model for Commission
function in the Functional Model.’’ 73 registered entity that can perform the
approval. While some commenters
work more effectively. Further, ATC
suggest that revisions be filed for i. Comments maintains, Regional Entities should
informational purposes, we see little 131. A number of commenters raise ensure that entities be given
value in mandating such a filing.71 concerns or seek clarification regarding accountability only for systems,
128. With regard to the comments of the relationship between the Functional facilities and functions over which they
TAPS, APPA, TANC and others on Model and existing agreements that set actually have control.
whether revisions to the Functional forth the responsibility of various 134. NPCC states that requirements
Model should be made through the entities, particularly in the context of applicable to local control centers
ERO’s Reliability Standards ISO and RTO operations. MISO requests should be distinct from requirements
development process, we do not believe the Commission to clarify that nothing applicable to transmission and
that it is necessary under the statute, in the Functional Model requires one generation operators under the NERC
since applicability will be determined at entity to be responsible for all of the Functional Model. NPCC submits that
this time by the specifications of the tasks within a function, regardless of there is a difference between being
Reliability Standards and the who actually performs the task. In those assigned to do a task and being
compliance registry process. Thus, we ISOs and RTOs where balancing responsible for the completion of that
leave to the discretion of the ERO the authorities have retained and have task. An organization that registers with
appropriate means of allowing never delegated to the RTO certain tasks NERC as performing a function is
stakeholder input when revising the that fall within the balancing authority considered a responsible entity and
Functional Model. To the extent that function, NERC’s Functional Model must ensure that all tasks are performed.
changes in the Functional Model require should only require one responsible While an organization may delegate a
revised specification in the Reliability entity per task rather than one task to another organization, it may not
Standards, the latter will be addressed responsible entity for all of the tasks delegate its responsibility for ensuring
in the Reliability Standards within that function. MISO submits that that the task is accomplished.
development process. the NERC Functional Model should not 135. According to Ontario IESO, the
129. While TAPS and Small Entities play a prescriptive role by assigning Commission’s proposal is inconsistent
Forum raise concerns regarding the responsibility for a given task where with the NERC Functional Model,
absence of size limitations in the such an assignment would be which envisions one responsible entity
Functional Model and potential inconsistent with a Commission- for each reliability function. In contrast,
negative impacts on small entities, we approved regional transmission the Commission’s proposal would split
believe that these concerns are agreement, RTO tariff, or reliability plan the same function between different
addressed above in our decision filed with NERC, all of which specify organizations such as an ISO and a local
regarding use of the NERC compliance the entity performing each task. control center. PJM claims that, under
registry process. MISO, Wisconsin 132. PJM states that, while the the Functional Model, single entity
Electric and others comment on the Commission proposed to assign registration is a foundational
need to clarify certain ambiguities in the responsibility for reliable operations to cornerstone for ensuring clear
Functional Model. Given that the multiple entities within an ISO or RTO responsibility and accountability for
Functional Model is an evolving to address its concern that decision compliance with Reliability Standards.
guidance document, the ERO can making and implementation are 136. Ontario IESO asserts that the
address such concerns as it updates and performed by separate organizations, it Commission’s proposal is also
revises the Functional Model. does not believe that increasing the problematic because in the event of a
b. Responsibility for Functions Within number of organizations responsible for violation it will be difficult to determine
the Functional Model a given function for the same facilities who violated the Reliability Standard—
within the bulk electric system has been the entity making the decision or the
130. In the NOPR, the Commission entity implementing the decision.
shown to be an effective or appropriate
explained that, in the context of an ISO Ontario IESO argues that, although the
solution to the concerns cited. PJM
or RTO or any organization that pools NERC Functional Model is not
states that NERC employs processes that
resources, decision-making and foolproof, it avoids complications by
successfully manage the delegation of
implementation are performed by distinguishing between responsibility
separate groups.72 The ISO or RTO 73 Id. at P 237. Although discussed in the context and performance. The ISO is the
71 We note that NERC has available on its Web

of the communication (COM) Reliability Standards, responsible entity and it delegates some
the NOPR suggested that the proposal would apply of its tasks to local control centers, but
site, http://www/nerc.com, the current version of to other Reliability Standards. Because of the nature
the Functional Model. We expect NERC to continue of the comments on the issue and its relationship retains the overall responsibility.
to do so in the future. to the Functional Model, we discuss the matter 137. According to Ontario IESO,
72 NOPR at P 236. here. NERC has recognized that, although
organizations such as local control that a revised NERC Functional Model For example, the involvement of a
centers play an important role in should recognize local control centers transmission operator at an ISO or RTO
reliability, they are not responsible that take some direction from RTOs yet with respect to the requirements related
entities. Therefore, NERC has made maintain authority to act independently to telecommunications facilities (COM–
such organizations subject to to carry-out functional tasks that require 001–1) from the local control room and
compliance audits and placed other real-time operation of the system. blackstart restoration plans (EOP–005–
requirements on them. In addition, According to FirstEnergy, the required 0) may be minimal. Because the
NERC intends that the regional registration and certification of such operators at local control centers
reliability plans will document the entities would clearly indicate the need actually perform all or most of the tasks
relationships between the local control for operational personnel in these contemplated under various Reliability
centers and the entity that delegates its control rooms to be NERC-certified. It Standards, we are concerned that there
responsibility to such centers. The concludes that at a minimum, a NERC may be unintended gaps in such
current framework has a mechanism for certification for the tasks performed by responsibilities if the existing contracts
accommodating reliability such local control center individuals between the ISO or RTO and owners of
considerations for organizations such as would be an enhancement over the the facilities do not address such
local control centers. In this regard, current situation. responsibilities.
NERC’s ongoing formal certification of 140. ISO–NE argues that the 143. In response to MISO, we did not
reliability coordinator, balancing Commission should not mandate that intend to be prescriptive in assigning
authority and transmission provider the tasks performed by local control tasks to specific entities. The intent was
will be useful in determining any centers be included in the definition of to allow flexibility in identifying the
delegation of tasks to local control transmission operator because to do so actual user, owner or operator of the
centers that must take place for a clear would be to suggest that a local control Bulk-Power System that would be
demarcation of responsibilities. Ontario center has independent autonomy in responsible for complying with the
IESO advises that, since NERC has not operating the Bulk Power System which Requirements in the Reliability
finished this task, the Commission would conflict with the ‘‘one set of Standards. One approach could be that
should defer its decision in this regard. hands on the wheel’’ philosophy. It the RTO, ISO or other pooled resource
138. ISO/RTO Council states that the explains that local control center registers as the transmission operator
Commission should not use the term personnel in New England implement pursuant to the NERC compliance
‘‘local control center’’ because it will tasks delegated to them by ISO–NE for registry process and, while retaining
cause confusion. The NERC Functional operation of designated transmission ultimate responsibility, assigns specific
Model does not define the term and it facilities. Therefore, ISO–NE submits, tasks to be performed by what are
means different things in different the scope of the Reliability Standard sometimes known as local control
regions. For example, in MISO, which need not be expanded. centers or other relevant organizations.
consists of 25 balancing areas, ‘‘local Alternatively, the local control center
control center’’ is an equivalent term for ii. Commission Determination operators could register together with
balancing area although this was 141. In response to the many concerns the RTO, ISO or pooled resources as
probably not the Commission’s intent in of commenters, the Commission transmission operators clearly
the NOPR. Therefore, ISO/RTO Council clarifies that it did not intend to change delineating their specific
argues that the Reliability Standards existing contracts, impose new responsibilities with regard to the
should be limited to defining the tasks organizational structures or otherwise Requirements of particular Reliability
in the context of users, owners and affect existing agreements that set forth Standards. Such joint registration must
operators of the Bulk-Power System; any the responsibilities of various entities. assure that there is no overlap between
delegation of responsibilities to a local Rather, its intent was to allow enough the decisionmaking and implementation
control center or any other organization granularity in the definitions so that the functions, i.e., that there are not two sets
should take place in the context of ISO/ appropriate user, owner or operator of of hands on the wheel. Again, our intent
RTO governing documents, operating the Bulk-Power System would be is to ensure that there is neither
agreements, tariffs and other identified for each Reliability Standard. redundancy nor gap in responsibility for
arrangements with transmission owners We agree also with MISO’s statement compliance with the Requirements of a
and related stakeholders. This approach, that nothing in the Functional Model Reliability Standard, while allowing
according to ISO/RTO Council will entities flexibility to determine how best
requires one entity to be responsible for
address the Commission’s concerns to accomplish this goal.
all of the tasks within a function,
with respect to local control centers 144. Consistent with our above
regardless of who actually performs the
without preempting possible regional explanation, we agree with NPCC that
task.
solutions. there is a difference between being
139. FirstEnergy believes that, while 142. The Commission’s concern is
that, particularly in the ISO, RTO and assigned to perform a task and being
independent authority to operate the responsible for completing the task. The
transmission system should be self- pooled resource context, there should be
neither unintended redundancy nor organization that registers with NERC to
evident, in RTO environments with perform a function will be the
local control centers, the tasks gaps for responsibilities within a
performed by each entity do not function. In particular, the Commission
Plans for Loss of Control Center Functionality;
encompass the entirety of tasks is concerned that such ‘‘gaps’’ could PRC–001—System Protection Coordination; PRC–
performed by the transmission operator occur in the context of several 007—Assessing Consistency with Entity
under the Functional Model. It suggests Reliability Standards addressing matters Underfrequency Load Shedding Programs with
related to activities other than directing Regional Reliability Organizations UFLS Program
that NERC should revise the Functional Requirements; PRC–009—Analysis and
Model to create certification and or implementing real-time operations.74 Documentation of Underfrequency Load Shedding
registration requirements for local Performance Following an Underfrequency Event;
74 See, e.g., CIP–001—Sabotage Reporting; COM– PRC–010—Technical Assessment of the Design and
control authorities within RTOs that 001—Telecommunications; EOP–003—Load Effectiveness of Undervoltage Load Shedding
perform real-time operations of the Shedding Plans; EOP–004—Disturbance Reporting; Program; PRC–022—UFLS Program Performance;
transmission system. FirstEnergy states EOP–005—System Restoration Plans; EOP–008— and TOP–006—Monitoring System Conditions.
responsible entity and, while it may are enforced by the ERO and Regional 150. ReliabilityFirst, TANC and SoCal
delegate the performance of that task to Entities. The NOPR proposed that, in Edison agree with the Commission that
another, it may not delegate its the long run, Regional Entities should regional reliability organizations and
responsibility for ensuring the task is be made responsible, through delegation Regional Entities cannot be users,
completed. from the ERO, for the functions owners or operators of the Bulk-Power
145. Accordingly, the Commission currently performed by the regional System and should not be subject to
directs that the ERO, in registering reliability organizations. To implement compliance with Reliability Standards.
RTOs, ISOs and pooled resource this, the Commission proposed the TANC states that Reliability Standards
organizations (or, indeed in registering modification of delegation agreements that reference a regional reliability
any entity), assure that there is clarity in to require the Regional Entities to organization need to be revised to
the assigning responsibility and that assume responsibility for reference a user, owner or operator of
there are no gaps or unnecessary noncompliance. In addition, the the Bulk-Power System in order to
redundancies with regard to the entity Commission proposed that the comply with the statute.
or entities responsible for compliance Reliability Standards should be 151. EEI agrees with the
with the Requirements of each relevant modified to apply to the users, owners Commission’s proposal to direct the
Reliability Standard. Accordingly, and operators of the Bulk-Power System ERO to require users, owners and
although the Commission is not that are responsible for providing operators to provide the information
requiring NERC to amend the information. The Commission proposed related to data gathering, data
Functional Model, we believe our to require that any Reliability Standard maintenance, reliability assessments
concerns can be addressed by having that references a regional reliability and other process-type functions that
the ERO, through its compliance registry organization as a compliance monitor be previously have applied to regional
process, ensure that each user, owner modified to refer to the ERO as the reliability organizations. EEI also agrees
and operator of the Bulk-Power System compliance monitor. that, in the long run, it is appropriate to
is registered for each Requirement in the 148. The Commission stated that,
make the Regional Entities responsible
Reliability Standards that relate to through delegation from the ERO for
while it is important that the existing
transmission owners to assure there are various functions now performed by
regional reliability organizations
no gaps in coverage of the type regional reliability organizations. In
continue to fulfill their current roles
discussed here. doing so, and during the transition in
during the transition to a regime where
particular, EEI maintains that it is
5. Regional Reliability Organizations Reliability Standards are mandatory and
important that functions now performed
146. The NOPR stated that 28 enforceable, the Commission does not
by the regional councils, such as
proposed Reliability Standards would understand why, once the transition is
planning, be continued.
apply, in whole or in part, to a regional complete, a regional reliability 152. A number of commenters discuss
reliability organization.75 Further, many organization should play a role separate the possible ongoing role for a regional
of the proposed Reliability Standards from a Regional Entity whose function reliability organization. For example,
that have compliance measures refer to and responsibility is explicitly Ontario IESO, NPCC and National Grid
the regional reliability organization as a recognized by section 215 of the FPA. state that the Commission should
compliance monitor. The Commission The Commission sought comment on recognize that the regional reliability
stated in the NOPR that it was not whether there is any need to maintain organizations will continue to play a
persuaded that a regional reliability separate roles for regional reliability role in areas including developing
organization’s compliance with a organizations with regard to establishing regional reliability plans and adequacy
Reliability Standard can be enforced as and enforcing Reliability Standards requirements that are outside the
proposed by NERC because it does not under section 215. jurisdiction of the ERO. NPCC states
appear that a regional reliability a. Comments that enforcement of adequacy
organization is a user, owner or operator requirements should continue to reside
of the Bulk-Power System. 149. NERC believes it can remove with the regional reliability
147. The Commission proposed to references to regional reliability organization. National Grid states that
approve and direct modification of five organizations and Regional Entities from the role of regional reliability
Reliability Standards that apply the Reliability Standards, with the organizations can be preserved in a
partially to regional reliability exception of retaining the Regional variety of ways, including requiring
organizations. For the other Reliability Entities as the compliance enforcement obligations currently imposed upon
Standards that apply to regional authorities. However, NERC and regional reliability organizations to be
reliability organizations, the California PUC request that the included in the regional delegation
Commission proposed, as an interim Commission reconsider its proposal to agreements.
measure, to direct the ERO to use its direct that the ERO be listed as the 153. NPCC further maintains that
authority pursuant to § 39.2(d) of our compliance monitor in each Reliability regional reliability organizations should
regulations to require users, owners and Standard. California PUC states that continue to function as regional sites for
operators to provide to the regional naming NERC as the compliance technical expertise for enhanced
reliability organizations information monitor deprives the Regional Entities reliability requirements through
related to data gathering, data of their enforcement role under section adopting regionally-specific criteria.
maintenance, reliability assessments 215. NERC believes it will be clearer, According to NPCC, eliminating the
and other process-type functions. The and consistent with the delegation ability for regions to develop and
NOPR explained that this approach is agreements, to designate the Regional propose new criteria that enhance
necessary to ensure that there will be no Entity as the compliance monitor in system reliability would edge the
gap during the transition from the almost all Reliability Standards. system closer towards the lowest
current voluntary system to a mandatory According to NERC, this would also be common denominator rather than
system in which Reliability Standards helpful to distinguish those few striving towards operational excellence.
Reliability Standards that are monitored Further, Ontario IESO and NPCC state
75 NOPR at P 54. directly by NERC. that regional reliability organizations
should be allowed to perform certain that it can remove such references, 160. In response to the Commission’s
functions for their members, such as except that the Regional Entity should inquiry in the NOPR, commenters
system operator workshops, forums for be identified as the compliance monitor identify a number of possible
coordination of operations and planning where appropriate. While the continuing roles for regional reliability
and operational readiness conference Commission originally proposed that organizations. Such activities are
calls. the ERO should be designated as the beyond the scope of this proceeding.
154. Massachusetts DTE comments compliance monitor, we agree with Clearly, any such role must be limited
that a regional reliability organization NERC’s approach and believe that to non-statutory functions. Some
should be allowed to propose a identifying the Regional Entity as the commenters suggest that regional
Reliability Standard that may exceed or compliance monitor will provide useful reliability organizations may have a role
enhance the proposed mandatory specificity as to which entity will be in developing voluntary criteria.
Reliability Standards to ensure regional immediately tasked with monitoring Regional reliability organizations should
reliability. It further states that any compliance with a particular Reliability not develop voluntary criteria that
regional reliability criteria proposed by Standard. However, as we stated in address the same or similar matters as
a regional reliability organization Order No. 672, the ERO retains mandatory and enforceable Reliability
should be vetted through a regional responsibility to ensure that a Regional Standards, because that is the
stakeholder process and then Entity implements its enforcement responsibility of the Regional Entities.79
specifically adopted by the appropriate program in a consistent manner, and to
state regulatory authorities. periodically review the Regional D. Mandatory Reliability Standards
155. Although MRO does not oppose Entity’s enforcement activities.76 1. Legal Standard for Approval of
regional reliability organizations, with 158. For those Reliability Standards Reliability Standards
regard to establishing and enforcing that identify the regional reliability
mandatory Reliability Standards, MRO, organization as the sole applicable 161. The NOPR explained that section
Constellation and Xcel state that there is entity, and that relate to data gathering, 215(d)(2) of the FPA states that the
no need to maintain a separate role for data maintenance, reliability Commission may approve a Reliability
regional reliability organizations. assessments and other process-type Standard if it determines that it is just,
Because Regional Entities may perform functions,77 the NOPR proposed: reasonable, not unduly discriminatory
non-reliability functions, Constellation or preferential and in the public
as an interim measure * * * to direct the interest. Further, Order No. 672 laid out
states that maintaining regional ERO to use its authority pursuant to § 39.2(d)
reliability organizations will result in of our regulations to require users, owners
a series of factors it would consider
unnecessary cost. While Constellation and operators to provide to the regional when assessing whether to approve or
has no objection to the Regional Entities reliability organizations the information remand a Reliability Standard.80
performing non-statutory functions, it related to data gathering, data maintenance, 162. In response to NERC’s suggestion
states that the Commission should not reliability assessments and other ‘‘process’’- that a proposed Reliability Standard
type functions. We believe that this approach developed through its open and
allow Regional Entities to impose
is necessary to ensure that there will be no inclusive process is assured to be ‘‘just,
Reliability Standards developed by the ‘‘gap’’ during the transition from the current
regional reliability organizations as reasonable, and not unduly
voluntary reliability model to a mandatory
mandatory Reliability Standards. system in which Reliability Standards are
discriminatory or preferential,’’ the
156. MidAmerican believes that it enforced by the ERO and Regional Entities. NOPR explained that:
will be important to separate the In the long run, we propose to make the While an open and transparent process
compliance functions of the Regional Regional Entities responsible, through certainly is extremely important to the
Entities from non-compliance functions delegation by the ERO, for the functions overall success of implementing section 215
currently assigned to the regional currently performed by the regional of the FPA, an evaluation of any proposed
reliability organizations. As part of this Reliability Standard must focus primarily on
reliability organizations. It states that change, the delegation agreements to the matters of substance rather than procedure.
this can be done by: (1) Separating these Regional Entities should be modified to bind We will, therefore, review each Reliability
functions internally in the Regional the Regional Entities to assume these duties Standard in addition to the process through
Entities; (2) separating these functions and responsibility for noncompliance. In which it was approved by NERC to ensure
in different organizations; or (3) addition, the Reliability Standards should be that the Reliability Standard is just,
separating these functions by assigning modified to apply through the Functional reasonable, not unduly discriminatory or
non-compliance related functions Model, to the users, owners and operators of preferential, and in the public interest.81
the Bulk-Power System that are responsible
currently assigned to the regional for providing information.78 163. Further, with regard to NERC’s
reliability organizations to other users, ‘‘benchmarks’’ for evaluating a proposed
owners and operators. This will 159. We continue to believe that this Reliability Standard,82 the Commission
minimize conflicts between the is a reasonable interim measure, and explained that it would not be
Regional Entity core compliance note that EEI and others support this constrained by such benchmarks in
function and the non-compliance approach. To ensure that the ERO approving or remanding a proposed
regional reliability organization properly and timely addresses this Reliability Standard. Rather, Order No.
requirements. matter, we direct the ERO to submit an 672 identified factors that the
informational filing within 90 days of
b. Commission Determination Commission will consider when
the Final Rule that describes its plan
determining whether a proposed
157. The Commission adopts the and schedule for developing both an
NOPR proposal to eliminate references interim and long-term resolution based 79 See ERO Certification Order at P 281.
to the regional reliability organization as upon the above direction. 80 Order No. 672 at P 262, 321–37.
a responsible entity in the Reliability 81 NOPR at P 74.
76 OrderNo. 672 at P 654.

Standards. We conclude that this 82 Id. at P 9–12. The benchmarks are:
77 EOP–007, MOD–011, MOD–013, MOD–014,
approach is appropriate because, as applicability, purpose, performance requirements,
MOD–015, MOD–024, MOD–025, PRC–002, PRC– measurability, technical basis in engineering and
explained in the NOPR, such entities are 003, PRC–006, PRC–012, PRC–013, PRC–014, PRC– operations, completeness, consequences for
not users, owners or operators of the 020, TPL–005 and TPL–006. noncompliance, clear language, practicality, and
Bulk-Power System. NERC indicates 78 NOPR at P 57 (footnotes omitted). consistent terminology.
Reliability Standard satisfies the presumption that a proposed Reliability information to enable the Commission
statutory requirements. Standard developed through an ANSI- to propose a disposition. For those
certified process automatically satisfies Reliability Standards, the Commission
a. Comments
the statutory standard of review.83 The identified the needed information, and
164. NERC states that 83 of the Commission reiterates that simply proposed not to approve or remand
Reliability Standards are ‘‘just, because a proposed Reliability Standard these Reliability Standards until all the
reasonable, not unduly discriminatory has been developed through an relevant information is received. As an
or preferential, and in the public adequate process does not mean that it example, the NOPR explained that
interest,’’ and should therefore be is adequate as a substantive matter in many of the fill-in-the-blank standards
approved and made effective as protecting reliability. We will, therefore, would not be approved or remanded
mandatory Reliability Standards. NERC review each Reliability Standard to until the Commission had received all
believes that, by following NERC’s ensure that the Reliability Standard is the necessary information.
Reliability Standards development just, reasonable, not unduly
process, a Reliability Standard should discriminatory or preferential, and in a. Comments
meet the requirement that a standard be the public interest, giving due weight to 172. Most commenters generally
‘‘just, reasonable, not unduly the ERO. support the Commission’s proposal to
discriminatory or preferential.’’ Further, 168. In response to FirstEnergy, the have four courses of action it may take
NERC asserts that, by filing with the Commission has already laid out the on a Reliability Standard. However,
Commission the written record of factors against which to review a Xcel has concerns about the legality of
development for each Reliability Reliability Standard, as well as other approving many of the proposed
Standard, NERC has given the considerations.84 The Commission has Reliability Standards as mandatory but,
Commission strong evidence that those no need to revisit this issue. at the same time, ordering the ERO to
83 Reliability Standards are just, make specific modifications to them.
reasonable, and not unduly 2. Commission Options When Acting on
a Reliability Standard According to Xcel, section 215(d) does
discriminatory or preferential. not expressly create this ‘‘approve but
165. NERC states that the requirement 169. In the NOPR, the Commission
modify’’ option. To the contrary, section
that a Reliability Standard be ‘‘in the proposed that, for this rulemaking, it
215(d)(4) suggests that the Commission
public interest’’ provides the would take one of four actions with
Commission with broad discretion to regard to each proposed Reliability should remand to the ERO a standard
review and approve a Reliability Standard: (1) Approve; (2) approve as that it disapproves ‘‘in whole or in
Standard. According to NERC, implicit mandatory and enforceable; and direct part.’’
in the ‘‘public interest’’ test is that a modification pursuant to section 173. While many commenters support
Reliability Standard is technically 215(d)(5); (3) request additional the Commission proposal to approve
sound and ensures an adequate level of information; or (4) remand. In fact, the certain Reliability Standards as
reliability, and that the Reliability NOPR did not propose to remand any mandatory and enforceable; and direct
Standards provides a comprehensive proposed Reliability Standard.85 NERC to modify them pursuant to
and complete set of technically sound 170. With regard to the second section 215(d)(5), they are concerned
requirements that establish an category, the Commission explained that the Commission’s directives to
acceptable threshold of performance that it would take two separate and modify certain Reliability Standards are
necessary to ensure reliability of the distinct actions under the statute. First, too prescriptive.86 They contend that, in
Bulk-Power System. NERC states that it pursuant to section 215(d)(2) of the prescribing particular requirements,
believes that approving those 83 FPA, the Commission would approve a metrics, or specific language to be used,
Reliability Standards as enforceable as proposed Reliability Standard, which the Commission is setting the Reliability
NERC begins operating as the ERO would be mandatory and enforceable Standard outside the open Reliability
meets this objective and will achieve an upon the effective date of the Final Standards development process and not
adequate level of reliability as required Rule. Second, the Commission would giving due weight to the ERO under
by law. NERC asserts that adopting direct NERC to submit a modification of section 215 of the FPA. NRECA, for
fewer of the Reliability Standards would the Reliability Standard to address example, argues there is a major
both create potential reliability risks and specific issues or concerns identified by distinction between (a) requiring a
communicate that some aspects of the Commission pursuant to section Reliability Standard to address a
reliability are not viewed as important 215(d)(5) of the FPA. specific matter and (b) requiring (as
enough to be the subject of mandatory 171. With regard to the third category, opposed to suggesting) a specific
and enforceable Reliability Standards ‘‘request additional information,’’ the Reliability Standard or requiring a
under the FPA. NOPR explained that some Reliability reliability matter to be addressed in a
166. FirstEnergy states that each Standards do not contain sufficient specific way. These commenters ask
proposed standard should be reviewed that the Final Rule state that a directive
83 Order No. 672 at P 338.
against the following criteria: (1) Clarity; to improve a Reliability Standards be in
84 Id.at P 262, 321–37. (A proposed Reliability
(2) technical means to comply; (3) the form of an objective to be achieved
Standard must: (1) Provide for the Reliable
practicability; (4) consistency and (5) Operation of Bulk-Power System facilities; (2) be or concern or deficiency to be resolved
costs. designed to achieve a specified reliability goal and within the Reliability Standard, rather
must contain a technically sound means to achieve than a particular requirement, metric, or
b. Commission Determination this goal; (3) be clear and unambiguous regarding specific language to be used.
what is required and who is required to comply; (4)
167. The Commission agrees with clearly state the possible consequences for violating 174. Many commenters request that
NERC that an open and transparent the proposed Reliability Standard; (5) include a the Commission require that changes to
process is important in implementing clear criterion or measure of whether an entity is any Reliability Standard be made
section 215 of the FPA and developing in compliance with a proposed Reliability
Standard; (6) achieve its reliability goal effectively
through NERC’s Reliability Standard
proposed mandatory Reliability and efficiently; (7) not reflect the ‘‘lowest common
Standards. However, in Order No. 672, denominator.’’) 86 See, e.g., NERC, Entergy, EEI, APPA, National
the Commission rejected the 85 NOPR at P 78–82. Grid, NRECA, TAPS, ISO–NE and Duke.
development procedure.87 NERC states modification would lead to differing that have been identified. Northern
that there are areas where the interpretations of the Reliability Indiana believes the Commission’s
Commission proposes a specific Standards and confusion. current actions may, in the near term,
directive on a particular Reliability 177. CEA asserts that the proposed create a lower probability of success in
Standard that is well beyond the bounds directives to modify certain Reliability achieving the Commission’s stated
of current utility practice. According to Standards, while not remands, reflect objectives. Northern Indiana suggests
NERC, these recommendations are often engagement in the standards-setting that the traditional summer peak season
derived from the Staff Preliminary process that may interfere with the is not a good time to implement broad
Assessment or are based on a limited ERO’s ability to effectively function as changes in electric system operations,
number of comments to that assessment. an international body. For example, procedures and protocols.
NERC anticipates that the issue of Manitoba states that the Commission’s 181. NRECA states it is concerned by
concern with respect to these Reliability proposed modifications without the NOPR’s efforts to establish specific
Standards will be addressed, but the industry input may unintentionally one and three year time frames for
results may be somewhat different than place Manitoba in a position where it resolution of various matters. It states
anticipated by the Commission. must recommend that the Government that the Commission is authorized to
Similarly, EEI and Progress state that of Manitoba disallow the Commission’s comment on priorities and suggest
NERC should not pre-determine the prescribed modifications to several timing, it must allow NERC to follow its
outcome of the Reliability Standard NERC Reliability Standards, thus ANSI-certified Reliability Standards
development procedure in response to creating discrepancies between development process.
the Commission’s guidance. Ontario Reliability Standards across North 182. NERC requests that the
IESO states that the Commission should America. Commission provide a directive in the
allow its detailed input on the proposed 178. FirstEnergy agrees with the Final Rule requiring NERC to address
Reliability Standards to be considered Commission’s rejection of the concept of both the Commission’s concerns with
through Reliability Standards ‘‘conditional approval’’ in favor of the existing Reliability Standards and
development process. approve but modify to ensure that all comments filed in this rulemaking
175. According to EEI, NERC should enforceable standards are in place. proceeding suggesting specific
be permitted to provide, if the However, it asks that the Commission improvements to the Reliability
Commission’s guidance for modification consider waiving, or at least Standards. NERC states that if the
of a proposed Reliability Standard is not substantially reducing, penalties for Commission acts on the views
adopted in the Reliability Standard violations of some enforceable, but yet- expressed on a specific Reliability
development procedure, an explanation to-be-completed or modified Reliability Standard by an individual commenter
for that outcome when it submits the Standards because compliance with in this rulemaking, it may encourage
modified standard to the Commission such Reliability Standards may prove others to avoid participating in the
for approval. Constellation asks the difficult to determine. FirstEnergy NERC process and instead wait until a
Commission to clarify that, if the ERO therefore suggests that the Commission proposed new or modified Reliability
Reliability Standards development exercise due discretion in enforcing Standard reaches the Commission
process does not result in a Reliability affected Reliability Standards, approval stage to express their views on
Standard that includes the especially where the Commission itself the standards. NERC states that no
Commission’s proposed modifications, has found that a standard is incomplete commenter should be entitled to have
the existing Reliability Standard would or ambiguous. International its comments on a specific Reliability
remain in effect until such time as Transmission agrees that in instances Standard resolved by the Commission in
NERC proposes and the Commission where the Commission has proposed this rulemaking proceeding.
approves a different Reliability Standard material changes to a Reliability 183. NERC maintains that referring all
(approved through the Reliability Standard and its associated comments to the NERC Reliability
Standards development process). measurements, risk factors and Levels of Standards development process for
176. Manitoba and Northwest Non-Compliance, it may be appropriate resolution is consistent with NERC’s
Requirements Utilities disagree with the for the ERO to exercise enforcement obligation to facilitate an open
Commission’s proposal to approve discretion on a case-by-case basis. stakeholder process for the development
certain Reliability Standards and, 179. SoCal Edison is concerned that of Reliability Standards. NERC asserts
separately, direct NERC to make entities may not have an opportunity to that it gives fair consideration to all
modifications. Some commenters, such (1) review the Reliability Standards that comments and objections on a proposed
as California PUC, Northwest are adopted in the Final Rule and (2) new or revised Reliability Standard and
Requirements Utilities and SMA state make any necessary changes in their such comments are either resolved to
that the users, owners and operators of operating or planning practices in order the satisfaction of the commenter, or
the Bulk-Power System should not be to incorporate differences between the reasons are stated as to why the
expected to comply with Reliability NOPR and the Final Rule. SoCal Edison commenter’s recommendation should
Standards that are not finalized or need recommends the Commission not be adopted.
modification. Northwest Requirements specifically state the ‘‘effective date’’ for
compliance with each Reliability b. Commission Determination
Utilities contends that complete and
Standard in its Final Rule. SoCal Edison 184. The Commission affirms the four
clear Reliability Standards and
is concerned because some standards possible courses of action that it will
requirements are necessary to fair
have a proposed NERC ‘‘effective’’ date take with regard to each proposed
enforcement, particularly if monetary
after the Final Rule. Reliability Standard: (1) Approve; (2)
sanctions may apply. Manitoba and
180. Northern Indiana states it is approve as mandatory and enforceable;
California PUC state that approving
concerned how a June 2007 effective and direct modification pursuant to

Reliability Standards that still require
date will impact electric system section 215(d)(5); (3) request additional
87 See, e.g., NERC, EEI, ELCON, CEA, NYSRC, reliability during the critical summer information; or (4) remand. Each course
TVA, LPPC, NPCC, Ontario IESO, Constellation, peak demand period, particularly given of action is justified and has a sound
Progress and Dynegy. the many problems with the standards basis in the statute. Xcel questions the
legality of the second option above, the FPA.91 In the Final Rule, we have NERC’s Work Plan through the ERO
which it incorrectly equates to considered commenters’ concerns and, Reliability Standards development
‘‘conditional acceptance.’’ Rather, as where a directive for modification process. The Commission, however,
explained in the NOPR,88 the appears to be determinative of the does not direct any outcome other than
Commission is taking two independent outcome, the Commission provides that the comments receive
actions, both authorized by the statute. flexibility by directing the ERO to consideration.
First, we are exercising our authority, address the underlying issue through 189. We disagree with commenters,
contained in section 215(d)(2) of the the Reliability Standards development such as Xcel, suggesting that the
FPA, to approve a proposed Reliability process without mandating a specific Commission should not approve
Standard. Second, we are directing the change to the Reliability Standard. Reliability Standards that we require
ERO to submit a modification of the Further, the Commission clarifies that, NERC to modify. The Commission is
Reliability Standard to address specific where the Final Rule identifies a only approving those Reliability
issues or concerns identified by the concern and offers a specific approach Standards that it has determined to be
Commission, pursuant to section to address the concern, we will consider just, reasonable, not unduly
215(d)(5) of the FPA.89 Accordingly, we an equivalent alternative approach discriminatory or preferential, and in
reject Xcel’s contention and adopt the provided that the ERO demonstrates the public interest. As discussed more
NOPR proposal on this matter. that the alternative will address the fully in the discussion of the individual
185. With regard to the many Commission’s underlying concern or Reliability Standards, we have
commenters that raise concerns about goal as efficiently and effectively as the determined that each approved
the prescriptive nature of the Commission’s proposal. Reliability Standard is sufficiently clear
Commission’s proposed modifications, 187. Consistent with section 215 of and independently enforceable. Because
the Commission agrees that a direction the FPA and our regulations, any we believe that these Reliability
for modification should not be so overly modification to a Reliability Standard, Standards are enforceable as written, the
prescriptive as to preclude the including a modification that addresses Commission will not exempt them from
consideration of viable alternatives in a Commission directive, must be enforcement.
the ERO’s Reliability Standards developed and fully vetted through 190. The Commission disagrees with
NERC’s Reliability Standard Northern Indiana that the Reliability
development process. However, in
development process. The Standards should not be implemented
identifying a specific matter to be
Commission’s directives are not in summer of 2007.92 Most or all users,
addressed in a modification to a
intended to usurp or supplant the owners and operators of the Bulk-Power
Reliability Standard, it is important that
Reliability Standard development System have participated in NERC’s
the Commission provide sufficient
procedure. Further, this allows the ERO voluntary reliability regime for years
guidance so that the ERO has an
to take into consideration the and are familiar with the proposed
understanding of the Commission’s
international nature of Reliability Reliability Standards. Others have had
concerns and an appropriate, but not
Standards and incorporate any notice of the Reliability Standards since
necessarily exclusive, outcome to
modifications requested by our they were filed by NERC in April 2006.
address those concerns. Without such
counterparts in Canada and Mexico. We are not persuaded that making
direction and guidance, a Commission
Until the Commission approves NERC’s Reliability Standards enforceable, most
proposal to modify a Reliability
proposed modification to a Reliability of which were being complied with on
Standard might be so vague that the
Standard, the preexisting Reliability a voluntary basis, will require broad
ERO would not know how to adequately
Standard will remain in effect. changes in electric system operations,
respond. 188. We agree with NERC’s suggestion procedures and protocols. Therefore, we
186. Thus, in some instances, while that the Commission should direct do not see any reason to further delay
we provide specific details regarding the NERC to address NOPR comments implementation of the mandatory
Commission’s expectations, we intend suggesting specific new improvements Reliability Standards.
by doing so to provide useful guidance to the Reliability Standards, and we do 191. In response to SoCal Edison,
to assist in the Reliability Standards so here. We believe that this approach Reliability Standards will become
development process, not to impede will allow for a full vetting of new effective the latter of the effective date
it.90 We find that this is consistent with suggestions raised by commenters for of this Final Rule or the ERO’s proposed
statutory language that authorizes the the first time in the comments on the NERC effective date. The Commission
Commission to order the ERO to submit NOPR and will encourage interested disagrees with SoCal Edison that users,
a modification ‘‘that addresses a specific entities to participate in the ERO owners and operators of the Bulk-Power
matter’’ if the Commission considers it Reliability Standards development System will not have an opportunity to
appropriate to carry out section 215 of process and not wait to express their review the Reliability Standards that are
views until a proposed new or modified adopted in the Final Rule and
88 See NOPR at P 79–80. Reliability Standard is filed with the incorporate differences between the
89 16 U.S.C. 824o(d)(5) ( ‘‘[t]he Commission * * * Commission. As noted throughout the NOPR and the Final Rule into their
may order the Electric Reliability Organization to
submit to the Commission a proposed Reliability
standard-by-standard analysis that operating practices. The Reliability
Standard or modification to a Reliability Standard follows, various commenters provide Standards approved in this Final Rule
that addresses a specific matter if the Commission specific suggestions to improve or are approved as proposed by the ERO.
considers such a new or modified Reliability otherwise modify a Reliability Standard
Standard appropriate to carry out this section.’’).
No changes will be made immediately
90 Moreover, in the NOPR, the Commission first
that address issues not raised in the based on the Commission’s direction to
discussed in detail its substantive concerns NOPR. In such circumstances, the modify those Reliability Standards. Any
regarding a particular proposed Reliability Standard Commission directs the ERO to consider modifications will be developed
and, to provide greater clarity regarding the such comments as it modifies the through the ERO’s Reliability Standards
Commission proposal, then summarized the Reliability Standards during the three-
proposed findings and modifications. It appears development process and should have a
that such summaries of broader and fuller year review cycle contemplated by
discussions led to misunderstandings of the NOPR 92 See discussion below regarding the Trial
proposals. 91 16 U.S.C. 824o(d)(5). Period, section II.D.4.
proposed effective date that will take further proposed that the ERO develop 199. NERC expresses concern that the
into account any time needed for users, a detailed, comprehensive Work Plan to Commission suggests in the NOPR that
owners and operators of the Bulk-Power address all of the modifications that are it may direct some early modifications
System to incorporate the necessary directed pursuant to a Final Rule. The to the Reliability Standards that appear
changes. Therefore, there is no need for Work Plan would take a staggered to provide quick results.97 According to
any entity to make any changes based approach and complete all the proposed NERC, because of the procedural
on differences between the NOPR and modifications within either two or three requirements of the Reliability
the Final Rule. years from the effective date of the Final Standards development process, this
192. NRECA’s assertion that the Rule. would delay work that is more
Commission should not establish 196. As noted above, on December 1, important. NERC states that it can make
timelines to resolve matters is a 2006, NERC submitted its Work Plan as such changes quickly for a particular
collateral attack on Order No. 672. In an informational filing. According to the Reliability Standard if there are no other
that order, the Commission adopted its Work Plan, NERC will revise the changes to that standard. However,
regulations to provide that the existing Reliability Standards to NERC’s Work Plan contemplates that
Commission, when ordering the ERO to incorporate improvements. A total of 31 almost every Reliability Standard is to
submit to the Commission a proposed different projects will be completed over be upgraded; modifying each standard
Reliability Standard or proposed a three-year period.96 Some of the in multiple steps would add significant
modification to a Reliability Standard projects address revising a single delay.
that addresses a specific matter, may Reliability Standard. The largest project 200. APPA similarly cautions the
order a deadline by which the ERO must includes revising 19 Reliability Commission that the industry does not
submit a proposed or modified Standards focusing on related topics. have unlimited ability to
Reliability Standard.93 NERC asserts that grouping the simultaneously reevaluate the
Reliability Standards in this manner Reliability Standards, prepare for
3. Prioritizing Modifications to NERC’s and the Regional Entities’
Reliability Standards will be the most efficient use of the
resources and will allow consistency in compliance monitoring and
193. As discussed above, the requirements on related standards. enforcement programs, and actually
Commission proposed to approve NERC states that the Work Plan plan and operate their utility systems on
certain Reliability Standards and, as a incorporates modifications that were a reliable basis. According to APPA,
separate action, proposed to direct the proposed in the NOPR, but it will NERC should promptly address the
ERO to modify many of the same modify its Work Plan to align it with the administrative elements of those
Reliability Standards pursuant to modifications the Commission orders in Reliability Standards that are now at
section 215(d)(5) of the FPA. In the the Final Rule. In addition, the Work best incomplete, with missing
NOPR, the Commission recognized that Plan will remain dynamic as new Compliance Measures, Levels of Non-
it is not reasonable to expect the Reliability Standards are proposed and Compliance and Violation Risk Factors.
modification of such a substantial priorities evolve. The Work Plan will be NERC must also deal with the regional
number of Reliability Standards in a updated on an annual basis, and more fill-in-the-blank standards and criteria
short period of time. Thus, the NOPR frequently if needed. that have not yet been submitted to
provided guidance on the prioritization 197. According to the Work Plan, either NERC or to the Commission for
of needed modifications.94 NERC will periodically report progress review and approval.
194. The NOPR proposed that NERC and revisions to the Work Plan and 201. International Transmission states
first focus its resources on modifying timetable to the Commission. NERC’s that the Commission should not direct
those Reliability Standards that have the intent is to provide accountability for NERC to make changes to the Reliability
largest impact on near-term Bulk-Power the revision and development of Standards within a specific time frame
System reliability, including many of Reliability Standards, while recognizing because this would circumvent the
the proposed modifications that reflect it is impossible to have a fixed schedule Reliability Standard development
Blackout Report recommendations. when working in a consensus-driven process. It asks the Commission to
Further, the Commission identified a process addressing complex technical instruct the ERO to initiate the
group of Reliability Standards that it matters. Reliability Standards development
believes should be given the highest process in a time frame that would
priority by the ERO based on the above a. Comments likely result in their presentation to the
guidance.95 The NOPR explained that 198. NERC states that it is pleased that Commission by a desired date,
the list is not meant to be exclusive or the Commission did not propose acknowledging that a revised Reliability
inflexible and solicited ERO and specific deadlines in the NOPR for Standard may not reach industry
commenter input. The NOPR proposed completing the directives to improve the consensus and thus not meet the
that NERC address the ‘‘high priority’’ Reliability Standards. NERC requests Commission’s desired time frame.
modifications within one year of the that the Commission not state specific Further, International Transmission
effective date of the Final Rule. delivery dates, because developing believes that the priority of a Reliability
195. In addition, the NOPR proposed consensus Reliability Standards on Standard for subsequent modification
that the ERO promptly address certain complex technical matters within fixed should be based on the standard’s
proposed modifications that are not time frames may not be realistic in all ‘‘Violation Risk Factor.’’ Reliability
necessarily identified as ‘‘high priority’’ cases. NERC states that it will report the Standards that have the greatest impact
but may be addressed in a relatively reasons for any delays in the schedule on bulk electric system reliability
short time frame because the proposed and will work to ensure that no should be addressed first. All high risk
modifications are relatively minor or unnecessary delays occur due to lack of requirements should be addressed in the
‘‘administrative’’ in nature. The NOPR attention or effort. 2007 Work Plan. International
Transmission states the addition of
93 See 18 CFR 39.5(g). 96 Some projects relate to new Reliability Measures and Levels of Non-
94 NOPR at P 85–87. Standards that are not before the Commission in the
95 Id. at Appendix D (High Priority List). instant rulemaking. 97 NOPR at P 86.
Compliance is neither minor nor working through NERC, to modify the the NOPR did not propose a trial
administrative in nature, although ATC-related Reliability Standards period.99
designated by the Commission as such within 270 days of publication of Order 209. However, the Commission
and called for an accelerated time No. 890 in the Federal Register.98 Our recognized that there are entities that
period for their addition. action there affects approximately nine have not historically participated in the
202. MRO recommends that the MOD Reliability Standards and one FAC pre-existing voluntary reliability system
Commission place a greater emphasis on Reliability Standard that are before us in (including some relatively small
directing NERC to develop clear and this proceeding. The ERO must submit entities) that may not be familiar with
measurable Requirements. If the its revised Work Plan within 90 days of what is required for compliance with
Requirements are not clear and the effective date of the Reliability the proposed mandatory Reliability
measurable, the Measures and Levels of Standards approved in this order as an Standards. For such entities, the NOPR
Non-Compliance will be fundamentally informational filing to: (1) Reflect proposed that the ERO and Regional
flawed. MRO also states that there are modification directives contained in the Entities use their discretion in imposing
numerous Requirements that are now Final Rule; (2) include the timeline for penalties on such entities for the first
part of the Reliability Standards that completion of ATC-related Reliability six months the Reliability Standards are
came from elements of the former NERC Standards as ordered in Order No. 890 in effect. However, the Commission, the
Operating Manual that were never and (3) account for the views of its ERO and the Regional Entities would
intended as Requirements. It believes stakeholders, including those raised in still retain the authority to impose
that this, in part, has created certain this proceeding. penalties on such entities if warranted
difficulties that have resulted in a lack 207. The Commission disagrees with by the circumstances.
of Measures or Levels of Non- NERC that we should not set specific
Compliance in the Reliability Standards. a. Comments
delivery dates. A Work Plan with
MRO provides examples of such specific target dates will provide a 210. Most commenters request that
difficulties in its comments regarding valuable tool and incentive to timely the Commission reconsider the proposal
specific Reliability Standards. MRO address the modifications directed in to reject a trial period during which the
suggests grouping each Requirement this Final Rule. We note that the ERO Reliability Standards are mandatory and
with its associated Measure and Level of previously prepared and submitted to enforceable but during which penalties
Non-Compliance thus making it clear to the Commission for informational would not be assessed for violating a
the user, owner or operator as to which purposes one iteration of such a Work Reliability Standard.100 EEI, for
Requirements, Measures and Levels of Plan that identifies target dates for the example, notes that the compliance
Non-Compliance are related thereby modification of Reliability Standards. enforcement program and the delegation
reducing confusion. Accordingly, we direct the ERO to agreements have not yet been approved
203. APPA and Alcoa state that the submit as an informational filing, within by the Commission and there may be a
Commission did not give sufficient time 90 days of the effective date of this Final short time between their approval and
for comments on NERC’s submitted Rule, a Work Plan that identifies a plan the projected start date for enforcing the
Work Plan. APPA notes that the Work for addressing the modifications to the Reliability Standards. Therefore,
Plan will have to be revised following Reliability Standards directed by the commenters generally state that a trial
issuance of the Final Rule. Commission in this Final Rule and a period is appropriate to ensure that the
b. Commission Determination schedule with delivery dates for compliance monitoring and
completing such modifications. The enforcement processes work as intended
204. Given the concerns raised by and that entities have time to implement
commenters, the Commission will not ERO should make every effort to meet
such delivery dates. However, we new processes, such as required data
adopt the NOPR’s proposal to direct systems; after June 2007, commenters
some early modifications to the understand that there may be certain
cases in which the ERO is not able to generally state that NERC and the
Reliability Standards. We agree with Regional Entities would be able to
NERC that modifying each Reliability meet a Commission’s deadline. In those
instances, the ERO must inform the require remedial actions where there is
Standard first to address administrative an immediate actual or potential risk to
concerns, then sending it back to the Commission of its inability to meet the
specified delivery date and explain why reliable interconnected operations.
Reliability Standards development Further, some state that a trial period
process to address any modifications it will not meet the deadline and when
it expects to complete its work. would allow NERC to resolve issues
directed by the Commission or with unfinished standards or ambiguous
requested by stakeholders, might lead to 4. Trial Period standards for which the Commission
an unacceptable delay. has directed improvements. If the
205. While the Commission agrees 208. NERC and some commenters to
the Staff Preliminary Assessment Commission rejects a six-month trial
with International Transmission that a
recommended that the Commission period, several entities, such as EEI,
good starting point for prioritizing
establish a ‘‘trial period’’ during which PG&E, Xcel and NYSRC, request that the
modifications to a Reliability Standard
time the ERO would determine, but not Commission extend NERC’s
could be based on the Reliability
collect, monetary penalties. In the discretionary enforcement to all entities,
Standard’s ‘‘Violation Risk Factor,’’ the
NOPR, the Commission expressed not just those new to the Reliability
Commission will not mandate that the
concern that a trial period that Standards.
ERO do so. The ERO should take into
commences with the effective date of 211. NPCC essentially agrees with the
account the views of its stakeholders,
mandatory and enforceable Reliability Commission that there should be no
including the concerns raised in this
Standards may interfere with their being trial period, but if the definition of Bulk-
proceeding by APPA, International
Power System is substantially altered to
Transmission and MRO, in revising its made effective by summer 2007. Thus,
Work Plan following issuance of this 98 Preventing Undue Discrimination and 99 Id.
at P 92–93.
Final Rule. Preference in Transmission Service, Order No. 890, 100 See,
e.g., EEI, APPA, TAPS, EPSA, CAISO,
206. In Order No. 890, the 72 FR 12266(March 15, 2007), FERC Stats. & Regs. Bonneville, California PUC, Cleveland, Otter Tail,
Commission directed public utilities, ¶ 31,241 (2007) at P 223. Northwest Requirements Utilities, TVA and SMA.
draw in a broad range of entities that the collection of penalties as the rule Standards that have missing or
have not traditionally been subject to rather than the exception may increase ambiguous measures or severity levels
pre-existing reliability standards, a the risk of numerous legal challenges until those issues are resolved. National
transition period is appropriate to bring occurring in the early stages of Grid states that enforcement discretion
them into compliance. Where a implementing mandatory Reliability should not be limited in scope or
Reliability Standard has missing or Standards, whereas NERC would expect duration and should be extended to any
incomplete compliance measures, ATC a rapid decline in such challenges after situation in which a Reliability
states that the Commission should make its proposed validation period. In a Standard is applied in a novel manner,
these standards mandatory to avoid reply comment, Xcel supports NERC’s including when a Reliability Standard is
gaps, but not assess monetary penalties proposed approach. interpreted for the first time.
for non-compliance. ATC agrees with 215. If the Commission rejects NERC’s 218. PG&E asserts that NERC and the
the Commission that the new mandatory proposed modified approach, NERC Regional Entities should have discretion
reliability regime should be operational asks that it and the Regional Entities be in imposing fines for violations of
by June 2007, noting that it has been given broad discretion in setting Reliability Standards during a transition
over three years since the August 2003 penalties during this time period and period. Where an entity shows a good
Blackout and over a year since EPAct that this discretion not be limited to faith effort to comply with a new or
2005 was enacted. small entities or those who are new to changed Reliability Standard promptly
212. Several entities state that the Reliability Standards. Avista/Puget also and thoroughly, NERC and/or the
Commission’s proposal to allow the urges the Commission, the ERO and the Regional Entity should be permitted to
ERO and Regional Entities discretion in Regional Entities to exercise consider those efforts in assessing fines.
setting penalties does not go far enough, enforcement discretion more broadly PG&E suggests a transition period of
even if it is applied to all users, owners than proposed in the NOPR. Penalties three to six months. Without such
and operators of the Bulk-Power should be waived for an initial period discretion, entities may be pressured to
System. For example, SERC maintains in several situations, including where a implement Reliability Standards hastily
that its proposed delegation agreement Reliability Standard is applied based on and inadequately. PG&E also notes that
and the NERC Compliance Monitoring new or different interpretations. some entities in WECC have voluntarily
and Enforcement Program may not 216. Some commenters request that
participated in WECC’s enforcement
allow discretion in imposing penalties. the Commission grant a longer trial
program. The new regime entails
213. NERC states that it understands period in certain cases. For instance,
procedural and substantive changes.
and supports the importance the TANC believes that for smaller entities
Entities that have complied voluntarily
Commission places on the ERO having the Commission should, at a minimum,
should not be penalized by denying
the ability to impose a financial penalty adopt a trial period of at least one year
them an opportunity to adjust.
if a Bulk-Power System user, owner or to provide adequate time to evaluate
operator violates a mandatory and comply with the new mandatory 219. WECC states that it continues to
Reliability Standard that is in effect, Reliability Standards. Bonneville and believe that a trial period of more than
especially for egregious behavior. NPCC suggest that, for Reliability six months is appropriate, but it is not
However, NERC continues to maintain Standards that have an annual reporting requesting that the Commission revisit
that a validation period for the requirement, the compliance cycle its decision on this issue. WECC asks
compliance process and the calculation should start on June 2007 so that a that Regional Entities have somewhat
of penalties is important and proposes Reliability Standard that relies on data greater flexibility in monitoring and
a modified approach to that taken by the reporting back into the prior year should enforcing compliance during the initial
Commission. NERC asks the have an initial compliance measurement period of implementation. According to
Commission to authorize NERC and the date of June 2008. AMP-Ohio states that WECC, the Commission should
Regional Entities to exercise discretion the Commission’s proposal does not go recognize that, in the early stages of
to calculate financial penalties, but not far enough and suggests a ‘‘ramp-up’’ implementation, penalties should be
collect them in the case of most period for entities that are new to reserved for clear situations where
violations through December 31, 2007. standards, through and including the Registered Entities are refusing to
At the same time it asks the Commission entity’s first compliance audit or, if the comply. Unreasonably harsh
to specify that in a situation in which Commission rejects this proposal, the enforcement in the early stages of
an entity violates a clear and well- Commission should extend the trial implementation may damage the current
understood Reliability Standard that period from six to twelve months. level of reliability by diverting resources
causes a significant disturbance on the Reliant also advocates a phase-in of away from developing solutions in order
Bulk-Power System, or in the face of penalties over six to twelve months, to avoid fines and support litigation.
other aggravating circumstances such as with an increasing scale of penalties This flexibility should continue beyond
repeated or intentional violations, the over time. six months after the effective date, if
ERO and the Regional Entities would 217. Portland General and Tacoma necessary, for those Reliability
have the authority and responsibility to request that the Commission institute a Standards requiring modification, until
hold the offending entity fully one-year trial period to allow the such modifications have become
accountable for the violation, by the industry time to finalize the language of effective.
assessment of financial penalties. the mandatory Reliability Standards and 220. According to WECC, it is
214. NERC states that this alternative to allow users, owners and operators extremely important that United States,
approach is supported by the newness time to adapt to the final language. For Canadian and Mexican authorities
of the compliance enforcement program, any Reliability Standard that requires enforce their respective standards
the Sanctions Guidelines and the modification, Tacoma requests that the within WECC in a way that avoids
penalty matrix, and the Violation Risk Commission provide a six-month trial conflicting obligations. WECC thus
Factors, which have not been approved period beyond the date when the suggests that the Commission grant
by the Commission. Further, NERC Reliability Standard is completed. WECC substantial discretion to focus on
claims that initiating operations under Bonneville asks that the Commission education and facilitation of compliance
mandatory Reliability Standards with extend the trial period for Reliability with NERC Reliability Standards while
it seeks to promote consistent Standard has been violated. appropriate penalty within the range of
enforcement internationally. Furthermore, where the ERO uses its applicable penalties.103
discretion and does not assess a penalty
b. Commission Determination 5. International Coordination
for a Reliability Standard violation, we
221. The Commission adopts its encourage the ERO to establish a 226. In response to concerns regarding
proposal not to institute a formal trial process to inform the user, owner or international coordination of action on
period. As we explained in the NOPR, operator of the Bulk-Power System of proposed Reliability Standards, the
a trial period is inconsistent with the violation and the potential penalty Commission reaffirmed its recognition
mandatory and enforceable Reliability that could have been assessed to such of the importance of international
Standards taking effect in a timely entity and how that penalty was coordination, previously discussed in
manner.101 The Commission’s calculated. We leave to the ERO’s both Order No. 672 104 and the ERO
overriding concern is the reliability of discretion the parameters of the Certification Order.105
the Bulk-Power System, and mandatory notification process and the amount of a. Comments
and enforceable Reliability Standards resources to dedicate to this effort.
becoming effective in a timely manner 227. Ontario IESO agrees with the
Moreover, the Commission retains its Commission ‘‘that NERC’s development
are essential to ensuring the reliability
power under section 215(e)(3) of the of a coordination process, together with
of the Bulk-Power System. Accordingly,
FPA to bring an enforcement action the existing means of communications
the Commission will not adopt a formal
against a user, owner or operator of the and coordination such as the United
trial period.
222. The Commission is, however, Bulk-Power System. States—Canada Bilateral Electric
also cognizant of commenters’ concerns. 224. The Commission believes that Oversight Group will provide the
In the NOPR, the Commission proposed the goal should be to ensure that, at the necessary mechanisms for international
that the ERO and Regional Entities use outset, the ERO and Regional Entities coordination’’ and supports the
their enforcement discretion in can assess a monetary penalty in a coordination process proposed by NERC
imposing penalties on entities that situation where, for example, an entity’s in its October 18, 2006 filing in Docket
historically had not participated in the non-compliance puts Bulk-Power No. RR06–1–003.106
pre-existing voluntary reliability regime, System reliability at risk. Requiring the 228. EEI and National Grid state that
although authority to impose a penalty ERO and Regional Entities to focus on it is not sufficient to coordinate remands
on such an entity would be retained ‘‘if the most serious violations will allow through NERC alone because both the
warranted by the circumstances.’’ 102 In the industry time to adapt to the new Commission and Canadian provincial
light of commenters’’ concerns, regime while also protecting Bulk- authorities have the ultimate say in
including the fact that there are new Power System reliability by allowing the approving applicable Reliability
aspects to the Reliability Standards and ERO or a Regional Entity to take an Standards. They advocate that the
the proposed compliance program that enforcement action against an entity various regulators commit to coordinate
will apply to all users, owners and whose violation causes a significant through a formal mechanism, such as a
operators of the Bulk-Power System, the disturbance. Our approach strikes a memorandum of understanding.
Commission directs the ERO and reasonable balance in ensuring that the According to EEI, the Commission
Regional Entities to focus their ERO and Regional Entities will be able should coordinate with its international
resources on the most serious violations to enforce mandatory Reliability counterparts when directing
during an initial period through Standards in a timely manner, while modifications to Reliability Standards to
December 31, 2007. This thoughtful use still allowing users, owners and ensure that the resulting Reliability
of enforcement discretion should apply operators of the Bulk-Power System Standards are uniform to the greatest
to all users, owners and operators of the time to acquaint themselves with the extent possible. NPCC adds that the
Bulk-Power System, and not just those new requirements and enforcement Commission should coordinate with its
new to the program as originally program. In addition, our approach international counterparts when
proposed in the NOPR. This approach ensures that all users, owners and proposing to hold, remand or reject a
will allow the ERO, Regional Entities operators of the Bulk-Power System take proposed Reliability Standard to avoid
and other entities time to ensure that the seriously mandatory, enforceable inconsistencies in Reliability Standards
compliance monitoring and reliability standards at the earliest application.
enforcement processes work as intended opportunity and before the 2007 229. National Grid states that, where
and that all entities have time to summer peak season. similar interpretations and
implement new processes. modifications to Reliability Standards
223. By directing the ERO and 225. National Grid, among others, are not adopted by the provincial
Regional Entities to focus their states that the Commission should allow authorities in Canada, there is potential
resources on the most serious violations enforcement discretion on an ongoing for conflicting requirements for
through the end of 2007, the ERO and basis, for example, when the ERO or a interconnected facilities. The Alberta
Regional Entities will have the Regional Entity interprets a Reliability ESO is also concerned that, due to
discretion necessary to assess penalties Standard for the first time. The regulatory/legislative requirements and
for such violations, while also having Commission agrees that, separate from industry structures in Canada, some of
discretion to calculate a penalty without our specific directive that all concerned the Reliability Standards may not be
collecting the penalty if circumstances focus their resources on the most implemented as they are written.
warrant. Further, even if the ERO or a serious violations during an initial
Regional Entity declines to assess a period, the ERO and Regional Entities 103 ERO Certification Order at P 451.
monetary penalty during the initial retain enforcement discretion as would 104 See Order No. 672 at P 400.
period, they are authorized to require any enforcement entity. Such discretion, 105 ERO Certification Order at P 286.
remedial actions where a Reliability in fact, already exists in the guidelines; 106 Compliance Filing of the North American
as we stated in the ERO Certification Electric Reliability Council and the North American
Electric Reliability Corporation Addressing Non-
101 NOPR at P 92. Order, the Sanction Guidelines provide Governance Issues, Appendix 3C, Docket No.
102 Id. at P 93. flexibility as to establishing the RR06–1–000 (October 18, 2006).
Therefore it requests that the Commission is approving several Recommendation No. 8 because
Commission require that the regional differences in Reliability compliance with mandatory Reliability
international coordination process Standards; in the United States, NERC Standards may expose transmission
include a provision where variances are identifies regional variations by operators to liability for actions required
identified by these international submitting them to the Commission in by a Reliability Standard; Blackout
governmental authorities to minimize the form of a Reliability Standard.109 Report Recommendation No. 8
the possibility of a governmental 233. In response to WIRAB, if a identified this concern and
authority remanding a Reliability governmental authority in Canada or recommended that legislative bodies
Standard. According to Alberta ESO, Mexico requests that NERC modify a and regulators establish that operators
while the goal should be consistent, continent-wide Reliability Standard who initiate load shedding are not
North America-wide Reliability rather than create a regional variance, subject to liability. EEI disagrees with
Standards, there will be instances where NERC must submit any revised the suggestion that the Commission
this is not achievable. Reliability Standard to the Commission. cannot shield operators from liability
230. WIRAB advises that some The Commission will then have an suits. EEI states that the Commission
Canadian provinces or Mexican opportunity to review the proposed has the authority under FPA sections
authorities may approve NERC- revised Reliability Standard, taking into 205 and 206 to provide liability
proposed Reliability Standards with account the request of the foreign protection and has done so for several
changes or modifications. It is important governmental authority. transmission operators in several cases
to allow minor variations across such by approving amendments to open
E. Common Issues Pertaining to
jurisdictions to minimize the possibility access transmission tariffs providing for
Reliability Standards
of a governmental authority remanding liability limitations.112 However, it
a Reliability Standard. According to 1. Blackout Report Recommendation on notes that the Commission has rejected
WIRAB, the goal should be a consistent Liability Limitations efforts by other parties to implement
system throughout North America with 234. In the NOPR, the Commission similar protections.113
enough flexibility for some stated that the Blackout Report
jurisdictional variation when uniformity b. Commission Determination
recommendations, many of which
is not immediately possible. address key issues for assuring Bulk- 237. Consistent with Order No. 890,
Power System reliability, have received the Commission does not adopt new
b. Commission Determination liability protections.114 The Commission
international support and represent a
231. In the January 2007 Compliance does not believe any further action is
well-reasoned and sound basis for
Order, the Commission stated that, to needed to implement Blackout Report
action. Thus, in the discussion of a
minimize the possibility of a Recommendation No. 8. First, the Task
particular proposed Reliability
governmental authority directing a Force found that no further action is
Standard, the NOPR often recognized
remand, it seemed appropriate for such needed.115 Further, the Blackout report
the merit of a specific Blackout Report
governmental authorities to have an indicated that some states already have
recommendation and reaffirmed the
opportunity to provide NERC with input appropriate protection against liability
reasoning behind such recommendation
prior to its filing for governmental suits.116 Finally, in Order No. 888, the
in proposing to approve, with a
approval of a proposed Reliability proposed directive to modify, a specific Commission declined to adopt a
Standard.107 In that order, the Reliability Standard. Further, the uniform federal liability standard and
Commission agreed with NERC’s Commission indicated that a decided that, while it was appropriate to
proposal to facilitate informal modification to a proposed Reliability protect the transmission provider
conferences to provide an opportunity Standard based on a Blackout Report through force majeure and
for governmental authorities to consult recommendation should receive the indemnification provisions from
with NERC and stakeholder highest priority in terms of NERC’s damages or liability when service is
representatives regarding Reliability Work Plan.110 provided by the transmission provider
Standard development work-plans, 235. The Blackout Report’s without negligence, it would leave the
objectives and priorities, and emerging Recommendation No. 8 recognized that determination of liability in other
Reliability Standards.108 While we did timely and sufficient action to shed load instances to other proceedings.117 Order
not initiate a formal mechanism for on August 14, 2003, would have
coordination as EEI and National Grid prevented the spread of the blackout
112 EEI at 16, citing Southwest Power Pool, Inc.,
now suggest, we did state that we 112 FERC ¶ 61,100 (2005); Midwest Independent
beyond northern Ohio, and Transmission System Operator, Inc., 110 FERC
anticipate that the Commission and recommended that legislative bodies ¶ 61,164 (2005); ISO New England, Inc., 106 FERC
counterpart governmental authorities in and regulators should: (1) Establish that ¶ 61, 280, order on reh’g, 109 FERC ¶ 61,147 (2004).
Canada and Mexico will convene operators (whether organizations or 113 Id., citing Southern Company Services, Inc.,
regular meetings to coordinate on issues 113 FERC ¶ 61,239 (2005).

individuals) who initiate load shedding 114 Order No. 890 at P 1671–77.
relating to reliability. We reaffirm that pursuant to operational guidelines are 115 U.S.-Canada Power System Outage Task Force,
approach as an appropriate framework not subject to liability suits and (2) Final Report on Implementation of Task Force
for addressing matters of international affirm publicly that actions to shed load Recommendations at 22 (Oct. 3, 2006), available at
coordination in the context of continent- pursuant to such guidelines are not http://www.oe.energy.gov/news/blackout.htm
wide Reliability Standards. (‘‘Action Required at Fully Implement
indicative of operator failure.111 Recommendation 8: No further action under this
232. We agree with Alberta ESO and recommendation is needed’’).
WIRAB that the goal should be a. Comments 116 Id. (‘‘In the United States, some state
consistent, North America-wide 236. EEI states that the Commission regualtors have informally expressed the view that
Reliability Standards, but that this may should adopt OATT liability limitations there is appropriate protection against liability suits
not be achievable in all instances. For for parties who shed load according to approved
to implement Blackout Report guidelines.’’)
example, in this rulemaking the 117 Order No. 888–B, 81 FERC ¶ 61,248 at 62,081
109 Order No. 672 at P 296. (1997), order on reh’g, Order No. 888–C, 82 FERC
107 January 2007 Compliance Order at P 44. 110 NOPR at P 99–100. ¶ 61,046 (1998), aff’d in relevant part sub nom.
108 Id. 111 Blackout Report at 147 Transmission Access Policy Study Group v. FERC,
No. 890 reaffirmed this decision. EEI Reliability Standards calls for a ‘‘data 243. NYSRC states that, in NERC’s
has offered no arguments that retention’’ metric. Yet, some proposed rush to file with the Commission the 20
demonstrate that an OATT limit on Reliability Standards either do not revised Reliability Standards with new
liability is warranted. contain a data retention requirement or Measures and Levels of Non-
state that no record retention period Compliance, the revised Reliability
2. Measures and Levels of Non-
applies. In the NOPR, the Commission Standards were submitted to the NERC
Compliance
requested comment on: (1) Whether the ballot body as a group, rather than
238. The NOPR noted that, according retention time periods specified in individually. It maintains that the group
to the Staff Preliminary Assessment, a various Reliability Standards proposed treatment prevented stakeholders from
number of proposed Reliability by NERC are sufficient to foster effective providing the careful attention that each
Standards do not contain Measures 118 enforcement and (2) what, if any, revised Reliability Standard deserves.
or Levels of Non-Compliance,119 or additional records retention NYSRC believes that, as a result,
both. NERC, in its petition, identified 21 requirements should be established for Requirements for a number of these
Reliability Standards that lack Measures the proposed Reliability Standards. Reliability Standards are flawed. While
or Levels of Non-Compliance and their prompt approval may be justified
indicated that it planned to file a. Improving Measures and Levels of to have them in place for the upcoming
modified Reliability Standards that Non-Compliance summer, there is not a sufficient basis
include the missing Measures and i. Comments for the Commission to conclude that the
Levels of Non-Compliance in November weaknesses identified in these 20
2006. On November 15, 2006, NERC 241. A number of commenters raise Reliability Standards have been
made this filing. concerns regarding the adequacy of adequately addressed. NYSRC
239. In the NOPR, while the current Measures and Levels of Non- recommends that the Commission
Commission recognized the importance Compliance. Some commenters, such as approve the 20 revised Reliability
of having Measures and Levels of Non- Nevada Companies, state that some Standards and direct the ERO to more
Compliance specified for each Reliability Standards do not need carefully address the weaknesses
Reliability Standard, the Commission multiple Measures and multiple Levels identified in those standards and to
also stated that the absence of these two of Non-Compliance when such items do individually submit each revised
elements is not critical to the not fit the context of the specific standard to a ballot for separate
determination of whether to approve a Reliability Standard. According to consideration.
proposed Reliability Standard. Rather, Nevada Companies, some proposed 244. MISO, International
the most critical elements of a Reliability Standards are more like Transmission and Constellation also
Reliability Standard are the business practices that are susceptible to raise concerns with NERC’s Violation
Requirements, and, if properly drafted, a pass/fail test, and are not necessarily Risk Factors. They are concerned that
a Reliability Standard may be enforced amenable to multiple Measures and risk is, in some cases, being confused
even in the absence of specified Levels of Non-Compliance. Progress and with importance. For example, MISO
Measures or Levels of Non- Xcel maintain that Measures and Levels states that NERC appears to be assigning
Compliance.120 Thus, the NOPR of Non-Compliance do not necessarily risk to every sentence in each proposed
proposed to approve a Reliability need to be added to every Reliability Reliability Standard, including
Standard even though it may lack Standard. explanatory information and
Measures or Levels of Non-Compliance, 242. Constellation is concerned that administrative requirements, thereby
or where these elements contain the Levels of Non-Compliance do not confusing risk with importance. MISO
ambiguities, provided that the appear to be based on objective criteria, states that, while there may be many
Requirement is sufficiently clear and but rather appear to be based on things that a transmission operator does
enforceable. Where a Reliability arbitrary criteria and assumptions that are important, failure to do an
Standard would be improved by regarding the impact on reliability, important thing one time would not
providing missing Measures or Levels of which could lead to penalties that are necessarily jeopardize the
Non-Compliance or by clarifying excessive compared to the violation. Interconnection or cause a cascading
ambiguities with respect to Measures or MISO states that the original intent of failure.
Levels of Non-Compliance, the NOPR the Levels of Non-Compliance was to 245. MISO believes the definition of
proposed to approve the Reliability assign a scale based on the impact on risk should reflect the likelihood that
Standard and concurrently direct NERC the Interconnection. MISO asserts that something serious is likely to happen if
to modify the Reliability Standard many Requirements are rated at too high an event occurs. International
accordingly. a level and that many events that would Transmission, Constellation and MISO
240. The NOPR explained that the be rated ‘‘level 4’’ are really just believe that a high risk event should, in
common format of NERC’s proposed administrative requirements. It asserts and of itself, pose a significant threat to
that there are more ‘‘level 4’’ events than reliability and should not assume that
225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New
York v. FERC, 535 U.S. 1 (2002). other categories, when logic would multiple events occur simultaneously.
118 Although NERC does not formally define imply a pyramid structure with only a According to MISO, only a small
‘‘Measures,’’ NERC explains that they ‘‘are the few items at the highest ‘‘level 4.’’ MISO number of Requirements in the
evidence that must be presented to show states there should be a simplified Reliability Standards fit the true
compliance’’ with a standard and ‘‘are not intended
to contain the quantitative metrics for determining
process that measures the true impact definition of high risk. Constellation
satisfactory performance.’’ NERC Comments to the on reliability. MISO and Dynegy state maintains that rating too many
Staff Preliminary Assessment at 104. that there should also be an Requirements as high risk will water
119 ‘‘Levels of Non-Compliance’’ are established

‘‘administrative infraction’’ category down the Requirements, and could shift
criteria for determining the severity of non- created in addition to the current ‘‘low,’’ the focus of attention away from the
compliance with a Reliability Standard. The Levels
of Non-Compliance range from Level 1 to Level 4, ‘‘medium’’ and ‘‘high,’’ so that the truly high risk Requirements, leading to
with Level 4 being the most severe. enforcement of supporting tasks can be a less effective, less efficient reliability
120 NOPR at P 105–07. handled expeditiously. program.
ii. Commission Determination standard under consideration in the cannot meet the Commission’s
future. requirement that a Reliability Standard
246. With regard to the comments of 249. MISO, International must have a ‘‘clear criterion or measure
Nevada Companies, Progress and others, Transmission and Constellation raise of whether an entity is in compliance
we believe that the ERO should have concerns with NERC’s Violation Risk with a proposed Reliability
flexibility in initially developing Factors. The NERC board approved the Standard.’’ 121
appropriate Measures and Levels of Violation Risk Factors for Version 0 252. Progress and Xcel state that the
Non-Compliance. For example, the ERO Reliability Standards and submitted Commission should clarify that the
in the first instance should determine them to the Commission on February Measures and Levels of Non-
whether a Measure is necessary for 23, 2007. The Commission is reviewing Compliance are included solely for
every Requirement of a particular the Violation Risk Factors in a seprate guidance and that only violations of the
Reliability Standard, or whether every proceeding in Docket No. RR07–9–000. Requirements are subject to penalties.
Reliability Standard must have the same Thus, these issues are not ripe for Portland General maintains that the
number of Levels of Non-Compliance. consideration in this Final Rule. MISO, Measures are an integral part of each
Entities interested in developing International Transmission and Reliability Standard because entities
meaningful Measures and Levels of Constellation may raise concerns they will need to know the Measures so that
Non-Compliance should, we find, have with the Violation Risk Factors in they can build them into their
participate in the ERO’s Reliability that separate proceeding. compliance efforts from the beginning.
Standards development process to In a similar vein, National Grid states
ensure that their opinions are b. Enforcement Implications
that the lack of clear Measures or Levels
considered. i. Comments of Non-Compliance also makes it
247. With regard to the concerns of 250. Certain commenters, such as EEI, difficult for users, owners and operators
MISO and Constellation, we agree as a Northeast Utilities, APPA and TAPS, to tailor their businesses and practices
general principle that Levels of Non- state that Reliability Standards that lack toward compliance or to track ongoing
Compliance should be based on clear Measures or Levels of Non- compliance.
objective criteria and that a ‘‘level 4’’ Compliance should not be fully ii. Commission Determination
violation should reflect a commensurate enforced because they are not just and
level of severity in its impact on Bulk- reasonable and raise potential due 253. The Commission disagrees with
Power System reliability. However, we process concerns. APPA states that this commenters that a Reliability Standard
will allow the ERO in the first instance is equally true of Reliability Standards cannot reasonably be enforced, or is
to determine whether specific revisions that lack Violation Risk Factors or otherwise not just and reasonable, solely
to particular Reliability Standards are Violation Severity Levels because there because it does not include Measures
needed to address these concerns. While is not proper notice as to the amount or and Levels of Non-Compliance. The
we consider the appropriateness of range of monetary penalties to be Commission adopts the position it took
Measures and Levels of Non- assessed for a particular violation. in the NOPR that, while Measures and
Compliance in our standard-by-standard APPA recommends that the Levels of Non-Compliance provide
review, we believe in the first instance Commission approve Reliability useful guidance to the industry,
it is the responsibility of the ERO to Standards that lack Measures and compliance will in all cases be
develop meaningful Measures and Violation Severity Levels, but that, until measured by determining whether a
Levels of Non-Compliance, and those the deficiencies are corrected, require party met or failed to meet the
seeking to influence the process, as we NERC and Regional Entities to waive Requirement given the specific facts and
have already found, should participate imposition of monetary penalties. APPA circumstances of its use, ownership or
in the ERO’s Reliability Standards would, however, reserve the operation of the Bulk-Power System. As
development process. Likewise, we Commission’s right to impose monetary we explained in the NOPR, and reiterate
leave it to the ERO to determine initially sanctions where warranted and also here:
whether there is any merit in require compliance with NERC and The most critical element of a Reliability
developing a category of ‘‘administrative Regional Entity remedial action Standard is the Requirements. As NERC
infraction’’ as suggested by some directives for these Reliability explains, ‘‘the Requirements within a
commenters. standard define what an entity must do to be
Standards.
compliant * * * [and] binds an entity to
248. The Commission agrees with 251. WIRAB disagrees that Reliability certain obligations of performance under
NYSRC that, as a general matter, each Standards can be consistently enforced section 215 of the FPA.’’ If properly drafted,
Reliability Standard should be based solely on sufficiently clear and a Reliability Standard may be enforced in the
independently balloted in the enforceable Requirements. According to absence of specified Measures or Levels of
Reliability Standards development WIRAB, Levels of Non-Compliance are Non-Compliance.122
process. However, the Commission will needed to inform parties of the 254. APPA, WIRAB and others
not require the ERO to resubmit each of consequences of non-compliance. contend that, without Measures and
the 20 revised Reliability Standards to WIRAB is concerned that a complex Levels of Non-Compliance, a Reliability
the Reliability Standards development penalty structure that requires Regional Standard should not be enforced. We
process for separate consideration. We Entities to consider multiple subjective disagree. Where a Reliability Standard
do not believe such an action is required mitigating and aggravating factors will has Requirements that are sufficiently
by the statute and would otherwise compound the problems of missing and clear so that an entity is aware of what
unnecessarily delay implementation of ambiguous Measures and Levels of Non- it must do to comply, sufficient notice
the proposed Reliability Standards. Compliance. A simple penalty structure has been provided. While it can be
However, we expect that the ERO’s would reduce enforcement ambiguities, helpful to provide additional guidance
Reliability Standards development increase uniformity and promote greater
process will provide adequate clarity. FirstEnergy states that, without 121 FirstEnergy at 10–11, citing NOPR at P 16; see
opportunity for independent Measures and Levels of Non- also Order No. 672 at P 262, 321–37.
consideration by stakeholders of each Compliance, a Reliability Standard 122 NOPR at P 105 (footnote omitted).
regarding the amount or range of note that NERC and the Regional standard should be retained longer and
monetary penalties that may be assessed Entities should have further guidance as that there should be a retention period
for a particular violation, the absence of to how to use their enforcement of at least three years.
such information is not a defect that discretion from the Commission’s Policy 261. FirstEnergy states that individual
renders a Reliability Standard Statement on Enforcement.124 Further, record retention requirements on a
unenforceable. Where the Requirement if NERC does not submit Violation Risk standard-by-standard basis will create
in a Reliability Standard is sufficiently Factors and Violation Severity Levels confusion and will be difficult to track.
clear, an entity will know what it before NERC’s enforcement program It therefore suggests that the
should be doing to comply and will becomes effective, the Commission has Commission establish a uniform records
know that there are consequences for reserved the ability to take appropriate retention standard of ‘‘current calendar
failure to comply. Therefore, where a action to ensure that the penalty-setting year plus three years’’ for all proposed
Requirement in a Reliability Standard is process described in the Sanction Reliability Standards that include a data
sufficiently clear, we approve the Guidelines is operative.125 retention requirement. Similarly,
Reliability Standard even though it may Entergy states that data retention
c. Data Retention requirements established for the
lack Measures or Levels of Non-
Compliance. Where a Reliability i. Comments Reliability Standards should be uniform
Standard can be improved by providing 258. In the NOPR, the Commission and asks the Commission to direct the
missing Measures or Levels of Non- solicited comments regarding the ERO to implement records retention
Compliance or by clarifying ambiguities sufficiency of data retention requirements of no longer than three
with respect to Measures or Levels of requirements in the Reliability years.
Non-Compliance, we approve the Standards.126 NERC states that the 262. International Transmission and
Reliability Standard and concurrently compliance data retention requirement Entergy comment that only the relevant
direct NERC to modify it accordingly.123 is a defined element in the Reliability core reliability requirements of the
255. In response to FirstEnergy, where Standard template and that all data Reliability Standards should be subject
the Requirement in a Reliability retention requirements, even those that to data retention requirements.
Standard is sufficiently clear, that are currently missing, will be reviewed International Transmission states that,
Reliability Standard meets the and updated as part of the Reliability in instances where retaining evidence of
requirement that it must have a ‘‘clear Standards Work Plan. NERC requests compliance is impractical or where no
criterion or measure of whether an that the Commission not attempt to fix evidence exists of compliance, it is
entity is in compliance with a proposed specific data retention requirements on appropriate that no documentation be
Reliability Standard.’’ The fact that retained. Otherwise the record retention
the basis of comments received during
NERC, in certain circumstances, did not period should be no less than the
this proceeding. NERC would prefer that
include Measures and Levels of Non- prevailing audit frequency. Progress and
the Commission direct those comments
Compliance does not make an otherwise Xcel agree that inclusion of data
and any goals the Commission may have
clear Requirement unenforceable. retention metrics in the Reliability
with regard to data retention back to
Neither section 215 nor the Standards would be useful, but the
NERC for resolution through the
Commission should make clear that
Commission’s regulations require the Reliability Standards development
violations of the data retention metrics
level of specificity sought by process.
are not subject to separate penalties
FirstEnergy in order for a Reliability 259. SoCal Edison supports the data
under section 215 of the FPA.
Standard to be enforceable. retention requirements in the Reliability
256. Progress and Xcel seek Standards. APPA and SERC recommend ii. Commission Determination
clarification that Measures and Levels of that data retention requirements should 263. The Commission agrees that it is
Non-Compliance are included solely for be stated in each Reliability Standard appropriate for each Reliability
guidance and that only violations of the and determined on a case-by-case basis Standard to have a data retention
Requirements are subject to penalties. through the Reliability Standards requirement. We are not persuaded that
While the Commission generally agrees development process. a one-size fits all approach to data
that it is a violation of the Requirements 260. SERC agrees with NERC that an retention is appropriate, however,
that is subject to a penalty, we recognize appropriate retention period is five because different Reliability Standards
that because Measures are intended to years unless otherwise specified in a may require data to be retained for
gauge or document compliance, failure Reliability Standard. ISO-NE submits shorter or longer periods. Nor are we
to meet a Measure is almost always that any data retention policy persuaded that the Commission should
going to result in a violation of a established by the ERO should be in line set a data retention requirement for any
Requirement. with the five year civil penalty statute Reliability Standard for which one is
257. While we applaud NERC for of limitations for violations of NERC currently lacking. Therefore, the
adding additional levels of detail to its Standards, while APPA cautions that Commission will not prescribe a set data
compliance enforcement program, we detailed operational data may be so retention period to apply to all
voluminous that a five-year retention Reliability Standards. Instead, the
123 APPA raises concerns regarding the
requirement would be burdensome and Commission directs the ERO to review
completeness or adequacy of Measures and Levels of questionable value. MRO believes
of Non-Compliance in its discussion of specific and update the data retention
Reliability Standards. In such instances, APPA that the Reliability Standards retention requirements in each Reliability
argues that the Reliability Standard should not be period should be commensurate with Standard as it is reevaluated through its
enforced until current Measures and Levels of Non- operating and planning horizons, Reliability Standards development
Compliance are improved or, where incomplete, documentation related to a planning
new ones developed. Applying our above rationale process and submit the result for
to these particular circumstances, while the ERO

124 Enforcement of Statutes, Orders, Rules, and
Commission approval. In doing so,
should improve or develop Measures and Levels of NERC should take into account the
Non-Compliance where necessary, we will not Regulations, 113 FERC ¶ 61,068 (2005) (Policy
delay the enforcement of such Reliability Standards Statement on Enforcement). comments raised in this proceeding and
until the ERO develops such improvements or 125 January 2007 Compliance Order at P 93. should seek input from other industry
additions. 126 NOPR at P 107. stakeholders.
3. Ambiguities and Potential Multiple Reliability Standard that includes Standards that is presented in context as
Interpretations ambiguous requirements or lacks certain Requirements. According to MISO,
264. In the NOPR, the Commission technical features or specificity may users now are trying to figure out how
proposed that a proposed Reliability raise due process concerns if the to measure Requirements that are really
Standard that has Requirements that are required performance or performance supporting text. MISO believes that the
measurements are not ‘‘clear and process should be simplified by
so ambiguous as to not be enforceable
unambiguous.’’ Both in this docket and separating each Reliability Standard
should be remanded.127 A Reliability
on a going forward basis, EEI questions into its core requirements and
Standard that has sufficiently clear
whether proposed Reliability Standards supporting information.
Requirements, Measures and Levels of 271. Similarly, Constellation,
with various shortcomings or
Non-Compliance language and International Transmission and Dynegy
deficiencies are sufficiently clear to
otherwise satisfies the statutory comment that the Commission should
meet the legal standard of review.
standard of review should be approved. 268. EEI and Wisconsin Electric state distinguish between those Requirements
A proposed Reliability Standard that that it is not clear what ‘‘common in each Reliability Standard that are
has sufficiently clear Requirements, but interpretations’’ the Commission refers core requirements as opposed to
Measures or Levels of Non-Compliance to in the NOPR or whether they are supporting information, an explanatory
that are ambiguous (or none at all), accepted or known across the industry. statement, or an administrative process.
should be approved in some cases with Wisconsin Electric states that common International Transmission and Dynegy
a directive that the ERO develop clear interpretations and best practices must state that Measures should only apply to
and objective Measures and Levels of be clearly spelled out and made these core reliability requirements.
Non-Compliance language. In other available for review. These Reliant is also concerned that each
cases, where some ambiguity may exist interpretations should be incorporated Reliability Standard contains a great
but there is also a common into the audit guidelines. Further, EEI deal of explanatory text, formatted to
interpretation for certain terms based on states that common interpretations appear as enforceable obligations.
the best practices within the industry, should not supersede provisions that are 272. International Transmission,
the Commission proposed to adopt that clearly stated in a Reliability Standard. Reliant and MISO note that the
interpretation in the NOPR. According to EEI, if part of a proposed proposed Reliability Standards contain
a. Comments Reliability Standard is not clear, the many inherently ambiguous phrases or
NERC Reliability Standards terms that can be misapplied, including
265. NERC maintains that, even if the development process should be used to ‘‘adequate’’ or ‘‘adequately,’’
Commission believes that there is some clarify it. Further, EEI maintains that the ‘‘sufficient,’’ ‘‘immediate,’’ ‘‘where
degree of ambiguity in some of the Commission should require the ERO to technically feasible,’’ ‘‘as soon as
Reliability Standards, making the review all existing industry sources, possible’’ and ‘‘where practical.’’ Reliant
Reliability Standards mandatory enables such as the NERC glossary or Institute states that all ambiguous language must
NERC and Regional Entities to respond of Electrical and Electronics Engineers be eliminated before penalties can be
to questionable performance by (IEEE) standards, to supplement the assessed. MISO and Wisconsin Electric
clarifying to the responsible entity, and interpretation of Reliability Standards. state that, while use of such terms may
others, on a going-forward basis what Undocumented ‘‘common be acceptable in explanatory
behavior would constitute compliance interpretations’’ should be relied on information, if a term cannot be
with the Reliability Standards. only as a last resort. Moreover, EEI definitively and objectively defined, it
Thereafter, participants would know contends that, if such interpretations are should not appear in the core
how NERC and the Regional Entities to be used as a basis for assessing Requirements of a Reliability Standard.
were interpreting the Reliability compliance and enforcement, they must 273. Alcoa reiterates its concern that
Standards. According to NERC, this be clearly spelled out and made the Commission has not defined the
information would become part of the available in advance. target level of reliability of the Bulk-
public record and help to eliminate any 269. MISO notes that some Reliability Power System that the Reliability
ambiguity as to what constitutes Standards may have portions applicable Standards are intended to achieve.
compliant and noncompliant behavior to five or more entities and that there Further, Alcoa is concerned that the
under a Reliability Standard. In are situations where a particular proposed Reliability Standards are
contrast, if the Reliability Standards functional entity is not mentioned in the fragmented and overlap and in some
remain voluntary or temporarily ‘‘Applicability’’ section of the cases may result in inconsistent
unapproved, NERC contends that it and Reliability Standard, but they show up treatment of the same issue. Alcoa states
the Regional Entities will lack a legal in the Requirements. It believes that the that the ERO should move towards a
basis to compel corrective behavior. industry needs a database-style tool that more encompassing approach for
266. In contrast, Reliant urges the is a companion to the Reliability developing Reliability Standards in
Commission to either not approve Standards that permits any functional which a reliability goal is addressed
ambiguous Reliability Standards or entity to sort and find all requirements from all aspects in a more consistent
approve them without subjecting and supporting compliance information manner. Therefore, Alcoa maintains that
entities to penalties. The level of applicable to it. Such a tool would help the Commission should require NERC to
ambiguity in many cases appears to entities prevent oversights and also help engage in advance planning, mapping
violate the ‘‘just and reasonable’’ criteria NERC eliminate redundancy in the out what kind of reliability is adequate
for approval. It states that entities Reliability Standards. for the Bulk-Power System and then
should not be found in violation based 270. MISO also states that, in developing a plan to get there.
on retroactive interpretation of a developing the Version 0 Reliability
Reliability Standard. Standards, there was a conscious b. Commission Determination

267. EEI expresses concern that decision to include supporting 274. The Commission finds that it is
approval and enforcement of a information in the Reliability Standards essential that the Requirements for each
themselves. As a result, there is now Reliability Standard, in particular, are
127 NOPR at P 110–12. explanatory material in the Reliability sufficiently clear and not subject to
multiple interpretations. Where the of up to ‘‘$1 million per violation, per agree with EEI that a common
Requirements portion of a Reliability day’’ in addition to other remedies. The interpretation cannot supplant a
Standard is sufficiently clear (and no Commission has explained how it will provision that is clearly stated in a
other issues have been identified), we approach civil penalties in its Reliability Standard. We also agree,
approve the Reliability Standard. Upon Enforcement Policy Statement. The ERO however, that, over time, these
review of the Reliability Standards and has provided guidance in its compliance interpretations could be incorporated
the comments submitted in response to filings, and will continue to do so, as to either into the Reliability Standard itself
the NOPR, the Commission finds that how it will administer compliance and through the Reliability Standards
none of the Reliability Standards that enforcement functions. Clarity should development process or the ERO and
we approve today contain an ambiguity not be confused with certainty. The Regional Entity audit guidelines.
that renders it unenforceable or former is provided by the statute, the 279. The Commission disagrees with
otherwise unjust and unreasonable. As Final Rule and the aforementioned MISO that some Reliability Standards as
discussed in our standard-by-standard authorities. The latter is simply proposed are unclear with respect to
review, each Reliability Standard that unavailable in this context. Indeed, applicability. In certain situations, Bulk-
we approve contains Requirements that guaranteeing in advance specific Power System reliability depends on
are sufficiently clear as to be enforceable enforcement outcomes hampers more than one entity complying with a
and do not create due process concerns. necessary and appropriate enforcement Reliability Standard. Further, in certain
275. The underlying assumption of flexibility and poses the danger of users, situations, the Requirement of a
many of the commenters seems to be owners and operators of the Bulk-Power Reliability Standard may reference an
that the Reliability Standards must spell System simply calculating the cost of a entity that is not itself responsible for
out in minute detail all factual scenarios violation into the cost of doing compliance with the Reliability
that might violate a Requirement and business—a dynamic that would Standard, for example, where an entity
the precise consequences of that frustrate the very purpose of a responsible for compliance must report
violation. But due process requirements mandatory Reliability Standards system, information to or communicate with
do not go so far. Indeed, many which is to promote reliability. another entity, without that other entity
government regulatory schemes provide 277. The Commission agrees with being required to comply with the
far less specificity in terms of what is NERC that, even if some clarification of Reliability Standard. However, in its
required or proscribed, and yet those a particular Reliability Standard would review of Reliability Standards, the ERO
regulations are routinely enforced.128 be desirable at the outset, making it should ensure that, if a functional entity
Indeed, many tariffs on file with the mandatory allows the ERO and the must comply with the Reliability
Commission do not specify every Regional Entities to provide that Standards, it must be mentioned in the
compliance detail, but rather provide clarification on a going-forward basis Applicability section. In this regard, we
some level of discretion as necessary to while still requiring compliance with encourage the ERO to consider
carry out a particular act. This does not Reliability Standards that have an development of a database-style tool
mean the tariffs are unenforceable; important reliability goal. Further, we that is a companion to the Reliability
rather, it means that, if a dispute arises support the ERO’s efforts to review each Standards that permits any user, owner
over compliance and there is a of the current Reliability Standards to or operator to sort and find all
legitimate ambiguity regarding a improve them and provide yet further Requirements applicable to it.
particular fact or circumstance, that clarity. We encourage all interested 280. In response to MISO,
entities, especially those that have Constellation, International
ambiguity can be taken into account in
identified specific suggestions for Transmission and Dynegy, the
the exercise of the Commission’s
improvement, to participate in the Commission believes that the
enforcement discretion. Therefore, we
ERO’s Reliability Standards Requirements in each Reliability
find that the Reliability Standards must
development process. Standard are core obligations and that
strike a balance between a level of
278. The Commission finds that these the Measures and Levels of Non-
specificity that places users, owners and
Reliability Standards, with the Compliance provide useful guidance to
operators on notice of what is required,
interpretations provided by the the industry and can be supporting
and a level of generality that
Commission in the standard-by- information, an explanatory statement
encompasses unanticipated but serious
standard discussion, meet the statutory or an administrative process. As
actions or omissions that could affect criteria for approval as written and discussed above, NERC is to enforce the
Bulk-Power System reliability. We are should be approved. In any event, Requirements in a Reliability Standard.
satisfied that the Requirements portions penalties are warranted under section The Measures are part of the Reliability
of each Reliability Standard that we 215 only when an entity knew or Standards and, if not met, are almost
approve in this Final Rule appropriately reasonably should have known that its always going to result in a violation of
strike this balance. acts or omissions were contrary to the a Requirement.
276. Some commenters argue that 281. The Commission has previously
Reliability Standards. Wisconsin
certain Reliability Standards require Electric seems to interpret the addressed Alcoa’s concerns about
additional specificity or else users, Commission as requiring that users, defining the target level of reliability of
owners and operators will not owners and operators of the Bulk-Power the Bulk-Power System that the
understand the consequences of a System comply with best practices Reliability Standards are intended to
violation. This notion is similarly under the Reliability Standards. We achieve. In the January 2007
misplaced because the potential (if not disagree. While we appreciate that many Compliance Order, the Commission
actual) consequences for any violation entities may perform at a higher level directed the ERO to establish a
are clearly spelled out—the statute than that required by the Reliability stakeholder process to define adequate
permits the ERO to assess civil penalties Standards, and commend them for level of reliability.129 While the
128 Many sections of the FPA, including section
doing so, the Commission is focused on Commission agrees that this is a
215, use such terms as just and reasonable or
what is required under the Reliability worthwhile effort, we disagree with
unduly discriminatory or preferential or even the Standards; we do not require that they
public interest. exceed the Reliability Standards. We 129 January 2007 Compliance Order at P 16.
Alcoa that Reliability Standards cannot b. Commission Determination 288. Further, the NOPR proposed to
be approved until this analysis is done. 285. The Commission fully intends to require supplemental information
Such analysis is not required by the address technical adequacy on a regarding any Reliability Standard that
statute, and Alcoa has not identified any standard-by-standard basis and the requires a regional reliability
compelling reason why the proposed Commission agrees that the ability of a organization to fill in missing criteria or
Reliability Standards are defective Regional Entity to propose more procedures. The Commission explained
without the benefit of such analysis. stringent Reliability Standards to meet that, ‘‘where important information has
the reliability needs of that region does not been provided to us to enable us to
4. Technical Adequacy complete our review, we are not in a
not justify the weakening of continent-
282. In the NOPR, we stated that we wide Reliability Standards. In this position to approve those Reliability
are cautious about drawing any general regard, we note that, in the January 2007 Standards.’’ 134 Therefore, the NOPR
conclusions about technical adequacy as Compliance Order, we directed the ERO proposed to not approve or remand such
we consider this a matter that can only to closely monitor the voting results for Reliability Standards until all necessary
be addressed on a standard-by-standard Reliability Standards and to report to us information is provided, although
basis. Where we have specific concerns quarterly for the next three years its compliance would still be expected as a
regarding whether a Requirement set analysis of the voting results, including matter of good utility practice.
forth in a proposed Reliability Standard trends and patterns that may signal a a. Comments
may not be sufficient to ensure an need for improvement in the voting
adequate level of reliability or 289. NERC, APPA and TAPS support
process, such as the rejection of a
represents a ‘‘lowest common the Commission’s proposal to defer
Reliability Standard and subsequent
denominator’’ approach, we address consideration of fill-in-the-blank
ballot approval of a less stringent
those concerns in the context of that standards. APPA believes that the
version of the Reliability Standard.131
particular Reliability Standard.130 Commission’s proposal balances the
The Commission will use this
need for greater uniformity against the
a. Comments information to evaluate whether it needs
need for regional flexibility.
to re-examine the Reliability Standard 290. NERC agrees with the
283. NYSRC shares the Commission’s development procedure. In doing so, the Commission’s proposal to hold 24
concerns regarding the use of a ‘‘lowest Commission will also be sensitive to Reliability Standards (mainly fill-in-the-
common denominator’’ approach in the concerns that ‘‘lowest common blank standards) as pending at the
development of Reliability Standards denominator’’ Reliability Standards are Commission until further information is
and agrees that this concern can be being developed. provided, and to require that Bulk-
addressed only on a standard-by- 286. The Commission agrees that its
Power System users, owners and
standard basis. NYSRC maintains that, staff should participate in and support
operators follow these pending
in commenting on pending ERO the Reliability Standards development
standards as ‘‘good utility practice’’
Reliability Standards, the NYSRC processes, to the extent consistent with
pending their approval by the
believed could weaken existing its regulatory role. The Commission’s
Commission. NERC also agrees that it
Reliability Standards, the NERC drafting participation in those processes will not
and the Regional Entities can monitor
team responded that a region is free to constitute its entire assessment of the
compliance with these pending
develop more stringent Reliability technical adequacy of a proposed
standards using the ERO’s authority
Standards. NYSRC maintains that the Reliability Standard. The Commission
pursuant to § 39.2(d) of the
ability of a Regional Entity to propose will also conduct an assessment during
Commission’s regulations. NERC
more stringent Reliability Standards to its rulemaking or order process after the
believes this approach is necessary to
meet the reliability needs of that region Reliability Standard is submitted by the
ensure that there will be no gap during
does not justify the weakening of ERO to the Commission for approval.
the transition from the current voluntary
continent-wide Reliability Standards by 5. Fill-in-the-Blank Standards reliability regime to mandatory and
use of a ‘‘lowest common denominator’’ enforceable Reliability Standards.
approach to achieve greater support for 287. The NOPR explained that certain
Reliability Standards, referred to as fill- 291. While TAPS supports deferring
a proposed Reliability Standard. NYSRC consideration of fill-in-the-blank
recommends that the Commission in-the-blank standards, require the
regional reliability organizations to standards, it urges the Commission to
reaffirm that it will carefully review view with skepticism regional
subsequent proposed ERO Reliability develop criteria for use by users, owners
or operators within each region.132 In differences within an Interconnection
Standards to ensure that they are that are not justified by physical
technically adequate and do not weaken the NOPR, the Commission expressed
concern regarding the potential for the differences. It states that such regional
the current level of reliability. Reliability Standards, even if more
284. ATC agrees with the Commission fill-in-the-blank standards to undermine
uniformity. With regard to NERC’s stringent, can wreak havoc on
that the industry, organized in Regional competitive markets, especially where
Entities under the ERO, must continue stated intention to submit an action plan
and schedule for completing the fill-in- entities within the same transmission
to be wholly accountable for the system or RTO footprint are subject to
technical adequacy of the Reliability the-blank standards, the NOPR
explained that NERC’s plan must be different regional Reliability Standards.
Standards. ATC thus suggests that the For example, TAPS maintains that
Commission’s efforts to ‘‘independently consistent with the discussion in Order
No. 672 regarding uniformity and the inconsistent regional underfrequency
assess the technical adequacy of any load shedding (UFLS) Reliability
proposed Reliability Standard’’ focus on limited circumstances in which a
regional difference would be Standards not justified by physical
Commission participation in and differences impose unjust burdens on
permitted.133
support of the Reliability Standards joint action agencies whose integrated

development processes at NERC and at 131 January load is split between NERC regions.
2007 Compliance Order at P 18.
the regions. 132 NOPR at P 116. Further, according to TAPS, a region’s
133 Id. at P 121, citing Order No. 672 at P 292;
130 NOPR at P 115. ERO Certification Order at P 274. 134 NOPR at P 123.
choice may reflect the historical lack of forma OATT, effective when the differences with skepticism, while
a balanced process for developing Reliability Standards become mandatory others such as MISO and Wisconsin
Reliability Standards at the regional in June 2007, because a reliability- Electric favor some regional variation.
level, allowing certain classes of market related violation should not be subject The Commission affirms the approach
participants to determine the region’s to two separate enforcement schemes. that it articulated in the NOPR.137 We
choice. 295. NPCC recommends that any of share commenters’ concerns regarding
292. According to ISO–NE, if the the 24 fill-in-the-blank standards that the potential for fill-in-the-blank
Commission withholds approval of are required to be Reliability Standards standards to undermine uniformity.
these 24 Reliability Standards, the should be developed as regional While uniformity is the goal with
Commission should also withhold Reliability Standards by the Regional respect to Reliability Standards, we
approval of Reliability Standards that Entity for compliance monitoring and recognize that it may not be achievable
rely, by reference, on such fill-in-the- enforcement, backed by the Commission overnight. Over time, we would expect
blank Reliability Standards.135 ISO–NE and Canadian provincial regulatory and/ that the regional differences will decline
submits that, until the missing or governmental authorities. and uniform and best practices will
information has been provided in the 296. California PUC states that the develop. In Order No. 672, the
cross-referenced fill-in-the-blank NOPR seeks national uniformity Commission identified two instances
Reliability Standard, it will be notwithstanding regional differences. It where regional differences may be
impossible for the applicable entities to states that, in the Western permitted, i.e., regional differences that
determine exactly what criteria they are Interconnection, there are 15 existing, are more stringent than continent-wide
expected to satisfy. APPA raises similar enforceable WECC standards pursuant Reliability Standards (including those
concerns, and suggests that the to the WECC Reliability Management that address matters not addressed by a
Commission approve such Reliability System (RMS) that overlap the proposed continent-wide Reliability Standard)
Standards but not enforce them until the mandatory Reliability Standards. Five of and a regional difference necessitated by
cross-referenced fill-in-the-blank these WECC standards fall into the fill- a physical difference in the Bulk-Power
Reliability Standards are approved. in-the-blank standards category. System.
293. MISO and Wisconsin Electric However, there are three additional 299. The ERO should develop the
believe that the fill-in-the-blank WECC RMS standards already in effect needed information for the Commission
standards may be acceptable in certain in the Western Interconnection that do to act on the fill-in-the-blank standards
situations. They give regions some not have a corresponding proposed consistent with these criteria. If a
flexibility in implementation, and allow Reliability Standard. California PUC regional difference is warranted, a
the deployment of a Reliability Standard asks that the Commission consider regional fill-in-the-blank proposal must
where it would be difficult to get approving these additional three be developed through an approved
consensus across several regions. They standards for enforcement in the regional Reliability Standards
also move the reliability agenda forward Western Interconnection. California development process, and submitted to
on issues that are historically under PUC states that there is no reason for the the ERO. If approved by the ERO, the
state jurisdiction, and some are an Commission to exclude any WECC ERO will then submit it to the
accommodation to those regions that standard already in effect, and that Commission for approval.
want to have a higher Reliability ignoring these established standards 300. The Commission disagrees with
Standard. when the Reliability Standards are ISO–NE, ISO/RTO Council and APPA
294. EEI agrees with the NOPR that, scheduled to go into effect can threaten that 16 additional Reliability Standards
regarding Reliability Standards for reliability already being achieved in the should not be acted on or enforced at
which the Commission needs additional Western Interconnection. this time. The fact that a Reliability
information, compliance in the interim Standard simply references another,
would be expected as a matter of good b. Commission Determination pending Reliability Standard, one that is
utility practice. While EEI agrees with 297. The Commission requires not being approved or remanded here,
this approach, it also cautions that the supplemental information for any does not alone justify not approving the
good utility practice provision of an Reliability Standard that currently former Reliability Standard. Rather,
OATT should not be used as an requires a regional reliability such a reference may be considered in
alternative means of enforcement organization to fill in missing criteria or an enforcement action, if relevant, but is
outside of section 215 of the FPA. procedures. Where important not a reason to delay approval of
Similarly, FirstEnergy posits that good information has not yet been provided enforcement of the Reliability Standard.
utility practice is subject to to us to enable us to complete our We find that the Reliability Standards
interpretation and by itself does not review, we are not in a position to that reference a pending Reliability
provide the level of guidance needed for approve or remand those Reliability Standard contain the appropriate level
a mandatory and enforceable Reliability Standards.136 Accordingly, we will not of specificity necessary to provide
Standard. It asserts that the Commission approve or remand such Reliability notice to users, owners and operators of
should not impose compliance burdens Standards until the ERO submits further the Bulk-Power System as to what is
indirectly where it has not imposed information. Until such information is required.
them directly. Xcel asserts that the provided, compliance with fill-in-the- 301. The Commission has reviewed
Commission should rescind the blank standards should continue on a the 16 Reliability Standards identified
Reliability Policy Statement that defines voluntary basis, and the Commission by commenters as referencing a
good utility practice under the pro considers compliance with such Reliability Standard that the
Reliability Standards to be a matter of Commission proposed not to approve or
135 ISO–NE and ISO/RTO Council state that the good utility practice. remand. It appears that many of these
following Reliability Standards are dependent upon 298. As noted above, some Reliability Standards either refer to the
‘‘fill-in-the-blank’’ standards: FAC–013–1, MOD– commenters such as TAPS urge the process of collecting data or reference
010–0, MOD–012–0, MOD–016–1, MOD–017–0,
MOD–018–0, MOD–019–0, MOD–021–0, PRC–004– Commission to view most regional Requirements that entities are generally
1, PRC–007–0, PRC–008–0, PRC–009–0, PRC–015–
0, PRC–016–0, PRC–018–1 and PRC–021–0. 136 NOPR at P 123. 137 Id. at P 121 (footnote omitted).
aware of because they have already been approved by the Commission under be exempt from Requirement R2 in
following these Reliability Standards on section 215. BAL–001–0, which requires that the
a voluntary basis. For example, MOD– 303. With regard to California PUC’s average area control error (ACE) for each
012–0 requires transmission and comments, we recognize the desire to of the six ten-minute periods during the
generator owners to provide data to the retain certain existing regional hour must be within specific limits, and
regional reliability organization to standards that apply to the Western that a balancing authority achieve 90
support system modeling required by Interconnection, which are currently percent compliance. This Requirement
MOD–013–0. The NOPR proposed not enforceable pursuant to WECC’s RMS is referred to as Control Performance
to approve or remand MOD–013–0 program. However, these regional Standard 2 (CPS2).
partly because MOD–013–0 requires Reliability Standards have not been 310. NERC explains that ERCOT
development of dynamics data submitted to the Commission by the requested a waiver of CPS2 because: (1)
requirements and reporting procedures ERO pursuant to the process set forth in ERCOT, as a single control area 140
that have not been submitted for our Order No. 672. Accordingly, California asynchronously connected to the
review. In addition, we proposed not to PUC’s concerns are beyond the scope of Eastern Interconnection, cannot create
act on MOD–013–0 partly because it this proceeding. The Commission will inadvertent flows or time errors in other
applies to a regional reliability review the WECC standards once they control areas and (2) CPS2 may not be
organization and the Commission was are approved by the ERO and submitted feasible under ERCOT’s competitive
not persuaded that a regional reliability to the Commission for approval. balancing energy market. In support of
organization’s compliance with a F. Discussion of Each Individual this argument, ERCOT cites to a study
Reliability Standard can be enforced by Reliability Standard that it performed showing that under
NERC. That is not the case with MOD– the new market structure, the ten
012–0, which applies to entities that are 304. The NOPR reviewed each
control areas in its region individually
clearly users, owners and operators of proposed Reliability Standard and
were able to meet CPS2 standards while
the Bulk-Power System. Although provided an analysis by chapter
the aggregate performance of the ten
MOD–012–0 references MOD–013–0, its according to the categories of Reliability
control areas was not in compliance.
applicability to a subset of users, owners Standards defined in NERC’s petition.
Since requesting the waiver from CPS2,
and operators is not at issue. Each chapter began with an
ERCOT has adopted section 5 of the
Accordingly, the Commission denies the introduction to the category, followed
ERCOT protocols which identify the
requests to leave pending this and by a discussion of each proposed
necessary frequency controls needed for
similar data-related Reliability Reliability Standard. The Final Rule
reliable operation in ERCOT.
Standards and reaffirms the NOPR takes a similar approach.
311. In the NOPR, the Commission
approach described above. 1. BAL: Resource and Demand proposed to approve the ERCOT
302. While EEI and others agree with Balancing regional difference and have the ERO
the proposal that, in the interim, 305. The six Balancing (BAL) submit a modification of the ERCOT
compliance with Reliability Standards Reliability Standards address balancing regional difference to include the
for which the Commission needs resources and demand to maintain requirements concerning frequency
additional information should continue interconnection frequency within response contained in section five of the
as a matter of good utility practice, they prescribed limits. ERCOT protocols.141
caution that this should not lead to an
alternative means of enforcement a. Real Power Balancing Control i. Comments
outside of section 215 of the FPA. In our Performance (BAL–001–0)
312. No comments were filed on this
Reliability Policy Statement, we 306. The purpose of this Reliability regional difference.
explained that compliance with NERC Standard is to maintain Interconnection
Reliability Standards (or more stringent steady-state frequency within defined ii. Commission Determination
regional standards) is expected as a limits by balancing real power demand 313. The Commission approves the
matter of good utility practice as that and supply in real-time. The proposed ERCOT regional difference as
term is used in the pro forma OATT.138 Reliability Standard would apply to mandatory and enforceable. Order No.
The Commission continues to expect balancing authorities. In the NOPR, the 672 explains that ‘‘uniformity of
compliance with such Reliability Commission proposed to approve BAL– Reliability Standards should be the goal
Standards as a matter of good utility 001–0 as mandatory and enforceable.139 and the practice, the rule rather than the
practice. That being said, the
i. Comments exception.’’ 142 However, the
Commission agrees that retaining a dual
Commission has stated that, as a general
mechanism to enforce Reliability 307. APPA agrees with the
matter, regional differences are
Standards both as good utility practice Commission that BAL–001–0 is
permissible if they are either more
and under section 215 of the FPA is sufficient for approval as a mandatory
stringent than the continent-wide
inappropriate; the OATT only applies to Reliability Standard.
Reliability Standard, or if they are
entities subject to our jurisdiction as
ii. Commission Determination necessitated by a physical difference in
public utilities under the FPA, while
308. For the reasons stated in the the Bulk-Power System.143 Regional
section 215 defines more broadly our
NOPR, the Commission approves BAL– differences must still be just, reasonable,
jurisdiction with respect to mandatory
001–0 as mandatory and enforceable. not unduly discriminatory or
Reliability Standards. We therefore do
not intend to enforce, as an OATT b. Regional Difference to BAL–001–0: 140 At the time NERC granted this regional
violation, compliance with any
ERCOT Control Performance Standard 2 difference, the term ‘‘control area’’ was used instead
Reliability Standard that has not been of ‘‘balancing authority.’’ For purposes of this
309. NERC approved a regional discussion, they are the same.
138 Policy
Statement on Matters Related to Bulk difference for ERCOT by allowing it to 141 Id. at P 143.
142 Order No. 672 at P 290.
Power System Reliability, 107 FERC ¶ 61,052 at P
23–26 (2004) (Reliability Policy Statement). 139 NOPR at P 136. 143 Id. at P 291.
preferential and in the public i. General Comments ERO has the responsibility to assure the
interest.144 318. Constellation supports the reliability of the Bulk-Power System and
314. The Commission finds that Commission’s proposals with respect to should be the entity that modifies the
ERCOT’s approach under section 5 of BAL–002–0. Disturbance Recovery Period as
the ERCOT protocols appears to be a 319. Xcel notes that this Reliability necessary. As identified in the
more stringent practice than Standard would apply to a reserve Applicability Issues section, the
Requirement R2 in BAL–001–0 and sharing group, which is not defined in Commission directs the ERO to modify
therefore approves the regional the NERC Functional Model but this Reliability Standard to substitute
difference. generally consists of a group of separate Regional Entity for regional reliability
315. As proposed in the NOPR, the entities. Xcel states it is not clear how organization as the compliance
Commission directs the ERO to file a compliance and penalties would be monitor.150 The remaining
modification of the ERCOT regional applied to a reserve sharing group and modifications to this Reliability
difference to include the requirements seeks clarification from the Standard proposed in the NOPR are
concerning frequency response Commission. As a second concern, Xcel discussed below.
contained in section 5 of the ERCOT states it is not clear who calculates ACE iii. Including Demand-Side Management
protocols. As with other new regional between a balancing authority and a as a Resource
differences, the Commission expects reserve sharing group and states that the
that the ERCOT regional difference will (a) Comments
Commission should require the ERO to
include Requirements, Measures and clarify this issue when modifying the 322. SMA supports the Commission’s
Levels of Non-Compliance sections. Reliability Standard. proposed requirement explicitly
allowing demand-side response as a
c. Disturbance Control Performance ii. Commission Determination resource and agrees with the
(BAL–002–0)
320. The Commission approves BAL– Commission that DSM and direct load
316. The stated purpose of this 002–0. With regard to Xcel’s concern, control should be considered on the
Reliability Standard is to use the NERC glossary defines a reserve same basis as conventional generation
contingency reserves to balance sharing group as ‘‘two or more balancing or any other technology with respect to
resources and demand to return authorities that collectively maintain, contingency reserves. SMA states that
Interconnection frequency to within allocate, and supply operating reserves nationwide its members provide over
defined limits following a reportable required for each balancing authority’s 1,300 MW of demand that is curtailable
disturbance. The proposed Reliability use in recovering from contingencies on 10 minutes notice or less and
Standard would apply to balancing within the group.’’ 149 The Commission indicates that most of this curtailable
authorities, reserve sharing groups 145 notes that the Reliability Standard’s capacity is committed to utilities
and regional reliability organizations. Requirements and Levels of Non- pursuant to retail tariffs or contracts for
317. In the NOPR, the Commission Compliance are applicable to both operating reserves.
proposed to approve Reliability balancing authorities and reserve 323. FirstEnergy states that demand-
Standard BAL–002–0 as mandatory and sharing groups and are clear as to the side resources should be included as
enforceable.146 In addition, pursuant to roles and responsibilities of these another tool for the balancing authority
section 215(d)(5) of the FPA and entities. The ERO will be responsible for to use in meeting the control
§ 39.5(f) of our regulations, the ensuring compliance with this performance and disturbance control
Commission proposed to direct NERC to Reliability Standard for all applicable standards. According to FirstEnergy,
submit a modification to BAL–002–0 entities. A reserve sharing group, demand-side resources should mimic
that: (1) Includes a Requirement that however, as an independent the requirements of generation resources
explicitly allows demand-side organization, is able to determine on its but with a decrease in load rather than
management (DSM) to be used as a own as a commercial matter whether an increase in generation response.
resource for contingency reserves; (2) any penalties related to non-compliance 324. Process Electricity Committee
develops a continent-wide contingency should be re-apportioned among the generally supports the proposal to treat
reserve policy; 147 (3) includes a members of the group. With regard to demand response resources in a manner
Requirement that measures response for Xcel’s concern about which entity similar to conventional generation so
any event or contingency that causes a calculates ACE, it is not clear from long as such demand resources
frequency deviation; 148 (4) substitutes Xcel’s comments what it believes needs participate in such DSM programs
the ERO for the regional reliability clarification. In general, we understand voluntarily and comply with all
organization as the compliance monitor that all balancing authorities are applicable Reliability Standards and
and (5) refers to the ERO rather than the required to calculate ACE with the requirements. Process Electricity
NERC Operating Committee in exception of balancing authorities that Committee recommends that the
Requirements R4.2 and R6.2. use dynamic schedules to provide all Commission modify its proposal to
regulating reserves from another clarify that any such demand response
144 Id. balancing authority. As such, reserve resources may be used only with the
145 A ‘‘reserve sharing group’’ is a group of two sharing groups will not calculate ACE; end-user’s express written agreement
or more balancing authorities that collectively they will rely on balancing authorities pursuant to clear contractual rights and
maintain, allocate and supply operating reserves. obligations.
See NERC Glossary at 15.
to do so.
146 NOPR at P 151. 321. The Commission adopts the 325. NY Major Consumers states that
147 The NOPR explained that this could be NOPR’s proposal to require the ERO to many large end use customers currently
accomplished by modifying Requirement R2 or develop a modification to the Reliability have the ability to provide all ancillary
developing a new Reliability Standard. Standard that refers to the ERO rather
148 This proposed Requirement addressed 150 See Applicability Issues: Regional Reliability
than to the NERC Operating Committee
modifications to Requirement R3.1 which are Organizations, supra section II.C.5. This directive
described in the ‘‘Disturbance Control Standard and in Requirements R4.2 and R6.2. The applies generically to all Reliability Standards that
the Associated Reserve Requirement’’ section of this identify the regional reliability organization as the
Final Rule. 149 NERC Glossary at 15. compliance monitor.
services, or are capable of providing (b) Commission Determination that the ERO would determine what
these services in the near future and that 330. We direct the ERO to submit a technical requirements DSM would
this capability has been recognized by modification to BAL–002–0 that need to meet to provide contingency
Commission staff in Docket No. AD06– includes a Requirement that explicitly reserves.155 While ISO–NE, APPA and
2–000, Assessment of Demand Response provides that DSM may be used as a SDG&E suggest that there is limited
Resources. NY Major Consumers further resource for contingency reserves, access to qualified DSM or that DSM
states that there remains some subject to the clarifications provided may not be optimal from a technical
ambiguity in the proposed Reliability below. standpoint, we note that SMA’s
Standards as to the eligibility of 331. The Commission disagrees with comments state that its members are
technically-qualified loads to provide APPA that we should not explicitly currently providing over 1,300 MW of
these services and requests that the identify any type of capacity as a contingency reserve service through
Commission eliminate any such resource for meeting reserve retail tariffs or contracts. Alcoa states
uncertainty and amend the proposed contingencies. The Commission believes that it could use the digital controls of
Reliability Standards as further that listing the types of resources that its aluminum smelters to provide load
described in its comments. can be used to meet contingency control that would be superior to
326. Some commenters 151 disagree reserves makes the Reliability Standard conventional generation in terms of
with the Commission’s proposal to add clearer, provides users, owners and ramp rate and speed of response. Also,
a requirement explicitly allowing DSM operators of the Bulk-Power System a the Commission notes that New Zealand
as a resource for contingency reserves. set of options to meet contingency is currently using DSM for contingency
NERC, APPA and ISO–NE state that this reserves, and treats DSM on a reserves.156 Nonetheless, our
requirement is too prescriptive. NERC comparable basis with other resources. requirement is that BAL–002–0
maintains that explicitly allowing DSM 332. Many commenters argue that the explicitly provides that demand
goes well beyond the bounds of current Commission’s proposed directive that resources may be used as a resource for
utility practice and suggests an would explicitly allow DSM as a contingency reserves without requiring
improved directive would simply place resource for contingency reserves is too the use of a specific resource or type of
DSM on the same basis as other prescriptive. Concerns in this area resource.
resources. APPA states that DSM generally fall into three categories: (1) 335. Accordingly, the Commission
resources should be included as an that DSM should be treated on a directs the ERO to explicitly allow DSM
option for a balancing authority to use comparable basis as other resources; (2) as a resource for contingency reserves,
in meeting its reserve obligations, but that the Reliability Standard should be and clarifies that DSM should be treated
that the Commission should not require based on meeting an objective as on a comparable basis and must meet
NERC to modify the Reliability Standard opposed to stating how that objective is similar technical requirements as other
to explicitly identify DSM or any other met and (3) that DSM may not be resources providing this service.157
type of capacity as a resource for technically capable of providing this iv. Continent-Wide Contingency Reserve
meeting reserve contingencies. service. Policy
327. In addition, ISO–NE states that 333. With regard to the first concern,
DSM, to which it has access, responds (a) Comments
the Commission clarifies that the
to capacity requirements and may not purpose of the proposed directive is to 336. The Commission proposed in the
provide relief on a contingency basis, ensure comparable treatment of DSM NOPR to direct the ERO to develop one
but states that it has a limited number with conventional generation or any uniform continent-wide contingency
of resources that could meet this other technology and to allow DSM to reserves policy. Specifically, the
requirement. SDG&E argues that DSM be considered as a resource for Commission noted that the appropriate
participation in real-time is often contingency reserves on this basis mix of operating reserves, spinning
unknown in comparison to without requiring the use of any reserves and non-spinning reserves
conventional generation and further particular contingency reserve should be addressed on a consistent
states that the NOPR does not explain option.153 The proposed directive as basis and consideration should be given
how DSM could be used in real-time written achieves that goal. With regard to the amount of frequency response
dispatch. Further, SDG&E maintains to the second concern, we believe that from generation or load needed to
that the Commission has not established this Reliability Standard is objective- assure reliability. The Commission
a clear and workable definition of DSM. based and we reiterate that we are proposed that this policy be neutral as
328. MISO states that it is not clear simply attempting to make it inclusive to the source of the contingency reserves
about the meaning and questions the of other technologies that may be able in terms of ownership or technology.
value of the Commission’s proposed to provide contingency reserves, and are 337. SMA supports the Commission’s
requirement to include DSM as a not directing the use of any particular proposal to develop a continent-wide
contingency reserve resource.152 type of resource. By specifying DSM as contingency reserve policy and agrees
329. While EEI and MRO do not a potential resource for contingency with the Commission that the policy
disagree with the Commission’s reserves, the Commission is clarifying should be neutral as to the source of the
proposed requirement to include DSM, the substance of the Reliability
155 Id. (‘‘We leave it to the ERO to develop
EEI states that both generation and Standard.154
proposed Reliability Standards that appropriately
controllable load should comply with 334. With regard to commenters’ balance reliability principles and implementation
the same requirements to the maximum concern that DSM may not be features.’’)
extent possible, while MRO suggests technically possible, we first clarify that 156 See http://www.electricitycommission.govt.nz/
that this requirement should also in order for DSM to participate, it must pdfs/rulesandregs/rules/rulespdf/Part-C-sched-C5-
include study and testing requirements. be technically capable of providing 1Dec06.pdf.

157 ERCOT presently uses ‘‘Load Acting as a
contingency reserve service. We expect Resource’’ as part of its reserves which are triggered
151 See
NERC, ISO–NE, APPA and SDG&E. at a specified frequency. This is similar to but not
152 MISO–PJM 153 NOPR at P 157.
comments jointly with respect to the same as generation and is an example of how
IRO–006–3 only. 154 Order No. 672 at P 260. load can perform as a resource.
contingency reserves in terms of ‘‘[w]hile the Commission believes it is wide contingency reserve policy
ownership or technology. EEI and appropriate for balancing authorities to through the Reliability Standards
FirstEnergy both support development have different amounts of contingency development process, which should
of a continent-wide contingency reserve reserves, these amounts should be based include uniform elements such as
policy but suggest the need for regional on one uniform continent-wide certain definitions and requirements as
variations across the Bulk-Power contingency reserves policy. The policy discussed in this section. The
System. For instance, FirstEnergy should be based on the reliability risk of Commission clarifies that the continent-
suggests that a one percent peak load not meeting load associated with a wide policy can allow for regional
spinning requirement in the Eastern particular balancing authority’s differences pursuant to Order No. 672,
Interconnection could be the equivalent generation mix and topology.’’ 159 In
but that the policy should include
of a two percent spinning requirement addition, the contingency reserves
procedures to determine the appropriate
in the Western Interconnection. should include sufficient frequency
338. Other commenters 158 disagree responsive resources such that the net mix of operating reserves, spinning and
with the Commission’s proposal to have frequency response of the balancing non-spinning, as well as requirements
NERC develop a continent-wide authority is sufficient for either pertaining to the specific amounts of
contingency reserve policy and instead interconnected or isolated operation.160 operating reserves based on the load
support an Interconnection-wide or 341. The Commission agrees with characteristics and magnitude, topology,
regional approach. APPA, LPPC and MISO that certain terms such as and mix of resources available in the
MISO state that a continent-wide policy ‘‘spinning’’ and ‘‘non-spinning’’ or any region.
would not work because of regional other term used to describe contingency
v. Disturbance Control Standard and the
differences such as size, topology, mix or operating reserves could be
of resources and likely contingencies. developed continent-wide. Associated Reserve Requirement
While APPA supports the Commission’s Additionally, we believe the technical (a) Comments
proposal that contingency reserves requirements for resources that provide
should be based on the reliability risk of contingency reserves should not change 346. The Commission identified two
a balancing authority not meeting load, from region to region. items in the Disturbance Control
it favors an Interconnection-wide 342. We believe a continent-wide Standard section of the NOPR. In the
approach. MISO suggests that defining contingency reserves policy would first item, the Commission agreed with
certain terms such as ‘‘spinning,’’ ‘‘non- assure that there are adequate the interpretation that the 15 minute
spinning,’’ ‘‘contingency’’ and magnitude and frequency responsive limit on a reportable disturbance was
‘‘replacement’’ and having common contingency reserves in each balancing ‘‘absolute, objective, and measurable’’
calculations would be of value. It authority. This will improve and therefore enforceable in the present
contends, however, that EPAct does not performance so that no balancing Reliability Standard. The second item
apply to resource adequacy authority will be doing less than its fair resulted in a proposal to modify
requirements, implying that the share. Requirement R3.1, which currently
Commission therefore is prevented from 343. With regard to California PUC’s requires that a balancing authority to
directing the development of a concerns regarding the cost of providing
carry at least enough contingency
continent-wide contingency reserve reserves, and the suggestion that loss of
reserves to cover ‘‘the most severe single
policy. International Transmission firm load may be an acceptable
alternative to enhanced reliability of the contingency.’’ The Commission
shares this view. proposed to change the Requirement to
339. California PUC states that some system, the Commission disagrees. Loss
of firm load should not be permitted in include enough contingency reserves to
customers can tolerate a limited number
planning the system for a single cover any event or single contingency,
of outages and suggests that it may be
more cost-effective to provide back-up contingency. However, the Commission including a transmission outage, which
power to customers with high reliability recognizes the appropriate concern of results in a significant deviation in
needs rather than designing the entire California PUC regarding costs. The frequency from the loss or mismatch of
system to a very high and expensive California PUC can have a strong role in supply either from local generation or
level. California PUC disagrees with the this area by encouraging or requiring imports. The Commission noted that
Commission that contingency reserves DSM programs that can reduce the this approach would address staff’s
should be based only on the reliability demand on the transmission system. concern with Requirement R3.1—
risk of a balancing authority not meeting 344. With regard to statements that specifically, addressing the ambiguity
load. It suggests that certain other EPAct does not apply to resource over whether the Requirement meant
relevant factors should be considered, adequacy, we note that this Reliability the loss of generation or the loss of
such as the number of customers or MW Standard does not concern resource supply resulting from a transmission or
lost, the value that customers in a adequacy, but addresses contingency generation contingency.161
certain area place on reliability and the reserves, which are operating and not
planning reserves. Operating reserves 347. Most commenters 162 express
costs of avoiding outages (the cost of concern over the Commission’s proposal
reserves). are not the same as resource adequacy,
a planning element. Section 215 to add a Requirement that measures
(b) Commission Determination authorizes the Commission to approve response for any event or contingency
340. We direct the ERO to submit a Reliability Standards for contingency that causes a frequency deviation. NERC
modification to BAL–002–0 to include a reserves because they are necessary for states that this proposed directive is
continent-wide contingency reserve real-time Reliable Operation of the Bulk- overly prescriptive and suggests that an
policy. We are not prescribing the Power System. improved modification would be to
details of that policy. As the 345. Accordingly, the Commission direct the ERO to resolve the ambiguity
Commission stated in the NOPR, requires the ERO to develop a continent-
161 NOPRat P 153.
159 NOPR at P 156. 162 See
158 See
APPA, International Transmission, MISO– NERC, APPA, Xcel, MRO, ISO–NE, EEI
PJM, LPPC and California PUC. 160 Although Frequency Response and Bias are and Nevada Companies.
in Requirement R3.1 as pointed out in balancing authority’s deployment of Disturbance Control Standard section of
the Staff Preliminary Assessment. APPA reserves for contingencies. BAL–002–0. The first discussed NERC’s
suggests that the Commission should 351. MISO and ERCOT comment on comment that the Reliability Standard is
not require NERC to modify the the Commission’s suggestion that NERC ‘‘absolute, objective, and measurable’’
Reliability Standard, but should allow should consider defining a frequency because it allows up to 15 minutes for
NERC to address the Commission’s deviation of 20 milli Hertz lasting longer the recovery from a reportable
concerns in its Reliability Standards than the 15 minute recovery period as disturbance,165 and second, the
development process and, while doing a significant deviation. MISO argues Commission asked whether a frequency
so, NERC should consider defining that the value could vary in different deviation of 20 milli Hertz lasting longer
‘‘Most Severe Single Contingency’’ Interconnections and believes the than the 15 minute recovery period
contained in the WECC Frequency current method is acceptable. ERCOT should be used to define a significant
Response Standard White Paper.163 Xcel states that it is not feasible to apply a deviation in frequency.166 No
has concerns about the compliance single frequency-deviation number to commenters address the first concern
aspects of this proposed modification ERCOT and the other Interconnections but many commented on the second.
stating that there is no equitable method and asks the Commission to instead 355. First, the Commission directs the
to assess an individual entity’s consider a Reliability Standard that is ERO to develop a modification to the
performance for an occurrence that is proportional to the size of each Reliability Standard requiring that any
potentially Interconnection-wide. Interconnection. ERCOT notes that 20 single reportable disturbance that has a
348. NRC notes the NERC and milli Hertz would be far more strict than recovery time of 15 minutes or longer be
Commission observations regarding the ERCOT’s historic frequency reported as a violation of the
declining trend in frequency response performance. Disturbance Control Standard. This is
and states that this Reliability Standard consistent with our position in the
(b) Commission Determination
provides the opportunity to establish a NOPR and NERC’s position in response
352. On this issue, the Commission to the Staff Preliminary Assessment of
frequency response performance
will not direct the ERO to modify BAL– the Requirements in BAL–002–0, and
standard. NRC staff suggests that a
002–0 in the manner proposed in the was not disputed or commented upon
Measure be added to establish a
NOPR. Rather, the Commission directs by any NOPR commenters.
frequency response. the ERO to address the concerns
349. MRO suggests that, if this 356. Taking into account commenters’
expressed by the Commission about concerns about defining a significant
requirement is adopted, a clear having enough contingency reserves to
definition of the event that causes a deviation as a frequency deviation of 20
respond to an event on the system in milli Hertz lasting longer than the 15
frequency deviation will be required. Requirement R3.1 and how such
ISO–NE comments that Requirement minute recovery period, the
reserves are measured. The ERO should Commission will not direct a specific
R3.1 is already clear and the suggested address this through adoption or
modification is not clear because: (1) It change. Instead, we direct the ERO,
modification of Requirements and through the Reliability Standards
is not possible to plan for all such metrics in the Reliability Standards
events and (2) it is not clear what is a development process, to modify this
development process. Reliability Standard to define a
‘‘significant deviation.’’ EEI states that a 353. NERC correctly points out that
requirement to measure frequency significant deviation and a reportable
the Commission’s proposal on this point event, taking into account all events that
response for any event or contingency stemmed from the ambiguity in
could provide beneficial information for have an impact on frequency, e.g., loss
Requirement R3.1 that Commission staff of supply, loss of load and significant
system operators but states that there is highlighted in the Staff Preliminary
presently no requirement for generators scheduling problems, which can cause
Assessment. Requirement R3.1 currently frequency disturbances and to address
to report all outages so measurements requires that a balancing authority carry
cannot be made. EEI further states that how balancing authorities should
at least enough contingency reserves to respond. As suggested by NRC, this or
the compliance costs of this requirement cover ‘‘the most severe single
may outweigh the benefits. The Nevada a related Reliability Standard should
contingency.’’ The Commission also include a frequency response
Companies disagree with the proposed emphasizes that the goal of this
modification and state that the requirement. The present Control
Reliability Standard is to insure against Performance Standards represent the
Reliability Standard must instead focus the reliability risk of not serving load by
strictly on the loss of supply. The monthly and yearly averages which are
matching generation and load following appropriate for measuring long-term
Nevada Companies further state that, for any disturbance or event that results in
purposes of this Reliability Standard, trends but may not be appropriate for
a significant deviation in frequency. measuring short-term events. In
WECC’s present contingency reserve Consistent with this goal, the
criterion, which requires consideration addition, the measures should be
Commission believes that this available to the balancing authorities to
of loss of generation that would result Reliability Standard should be inclusive
from the most severe single assist in real-time operations.167
of all events, i.e., loss of supply, loss of
contingency, is most applicable. load or significant scheduling problems, vi. Summary of Commission
350. Georgia Operators comment that which can cause frequency disturbances Determination
the Commission’s intent in this and should address how balancing 357. The Commission approves
proposed modification should not be authorities should respond. The Reliability Standard BAL–002–0 as
interpreted to require a balancing Commission notes that PJM recently
authority to carry enough reserves to issued a paper addressing frequency 165 NERC Comments on the Staff Preliminary
cover any event resulting in a significant excursion related to scheduling Assessment at 41.
deviation in frequency and should not problems.164 166 NOPR at P 153.
be read to suggest that frequency rather 354. In the NOPR, the Commission 167 It is the Commission’s understanding that the
than ACE should be used to measure a Balancing Authority ACE Limit Standards that are
identified two concerns in the currently being field tested are triggered on
frequency deviations and can be used as feedback
163 See NOPR at n.116. 164 Id. at n.134. to the real-time operations personnel.
mandatory and enforceable. In addition, ERO to modify Measurement M1 to should exercise caution in requesting
the Commission directs the ERO to include yearly surveys. changes to this Reliability Standard. EEI
develop a modification to BAL–002–0 361. LPPC agrees with the states that the frequency bias varies
through the Reliability Standards Commission’s proposed directive. EEI continuously in terms of the type and
development process that: (1) Includes a states that NERC currently conducts an magnitude of load changes, and the
Requirement that explicitly provides annual frequency response types and loading of generation
that DSM may be used as a resource for characteristic survey that appears to resources. Therefore, EEI suggests that
contingency reserves; (2) develops a address the Commission’s proposed the accuracy of any estimate of
continent-wide contingency reserve directive. If the yearly survey would frequency bias is highly questionable.
policy;168 and (3) refers to the ERO replace the frequency response Further, EEI states that the one percent
rather than the NERC Operating characteristic survey, EEI states that the default value was deliberately set to
Committee in Requirements R4.2 and survey should include questions over-bias the system to ensure adequate
R6.2. In addition, the Commission regarding the scope of potential new frequency response. EEI is unaware of
directs the ERO to modify the Reliability requirements. ISO/RTO Council any evidence of undamped oscillations
Standard in a manner that recognizes believes that yearly surveys are due to this over-biasing and states that
the loss of transmission as well as unnecessary and would prefer that the one percent floor should be
generation, thereby providing a realistic NERC focus on surveying balancing recognized by the Commission as just
simulation of possible events that might authority responses to large frequency and reasonable until an optimum
affect the contingency reserves. disturbances. frequency bias value can be studied. EEI
362. APPA agrees that the sees the potential need for developing
d. Frequency Response and Bias (BAL– Commission has correctly identified requirements for modifying frequency
003–0) shortcomings in this Reliability bias during emergency conditions,
358. The purpose of BAL–003–0 is to Standard and states that, while the citing evidence from the August 2003
ensure that a balancing authority’s Commission may have identified blackout suggesting that oscillations
frequency bias setting 169 is accurately appropriate modifications, the following the ISO New England
determination should be left to NERC to separation from the Eastern
calculated to match its actual frequency
address in the first instance. APPA Interconnection may have been caused
response.170 In the NOPR, the
supports the development of a by over-biasing.
Commission proposed to approve
consistent Interconnection-wide policy 365. ISO/RTO Council comments that
Reliability Standard BAL–003–0 as
and suggests that NERC should consider the details of the procedures that are
mandatory and enforceable. In addition,
procedures similar to those used in used to ensure frequency bias are
pursuant to section 215(d) of the FPA
ERCOT and WECC. appropriate and no additional
and § 39.5(f) of our regulations, the 363. FirstEnergy suggests that requirements for balancing authorities
Commission proposed to direct NERC to Requirements R5 and R5.1 of this are needed. It disagrees with the
submit a modification to BAL–003–0 Reliability Standard should be required Commission’s proposal to develop
that: (1) Includes Levels of Non- in lieu of Requirement R2 if a balancing uniform requirements for frequency
Compliance and (2) modifies Measure authority has load but no generation bias.173 ISO/RTO Council states that
M1 to include yearly surveys of (R5) or if a balancing authority has there is no single right way to develop
frequency response.171 generation but no load (R5.1). and apply a frequency bias setting and
359. The Commission further FirstEnergy states that without this no universally accepted norm. ISO/RTO
requested comments on whether BAL– change the Reliability Standard is not Council believes the key point is that
003–0 appropriately addresses clear because it implies that a balancing the frequency bias setting be greater
frequency bias setting during normal as authority could choose between two than the natural frequency response of
well as emergency conditions and options. Most commenters responded to the system and believes that the percent
whether a requirement should be added the Commission’s request for comments minimum currently in place is
for balancing authorities to calculate the in the NOPR by stating that additional sufficient. ISO/RTO Council
frequency response necessary for requirements do not need to be added recommends that NERC investigate (1)
reliability in each of the for balancing authorities to calculate the reliability issues associated with low
Interconnections and identify a method frequency response necessary for natural response; (2) causes of
of obtaining that frequency response reliability in each of the decreasing natural response and (3)
from a combination of generation and Interconnections. NERC states that possible opportunities for creating
load resources.172 frequency bias is currently over- markets for load and generator response
compensated across the to frequency changes.
i. Comments
Interconnections and that requiring 366. Xcel responds that there is no
360. Several commenters address the frequency bias to be actual frequency need for this Reliability Standard to
Commission’s proposal to direct the response may reduce control address frequency bias during black
performance. Additionally, NERC states start, restoration and islanding due to
168 This could be accomplished by modifying that some studies have shown a decline the transitional nature of those events.
Requirement R2 or developing a new Reliability in frequency (e.g., governor) response Northern Indiana opposes imposing
Standard. over several decades and that it is greater restrictions on frequency bias
169 Frequency bias setting is a value expressed in
MW/0.1 Hz, set into a balancing authority ACE

addressing this issue through the and frequency response calculations,
algorithm, which allows the balancing authority to request for a new Reliability Standard stating that they could be counter-
contribute its frequency response to the on frequency response. NERC also notes productive by making procedural errors
Interconnection. See NERC glossary at 7. that BAL–003–0 will be replaced soon more likely, which could harm
170 The actual frequency response is the increase

by the new balancing Reliability reliability. Northern Indiana suggests
in output from generators after the loss of a
generator and determines the frequency at which Standards that are approaching ballot. that the approach suggested in the
generation and load return to balance. 364. In general, EEI believes that NOPR would require frequency
171 NOPR at P 177. systemic over-biasing does not present a
172 Id. at P 175. reliability problem and the Commission 173 See id. at P 129.
response to be calculated based on disturbances is appropriate. The frequency bias settings are appropriate
various contingencies in a way that, if Commission understands that the last and all agree that no additional
a particular contingency does not occur, analysis was performed in 2002. requirements are needed. However,
the balancing authority might contribute Currently, Measure M1 only requires NERC acknowledges that the frequency
to an incorrect frequency response. balancing authorities to perform surveys response of the Eastern and Western
Northern Indiana maintains that the when requested by the NERC operating Interconnection is decreasing and states
existing Reliability Standard is committee. As identified in Order No. it will address the issue with a new
appropriate because it reflects the 672, the Reliability Standards should be frequency response Reliability Standard.
unique characteristics of each utility’s based on actual data.174 Therefore, on There is no similar need in ERCOT
operating characteristics and allows further consideration, instead of because ERCOT has adopted an
experienced, certified operators to act to requiring yearly surveys as proposed in approach to calculate the necessary
avoid adverse effects on the electric the NOPR, the Commission believes that frequency response needed for Reliable
system. the frequency of these surveys should be Operation and has identified a method
367. MidAmerican believes that a based on the data requirements that will of obtaining the necessary frequency
requirement for balancing authorities to assist the ERO to determine if the response as discussed in BAL–001–0
calculate the necessary frequency balancing authorities are providing regional difference. The Commission
response is not necessary for reliability, adequate and equitable frequency understands that this approach was
nor should balancing authorities be response to disturbances on the Bulk- based on lessons learned from the May
required to identify the method to Power System. Accordingly, we direct 15, 2003 event 176 that resulted in larger
obtain that frequency response. the ERO to determine the optimal than anticipated amounts of firm load
MidAmerican states that the bias periodicity of frequency response shedding by underfrequency relays
settings addressed in BAL–003–0 are surveys necessary to ensure that operation due to less than desirable
appropriate for normal and emergency Requirement R2 and other Requirements amounts of frequency response.
conditions. It further explains that large of the Reliability Standard are being met 373. The Commission is not
disturbances resulting in large and to modify Measure M1 based on persuaded by the commenters. We
frequency shifts can only be corrected this determination.175 conclude that the minimum frequency
by bringing load and generation into 371. With respect to FirstEnergy’s response needed for Reliable Operation
balance. MidAmerican further states comment, Requirement R2 states that should be defined and methods of
that the annual review of bias settings the frequency bias setting should be as obtaining the frequency response
uses tie line and frequency deviations close as practical to, or greater than, the identified. In addition to the ERCOT
during large disturbances to provide balancing authority’s frequency experience, EEI provides an additional
bias settings representative of relatively response. That is the Requirement example that underscores the
large frequency excursions and adds concerning the relationship between Commission’s concern in this area with
that these settings, along with automatic frequency response and frequency bias, its discussion of the ISO–NE frequency
generation control and governor with Requirement R5 and R5.1 oscillations resulting from the August
response, provide an over-biased providing minimum frequency bias 14, 2003 blackout. Severe oscillations
response to steady-state frequency values for specific types of balancing were observed in the ISO–NE frequency
deviations. MidAmerican states that as authorities. The three Requirements do when it separated from the Eastern
long as system disturbances are not conflict. A balancing authority must Interconnection during the August 14,
continually tracked to ensure frequency use a frequency bias of at least one 2003 blackout.177 The ISO–NE operators
decay is sufficiently mitigated, enough percent and they must have a frequency acted quickly to reduce the bias setting
frequency bias will be on the system bias that is as close as practical to, or so as to eliminate the self-induced
and the current Reliability Standard can greater than, the balancing authority’s frequency oscillations before they
be considered sufficient. actual frequency response. As will be affected system reliability. This
368. MISO states that it expects the discussed more fully below, the apparent mismatch between the bias
Commission’s concerns with the Commission expects each balancing and the actual frequency response might
frequency response and bias standard to authority to meet these Requirements to have caused the ISO–NE system to
be addressed in NERC’s frequency be in compliance with the existing cascade if it had not been for the quick
response Reliability Standard BAL–003–0. actions of its operators. Therefore, we
Authorization Request. 372. With respect to the Commission’s direct the ERO to either modify this
request for comments, most commenters Reliability Standard or develop a new
ii. Commission Determination are opposed to additional requirements Reliability Standard that defines the
369. The Commission approves for balancing authorities to calculate the necessary amount of frequency response
Reliability Standard BAL–003–0 as frequency response necessary for needed for Reliable Operation and
mandatory and enforceable. In addition, reliability in each of the methods of obtaining and measuring
the Commission directs the ERO to Interconnections. NERC states that that frequency response is available.
develop a modification to BAL–003–0 as frequency bias is currently over- 374. As the Commission noted in the
discussed below. compensated across the NOPR and in our response to
370. With respect to the frequency of Interconnections, while EEI states that FirstEnergy, Requirement R2 of this
frequency response surveys, EEI states the one percent default value was
that NERC currently conducts an annual deliberately set to over-bias the system 176 See Underfrequency Load Shedding 2006
frequency response characteristic survey to ensure adequate Frequency Response. Assessment and Review by ERCOT Dynamics
Working Group, available at http://www.ercot.com/
that appears to address the The ISO/RTO Council comments that meetings/ros/keydocs/2007/0111/
Commission’s concern. The 10a._DWG_2006_UFLS_Assessment_12-18-06.doc.
Commission disagrees. The surveys that 174 OrderNo. 672 at P 324. 177 See Performance of the New England and
were performed on a yearly basis are not 175 Asinput to the Reliability Standards Maritimes Power Systems During the August 14,
development process, the Commission suggests that 2003 Blackout by Independent System Operator
available on NERC’s Web site and the the ERO perform sufficient analysis to understand New England, available at https://www.npcc.org/
ISO/RTO Council believes that more how the frequency response varies between publicFiles/blackout/archives/
frequent analysis after large frequency balancing authorities and Interconnections. Restoration_of_the_NPCC_Areas.pdf.
Reliability Standard states that ‘‘[e]ach Commission proposed to approve 381. Xcel states that its operating
Balancing Authority shall establish and Reliability Standard BAL–004–0 as company located in WECC has
maintain a Frequency Bias Setting that mandatory and enforceable. In addition, experienced problems with WECC’s
is as close as practical to, or greater pursuant to section 215(d)(5) of the FPA automatic time error correction
than, the Balancing Authority’s and § 39.5(f) of our regulations, the procedure and therefore does not
Frequency Response.’’ The Commission Commission proposed to direct that support adoption of this procedure by
believes that the achievement of this NERC submit a modification to BAL– other regions. In addition, Xcel states
Requirement is fundamental to the tie 004–0 that includes Levels of Non- that time error correction is not
line bias control schemes that have been Compliance and additional Measures.180 necessary for utilities in regional
in use to assist in balancing generation 378. Further, the Commission noted markets where imbalances are settled
and load in the Interconnections for that WECC has implemented an financially and the regional market
many years.178 We understand that the automatic time error correction operator manages the scheduled
present Reliability Standard sets the procedure 181 that, according to data on interchange offsets. LPPC suggests that
required frequency response of the the NERC Web site, is more effective in there is not enough evidence to show
balancing authorities to be minimizing both time error corrections that WECC’s time error correction
approximately one percent or greater by and inadvertent interchange.182 The procedure is appropriate for the Eastern
requiring that the frequency bias shall NOPR asked for comment on whether Interconnection. LPPC adds that the
not be less than one percent and that the the Commission should require NERC to choice of switching to the WECC
frequency bias be as close as practical adopt Requirements similar to those in procedure should be left up to the NERC
to, or greater than, the actual frequency the WECC automatic time error Reliability Standards development
response. correction procedure. process.
375. While EEI supports additional 382. MISO states that, while the
requirements related to frequency bias i. Comments WECC procedure has advantages with
during emergency conditions, Xcel regard to reducing inadvertent
379. MISO states that it is unclear
states that frequency response during interchange values, it does not reduce
black start, restoration and islanding what the Commission had in mind with the number of time error corrections
situations need not be addressed in a its proposed directive to include Levels because WECC monitors and performs
Reliability Standard due to the transient of Non-Compliance and additional time error correction on a shorter time
nature of these events. The Commission Measures and that the reliability benefit frame than the Eastern Interconnection.
disagrees with Xcel and agrees with EEI. of such Levels of Non-Compliance and MISO argues that this is more of a
The Bulk-Power System should be additional Measures is also unclear. technical requirement and not a
operated in a reliable manner at all 380. While APPA and EEI favor Reliability Standard and suggests there
times. adopting the WECC approach to time are simpler ways to control time error
376. Accordingly, the Commission error correction, NERC and the majority and manage inadvertent balances. MISO
approves Reliability Standard BAL– of other commenters 183 are either states that NERC previously allowed
003–0 as mandatory and enforceable. In opposed to adopting the WECC unilateral payback of inadvertent
addition, the Commission directs the automatic time error correction balance of up to 20 percent of bias when
ERO to develop a modification to BAL– procedure in other regions or think time the payback is in a direction to reduce
003–0 through the Reliability Standards error correction is more appropriately time error and states that this reduced
development process that: (1) Includes addressed as a business practice. NERC the number of time error corrections
Levels of Non-Compliance; (2) notes that the WECC procedure is in while giving balancing authorities a tool
determines the appropriate periodicity lieu of an equivalent procedure to balance their accounts. In its
of frequency response surveys necessary contained within the business practices comments addressing BAL–006–1,
to ensure that Requirement R2 and other of the North American Energy Standards MISO suggests that the number of time
requirements of the Reliability Standard Board (NAESB) and suggests that error corrections could be reduced by
are being met, and to modify Measure instructions for implementing a time following the European methodology
M1 based on that determination and (3) error correction are more appropriately which has a wider window of allowable
defines the necessary amount of addressed as a business practice. time and implements full clock-day, but
Frequency Response needed for Reliable Northern Indiana maintains that WECC- with a smaller offset.
Operation for each balancing authority type procedures are unnecessary, and
with methods of obtaining and ii. Commission Determination
could result in unintended process
measuring that the frequency response errors or operational problems. It urges 383. The Commission approves
is achieved. the Commission to allow time error Reliability Standard BAL–004–0 as
issues to remain within the jurisdiction mandatory and enforceable. In addition,
e. Time Error Correction (BAL–004–0) pursuant to section 215(d)(5) of the FPA
of NAESB and suggests that time error
377. The purpose of BAL–004–0 is to correction is not essential to reliability and § 39.5(f) of our regulations, the
ensure that time error corrections are and is more appropriately treated as a Commission directs the ERO to develop
conducted in a manner that does not non-essential guide. ISO–NE agrees that a modification to BAL–004–0 through
adversely affect the reliability of the time error correction is not a reliability the Reliability Standards development
Interconnection.179 In the NOPR, the issue. process that includes Levels of Non-
Compliance and additional Measures for
178 Cohn, Nathan, Control of Generation and
180 NOPR at P 184. Requirement R3. Further, based on
Power Flow on Interconnected Systems, (John Wiley
and Sons 1966).
181 See http://www.wecc.biz/documents/library/ commenters’ concerns that there is no
179 The NERC glossary defines ‘‘time error procedures/Time_Error_ Procedure_10-04-02.pdf. engineering basis for changing the time
correction’’ as ‘‘an offset to the Interconnection’s

182 See http://www.nerc.com/~filez/inadv.html
error correction to the WECC approach
scheduled frequency to return the Interconnection (regarding inadvertent interchange data) and http:// or any other approach, when reviewing
Time Error to a predetermined value.’’ NERC www.nerc.com/~filez/timerror.html (regarding time
Glossary at 18. Time error is caused by the error correction). the Reliability Standard during the
accumulation of frequency error over a given 183 See Xcel, Northern Indiana, ISO–NE, LPPC ERO’s scheduled five-year cycle of
period. and MISO–PJM. review, we direct the ERO to perform
research that would provide a technical commenters do not believe or are 390. Further, the NOPR stated that the
basis for the present approach or for any uncertain about whether the WECC Commission is interested in knowing
alternative approach. procedure is appropriate for the Eastern whether any balancing authority is
384. Many commenters aver that the Interconnection. However, when this experiencing or is predicting any
time error correction procedure belongs Reliability Standard is scheduled for its difficulty in obtaining sufficient
within the realm of NAESB and is not regular five-year cycle of review, the automatic generation control.
a reliability issue. The Commission Commission directs the ERO to perform i. Minimum Amount of Regulating
disagrees, as BAL–004–0 is intended to whatever research it and the industry Reserves
ensure that time error corrections are believe is necessary to provide a sound
performed in a manner that does not technical basis for either continuing (a) Comments
adversely affect the reliability of the with the present practice or identifying 391. South Carolina E&G and SMA
Interconnection. The financial aspects an alternative practice that is more support the Commission’s proposal to
of time error correction such as MISO’s effective and helps reduce inadvertent include a requirement that addresses
concern about the unilateral payback of interchange. minimum regulating reserves. It states
interchange imbalances remain with 387. The Commission agrees with that the control performance standard
NAESB. However, the technical details, MISO regarding the number of time metric is a lagging indicator of necessary
including the means to carry out the error corrections using WECC’s reserves and other standards such as
procedure, are a reliability issue. procedure. However, the magnitude of frequency response may eventually
385. We believe that the efficiency of the frequency change in the WECC provide a more dynamic real-time
the time error correction can be viewed automatic time error correction is indicator. South Carolina E&G believes
as a measure of whether all balancing smaller than the manual correction and the Commission’s proposal provides a
authorities are participating in time timing of the corrections are better good interim solution.
error correction. Requirement R3 states correlated to when the error was 392. Alcoa comments that, in
that each balancing authority, when created. These two characteristics of the establishing a minimum amount of
requested, shall participate in a time WECC procedure avoid placing the reserves, NERC should be required to
error correction. The Commission system in less secure conditions and tie consider the quality of each source of
believes that this is a critical the payback to the initiating action, both reserves. Alcoa suggests that digitally
requirement, but the data on the NERC of which appear to better serve both controlled DC loads, such as an
Web site indicates that efficiency is reliability and equity. aluminum smelter, could respond much
decreasing, indicating that fewer more rapidly and accurately than
balancing authorities are employing f. Automatic Generation Control (BAL– thermal generators and that using such
time error correction.184 Therefore, the 005–0) resources could reduce the response
Commission affirms its preliminary 388. The goal of this Reliability time for recovery, allowing thermal
finding that the efficiency of time error Standard is to maintain Interconnection units to carry fewer spinning reserves
corrections has decreased over the last frequency by requiring that all and increasing operating efficiencies of
ten years and that participation in time generation, transmission, and customer the grid.
error corrections may be lacking.185 load be within the metered boundaries 393. NERC and other commenters 187
Accordingly, we direct the ERO to of a balancing authority area, and suggest that the Commission’s proposed
develop additional Measures and add establishing the functional requirements directive to have NERC include
Levels of Non-Compliance to assure that for the balancing authority’s regulation ‘‘Requirements that identify the
the requirements in Requirement R3 are service, including its calculation of minimum amount of automatic
achieved. One approach to achieving ACE. generation control or regulating reserves
this would be to use the existing 389. In the NOPR, the Commission a balancing authority must have at any
measurement of efficiency as a metric of proposed to approve Reliability given time’’ is too prescriptive. They
participation of all balancing also object to this proposed requirement
Standard BAL–005–0 as mandatory and
authorities. If the efficiency is since a balancing authority’s failure to
enforceable. In addition, pursuant to
significantly less than 100 percent, the maintain sufficient regulating reserves
section 215(d)(5) of the FPA and
Measures should provide a process to will result in violations of control
§ 39.5(f) of our regulations, the
identify which balancing authorities are performance standard criteria already
Commission proposed to direct NERC to
not meeting the requirements of the found in BAL–001–0.
submit a modification to BAL–005–0 394. NERC further states that a
Reliability Standard. that: (1) Includes Requirements that requirement to have a minimum amount
386. Although the Commission noted identify the minimum amount of of regulating reserves would result in an
in the NOPR that WECC’s time error automatic generation control or arbitrary constraint that would not add
correction procedure appears to serve as regulating reserves a balancing authority to reliability and suggests that the
a more effective means of accomplishing must have at any given time; (2) changes Commission instead direct NERC to
time error correction, based on concerns the title of the Reliability Standard to be consider the issue of a minimum
that there is no engineering basis for neutral as to source of the reserves; (3) requirement in its Reliability Standards
changing the time error correction to the includes DSM and direct control load process in order to determine the
WECC approach, the Commission will management as part of contingency reliability benefit.
not direct the ERO to adopt reserves and (4) includes additional 395. EEI states that the industry
requirements similar to WECC’s Levels of Non-Compliance and currently has no consensus-based,
procedure. With the exception of Measures, including a Measure that sound engineering methodology for
comments from APPA and EEI, most provides for a verification process over determining a minimum regulating
the minimum required automatic reserve requirement given widely

184 See W.R. Prince, et al., Cost Aspects of AGC,
generation control or regulating reserves varying needs throughout the country.
Inadvertent Energy and Time Error, IEEE
Transactions on Power Systems, February 1990, at
a balancing authority maintains.186
111. 187 See APPA, EEI, International Transmission,
185 NOPR at P 179, 183. 186 NOPR at P 197. MISO–PJM, MidAmerican and LPPC.
Nonetheless, EEI offers several regulating reserve are being carried at all reserves.189 MidAmerican agrees with
guidelines that it says could be used to times. The Commission notes that the Commission on the proposed title
provide estimates for minimum Requirement R2 requires maintenance change to allow it to be neutral as to the
regulating reserves. Similarly, of a level of regulating reserves in order source of reserves but cautions the
MidAmerican states that normal to prospectively meet the control Commission on including DSM as a
regulating margins can vary from one performance standard but does not source of contingency reserves. While
balancing authority to another, and even provide a calculation for the exact level MidAmerican believes it proper to
within one balancing authority, due to which would be required. In particular, include direct control load management,
frequently changing load characteristics the Commission believes that, while the which is under direct control of the
making it extremely difficult to quantify control performance standard metric is system operator in contingency reserves,
an hourly required level of reserves. useful in identifying trends relating to it states that the term DSM (as defined
MidAmerican suggests that instead of poor regulating practices, specification in the NERC glossary) is too general and
prescriptively quantifying reserve of minimum reserve requirements to be includes programs that cannot
levels, the ERO should continue to maintained at all times would contribute toward contingency reserves.
allow the industry to find efficient ways complement the control performance 403. APPA and International
to comply with the control performance standard metrics by providing real-time Transmission both disagree with the
standards of BAL–001–0. requirements necessary for proper Commission’s proposals to change the
396. FirstEnergy suggests that a single control. title of this Reliability Standard and to
entity should have the responsibility to include DSM and direct control load
establish, through an annual review 399. With regard to Alcoa’s comment,
the Commission agrees that the quality management. APPA suggests that DSM
process, the level of regulating reserves and direct control load management are
that a balancing authority must of reserves is relevant in determining if
the resource is able to technically not operationally equivalent to
maintain pursuant to the control dispatchable generation resources and
performance standard requirements. qualify as regulation.
does not believe these programs are an
FirstEnergy suggests that all generators 400. Nevertheless, the Commission effective source of regulating reserve
and technically qualified DSM that recognizes commenters’ concerns given the current state of technology.
participate in energy markets should related to the calculation of minimum International Transmission simply
install automatic generation control as a regulation. EEI has offered several states that regulating reserves required
condition of market participation. In possible methods to calculate the by BAL–005–0 are specifically
non-market areas, FirstEnergy suggests minimum amount of regulation needed responsive to automatic generation
that balancing authorities could meet for reliability, which may or may not be control.
requirements through bilateral contracts consistent with others in the industry. 404. ISO–NE disagrees with the
or the normal scheduling process and The fundamental reason for regulating Commission’s proposal to include DSM
suggests that the Commission might reserves is to balance load and and direct control load management as
have to assert its jurisdiction and order generation in the short term due to the part of this service, stating that
technically qualified DSM providers to random variations in the balancing responsive load has not demonstrated
install automatic generation control at authorities’ loads and to accommodate the load following capability necessary
their facilities. FirstEnergy states that ramping of transactions. The to provide regulation and that it is not
further work would need to be Commission therefore directs the ERO aware of any load-based resources that
conducted on the technical to develop a process to calculate the can closely follow automatic generation
qualifications and capacity thresholds minimum regulating reserve for a control signals sent every four seconds.
that would control whether installation balancing authority, taking into account As an alternative to the Commission’s
of automatic generation control would expected load and generation variation approach, ISO–NE suggests that the
be required. and transactions being ramped into or Reliability Standard should define the
(b) Commission Determination out of the balancing authority. reliability purpose or objective and then
397. On this issue, the Commission ii. Title Change and Inclusion of DSM. be resource-neutral.
directs the ERO to modify BAL–005–0 (a) Comments (b) Commission Determination
through the Reliability Standards
development process to develop a 401. As an initial matter, many 405. At the outset, the Commission
process to calculate the minimum commenters express confusion about agrees with commenters that this
regulating reserve for a balancing the Commission’s proposal to require Reliability Standard applies to
authority, taking into account expected NERC to change the title of the regulating reserves and not contingency
load and generation variation and Reliability Standard to be neutral as to reserves. The references to contingency
transactions being ramped into or out of the source of the reserves, and include reserves under this Reliability Standard
the balancing authority. DSM and direct control load in the NOPR are confusing. The
398. As a general matter, the management as part of contingency Commission clarifies that its direction
Commission believes that a single entity reserves.188 In particular, these to the ERO in this section is for it to
should establish the level of regulating commenters argue that this Reliability develop a modification to BAL–005–0
reserve required based on the generation Standard pertains to regulating reserve through the Reliability Standards
mix and ramping rates in the region. We and not contingency reserves. development process that changes the
disagree with commenters that title of the Reliability Standard to be
402. Constellation agrees with the neutral as to the source of regulating
minimum regulating reserve Commission that DSM and direct
requirements are not necessary. As reserves and allows the inclusion of
control load management should be
South Carolina E&G correctly points technically qualified DSM and direct
included as viable options for regulating
out, the control performance standard 189 Since the Commission used the term
metric is a lagging indicator and, as 188 EEI,TVA, International Transmission, ‘‘contingency reserves’’ inappropriately in this
such, does not provide a good Multiple Interveners, MISO–PJM, South Carolina section, we assume that Constellation intended this
indication that the necessary amounts of E&G and Wisconsin Electric. to be regulating reserves.
control load management as regulating the Reliability Standards and that term ‘‘check’’ in Requirement R17 needs
reserves, subject to the clarifications Requirement R5 of BAL–005–0 provides to be clarified.
provided in this section. that balancing authorities must have 413. California Cogeneration states
406. We disagree that it is not possible back-up plans to provide replacement that the Commission has previously
to use DSM and direct control load regulation service if the purchased ruled that separate metering for the
management as a source of regulating regulation service is lost. Constellation gross generation of a customer-owned
reserves or any other type of operating requests that the Commission clarify generator is not proper or necessary, and
reserves. The Commission notes that, that the transmission providers may not states that the Commission should
while DSM and direct control load impose a requirement to rely clarify that this Reliability Standard
management may not be widely used exclusively on firm transmission for the does not establish metering
today as a source of operating reserves, dynamic transfers of regulating reserves. requirements for individual generators,
comments received and other evidence and does not allow separate metering of
(b) Commission Determination generation and load on an end-user’s
suggest that certain types of loads are
technically capable of providing this 409. In response to Constellation’s site.191
service. For example, comments concerns, the Commission notes that, if 414. LPPC notes that BAL–005–0 has
received from Alcoa suggest that certain regulation is being provided over non- 17 requirements but no Measures, and
loads, such as digitally controlled DC firm transmission service, the entity that it uses phrases such as ‘‘adequate
loads, are capable of responding much receiving the regulation should be metering’’ and ‘‘burden on the
faster than generation to a reserve need. responsible for having a back-up plan to interconnection.’’ LPPC contends that
407. Given that most of the include loss of the non-firm there is no definition for these
commenters’ concerns over the transmission service as referenced in ambiguous terms and that there is no
inclusion of DSM as part of regulating Requirement R5. The Commission way to determine if terms like
reserves relate to the technical believes that a balancing authority may ‘‘adequate metering’’ will mean the
requirements, the Commission clarifies use non-firm transmission service for same thing in different parts of the
that to qualify as regulating reserves, procuring regulation, so long as that country or ensure consistent penalties
these resources must be technically balancing authority has a back-up plan will be assessed for the same violation.
capable of providing the service. In that it can implement to include loss of (b) Commission Determination
particular, all resources providing non-firm transmission service.
415. The Commission agrees with
regulation must be capable of
iv. Other Comments MISO that, while the number of
automatically responding to real-time
(a) Comments frequency deviations due to loss of
changes in load on an equivalent basis
generation has decreased, the
to the response of generation equipped 410. MISO states that it is uncertain Commission is concerned with the
with automatic generation control. From of the basis of the claim that there have implications of the actual data
the examples provided above, the been an increased number of presented by PJM that shows two
Commission understands that it may be ‘‘[automatic generation control] frequency deviations each week day
technically possible for DSM to meet controllable’’ frequency excursions.190 without the loss of generation.192 This
equivalent requirements as conventional MISO further states that data in the concern is supplemented by documents
generators and expects the Reliability Eastern Interconnection shows the that identify that some balancing
Standards development process to number of larger-slower excursions has authorities are restricting automatic
provide the qualifications they must decreased over the past few years. generation control actions during
meet to participate. These qualifications 411. Xcel requests that the schedule changes.193
will be reviewed by the Commission Commission reconsider Requirement 416. Both Xcel and FirstEnergy
when the revised Reliability Standard is R17 of this Reliability Standard stating question Requirement R17 but do not
submitted to the Commission for that the accuracy ratings for older oppose the Commission’s proposal to
approval. equipment (current and potential approve this Reliability Standard.
iii. Whether Balancing Authorities Are transformers) may be difficult to Earlier in this Final Rule, we direct the
Experiencing or Predicting Difficulty in determine and may require the costly ERO to consider the comments received
Obtaining Sufficient Automatic replacement of this older equipment on to the NOPR in its Reliability Standards
Generation Control combustion turbines and older units development process. Thus, the
while adding little benefit to reliability. comments of Xcel and FirstEnergy
(a) Comments Xcel states that the Commission should should be addressed by the ERO when
408. Constellation states that its clarify that Requirement R17 need only this Reliability Standard is revisited as
ability to obtain regulating reserves is apply to interchange metering of the part of the ERO’s Work Plan.
hampered by a lack of resources that balancing area in those cases where 417. California Cogeneration requests
qualify as regulation and the practices errors in generating metering are clarification that Commission rulings
that some transmission service captured in the imbalance responsibility made prior to the enactment of FPA
providers have adopted in calculation of the balancing area. section 215 would still be applicable.
implementing dynamic transfers needed 412. FirstEnergy states that The case cited by California
to procure regulating reserves from Requirement R17 should include only Cogeneration was issued before EPAct
other balancing authorities. In ‘‘control center devices’’ instead of 2005 was enacted and gave the
particular, Constellation states that devices at each substation. FirstEnergy Commission direct responsibility over
many transmission service providers states that accuracy at the substation
impose a requirement that regulation level is unnecessary and the costs to 191 See California Cogeneration at 6, citing
services must be provided using firm install automatic generation control California Independent System Operator Corp.,
Opinion No. 464, 104 FERC ¶ 61,196 (2003).
transmission. Constellation suggests that equipment at each substation would be 192 NOPR at n.134.
purchasing regulation from another high. FirstEnergy also states that the 193 See R. L. Vice, Frequency Issues 2005,
balancing authority using non-firm available at: http://www.wecc.biz/documents/
transmission service is allowed under 190 NOPR at P 194. library/RITF/Frequency_Issues_2005_rev_0.pdf.
Bulk-Power System reliability. By its v. Summary of Commission i. Measures and Additional Levels of
terms, BAL–005–0 requires each Determinations Non-Compliance Including Measures
generator operator with generating Concerning the Accumulation of Large
facilities operating within an 421. The Commission approves Inadvertent Imbalances
Interconnection to ensure that those Reliability Standard BAL–005–0 as
(a) Comments
generating facilities are included within mandatory and enforceable. In addition,
the metered boundaries of a balancing pursuant to section 215(d)(5) of the FPA 425. Certain commenters 197 do not
authority area. Therefore, any generator and § 39.5(f) of our regulations, the support the Commission’s proposal to
that is subject to the Reliability Commission directs the ERO to develop add Measures and additional Levels of
Standards, as discussed in the a modification to BAL–002–0 through Non-Compliance, including Measures
Applicability Issues section of this Final the Reliability Standards development concerning the accumulation of large
Rule,194 is subject to the metering inadvertent imbalances. Xcel states that
process that: (1) Develops a process to
requirements in this Reliability such a measure would not enhance
calculate the minimum regulating
Standard. Our conclusion, however, reliability and involves primarily a
reserve a balancing authority must have commercial matter. MRO suggests that
does not determine the appropriate at any given time taking into account
ratemaking treatment. large inadvertent balances are an equity
expected load and generation variation issue and as such should be addressed
418. With respect to LPPC’s concern
and transactions being ramped into or through business practices and not
that terms used in the Reliability
Standard are not definitive when out of the balancing authority; (2) through the Reliability Standards.
viewed individually, and LPPC’s changes the title of the Reliability MidAmerican states that no additional
statement that the Reliability Standard Standard to be neutral as to the source measures addressing inadvertent
is ambiguous because it does not of regulating reserves and to allow the imbalances are needed in this
include Measures, we disagree. The inclusion of technically qualified DSM Reliability Standard because the issue is
Commission finds each Requirement of and direct control load management; (3) adequately addressed in other
BAL–005–0 is clear and enforceable. clarifies Requirement R5 of this Reliability Standards.198 MidAmerican
The Requirements provide sufficient Reliability Standard to specify the states that if the Commission proceeds
guidance for an entity to understand its required type of transmission or backup to require Measures and Levels of Non-
obligations. When Measures are plans when receiving regulation from Compliance for large accumulations, it
incorporated into the Reliability outside the balancing authority when must insure that no ‘‘double penalties’’
Standard, the Measures will provide using non-firm service and (4) includes are imposed.
guidance on assessing non-compliance Levels of Non-Compliance and a 426. EEI believes that the need to set
with the Requirements. For these Measure that provides for a verification a Measure for the accumulation of large
reasons and as previously addressed in inadvertent imbalances may be
process over the minimum required
the NOPR, the Commission disagrees premature. EEI suggests that inadvertent
automatic generation control or
that the enforceable obligations set forth energy is not a problem in real-time
regulating reserves a balancing authority
in Requirements are unclear absent operations and is the result of frequency
must maintain. over-bias. EEI further states that if the
Measures.
419. The Commission notes that no g. Inadvertent Interchange (BAL–006–1) Commission believes the industry
one commented on the proposal to should address both inadvertent energy
include Levels of Non-Compliance and 422. BAL–006–1 requires that each and frequency bias, the clear
Measures, including a Measure that balancing authority calculate and record consequence is a fundamental
provides for a verification process over inadvertent interchange on an hourly reconsideration of the control
the minimum required automatic basis. performance standard. EEI strongly
generation control or regulating reserves 423. In the NOPR, the Commission recommends that the Commission
a balancing authority maintains. The proposed to approve Reliability clarify whether it intends for the
Commission adopts the NOPR proposal Standard BAL–006–1 as mandatory and industry to reconsider this fundamental
to require the ERO to modifiy the reliability principle.
enforceable. In addition, pursuant to
Reliability Standards to include a 427. Constellation states some
section 215(d)(5) of the FPA and concern regarding the ability of
Measure that provides for a verification
process over the minimum required § 39.5(f) of our regulations, the balancing authorities to make
automatic generation control or Commission proposed to direct that appropriate arrangements to settle
regulating reserves a balancing authority NERC submit a modification to BAL– inadvertent imbalances. In particular,
maintains. However, as discussed in the 006–1 that adds Measures and Constellation states that in arranging
Common Issues section of this Final additional Levels of Non-Compliance bilateral paybacks, it is difficult to find
Rule, we will leave it to the discretion including Measures concerning the a counterparty with an opposite balance
of the ERO whether to include other accumulation of large inadvertent and there are transmission fees that
Measuers.195 imbalances.196 further hinder the process of these
420. FirstEnergy has a number of 424. In addition, the NOPR solicited paybacks. Constellation states that the
suggestions to improve the existing comment on whether accumulation of Commission should require the industry
Reliability Standard and the ERO is large amounts of inadvertent imbalances to adopt procedures that will better
directed to consider those suggestions in facilitate bilateral payback of
is a concern to the industry and if so,
its Reliability Standards development inadvertent energy, such as waiving the
options to address the accumulation.
process.
197 Xcel,
MRO, MidAmerican and MISO–PJM.
194 See Applicability Issues: Bulk-Power Ststem v. 198 MidAmerican explains that large interchange
Bulk Electric System and Applicability to Small imbalances are a result of telemetry failures, AGC
Entities, supra sections II.C.1–2. misoperation or scheduling errors and further states
195 See Common Issues Pertaining to Reliability that BAL–001 addresses AGC performance and the
Standards: Measures and Levels of Non- INT standards handle compliance with scheduling
Compliance, supra section II.E.2. 196 NOPR at P 212. requirements.
scheduling requirement for small Standards. If the industry wishes to the interconnection in a way which
bilateral paybacks (such as WECC has propose alternative metrics to the results in a large inadvertent imbalance
implemented). control performance Reliability this behavior should be reflected in the
428. TAPS repeats the arguments it Standards, the Commission suggests balancing authority’s control
made in its comments on the Staff that it does so through the ERO performance standard compliance.
Preliminary Assessment that the processes and that such changes include MISO states that some large amounts of
existing treatment of balancing authority an explanation of how the revised inadvertent imbalance are due to a
inadvertent interchange is not metrics would better measure the ability balancing authority fulfilling its bias
comparable to the treatment of energy of an individual balancing authority to obligation. MISO states that an arbitrary
imbalances. TAPS suggests that the match load and generation. cap should not be a part of this
Commission has an obligation to do 432. In response to Constellation’s Reliability Standard.
more than what is proposed in the comment about the fees associated with
NOPR, which states that the issue is the settlement of inadvertent (b) Commission Determination
being addressed in the OATT reform imbalances, the Commission notes that
docket 199 while approving Reliability 438. As stated previously, while the
this issue relates to business practices
Standards that perpetuate the Commission agrees that these
and should be brought before NAESB or
preferential treatment of balancing imbalances do not present an immediate
otherwise addressed in contexts other
authority inadvertent interchange.200 than section 215 of the FPA. reliability problem, we believe, as stated
433. With respect to TAPS’ concerns by LPPC, that large interchange
(b) Commission Determination imbalances are indicative of an
regarding disparate treatment of
429. The Commission directs the ERO imbalances for non-control area utilities, underlying problem related to balancing
to develop a modification to BAL–006– the Commission is not convinced that of resources and demand. It would be
1 that adds Measures concerning the this is a reliability issue. As identified worthwhile for the ERO to examine the
accumulation of large inadvertent in Order No. 890, inadvertent WECC time error correction procedure.
imbalances and Levels of Non- interchange is not comparable to 439. Since the ERO indicates that the
Compliance. While we agree that imbalances.202 reliability aspects of this issue will be
inadvertent imbalances do not normally 434. Accordingly, the Commission addressed in a Reliability Standards
affect the real-time operations of the adopts the proposal in the NOPR to filing later this year, the Commission
Bulk-Power System and pose no direct the ERO to develop Measures asks the ERO, when filing the new
immediate threat to reliability, we are under this Reliability Standard to Reliability Standard, to explain how the
concerned that large imbalances ensure balancing authorities will not new Reliability Standard satisfies the
represent dependence by some have large inadvertent imbalances. Commission’s concerns.
balancing authorities on their neighbors
and are an indication of less than ii. Whether the Accumulation of Large iii. Summary of Commission
desirable balancing of generation with Amounts of Inadvertent Imbalances Is a Determinations
load. The Commission also notes that Concern and Potential Options
the stated purpose of this Reliability (a) Comments 440. Accordingly, the Commission
Standard is to define a process for approves Reliability Standard BAL–
435. LPPC states that its members are 006–1 as mandatory and enforceable. In
monitoring balancing authorities to
concerned that large inadvertent addition, pursuant to section 215(d)(5)
ensure that, over the long term,
imbalances would be an indication of an of the FPA and § 39.5(f) of our
balancing authorities do not excessively
underlying issue related to overall regulations, the Commission directs the
depend on other balancing authorities
balancing of resources and demand and ERO to develop a modification to BAL–
in the Interconnection for meeting their
suggests that options to address these 006–1 through the Reliability Standards
demand or interchange obligations.
430. The Commission disagrees with large inadvertent imbalances should be development process that includes
MidAmerican that having Measures in addressed through the Reliability Measures concerning the accumulation
this Reliability Standard will result in Standards development process. of large inadvertent imbalances and
double penalties. The Commission 436. NERC states that the performance additional Levels of Non-Compliance.
believes that this Reliability Standard requirements that relate to reliability are
addressed in BAL–001–0 and BAL–002– h. Regional Differences to BAL–006–1:
has an independent reliability goal that
0 and the new Reliability Standards Inadvertent Interchange Accounting and
‘‘define[s] a process for monitoring
which will replace them. Further, NERC Financial Inadvertent Settlement
balancing authorities to ensure that,
over the long term, balancing authorities states that if the Commission wishes to
direct consideration of limits on the 441. The NOPR explained that BAL–
do not excessively depend on other 006–1 provides for two regional
balancing authority areas in the amount of inadvertent imbalances, such
directive should be in the form of an differences.203 First, a regional
Interconnection for meeting their difference is provided for an RTO with
demand or interchange obligations.’’ 201 issue to be resolved or reliability
objective to be achieved rather than a multiple balancing authorities. The
431. The Commission agrees with EEI control area participants of MISO
that one of the root causes of specific requirement to set a fixed limit
on inadvertent accumulation. requested that MISO be given an
inadvertent interchange is the difference inadvertent interchange account so that
between the actual frequency response 437. TVA, MISO and MidAmerican
state that the accumulation of large financial settlement of all energy
and the existing bias settings. The receipts and deliveries using locational
Commission has directed that this cause inadvertent balances over time does not
raise grid reliability issues. TVA asserts marginal pricing could be implemented
be addressed in other BAL Reliability
that this is largely a financial matter. In to meet their Commission directed

199 OATT addition, TVA comments that if a market obligations. Subsequently,
Reform NOPR at P 208.
200 NOPR at P 206. balancing authority inappropriately uses Southwest Power Pool (SPP) requested,
201 See BAL–006–1 (Inadvertent Interchange,
Purpose Statement). 202 See Order No. 890 at P 702–03. 203 NOPR at P 216.
and NERC approved, the same regional 2. CIP: Critical Infrastructure Protection application of monetary penalties until
difference for.204 446. The goal of CIP–001–1 is to further guidance is provided on what
442. Second, the NOPR explained that ensure that operating entities recognize events are reportable and what steps an
a regional difference would apply to the sabotage events and inform appropriate entity must take to be certain it is in
control area participants of MISO and authorities and each other to properly compliance with the Reliability
respond to the sabotage to minimize the Standard. Claiming that CIP–001–1 is
SPP that would allow each RTO to
impact on the Bulk-Power System.206 too vague to be enforceable, TAPS
financially settle inadvertent energy
The Reliability Standard requires that opposes approval until NERC has
between control areas in the RTO. Each further defined ‘‘sabotage’’ and the
RTO would maintain accumulations of each reliability coordinator, balancing
authority, transmission operator, facilities to which the Reliability
the net inadvertent interchange for all Standard applies.
the control areas in the RTO after the generation operator and LSE have
procedures for recognizing and for 450. APPA questions whether CIP–
financial settlement, and therefore 001–1 should apply to LSEs (LSEs)
accumulation of net-interchange would making operating personnel aware of
sabotage events, and communicating contending that, unlike transmission
not affect the non-participant control owners and generators, LSEs do not own
information concerning sabotage events
areas. or operate ‘‘hard assets’’ that are
to appropriate ‘‘parties’’ in the
443. The Commission proposed to Interconnection.207 normally thought of ‘‘at risk’’ to
approve these regional differences, 447. In the NOPR, the Commission sabotage. It claims that compliance
explaining that the two proposed proposed to approve Reliability would be particularly burdensome for
regional differences relate solely to Standard CIP–001–0 as mandatory and small LSEs, such as the requirement to
facilitating financial settlements of enforceable. In addition, pursuant to provide a preliminary report within one
accumulated inadvertent interchange section 215(d)(5) of the FPA and hour of an event. APPA states that
due to the physical differences of these § 39.5(f) of our regulations, the NERC should therefore reconsider
areas and have minimal, if any, Commission proposed to direct that whether LSEs should be required to
NERC submit a modification to CIP– comply with this Reliability Standard.
reliability implications.
001–0 that: (1) Includes Measures and Further, while APPA supports the
i. Comments Levels of Non-Compliance; (2) gives application of CIP–001–1 to larger
guidance for the term ‘‘sabotage;’’ (3) generators and any unit required for
444. FirstEnergy notes that the two reliable interconnected operations, it
requires an applicable entity to contact
proposed regional differences reference questions whether it is critical to extend
appropriate federal authorities, such as
the Version 0 policies instead of the the Reliability Standard to all generator
the Department of Homeland Security,
NERC Reliability Standards and in the event of sabotage within a operators—noting that there are 3,564
requests that the Commission direct specified period of time and (4) requires generating plants in the United States
NERC to revise the regional differences periodic review of sabotage response with a total capacity of 75 MW or less.
accordingly. In addition, FirstEnergy procedures. APPA contends that the incremental
states that the Commission should 448. In the NOPR, the Commission benefits of requiring all generators to
direct NERC to define the function of a explained that the Requirements of CIP– comply with CIP procedures seem
waiver. FirstEnergy agrees that 001–0 refer to a ‘‘sabotage event’’ but do minimal since many facilities are
transferring responsibility for the tasks not define that term. The Commission unlikely to have a material impact on
under these waivers to the RTO is stated that, while ‘‘sabotage’’ is a Bulk-Power System reliability or be a
appropriate. commonly understood term and the target for sabotage in the first place.
common understanding should suffice APPA suggests that the Commission
ii. Commission Determination defer action on CIP–001–1 while it
in most circumstances, it was concerned
that situations may arise in which it is implements a prioritization plan.
445. No commenter objected to the 451. TAPS and California
regional differences to BAL–006–1. not clear whether action pursuant to
CIP–001–0 is required. Thus, the NOPR Cogeneration are also concerned about
However, the Commission agrees with applicability and contend that
FirstEnergy that the regional differences proposed that the ERO provide guidance
clarifying the triggering event for an compliance should be limited to those
incorrectly reference retired policy that have a significant or material
terminology. Therefore, the Commission entity to take action pursuant to CIP–
001–0. impact on Bulk-Power System
approves the regional differences as reliability. Both are concerned that
mandatory and enforceable under Order a. Comments compliance with this Reliability
No. 672 as necessary due to the physical 449. EEI and Entergy comment that Standard would create significant
differences between multiple balancing they generally agree with the administrative burdens and
authorities and a single market 205 but Commission’s perspective. While APPA documentation requirements that are
the Commission directs the ERO to and Six Cities support approving CIP– not justified where a facility does not
modify the regional differences so that 001–1 as mandatory and enforceable, have a material impact on the Bulk-
they reference the current Reliability they ask that the Commission defer the Power System. California Cogeneration
Standards and are in the standard form, suggests that CIP–001–1 be revised to:
which includes Requirements, Measures 206 The NOPR addressed CIP–001–0. On (1) Exclude generator output used on-
and Levels of Non-Compliance. The November 15, 2006, NERC submitted for approval site and (2) provide a mechanism for
proposed Reliability Standard CIP–001–1, which determining that a facility has no
ERO should explore FirstEnergy’s revised and replaced the previous version of the
request to define the function of a Reliability Standard to include Measures and Levels material impact and thus is exempt from
waiver in its Reliability Standards of Non-Compliance. compliance.
development process. 207 On August 28, 2006, NERC submitted for 452. A number of commenters agree
approval proposed Reliability Standards CIP–002– with the Commission’s concern that the
1 through CIP–009–1. These proposed Reliability
204 BAL–006–1, filed on August 28, 2006, would
Standards, which relate to cybersecurity, are being
term ‘‘sabotage’’ needs to be better
extend the regional difference to SPP. addressed in a separate rulemaking proceeding in defined and guidance provided on the
205 Order No. 672 at P 291. Docket No. RM06–22–000. triggering events that would cause an
entity to report an event.208 FirstEnergy Federal Bureau of Investigation (FBI) or standards. EEI, FirstEnergy and Xcel
states that this definition should Royal Canadian Mounted Police (RCMP) suggest greater coordination, possibly
differentiate between cyber and physical such that communication channels are with all events being reported to NERC,
sabotage and should exclude established to report incidents to the which would then coordinate with
unintentional operator error. It appropriate authority.’’ It states that, in federal authorities. Xcel suggests the
advocates a threshold of materiality to the case of a municipal utility that is development of a single sabotage
exclude acts that do not threaten to part of a local governmental agency that reporting form to streamline the
reduce the ability to provide service or already has a public safety department reporting process and make it easier for
compromise safety and security. SoCal which is in regular contact with the affected entities to provide reports in a
Edison states that clarification regarding local FBI, and where clear timely manner.
the meaning of sabotage and the communication channels already exist 458. APPA and FirstEnergy express
triggering event for reporting would be between the public safety department concern about a requirement to report
helpful and prevent over-reporting. and the utility, it would be redundant an act of sabotage within a fixed period
453. APPA comments that for the utility to establish a direct link of time. Xcel states that the triggering
Requirement R1 of CIP–001–1, which to the FBI for reporting purposes. Xcel event for disclosure of an act of sabotage
provides that an entity must have also suggests that the term ‘‘appropriate often will be unclear and that an
procedures for recognizing sabotage federal authorities’’ should be modified investigation will take time especially if
events and making its personnel aware to avoid conflict with established the event occurs at an unstaffed or
of sabotage events, while a ‘‘good first processes now in place, and that the remote facility. Thus, Xcel does not
step,’’ lacks sufficient detail upon which term should be specifically identified so believe that the standard should contain
the ERO can base compliance and the Requirements on affected entities an express time limit for reporting an
enforcement efforts. It characterizes are clear. act of sabotage since the amount of time
CIP–001–1 as an ‘‘entity-specific ‘fill-in- 456. Process Electricity Committee necessary to make that report may vary
the-blank’ standard’’ that does not advocates approval of CIP–001–0 as depending on the circumstances.
provide sufficient direction or guidance initially proposed by NERC without FirstEnergy suggests that CIP–001–1
for an entity to determine whether it is modification, but it objects to the should define the specified period for
in compliance. APPA further states that revised CIP–001–1 as placing an undue reporting an incident beginning from
Measure M1 provides no criteria for a burden on smaller entities. It is when the event is discovered or
Regional Entity, acting in its capacity as concerned that the Commission’s suspected to be sabotage. APPA is also
a compliance monitor, to make an proposal to require mandatory reporting concerned that a specific time limit for
objective determination that an entity’s to appropriate federal authorities within a report (such as a 60 minute
sabotage procedure is adequate. a specific time frame will impose requirement) would be burdensome to
454. In response to the Commission’s substantial burdens on end users with meet for a small LSE that is not
concern regarding the need for periodic little or no discernable benefit. It states continuously staffed when a triggering
review of sabotage response procedures, that there is no evidence that any event occurs outside staffed hours.
FirstEnergy suggests that CIP–001–1 entities—both regulated and
should define what time period is unregulated—under-report sabotage b. Commission Determination
sufficient for periodic reviews and events. Further, according to Process i. Applicability to Small Entities
suggests that a bi-annual review would Electricity Committee, the adoption of
be appropriate. MRO believes that a uniform requirements could require end 459. The Commission acknowledges
requirement to annually review the users to modify existing security the concerns of the commenters about
sabotage response procedures should be programs and procedures that are the applicability of CIP–001–1 to small
added to the Reliability Standard. designed to protect industrial facilities, entities and has addressed the concerns
455. NERC objects to the wording of whereas the utility generator of small entities generally earlier in this
the Commission’s proposed directive requirements could be conflicting or Final Rule. Our approval of the ERO
that NERC modify CIP–001–1 to require duplicative. Compliance Registry criteria to
an applicable entity to contact 457. Entergy and FirstEnergy express determine which users, owners and
appropriate federal authorities, such as concern that there is a potential for operators are responsible for compliance
the Department of Homeland Security, redundancy between CIP–001–1 and addresses the concerns of APPA and
in the event of sabotage within a other related federal reporting others.
specified period of time. NERC states standards. Entergy states that NERC 460. However, the Commission
the Commission’s directive is overly should consider ensuring that CIP–001– believes that there are specific reasons
prescriptive because it specifies 1 is consistent with, but not duplicative for applying this Reliability Standard to
language to be included in the standard of, these other requirements. FirstEnergy such entities, as discussed in the NOPR.
and thereby circumvents the Reliability states that both the Department of APPA indicates that some small LSEs
Standards development process. Energy (DOE) and the Energy do not own or operate ‘‘hard assets’’ that
Further, NERC objects that this directive Information Administration (EIA) are normally thought of as ‘‘at risk’’ to
would require entities in other nations impose reporting requirements that are sabotage. The Commission is concerned
such as Canada or Mexico to report to similar to CIP–001–1 and suggests that that, an adversary might determine that
the U.S. Department of Homeland to avoid conflicts the reporting a small LSE is the appropriate target
Security. Santa Clara suggests that requirements under this Reliability when the adversary aims at a particular
Requirement R4 (and corresponding Standard should be conformed to the population or facility. Or an adversary
measure M3) should be modified to existing DOE and EIA requirements. It may target a small user, owner or
state that ‘‘* * * contacts should be also states that nuclear units have their operator because it may have similar
established with the appropriate public own set of operating requirements, equipment or protections as a larger
safety officials or directly with the local including procedures for reporting facility, that is, the adversary may use
sabotage, and suggests that a company’s an attack against a smaller facility as a
208 See, e.g., APPA, FirstEnergy, SoCal Edison, compliance with NRC procedures training ‘‘exercise.’’ The knowledge of
Six Cities and TAPS. should be presumed to meet NERC sabotage events that occur at any facility
(including small facilities) may be event is not correctly reported because suggests that a bi-annual review would
helpful to those facilities that are it did not cause sufficient harm. be appropriate and MRO believes that
traditionally considered to be the an annual review requirement should be
iii. Procedures for Recognizing Sabotage
primary targets of adversaries as well as added to the Reliability Standard.
Events
to all members of the electric sector, the Periodic testing of the procedures
law enforcement community and other 464. Requirement R1 of CIP–001–1 through an exercise would assist in
critical infrastructures. provides that an applicable entity must determining if the procedures are
461. For these reasons, the have procedures ‘‘for the recognition of adequate for achieving the desired
Commission remains concerned that a and for making their operational result. Lessons learned from these
wider application of CIP–001–1 may be personnel aware of sabotage events on events would help in developing or
appropriate for Bulk-Power System its facilities and multi-site sabotage modifying the sabotage reporting
reliability. Balancing these concerns affecting larger portions of the procedures.
with our earlier discussion of the Interconnection.’’ The NOPR expressed 467. The Commission affirms the
applicability of Reliability Standards to concern that the provision does not NOPR directive and directs the ERO to
smaller entities, we will not direct the establish baseline requirements incorporate a periodic review or
ERO to make any specific modification regarding what issues should be updating of the sabotage reporting
to CIP–001–1 to address applicability. addressed by the developed procedures. procedures and for the periodic testing
However, we direct the ERO, as part of APPA goes even further and, of the sabotage reporting procedures. At
its Work Plan, to consider in the characterizing it as an entity specific this time, the Commission does not
Reliability Standards development fill-in-the-blank standard, contends that specify a review period as suggested by
process, possible revisions to CIP–001– it lacks sufficient detail upon which the FirstEnergy and MRO and, rather,
1 that address our concerns regarding ERO can base compliance and believes that the appropriate period
the need for wider application of the enforcement efforts. should be determined through the
465. While the Commission believes ERO’s Reliability Standards
Reliability Standard. Further, when
that this Reliability Standard can and development process. However, the
addressing such applicability issues, the
should be enhanced by specifying Commission directs that the ERO begin
ERO should consider whether separate,
baseline requirements regarding what this process by considering a staggered
less burdensome requirements for
issues should be addressed in the schedule of annual testing of the
smaller entities may be appropriate to
procedures for recognizing sabotage procedures with modifications made
address these concerns.
events and making personnel aware of when warranted formal review of the
ii. Definition of Sabotage such events, it disagrees with APPA that procedures every two or three years.
Requirement R1 lacks sufficient detail
462. Several commenters agree with v. Mandatory Reporting of a Sabotage
on which to base ERO compliance and
the Commission’s concern that the term Event
enforcement efforts. As indicated in
‘‘sabotage’’ should be defined. For the
Measure M1, an applicable entity must 468. CIP–001–1, Requirement R4,
reasons stated in the NOPR, we direct
have and maintain the procedure as requires that each applicable entity
that the ERO further define the term and
defined by Requirement R1. Thus, if an establish communications contacts, as
provide guidance on triggering events
applicable entity cannot provide the applicable, with the local FBI or Royal
that would cause an entity to report an
required procedure to the ERO or a Canadian Mounted Police officials and
event.209 However, we disagree with
Regional Entity auditor upon request, it develop reporting procedures as
those commenters that suggest the term
would likely be subject to an appropriate to its circumstances. The
‘‘sabotage’’ is so vague as to justify a
enforcement action. While we expect Commission in the NOPR expressed
delay in approval or the application of concern that the Reliability Standard
that an applicable entity that has made
monetary penalties. As explained in the does not require an applicable entity to
a good faith effort to develop a
NOPR, we believe that the term sabotage actually contact the appropriate
meaningful procedure to comply with
is commonly understood and that governmental or regulatory body in the
Requirement R1 (and Measure M1)
common understanding should suffice event of sabotage. Therefore, the
would not be subject to an enforcement
in most instances.210 Further, in the Commission proposed that NERC
action, an ERO or Regional Entity audit
interim while the matter is being modify the Reliability Standard to
team may provide steps to improve the
addressed by the Reliability Standards require an applicable entity to ‘‘contact
individual entity’s procedure, which
development process, we direct the ERO appropriate federal authorities, such as
would serve as a baseline for that entity
to provide advice to entities that have the Department of Homeland Security,
for any subsequent audit. Such an
concerns about the reporting of in the event of sabotage within a
approach would be acceptable and
particular circumstances as they arise. specified period of time.’’ 212
allow for meaningful compliance in the
463. Further, in defining sabotage, the 469. As mentioned above, NERC and
interim until CIP–001–1 is modified
ERO should consider FirstEnergy’s others object to the wording of the
pursuant to our directive.
suggestions to differentiate between proposed directive as overly
cyber and physical sabotage and iv. Periodic Review of Sabotage prescriptive and note that the reference
develop a threshold of materiality. Reporting Plans to ‘‘appropriate federal authorities’’ fails
However, regarding the latter 466. The Commission was concerned to recognize the international
suggestion, the Commission directs that that CIP–001–1 did not include a application of the Reliability Standard.
guidance for a threshold of materiality requirement for the periodic review or The example of the Department of
must be designed carefully to mitigate updating of sabotage reporting plans or Homeland Security as an ‘‘appropriate
the risk that an unsuccessful sabotage procedures, or for the periodic testing of federal authority’’ was not intended to
the sabotage reporting procedures to be an exclusive designation.

209 See NOPR at P 224.
210 Id.
verify that they achieve the desired Nonetheless, the Commission agrees
at P 224, n.140, quoting a dictionary
definition of ‘‘sabotage’’ as ‘‘destruction of property result.211 In response, FirstEnergy that a reference to ‘‘federal authorities’’
or obstruction of normal operations, as by civilians
or enemy agents. * * *’’ 211 NOPR at P 228. 212 Id. at P 231.
could create confusion. Accordingly, we events occurring outside staffed hours at operator and generator operator function
modify the direction in the NOPR and small entities. would apply to RTO, ISO and pooled
now direct the ERO to address our resource organizations. In this Final
c. Summary of Commission
underlying concern regarding Rule, conclusions concerning those
Determinations
mandatory reporting of a sabotage event. issues are covered in the Applicability
The ERO’s Reliability Standards 472. As explained in the NOPR, while Issues section.214 In essence, an
development process should develop the Commission has identified concerns organization may, but does not have to,
the language to implement this regarding CIP–001–1, we believe that accept compliance responsibility on
directive. the proposal serves an important behalf of its members. Since
purpose in ensuring that operating telecommunication is vital to the
470. As noted above, FirstEnergy, EEI entities properly respond to sabotage Reliable Operation of the Bulk-Power
and others express concern regarding events to minimize the adverse impact System, the Commission finds that it is
the potential for redundant reporting on the Bulk-Power System. Accordingly, not permissible to have either
under CIP–001–1 and other government the Commission approves Reliability unnecessary overlaps or gaps in
reporting standards, and the need for Standard CIP–001–1 as mandatory and telecommunications.
greater coordination. The Commission enforceable. In addition, pursuant to
understands the concern about multiple section 215(d)(5) of the FPA and a. Telecommunications (COM–001–1)
reporting channels that may arise and § 39.5(f) of our regulations, the 475. COM–001–0 215 seeks to ensure
the burden that this may present to Commission directs the ERO to develop coordinated telecommunications among
applicable entities. We direct the ERO to the following modifications to the operating entities, which are
explore ways to address these Reliability Standard through the fundamental to maintaining grid
concerns—including central Reliability Standards development reliability. This proposed Reliability
coordination of sabotage reports and a process: (1) Further define sabotage and Standard establishes general
uniform reporting format—in provide guidance as to the triggering telecommunications requirements for
developing modifications to the events that would cause an entity to specific operating entities, including
Reliability Standard with the report a sabotage event; (2) specify equipment testing and coordination. It
appropriate governmental agencies that baseline requirements regarding what also establishes English as the common
have levied the reporting requirements. issues should be addressed in the language between and among operating
471. The Commission stated that the procedures for recognizing sabotage personnel, and sets policy for using the
reporting of a sabotage event should events and making personnel aware of NERCNet telecommunications system.
occur within a fixed period of time, and such events; (3) incorporate a periodic COM–001–0 applies to transmission
referred to a Homeland Security review or updating of the sabotage operators, balancing authorities,
procedure that references a 60-minute reporting procedures and for the reliability coordinators and NERCNet
period for submitting a preliminary periodic testing of the sabotage user organizations.
reporting procedures and (4) require an 476. The Commission proposed to
report and a follow-up report within
applicable entity to contact appropriate approve Reliability Standard COM–001–
four to six hours.213 While commenters
governmental authorities in the event of 0 as mandatory and enforceable. In
raise a number of concerns about the
sabotage within a specified period of addition, the Commission proposed to
need for fairness in the implementation
time. In addition, we direct the ERO, as direct that NERC submit a modification
of such a requirement, they do not
part of its Work Plan, to consider to COM–001–0 that: (1) Includes
challenge the NOPR’s underlying
revisions to CIP–001–1 that address our Measures and Levels of Non-
concern or the appropriateness of such
concerns regarding applicability to Compliance; (2) includes generator
a provision. The Commission believes
smaller entities. The ERO should also operators and distribution providers as
that an applicable entity should report consider consolidation of the sabotage
a sabotage event in a timely manner to applicable entities and (3) includes
reporting forms and the sabotage Requirements for communication
allow government authorities and reporting channels with the appropriate
critical infrastructure members the facilities for use during emergency
governmental authorities to minimize situations.
opportunity to react in a meaningful the impact of these reporting 477. In addition, the Commission
manner to such information. Thus, the requirements on all entities. sought comments on specific
Commission directs the ERO to modify
3. COM: Communications requirements or performance criteria for
CIP–001–1 to require an applicable telecommunications facilities, noting
entity to contact appropriate 473. The Communications (COM) that COM–001–0 might be improved by
governmental authorities in the event of group contains two Reliability providing specific requirements for
sabotage within a specified period of Standards. The first requires that adequacy, redundancy, diverse routing,
time, even if it is a preliminary report. transmission operators, balancing and periodic testing. The Commission
The ERO, through its Reliability authorities and other applicable entities also sought comments on whether the
Standards development process, is have adequate internal and external relative roles of applicable entities
directed to determine the proper telecommunications facilities for the should be considered when setting
reporting period. In doing so, the ERO exchange of interconnection and down requirements for
should consider suggestions raised by operating information necessary to telecommunication facilities, since the
commenters such as FirstEnergy and maintain reliability. The second needs will vary based on role.
Xcel to define the specified period for Reliability Standard requires that these
reporting an incident beginning from communication facilities be staffed and 214 See Applicability Issues: Use of the NERC
when an event is discovered or available to address real-time Functional Model, supra section II.C.4.
suspected to be sabotage, and APPA’s emergencies and that operating 215 In its November 15, 2006, filing, NERC
concerns regarding events at unstaffed personnel carry out effective submitted COM–001–1, which supercedes the
or remote facilities, and triggering Version 0 Reliability Standard. COM–001–1 adds
communications. Measures and Levels of Non-Compliance to the
474. The NOPR contained a Version 0 Reliability Standard. In this Final Rule,
213 Id. at n.142. discussion of how the transmission we review the November version, COM–001–1.
478. Most comments address the operators. Further, SDG&E submits that, proposed Reliability Standard and the
specific modifications and concerns while generator operators and operation of the Bulk-Power System. It
raised by the Commission in the NOPR. distribution providers may logically contends that this aspect of the
Below, we address each topic have some role in enabling Commission’s proposed directive is
separately, followed by a summary of communications that help ensure duplicative and unnecessary when
our conclusions. reliability, SDG&E sees no basis for applied to entities in California, and
subjecting such entities to the same, risks being counterproductive unless
i. Applicability to Generator Operators
extensive requirements incumbent on applied with considerable restraint
and Distribution Providers and their
transmission operators. since California PUC’s Operation
Telecommunications Facility
483. APPA argues that, while Standards require power plants to
Requirements
telecommunications Reliability maintain the ability to communicate
479. The Commission stated in the Standards with generator operators and with the balancing authority at all times,
NOPR that communications with distribution providers as applicable and to plan for the continuity of
generator operators and distribution entities may be needed, they are already communications during emergencies.
providers are necessary to maintain subject to telecommunications 487. Process Electricity Committee
system reliability during normal and requirements as part of their bilateral agrees that the extent and maintenance
emergency situations, while recognizing interconnection agreements with of telecommunication facilities should
that telecommunication facility needs balancing authorities and transmission vary based on the operator’s potential
will vary between these two entities and providers. It contends that if NERC affect on system reliability. It points out
other reliability entities such as deems it necessary, a separate that existing regulations and contractual
reliability coordinators, transmission Reliability Standard should be obligations already require end users to
operators and balancing authorities. The developed to govern maintain adequate communications
Requirements for each of these entities telecommunications between balancing facilities. Further, it states that on-site
will vary according to its respective authorities and generator operators, and generation interconnected with the
roles. between transmission operators and electricity grid typically is required to
(a) Comments distribution providers under their maintain sufficient telecommunications
respective footprints. facilities between the generator owner
480. EEI supports the goals stated by 484. TAPS states that Requirement or operator and the grid operator. In the
the Commission with regard to COM– R1.4 has an ambiguous requirement 216 absence of evidence that this
001–1, in particular, the need to apply that, if applied to distribution providers arrangement is inadequate, Process
this Reliability Standard to distribution and generator operators, would impose Electricity Committee recommends that
providers. TVA agrees with the redundancy requirements well beyond the amended COM Reliability Standards
Commission’s reasoning that generator what is reasonably necessary for Bulk- be clarified so that they do not impose
operators and distribution providers Power System reliability. Further it new requirements on end users and
should be subject to this Reliability asserts that the NOPR provides no basis other entities that have only minimal
Standard, but seeks clarification that for expanding the Reliability Standard impact on the reliability of the
such entities may transfer their to small entities, such as a 2–MW interconnected transmission network.
responsibility for data sharing with and distribution provider or generator, much
reporting to NERC and Regional Entities (b) Commission Determination
less than one that has no connection to
by contract to another entity. the bulk transmission system. Finally, 488. The Commission reaffirms its
481. In contrast, MRO, APPA, TAPS position that generator operators and
TAPS contends that, in making this
and SDG&E indicate that applying this distribution providers should be
proposal, the Commission is ‘‘over-
Reliability Standard to generator included as applicable entities in COM–
stepping its bounds’’ by not leaving it to
operators and distribution providers 001–1 to ensure there is no reliability
the ERO’s expert judgment whether
may not be appropriate. APPA argues gap during normal and emergency
COM–001–1 has sufficient coverage to
generator operators and distribution operations. For example, during a
protect Bulk-Power System reliability
providers do not affect the Bulk-Power blackstart when normal
and states that, in any event,
System in the same manner as a communications may be disrupted, it is
applicability should be limited through
reliability coordinator, balancing essential that the transmission operator,
NERC’s registry criteria and definition
authority or transmission provider does, balancing authority and reliability
of bulk electric system. coordinator maintain communications
since generator operators and 485. MRO further states that applying
distribution providers only have a with their distribution providers and
this Reliability Standard to generator
secondary or support role with respect generator operators. However, the
operators and distribution providers and
to reliability of the Bulk-Power System. current version of Reliability Standard
including Requirements for
482. Further, APPA and SDG&E are COM–001–1 does not require this
communication facilities for use during
concerned that the Commission’s because it does not include generator
emergency situations may also not be
proposal would unnecessarily subject operators and distribution providers as
appropriate if the distribution provider
generator operators and distribution applicable entities. We clarify that the
does not operate its own systems.
providers to Requirements that were 486. California PUC believes that the
NOPR did not propose to require
designed for transmission operators. For Commission’s assertion of authority to
redundancy on generator operators’ or
example, APPA indicates that NERCNet impose Reliability Standards applicable
distribution providers’
was designed as part of the NERC to either generator operators or
telecommunication facilities or that
Interregional Security Network for distribution providers should be
generator operators or distribution
communications among reliability extremely limited, and should be based
providers be trained on anything not
coordinators, balancing authorities and on an essential nexus between the

related to their functions during normal
transmission operators, and was not and emergency conditions. We expect
designed to connect generators to their 216 COM–001–1 Requirement R1.4 states: ‘‘Where the telecommunication requirements for
balancing authorities and distribution applicable, these [telecommunications] facilities all applicable entities will vary
providers to their transmission shall be redundant and diversely routed.’’ according to their roles and that these
requirements will be developed under 215(d)(5) of the FPA which authorizes requirements. Therefore, we adopt our
the Reliability Standards development the Commission, upon its own motion, proposal to require the ERO to modify
process. to order the ERO ‘‘to submit to the COM–001–1 to apply to generator
489. As stated in the Applicability Commission a proposed Reliability operators and distribution providers.
Issues section of this Final Rule, entities Standard or a modification to a However, we recognize that some of the
may share responsibility for complying Reliability Standard that addresses a existing requirements (such as
with Reliability Standards and the specific matter if the Commission Requirement R6 related to NERCNet)
ERO’s registration process takes this considers such a new or modified need not apply to generator operators
into account.217 We believe that this Reliability Standard appropriate to carry and distribution providers. In light of
satisfies TVA’s concern about data out this section.’’ We have identified commenters’ concerns, as an alternative,
sharing and reporting responsibilities such a matter and have left to the ERO it would be acceptable for the ERO to
and MRO’s concern about applying this to develop a specific proposal by develop a new Reliability Standard that
Reliability Standard to distribution invoking its Reliability Standards would specifically address an
providers only if they operate their own development process. Further, appropriate range of Requirements for
systems. consistent with our discussion above telecommunication facilities of
490. The Commission agrees with regarding applicability of Reliability generator operators and distribution
APPA that the primary purpose of Standards, applicability would be providers that reflect their respective
Requirement R6 is to provide limited through NERC’s registry criteria roles on Reliable Operation of the Bulk-
information to ensure reliable and definition of bulk electric system at Power System.
interregional operations and therefore this time.
should not apply to generator operators 493. In response to California PUC, in ii. Requirements for
and distribution providers. However, we this Final Rule we are initially limiting Telecommunications Facilities
disagree that this leads to the the applicability of these Reliability 495. The Commission sought
conclusion that generator operators and Standards to those users, owners and comment on specific requirements or
distribution providers should not be operators of the Bulk-Power System on performance criteria for
included in COM–001–1. As we have the ERO’s compliance registry. The telecommunication facilities and
stated, telecommunication requirements Commission notes that it has whether the modified Reliability
for all applicable entities will vary jurisdiction under section 215 of the Standard should provide requirements
according to their roles. In modifying FPA over all users, owners and that also consider the relative role of
COM–001–1 through the Reliability operators of the Bulk-Power System to applicable entities.
Standards development process, the ensure Reliable Operation of the Bulk-
Commission believes that the ERO Power System. To ensure reliability, it (a) Comments
should create appropriate is important to include appropriate 496. A number of commenters agree
telecommunications requirements for generator operators and distribution with the Commission that the relative
generator operators and distribution providers as applicable entities in role of an entity should be taken into
providers, which may be additional and Reliability Standard COM–001–1. account when specifying the
separate Requirements to COM–001–1 However, any generator operator or requirements for its telecommunications
or, alternatively, a new Reliability distribution provider that is not a user, facilities.218 For example, ISO–NE states
Standard as suggested by APPA. owner or operator of the Bulk-Power that a single generator operator will not
491. In response to SDG&E, the System will not be included. Also, at need the level of redundancy and
Commission’s intent is not to subject this time, the Bulk-Power System is diverse routing that a reliability
generator operators and distribution defined on the basis of the ERO’s coordinator needs.
providers to the same requirements definition of the ‘‘bulk electric system.’’ 497. Many commenters recommend
placed on transmission operators. As The Commission believes that this that telecommunications facilities
part of the modification of this should satisfy California PUC’s concern requirements should be specified in
Reliability Standard or development of that this Reliability Standard be limited broad terms. EEI, APPA, Alcoa,
a new Reliability Standard to include to Bulk-Power System operations. We International Transmission, LPPC and
the appropriate telecommunications will not further limit our directive as to SoCal Edison believe that revision to
facility requirements for generator which entities this Reliability Standard COM–001–1 should provide specific or
operators and distribution providers, the should apply. minimum requirements for adequacy,
ERO should take into account what 494. As we explained in the NOPR, redundancy and diverse routing.
would be required of generator communication with generator However, EEI, Alcoa and Northern
operators and distribution providers in operators and distribution providers Indiana maintain that entities should
terms of telecommunications for the becomes especially important during an have flexibility in meeting the
Reliable Operation of the Bulk-Power emergency when generators with black requirements and to allow for
System, instead of applying the same start capability must be placed in innovative technological advancements.
requirements as are placed on other service and nearby loads restored as an Alcoa and Northern Indiana maintain
reliability entities such as reliability initial step in system restoration. This that without flexibility, an applicable
coordinators, balancing authorities and occurs at a critical time when normal entity may choose a less optimal
transmission operators. communication paths may be disrupted. solution just to comply with the
492. With regard to TAPS’s comment, While many generator operators and Reliability Standard. EEI asserts that
the Commission has identified a distribution providers may have such flexibility will also permit
concern and directs that the ERO telecommunications requirements alternative means of implementing the
address the matter through its pursuant to a bilateral contract as requirements that will translate into cost
Reliability Standards development indicated by APPA, it is important that savings. International Transmission
process. This comports with section all generator operators and distribution
providers identified by the ERO through 218 See, e.g., EEI, International Transmission,
217 SeeApplicability Issues: Applicability to its registration process are subject to ISO–NE, Process Electricity Committee and SoCal
Small Entities, supra section II.C.2. uniform telecommunications Edison.
cautions that we should not prejudice facilities’’ is generally understood to necessary to ensure system reliability.
the modification of this Reliability mean both voice and data facilities, the We believe that the ERO must specify
Standard by indicating the specific current practice is to display alarms requirements for using
requirements or the performance only for data facilities. Requirement R2 telecommunications facilities during
criteria. could be misinterpreted to require normal and emergency conditions that:
498. APPA states that, because the alarms on voice facilities as well, which (1) Reflect the roles of the applicable
communications requirements for an would be impractical. entities and their impact on Reliable
entity that is responsible for serving 502. Six Cities is concerned that the Operation and (2) include adequate
3,000 MW of load is distinctly different scope of improper conduct under the flexibility. Accordingly, the
from another entity that serves 30 MW ‘‘NERCNet security policy’’ in Commission directs the ERO to modify
of load, the ERO should take the size of Attachment 1 is virtually limitless 219 COM–001–1 through the Reliability
the entity into consideration. Six Cities recognizes that it would be Standards development process to
499. NERC believes that the questions difficult to provide a comprehensive address our concerns. The Commission
posed by the NOPR regarding and detailed list of all conduct that believes that the concerns of Entergy
performance criteria should be might be considered a misuse of and FirstEnergy are best addressed by
considered through the Reliability NERCNet data, but that difficulty does the ERO in the Reliability Standards
Standards development process, in not justify exposing NERCNet users to development process.
accordance with NERC’s Work Plan, the risk of monetary penalties based on 505. Six Cities suggests specific new
which will allow a broader industry amorphous and unbounded descriptions improvements to COM–001–1. As stated
debate on the requirements for of potentially violative conduct. Six above, such comments should be
telecommunications facilities. This Cities states that one solution would be addressed as the ERO modifies the
approach will avoid any potential to limit the imposition of monetary Reliability Standards in the Reliability
conflicts with the requirements already penalties for misuse of NERCNet data to Standards development process.
established in the telecommunications instances where such misuse is
industry and by the Institute of intentional or grossly negligent. iii. Measures and Levels of Non-
Electrical and Electronics Engineers. According to Six Cities, it would be Compliance
500. Entergy states that it is unclear appropriate to exact a monetary penalty 506. In its November 15, 2006, filing,
what cyber assets are covered by COM– where a NERCNet user deliberately uses NERC submitted COM–001–1, which
001–0. Entergy believes that the NERCNet data for unauthorized or supersedes the Version 0 Reliability
Reliability Standard should focus on unreasonable purposes. Six Cities asks Standard. COM–001–1 adds Measures
telecommunications that support the that it be modified to provide for a and Levels of Non-Compliance to the
operation of critical assets. Entergy also warning for the improper disclosure of Version 0 Reliability Standard.
believes that COM–001–0 should be NERCNet data where the disclosure was
expanded to include advances in (a) Comments
not intentional or grossly negligent.
communications technology. It states 507. ISO–NE notes that Compliance
that NERC should consider addressing (b) Commission Determination 1.1 of COM–001–0 specifies that
the following in a way that will 503. The Commission adopts its ‘‘Regional Reliability Organizations
facilitate an understanding of the NOPR proposal that shall be responsible for compliance
Reliability Standards’ requirements: (1) telecommunications facility monitoring * * *.’’ ISO–NE suggests
Voice communications; (2) command requirements must reflect the roles of that since NERC designed and created
and control data communications; (3) the respective operating or reliability NERCNet, NERC should be responsible
security coordination data entities that are included in the for maintaining and ensuring the
communications; (4) digital messaging applicability section in this Reliability compliance with the Reliability
communications; (5) human linguistic Standard and how they would affect the Standard rather than regional reliability
convention and (6) other types of reliability of the Bulk-Power System. organizations. ISO–NE recommends that
communications, including video We note that most commenters agree the Commission direct NERC to modify
conferencing and communications with with this approach. Compliance 1.1 to provide that NERC
remote security cameras. Entergy 504. The Commission agrees with shall be responsible for monitoring
believes that this could be accomplished commenters that flexibility is important compliance of the NERCNet user
through an enhancement to the in setting telecommunications organizations.
definition of communications in the requirements in order to foster
NERC glossary and recasting COM–001– (b) Commission Determination
innovation, allow the adoption of new
0 to improve the specificity of technologies and provide for cost- 508. With respect to ISO–NE’s
requirements for each form of effective solutions for compliance with comment, we find that a regional
communication. Finally, Entergy the Reliability Standard. However, the reliability organization does not have
believes that Requirement R4 of COM– Commission finds that certain any role with compliance matters; that
001–0, which requires reliability modifications to COM–001–1 are role is reserved for the ERO or the
coordinators, transmission operators Regional Entities. However, we disagree
and balancing authorities to use English 219 Attachment 1 provides that Violations of the with ISO–NE that the ERO must replace
in all types of communications, should NERCNet Security Policy shall include, but not be the regional reliability organization as
limited to any act that: the compliance monitor. The fact that
apply only to verbal and written
Exposes NERC or any user of the NERCNet to
communications. actual or potential monetary loss through the
NERC designed and created NERCNet
501. FirstEnergy asserts that the compromise of data security or damage. does not require the ERO to be the
Requirement R2 is unclear because it Involves the disclosure of trade secrets, compliance monitor. Section 215 of the
does not specify whether the phrase intellectual property, confidential information or FPA states that the ERO may delegate
‘‘telecommunication facilities’’ covers the unauthorized use of data. compliance and enforcement authority
Involves the use of data for illicit purposes,
both voice and data facilities in the which may include violation of any law, regulation
to a Regional Entity, even if the ERO
context of alarms. It states that, although or reporting requirement of any law enforcement or creates the Reliability Standards.
the word ‘‘telecommunications government body. Therefore, although we direct that the
regional reliability organization should communication paths of any condition is misplaced, since, as we explain in our
not be the compliance monitor for that could threaten the reliability of Applicability discussion above, we are
NERCNet, we leave it to the ERO to their areas or when firm load shedding approving NERC’s registry process,
determine whether it is the appropriate is anticipated. including the registry criteria.
compliance monitor or if compliance 511. The Commission proposed in the Therefore, we adopt our proposal to
should be monitored by the Regional NOPR to approve Reliability Standard require the ERO to modify COM–002–2
Entities for NERCNet User COM–002–1 as mandatory and to apply to distribution providers
Organizations. enforceable. In addition, the through its Reliability Standards
Commission proposed to direct that development process.
iv. Summary of Commission 514. The Commission believes that
Determination NERC submit a modification to COM–
002–1 that: (1) Includes Measures and this Reliability Standard does not alter
509. While the Commission has Levels of Non-Compliance; (2) includes who would operate a distribution
identified a number of concerns with a Requirement for the reliability provider’s system. It only concerns
regard to COM–001–1, this Reliability coordinator to assess and approve communications, not the operation of
Standard is independently enforceable actions that have impacts beyond the the distribution system.
without the modifications we are area views of transmission operators or
directing. Therefore, the Commission ii. Measures and Levels of Non-
balancing authorities; (3) includes Compliance
approves Reliability Standard COM– distribution providers as applicable
001–1 as mandatory and enforceable. entities and (4) requires tightened (a) Comments
Because of the importance of this communications protocols, especially 515. APPA notes that the Levels of
Reliability Standard in requiring for communications during alerts and Non-Compliance for COM–002–2 are
transmission operators and others to emergencies. With respect to this final inadequate in two respects: (1)
have necessary telecommunications issue, the Commission proposed reliability coordinators are not included
equipment, we additionally, pursuant to alternatively to direct NERC to develop in any Level of Non-Compliance and (2)
section 215(d)(5) of the FPA and a new Reliability Standard that the Levels of Non-Compliance for
§ 39.5(f) of our regulations, direct the responds to Blackout Report transmission operators and balancing
ERO to develop a modification to COM– Recommendation No. 26, which deals authorities in Compliance D.2 do not
001–1 through the Reliability Standards with the need for tightened reference Requirements R1 and R2.
development process that: (1) Expands communications protocols. Therefore, APPA would support
the applicability to include generator approval of COM–002–2 as a mandatory
operators and distribution providers and i. Applicability to Distribution Providers Reliability Standard, but would not
includes Requirements for their (a) Comments support levying penalties for violating
telecommunications facilities; (2) incomplete portions of the Reliability
identifies specific requirements for 512. While EEI states that there is a
Standard.
telecommunications facilities for use in clear need to apply the Reliability
normal and emergency conditions that Standard to distribution providers, (b) Commission Determination
reflect the roles of the applicable APPA finds the proposal problematic 516. As stated in the Common Issues
entities and their impact on Reliable because it would mean that close to section, a Reliability Standard is
Operation and (3) includes adequate 2,000 public power systems would have enforceable even if it does not contain
flexibility for compliance with the to be added to the compliance registry. Levels of Non-Compliance.221 However,
Reliability Standard, adoption of new APPA argues that the Commission the Commission agrees with APPA that
technologies and cost-effective should instruct NERC to consider the this Reliability Standard could be
solutions. As an alternative to applying applicability of COM–002–2 to improved by incorporating the changes
this Reliability Standard to generator distribution providers through its proposed by APPA. Therefore, when
operators and distribution providers, the Reliability Standards development reviewing the Reliability Standard
ERO may develop a new Reliability process. MRO requests that the through the Reliability Standards
Standard that will address the Commission clarify whether the development process, the ERO should
Requirements for telecommunication distribution providers will continue to consider APPA’s concerns.
facilities applicable to generator operate their own systems in the future.
iii. Reliability Coordinator Assessment
operators and distribution providers. (b) Commission Determination and Approval of Actions that have
b. Communications and Coordination 513. The Commission finds that, Impacts Beyond the Area Views of
(COM–002–2) during both normal and emergency Transmission Operators and Balancing
510. COM–002–2 220 seeks to ensure operations, it is essential that the Authorities
that transmission operators, generator transmission operator, balancing (a) Comments
operators and balancing authorities have authority and reliability coordinator
517. Alcoa argues that there is a need
adequate communications and that their have communications with distribution
for communication regarding operating
communications capabilities are staffed providers. In response to APPA, as
actions taken by transmission operators
and available to address real-time discussed above, any distribution
and balancing authorities that may have
emergency conditions. This Reliability provider that is not a user, owner or
impacts beyond their area views.
Standard requires balancing authorities operator of the Bulk-Power System
However, a number of commenters
and transmission operators to notify would not be required to comply with
oppose the Commission’s proposal to
others through pre-determined COM–002–2, even though the
modify the Reliability Standard to
Commission is requiring the ERO to
require reliability coordinators to assess
220 In its November 15, 2006, filing, NERC modify the Reliability Standard to
submitted COM–002–2, which supercedes the and approve actions that have impacts
include distribution providers as
Version 1 Reliability Standard. COM–002–2 adds
Measures and Levels of Non-Compliance to the
applicable entities. APPA’s concern that 221 See Common Issues Pertaining to Reliability
Version 1 Reliability Standard. In this Final Rule, 2,000 public power systems would have Standards: Measures and Levels of Non-
we review the November version, COM–002–2. to be added to the compliance registry Compliance, supra section II.E.2.
beyond the area views of transmission (b) Commission Determination proposed directive as stated in the
operators or balancing authorities and 520. The Commission reaffirms its NOPR.
seek clarifications.222 Alcoa, California belief that Reliable Operation of the 522. In response to commenters, the
PUC, SDG&E and Xcel are concerned Bulk-Power System can only be Commission clarifies that the proposed
that obtaining approval from reliability achieved by coordinated efforts of all directive does not conflict with the
coordinators could create delays in operating entities, such as reliability transmission operators’ and balancing
completing the operating action in coordinators, transmission operators authorities’ rights to take actions
emergency situations. Xcel and Alcoa and balancing authorities in operating necessary to preserve reliability of their
request that the Commission clarify that their respective systems and performing areas and alleviate operating
this requirement would not prevent their respective functions in accordance emergencies, consistent with
timely performance by a transmission with their responsibilities and Requirement R1 and R2 in TOP–001–
operator of actions necessary to authorities. Most operating actions 1.226 Further, the proposed directive
maintain the reliability of its system taken by transmission operators and does not in any way diminish their
under emergency conditions.223 Both balancing authorities in real-time would operating authority regarding local area
Alcoa and Xcel are concerned that only affect their own areas and reliability for normal and emergency
waiting for an assessment and approval equipment and have no adverse impacts situations, a responsibility that is under
by a reliability coordinator may not be on the interconnection reliability the responsibility of a transmission
feasible, especially during emergencies. operating limits, and therefore they have operator or a balancing authority.
Xcel further asks the Commission to unilateral authority to act. However However, the majority of their operating
clarify that the entity taking operating some operating actions that would have actions are not emergency actions and
actions should not be held responsible impacts beyond their own areas must would only affect a transmission
for delays caused by the reliability involve the reliability coordinator who operator’s or balancing authority’s area
coordinator’s assessment and approval. has the wide-area views and the of responsibilities. Since these actions
Alcoa suggests that there should be a necessary operating tools, including are expected to have little impact
clear definition of what actions have an monitoring facilities and real-time outside of the transmission operator’s or
impact beyond the area views of analytic tools with wide-area balancing authority’s area, the authority
transmission operators or balancing representation to enable the reliability to take unilateral actions remains with
authorities. SDG&E further states that coordinator to fulfill its the transmission operator or balancing
serious damage to transmission responsibility.225 In response to Alcoa, authority. Other non-emergency actions
equipment could occur if the the Commission believes that actions should be coordinated with the
transmission operator is not able to take that have an impact beyond an area will, reliability coordinator prior to taking
immediate action during an emergency. in general, vary based on the conditions
518. ISO–NE is concerned that the action.
at the time of the action.
Commission proposal goes too far and if 521. Further, we clarify that we did 523. Regarding SDG&E’s concern that
implemented, will prevent capable not propose to require an entity to serious damage to transmission
transmission operators from quickly inform its reliability coordinator of equipment could occur if the
addressing reliability problems that may every action it takes. Instead, the transmission operator is not able to take
arise. It maintains that transmission proposed directive included a immediate action during an emergency,
operators usually do not have enough Requirement for the reliability we believe this is adequately addressed
time to inform the reliability coordinator to assess and approve only under Requirement R3 of TOP–001–0
coordinator, who must then ‘‘assess and those actions that have impacts beyond which provides that operating entities
approve’’ the proposed action. If the the area views of transmission operators need not comply with directives from
Commission’s proposal is implemented, and balancing authorities. We remain reliability coordinators when such
transmission operators will doubt convinced that it is the reliability actions would violate safety, equipment,
themselves and delay necessary action. coordinator’s responsibility to ensure regulatory or statutory requirements.
However, it does not see any problem Reliable Operation of its reliability 524. NERC should consider Xcel’s
for the New England balancing area and coordinator area. The reliability suggestion that the entity taking
the NPCC region, because ISO–NE coordinator must also ensure that operating actions should not be held
serves as the New England reliability actions taken by operating entities responsible for delays caused by the
coordinator, balancing authority and under its authority will not have wide- reliability coordinator’s assessment and
transmission operator. area impacts that would adversely approval in the Reliability Standards
519. APPA contends that the impact Reliable Operation of the Bulk- development process. We note that the
Commission’s proposed directive Power System. Therefore, we adopt the operating entity has the authority to take
appears to have been covered under emergency actions to protect its system
Reliability Standard IRO–005–1. EEI Authorities * * * operate to prevent the that may circumvent or preempt the
agrees, stating that IRO–005–1 already likelihood that a disturbance, action or non-action
reliability coordinator’s approval
requires a reliability coordinator to in its Reliability Coordinator Area will result in a
SOL or IROL violation in another area of the process under TOP–001–1 Requirement
ensure that transmission operators and Interconnection.’’ R3 in cases of personnel safety,
balancing authorities operate to prevent 225 The NERC glossary states that A reliability
potential equipment failure or
action or non-action that will impact coordinator is the ‘‘entity that is the highest level
environmental needs.
neighboring areas.224 of authority who is responsible for the reliable
operation of the bulk electric system, has the wide- 525. We disagree with commenters
area view of the bulk electric system, and has the that the Commission’s proposed
222 See, e.g., APPA, EEI, California PUC, ISO–NE
operating tools, processes and procedures,
and SDG&E. including the authority to prevent or mitigate 226 TOP–001–1, R1 states in part ‘‘Each
223 Alcoa notes that this is consistent with the
emergency operating situations in both next-day
Requirements in TOP–001–1, which provides analysis and real-time operations. The reliability transmission operator shall have the responsibility
transmission operators and balancing authorities coordinator has the purview that is broad enough and clear decision-making authority to take
wide latitude to preserve reliability of their area. to enable the calculation of IROLs, which may be whatever actions are needed to ensure the
224 The Requirement R13 of IRO–005–1 provides based on the operating parameters of transmission reliability of its area * * * ’’ and R2 states in part
that ‘‘[e]ach reliability coordinator shall ensure that systems beyond any transmission operator’s ‘‘Each transmission operator shall take immediate
Transmission Operators, Balancing vision.’’ NERC Glossary at 15. actions to alleviate operating emergencies * * *.’’
directive is already covered under responds to the Blackout Report Staff Preliminary Assessment supports
Requirement R13 of IRO–005–1, which Recommendation. the need to develop additional
requires each reliability coordinator to Reliability Standards addressing
(a) Comments
ensure that all transmission operators, consistent communications protocols
balancing authorities and others operate 528. In its response to the Staff among personnel responsible for the
to prevent the likelihood that a Preliminary Assessment, NERC agreed reliability of the Bulk-Power System.
disturbance, action, or non-action in its with the need to develop additional 533. While we agree with EEI that
reliability coordinator area will result in Reliability Standards addressing EOP–001–0, Requirement R4.1 requires
a SOL and IROL violation in another consistent communications protocols communications protocols to be used
area of the Interconnection. In order for among personnel responsible for the during emergencies, we believe, and the
the reliability coordinator to carry out reliability of the Bulk-Power System.229 ERO agrees, that the communications
its function under IRO–005–1, it must 529. EEI supports the Commission in protocols need to be tightened to ensure
have information from the transmission its concerns regarding Blackout Reliable Operation of the Bulk-Power
operators and balancing authorities. Recommendation No. 26 on emergency System. We also believe an integral
However, IRO–005–1 does not require communications. However, EEI states component in tightening the protocols is
transmission operators and balancing that Requirement R4 of EOP–001–0, to establish communication uniformity
authorities to provide the reliability Emergency Operations Planning, as much as practical on a continent-
coordinator with the information it addresses the Commission’s concerns wide basis. This will eliminate possible
would need to prevent the likelihood about communication protocols during ambiguities in communications during
that an action from these two entities emergency conditions.230 EEI normal, alert and emergency conditions.
will result in a SOL or IROL violation recommends that, instead of duplicating This is important because the Bulk-
in another area of the Interconnection. the same requirement in COM–002–2, Power System is so tightly
The Commission’s directive ensures that the Commission should consider interconnected that system impacts
the reliability coordinator has such directing NERC to provide an often cross several operating entities’
information. Therefore, we do not interpretation on the elements of such areas.
believe that COM–002–2 is duplicative protocols. 534. Regarding APPA’s suggestion
of IRO–005–1. 530. APPA believes that the that it may be beneficial to include
526. Accordingly, we direct the ERO communications protocols to be used communication protocols in the
to include a Requirement for the during emergencies should be included relevant Reliability Standard that
reliability coordinator to assess and in the relevant Reliability Standard that governs those types of emergencies, we
approve actions that have impacts governs each type of emergency, rather direct that it be addressed in the
beyond the area views of transmission than in COM–002–2. For example, Reliability Standards development
operators or balancing authorities, Requirement R3 of Reliability Standard process.
including how to determine whether an VAR–002–1 establishes the protocol for 535. In response to MISO’s contention
action needs to be assessed by the communication with the transmission that Blackout Report Recommendation
reliability coordinator. This operator if a generator loses its ability to No. 26 has been fully implemented, we
Requirement is best developed under provide voltage control. By keeping the note that Recommendation No. 26
the Reliability Standards development necessary communication protocols addressed two matters. We believe
process including the consideration clustered with the events to which they MISO is referring to the second part of
whether this Requirement should be apply, NERC would make the Reliability the recommendation requiring NERC to
included in this communications Standards more user-friendly. ‘‘[u]pgrade communication system
Reliability Standard or an operating 531. MISO claims that Blackout hardware where appropriate’’ instead of
Reliability Standard. Report Recommendation No. 26 on tightening communications protocols.
iv. Tightened Communications tightened communications protocols While we commend the ERO for taking
Protocols dealt primarily with NERC appropriate action in upgrading its
infrastructure and has been fully NERCNet, we remind the industry to
527. The Blackout Report cited
implemented. It is concerned that continue their efforts in addressing the
ineffective communications as a factor
developing measures that require first part of Blackout Recommendation
common to the August 14, 2003
ongoing administration will impede No. 26.
blackout and other previous major
rather than improve timely 536. Accordingly, we direct the ERO
outages in North America.227 In
communications in an emergency. to either modify COM–002–2 or develop
addition, Recommendation No. 26 of the
Blackout Report instructed NERC, a new Reliability Standard that requires
working with reliability coordinators tightened communications protocols,
532. We adopt our proposal to require especially for communications during
and control area operators, to ‘‘[t]ighten the ERO to establish tightened
communications protocols, especially alerts and emergencies.
communication protocols, especially for
for communications during alerts and communications during alerts and v. Other Issues
emergencies * * * ’’.228 In the NOPR, emergencies, either as part of COM– (a) Comments
the Commission endorsed Blackout 002–2 or as a new Reliability Standard.
Recommendation No. 26 and proposed 537. Santa Clara requests clarification
We note that the ERO’s response to the whether the phrase ‘‘Such
to direct the ERO to require tightened
communications protocols, especially 229 NOPR
communications shall be staffed and
at P 255.
for communications during alerts and 230 EOP–001–0, Requirement R4 provides, in
available’’ in Requirement R1 applies
emergencies. Alternatively, we relevant part, that: ‘‘[e]ach Transmission Operator only to operating staff available on site
proposed to direct the ERO to develop and Balancing Authority shall have emergency at all times or includes repair personnel
plans that will enable it to mitigate operating who are available only on an on-call
a new Reliability Standard that emergencies. At a minimum, Transmission
Operator and Balancing Authority emergency plan
basis.
227 Blackout Report at 107. shall include [c]ommunication protocols to be used 538. FirstEnergy asks that the
228 Id. at 141. during emergencies.’’ Reliability Standard specify what is
meant by ‘‘staffed’’ and states that the Recommendation No. 26 in the manner proposed Reliability Standard
term should not require a physical described above. Finally, we direct the applicable to the reliability coordinator.
presence at all facilities at all times ERO to include APPA’s suggestions to FirstEnergy states the reliability
because some units, such as peaking complete the Measures and Levels of coordinator should take an active role
units, are not staffed 24 hours a day. In Non-Compliance in its modification of and should have clearly defined,
addition, FirstEnergy suggests that, COM–002–2 through the Reliability specific responsibilities for coordinating
because nuclear units are already Standards development process. and implementing emergency
subject to communications requirements operations plans. In addition,
4. EOP: Emergency Preparedness and
in their operating procedures, their FirstEnergy states that inclusion of the
Operations
compliance with NRC operating reliability coordinator as an applicable
procedures should be deemed in 542. The Emergency Preparedness entity removes ambiguity that may exist
compliance with the NERC Reliability and Operations (EOP) group of proposed concerning the reliability coordinator’s
Standards. Reliability Standards consists of nine role and its responsibilities during
539. Similarly, Six Cities states that, Reliability Standards that address restoration activities.
to avoid unnecessary staffing burdens, preparation for emergencies, necessary 547. SoCal Edison agrees that certain
particularly for smaller entities, the actions during emergencies and system aspects of EOP–001–0 should be
Commission should direct NERC to restoration and reporting following applicable to reliability coordinators;
clarify COM–002–2 by providing that disturbances. however, it proposes that NERC,
identification of an emergency contact a. Emergency Operations Planning through the stakeholder process, should
person on call to respond to real-time (EOP–001–0) receive input from stakeholders on
emergency conditions will constitute which requirements should be exclusive
543. NERC’s proposed Reliability to the transmission operator or
adequate compliance.
Standard EOP–001–0 requires each balancing authority with the reliability
(b) Commission Determination transmission operator and balancing coordinator responsible only for
540. Santa Clara, FirstEnergy and Six authority to develop, maintain and collecting and incorporating this
Cities suggest specific new implement a set of plans to mitigate information into its overarching plan.
improvements to the Reliability operating emergencies. These plans MISO, on the other hand, questions the
Standards. As stated above, such must be coordinated with other need for the proposed modification,
comments should be considered as the transmission operators and balancing contending that the reliability
ERO modifies the Reliability Standards authorities and the reliability coordinators have parallel
in the Reliability Standards coordinator. responsibilities laid out in other EOP
544. In the NOPR, the Commission Reliability Standards.
development process.
proposed to approve Reliability
vi. Summary of Commission Standard EOP–001–0 as mandatory and (b) Commission Determination
Determination enforceable. In addition, pursuant to 548. In the NOPR, we stated that the
541. While the Commission identified section 215(d)(5) of the FPA and proposed Reliability Standard applies to
concerns regarding COM–002–2, the § 39.5(f) of our regulations, the transmission operators and balancing
proposed Reliability Standard serves an Commission proposed to direct that authorities, that the applicability
important purpose by requiring users, NERC submit a modification to EOP– portion of the Reliability Standard is
owners and operators to implement the 001–0 that: (1) Includes the reliability sufficiently clear as to who must comply
coordinator as an applicable entity with with the filed version of the Reliability
necessary communications and
responsibilities as described above; (2) Standard and that the Reliability
coordination among entities.
clarifies the 30-minute requirement in Standard can be enforced against these
Accordingly, the Commission approves
Requirement R2 of the Reliability entities.232 However, we recognized
Reliability Standard COM–002–2 as
Standard to state that load shedding commenters’ concerns that the
mandatory and enforceable. In addition,
should be capable of being implemented Reliability Standard does not assign a
pursuant to section 215(d)(5) of the FPA
as soon as possible and much less than role to the reliability coordinator, which
and § 39.5(f) of our regulations, the
30 minutes and (3) includes definitions is the highest level of authority
Commission directs the ERO to develop
of system states to be used by the responsible for reliable operation of the
a modification to COM–002–2 through
operators, such as transmission-related Bulk-Power System and which has a
the Reliability Standards development
‘‘normal,’’ ‘‘alert,’’ and ‘‘emergency’’ wide-area view. MISO contends that
process that: (1) Expands the
states, provides criteria for entering into EOP–001–0 need not apply to reliability
applicability to include distribution
these states and identifies the authority coordinators because they have parallel
providers as applicable entities; (2)
that will declare these states. responsibilities in other EOP Reliability
includes a new Requirement for the 545. Most of the comments address
reliability coordinator to assess and Standards. We disagree. Given the
the specific modifications and concerns importance NERC attributes to the
approve actions that have impacts raised by the Commission in the NOPR.
beyond the area view of a transmission reliability coordinator in connection
Below, we address each topic with matters covered by EOP–001–0, the
operator or balancing authority 231 and separately, followed by an over-all
(3) requires tightened communications Commission is persuaded that specific
conclusion and summary. responsibilities for the reliability
protocols, especially for
communications during alerts and i. Applicability to reliability coordinator in the development and
emergencies. Alternatively, with respect coordinators coordination of emergency plans must
to this final issue, the ERO may develop be included as part of this Reliability
(a) Comments Standard. While balancing authorities
a new Reliability Standard that
546. MRO states that it is necessary to and transmission operators are capable
responds to Blackout Report
include reliability coordinators as of developing, maintaining and
231 This Requirement could, for example, be applicable entities because reliability implementing plans to mitigate
included in COM–002–2 or in an operating coordinators have a wide-area view.
Reliability Standard. FirstEnergy also supports making the 232 NOPR at P 272.
operating emergencies for their specific implemented to alleviate IROL agrees with EEI and California PUC that
areas of responsibility, unlike reliability violations within 30 minutes. It adds not all load reduction schemes should
coordinators, they do not have wide- that load shedding is the option of last be required to be operable within 30
area views. resort and that the timing for minutes but only those used for
549. Further we agree with SoCal implementation of load shedding would emergency operations.
Edison that clear direction is needed on be better addressed in proposed 555. Further, as Xcel recognizes, load
which requirements should be exclusive Reliability Standard EOP–003–1. EEI shedding is the option of last resort and
to transmission operators and balancing and California PUC state that not all there may be other options available to
authorities with the reliability load reduction schemes should be alleviate IROL violations within 30
coordinator being responsible for required to be operable within 30 minutes. The ERO should consider
incorporating this information into its minutes; only those used for emergency these other options as it works through
overarching plan. Accordingly, the operations. APPA states that the 30- the Reliability Standards development
Commission finds the reliability minute interval was selected based on process to modify EOP–001–0.
coordinator is a necessary entity under industry consensus and, rather than 556. With regard to the wording of the
EOP–001–0 and directs the ERO to dismiss this consensus, the Commission proposed modification stating that load
modify the Reliability Standard to should instruct NERC to reconsider the shedding should be capable of being
include the reliability coordinator as an 30-minute requirement and either implemented ‘‘as soon as possible and
applicable entity. In addition, the ERO modify it or better explain why it is the in much less than 30 minutes,’’ the
should consider SoCal Edison’s appropriate time period for the Commission agrees with PG&E and
suggestion in the ERO’s Reliability requirement. MISO questions what International Transmission that this
Standards development process. would be achieved by the proposed language may be unclear and unduly
modification and states that operators subjective. In the NOPR, we stated that
ii. Clarification of the 30-minute Load do not intentionally delay taking action the reference to 30 minutes could
Shedding Requirement when required. suggest that anything up to that limit
(a) Comments 552. International Transmission and was acceptable and proposed the
PG&E state that shedding load ‘‘as soon modification to emphasize our concern
550. NERC comments that the as possible and much less than 30 that implementation was expected
proposed directive to clarify the 30- minutes’’ is vague and unenforceable. much sooner than in 30 minutes.
minute requirement in Requirement R2 International Transmission proposes International Transmission’s suggested
presumes that all manual load shedding shedding of load ‘‘as soon as possible rewording addresses our concern.
can be performed by supervisory when required to mitigate an IROL Accordingly, we direct the ERO to
control. It states that, in many systems, violation, but in no case in more than develop a modification through the
shedding load requires actions by field 30 minutes.’’ Reliability Standards development
personnel who must be dispatched to a process clarifying that when the load
site. NERC recognizes the reliability (b) Commission Determination reduction plan of Requirement R2
benefit of being able to shed greater 553. The proposed Reliability involves load shedding, such load
amounts of load in seconds or minutes Standard states that the transmission shedding be capable of being
but contends that the amount of load operator shall have an emergency load implemented as soon as possible when
shedding under remote supervisory reduction plan for all identified IROLs required to mitigate an IROL violation
control and the timing requirements and that the load reduction plan must but in no case in more than 30 minutes.
should be vetted through industry be capable of being implemented within 557. Finally, in response to APPA’s
experts based on good utility practice. 30 minutes. In the NOPR, we proposed comments, as stated in the NOPR,235 the
While acknowledging that the proposed to direct NERC to modify EOP–001–0 to Commission accepts the 30-minute
modification is appropriate because it clarify the 30-minute requirement in requirement as a reasonable period
corresponds to current good utility Requirement R2 to state that load within which operators should return
practice and widely held interpretations shedding should be capable of being the system to a reliable operating state.
of the requirement to shed load, implemented as soon as possible and in However, in order to satisfy this
FirstEnergy, like NERC, notes that loads much less than 30 minutes.233 The Requirement, when load shedding is the
that does not have SCADA cannot be intent was to have a requirement that only viable option, the Commission
shed within 30 minutes because field precludes waiting until the 29th minute believes that operators must have the
staff must be dispatched. It proposes to begin implementation. capability through SCADA or other
that the Reliability Standard should 554. In response to the concerns of equivalent means to shed appropriate
specify that, for loads that do not have commenters, the Commission clarifies amounts of load in the desired locations
SCADA, the implementation plan must that the proposed modification does not as soon as possible to mitigate IROL
be initiated, but not necessarily require that SCADA or its equivalent be violations but in no case in more than
completed, within 30 minutes. installed for all loads. Rather, SCADA 30 minutes.236
Similarly, MidAmerican is concerned would be required only for those loads iii. Definitions of System States
that if load shedding is to be performed necessary to mitigate IROL violations
in much less than 30 minutes it will and to maintain reliable operations. As (a) Comments
require automatic load shedding which we stated in the NOPR, the Commission 558. FirstEnergy states that it may be
may trigger when not required leading understands that it is not the intent of difficult to define system states that
to less reliability under certain the Reliability Standard to require the cover all operating conditions, but
conditions. MidAmerican proposes a shedding of all available load within 30 nonetheless recognizes that the
modification to specifically permit load minutes, but rather only the amount standardization of these states is a first
shedding with non-automatic schemes. necessary to correct system step to bringing clarity to operators
551. Xcel states that the proposed emergencies.234 Thus the Commission concerning system conditions and the
modification is unnecessary because
there are many different options besides 233 Id. at P 273. 235 Id. at P 995.
load shedding that could be 234 Id. 236 Id.
resulting actions they are expected to addition of the restoration state.239 electrical energy from remote systems is
take. California PUC, on the other hand, Accordingly, we direct the ERO to a function they normally perform.
states that imposing uniform definitions determine the optimum number of Because an ISO or RTO may choose to
for ‘‘normal,’’ ‘‘alert’’ and ‘‘emergency’’ continent-wide system states and their either deliver fuel or electrical energy
states is impractical and attributes and to modify the Reliability from remote systems, Requirement R7.4
counterproductive. California PUC Standard through the Reliability will not burden ISOs and RTOs with
claims that trying to define in advance Standards development process to functions they do not normally perform.
all contingencies that the system may accomplish this objective. 566. The Commission agrees with
face is probably infeasible and argues 563. Further, we agree with ISO–NE ISO–NE that the Reliability Standard
that improved real-time monitoring of that the proposed modification should should be clarified to indicate that the
the grid is the preferred approach for be field-tested and that policies and actual emergency plan elements, and
quick identification and correction of procedure be put in place, including not the ‘‘for consideration’’ elements of
problems. operator training, before any processes Attachment 1, should be the basis for
559. ISO–NE states that it is important for continent-wide system states are compliance. However, all of the
to define system states but that such implemented. Such testing will help elements should be considered when
definitions should not be implemented assure that all applicable entities and the emergency plan is put together.
until a ‘‘pilot program’’ is field tested. their personnel understand how the
v. Summary of Commission
ISO–NE explains that after such a pilot terms will be used and will allow
Determination
program is conducted operators would operators to train staff to make any
necessary changes to their policies and 567. Accordingly, the Commission
need to make changes to their policies
procedures. We direct the ERO to concludes that Reliability Standard
and procedures, including operator
consider such a pilot program as it EOP–001–0 is just, reasonable, not
training, to make sure that their
modifies EOP–001–0 through the unduly discriminatory or preferential
practices are administered in a secure
Reliability Standards development and in the public interest and approves
and well-understood fashion. it as mandatory and enforceable. In
process.
(b) Commission Determination addition, pursuant to section 215(d)(5)
iv. Other issues of the FPA and § 39.5(f) of our
560. In the NOPR, the Commission regulations, the Commission directs the
(a) Comments
stated that clearly defined system states ERO to develop a modification to EOP–
incorporated into real-time operation 564. ISO–NE raises two additional
concerns with the proposed Reliability 001–0 through the Reliability Standards
can significantly improve operator development process that: (1) Includes
recognition of emergency conditions, Standard. First, it states that activities
outlined in Requirement R7.4, including the reliability coordinator as an
rapid and accurate response and applicable entity with responsibilities as
recovery to normal system coordinating fuel conservation and
arranging for fuel deliveries, are not described above; (2) clarifies the 30-
conditions.237 minute requirement in Requirement R2
561. The Commission recognizes that functions that independent transmission
operators and balancing authorities of the Reliability Standard to state that
the triggering events and the nature of load shedding should be capable of
the emergency states may be different typically perform. Second, ISO–NE
notes that Requirement R5 provides that being implemented as soon as possible
for different systems; however, we find but in no more than 30 minutes; (3)
that a clearly defined set of system each transmission operator and
balancing authority must include includes definitions of system states to
states will help operators proactively be used by the operators, such as
avert escalations of system disturbances applicable elements of Attachment 1 of
EOP–001–0 in an emergency plan. transmission-related ‘‘normal,’’ ‘‘alert’’
and cascading outages. Further, and ‘‘emergency’’ states, provides
operators, the ERO and regulators will However, according to ISO–NE, the
elements identified in Attachment 1 are criteria for entering into these states,
better understand how reliably the and identifies the authority that will
system is operating and how it characterized as ‘‘for consideration’’ and
are not mandatory. ISO–NE argues that declare these states and (4) clarifies that
performed historically if statistics can the actual emergency plan elements,
be collected based on well-defined the proposed Reliability Standard
should be clarified to indicate that the and not the ‘‘for consideration’’
system states. We find it reasonable for elements of Attachment 1, should be the
actual emergency plan elements, and
the ERO, through the stakeholder basis for compliance. Further, the
not the ‘‘for consideration’’ elements of
process, to develop a well-defined set of Commission directs the ERO to consider
Attachment 1, should be the basis for
uniform, continent-wide system states a pilot program for system states, as
compliance.
that can be understood by transmission discussed above.
operators, balancing authorities, (b) Commission Determination
reliability coordinators and the ERO to b. Capacity and Energy Emergencies
565. With regard to ISO–NE’s concern
correspond to specific, predetermined (EOP–002–2)
that certain activities outlined in
levels of urgency. Requirement R7.4 are not functions 568. EOP–002–2 applies to balancing
562. As we noted in the NOPR, some normally performed by independent authorities and reliability coordinators
control areas define and effectively use transmission operators and balancing and is intended to ensure that they are
more than the ‘‘normal,’’ ‘‘alert’’ and authorities, the Commission prepared for capacity and energy
‘‘emergency’’ system states included in understands that this Requirement emergencies.240 The Reliability
the Blackout Report covers either delivery of fuel or delivery Standard requires that balancing
recommendation.238 We proposed that of electrical energy from remote authorities have the authority to bring
the ERO determine the optimum systems. While arranging for fuel
number of system states to be employed deliveries may be outside of the 240 In its November 15, 2006, filing, NERC
continent-wide and to consider the functions that ISOs and RTOs perform, submitted EOP–002–2, which supercedes the
Version 1 Reliability Standard. EOP–002–2 adds
the requirement to arrange deliveries of Measures and Levels of Non-Compliance to the
237 Id. at P 275. Version 0 Reliability Standard. In this Final Rule,
238 Id. at P 276. 239 Id. we review the November version, EOP–002–2.
all necessary generation on line, ii. Demand-Side Management iii. Warning regarding TLR procedure
communicate about the energy and (a) Comments (a) Comments
capacity emergency with the reliability
coordinator and coordinate with other 573. FirstEnergy states that it is 575. MRO states that it is very
balancing authorities. EOP–002–2 appropriate to include demand-side important that all concerned parties
includes an attachment that describes resources as another tool for balancing realize that TLR is not a first line of
an emergency procedure to be initiated authorities to use in meeting control defense to mitigate IROL violations.
by a reliability coordinator that declares performance and disturbance control Entergy and MidAmerican agree that
one of four energy emergency alert Reliability Standards. It states, however, TLR procedures are not effective to
levels to provide assistance to the LSE. that in order to qualify, the demand-side mitigate IROL violations or for use in
resource options must meet similar emergency situations. EEI supports the
569. In the NOPR, the Commission technical requirements as generation
proposed to approve the Reliability Commission’s proposed modifications
resource options. Comverge to the Reliability Standard; however,
Standard as mandatory and enforceable. recommends that the terms ‘‘demand
In addition, pursuant to section EEI along with Entergy, MidAmerican
response’’ and ‘‘curtailable loads’’ be and APPA, believes that the TLR
215(d)(5) of the FPA and § 39.5(f) of our specifically added to R3, R4 and R6.3
regulations, the Commission proposed process is effective in avoiding and
and Alert Level 1 to ensure that they are mitigating potential IROL violations.
to direct that NERC submit a included in the list of resources that
modification to the Reliability Standard These commenters request that the
will be controlled during capacity and Commission clarify the proposed
that: (1) Addresses emergencies energy emergencies. APPA contends
resulting not only from insufficient modification so that it does not
that Requirement R6.6 adequately foreclose such use of the TLR process.
generation but also from insufficient accounts for the use of demand-side
transmission capability, including 576. International Transmission states
remedies to address emergencies. As
situations where insufficient that TLR can be an effective and
such, APPA opposes the Commission’s
transmission impacts the appropriate means to mitigate IROL
proposal as being unduly prescriptive.
implementation of the capacity and violations or for use in emergency
Also ISO–NE contends that the
energy emergency plan; (2) identifies situations and therefore EOP–002–2
proposed modifications effectively
DSM in Requirement R6 as one possible should not preclude the use of TLR
dictate a specific means to solve the
remedy that a balancing authority may when its use is warranted. MISO states
underlying problems instead of leaving
use to bring it in compliance with that, while TLR is not the preferred
it to the responsible entities to
control performance and disturbance method of responding to emergencies,
determine how to achieve the reliability
control Reliability Standards and (3) an operator should not be precluded
objective. A proper recommendation
includes a clear warning that the TLR from implementing TLR during
would be to make the requirement
procedure is an inappropriate and emergencies. It argues that TLR may be
resource-neutral.
ineffective tool to mitigate IROL appropriate when events develop slowly
violations or for use in emergency (b) Commission Determination or when an entity is affected by external
situations. 574. The Commission agrees with transactions and has exhausted all
570. Most of the comments address FirstEnergy that for demand-side control actions or needs to reserve some
the specific modifications and concerns resources to qualify as another tool for control actions for contingencies.
raised by the Commission in the NOPR. balancing authorities to use in meeting 577. APPA contends that the specific
Below, we address each topic control performance and disturbance direction provided in this proposed
separately, followed by an over-all control Reliabilty Standards, they must modification intrudes on NERC’s role as
conclusion and summary. meet comparable technical performance a standard setting agency and would be
requirements as generation resource better framed as a direction to NERC to
i. Insufficient Transmission Capability investigate the concern and revise the
options. In response to comments from
(a) Comments Comverge and APPA, the Commission Reliability Standard accordingly.
believes that curtailable loads are Similarly, while ISO-NE supports the
571. MRO believes that the definition Commission’s conclusion that reliance
adequately addressed in Requirement
for the term ‘‘insufficient transmission on TLR procedures can be
R6 of the Reliability Standard but that
capability’’ should be clarified because inappropriate, it recommends that the
demand response is not covered.242
insufficient transmission capability proposed Reliability Standard would be
Demand response covers considerably
could be due to a thin spot in the improved if it did not specify the
more resources than interruptible load.
interconnection, prior outages or storm operating method required to achieve
Accordingly, the Commission directs
damage. compliance. ISO–NE also believes that
the ERO to modify the Reliability
(b) Commission Determination Standard to include all technically the Commission should direct NERC to
feasible resource options in the allow the responsible entities flexibility
572. As we stated in the NOPR, management of emergencies. These in the means by which they achieve
neither EOP–002–2 nor any other options should include generation compliance with the Reliability
Reliability Standard addresses the resources, demand response resources Standard.243
impact of inadequate transmission and other technologies that meet
during generation emergencies.241 The (b) Commission Determination
comparable technical performance
Commission agrees with MRO that requirements. 578. A number of commenters agree
‘‘insufficient transmission capability’’ that the TLR procedure is an
could be due to various causes. The 242 Requirement R6 provides, in pertinent part:
inappropriate and ineffective tool for
ERO should examine whether to clarify ‘‘R6. If the Balancing Authority cannot comply with mitigating actual IROL violations or for
this term in the Reliability Standards the Control Performance and Disturbance Control
development process. Standards, then it shall immediately implement
remedies to do so. These remedies include, but are 243 ISO–NE also notes that in the first line of
not limited to: R6.3. Interrupting interruptible load Requirement R7 the reference to ‘‘R7’’ should be to
241 NOPR at P 284. and exports.’’ ‘‘R6.’’
use in emergency situations.244 On the balancing authorities who may have the automatic load shedding for
other hand, International Transmission same, partial or whole footprint and underfrequency or undervoltage,
believes the TLR procedure can be an who are both likely to respond to the manual load shedding to respond to
appropriate and effective tool to same emergency. real-time emergencies and
mitigate IROL violations or for use in 582. APPA notes that revised communication with other balancing
emergency situations and MISO argues Reliability Standard EOP–002–2, filed authorities and transmission operators.
that operators should not be precluded by NERC on November 15, 2006,
includes new Measures for some of the 586. In the NOPR, the Commission
from implementing the TLR procedure
requirements but not all the proposed to approve the Reliability
during emergencies. The Commission
disagrees. As explained in the NOPR requirements. APPA states that NERC Standard as mandatory and enforceable.
and in the Blackout Report, actions should be directed to include Measures In addition, pursuant to section
undertaken under the TLR procedure related to Requirements R4, R5, R6, R7 215(d)(5) of the FPA and § 39.5(f) of our
are not fast and predictable enough for and R9.1. regulations, the Commission proposed
use in situations in which an operating to direct that NERC submit a
(a) Commission Determination modification to EOP–003–0 that: (1)
security limit is close to being, or
actually is being, violated. As such the 583. The Commission finds that the Specifies the minimum load shedding
Commission cannot agree with issues raised by ISO-NE should be capability that should be provided and
International Transmission and MISO. addressed through the Reliability the maximum amount of delay before
However, the Commission agrees with Standards development process. As to load shedding can be implemented; (2)
APPA, EEI, Entergy and MidAmerican FirstEnergy’s concern with Requirement requires periodic drills of simulated
that the TLR procedure may be R1, the reliability coordinator has the load shedding and (3) contains
appropriate and effective for use in highest level of authority. Accordingly, Measures and Levels of Non-
managing potential IROL violations. the Commission directs that the ERO, Compliance.
Accordingly, the Commission will through the Reliability Standards
development process, address ISO-NE’s 587. Most of the comments address
maintain its direction that the ERO the specific modifications and concerns
modify the Reliability Standard to concern. Further, we direct the ERO to
consider adding Measures and Levels of raised by the Commission in the NOPR.
ensure that the TLR procedure is not
Non-Compliance in the Reliability Below, we address each topic
used to mitigate actual IROL violations.
579. As to APPA’s comment that we Standard. separately, followed by an over-all
are intruding on NERC’s role as a conclusion and summary.
v. Summary of Commission
standard-setting agency, we have Determination i. Minimum load shedding and
authority to direct the ERO to submit a maximum delay
modification and, in this instance, 584. Accordingly, the Commission
requiring the ERO to ‘‘investigate the approves Reliability Standard EOP– (a) Comments
concern’’ first is unnecessary. The issue 002–2 as mandatory and enforceable. In
addition, pursuant to section 215(d)(5) 588. FirstEnergy and APPA agree that
is narrowly-framed and the comments
of the FPA and § 39.5(f) of our NERC should modify EOP–003–1 to
identify no points requiring the
regulations, the Commission directs the specify the minimum load shedding
approach suggested by APPA. In
ERO to develop a modification to EOP– capability and the maximum amount of
response to ISO–NE, we are precluding
use of TLR procedures at times of actual 002–2 through the Reliability Standards delay. However, FirstEnergy adds that
IROL violations, but are not otherwise development process that: (1) Addresses Requirement R8, which states that load
specifying permissible responses. emergencies resulting not only from shedding actions must be taken in a
insufficient generation but also from ‘‘time frame adequate for responding to
iv. Other issues insufficient transmission capability the emergency,’’ is ambiguous and
580. ISO–NE states that Requirement particularly where this affects the difficult to substantiate. NERC
R2 essentially requires the same actions implementation of the capacity and acknowledges that significant
covered by ISO–NE Operating energy emergency plan; (2) includes all improvements can be made to the EOP
Procedure No. 4. ISO–NE is concerned technically feasible resource options, Reliability Standards to establish
that a strict approach to auditing including demand response and criteria for the provision of load
compliance with the Reliability generation resources, in the shedding capability, but it states that
Standard could result in a finding that management of emergencies and (3) requiring a specific minimum amount of
ISO–NE was in violation of the ensures that the TLR procedure is not load (MW) or percentage of load that
Reliability Standard if it skipped a used to mitigate actual IROL violations. must be capable of being shed and the
particular action under its emergency c. Load Shedding Plans (EOP–003–1) maximum amount of time delay is as
plan even though that action was not likely to reduce reliability as it is to
called for under ISO–NE procedures. 585. EOP–003–1 deals with load
shedding plans and requires that increase it. NERC contends that the
ISO–NE requests that the Commission electric characteristics of local systems
direct NERC to clarify that a system balancing authorities and transmission
operators operating with insufficient and loads must be considered in
operator has discretion not to designing manual and automatic load
implement every action specified in its transmission and generation capacity
have the capability and authority to shedding capabilities. Accordingly, it
capacity and energy emergency plans proposes that the Commission direct
when other appropriate actions are shed load rather than risk a failure of
the Interconnection.245 It includes NERC to review industry best practices
possible.
581. FirstEnergy claims that requirements to establish plans for and propose requirements in the
Requirement R1 may impose Reliability Standards to ensure that
overlapping obligations and authority 245 In its November 15, 2006, filing, NERC adequate load shedding capabilities are
on reliability coordinators and submitted EOP–003–1, which supercedes the provided to protect the Bulk-Power
Version 0 Reliability Standard. EOP–003–1 adds System without causing adverse impacts
244 See, e.g., APPA, EEI, Entergy and Version 0 Reliability Standard. In this Final Rule, associated with unnecessary shedding
MidAmerican. we review the November version, EOP–003–1. of firm load.
589. SoCal Edison states that in uncontrolled failure of system elements the ERO to address the minimum load
certain circumstances, but not in all or cascading outages is increased. and maximum time concerns of the
cases, it would be valuable to have a 593. While the Reliability Standard Commission through the Reliability
minimum limit established for the requires transmission operators and Standards development process. We
amount of load shedding an entity is to balancing authorities to be capable of suggest that a review of industry best
accomplish. It suggests that the specific load shedding in a time frame adequate practices would be useful in developing
requirements should be derived based for responding to emergencies, this nationwide critera.
on studied conditions. could be clearer, as noted by
FirstEnergy. As mentioned by NERC, ii. Periodic drills of simulated load
590. Xcel, ISO–NE, TVA and shedding
significant improvements can be made
International Transmission do not to the Reliability Standard to establish (a) Comments
support a nationwide Reliability criteria for the provision of load
Standard for minimum load shedding 597. California PUC states that, since
shedding capability. We agree. load shedding at the distribution level
and maximum delay for implementing 594. Several commenters state that
load shedding because there are large has the minimum societal and economic
they do not support a nationwide
variations in load, resources and system impact, the Reliability Standard should
Reliability Standard for minimum load
configuration and characteristics across require all neighboring distribution or
shedding capability and maximum
the continent. TVA states that these transmission utilities to participate in
delay in implementing load shedding
parameters should be determined based annual drills when requested by an ISO
because these parameters are dependent
on studies of the specific transmission or other bulk power authority. Northern
on system configurations and load and
systems and applicable contingency Indiana and FirstEnergy support
resource characteristics across the
events. MISO states that it is not clear mandating periodic drills of simulated
continent, and as such, must be
what is intended or achieved by this load shedding; however, FirstEnergy
determined based on system studies.247
requirement because balancing The Commission agrees that the states that the drill requirements should
authorities and transmission operators minimum load shedding capability include simulated load shed via a
should already have the ability to shed, must take into account system simulator or table-top exercise, not an
by some means, all load within their characteristics and topology, however actual deployment of manpower, and
area and the timing requirements are the maximum time delay before load that these drill requirements should be
specified in the IROL-related Reliability shedding can be implemented is included in the PER–005–0 Reliability
Standards. independent of system characteristics Standard instead of EOP–003–1. PER–
and is governed by what is considered 005–0 only involves training of control
591. California PUC is concerned that room personnel, whereas these drills
the proposed modification assumes that to be feasible.
595. California PUC is concerned that should also include testing the
load shedding at the transmission level readiness and functionality of
is the only or the primary way to the proposed modification on load
shedding assumes that load shedding at procedures and personnel outside of the
address system emergencies. SDG&E control room.
recommends that the maximum delay the transmission level is the only or
for shedding load should begin when preferred way to address system (b) Commission Determination
the transmission operator or balancing emergencies. The Commission clarifies
598. As suggested by California PUC,
authority has actual knowledge of the that this assumption is incorrect and
periodic drills of simulated load
circumstances that would precipitate agrees with California PUC that load
shedding should involve all participants
load shedding. shedding at the distribution level has
required to ensure successful
the minimum societal and economic
(b) Commission Determination implementation of load shedding plans.
impact.
As such, the drills should extend
596. The Commission concludes that
592. Shedding of firm load is an beyond system operators to distribution
the Reliability Standard needs to be
operating measure of last resort to operators and LSEs. The Reliability
modified to ensure that adequate load
contain system emergencies and prevent Standard should require periodic drills
shedding capabilities are provided so
cascading. System operators must have by entities subject to section 215, and
that system operators have an effective
the capability to shed load in a timely require those entities to seek
operating measure of last resort to
manner to return the system to a stable participation by other entities. The
contain system emergencies and prevent
condition. The Commission disagrees drills should test the readiness and
cascading. The Commission recognizes
with NERC’s contention that requiring a functionality of the load shedding plans,
that the amount of load shedding
specific minimum amount of load that including, at times, the actual
capability required is dependent on
must be capable of being shed and the deployment of personnel. Therefore the
system characteristics and therefore it
maximum amount of delay is as likely Commission disagrees with FirstEnergy
may not be feasible to have a uniform
to reduce reliability as it is to increase that the requirement for periodic drills
nationwide load shedding capability.
it. As stated in the NOPR, the actual of simulated load shedding should be
This, however, does not preclude a
amount of load to be shed, the location incorporated into the new PER–005–0
uniform nationwide criterion on the
and the time frame will be at the Reliability Standard that is currently
methodology for establishing load
discretion of the system operator based being drafted to address operator
shedding capability that would specify
on the nature of the system problem and training.
the minimum amount of load shedding
the operator’s assessment of corrective capability that should be provided iii. Other issues
actions required.246 However, if the based on system characteristics and
capability to shed sufficient load in (a) Comments
conditions and the maximum amount of
locations where it is required and in a delay before load shedding can be 599. Santa Clara states that since
timely manner is not available to the implemented. The Commission directs automatic load shedding for
system operator, then the risk of undervoltage conditions is not required
247 See Xcel, ISO–NE, TVA, International in most parts of the West and possibly
246 NOPR at P 294. Transmission and MISO. in other areas of the country,
Requirement R2 should be modified to in the Common Issues section of this disturbance and (2) includes Measures
include the words ‘‘as applicable per the Final Rule, the Commission will not and Levels of Non-Compliance.
Regional Reliability Organization.’’ In adopt new liability protections.248
i. Comments
addition, APPA states that NERC should According to the Task Force, no further
consider requiring balancing authorities action is needed to implement that 607. EEI and FirstEnergy support the
and transmission operators to expand recommendation because some states Commission’s proposed modifications
coordination and planning of their already have appropriate protection to the Reliability Standard. EEI states
automatic and manual load shedding against liability suits.249 Further, in that data reporting requirements and
plans to include their respective Order No. 890, we have already other process requirements should be
Regional Entities, reliability declined to provide a uniform federal contained in enforceable Reliability
coordinators and generation owners. liability standard. Standards. FirstEnergy states that the
ISO-NE proposes that NERC establish proposed modification corresponds to
iv. Summary of Commission
coordinated trip settings within and good utility practice and that explicitly
Determination
among balancing authorities for each stating the requirement to provide data
interconnection. 604. The Commission approves to NERC brings clarity to the
600. While EEI generally supports the proposed Reliability Standard EOP– expectations of NERC and the
proposed modifications, it believes that 003–1 as mandatory and enforceable. In Commission.
the proposal for senior management to addition, pursuant to section 215(d)(5) 608. APPA is concerned about the
post letters to safeguard operators who of the FPA and § 39.5(f) of our scope of Requirement R2 because, in its
shed load in accordance with approved regulations, the Commission directs the opinion, Requirement R2 appears to
guidelines does not respond to or meet ERO to develop a modification to EOP– impose an open-ended obligation on
the needs reflected in the Blackout 003–1 through the Reliability Standards entities such as generation operators
Recommendation No. 8. EEI points out development process that: (1) Includes a and LSEs that may have neither the data
that, under other provisions of the FPA, requirement to develop specific nor the tools to promptly analyze
the Commission has approved liability minimum load shedding capability that disturbances that could have originated
limiting provisions for some operators should be provided and the maximum elsewhere. APPA proposes that
that appears to be consistent with the amount of delay before load shedding Requirement R2 be modified to require
Blackout Report Recommendation No. can be implemented based on an affected entities to promptly begin
8, but has rejected other similar overarching criteria that take into analyses to ensure timely reporting to
protections. EEI requests that the account system characteristics and (2) NERC and DOE.
Commission explicitly state that requires periodic drills of simulated 609. Xcel expresses concern regarding
transmission operators taking action in load shedding. what constitutes a reportable event for
compliance with the load shedding
d. Disturbance Reporting (EOP–004–1) each applicable entity and recommends
provisions of Commission approved
605. EOP–004–1 establishes that the Reliability Standard be revised
Reliability Standards will be protected
requirements for reporting system to define what a reportable event is for
from retaliatory actions, including legal
actions. disturbances to the regional reliability each entity that has reporting
organization and the ERO.250 It also obligations. Further, Xcel states that the
(b) Commission Determination requirement in Requirement R3.4 for a
establishes requirements for the analysis
601. Regarding Santa Clara’s concern of these disturbances. final report within 60 days may not be
that undervoltage load shedding is not 606. In the NOPR, the Commission feasible given the current WECC
required in most parts of WECC and that proposed to approve the Reliability process, which among other things,
Requirement R2 should be modified to Standard as mandatory and enforceable. requires the creation of a group to
reflect this, the Commission notes that In addition, pursuant to section prepare the report and a 30-day posting
Requirement R2 states that each 215(d)(5) of the FPA and § 39.5(f) of our of a draft report before it becomes final.
transmission operator and balancing regulations, the Commission proposed Xcel also states that if the ultimate
authority shall establish plans for to direct that NERC submit a purpose of the report is to provide
automatic load shedding for modification to the Reliability Standard information to avoid a recurrence of a
underfrequency or undervolatge that: (1) Includes any requirements system disturbance, then the Reliability
conditions. The Commission clarifies necessary for users, owners and Standard should be revised to require
that the Reliability Standard does not operators of the Bulk-Power System to the distribution of the report to similarly
mandate undervoltage load shedding provide data that will assist NERC in the situated entities.
unless needed for Reliable Operation. investigation of a blackout or 610. FirstEnergy states that, since
602. We also note that APPA and nuclear units have their own NRC
ISO-NE raise issues regarding 248 See Common Issues Pertaining to Reliability reporting procedures covering the
coordination of trip settings and Standards: Blackout Report Recommendation on Requirements under EOP–004–1, the
automatic and manual load shedding Liability Limitations, supra section II.E.1. Reliability Standard should specify that
249 U.S.-Canada Power System Outage Task Force,
plans. The Commission directs the ERO compliance with such operating
Final Report on Implementation of Task Force
to consider these comments in future Recommendations at 22 (Oct. 3, 2006), available at procedures is sufficient to satisfy the
modification to the Reliability Standard http://www.oe.energy.gov/news/blackout.htm (‘‘In requirements of EOP–004–1. FirstEnergy
through the Reliability Standards the United States, some state regulators have also states that the title of this
informally expressed the view that there is Reliability Standard should be changed
development process. appropriate protection against liability suits for
603. EEI seeks adoption of a provision parties who shed load according to approved to ‘‘Disturbance Event Reporting’’ to
to shield transmission operators from guidelines.’’) indicate that the events covered under
liability when they take action in 250 In its November 15, 2006, filing, NERC this Reliability Standard include a broad
compliance with the load shedding submitted EOP–004–1, which supercedes the range of events that go beyond the
provisions of the Reliability Standards. Measures and Levels of Non-Compliance to the
events for which reports may be
Consistent with our discussion of Version 0 Reliability Standard. In this Final Rule, required under Reliability Standard
Blackout Report Recommendation No. 8 we review the November version, EOP–004–1. BAL–002–0.
611. APPA states that NERC’s this Reliability Standard. The a normal condition in the event of a
November 15, 2006 revision partially Commission disagrees with FirstEnergy partial or total system shut down. The
fulfills the proposed modification to because there are situations where the Reliability Standard requires
include Measures and Levels of Non- ERO Reliability Standards are more transmission operators, balancing
Compliance. APPA notes that EOP–004– stringent than the NRC procedures. In authorities, and reliability coordinators
1 did not provide Measures for R2, R3.2, such cases, the ERO Reliability to have effective restoration plans, to
R3.4, R4 and R5. Standards must apply in addition to the test those plans, and to be able to restore
NRC requirements. Also, the the interconnection using them
ii. Commission Determination
Commission disagrees with following a blackout. It also requires
612. Complete and timely data is FirstEnergy’s comment on changing this operating personnel to be trained in
essential for analyzing system Reliability Standard’s name to avoid these plans.
disturbances. In the NOPR, the confusion with BAL–002–0. The 621. In the NOPR, the Commission
Commission proposed modifying this purpose of the Reliability Standard is proposed to approve Reliability
disturbance Reporting Standard to clear as to the extent of the disturbances Standard EOP–005–1 as mandatory and
include requirements necessary for to be reported. enforceable. In addition, pursuant to
users, owners and operators of the Bulk- 616. The Commission declines to section 215(d)(5) of the FPA and
Power System to provide disturbance address Xcel’s concerns about the § 39.5(f) of our regulations, the
data, voice recordings and other current WECC process. These issues Commission proposed to direct that
information collected during the should be addressed in the Reliability NERC submit a modification to EOP–
disturbance to assist NERC in the Standards development process or 005–1 that: (1) Includes Measures and
investigation of the blackout or submitted as a regional difference. The (2) identifies time frames for training
disturbance.251 While some commenters Commission directs the ERO to consider and review of restoration plan
agree with this proposal, APPA and all comments in future modifications of requirements to simulate contingencies
Xcel express concerns regarding the the Reliability Standard through the and prepare operators for anticipated
scope and applicability of some of the Reliability Standards development and unforeseen events.
Requirements of the Reliability process.
Standard. 617. In response to APPA’s concern i. Comments
613. Requirement R2 of the Reliability that NERC did not provide a Measure 622. APPA and EEI state that
Standard requires reliability for each Requirement, we reiterate that Reliability Standard EOP–005–1 is
coordinators, balancing authorities, it is in the ERO’s discretion whether sufficient for approval as a mandatory
transmission operators, generator each Requirement requires a Reliability Standard and requests that
operators and LSEs to promptly analyze corresponding Measure. The ERO the Commission direct NERC to address
disturbances on their system or should consider this issue through the missing Measures and training
facilities. APPA is concerned that Reliability Standards development requirements. In addition, APPA notes
generator operators and LSEs may be process. that the Reliability Standard is
unable to promptly analyze 618. While the Commission has applicable to both balancing authorities
disturbances, particularly those identified concerns with regard to EOP– and transmission operators but the
disturbances that may have originated 004–1, we believe that the proposal Measures and Levels of Non-
outside of their systems, as they may serves an important purpose in Compliance elements refer only to
have neither the data nor the tools establishing requirements for reporting transmission operators.
required for such analysis. The and analysis of system disturbances. 623. ISO-NE does not support
Commission understands APPA’s Accordingly, the Commission approves adoption of the proposed Reliability
concern and believes that, at a Reliability Standard EOP–004–1 as Standard because, while Requirement
minimum, generator operators and LSEs mandatory and enforceable. In addition, R1 requires transmission operators to
should analyze the performance of their pursuant to section 215(d)(5) of the FPA include applicable elements from
equipment and provide the data and and § 39.5(f) of our regulations, the Attachment 1 of EOP–005–1 in their
information on their equipment to assist Commission directs the ERO to develop restoration plans, Requirement R1
others with their analyses. The a modification to EOP–004–1 through appears to indicate that the elements in
Commission directs the ERO to consider the Reliability Standards development Attachment 1 are to be included in the
this concern in future revisions to the process that includes any Requirements emergency plan only ‘‘as applicable.’’
Reliability Standard through the necessary for users, owners and ISO-NE states that the Reliability
Reliability Standards development operators of the Bulk-Power System to Standard should be clarified to indicate
process. provide data that will assist NERC in the that the actual emergency plan elements
614. The Commission disagrees with investigation of a blackout or should be the basis for compliance.
Xcel that the Reliability Standard is disturbance. 624. EEI and FirstEnergy note that the
unclear about what constitutes a 619. Requirement R3 addresses the proposed modification to identify time
reportable event. Attachment 1 of the reporting of disturbances to the regional frames for training and review of
Reliability Standard details the various reliability organizations and NERC. The restoration plan requirements is being
events that would trigger the reporting Commission directs the ERO to change addressed in the proposed Reliability
requirement under this Reliability its Rules of Procedure to assure that the Standard PER–005–1 and that including
Standard. Commission also receives these reports this requirement in EOP–005–1 would
615. FirstEnergy states that since within the same time frames as DOE. be redundant. MISO also believes that
nuclear units have their own NRC the proposed modification is
reporting requirements the Reliability e. System Restoration Plans (EOP–005– unnecessary. It states that there are
Standard should specify that 1) already requirements for simulation-

compliance with NRC procedures is 620. EOP–005–1 deals with system based training on emergencies and
sufficient to satisfy the obligations of restoration plans and requires that restoration and it is unclear what is
plans, procedures, and resources be meant by conducting training to prepare
251 NOPR at P 304. available to restore the electric system to operators for unforeseen events.
625. FirstEnergy states that participation of not only control room Interconnection following a blackout.
Requirement R1 calls for a plan for a personnel but also those outside of the Accordingly, the Commission approves
partial shutdown of the system and that control room. These include blackstart Reliability Standard EOP–005–1 as
there is an infinite set of events that can unit operators and field switching mandatory and enforceable. In addition,
cause a partial shutdown. According to operators in situations where SCADA pursuant to section 215(d)(5) of the FPA
FirstEnergy, because the borders of a capability is unavailable. As such, the and § 39.5(f) of our regulations, the
partial shutdown are difficult, if not Commission believes that inclusion of Commission directs the ERO to develop
impossible, to foresee, the Reliability periodic system restoration drills and a modification to EOP–005–1 through
Standard should specify some training and review of restoration plans the Reliability Standards development
boundaries for analysis of partial in a system restoration Reliability process that identifies time frames for
shutdowns including an appropriate Standard is the most effective way of training and review of restoration plan
definition of the term ‘‘partial achieving the desired goal of ensuring requirements to simulate contingencies
shutdown.’’ In addition, FirstEnergy that all participants are trained in and prepare operators for anticipated
states that one uniform plan for all system restoration and that the and unforeseen events and gathers the
systems is not feasible; rather the restoration plans are up to date to deal data from simulations and drills of
Reliability Standard should recognize with system changes. system restoration on the time it takes
that some companies already have 629. Several commenters raise issues to restore power to the auxiliary power
existing plans that could be used for that should be addressed by the ERO systems of nuclear power plants under
analyzing events. FirstEnergy also states through the Reliability Standards its data gathering authority and report
that the Reliability Standard should development process.252 For example: that information to the Commission on
provide a uniform checklist of factors to whether the Measures and Levels of a quarterly basis.
analyze, developed on a company- Non-Compliance should refer to
balancing authorities; clarification of the f. Reliability Coordination-System
specific basis.
626. NRC suggests that this Reliability elements that form the basis for Restoration (EOP–006–1)
Standard include: (1) A requirement to compliance with the requirements of 632. Proposed Reliability Standard
record the time it takes to restore power Attachment 1; what constitutes a partial EOP–006–1 addresses reliability
to the auxiliary power systems of shutdown for which restoration plans coordination and system restoration.253
nuclear power plants; (2) a provision must be developed and recognition that It establishes specific requirements for
stating that the affected transmission some companies already have existing reliability coordinators during system
operators shall give high priority to plans that could be used for analyzing restoration, and it states that reliability
restoration of off-site power to nuclear events; and that the Reliability Standard coordinators must have a coordinating
power plants whether or not a nuclear should provide a uniform checklist of role in system restoration to ensure that
power plant is being powered from the factors to analyze, developed on a reliability is maintained during
nuclear power plant’s onsite power company-specific basis. We find that restoration and that priority is placed on
supply and (3) a provision stating that consideration of these issues could be restoring the Interconnection.
restoration shall not violate nuclear helpful in meeting the objectives of the 633. In the NOPR, the Commission
power plant minimum voltage and Reliability Standard. Accordingly, the proposed to approve the Reliability
frequency requirements. ERO should consider these concerns in Standard as mandatory and enforceable.
627. While not commenting on the future revisions of the Reliability In addition, pursuant to section
substance of Reliability Standard EOP– Standard through the Reliability 215(d)(5) of the FPA and § 39.5(f) of our
005–1, MRO states that EOP–005–1, Standards development process. regulations, the Commission proposed
EOP–006–1 and EOP–007–0 are ordered 630. NRC raises several issues to direct that NERC submit a
in a confusing manner and should be concerning the role and priority that modification to the Reliability Standard
renumbered. MRO reasons that since the nuclear power plants should have in that: (1) requires that the reliability
regional coordinator has oversight system restorations. The Commission coordinator be involved in the
responsibility for system restoration, shares these concerns and directs the development of and approves
EOP–006–1 should be first in the system ERO to consider the issues raised by restoration plans and (2) includes
restoration sequence of Reliability NRC in future revisions of the Measures and Levels of Non-
Standards (i.e., EOP–006–1 should Reliability Standard through the Compliance.
precede EOP–005–1). Further, MRO Reliability Standards development
process. In addition the Commission i. Comments
recommends that EOP–005–1 follow
EOP–006–1 because transmission directs the ERO to gather data, pursuant 634. APPA states that Reliability
owners and balancing authorities are to § 39.5(f) of the Commission’s Standard EOP–006–1, which NERC filed
responsible for submitting restoration regulations, from simulations and drills on November 15, 2006, includes the
plans to the regional coordinator. MRO of system restoration on the time it takes required Measures and Levels of Non-
requests that if a reason exists for the to restore power to the auxiliary power Compliance and as such APPA agrees
current order, NERC should provide that systems of nuclear power plants under that EOP–006–1 should be approved as
reason to the Commission. its data gathering authority and report mandatory and enforceable. In addition,
that information to the Commission on APPA does not oppose industry
ii. Commission Determination consideration of a requirement that
a quarterly basis.
628. With regard to comments that the 631. We find that the Reliability reliability coordinators be involved in
Commission’s concerns are being Standard adequately addresses the development and approval of
addressed in NERC’s drafting of operating personnel training and system restoration plans.
proposed PER–005–1 Reliability restoration plans to ensure that
Standard on operator training, we note transmission operators, balancing 253 In its November 15, 2006, filing, NERC
PER–005–1 only includes Requirements authorities and reliability coordinators submitted EOP–006–1, which supercedes the
on the control room personnel and not are prepared to restore the Measures and Levels of Non-Compliance to the
those outside of the control room. Version 0 Reliability Standard. In this Final Rule,
System restoration requires the 252 See APPA, ISO–NE, FirstEnergy and MRO. we review the November version, EOP–006–1.
635. EEI states that Requirements R4 those stable islands should be afforded to provide an appropriate mix
and R11 of EOP–005–1 already address resynchronized with each other and the of facilities to achieve the reliability
reliability coordinator involvement in rest of the interconnected system. objectives. EEI suggests that EOP–007–
the development and approval of 639. The Commission finds that the 0 be rewritten so that compliance
transmission operator system restoration Reliability Standard adequately obligations are assigned directly to those
plans. Further, while EEI agrees that the addresses the goals of effective and entities that provide the data and other
reliability coordinator’s role is efficient reliability coordination and information.
appropriate, it believes that the asset system restoration. Accordingly, the 644. FirstEnergy and MRO state that
owner, as the entity that ultimately Commission approves Reliability the reliability coordinator, not the
bears responsibility for restoration Standard EOP–006–1 as mandatory and Regional Entity, should be responsible
capabilities, should also have authority enforceable. In addition, pursuant to for the regional blackstart plan for its
to develop and maintain the plans. section 215(d)(5) of the FPA and area of responsibility. Further,
MISO believes that it is unnecessary to § 39.5(f) of our regulations, the FirstEnergy states that the blackstart
modify the Reliability Standard to Commission directs the ERO to develop plan developed for a region should be
involve the reliability coordinator a modification to EOP–006–1 through consistent with NRC requirements,
because there is already a requirement the Reliability Standards development should recognize that nuclear units have
in EOP–005–1 for balancing authorities process that ensures that the reliability no blackstart capability and should
and transmission operators to coordinator, which is the highest level recognize that nuclear units must have
coordinate their plans with the of authority responsible for reliability of priority access to off-site power for
reliability coordinator. the Bulk-Power System, is involved in safety reasons. FirstEnergy requests that
636. Xcel disagrees that the reliability the development and approval of system the Commission direct NERC to revise
coordinator should be involved with the restoration plans. the definition of a blackstart unit to
development of restoration plans mean a ‘‘diesel, hydro, pump storage, or
g. Establish, Maintain, and Document a
because the reliability coordinator the combustion turbine generating unit
Regional Blackstart Capability Plan
typically does not have the knowledge that is used to provide cranking power
of the details necessary to develop the (EOP–007–0)
to a larger steam generating unit
plans in contrast to the balancing 640. EOP–007–0, which deals with designed to restore load’’ or to mean a
authorities and the transmission establishing, maintaining and ‘‘larger steam generating unit designed
operators. Instead it proposes that the documenting regional blackstart to restore load.’’ 254 MRO states that
reliability coordinator develop its own capability plans, ensures that the arrangements for coordination of
plans and coordinate that with the quantity and location of system blackstart capability should be
balancing authority and transmission blackstart generators are sufficient and addressed in a contract between
operator’s plans. that they can perform their expected appropriate entities.
functions as specified in the overall
ii. Commission Determination ii. Commission Determination
coordinated regional system restoration
637. The reliability coordinator is the plans. 645. The Commission will not
highest level of authority that is 641. The NOPR did not propose to approve or remand EOP–007–0, because
responsible for the reliable operation of approve or remand EOP–007–0, because it applies only to regional reliability
the Bulk-Power System. Given the it applies only to regional reliability organizations. However, the
importance of this role in connection organizations. Commission provides guidance for the
with matters covered by EOP–006–1, the ERO’s future consideration.
Commission believes that the reliability i. Comments
646. The Commission disagrees with
coordinator must be involved in the 642. APPA agrees that EOP–007–0 APPA that an umbrella organization is
development and approval of the should not be approved as a mandatory needed for the Eastern Interconnection
restoration plans. The current Reliability Standard and states that in while the Reliability Standard is
Reliability Standard only requires that the interim the regional reliability pending final approval. The
the reliability coordinator be aware of organizations and Regional Entities Commission is persuaded that
the restoration plan of each should continue to perform this FirstEnergy’s and MRO’s comments
transmission operator in its area. The function. In addition, APPA proposes concerning the reliability coordinator
Commission disagrees with EEI and that, in the interim, an umbrella being responsible for regional blackstart
MISO, who contend that the reliability organization composed of plans have merit. The Commission has
coordinator’s role in the transmission representatives from each regional directed that the reliability coordinator
operator’s restoration plan is covered in reliability organization and Regional approve the system restoration plans
EOP–005–1. EOP–005–1 only requires Entity should be formed to establish and this is a logical extension of that
coordination with the reliability operation planning rules, including direction. However, until such time as
coordinator, and during actual system blackstart requirements, across the the Reliability Standard has been
restoration, EOP–005–1 requires Eastern Interconnection. APPA suggests revised and approved by the ERO and
approval from the reliability coordinator that such an effort would go a long way the Commission, the regional reliability
to resynchronize isolated areas with in identifying critical facilities, using organization (or Regional Entity,
other isolated areas. consistent and transparent study depending on the organization of a
638. In response to comments by Xcel, assumptions and minimizing seams particular region) should continue to
the Commission believes that while the during system emergencies throughout perform this role as it has in the past.255
reliability coordinator may not have the the Interconnection. 647. With regard to TANC’s request
level of detailed knowledge that the 643. TANC states that the number of for regional flexibility in determining
balancing authorities and transmission blackstart units and their locations the appropriate mix of facilities needed
operators may have for setting-up the depend heavily on regional to achieve the reliability objectives, it is
stable islands required under restoration characteristics and cannot be prescribed
plans, the reliability coordinator is in in a uniform, continent-wide manner. It 254 See FirstEnergy at 35.
the best position to determine how proposes that regional flexibility be 255 See NOPR at P 328.
our understanding that the Reliability (a) Comments contract for backup capabilities from
Standard provides for the number and 653. EEI, Entergy, FirstEnergy and others who already have full backup
location of blackstart units to vary Northern Indiana support the proposed control centers. FirstEnergy and
depending on the specific requirements modifications to EOP–008–0. Entergy Northern Indiana advocate for flexibility
of each system. We believe that agrees with the Commission’s proposed in the means used to meet the backup
uniformity will be required, however, in modifications to include more requirements and request that the
the criteria used to determine the Requirements regarding backup Commission clarify that a ‘‘full backup
number and location of blackstart units capabilities. center’’ can include providing full
and testing requirements. 654. APPA, Nevada Companies and redundancy by contract rather than
648. EEI, FirstEnergy and MRO offer TAPS caution that costs must be physical backup center facilities. SoCal
suggestions for improving the Reliability considered and compared to possible Edison states that when entities utilize
Standard. The Commission directs the benefits. APPA states that it would take the services of another entity for
ERO to consider these suggestions in some time to implement the proposed backup, they should be required to test
future revisions to improve EOP–007–0, the backup capability a minimum
modifications and therefore specific
through the Reliability Standards number of times during the year and
requirements for backup control
development process. that all system operators should be
facilities and capabilities should be left
649. Accordingly, the Commission required to participate in such testing
to the Reliability Standard development
will not approve or remand EOP–007– over a specified time period.
process. Nevada Companies cautions 659. NRC suggests that this Reliability
0 at this time. that utilities that have invested millions Standard require: (1) A list of the
h. Plans for Loss of Control Center of dollars in back-up capabilities may nuclear power plants and their voltage,
Functionality (EOP–008–0) find these facilities to be non-compliant thermal, and/or frequency limits and (2)
with the proposed Reliability Standard. provisions to notify nuclear power
650. EOP–008–0 addresses plans for It suggests that cost/benefits analyses be
loss of control center functionality. It plants of the loss of control center
conducted and that a grandfathering functionality.
requires each reliability coordinator, provision be adopted to protect
transmission operator and balancing investments in backup systems that (b) Commission Determination
authority to have a plan to continue were made in a good faith effort to
reliable operations and to maintain 660. As we stated in the NOPR, the
comply with rules in place in the past, goal of the Reliability Standard is the
situational awareness in the event its but which may not comply with the
control center is no longer operable. continuation of reliable operations and
Reliability Standard. the maintenance of situational
651. The Commission proposed five 655. MRO requests clarification of the awareness in the event that the primary
modifications to the Reliability term ‘‘capability’’ because it is unsure if control center is no longer
Standard and requested additional the term is intended to refer to a facility, operational.257 Some commenters
comments on other issues. We have what such a facility should consist of support the proposal to require backup
grouped the comments into two general and what operators should be capable of capabilities while others including
categories: (1) Capabilities of backup doing from that facility. APPA, Nevada Companies and TAPS
control centers and (2) which entities 656. In response to the request for caution that the cost of the proposal
should have full backup centers. Below, comments on backup capabilities, NERC may not be justified. In addition, some
we address each topic separately, states that these are best addressed commenters, including FirstEnergy and
followed by an overall conclusion and through the Reliability Standards Northern Indiana, advocate for
summary. development process. flexibility in meeting the backup
i. Capabilities of Backup Control Centers 657. SoCal Edison suggests that a risk- requirements and suggest that entities
based assessment be considered to should be able to contract for full
652. In the NOPR, the Commission determine the requirements for backup.
proposed to approve Reliability redundancy. MRO seeks clarification
MISO, TAPS and International regarding the use of the term
Standard EOP–008–0 as mandatory and Transmission note that work is
enforceable. In addition, pursuant to ‘‘capability.’’
underway by NERC to address the 661. In the NOPR, we found that the
section 215(d)(5) of the FPA and provisions for redundancy and backup
§ 39.5(f) of our regulations, the provision of backup capabilities should
control capabilities via the Operating be an explicit Requirement to meet the
Commission proposed to direct that Committee Backup Control Task Force
NERC submit a modification to EOP– objectives of the Reliability Standard.
and that the focus is on functionality We chose to use the word ‘‘capabilities’’
008–0 that includes a Requirement that rather than physical requirements.
provides for backup capabilities that, at to avoid defining particular facilities or
TAPS states that, rather than directing preclude other options, including
a minimum, must: (1) Be independent of NERC to adopt specific modifications to
the primary control center; (2) be arranging for backup capabilities by
the Reliability Standard that would contracting with others. We stated that
capable of operating for a prolonged inappropriately burden small systems
period of time and (3) provide for a the mechanism to provide these
with the cost of dual facilities, the capabilities may include building fully
minimum set of tools and facilities to Commission should identify objectives
replicate the critical reliability functions redundant physical backup control
to the Task Force. TAPS also states that centers, contracting for backup control
of the primary control center.256 In a small balancing authority might be services or using backup equipment
addition to these three capabilities able to meet the functional requirements within a separate existing facility.258 In
requirements, the Commission solicited for a backup control center with a
comments concerning other specific addition, regardless of the means used
contract with another entity while larger to provide the backup capabilities, as
capabilities.
entities might need a physical backup we stated in the NOPR, the time period
256 The term ‘‘facility’’ in this context includes,
center. for which backup capability is required
but is not limited to, telecommunications, backup
658. Northern Indiana states that the
power supplies, computer systems and security Commission’s proposal appears to 257 NOPR at P 329.
systems. NOPR at P 335 & n.159. eliminate an entity’s opportunity to 258 See Id. at P 336.
should correspond to the time it would addition to reliability coordinators, large very high level of control center
take to replace the primary control balancing authorities and transmission reliability achieved now with the
center. operators need full backup control existing solution of a single control
662. On the issue of additional centers. MISO states that there are center plus backup of critical systems.
backup capabilities, NERC, MISO, TAPS certain situations where large generation
and International Transmission propose fleets that are controlled centrally (b) Commission Determination
that the functional requirements for would also warrant full backup systems
backup capabilities be determined by 671. Several commenters agree with
and that small entities can operate
the NERC Backup Control Task Force. the Commission that reliability
reliably with less robust systems.
NRC offers requirements it believes Further, it argues that the ERO needs coordinators at a minimum should have
should be added to the Reliability latitude to decide from a reliability full backup control centers. They also
Standard. standpoint how much redundancy is propose that this requirement be
663. The Commission disagrees with needed. FirstEnergy states that in place extended to large balancing authorities,
the Nevada Companies’ proposal for of full backup control facilities it should transmission operators and centrally
grandfathering. The Reliability be acceptable to have standing contracts dispatched generation facilities. Others
Standards must define the minimum in place to provide backup services in caution on the cost implications of
functions that are necessary for the the event of a loss of a control center. requiring full duplication given the very
Reliable Operation of the Bulk-Power 667. NERC states that the proposed high level of control center reliability
System. The flexibility described above directive presumes that the only way to achieved with the existing technology
on how capabilities are provided should achieve highly reliable and independent and backup of critical systems. Having
mitigate any costs incurred to upgrade backup capability to perform reliability carefully considered all the issues raised
older centers. coordinator functions in an emergency by commenters and taking into account
664. Given the importance to is to have a redundant control center. the reliability impacts of loss of primary
reliability of maintaining situational NERC contends that while this may be control centers and the role of reliability
awareness in the event of loss of the an option, it may not be the only one for coordinators as the highest level of
primary control center operations, the achieving the necessary reliability
authority responsible for reliability of
Commission believes that, at a objective. NERC proposes that the
minimum, the three requirements— the Bulk-Power System, the
Reliability Standard be modified to
independence from the primary control define the performance results expected Commission is persuaded that all
center, capability to operate for a rather than how an entity should meet reliability coordinators must have fully
prolonged period corresponding to the the requirements. redundant independent backup control
time it would take to replace the 668. NERC, SoCal Edison and Otter centers. In response to NERC, any
primary control center, and the Tail state that the question of what other proposed modification that is
provision of a minimum set of tools and entities should have full backup centers independent from the primary center,
facilities to replicate the critical is best addressed through the Reliability provides for continuous monitoring and
reliability functions of the primary Standards development process. Otter has the full functionality of the primary
control center—must be included as Tail requests that the Commission not center would satisfy our concerns. Other
explicit requirements in the Reliability require all balancing authorities to have entities, including balancing authorities,
Standard. Other additional full backup centers since the loss of a transmission operators and centrally
Requirements may be developed by the small balancing authority’s control dispatched generation control centers,
Backup Control Task Force for inclusion center would not have a substantial must provide for the minimum backup
in the Reliability Standard. The impact on the reliability of the Bulk- capabilities discussed above but may do
Commission directs the ERO to develop Power System. Northern Indiana states so through other means, such as
modifications to the requirements in that requiring transmission operators contracting for these services instead of
future revisions to the Reliability and balancing authorities to have full through dedicated backup control
Standard through the Reliability backup centers would result in
centers.
Standards development process. significant unnecessary facility
duplication, at great cost to consumers, 672. In addition, in response to
ii. Which entities should have full and without a material increase in FirstEnergy’s concern regarding
backup centers reliability. balancing authorities and transmission
665. In the NOPR , the Commission 669. FirstEnergy comments that the operators having fully redundant
proposed to direct that NERC submit a Reliability Standard should not require SCADA systems and distributed
modification to EOP–008–0 that: (1) a fully redundant SCADA system for the computer systems, the Commission
Provides that the extent of the backup backup control center for balancing requires the primary and backup
capability be consistent with the impact authorities or transmission operators capabilities to replicate critical
of the loss of the entity’s primary because the cost would be prohibitive. reliability functionalities and be
control center on the reliability of the It states that balancing authorities, independent from the primary control
Bulk-Power System and (2) includes a transmission operators and centrally- center, including telemetered data and
Requirement that all reliability located generation owners should be control from remote terminal units. This
coordinators have full backup control permitted to have a single distributed can be achieved through a variety of
centers. The Commission also requested computer system in place to diminish
design alternatives, e.g., developing a
comments on what other entities, such the probability of a complete system
SCADA management platform that will
as balancing authorities and large shutdown due to a natural disaster or a
allow telemetered data and control to be
transmission operators, should have full single man-made physical act of
sabotage. shared among SCADA systems so that

backup centers.
670. Nevada Companies also data and control is not lost during a
(a) Comments questions whether the significant cost of SCADA or communications failure. The
666. International Transmission, full replication could ever be cost- Commission’s focus is on function, not
MISO and FirstEnergy state that in effective, especially considering the design.
iii. Summary of Commission 677. Two commenters made transmission and end-user facilities into
Determination suggestions for improving the Reliability the interconnected transmission system.
Standard. The Commission directs the 683. In the NOPR, the Commission
673. Accordingly, the Commission
ERO to take these suggestions into proposed to approve Reliability
approves Reliability Standard EOP–
consideration when revising the Standard FAC–002–0 as mandatory and
0081–0 as mandatory and enforceable.
Reliability Standard through the enforceable. In addition, pursuant to
In addition, pursuant to section
Reliability Standards development section 215(d)(5) of the FPA and
215(d)(5) of the FPA and § 39.5(f) of our
process. § 39.5(f) of our regulations, the
regulations, the Commission directs the
Commission proposed to direct that
ERO to develop a modification to EOP– 5. FAC: Facilities Design, Connections,
NERC submit a modification to FAC–
008–0 through the Reliability Standards Maintenance, and Transfer Capabilities
002–0 that amends Requirement R1.4 to
development process that includes a
678. The nine Facility (FAC) require evaluation of system
Requirement that provides for backup
Reliability Standards address topics performance under both normal and
capabilities that, at a minimum, must:
such as facility connection contingency conditions by referencing
(1) Be independent of the primary
requirements, facility ratings, system TPL–001 through TPL–003.
control center; (2) be capable of
operating for a prolonged period of time, operating limits and transfer i. Applicability and Assessment
generally defined by the time it takes to capabilities. The FAC Reliability Responsibility
restore the primary control center; (3) Standards also establish requirements
for maintaining equipment and rights- (a) Comments
provide for a minimum functionality to
replicate the critical reliability functions of-way, including vegetation 684. APPA, Xcel and FirstEnergy state
of the primary control center; (4) management. The NOPR provided that this Reliability Standard is not clear
provides that the extent of the backup direction for seven of the nine FAC about who will perform the required
capability be consistent with the impact Reliability Standards; NERC withdrew assessment and how many assessments
of the loss of the entity’s primary two others, Reliability Standards FAC– are required under this Reliability
control center on the reliability of the 004–0 and FAC–005–0. NERC, in its Standard. APPA requests that the
Bulk-Power System; (5) includes a November 15, 2006 filing requests Reliability Standard be clarified to state
Requirement that all reliability approval of three additional FAC that the required assessment must be
coordinators have full backup control Reliability Standards: FAC–010–0, performed only by the transmission
centers and (6) requires transmission FAC–011–0 and FAC–014–0. These planner and the planning authority.
operators and balancing authorities that Reliability Standards are being Xcel requests that the Commission
have operational control over significant addressed in a separate docket. clarify that only one required
portions of generation and load to have a. Facility Connection Requirements assessment needs to be done when new
minimum backup capabilities discussed (FAC–001–0) facilities are added, and that all the
above but may do so through listed entities should participate in that
contracting for these services instead of 679. Proposed Reliability Standard single assessment.
through dedicated backup control FAC–001–0 is intended to ensure that 685. FirstEnergy requests that NERC
centers. transmission owners establish facility clarify what is considered a new facility
connection and performance and asks if, for example, up-rates should
i. Documentation of Blackstart requirements to avoid adverse impacts be included as new facilities. MRO is
Generating Unit Tests Results (EOP– to the Bulk-Power System. In the NOPR, concerned that the impact of the
009–0) the Commission proposed to approve Commission’s directive is too broad and
674. Proposed Reliability Standard FAC–001–0 as mandatory and may have a substantial affect on those
EOP–009–0 deals with documentation enforceable. individual entities that are responsible
of blackstart generating unit test results. i. Comments for performing the studies; MRO asks
In the NOPR, the Commission proposed the Commission to clarify FAC–002–0 to
to approve EOP–009–0 as mandatory 680. APPA agrees with the the extent necessary, but does not
and enforceable without modifications. Commission’s proposal to approve propose a specific change.
FAC–001–0 as mandatory and 686. Six Cities requests that this
i. Comments enforceable. Reliability Standard clarify that all
675. APPA agrees that EOP–009–0 is ii. Commission Determination applicable entities must make available
sufficient for approval as a mandatory data necessary for all other responsible
and enforceable Reliability Standard. 681. As discussed in the NOPR, the entities to perform the required
Xcel states that the Reliability Standard Commission believes that Reliability assessment. Six Cities also suggests that
should provide details on what Standard FAC–001–0 is just, reasonable, the transmission operator be added as
constitutes a blackstart test and not unduly discriminatory or an entity to which this Reliability
FirstEnergy states that EOP–009–0 preferential and in the public interest Standard is applicable, at least from the
should be consolidated with EOP–007– and approves it as mandatory and perspective that it make necessary data
0 because the Requirements of EOP– enforceable. available to all other entities responsible
009–0 already exist in EOP–007–0. for assessment. TAPS believes that this
b. Coordination of Plans for New
Reliability Standard seems to assume
ii. Commission Determination Generation, Transmission, and End-User
that the LSE and distribution provider
Facilities (FAC–002–0)
676. The Commission believes that actively participate in planning of new
this Reliability Standard sufficiently 682. Proposed Reliability Standard facilities in the Bulk-Power System.
addresses documentation of blackstart FAC–002–0 requires that each TAPS states that very few LSEs or
generating unit test results. Accordingly, generation owner, transmission owner, distribution providers have the
the Commission approves Reliability distribution provider, LSE, transmission expertise to perform the tasks outlined
Standard EOP–009–0 as mandatory and planner and planning authority assess in this Reliability Standard and that
enforceable. the impact of integrating generation, these two entities provide only certain
data regarding certain new facilities to or OATT satisfies requirement R1 under NERC to submit a modification to FAC–
some or all of the other entities this Reliability Standard. We will not 002–0 that amends Requirement R1.4 to
identified in this Reliability Standard. make that determination here. If require evaluation of system
TAPS therefore believes that it would be FirstEnergy believes that complying performance under both normal and
unreasonable to require LSEs to provide with the MISO and PJM interconnection contingency conditions by referencing
the transmission planning evaluations procedures meets the applicable TPL–001–0 through TPL–003–0, Entergy
and assessments called for by R1. Reliability Standards, then it should disagrees and proposes that evaluation
California Cogeneration believes that the follow those procedures, it should not of system performance under Reliability
Reliability Standard implies that be concerned about violating the Standards TPL–001–0 and TPL–002–0
generator owners will perform an Reliability Standard. should be sufficient. Entergy states that
independent assessment and if so, it given the large number of small end-
believes that such task is impossible, ii. Standards of Conduct user requests that transmission
since generators do not have the (a) Comments operators may receive, expanding the
relevant information about the power 690. Xcel and MidAmerican believe scope of Requirement R1.4 may lead to
system to perform such evaluations. that the assessment required under this additional work and documentation that
California Cogeneration believes that the Reliability Standard may conflict with ultimately will not benefit reliability.
Reliability Standard should be clarified the Commission’s Standards of First Entergy states that the proposed
so that generator owners cooperate with Conduct 260 since the assessment reference to TPL Reliability Standards
and provide input to the assessment requires coordination among several should be expanded to include TPL–
performed by the transmission operator different functional groups within a 001–0 through TPL–004–0.
and the balancing authority. vertically integrated public utility.
687. FirstEnergy states that both MISO (b) Commission Determination
MidAmerican asserts that, since direct 693. The Commission notes that
and PJM already have Large Generator
communication between the generation APPA and EEI agree with the
Interconnection Procedures (LGIP) in
and transmission entities would result Commission’s proposed directive to
place that provide a formal process that
in more efficient overall planning, the NERC to modify FAC–002–0 to require
meets the requirements listed under R1,
Commission should clarify its intended evaluation of system performance under
and asks that the Commission state that
application of Standards of Conduct both normal and contingency conditions
complying with the interconnection
agreement and/or OATT satisfies this restrictions on joint planning activities. by referencing TPL–001–0 through TPL–
requirement. MISO states that their Xcel asks the Commission to clarify that 003–0. The Commission also notes that
procedures for coordinating plans for actions taken to comply with this NERC, in response to the Staff
new generation, transmission and end- Reliability Standard will not result in a Preliminary Assessment, has also agreed
user facilities includes modeling of transmission provider being in violation with the same proposal.261 These three
normal system and contingency of the Standards of Conduct. TPL Reliability Standards cover normal
conditions. (b) Commission Determination operation, first contingency operation
and multiple contingency operations
(b) Commission Determination 691. The Commission disagrees with respectively. The Commission disagrees
688. All of the above commenters MidAmerican and Xcel that this with Entergy that TPL–001–0 and TPL–
request clarification of Requirement R1 Reliability Standard may conflict with 002–0 are sufficient because it is
in the Reliability Standard that states the Standards of Conduct. This type of important to plan for new facilities
that various functional entities ‘‘shall system assessment is being performed taking into account not only normal
each coordinate and cooperate on its today with the cooperation of the circumstances but also contingencies. In
assessments with its transmission entities listed in the Applicability addition, we note that including TPL–
planner and planning authority.’’ 259 section. Further, we note that the 001–0 through TPL–003–0 will result in
The Commission believes that all Standards of Conduct were designed to the FAC–002 Reliability Standard being
entities listed in the Applicability address such interactions. The entities consistent with Order No. 2003, which
section have a stake in the performance participating in the assessment effort requires interconnecting entities to take
of the system and should have the can continue to contribute to this into account multiple contingencies in
opportunity to provide input in the assessment and observe the Standards of interconnection studies. With respect to
assessment under R1. The Commission Conduct at the same time. If any entity FirstEnergy’s suggestion to also include
believes that commenters have raised finds an area where it believes the a reference to Reliability Standard TPL–
valid concerns that, if addressed, would Standards of Conduct prevent it from 004–0, we direct the ERO to consider it
make the Reliability Standard better. cooperating with the assessment through the Reliability Standards
The wording would allow a number of process, it may seek clarification from development process.
organizational approaches to achieving the Commission as to whether that area 694. Accordingly, the Commission
the goal of performing an analysis. The of involvement is in conflict with the approves Reliability Standard FAC–
Commission does not intend to limit Standards of Conduct. 002–0 as mandatory and enforceable. In
which organizational approach is used iii. Reference to TPL Reliability addition, pursuant to section 215(d)(5)
by the entities, only to assure that a Standards of the FPA and § 39.5(f) of our
single competent and collaborative regulations, the Commission directs the
analysis is performed. Therefore, the (a) Comments ERO to develop a modification to FAC–
Commission directs the ERO to address 692. While APPA and EEI agree with 002–0 through the Reliability Standards
these concerns in the Reliability the Commission’s proposal to direct development process that amends
Standards development process. Requirement R1.4 to require evaluation
689. FirstEnergy asks the Commission 260 Standards of Conduct for Transmission
of system performance under both
to state that complying with MISO’s and Providers, Order No. 2004, FERC Stats. & Regs., normal and contingency conditions by
Regulations Preambles ¶ 31,155 (2003), order on
PJM’s interconnection agreements and/ reh’g, Order No. 2004–A, III FERC Stats. & Regs. referencing TPL–001 through TPL–003.
¶ 31,161 (2004), order on reh’g, Order No. 2004–B,
259 FAC–002–0. III FERC Stats & Regs. ¶ 31,166 (2004). 261 NOPR at P 352.
Further, the Commission also directs the i. Applicability 703. Progress, SERC, FirstEnergy and
ERO to consider the above commenters’ (a) Comments Avista argue that automatically
concerns through the Reliability subjecting lines below 200 kV to
Standards development process. 698. Entergy agrees with the Reliability Standard FAC–003–1 would
Commission’s proposal and supports increase maintenance, documentation
c. Transmission Vegetation Management applying the Reliability Standard to and reporting costs and impacts to land
Program (FAC–003–1) only those lines that have an impact on owners, but would not necessarily
reliability as determined by the ERO, as increase the reliability of the grid. LPPC
695. According to NERC, FAC–003–1 supported by reliability studies using does not object to eliminating the 200
is designed to minimize transmission consistent reliability contingency kV bright line threshold, but believes
outages from vegetation located on or criteria. that extending vegetation management
near transmission rights-of-way by 699. LPPC supports using an impact- practices to all facilities of 100 kV and
maintaining safe clearances between based definition of the Bulk-Power above would unnecessarily extend the
transmission lines and vegetation, and System to determine applicability and scope of the vegetation management
establishing a system for uniform suggests that the definition of significant requirements, creating large cost
reporting of vegetation-related adverse impact should be determined increases for many utilities without
transmission outages. FAC–003–1 through the NERC process. Further, creating a material increase in the
would apply to transmission lines LPPC asserts that actual facilities reliability of the Bulk-Power System.
operated at 200 kV or higher voltage meeting that criteria should be FirstEnergy recommends that if the
(and lower-voltage transmission lines determined by Regional Entities, which voltage level is lowered,
which have been deemed critical to best understand the impacts of facilities implementation, especially for reporting
reliability by a regional reliability on the regional system. LPPC notes that requirements, should be spread over at
organization). It would require each Regional Entities can continue to use least one year. Similarly, Xcel asks the
transmission owner to have a such tools as modeling and power flow Commission to allow flexibility in
documented vegetation management analyses to determine which facilities complying with this Reliability
program in place, including records of are critical to the reliability of the Bulk- Standard for lower-voltage facilities that
its implementation. Each program must Power System. previously were not subject to this
700. APPA and Avista believe that Reliability Standard.
be designed for the geographical area 704. EEI maintains that not changing
Regional Entities should determine
and specific design configurations of the what transmission facilities this this Reliability Standard would best
transmission owner’s system. standard applies to, since Regional maintain reliability, since removing the
696. This Reliability Standard Entities have detailed knowledge existing 200 kV threshold requirement
requires a transmission owner to define regarding the transmission facilities could inadvertently expose the Bulk-
a schedule for and the type (aerial or within their regions. APPA would have Power System to a new set of risks.
ground) of right-of-way vegetation the Regional Entities create a regional SoCal Edison argues that the Reliability
inspections. In addition, it requires a Reliability Standard to do so, subject to Standard already covers transmission
transmission owner to determine and ERO review for reasonableness and lines rated less than 200 kV, because
document the minimum allowable consistency. Avista points out that Requirement 4.3 of FAC–003–1 states
clearance between energized conductors WECC and the other Regional Entities that this Reliability Standard ‘‘shall
and vegetation before the next trimming, have already reviewed and designated apply to all transmission lines operated
critical lower voltage transmission at 200 kV and above and to any lower
and it specifically provides that
facilities, and the Reliability Standards voltage lines designated by the regional
‘‘Transmission-Owner-specific
currently apply to such facilities. reliability organization as critical to the
minimum clearance distances shall be reliability of the electric system in the
no less than those set forth in the IEEE 701. MISO asks for clarification with
respect to the intent of adding region.’’
Standard 516–2003 (IEEE Guide for 705. APPA opposes the Commission’s
transmission lines below 200 kV ‘‘that
Maintenance Methods on Energized proposal to direct NERC to change the
impact reliability’’ and whether the
Power Lines).’’ 262 applicability of this Reliability
included lines are IROL-related
697. In the NOPR, the Commission facilities 263 or some other facilities. Standard. APPA argues that the
proposed to approve Reliability Progress and SERC suggest that it may Commission should deal with this
Standard FAC–003–1 as mandatory and be appropriate to limit the applicability concern by having NERC reevaluate the
enforceable. In addition, pursuant to of the Reliability Standard to all lines Reliability Standard. National Grid
section 215(d)(5) of the FPA and that are operated at 200 kV and above argues that expanding the applicability
§ 39.5(f) of our regulations, the and to operationally significant circuits of Reliability Standards would not be
between 100 kV and 200 kV that are appropriate because it could
elements of IROLs. dramatically change the meaning of the
submit a modification to FAC–003–1
702. California PUC believes that Reliability Standards and would
that: (1) Requires the ERO develop a
discretion about determining which undermine the Reliability Standard
minimum vegetation inspection cycle development process which yielded the
that allows variation for physical lines are critical to the Bulk-Power
System should be left to the individual careful balances struck in developing
differences and (2) removes the general the standards.
limitation on applicability to state (working in concert with RTOs and
706. NERC argues that the
transmission lines operated at 200 kV ISOs), which has much greater
Commission’s proposed modification
and above so that the Reliability knowledge of what is needed on the
should be vetted through the Reliability
local level, rather than to NERC or the
Standard applies to Bulk-Power System Standards development process to better

transmission lines that have an impact Regional Reliability Organization.
understand what will be gained in terms
on reliability as determined by the ERO. 263 An IROL-related facility is a facility whose of impacts to the reliability of the Bulk-
outage would result in an Interconnection Power System. NERC notes that the
262 FAC–003–1 (Requirement R1.2.2). Reliability Operating Limit (IROL) violation. current applicability of the Reliability
Standard to 200 kV and above in a neighboring state. Since a modifications should be vetted through
transmission lines was debated vegetation-related outage affects all the Reliability Standards development
extensively by the industry, and any customers connected to that process. The Commission’s goal is to
change to this requirement should be transmission line, customers in both promote the Reliable Operation of the
vetted again. states could potentially have lower Bulk-Power System by including all of
reliability as a result of one state having those entities necessary to comply with
a less stringent standard than another. this Reliability Standard. We believe
707. We will not direct NERC to 709. Avista, LPPC, Progress and SERC that requiring the Reliability Standard to
submit a modification to the general raise concerns about the cost of include a greater number of entities and
limitation on applicability as proposed implementing this Reliability Standard exclude those that will not affect
in the NOPR. However, we will require if the applicability is expanded to reliability will more effectively sustain
the ERO to address the proposed lower-voltage facilities. We recognize reliability than an overly exclusive list
modification through its Reliability these concerns, and this was one of the of applicable entities.
Standards development process. As reasons we proposed to apply this
explained in the NOPR, the Commission Reliability Standard to Bulk-Power ii. Inspection Cycles
is concerned that the bright-line System transmission lines that have an 713. In the NOPR, the Commission
applicability threshold of 200 kV will impact on reliability as determined by proposed to direct NERC to submit a
exclude a significant number of the ERO. We recognize that many modification to FAC–003–1 that
transmission lines that could impact commenters would like a more precise requires the ERO to develop a minimum
Bulk-Power System reliability. Although definition for the applicability of this vegetation inspection cycle that allows
the regional reliability organizations are Reliability Standard, and we direct the variation for physical differences.
given discretion to designate lower ERO to develop an acceptable definition (a) Comments
voltage lines under the proposed that covers facilities that impact
Reliability Standard, none have reliability but balances extending the 714. FirstEnergy states that a
designated any operationally significant applicability of this standard against designation of a minimum annual
lines even though there are lower unreasonably increasing the burden on inspection cycle is appropriate and the
voltage lines involving IROL as transmission owners. method of inspection (aerial or by
suggested by Progress and SERC. We 710. FirstEnergy and Xcel suggest that ground) should be left to the
continue to be concerned that this if the applicability of this Reliability transmission owner. Dominion cautions
approach will not prospectively result Standard is expanded, the Commission that if there is a requirement for annual
in the inclusion of all transmission lines should allow flexibility in complying inspections, it should be flexible and
that could impact Bulk-Power System with this Reliability Standard for lower- allow for different approaches to
reliability. In proposing to require the voltage facilities, or allow lower-voltage transmission line inspections.
ERO to modify the Reliability Standard facilities one year before the Reliability 715. APPA, Entergy, EEI, LPPC,
to apply to Bulk-Power System Standard is implemented. The ERO Progress Energy, SERC and SoCal
transmission lines that have an impact should consider these comments when Edison disagree with the Commission’s
on reliability as determined by the ERO, determining when it would request that proposal to require the ERO to set
we did not intend to make this the modification of this Reliability minimum vegetation inspection cycles
Reliability Standard applicable to fewer Standard to go into effect. that allow for physical differences.
facilities than it currently is with the 711. In response to EEI’s concerns that APPA, Entergy and LPPC say that,
200 kV bright line applicability, but to removing the existing 200 kV threshold instead of proposing the development of
extend the applicability to lower-voltage could expose the Bulk-Power System to a Reliability Standard for minimum
facilities that have an impact on a new set of risks, we clarify that we are vegetation inspection cycles, the
reliability. We support the suggestions not immediately modifying this Commission should permit the
by Progress Energy, SERC and MISO to Reliability Standard. Instead, it will go transmission system owner or local
limit applicability to lower voltage lines into effect as written and the ERO will utility to determine the inspection cycle
associated with IROL and these revise it through the Reliability best suited for its system and adhere to
suggestions should be part of the input Standards development process, with that cycle, with compliance
to the Reliability Standards the expectation that the applicability of enforcement performed by the Regional
development process. Similarly, the this Reliability Standard will expand to Entities and the ERO.
ERO should evaluate the suggestions include additional facilities that impact 716. Progress Energy and SERC
proposed by LPPC, APPA and Avista. reliability that currently are not covered believe that the Reliability Standard as
708. California PUC suggests that by this Reliability Standard. A written provides flexibility regarding
states should have discretion over what modification that reduces the vegetation inspection cycles and that
lines are critical to Bulk-Power System applicability of this Reliability Standard the Commission should not impose
reliability. The Commission has been would not meet the Commission’s requirements on the ERO to develop
given the responsibility to approve directives. In response to SoCal Edison’s minimum inspection intervals on a
Reliability Standards that assure the argument that the Reliability Standard continent with such regional diversity
Reliable Operation of the Bulk-Power already addresses the Commission’s in climate and vegetation. In addition,
System, including which facilities are concerns, the Commission agrees that Progress Energy argues that, where a
covered by the Reliability Standards. while there appears to be a mechanism particular region is heavily forested and
We cannot delegate that responsibility for inclusion of additional lines, none has heavy rainfall along with extended
as proposed by California PUC. Further, have been included. This lack of or year round growing seasons, a ‘‘back
since many transmission facilities inclusion is in spite of the evidence that stop’’ minimum inspection frequency
traverse multiple states, we are some lower voltage lines can have could lead transmission owners to
concerned that this proposal could significant impacts on the Bulk-Power conduct inspections less frequently than
result in the Reliability Standard System, including IROLs and SOLs. what the local conditions require, which
applying to a section of a line in one 712. In response to APPA, NRECA would lead to a lowest common
state but not applying to the same line and NERC we agree that the proposed denominator Reliability Standard. This
could result in a transmission owner determine whether a prepared APPA notes that U.S. Fish and Wildlife
complying with the Reliability Standard company-tailored inspection cycle is Service personnel have begun to take
while not adequately protecting the appropriate given the physical and action regarding vegetation management
reliability of that region’s transmission geographic factors and, through audits, on non-federal lands, and reports that
system. inspect individual vegetation APPA members have been told by U.S.
717. Progress Energy and SERC argue management programs for compliance. Fish and Wildlife personnel to refrain
that, since the performance metrics in 721. While the Commission disagrees from cutting vegetation at certain times
FAC–003–1 require reporting of that incorporating a backstop would of the year in the absence of an
applicable transmission interruptions lead to a lowest common denominator imminent reliability threat. APPA
caused by vegetation, the compliance Reliability Standard, the Commission is concludes that this information conflicts
process associated with this Reliability dissuaded from requiring the ERO to with specifying minimum nationwide
Standard should appropriately identify create a backstop inspection cycle at vegetation inspection/cutting cycles and
transmission owners’ inspection cycles this time. Instead, the Commission clearances. In addition, APPA requests
that are not adequate, and the ERO can agrees that an entity’s vegetation clarification of the Commission
use its authority to remedy any management program should be tailored interpretation ‘‘we interpret the FAC–
vegetation-related outage that is to anticipated growth in the region and 003–1 to require trimming that is
attributed to the transmission owner’s take into account other environmental sufficient to prevent outages due to
inspection frequency. factors. The goal is to assure that vegetation management practices under
718. SoCal Edison states that transmission owners conduct all applicable conditions.’’
transmission owners are already inspections at reasonable intervals. In 725. Several commenters express
obligated by Requirement R1.1 to the Commission’s Vegetation concern about the Commission’s
establish a minimum vegetation Management Report, we found that position that any potential issues
inspection schedule that allows many entities performed aerial or regarding minimum clearances on
adjustment for changing conditions. ground inspections less than every three National Forest Service lands should be
SoCal Edison believes that the best years or even ‘‘as needed.’’ 264 dealt with on a case-by-case basis.265
measure of an effective transmission 722. The Commission continues to be EEI, Progress Energy and SERC believe
vegetation management program is concerned with leaving complete that this approach is inconsistent with
whether or not tree-to-line contacts are discretion to the transmission owners in the Reliability Standard’s intent to use
occurring. SoCal Edison recommends determining inspection cycles, which consistent approaches in setting
the Commission rescind the two limits the effectiveness of the Reliability minimum vegetation clearance
proposed directives and order no further Standard. Accordingly, the Commission distances on both private and public
revisions to FAC–003–1 until such time directs the ERO to develop compliance lands and the Commission’s statement
as Reliability Standard is deemed audit procedures, using relevant
that this Reliability Standard requires
unenforceable by the ERO or is not industry experts, which would identify
minimum clearances that are ‘‘sufficient
otherwise achieving its stated goals. appropriate inspection cycles based on
719. APPA and Progress Energy state to prevent outages due to vegetation
local factors. These inspection cycles
that a minimum vegetation inspection management practices under all
are to be used in compliance auditing of
cycle could result in an undue financial applicable conditions.’’ 266 Therefore,
FAC–003–1 by the ERO or Regional
burden for some regions of the country, International Transmission, EEI, LPPC,
Entity to ensure such inspection cycles
because they would be forced into a Progress Energy and SERC assert that
and vegetation management
minimum cycle that might be Reliability Standard FAC–003–1 should
requirements are properly met by the
inappropriate for their own region. For be applicable to all responsible entities
responsible entities.
example, Progress Energy states that, including those with transmission on
iii. Minimum Clearances on National both private and public lands because
where a particular region is arid,
Forest Service Lands consistency is the only way to provide
sparsely forested or has a minimum
growing season, a ‘‘back stop’’ minimum 723. In the NOPR, the Commission a uniform and reliable electrical system.
could require a more frequent interval did not propose to modify the ERO’s Dominion suggests the Commission
than is realistically needed. This would general approach with respect to defer to NERC and the stakeholder
result in increased and unnecessary clearances. However, the Commission process to develop specifications for
costs to the transmission owner and its expressed its belief that any potential clearances.
customers without providing a issues regarding minimum clearances 726. Progress Energy and SERC note
comparable increase in reliability. EEI on National Forest Service (Forest that EEI and certain federal agencies 267
believes that a minimum inspection Service) lands should be dealt with on have jointly addressed the issue of
cycle will add nothing to the strength of a case-by-case basis. The Commission consistency in vegetation management
the existing practices and could add a requested comments on whether work on federal lands, and developed a
requirement that is not merited by another approach would be more memorandum of understanding
actual circumstances in many locations. appropriate to address this issue. (Vegetation MOU) which sets the
framework for managing vegetation on
(b) Commission Determination (a) Comments transmission line rights-of-way under
720. The Commission is concerned 724. APPA believes that a case-by-
about minimizing outages and supports case approach may have to be 265 See, e.g., EEI, Energy, International
employed, since Forest Service lands Transmission, Progress Energy, SERC, LPPC and
a realistic inspection cycle. In the MISO.
NOPR, the Commission proposed a are located all across the country and 266 The NOPR states that ‘‘Accordingly, we
minimum inspection cycle that takes have different regional characteristics. interpret the FAC–003–1 to require trimming that
account of physical differences as one is sufficient to prevent outages due to vegetation

way to address this concern. However, 264 Utility Vegetation Management and Bulk management practices under all applicable
Electric Reliability Report at 10–11, available at conditions* * *’’ NOPR at P 380.
we recognize that there may be other http://www.ferc.gov/industries/electric/indus-act/ 267 Forest Service, Bureau of Land Management,
options to achieve the same reliability reliability/2004.asp (Vegetation Management Fish & Wildlife Service, National Park Service, and
goal. For example, the ERO could Report). U.S. Environmental Protection Agency.
Federal agency jurisdiction.268 Progress concerning the term ‘‘under all practices.269 Further, the allowable
Energy and SERC recommend using the applicable conditions,’’ the Reliability clearances in the IEEE standard are
EEI’s Vegetation MOU framework for Standard already addresses this issue in significantly lower than those specified
managing vegetation on transmission Requirement R3.2 by allowing for by the relevant U.S. safety codes. As
line rights-of-way under federal agency exceptions for natural disasters such, use of IEEE clearance provision as
jurisdiction rather than the case-by-case (including wind shears and major a basis for minimum clearance prior to
approach proposed in the NOPR. LPPC storms) that cause vegetation to fall into the next tree trimming as a Requirement
recommends creating a bright-line when the transmission lines from outside the in vegetation management is not
it comes to utilities’ obligations (and ROW. The Commission therefore finds appropriate for safety and reliability
rights) for trimming vegetation located that no clarification is required in reasons. For example, the IEEE Standard
on Forest Service lands. Avista and response to APPA. 516–2003 specifies a 2.45-foot clearance
Portland General ask that the Vegetation from a live conductor for the 120 kV
731. The Commission agrees that
MOU be affirmed by the Commission voltage class,270 whereas the ANSI Z–
ownership of the land does not change 133 standard specifies 12 feet, 4 inches
and permitted to govern transmission the impact of a vegetation-related outage
line rights-of-ways located on lands as the approach distance for the 115 kV
on the Bulk-Power System. However, voltage class.271
managed by federal land management
the present Reliability Standard leaves 733. Accordingly, the Commission
agencies.
the determination and documentation of directs the ERO to develop a Reliability
727. SoCal Edison believes that
‘‘clearance 1’’ to transmission owners. Standard that defines the minimum
transmission owners should be allowed
As such, there are no specific clearance needed to avoid sustained
the latitude to establish measures/
clearances, or criteria/procedures to vegetation-related outages that would
procedures for less rigid tree-to-line
develop clearances, before the apply to transmission lines crossing
clearances in response to state and
Commission for approval. What is in both federal land and non-federal land.
federal agency demands or requests but
front of the Commission relative to While this consensus is developed, the
is concerned that these measures/
‘‘locations on the right-of-way where the Commission directs the ERO to address
procedures will prove to be of little or
Transmission Owner is restricted from any potential issues regarding
no value in the event of an ERO
investigation into a tree-to-line contact attaining the clearances specified in mitigation measures needed to assure
occurring within national/state forestry Requirement R1.2.1’’ is addressed in these minimum clearances on Forest
boundaries or on private property. Requirement R1.4. Requirement R1.4 Service lands are appropriate on a case-
728. California PUC points out that states that ‘‘Each Transmission Owner by-case basis. The Commission also
California already has requirements shall develop mitigation measures to directs the ERO to collect outage data
applicable to minimum vegetation achieve sufficient clearances for the for transmission outages of lines that
clearance, and that the Commission protection of the transmission facilities cross both federal and non-federal
must take care to assure that any when it identifies locations on the right- lands, analyze it, and use the results of
mandatory Reliability Standard does not of-way where the Transmission Owner this analysis and information to develop
preempt the ability of California (and is restricted from attaining the a Reliability Standard that would apply
other states with similar state standards) clearances specified in Requirement to transmission lines crossing both
to impose stricter requirements that R1.2.1.’’ This Requirement addresses the federal and non-federal land.
instances when an entity cannot attain 734. In regard to California PUC’s
have no adverse impacts on reliability.
the clearances that it needs on land that concern about its ability to impose
729. FirstEnergy states that the
it controls. Since there are multiple stricter requirements on vegetation
standard should define rights-of-way to
mitigation measures that the entity can clearances, the Commission notes that
encompass the required clearance area section 215(i)(3) of the FPA states that
instead of the corresponding legal land employ to achieve the goal of preventing
outages due to vegetation management nothing in section 215 shall be
rights. Some rights-of-way may be larger construed to preempt the authority of a
to accommodate future needs and practices, the Commission has stated
that any potential issues regarding state to take action to ensure the
therefore may exceed clearances needed reliability of electric service within that
for existing lines. FirstEnergy believes minimum clearances on Forest Service
lands should be dealt with on a case-by- state, as long as the action is not
that Reliability Standards should not inconsistent with any Reliability
require clearing entire rights-of-way case basis.
Standard. Therefore, the State of
when the required clearance for existing 732. Avista and Portland General ask California may set its own vegetation
lines does not take up the entire right- the Commission to endorse the management requirements that are
of-way. Vegetation MOU. The Commission stricter than those set by the
reiterates its direction that the minimum Commission as long as they do not
clearances must be sufficient to avoid conflict with those set by the
730. As proposed in the NOPR, the any sustained vegetation-related outages Commission. Further, the Commission
Commission approves Reliability for all applicable conditions. The notes that once a Reliability Standard is
Standard FAC–003–1 with no proposed Vegetation MOU references IEEE 516 as established, California PUC can develop
modification on the issue of clearances. the only way to determine applicable stricter rules to be applied within the
The Commission reaffirms its minimum clearances. The Commission
interpretation that FAC–003–1 requires declines to endorse the use of IEEE 516 269 Controlled environments and operating
sufficient clearances to prevent outages as the only minimum clearance because conditions include clear days without precipitation,
due to vegetation management practices it is intended for use as a guide by high winds or lightning.
270 Institute of Electrical and Electronics
under all applicable conditions. As to highly-trained maintenance personnel Engineers, Inc. (IEEE) Standard 516–2003, IEEE
APPA’s requests for clarification to carry out live-line work using Guide for Maintenance Methods at 20.
specialized tools under controlled 271 ANSI Z133, American National Standards
268 The Vegetation MOU is available at http://
environments and operating conditions, Institute Standard for Tree Care Operations—
www.eei.org/industry_issues/environment/land/ Pruning, Trimming, Repairing, Maintaining and
vegetation_management/EEI_MOU_FINAL_5-25-
not for those conditions necessary to Removing Trees, and Cutting Brush—Safety
06.pdf. safely carry out vegetation management Requirements.
state of California, and if it wants them d. Facility Ratings Methodology (FAC– the assumptions. Valley Group states
to be enforceable under section 215 of 008–1) that it is extremely important that the
the FPA, could submit those Reliability 737. FAC–008–1 requires each underlying assumptions and methods
Standards to the ERO and the transmission owner and generation are documented and known to all
Commission for approval as a regional owner to develop a facility rating parties. Valley Group maintains that this
difference. methodology for its facilities, which will also ensure that the rating
735. FirstEnergy suggests that rights- should consider manufacturing data, assumptions used by operating and
of-way be defined to encompass the design criteria (such as IEEE, ANSI or planning functions are consistent with
required clearance areas instead of the other industry methods), ambient each other. Valley Group emphasizes
corresponding legal rights, and that the conditions, operating limitations and that making these assumptions open is
standards should not require clearing other assumptions. This methodology is important, especially regarding paths
the entire right-of-way when the to be made available to reliability between different transmission owners,
required clearance for an existing line coordinators, transmission operators, to ensure that transmission owners
does not take up the entire right-of-way. transmission planners and planning cannot exercise market power. It argues
The Commission believes this authorities who have responsibility in that open assumptions will also provide
suggestion is reasonable and should be the same areas where the facilities are rational grounds for dispute resolution.
addressed by the ERO. Accordingly, the located for inspection and technical (b) Commission Determination
Commission directs the ERO to address reviews.
this suggestion in the Reliability 738. In the NOPR, the Commission 740. As EEI, TANC, Valley Group and
Standards development process. proposed to approve Reliability MidAmerican discuss in their
Standard FAC–008–1 as mandatory and comments, the Commission’s proposal
iv. Summary of Commission enforceable. In addition, pursuant to to modify FAC–008–1 to require
Determinations section 215(d)(5) of the FPA and additional documentation supports the
736. The Commission approves FAC– § 39.5(f) of our regulations, the Commission’s goals of improving
003–1 as mandatory as enforceable. In Commission proposed to direct NERC to uniformity and transparency in the
addition, while we do not direct the develop a modification to FAC–008–1 facility ratings process. EEI’s suggestion
ERO to submit a modification to the through the Reliability Standards that having this information available
general limitation on applicability as development process that requires for review upon request of a registered
proposed in the NOPR, we require the transmission and generation facility user, owner or operator should be
ERO to address the proposed owners to: (1) Document underlying considered by the ERO in its Reliability
modification through its Reliability assumptions and methods used to Standards development process. As
Standards development process as determine normal and emergency proposed in the NOPR, the Commission
discussed above. Further, while the facility ratings; (2) develop facility directs the ERO to submit a
Commission is dissuaded from requiring ratings consistent with industry modification to FAC–008–1 that
the ERO to create a backstop inspection standards developed through an open requires transmission and generation
cycle at this time, it directs the ERO to process such as IEEE or CIGRE and (3) facility owners to document underlying
develop compliance audit procedures to identify the limiting component(s) and assumptions and methods used to
identify appropriate inspection cycles define the increase in rating based on determine normal and emergency
based on local factors. These inspection the next limiting component(s) for all facility ratings. As stated in the NOPR,
cycles are to be used in compliance critical facilities. the Commission believes that this added
auditing of FAC–003–1 by the ERO or transparency will allow customers,
i. Methodology Used To Determine regulators and other affected users,
Regional Entity to ensure such Facility Ratings and Documentation of
inspection cycles and vegetation owners and operators of the Bulk-Power
Underlying Assumptions System to understand how facility
management requirements are properly
met by the responsible entities. Finally, (a) Comments owners set facility ratings through
the Commission directs the ERO to 739. EEI, Valley Group, MidAmerican differing methods that provide
develop a Reliability Standard through and TANC support the Commission’s equivalent results.
the Reliability Standard development proposal to require additional ii. Rating Facilities Consistent with
process that defines the minimum documentation as a reasonable means to Industry Standards Developed Through
clearance needed to avoid sustained provide more transparency and an Open Process such as IEEE and
vegetation-related outages that would consistency. EEI suggests that this CIGRE
apply to transmission lines crossing requirement could be accommodated
both federal land and non-federal land. with a provision for the disclosure of (a) Comments
While this consensus is developed, the such information upon request by a 741. The Valley Group states that the
Commission directs the ERO to address registered user, owner or operator. Commission correctly identifies IEEE
any potential issues regarding TANC supports the Commission’s and CIGRE as examples of open process
mitigation measures needed to assure proposal to not require a uniform methodologies suitable for overhead
these minimum clearances on Forest facility rating methodology and transmission line ratings calculations. It
Service lands are appropriate on a case- recommends that the Commission adopt claims that IEEE and CIGRE are the only
by-case basis. The Commission also a policy that provides for each methodologies which make their
directs the ERO to collect outage data transmission owner and generation algorithms available to everybody, and
for transmission outages of lines that owner to develop and document a clearly document their assumptions.
cross both federal and non-federal facility rating methodology, which is Valley Group notes that both of these
lands, analyze it, and use the results of consistent with industry methodologies, methodologies will undergo a revision
this analysis and information to develop for their facilities. TANC also states that for accuracy regarding calculations for
a Reliability Standard that would apply the methodology used for developing high temperatures and high current
to transmission lines crossing both facility ratings should include a densities in the next two years, which
federal and non-federal land. description of and justification for all of may lead in some cases to slightly lower
line ratings, although the changes are have been shown to provide appropriate National Electric Safety Code minimum
not expected to be substantial. results. Information from engineering requirements ‘‘safety buffers,’’ which
742. APPA suggests that the proposal textbooks, common sense or vary depending on their confidence in
to rate facilities consistent with industry manufacturer information would be part the accuracy of design calculations.
methodologies developed through an of the underlying assumptions. The 746. APPA is concerned about the
open process such as IEEE and CIGRE Commission’s intent in the NOPR was possible ‘‘unintended consequences’’ of
should be considered in the ERO’s to require that FAC–008–1 be modified this modification and questions whether
Reliability Standards development to require that facility ratings be this proposed Requirement can be done
process rather than ordered by the developed consistent with industry as a practical matter; how many critical
Commission. LPPC asks the standards developed through an open, facilities and limiting components
Commission to require only that facility transparent and validated process. The would have to be modeled to meet such
ratings be consistent with good utility Commission agrees with Valley Group a Requirement; and whether the cost of
practice. According to LPPC, to the that IEEE and CIGRE are two examples such modeling is justified by the
extent facility rating methodologies of such processes and disagrees with reliability benefits. Dynegy, MISO and
need to be more prescriptive than good LPPC that reference to industry Wisconsin Electric also oppose this
utility practice, the details must be standards is poor policy. Industry requirement because it is ambiguous,
spelled out in the ERO Reliability standards that have been verified by the additional work required to identify
Standards themselves, not by reference actual testing are appropriate. However, the increase in rating based on the next
to other unspecified industry the Commission agrees with limiting component(s) is unwarranted
methodologies. LPPC believes that it MidAmerican that IEEE and CIGRE are and potentially costly, and the need for
would be poor policy for the just two examples of such bodies; any any such specific information is
Commission to endorse these other open process that has been questionable. Dynegy and Wisconsin
methodologies since it would be technically validated for its provision of Electric do not believe there is a
impossible to police the processes by accurate, consistent ratings is also widespread need for this type of
which such organizations develop their acceptable. The ERO should consider information and recommend that the
methodologies. MidAmerican states that the concerns raised by LPPC and MRO need for it be explored on a case-by-case
the Commission should recognize that in its Reliability Standards development basis rather than including a global
the proposal to require facility ratings be process, and is hereby directed to do so. requirement in the standards.
consistent with industry methodologies The Commission does not expect there 747. Dynegy, FirstEnergy and MISO
developed through an open process is to be any regional differences because state that it is not clear what specific
potentially problematic, noting that the only differences should be from criteria would be used to define ‘‘critical
certain aspects of the development of facilities’’ and ‘‘limits.’’ EEI also states
different underlying assumptions that
facility ratings are based on industry that developing a practical definition of
are not defined by the Reliability
standards that are not developed ‘‘critical facilities’’ presents a challenge,
Standard.
through an open process, such as and that compliance would require the
information provided by engineering iii. Identify the Limiting Component(s) analysis of possibly hundreds of
textbooks or manufacturer information and Define for All Critical Facilities the thousands of ‘‘limiting’’ transmission
that is not specifically referenced in any Rating Based on the Next Limiting elements to determine whether a limit is
current standard. MidAmerican Component Within the Same Facility of primary concern or is contingent on
recommends that the Commission (a) Comments the status of other nearby elements or
delete the requirement that facility system conditions at a particular time.
ratings be ‘‘developed through an open 744. TANC maintains that the rating EEI suggests that, rather than requesting
process such as IEEE or CIGRE’’ or add information provided by the that the industry develop a definition, it
other sources that the Commission transmission owners and generator may be more useful for the Commission
would find appropriate, such as the owners should include additional to recommend that the industry develop
results of accepted scientific and information about all of the limiting a set of high-level criteria that could be
engineering investigations and common components of the elements (e.g., used to identify those transmission
sense. MRO requests that the transmission lines, transformers, etc.) elements that create significant potential
Commission clarify whether its for all critical facilities. Access to such limits that are independent of other
directive to modify FAC–008–1 to information will enable neighboring factors and considerations.
develop facility ratings consistent with systems to accurately study the effects 748. EEI and TVA assert this
industry standards developed through of other facilities on their own systems recommendation does not seem to be
an open process such as IEEE or CIGRE and determine the critical elements for intended to enhance reliability but to
would allow for legitimate regional increasing facility ratings. provide additional commercial
differences such as climate, terrain or 745. Valley Group states that information to the market, and may not
population density. identifying the limiting elements is an be appropriate to include in a Reliability
excellent objective for reliability Standard. Portland General further
(b) Commission Determination enhancement, but notes that its points out that this information can be
743. In the NOPR, the Commission granularity must be limited to major obtained from a transmission provider
stated, ‘‘While not proposing to mandate elements of the circuits, such as by submitting a transmission or
a particular methodology, we do transformers and breakers, while interconnection request when ATC is
propose that the methodology chosen by treating the transmission lines as single not posted or not available. TVA
a facility owner be consistent with elements. Valley Group also notes that, comments that, since the focus of this
industry standards developed through of the two examples discussed in the proceeding is the Reliable Operation of
an open process such as IEEE or NOPR, the example regarding relay the Bulk-Power System, changes to a
CIGRE.’’ 272 These processes have been settings is technically well justified, proposed Reliability Standard, such as
validated through actual testing and whereas rating the line based on a single FAC–008–1, that appear designed to
limiting span is generally impractical promote maximum commercial use of
272 NOPR at P 404. because line design engineers add to the the grid are unwarranted in this
proceeding and could jeopardize, rather limitations that set the current carrying impediment to service to major cities or
than further, reliable transmission capability of the critical facility. load pockets.
system operations. 754. Manitoba further notes that the 758. EEI and TVA raise concerns that
749. MRO seeks clarification about Commission proposal may lead to this modification promotes commercial
whether the proposed modification will international conflicts in Reliability use of the grid rather than ensuring
require that all limiting facilities Standards. Manitoba states that a Reliable Operation of the Bulk-Power
elements be published. MRO believes mandated change to FAC–008–1, which System, and relates more to
that serious confidentiality issues are forces an entity to accept facility ratings transmission access than reliable
raised due to the security-sensitive beyond its risk tolerance, would be operations. The Commission disagrees
nature of the information and urges the grounds for Manitoba to recommend that this modification relates primarily
Commission not to require the that the provincial government of to transmission access. When the
publication of such information. Manitoba not approve this Reliability transmission operators know which
750. Dominion states that the Standard because it would degrade component within the transmission
Commission should exclude from this reliability. element is limiting they have more
requirement facilities that are covered 755. APPA suggests that the proposal information to inform their decisions
under an open, regional transmission to identify the limiting component and about how to provide for the Reliable
expansion planning process, such as the define for all critical facilities the rating Operation of the Bulk-Power System.
Regional Transmission Expansion Plan based on the next limiting component Our proposed modification does not
process in PJM, where any interested be considered in the ERO’s Reliability require any entity to invest in
party can be involved in the studies and Standards development process rather equipment to increase ratings of any
determine what the limitations are and than ordered by the Commission. facility; it simply requires the next
what could be done to increase limiting component of each facility to be
transmission capacity. identified in order to understand what
756. The Commission agrees with components are causing the limits that
751. International Transmission states TANC that this modification would
that, if the Commission were to require are to be used in reliability mitigation
provide useful information to assessments. The identification of the
defining the increase in facility rating neighboring systems and users, owners
based on the next limiting element, it first limiting component is already an
and operators of the Bulk-Power inherent requirement in the existing
should restrict such application to System. The Commission also agrees rating process. As clarified above, the
transmission elements where the with Valley Group that identifying the modification to identify an increase in
conductor itself is not the limiting limiting elements of facilities enhances rating of the transmission element that
element. International Transmission reliability by providing operators would result from removing the first
explains that in cases where the line specific information about the limiting limitating component applies only to
must be completely rebuilt, it would not elements and therefore allowing them to critical facilities whose thermal ratings
be feasible to estimate the increase in assess the risks associated with circuit have been reached causing an SOL or
facility rating, since the new line could loadings. IROL condition. As Dominion highlights
be specified to carry virtually any 757. In response to the comments of in its comments, this information is
amount of power. APPA, Dynegy, EEI, MISO and already identified in the planning
752. MISO questions how a generator Wisconsin Electric, the Commission processes of some RTOs and ISOs.
operator or generation owner would clarifies that this Reliability Standard 759. In response to the concerns
identify the increase in rating based on and the Commission’s proposed raised by EEI and MRO about sharing
the next most limiting component(s) modification apply to facilities. As confidential, market-sensitive
associated with generator output. defined in the NERC glossary, a facility information, the Commission disagrees
FirstEnergy believes that this is ‘‘a set of electrical equipment that that ratings information is confidential
modification should recognize that operates as a single Bulk Electric System or market-sensitive. All users, owners
generators may need to rely on Element 273 (e.g., a line, a generator, a and operators should have access to the
transmission owners to point out shunt compensator, transformer, etc.).’’ facility ratings in order to operate the
facilities that are more limiting than the The most limiting component in a system reliably. Section 215(a)(4) of the
generator facilities. facility determines its rating, just like FPA defines Reliable Operation, in part,
753. Manitoba’s technical experts the rating of a chain is determined by as operating the elements of the Bulk-
disagree with the Preliminary Staff the weakest link. The Commission’s Power System within equipment and
Assessment regarding FAC–008–1. The proposed modification would require electric system thermal stability
Reliability Standard properly places the identifying and documenting the limits.274 Without knowing the ratings,
responsibility of determining facility limiting component for all facilities and it is not possible to know whether this
ratings with the facility owners. the increase in rating if that component requirement is being met. As to the
Manitoba also states that, since this were no longer the most limiting argument that this information is
Reliability Standard requires that the component; in other words, the rating confidential, the Commission clarifies
‘‘Facility Rating shall be equal to the based on the second-most limiting that, as with the other information
most limiting applicable Equipment component. The Commission further required by this Reliability Standard,
Rating of the individual equipment that clarifies that this Reliability Standard the additional information required by
comprises that Facility,’’ information on will require this additional thermal this modification would be shared only
the next limiting component is already rating information only for those with users, owners and operators of the
identified. Contrary to the Commission’s facilities for which thermal ratings Bulk-Power System.
view, Manitoba does not believe it cause the following: (1) An IROL; (2) a 760. In response to Dominion’s
would be appropriate in this Reliability limitation of TTC; (3) an impediment to comments, if the PJM Regional
Standard to identify the increase in generation deliverability or (4) an Transmission Expansion Planning
rating for all critical facilities based on process meets the criteria, there is no
the next limiting component. In a 273 An element is made up of one or more
networked system, there may be other components. 274 16 U.S.C. 824o(a)(4).
need to exclude facilities covered by 765. FirstEnergy also points out that dynamic ratings—as recommended by
that process from this requirement. facility ratings for nuclear units are part the Blackout Report, and recommends
761. The Commission directs the ERO of NRC license agreements and that the that the Commission include such
to consider International Transmission’s ratings methodologies included in NRC guidance in its Final Rule.
comments regarding requiring license agreements are approved by
information about the increase in NRC. FirstEnergy proposes that
facility rating based on the next limiting compliance with NRC ratings 769. The Commission believes that
element only for lines where the methodology requirements should be implementation of the modifications
conductor itself is not the limiting assumed to comply with this Reliability discussed earlier to Reliability Standard
element in its Reliability Standards Standard. FAC–008–1 meets our goal of
development process. Similarly, the implementing Blackout Report
ERO should also consider the comments Recommendation No. 27, which is to
from MISO and FirstEnergy that 766. The Commission agrees with ‘‘develop enforceable standards for
generators will have difficulty Xcel that an actual test could be used as transmission line ratings.’’ 275 To
determining the increase in ratings due a substitute for a mathematical achieve a clear and unambiguous
to the next limiting element, since in calculation of capability, and we ask the Requirement to rate transmission lines,
most cases the generator itself would be ERO to consider these comments in its it is important to understand the
the most limiting element. Reliability Standards development underlying assumptions and the
process. The Commission understands methodologies that will be used to
762. We agree with Manitoba that this that NRC provides ratings
Reliability Standard properly places the develop those ratings. The Commission
methodologies for nuclear power plants recognizes that dynamic line ratings are
responsibility to determine facility and not for the transmission system.
ratings on the facility owner. The an innovative application, and directs
Capacity ratings of nuclear generators the ERO to consider the comments from
Commission is not proposing to change determined using this methodology are
this. We also agree with Manitoba that Valley Group in future revisions of this
acceptable for reliability purposes. We Reliability Standard.
the most limiting component is already also direct the ERO to consider
identified when facility ratings are FirstEnergy’s comments in its Reliability vi. General Comments
determined. The Commission is only Standards development process.
directing transmission and generation 770. APPA notes that FAC–008–1
owners to provide additional v. Compliance With Blackout Report should be revised to replace Levels of
information on the next limiting Recommendation No. 27 Non-Compliance with Violation
component within the facility so that Security Levels, and to include
(a) Comments Violation Risk Factors on all FAC–008–
facility ratings are more transparent.
767. Manitoba believes this Reliability 1 requirements.
763. In response to Manitoba’s and
Standard meets the requirement of (a) Commission Determination
APPA’s concerns, we recognize that this
Blackout Report Recommendation No.
is an additional requirement with some 771. The Commission acknowledges
27 because the recommendation does
complexities, and this modification will that the Reliability Standards are
not require a uniform set of
go through the ERO Reliability changing. In this Final Rule, we are
methodologies for rating facilities, but
Standards development process. We do ruling on the Reliability Standards as
instead only recommends that there be
not intend to usurp the Reliability they were filed, and these documents
a clear, unambiguous requirement to
Standards development process, where use the term Levels of Non-Compliance.
rate transmission lines.
Manitoba may raise its concerns for the The ERO should address APPA’s
768. Valley Group notes that, while
ERO to consider. comments in its Reliability Standards
the Commission’s proposal would direct
iv. Applicability to Generator Owners the ERO to respond to a part of Blackout development process.
(a) Comments Report Recommendation No. 27, it does vii. Summary of Commission
not address the important second part of Determination
764. Xcel states that this Reliability the Recommendation, namely dynamic
Standard should not apply to generator ratings. Valley Group notes that 772. Accordingly, as discussed in the
owners because capability testing, rather dynamic ratings offer a very powerful responses to comments above, the
than using mathematical calculations, is tool both for maximizing the capabilities Commission approves FAC–008–1 as
the preferred method of determining of transmission paths and for avoiding mandatory and enforceable. In addition,
generating unit capability. Capability unnecessary transmission line loading we direct the ERO to develop
testing clearly includes the capability of relief. Valley Group also notes that modifications to FAC–008–1 through its
all the supporting components behind dynamic ratings, based either on Reliability Standards development
the generator that are required to ambient-adjusted ratings or ratings process requiring transmission and
produce a MW of capability. Xcel also generated by real-time monitoring generation facility owners to: (1)
states that this proposed Reliability systems, are widely used in the PJM Document underlying assumptions and
Standard, if applied to generating units, system, while broader real-time ratings methods used to determine normal and
would not improve system reliability are applied on certain lines in SPP and emergency facility ratings; (2) develop
and could result in conflicting and ERCOT and at several individual facility ratings consistent with industry
confusing unit capability ratings. Xcel utilities. Valley Group states that standards developed through an open,
notes that generating units already are controlling unnecessary operator transparent and validated process and
required to be capability-tested on a interventions with dynamic ratings both (3) for each facility, identify the limiting
periodic and seasonal basis to increases the reliability of Bulk-Power component and, for critical facilities,
demonstrate unit gross and net System and improves its economy. the resulting increase in rating if that
capability in accordance with proposed Valley Group concludes that it would be component is no longer limiting.
standards MOD–024–1 and MOD–025– highly desirable for the ERO to establish
1. policies and procedures regarding 275 Blackout Report at 162.
e. Establish and Communicate Facility The Reliability Standard does not Reliability Standard should provide a
Ratings (FAC–009–1) contain clear requirements on how framework for the transfer capability
773. FAC–009–1 requires each transfer capability should be calculated, calculation methodology, including data
transmission owner and generation which has resulted in diverse inputs and modeling assumptions. The
owner to establish facility ratings interpretations of transfer capability and Commission agrees with APPA that
consistent with its associated facility the development of various calculation there should be an umbrella
ratings methodology and provide those methodologies. The NOPR suggested organization to assure consistency
ratings to its reliability coordinator, that FAC–012–1 should, as a minimum, within the Eastern Interconnection and
transmission operator, transmission provide a framework for the transfer the other interconnections. We believe
planner and planning authority. In the capability calculation methodology that the best organization to do this
NOPR, the Commission proposed to including data inputs and modeling would be the ERO, because it is the only
approve FAC–009–1 as mandatory and assumptions. In addition, the NOPR organization with knowledge of all of
enforceable. asked for comments on the most the individual Regional Entities that can
efficient way to make the above carry out this function. Therefore, we
i. Comments information transparent for all direct the ERO to modify this Reliability
774. APPA supports approval of FAC– participants. Standard to provide such a framework.
009–1 as a mandatory and enforceable
i. Methodology ii. Transparency and Confidentiality
Reliability Standard.
(a) Comments (a) Comments
779. APPA, International 781. International Transmission
775. FAC–009–1 serves an important
Transmission and MidAmerican agree cautions that, in making information
reliability purpose of ensuring that
that the proposed FAC–012–1 is not regarding the framework for calculating
facility ratings are determined based on
sufficient and should not be accepted transfer capability transparent to all
an established methodology. Further,
for approval as a mandatory Reliability participants, a balance must be
the proposed Requirements set forth in
FAC–009–1 are sufficiently clear and Standard. They suggest that, at a maintained between the need for
objective to provide guidance for minimum, this Reliability Standard transparency and the need to maintain
compliance. Accordingly, the should provide a framework for the the confidentiality of sensitive critical
Commission approves Reliability transfer capability calculation energy infrastructure information (CEII).
Standard FAC–009–1 as mandatory and methodology, including data inputs and The results of certain critical
enforceable. modeling assumptions. APPA notes contingency analyses would not be
that, in the Western Interconnection and appropriate for public disclosure, but
f. Transfer Capability Methodology ERCOT, the sets of rules for long-range may be the basis for transfer capability
(FAC–012–1) and operational planning studies are limits imposed on some interfaces.
776. Proposed Reliability Standard transparent to all users, owners and 782. MidAmerican suggests that
FAC–012–1 requires each reliability operators and suggests that in the transparency could be provided in the
coordinator and planning authority to Eastern Interconnection, where multiple Eastern Interconnection by each
document the methodology used to regions exist, the Regional Entities reliability coordinator and each
develop its inter-regional and intra- should consider developing an umbrella planning authority posting the transfer
regional transfer capabilities. This organization or process comprised of capability calculations performed
methodology must describe how it representatives from each of the Eastern pursuant to FAC–012–1, along with a
addresses transmission topology, system Interconnection’s Regional Entities to document outlining how they were
demand, generation dispatch and use of establish the planning and operational determined and the purposes for which
projected and existing commitment of rules for the Interconnection. APPA they are used on a protected Web site.
transmission. suggests that this approach would work The protected site should be accessible
777. In the NOPR, the Commission well to identify critical facilities, by only to qualified entities. MidAmerican
explained that, because the using consistent and transparent study suggests that the Western
methodology to calculate transfer assumptions, and it would also Interconnection’s approach, the WECC
capability used by a reliability minimize seams issues when message system used for certain
coordinator or planning authority has establishing facility rating and transfer qualified paths, is an appropriately
not been submitted to the Commission, capabilities throughout the entire transparent system.
it is not possible to determine at this Interconnection. International
time whether FAC–012–1 satisfies the Transmission states that this Reliability
statutory requirement that a proposed Standard should identify the 783. Although we are not proposing to
Reliability Standard be just, reasonable, performance that is required, that approve or remand this proposed
not unduly discriminatory or specifics of how transfer capability Reliability Standard, the Commission
preferential, and in the public interest. should be calculated do not belong in believes that it can be improved. The
Thus, the NOPR did not propose to this Reliability Standard, and that a Commission believes that the process
approve or remand this Reliability reference document could be developed used to determine transfer capabilities
Standard until the regional procedures for this purpose. should be transparent to the
are submitted. stakeholders, and agrees with
778. The NOPR explained that FAC– (b) Commission Determination International Transmission and
012–1 only requires that the regional 780. Although we are not proposing to MidAmerican that the results of those
reliability organization provide approve or remand this Reliability calculations should not be available for
documentation on transfer capability Standard, because it is applicable to the public disclosure but only for qualified
methodology and provide it to entities regional reliability organization, the entities on a confidential basis. In
such as the relevant transmission Commission agrees with APPA, addition, the process and criteria used
planner, planning authority, reliability International Transmission and to determine transfer capabilities must
coordinator and transmission operator. MidAmerican that, at a minimum, this be consistent with the process and
criteria used for other users of the Bulk- Eastern Interconnection, where multiple essential to determine which planning
Power System. Simply stated, the regional reliability organizations and authorities and reliability coordinators
criteria used to calculate transfer Regional Entities exist, the Regional are responsible for determining and
capabilities for use in determining ATC Entities should consider developing an distributing each of the specific transfer
must be identical to those used in umbrella organization or process capability values. Reliability
planning and operating the system. The comprised of representatives from each coordinators have a wider-area view of
Commission directs the ERO to take this of the Eastern Interconnection’s the transmission system than planning
into account in its Reliability Standards Regional Entities, to establish the authorities, which is important in
development process, and to modify the planning and operational planning rules calculating inter- and intra-regional
Reliability Standard consistent with for the Interconnection. APPA believes transfer capabilities. Therefore, the
Order No. 890 in Docket No. RM05–25– that such a program would minimize
Commission agrees with MidAmerican
000. seams issues when establishing facility
784. Accordingly, the Commission ratings and transfer capabilities that reliability coordinators should
affirms the NOPR proposal to not throughout the entire Interconnection. calculate transfer capabilities in the
approve or remand this Reliability 788. MidAmerican supports the operating horizon. The Commission will
Standard. We understand that the ERO Commission’s proposal to make this not address MidAmerican’s proposal
implemented its Reliability Standards Reliability Standard applicable to all regarding calculating transfer
development process to revise the reliability coordinators and planning capabilities in the planning horizon
Reliability Standard and will be authorities. MidAmerican believes in a because those Reliability Standards are
submitting it in accordance with the clear separation of responsibilities being considered in Docket No. RM07–
schedule identified in Order No. 890. between the reliability coordinators and 3–000 and are therefore beyond the
planning authorities. MidAmerican scope of this proceeding.
g. Establish and Communicate Transfer
believes that reliability coordinators 792. The Commission, as discussed
Capability (FAC–013–1)
should calculate transfer capabilities in
785. FAC–013–1 requires either the elsewhere in this Final Rule, has
the operating horizon, while planning
reliability coordinator or the planning considered APPA’s proposal concerning
authorities calculate transfer capabilities
authority, as determined by the regional in the planning horizon, and would creating an umbrella organization in
reliability organization, to calculate support additional clarification of the regard to FAC–012–001.276
transfer capabilities consistent with its standard by explicitly stating the 793. In regard to TANC’s concern that
transfer capability methodology and continued responsibility of planning transmission service providers and
provide those capabilities to its authorities to calculate transfer transmission operators may be liable
transmission operators, transmission capabilities for the planning horizon. because they are specifically named in
service providers and planning 789. TANC is concerned that, if the Requirement R2.1, the Commission
authorities. transmission service provider and the clarifies that, because the Reliability
786. In the NOPR, the Commission transmission operators are specifically Standard only provides that the
proposed to approve Reliability named in Requirement R2.1 of this transmission service providers and
Standard FAC–013–1 as mandatory and Reliability Standard, but are not transmission operators receive
enforceable. In addition, pursuant to included in the Applicability section, information regarding transfer
section 215(d)(5) of the FPA and this will cause ambiguity. TANC capabilities, and does not require an
§ 39.5(f) of our regulations, the questions whether a transmission affirmative action on the part of
Commission proposed to direct NERC to service provider or transmission transmission service providers or
develop a modification to FAC–013–1 operator that does not receive the
that: (1) Makes it applicable to all transmission operators, a transmission
transfer capabilities from the reliability
reliability coordinators and (2) removes service provider or transmission
coordinator will be held accountable
the regional reliability organization as operator cannot be liable for violating
and penalized for not producing the
the entity that determines whether a transfer capabilities when the reliability the Reliability Standard.
planning authority has a role in coordinator never provided them. If this 794. The Commission disagrees with
determining transfer capabilities. is the case, TANC questions whether EEI that these matters should be
there will be different penalties for the evaluated only in the OATT Reform
i. Comments
transmission service provider and Proceeding. In Order No. 890, the
787. APPA supports the transmission operator, or whether they Commission directed transmission
Commission’s proposal to approve will be subject to the same penalties as owners to use the ERO’s Reliability
FAC–013–1 as a mandatory and the entities listed in the Applicability Standards development process to
enforceable Reliability Standard, but section. implement changes required in that
disagrees with the Commission’s 790. EEI believes that the full range of Final Rule.277
proposed modification to remove the issues discussed here are currently
regional reliability organization as the 795. Accordingly, the Commission
under review under Docket No. RM05–
entity that determines whether a 25 and proposes that these issues approves Reliability Standard FAC–
planning authority has a role in remain in a single forum to avoid 013–1 as mandatory and enforceable,
determining transfer capabilities. APPA confusion. and, pursuant to section 215(d)(5) of the
believes that regional committee FPA and § 39.5(f) of our regulations, the
processes are essential to determine, ii. Commission Determination Commission directs the ERO to develop
through their planning and operating 791. The Commission does not a modification to FAC–013–1 through
committees, which planning authorities believe that the regional reliability the Reliability Standards development
and reliability coordinators are organization should be able to decide process that makes it applicable to
responsible for determining and the type of entity to which this reliability coordinators.
distributing each of the specific transfer Reliability Standard applies. The
capability values within each regional Commission disagrees with APPA that 276 See supra P 780.
footprint. APPA proposes that in the regional committee processes are 277 Order No. 890 at P 196.
6. INT: Interchange Scheduling and and it urges that approval of the balancing authority, that takes on this
Coordination Reliability Standards that have the role in the future would be clear.
796. The Interchange Scheduling and interchange authority as an applicable 803. In short, there is sufficient clarity
Coordination (INT) group of Reliability entity be withheld until these issues are concerning the nature and
Standards addresses interchange resolved. responsibilities of this function for it to
transactions,278 which occur when 799. APPA agrees that applicability of be implemented at this time.
electricity is transmitted from a seller to the Reliability Standards to the Withholding approval of INT Reliability
a buyer across the power grid. Specific interchange authority is confusing. Standards pending further clarification
information regarding each transaction However, APPA suggests the best on this matter would create an
must be identified in an accompanying approach to the problem is for NERC to unnecessary gap in the coverage of the
electronic label, known as a ‘‘Tag’’ or identify the source and sink balancing Reliability Standards that potentially
‘‘e-Tag’’ which is used by affected authorities as the applicable entity in could threaten the reliability of the
reliability coordinators, transmission these Reliability Standards until the Bulk-Power System.
service providers and balancing Functional Model is revised to better b. Interchange Information (INT–001–2)
authorities to assess the transaction for specify the status and responsibility of
reliability impacts. Communication, interchange authorities. 804. INT–001–1 seeks to ensure that
submission, assessment and approval of 800. EEI observes that there is interchange information is submitted to
a Tag must be completed for reliability considerable confusion throughout the the reliability analysis service identified
consideration before implementation of industry regarding the registration by NERC.280 This Reliability Standard
the transaction. process and the relationship between applies to purchasing-selling entities
registration and applicability of and balancing authorities. It specifies
a. Interchange Authority two Requirements that focus primarily
standards, with the interchange
797. The Version 1 INT Reliability authority being an example of that on establishing who has responsibility
Standards submitted with NERC’s confusion. However, EEI states it in various situations for submitting the
August 28, 2006 supplemental filing understands that the role of an interchange information, previously
include a new entity, the interchange interchange authority is currently being known as transaction tag data, to the
authority, which oversees interchange addressed and revisions to the reliability analysis service identified by
transactions and is included as an Functional Model are currently moving NERC. The Requirements apply to all
applicable entity or referenced in the through the approval process. If Version dynamic schedules, delivery from a
Requirements sections of INT–005–1, 3 of the Functional Model is approved jointly owned generator and bilateral
INT–006–1, INT–007–1, INT–008–1, by the NERC Board, EEI believes it will inadvertent interchange payback.
INT–009–1 and INT–010–1.279 The clarify that a sink balancing authority 805. The Commission proposed in the
Commission requested in the NOPR that performing a Tag authority service NOPR to approve Reliability Standard
NERC provide additional information could serve as an interchange authority INT–001–1 as mandatory and
regarding the role of the interchange and this modification would address the enforceable. In addition, pursuant to
authority so that the Commission could Commission’s concern. section 215(d)(5) of the FPA and
determine whether the interchange 801. The CAISO suggests that it is § 39.5(f) of its regulations, the
authority is a user, owner or operator of premature to place any INT Reliability Commission proposed to direct NERC to
the Bulk-Power System required to Standards involving an interchange submit a modification to INT–001–1
comply with mandatory Reliability authority into effect until more that: (1) Includes Measures and Levels
Standards. information is provided concerning the of Non-Compliance and (2) includes a
interchange authority’s role. Requirement that interchange
i. Comments information must be submitted for all
798. ISO–NE states that it is unclear ii. Commission Determination point-to-point transfers entirely within a
who the interchange authority should 802. The NERC glossary definition of balancing authority area, including all
be, how its tasks could be performed interchange authority indicates that it is grandfathered and ‘‘non-Order No. 888’’
operationally and how the interchange intended to provide essentially a quality transfers.281
authority function relates to other control function in verifying and 806. The Commission also noted in
reliability and market functions. ISO– approving interchange schedules and the NOPR that certain Requirements of
NE states that NERC has not yet fully communicating that information. Our INT–001–0 that relate to the timing and
incorporated the concept of an understanding is that, in the interim, content of e-Tags had been deleted in
interchange authority into its Functional sink and source balancing authorities the Version 1 Reliability Standard.
Model and has not provided a means for will serve as interchange authorities NERC indicated that these Requirements
an entity to register as an interchange until the ERO has further clarified an are business practices that would be
authority under the Functional Model. interchange authority’s role and included in the next version of the
Finally, ISO–NE states that NERC must responsibility in the modification of the NAESB Business Practices. The
still create a process to allow the Functional Model and in the registration Commission stated in the NOPR that
appropriate entities to register as process. The new interchange authority NERC’s explanation of this change was
interchange authorities so that their function allows an entity other than a acceptable and proposed to approve
status is clear to all applicable entities, balancing authority to perform this INT–001–1 with the deletion of
function in the future; the pre-existing Requirements R1.1, R3, R4 and R5.
278 The NERC glossary defines ‘‘interchange’’ as
INT–001–1 Reliability Standard However, the Commission also noted
‘‘Energy transfers that cross Balancing Authority that NAESB had not yet filed the e-
boundaries.’’ NERC Glossary at 9. identified the balancing authority as the
Tagging requirements as part of its
279 The NERC Glossary defines an ‘‘interchange responsible entity to perform this
authority’’ as ‘‘the responsible entity that authorizes function. Any such entity should be 280 Currently, the reliability analysis service used
implementation of valid and balanced Interchange
Schedules between Balancing Authority Areas, and
registered by the ERO in the ERO by NERC is the Interchange Distribution Calculator.
ensures communication of Interchange information compliance registry, so that the 281 This Requirement was included in INT–001–
for reliability assessment purposes.’’ Id. responsibility of an entity, other than a 0 as Requirement R1.2.
business practices, and that if no such directive to include a requirement that this Reliability Standard include a
business practice has been submitted at the collective expertise and the Requirement that interchange
the time of the Final Rule, the consensus of the industry have information must be submitted for all
Commission may reinstate these determined to be unnecessary for point-to-point transfers entirely within a
Requirements in the Final Rule. reliability constitutes ‘‘setting the balancing authority area, including all
807. NERC submitted INT–001–2, standard.’’ grandfathered and ‘‘non-Order No. 888’’
which supersedes the Version 1 811. LPPC agrees with the transfers. The Commission points out
Reliability Standards, in its November Commission that Requirements R1.1, that unless these grandfathered and
15, 2006 filing. INT–001–2 adds R3, R4 and R5 are good business ‘‘non-Order No. 888’’ transfers are
Measures and Levels of Non- practices, and it states that for this included in one of the INT Reliability
Compliance to the Version 0 Reliability reason they should not be included in Standards, they might not be subject to
Standard. In this Final Rule, the the Reliability Standards. These appropriate curtailment as necessary
Commission addresses INT–001–2, as business practices should more due to system conditions. Curtailments
filed with the Commission on November appropriately be contained in NAESB are determined using the interchange
15, 2006. standards, or perhaps the pro forma distribution calculator. Unless
OATT. transactions internal to a balancing
i. Comments 812. ERCOT maintains that INT–001– authority area are included in the
808. APPA states that NERC’s 1 is not appropriate for the ERCOT calculator as we proposed, they are not
submission of INT–001–2 on November region. ERCOT states that it is a single recognized by the calculator and may
15, 2006 has fulfilled the Commission’s balancing authority. To the extent that never be curtailed. For instance, even if
proposed directive to include Measures INT–001–1 requires tagging transfers a transaction internal to a balancing
and Levels of Non-Compliance in this within a single balancing authority, it authority area is non-firm and some
Reliability Standard. APPA also states cannot be applied to ERCOT as written inter-balancing authority trades are firm,
that, while it does not oppose NERC because all point-to-point transfers the latter could be cut before the former,
consideration of the Commission’s within ERCOT are financial transactions despite the curtailment priorities in the
proposed directive regarding the only. ERCOT notes that it tags transfers Order No. 888 tariff. While we recognize
submission of interchange information outside the ERCOT region. that most trades internal to a balancing
for all point-to-point transfers entirely 813. Allegheny states that the authority area do not affect interchange,
within a balancing authority area, it requirement to tag point-to-point some do, since electricity flows do not
does not understand the Commission’s transactions cannot be met in the PJM necessarily follow the contract path.
reliability concerns in this connection. market where Tags are not used when 818. In addition, e-Tagging of such
809. MidAmerican states that it favors a transaction’s source and sink are transfers was previously included in
the Commission’s proposed directive to within the PJM footprint. Such INT–001–0 and the Commission is
NERC for a modification of the transactions are reported through the aware that such transfers are included
Reliability Standard as a substantial PJM eSchedule system, which already in the e-Tagging logs. In short, the
improvement for reliability. provides adequate information for the practice already exists, but if this
Constellation supports this proposal and PJM region to conduct reliability and Requirement is removed from INT–001–
states that the proposal, together with curtailment analyses. Allegheny states 2, no Reliability Standard would require
other initiatives, such as OATT reform, that there is no reliability gap in the PJM that such information be provided. We
represent additional steps to achieving market arising from this issue. therefore will adopt the directive we
not only Bulk-Power System reliability, 814. Santa Clara submits that LSEs proposed in the NOPR and direct the
but also a reduction of undue should be applicable entities under ERO to include a modification to INT–
discrimination in transmission services. proposed revised INT–001–2 to ensure 001–2 that includes a Requirement that
810. NERC disagrees with the that they have adequate notice of the interchange information must be
Commission’s proposal to direct the requirements of this Reliability submitted for all point-to-point transfers
submission of interchange information Standard. It states that the actions of entirely within a balancing authority
on all point-to-point transfers within a LSEs are implicated in Requirement R1 area, including all grandfathered and
balancing area. NERC contends that this of this proposed Reliability Standard.283 ‘‘non-Order No. 888’’ transfers.
issue was discussed at great length in ii. Commission Determination 819. The Commission agrees with
the Reliability Standards development ERCOT’s conclusion that the Reliability
815. The Commission approves INT– Standard does not apply to financial
process and the vast majority of 001–2 as a mandatory and enforceable
commenters and voters agreed that such point-to-point transfers within the
Reliability Standard. In addition, we ERCOT region. This interpretation is
a requirement would have no merit from direct the ERO to develop modifications
a reliability perspective. It also states consistent with the proposed INT
to the Reliability Standard through the Reliability Standards. Likewise,
that such data is not used today by the Reliability Standards development
NERC interchange distribution Allegheny’s views on tagging point-to-
process, as discussed below. point transactions within the PJM
calculator for reliability.282 Finally, 816. We agree with APPA that INT–
NERC concludes that while it may be market are consistent with the proposed
001–2, submitted on November 15, 2006 INT Reliability Standards.
appropriate for this issue to be includes Measures and Levels of 820. With respect to Santa Clara’s
reconsidered in revisions to the Compliance, and we will not direct any position that LSEs should be applicable
Reliability Standards, a Commission further action regarding Measures and entities under the Reliability Standard,
Levels of Compliance at this time. the Commission notes that in situations
282 The NERC glossary defines the interchange
817. MidAmerican and Constellation where a LSE is securing energy from
distribution calculator as ‘‘[t]he mechanism used by
Reliability Coordinators in the Eastern support the Commission’s proposal that outside the balancing authority to
Interconnection to calculate the distribution of supply its end-use customers, it would
Interchange Transactions over specific Flowgates. It 283 INT–001–2 Requirement R1 provides that the
includes a database of all Interchange Transactions LSE and purchasing-selling entity shall ensure that
function as a purchasing-selling entity,
and a matrix of the Distribution Factors for the arranged interchange is submitted to the as defined in the NERC glossary, and
Eastern Interconnection.’’ NERC Glossary at 9. interchange authority. would be included in the NERC registry
on that basis. This interpretation flows consider any regional differences that the level of granularity of
from the language of the Reliability contained in a proposed WECC tagging information provided to reliability
Standards, and the Commission does requirement for dynamic schedules coordinators must not be reduced or
not perceive any ambiguity in this when submitted by NERC for reliability will be negatively affected.
connection. Nevertheless, the Commission review. The waiver request text includes a
Commission directs the ERO to consider i. Comments condition specifying that the ‘‘Midwest
Santa Clara’s comments, and whether ISO must provide equivalent
some more explicit language would be 824. APPA agrees with the information to Reliability Authorities as
useful, in the course of modifying INT– Commission’s proposed course of action would be extracted from a transaction
001–2 through the Reliability Standards addressing this regional difference. tag.’’ The Commission proposed in the
development process. 825. Xcel requests that the NOPR to approve this regional
821. The Commission accepts NERC’s Commission accept the proposed difference. It explained there that, based
explanation that Requirements R1.1, R3, regional difference; tagging on the information provided by NERC,
R4 and R5 of INT–001–0 that were requirements for dynamic schedules do the proposed regional difference is
deleted in INT–001–1 are business not apply now in WECC, and it would necessary to accommodate MISO’s
practices. NAESB voluntarily filed be burdensome and would provide little Commission-approved, multi-control
‘‘Standards for Business Practices and reliability benefit to apply those area energy market. Thus, the
Communication Protocols for Public requirements to WECC by June 2007. Commission stated it believed that the
Utilities’’ in Docket No. RM05–5–000 on The Commission therefore should regional difference is appropriate,
November 16, 2006. This filing contains approve the proposed variance for an because it is more stringent than the
wholesales electric business practice interim period until WECC’s tagging continent-wide Reliability Standard and
standards that incorporate e-Tagging requirements for dynamic schedules are otherwise satisfies the statutory
requirements and is the subject of a developed and approved. standard for approval of a Reliability
separate rulemaking process that is ii. Commission Determination Standard.
expected to result in rules that will
826. The Commission stressed in i. Comments
become effective on or about the same
Order No. 672 that uniformity of
time as the Reliability Standard 828. APPA agrees with Commission’s
Reliability Standards should be the goal
becomes mandatory. proposed course of action in approving
822. Accordingly, the Commission and practice, ‘‘the rule rather than the
exception.’’ 286 The Commission this regional difference.
approves Reliability Standard INT–001–
2 as mandatory and enforceable. In therefore stated in the NOPR that the ii. Commission Determination
addition, the Commission directs the absence of a tagging requirement for
dynamic schedules in WECC is a matter 829. The information received by the
ERO to develop a modification to INT– Commission demonstrates that the
001–2 through its Reliability Standards of concern, and that for this reason it
could not approve or remand this proposed regional difference to INT–
development process that includes a 001–2 and INT–003–2, as filed on
Requirement that interchange regional difference without the
additional information it requested. To November 15, 2006, is necessary to
information must be submitted for all accommodate MISO’s Commission-
point-to-point transfers entirely within a date the Commission has not received
this information. Of particular approved, multi-control area energy
balancing authority area, including all market. The Commission concludes that
grandfathered and ‘‘non-Order No. 888’’ importance in this compliance filing
will be the ERO’s demonstration that the regional difference is appropriate,
transfers.284 because it is more stringent than the
this practice is due to a physical
c. Regional Difference to INT–001–2 and difference in the system or results in a continent-wide Reliability Standard and
INT–004–1: WECC Tagging Dynamic more stringent Reliability Standard. otherwise satisfies the statutory
Schedules and Inadvertent Payback Without this information, we are unable standard for approval of a Reliability
to address Xcel’s comments further. The Standard, and therefore approves it as
823. NERC proposed a regional mandatory and enforceable.
difference that would exempt WECC Commission therefore directs the ERO
from requirements related to tagging to submit a filing within 90 days of the e. Interchange Transaction
dynamic schedules and inadvertent date of this order either withdrawing Implementation (INT–003–2)
payback. The Commission noted in the this regional difference or providing
additional information. 830. The purpose of INT–003–1 is to
NOPR that WECC is developing a ensure that balancing authorities
tagging requirement for dynamic d. Regional Difference to INT–001–2 confirm interchange schedules with
schedules. The Commission requested and INT–003–2: MISO Energy Flow adjacent balancing authorities before
information from NERC on the status of Information implementing the schedules in their
the proposed tagging requirement, the area control error equations. INT–003–1
827. NERC proposed a regional
time frame for its development, its contains a Requirement that focuses on
difference that would allow MISO to
consistency with INT–001–1 and INT– ensuring that a sending balancing
provide market flow information in lieu
004–1 and whether the need for an authority confirms interchange
of tagging intra-market flows among its
exemption would cease when the schedules with its receiving balancing
member balancing authorities; the MISO
tagging requirements become effective. authority before implementing the
energy flow information waiver is
The Commission stated that it would schedules in its control area. The
needed to realize the benefits of
not approve or remand an exemption proposed Reliability Standard also
locational marginal pricing within
until NERC submits this information.285 requires that, for the instances where a
MISO while increasing the level of
Rather, we stated that we would
granularity of information provided to high voltage direct current (HVDC) tie is

284 The Requirement was included in INT–001–0
the NERC TLR Process. The waiver on the scheduling path, both sending
as Requirement R1.2. request text states that it is understood and receiving balancing authorities have
285 To date, the Commission has not received the to coordinate with the operator of the
requested information. 286 Order No. 672 at P 290. HVDC tie.
831. The Commission proposed in the than the continent-wide Reliability any change in the transaction. It also
NOPR to approve Reliability Standard Standard and otherwise satisfies the requires the updating of Tags for
INT–003–1 as mandatory and statutory standard for approval of a dynamic schedules.
enforceable. In addition the Commission Reliability Standard. 842. In the NOPR, the Commission
proposed to direct NERC to submit a proposed to approve Reliability
i. Comments
modification to INT–003–1 that Standard INT–004–1 as mandatory and
includes Measures and Levels of Non- 837. APPA agrees with the enforceable. The Commission also
Compliance. Commission’s proposed approval of proposed to direct NERC to submit a
832. NERC filed INT–003–2 with the these regional differences. modification to INT–004–1 that
Commission on November 15, 2006. 838. FirstEnergy states that it would includes Levels of Non-Compliance.
This Reliability Standard supersedes the be helpful if NERC clarified the function
Version 1 Reliability Standard INT– and effect of these waivers. FirstEnergy i. Comments
003–1 and adds Measures and Levels of states that, where a specific task will be 843. APPA agrees with the
Non-Compliance. performed by another entity on behalf of Commission that INT–004–1 can be
the transferor, the transferor entity approved as a mandatory and
i. Comments needs a delegation agreement, whereas enforceable Reliability Standard.
833. APPA states that INT–003–2 in transferring a responsibility, the However, it suggests that the missing
fulfills the Commission’s proposed transferor entity needs a waiver. Levels of Non-Compliance should be
directive to include Measures and FirstEnergy states that currently developed and submitted for
Levels of Non-Compliance. balancing authorities are held Commission approval before penalties
ii. Commission Determination accountable by regional reliability are levied for violations.
organizations for those functions the
834. INT–003–1 serves an important waivers transfer to the regional ii. Commission Determination
purpose in requiring receiving and reliability organization. FirstEnergy
sending balancing authorities to confirm 844. As explained in the NOPR, while
suggests that NERC should clarify that, the Commission has identified concerns
and agree on interchange schedules. under these waivers, responsibility for
With the addition of Measures and with regard to INT–004–1, this proposed
complying with these Reliability Reliability Standard serves an important
Levels of Non-Compliance, INT–003–2 Standards should be transferred to the
addresses the Commission’s only purpose by setting thresholds on
RTOs that actually perform the tasks changes in dynamic schedules for
reservation regarding this Reliability associated with these requirements.
Standard. Accordingly, the Commission which modified interchange data must
approves Reliability Standard INT–003– ii. Commission Determination be submitted. Further, the Requirements
2, as filed with the Commission on 839. These two variances from INT– set forth in INT–004–1 are sufficiently
November 15, 2006, as mandatory and 003–2, as filed with the Commission on clear and objective to provide guidance
enforceable. November 15, 2006, permit a market for compliance. Accordingly, the
participant to use a scheduling agent to Commission approves Reliability
f. Regional Differences to INT–003–2: Standard INT–004–1 as mandatory and
MISO/SPP Scheduling Agent and MISO prepare a transaction tag on its behalf,
providing administrative efficiency and enforceable. In addition, the
Enhanced Scheduling Agent Commission directs the ERO to consider
providing equal or greater amounts of
835. NERC proposed a regional information to the appropriate entities adding these Measures and Levels of
difference that would provide MISO and as required in MISO’s Commission- Non-Compliance to the Reliability
SPP with a variance from INT–003–1 to approved multi-control area energy Standard.
permit a market participant to use a market. This regional difference is h. Interchange Authority Distributes
scheduling agent to prepare a appropriate because it is more stringent Arranged Interchange (INT–005–1)
transaction Tag on its behalf.287 In than the continent-wide Reliability
addition, NERC proposed the MISO Standard and otherwise satisfies the 845. INT–005–1 seeks to ensure the
Enhanced Scheduling Agent Waiver, statutory standard for approval of a implementation of interchange between
which creates a variance from INT–003– Reliability Standard. The Commission source and sink balancing authorities
1 for MISO that permits an enhanced therefore approves the MISO/SPP and that interchange information is
single point of contact scheduling agent. Scheduling Agent Waiver and the MISO distributed by an interchange authority
836. The Commission proposed in the Enhanced Scheduling Agent Waiver as to the relevant entities for reliability
NOPR to approve these two additional mandatory and enforceable regional assessments.
regional differences. The Commission differences to INT–003–2. 846. The Commission proposed in the
explained that, based on the information 840. FirstEnergy may raise its NOPR to approve Reliability Standard
provided by NERC, the proposed suggestions in the Reliability Standards INT–005–1 as mandatory and
regional differences for this INT development process. However, we find enforceable. The Commission also
Reliability Standard would provide that FirstEnergy’s suggestion does not proposed to direct NERC to submit a
administrative efficiency, and provide affect our decision to approve these two modification to INT–005–1 that
equal or greater amounts of information regional differences. includes Levels of Non-Compliance.
to the appropriate entities as required in Further, the Commission noted that
MISO’s Commission-approved multi- g. Dynamic Interchange Transaction INT–005–1 is applicable to the
control area energy market. The NOPR Modifications (INT–004–1) ‘‘interchange authority’’ and requested
stated that the regional difference is 841. INT–004–1 seeks to ensure that that NERC provide additional
appropriate because it is more stringent dynamic transfers are adequately tagged information regarding the role of the
to be able to determine their reliability interchange authority so that the

287 NERC proposed three regional differences for
impact. It requires the sink balancing Commission can determine whether it is
INT–003–1 that would apply to MISO. One
proposed regional difference was addressed in
authority, i.e., the balancing authority a user, owner or operator of the Bulk-
Reliability Standard INT–001–1. The remaining two responsible for the area where the load Power System that is required to comply
are discussed here. or end-user is located, to communicate with mandatory Reliability Standards.
i. Comments Commission should merely instruct questions the value of specifying

847. Comments on the interchange NERC to respond to the Commission’s reliability coordinators and
authority have been discussed above concerns and refrain from directing transmission operators as applicable
under the heading ‘‘INT Reliability NERC to make specific changes to the entities because their responsibilities
Standards General Issues.’’ No other Reliability Standard; APPA states that are already laid out in the Reliability
comments on INT–005–1 have been while the changes the Commission Standards.
submitted. proposes may be appropriate, it should 857. Northern Indiana contends that
be left to NERC’s expertise and the the NOPR’s discussion of INT–006–1 is
ii. Commission Determination Reliability Standards development unclear and confusing. It states that it
848. The Commission has set forth process to address the Commission’s does not understand what the
above its analysis and conclusion on concerns. Commission means by ‘‘validate’’ when
interchange authorities. Our 853. FirstEnergy agrees that it is the Commission proposes that reliability
understanding is that, in the interim, appropriate for the reliability coordinators and transmission operators
source and sink balancing authorities coordinator to be included in the review and validate composite arranged
will serve as interchange authorities applicability section. However, it argues interchanges. Northern Indiana also
until the ERO has clarified the role and that it is impracticable in large questions whether both reliability
responsibility of an interchange organized markets, such as those of coordinators and transmission operators
authority in the modification of the MISO and PJM, for a local entity, such would be required to validate and
Functional Model and in the registration as a transmission operator, to review approve the Tags and what the basis for
process. wide-area transactions, and it does not approval would be. It questions what
849. The Commission is satisfied that improve reliability to do so. falls within the term ‘‘potential
the Requirements of INT–005–1 are Transactions occurring totally within detrimental reliability impact,’’ what
appropriate to ensure that interchange the market operation are provided as happens if a Tag is not validated within
information is distributed timely and part of network service net scheduled 20 minutes to the hour, and whether all
available for reliability assessment. interchange. schedules are canceled outright or
Accordingly, the Commission approves 854. EEI states that the ‘‘wide-area passively approved.
Reliability Standard INT–005–1 as reliability impact’’ review envisioned by 858. TVA suggests that the term
mandatory and enforceable. In addition, the Commission, which involves review ‘‘composite Tag’’ should be defined as
the Commission directs the ERO to of the composite energy interchange part of the proposed modifications.
consider adding additional Measures transactions, probably already takes CAISO also questions the meaning of
and Levels of Non-Compliance to the place under Reliability Standards INT– ‘‘composite Tag’’ and seeks clarification
Reliability Standard. 005 through INT–009 in a cost-effective on that issue. TVA notes that depending
manner. EEI explains that since most on the type of reliability analysis
i. Response to Interchange Authority transactions submitted by wholesale required to validate a ‘‘composite Tag,’’
(INT–006–1) markets to the transactions tagging it may prove impractical to conduct this
850. INT–006–1 applies to balancing process span multiple hours with evaluation for hourly transactions.
authorities and transmission service varying sizes (in MW), and are often 859. CAISO states that neither NERC
providers, and requires these entities to submitted days before transaction start nor the Commission has identified a
evaluate the energy profile and ramp times, the wide-area review consists of deficiency in the current interchange
rate of generation that supports ensuring that sufficient generator reliability assessment process or a
interchange transactions in response to ramping capability exists, as well as pressing reliability need for this
a request from an interchange authority examining for limits on transfer Reliability Standard. CAISO also has
to change the status of an interchange capabilities. This review is generally concerns about meeting the
from an arranged interchange considered sufficient to the extent that Commission-proposed directives
transaction to a confirmed interchange. analyses are taking place on the basis of regarding INT–006–1 since reliability
851. The Commission proposed in the projected system conditions. EEI coordinators and transmission operators
NOPR to approve Reliability Standard suggests that the Commission-proposed within the Western Interconnection
INT–006–1 as mandatory and review and validation of composite currently do not have a common
enforceable. In addition, the energy interchange transactions by database from which to draw the
Commission proposed to direct NERC to reliability coordinators might be more information needed to review composite
submit a modification to INT–006–1 effectively addressed through ‘‘near transactions from a wide-area reliability
that: (1) Makes it applicable to real-time’’ system review. It explains viewpoint. CAISO requests the
reliability coordinators and that, at this time, the broad range of Commission to consider whether the
transmission operators and (2) requires system condition parameters is better Western Interconnection should comply
reliability coordinators and known, and the reliability coordinators with these proposed Requirements at all
transmission operators to review can make use of the TLR process to or whether a transition period is
composite transactions from the wide- maintain system reliability. appropriate.
area reliability viewpoint and, where 855. Entergy disagrees with the
their review indicates a potential Commission’s proposed modifications. ii. Commission Determination
detrimental reliability impact, It contends that they will require 860. The Commission approves INT–
communicate to the sink balancing substantial changes to the tagging 006–1 as mandatory and enforceable. In
authorities necessary transaction specifications. Entergy believes that the addition, we direct that NERC develop
modifications before implementation. Commission’s concerns may already be modifications to the Reliability
addressed by Reliability Standards INT– Standard, as discussed below.
i. Comments 005 through INT–009. 861. The Commission remains

852. APPA agrees that INT–006–1 is 856. MISO believes the Reliability convinced that a proactive approach is
sufficient for approval as a mandatory Standards and e-Tag specifications superior to a reactive approach in
and enforceable reliability standard. already require reliability entities to maintaining system reliability. While
However, APPA states that the evaluate and approve e-Tags. It EEI and Entergy claim that reliability
coordinators and transmission notification time prior to actual their review indicates a potential
operators’ involvement in reliability transactions, this proactive approach detrimental reliability impact,
reviews of interchange transactions are should promote system reliability. communicate to the sink balancing
covered in INT–005 through INT–010, 864. We agree with FirstEnergy that it authorities necessary transaction
and MISO claims that such review is is appropriate to include reliability modifications before implementation.
covered in other Reliability Standards, coordinators as applicable entities for We also direct that the ERO consider the
we note the following: References to purposes of conducting wide-area suggestions made by EEI and TVA and
reliability coordinator and transmission reliability assessments; in large address the questions raised by Entergy
operator involvement are virtually organized markets transmission and Northern Indiana in the course of
absent from the INT Reliability operators may not be appropriate for the Reliability Standards development
Standards. One finds such references this purpose because they do not have process.
only in Requirement R2 of INT–010, a wide-area view.
which deals with interchange 865. While we did not address review j. Interchange Confirmation (INT–007–1)
coordination exemptions, and there the time frames in the NOPR, we are in 868. Reliability Standard INT–007–1
involvement of reliability coordinators general agreement with EEI’s suggestion requires that before changing the status
is restricted to situations that involve that ‘‘near-real time’’ system review by of submitted arranged interchanges to
current or imminent reliability-related reliability coordinators may be more confirmed interchanges, the interchange
reasons for action. We cannot find any practical, while still being efficient and authority must verify that the submitted
Requirements in the remaining INT effective in achieving reliability goals. A arranged interchanges are valid and
Reliability Standards that require a proactive approach, i.e. one that complete with relevant information and
wide-area reliability assessment, involves reliability coordinators in a approvals from the balancing authorities
regardless of the time periods, by a way that permits them to make wide- and transmission service providers. The
reliability coordinator; wide-area area assessments of composite Commission proposed in the NOPR to
reliability assessment, moreover, can interchange transactions for purposes of approve INT–007–1 as mandatory and
only be carried out by reliability evaluating reliability impact, including enforceable.
coordinators. identifying potential IROL violations
862. With respect to MISO’s comment and mitigating them using TLR i. Comments
on the value of applying the Reliability procedures before they become actual 869. APPA agrees with the
Standard to reliability coordinators and IROL violations, is far superior to a Commission that INT–007–1 is
transmission operators given that the reactive approach, i.e., one that brings sufficient for approval as a mandatory
Reliability Standards and the e-Tag reliability coordinators in after the fact and enforceable Reliability Standard,
specification already require evaluation to invoke TLR procedures to avoid an subject to NERC’s plans for the
and active approval of reliability entities IROL violation or other operating registration of entities as interchange
on e-Tags, we note that none of the INT actions to extricate the system from authorities.
Reliability Standards have those reliability problems such as an actual
requirements and that the e-Tag IROL violation. ii. Commission Determination
specification is not part of the 866. The Commission stated in Order 870. The Commission approves
mandatory Reliability Standards. Like No. 672 that it expected entities to use Reliability Standard INT–007–1 as
reliability coordinators who are the Reliability Standards development mandatory and enforceable. The
responsible for reliable operation of process to address their concerns about Commission has set forth above its
entire reliability coordinator areas, a a Reliability Standard. With respect to analysis and conclusion on interchange
transmission operator is the reliability CAISO’s request that the Commission authorities. Our understanding is that in
entity responsible for its local area consider whether the Western the interim source and sink balancing
operations. Interchange transactions Interconnection needs to comply with authorities will serve as interchange
would be likely to reduce system these Requirements at all or whether a authorities until the ERO has clarified
reliability if those transactions are not transition period is appropriate, since the role and responsibility of an
reviewed and approved by the CAISO did not raise either concern in interchange authority in the
appropriate reliability entities before the Reliability Standards development modification of Functional Model and
implementation. process, and others in the Western in the registration process.
863. With respect to the question Interconnection have not raised a
raised by TVA and CAISO on the similar concern, CAISO should raise k. Interchange Authority Distribution of
definition of ‘‘composite Tags,’’ we this issue in the Reliability Standards Information (INT–008–1)
expressed our reliability concerns in the development process in the first 871. INT–008–1 requires the
NOPR and explained that reliability instance. Reliability Standard INT–006– interchange authority to distribute
coordinators and transmission operators 1 will apply to CAISO. information to all balancing authorities,
should review composite energy 867. Accordingly, the Commission transmission service providers and
interchange transaction information approves Reliability Standard INT–006– purchasing-selling entities involved in
(composite Tags) for wide-area 1 as mandatory and enforceable. In the arranged interchange when the
reliability impact. In addition, we stated addition, the Commission directs the status of the transaction has changed
that when the review indicated a ERO to develop a modification to INT– from arranged interchange to confirmed
potential detrimental reliability impact, 006–1 through the Reliability Standards interchange. The Commission proposed
the reliability coordinator or development process that: (1) Makes it in the NOPR to approve INT–008–1 as
transmission operator should applicable to reliability coordinators mandatory and enforceable.
communicate to the sink balancing and transmission operators and (2)
authority the necessary transaction requires reliability coordinators and i. Comments

modifications before implementation.288 transmission operators to review energy 872. APPA agrees with the
While we did not require a specific interchange transactions from the wide- Commission that INT–008–1 is
area and local area reliability sufficient for approval as a mandatory
288 NOPR at P 219. viewpoints respectively and, where and enforceable Reliability Standard,
subject to NERC’s plans for the the ERO has clarified the role and compliance * * *.‘‘ instead of ‘‘[t]here
registration of entities as interchange responsibility of an interchange shall be a level three non-compliance
authorities. It suggests that NERC authority in the modification of the * * *.’’
should clarify which reliability entities Functional Model and in the registration 882. APPA agrees with the
have the responsibility for ensuring that process. Finally, we direct the ERO to Commission that INT–010–1 is
interchange information is coordinated consider APPA’s suggestions concerning sufficient for approval as a mandatory
between the source and sink balancing this Reliability Standard in the and enforceable Reliability Standard,
authorities before implementing the Reliability Standards development but APPA does not agree with the
Reliability Standard. APPA also states process. Commission’s interpretation of the
that NERC should modify this Reliability Standard. APPA explains
m. Interchange Exemptions (INT–010–1) that the stated purpose of INT–010–1 is
Reliability Standard to make clear what
entities it in fact would apply to. 877. INT–010–1 allows reliability to allow certain types of interchange
entities to initiate or modify certain schedules to be initiated or modified by
ii. Commission Determination types of interchange schedules under reliability entities and to be exempt
873. The Commission approves abnormal operating conditions and to be from compliance with other interchange
Reliability Standard INT–008–1 as exempt from compliance with other INT standards under abnormal operating
mandatory and enforceable. The Reliability Standards. conditions. This Reliability Standard in
Commission has set forth above its 878. The Commission explained in effect authorizes reliability coordinators
analysis and conclusion on interchange the NOPR that Reliability Standard to direct, and balancing authorities to
authorities. Our understanding is that a INT–010–1 includes provisions that take, remedial actions to adjust
source and sink balancing authority will allow modification to an existing interchange schedules immediately and
serve as the interchange authority until interchange schedule or submission of a then document these actions after the
the ERO has clarified the role and new interchange schedule that is fact. INT–010–1 thus provides the
responsibility of an interchange directed by a reliability coordinator to emergency waiver from other INT
authority in the modification of the address current or imminent reliability- Reliability Standards that makes
Functional Model and in the registration related reasons. The Commission adjusting interchange schedules the
process. Finally, we direct the ERO to interpreted these current or imminent appropriate response to a SOL or IROL.
consider APPA’s suggestions in the reliability-related reasons as not APPA states that the Commission’s
Reliability Standards development including actual IROL violations, since proposed interpretation therefore
process. they require immediate action so that should not be adopted.
the system can be returned to a secure 883. EEI cautions against adopting the
l. Implementation of Interchange (INT– operating state as soon as possible and Commission’s interpretation of INT–
009–1) no longer than 30 minutes after a 010–1. EEI believes that the existing
874. Reliability Standard INT–009–1 reliability-related system interruption— standard meets the Commission’s
seeks to ensure that the implementation a period that is much shorter than the expectation, i.e., permitting and
of an interchange between source and time that is expected to be required for encouraging immediate action to
sink balancing authorities is new or modified transactions to be alleviate an SOL or IROL. EEI explains
coordinated by an interchange implemented. that without INT–010–1, all interchange
authority. The Commission proposed in 879. The Commission proposed to scheduling and schedule modifications
the NOPR to approve INT–009–1 as approve INT–010–1, interpreted as set would go through the normal process
mandatory and enforceable. forth above, as mandatory and contained in INT–005 through INT–009.
enforceable. Only INT–010 would allow a balancing
i. Comments authority to make an immediate
875. APPA agrees with the i. Comments
interchange action without obtaining a
Commission that INT–009–1 is 880. Northern Indiana supports the Tag. Within 60 minutes of the action,
sufficient for approval as a mandatory Commission’s interpretation of INT– the balancing authority would follow up
and enforceable Reliability Standard, 010–1, but it requests that the Reliability with the necessary documentation and
subject to NERC’s plans for the Standard be modified to explicitly state carry forward the action, if necessary. In
registration of entities as interchange that it does not include actual IROL the absence of INT–010–1, a balancing
authorities. It suggests that NERC violations. authority taking such action would be in
modify its Functional Model to clarify 881. ISO–NE supports Commission violation of INT–009 for failing to
which reliability entities have the approval of INT–010–1, but does not comply with the normal process
responsibility for ensuring proper share the Commission’s concerns requirements.
implementation of interchange regarding the initiation or modification 884. EEI notes by way of example
transactions that have received of interchange schedules to address SOL that, to relieve an SOL or IROL, a
reliability assessments. APPA also or IROL violations. It states that reliability coordinator requires
suggests that NERC modify this interchange schedules can in certain immediate offsetting changes in the net
Reliability Standard to make clear what circumstances provide an additional scheduled interchange of ACE equations
entities it in fact would apply to. effective tool to help prevent an SOL of source and sink balancing authorities.
and IROL violation. While ISO–NE Within 60 minutes following the action,
ii. Commission Determination recognizes that other tools may in the reliability authority directs the
876. The Commission approves certain circumstances be more effective, balancing authority to reflect the
Reliability Standard INT–009–1 as it states that this neither diminishes the schedule change event using an
mandatory and enforceable. The value nor precludes the use of the tools arranged interchange. The tagging
Commission has set forth above its contained in INT–010–1. ISO–NE also activity ensures coordination going
analysis and conclusion on interchange notes that section 2.4 of INT–010–1, forward and provides a written record.
authorities. Our understanding is that a which describes Level 4 Non- All of this takes place after the
source and sink balancing authority will Compliance, should be edited to state operational tasks pertaining to the
serve as the interchange authority until that ‘‘[t]here shall be a level four non- action to alleviate the SOL or IROL,
consistent with Commission Reliability Standards development regulations, the Commission proposed
expectations. process. to direct NERC to submit a modification
to Requirement R1 of IRO–001–0 that:
ii. Commission Determination 7. IRO: Interconnection Reliability
(1) Reflects the process set forth in the
Operations and Coordination
885. For the reasons and NERC Rules of Procedures and (2)
interpretation noted in the NOPR, the 889. The Interconnection Reliability eliminates the regional reliability
Commission approves INT–010–1 as Operations and Coordination (IRO) organization as an applicable entity.
mandatory and enforceable. group of Reliability Standards detail the
responsibilities and authorities of a i. Comments
886. The Commission believes that
our interpretation of INT–010–1 is reliability coordinator.289 The IRO 893. APPA supports the approval of
consistent with the way APPA and EEI Reliability Standards establish the Reliability Standard but expresses
understand the Reliability Standards. requirements for data, tools and wide- concern that the Version 1 standard
The Commission believes that making a area view, all of which are intended to does not include Measures that
modification to an existing interchange facilitate a reliability coordinator’s correspond to Requirements R2 and R9.
schedule on paper for current or ability to perform its responsibilities APPA emphasizes the need for
imminent reliability-related situations and ensure the reliable operation of the Measures corresponding to Requirement
involving actual IROL violations is interconnected grid. R9, which requires the reliability
ineffective because its implementation coordinator to act in the interests of
a. Reliability Coordination—
usually takes much longer than the 30- reliability for the overall reliability
Responsibilities and Authorities (IRO– coordinator area and the
minute period that is allowed in the 001–1)
relevant IRO or TOP Reliability Interconnection before the interests of
890. IRO–001–1 requires that a any other entity. APPA supports
Standards. However, the Commission
reliability coordinator have reliability Requirement R8 with the extended
interprets INT–010–1 as allowing the
plans, coordination agreements and the applicability, provided that
actual physical transaction to be
authority to act and direct reliability applicability is determined by reference
modified to alleviate an IROL event
entities to maintain reliable system to the NERC compliance registry. APPA
without first documenting the
operations under normal, contingency agrees that the regional reliability
modification. The interchange schedule
and emergency conditions. organization should be eliminated as an
would then be modified after the fact to 891. In November 2006, NERC applicable entity and suggests it be
document the physical actions taken. submitted IRO–001–1, which includes replaced with Regional Entities.
887. With regard to ISO–NE’s Measures and Levels of Non- 894. FirstEnergy suggests that NERC
statement that interchange schedules Compliance.290 In addition, while the clarify whether Requirement R8, which
can, in certain circumstances, provide Version 0 Reliability Standard applied requires entities to comply with a
an additional effective tool to help to reliability coordinators and regional reliability coordinator directive ‘‘unless
prevent SOL and IROL violations while reliability organizations, IRO–001–1 such actions would violate safety,
other tools may, in certain would in addition apply to transmission equipment or regulatory or statutory
circumstances, be more effective, the operators, balancing authorities, requirements,’’ refers to personnel
Commission clarifies that our concern is generator operators, transmission safety, equipment safety or both. In
related to using interchange schedules service providers, LSEs and purchasing- addition, it suggests the establishment
to address actual IROL violations. We selling entities. The Version 1 of a chain of command so that, for
have no concern in using this as a tool Reliability Standard does not modify or example, if a generator receives
help prevent potential SOL and IROL add any Requirements, and it appears conflicting instructions from a balancing
violations as asserted by ISO–NE. We that the change in applicability authority and a transmission operator, it
further note that the phrase in corresponds to existing Requirement R8, can determine which instruction
Requirements R2 and R3 ‘‘current or which provides that transmission governs.
imminent reliability-related reasons’’ operators, balancing authorities, 895. Requirement R3 provides that a
can be interpreted as potential or actual generator operators, transmission reliability coordinator ‘‘shall have clear
IROL violations set forth in the service providers, LSEs and purchasing- decision-making authority to act and
comments from Northern Indiana, ISO– selling entities ‘‘shall comply with direct actions to be taken’’ by applicable
NE, APPA and EEI, and therefore Reliability Coordinator directives unless entities to ‘‘preserve the integrity and
modifications to INT–010–1 are needed. such actions would violate safety, reliability of the Bulk Electric System
888. Accordingly, the Commission equipment, or regulatory or statutory and these actions shall be taken without
approves Reliability Standard INT–010– requirements.’’ delay but no longer than 30 minutes.’’
1 as mandatory and enforceable. In 892. In the NOPR, the Commission Santa Clara contends that some actions
addition, we adopt the interpretation set proposed to approve the Reliability would require driving to a remote site
forth in the NOPR that these current or Standard as mandatory and enforceable. and therefore, mandating completion of
imminent reliability-related reasons do In addition, pursuant to section the required action within 30 minutes
not include actual IROL violations, 215(d)(5) of the FPA and § 39.5(f) of our would be unreasonable. Thus, it
since they require immediate control recommends that NERC modify
actions so that the system can be 289 According to the NERC glossary, at 15, a Requirement R3 to provide that ‘‘actions
returned to a secure operating state as reliability coordinator is ‘‘the entity with the shall commence without delay, but in
soon as possible and no longer than 30 highest level of authority who is responsible for the
reliable operation of the Bulk Electric System, has
any event shall commence within 30
minutes after a reliability-related system the Wide Area view of the Bulk Electric System, minutes.’’
interruption—a period that is much and has the operating tools, processes and 896. California Cogeneration
shorter than the time that is expected to procedures, including the authority to prevent or comments that the Reliability Standard
be required for new or modified mitigate emergency operating situations in both fails to address the operational
next-day analysis and real-time operations * * *.’’
transactions to be implemented. Finally, 290 IRO–001–1 supercedes the Version 0 limitations of QFs because they have
we direct the ERO to consider Northern Reliability Standard. In this Final Rule, we review contractual obligations to provide
Indiana and ISO–NE’s suggestions in the the November version, IRO–001–1. thermal energy to their industrial hosts.
It contends that a QF can be directed to amount of time the system operates in will be difficult to identify Measures
change operations only in the case of a an insecure mode and is vulnerable to and Levels of Non-Compliance because
system emergency, pursuant to 18 CFR cascading outages. the Requirements include terms like
292.307. ‘‘adequate,’’ ‘‘potential,’’ ‘‘could result’’
b. Reliability Coordination—Facilities
and ‘‘as required.’’
ii. Commission Determination (IRO–002–1)
897. In the NOPR, the Commission 900. IRO–002–1 establishes the ii. Commission Determination
proposed to approve the Reliability requirements for data, information, 905. NERC’s November 2006 revision
Standard as mandatory and enforceable. monitoring and analytical tools and to the Reliability Standard satisfies the
In addition, as a separate action under communication facilities to enable a proposal to include Measures and
section 215(d)(5), the NOPR proposed to reliability coordinator to meet the Levels of Non-Compliance. While MRO
direct the ERO to develop modifications reliability needs of the Interconnection, comments that it will be difficult to
to Requirement R1 291 to substitute to act in addressing real-time emergency identify Measures and Levels of Non-
‘‘Regional Entity’’ for ‘‘regional conditions and to control analysis Compliance, it does not provide any
reliability organization’’ and reflect tools.293 specific suggestions for changes to
NERC’s Rules of Procedure for 901. In the NOPR, the Commission NERC’s proposal.
registering, certifying and verifying proposed to approve the Reliability 906. Further, consistent with the
entities, including reliability Standard as mandatory and enforceable. NOPR, the Commission directs the ERO
coordinators. Commenters do not raise In addition, pursuant to section to modify IRO–002–1 to require a
any concerns regarding the proposed 215(d)(5) of the FPA and § 39.5(f) of our minimum set of tools that must be made
action. Accordingly, for the reasons regulations, the Commission proposed available to the reliability coordinator.
stated in the NOPR, the Commission to direct NERC to submit a modification We believe that this requirement will
approves IRO–001–1 as mandatory and that: (1) Includes Measures and Levels ensure that a reliability coordinator has
enforceable. In addition, for the reasons of Non-Compliance and (2) modifies the tools it needs to perform its
discussed in the NOPR, the Commission Requirement R7 to explicitly require a functions. Further, as noted by
directs the ERO to develop minimum set of tools for the reliability Dominion, such a requirement promotes
modifications to the Reliability coordinator. a more proactive approach to
Standard through the Reliability maintaining reliability.
i. Comments 907. With respect to the concerns of
Standards development process that
reflect the process set forth in the NERC 902. Dominion agrees with the APPA and LPPC, the Commission
Rules of Procedures and eliminate the proposal to require a minimum set of clarifies that the Commission’s intent is
regional reliability organization as an tools for reliability coordinators, to have the ERO develop a requirement
applicable entity.292 explaining that such specificity is that identifies capabilities, not actual
898. While APPA, FirstEnergy and needed to ensure that proactive efforts tools or products. The Commission
California Cogeneration suggest possible to maintain reliability are being agrees that the latter approach is not
changes to IRO–001–1, they do not continuously pursued. According to appropriate as a particular product
suggest that the proposed Reliability Dominion, a general requirement for could become obsolete and technology
Standard should not be approved. The ‘‘adequate’’ tools is insufficient and the improves over time. We disagree with
ERO should consider the commenters’ proposal to modify IRO–002–1 is APPA that our concern is addressed by
suggestions when modifying the appropriate since it will ensure that the new Measures as they neither
Reliability Standard pursuant to its operators have a minimum set of tools specify a minimum set of capabilities
Reliability Standards development with which to perform their duties. nor require any uniformity among
process. Further, the Commission 903. In contrast, both APPA and LPPC reliability coordinators or Regional
directs the ERO to consider adding ask the Commission to reject the Entities. We do not believe that the
Measures and Levels of Non- proposal to require a minimum set of identification of minimum capabilities
Compliance in the Reliability Standard tools because flexibility is needed to translates to ‘‘lowest common
as requested by APPA. allow change as technology improves denominator’’ as suggested by APPA. If
899. However, we disagree with Santa over time. LPPC states that the the Reliability Standards development
Clara’s suggested change regarding the Commission should, instead, require a process results in developing a ‘‘lowest
30-minute limit to implement a listing of capabilities that is not tied to common denominator’’ Reliability
corrective control action in Requirement a particular product or tool. APPA Standard that is geared toward
R3. When system integrity or reliability contends that, because the Measures guaranteeing compliance and avoiding
is jeopardized, e.g., exceeding IROLs or now require the reliability coordinator penalties as opposed to ensuring
SOLs, the relevant reliability entities to provide specifications to the Regional reliability, the Commission could
must take corrective control actions to Entity to be in compliance, the Regional remand such a Reliability Standard.294
return the system to a secure and Entity will set the minimum standards 908. We disagree with MRO that it
reliable state as soon as possible and in for reliability tools. Further, according will be difficult to identify Measures
no longer than 30 minutes. This is to APPA, setting a minimum and Levels of Non-Compliance since the
important to satisfy the relevant requirement would establish a ‘‘lowest Requirements include terms like
Reliability Standards such as IRO–005– common denominator’’ that might prove ‘‘adequate,’’ ‘‘potential,’’ ‘‘could result’’
0 and TOP–004–0 to minimize the counterproductive. and ‘‘as required.’’ Many tariffs on file
904. MRO states that IRO–002–0 is with the Commission do not specify
291 Requirement R1 of IRO–001–1 provides that another Reliability Standard for which it every compliance detail, but rather
each regional reliability organization, ‘‘subregion’’ provide some level of discretion as
or ‘‘Interregional Coordinating group’’ shall 293 In its November 15, 2006, filing, NERC
necessary to carry out a particular act.
establish one or more reliability coordinators to submitted IRO–002–1, which supercedes the
continuously assess transmission reliability and
This does not mean the tariffs are
Version 0 Reliability Standard. IRO–002–1 adds
coordinate emergency operations. See NOPR at P Measures and Levels of Non-Compliance to the unenforceable; rather, it means that, if a
506. Version 0 Reliability Standard. In this Final Rule,
292 See NOPR at P 505–06. we review the November version, IRO–002–1. 294 See Order No. 672 at P 329.
dispute arises over compliance and flexible enough to allow for changing Compliance, and the ERO and Regional
there is a legitimate ambiguity regarding conditions experienced in real-time Entities should not assess penalties
a particular fact or circumstance, that operations. Xcel notes that the term until additional Measures and Levels of
ambiguity can be taken into account in ‘‘critical facilities’’ is not defined and Non-Compliance are developed.
the exercise of the Commission’s suggests that the Reliability Standard 919. Entergy agrees that a mitigation
enforcement discretion. not be approved until the term is plan for potential operating problems
909. As we stated in the NOPR,295 defined. identified in the next-day analysis may
Reliability Standard IRO–002–1 serves be an appropriate requirement, but
an important purpose in ensuring that ii. Commission Determination cautions that it would be inappropriate
reliability coordinators have the 914. For the reasons stated in the to penalize an entity that chooses an
information, tools and capabilities to NOPR,297 the Commission approves alternate mitigation strategy when the
perform their functions. The Measures proposed Reliability Standard IRO–003– issues arise in real time based on system
and Levels of Non-Compliance 2 as mandatory and enforceable. NERC’s conditions prevalent at that time.
submitted by NERC further enhance the November 2006 revision to the 920. APPA, in contrast, disagrees with
Reliability Standard. Accordingly, the Reliability Standard satisfies the the proposed directive to identify
Commission approves Reliability proposal to include Measures and effective control actions in the next-day
Standard IRO–002–1 as mandatory and Levels of Non-Compliance. analysis. It contends that real-time
enforceable. In addition we direct the 915. Further, pursuant to section conditions are seldom the same as
ERO to develop a modification to IRO– 215(d)(5) of the FPA and § 39.5(f) of our predicted in the day-ahead schedule,
002–1 through the Reliability Standards regulations, we adopt in the Final Rule and state estimators using real-time
development process that requires a the proposal to direct that the ERO operating conditions are much more
minimum set of tools that should be develop a modification to the Reliability accurate than analyses based on day-
made available to reliability Standard through the Reliability ahead schedules.
coordinators. Standards development process to 921. FirstEnergy contends that IRO–
create criteria to define the term 004–1 should require a day-ahead
c. Reliability Coordination—Wide Area ‘‘critical facilities’’ in a reliability planning process and reflect activities
View (IRO–003–2) coordinator’s area and its adjacent inherent within a market operation.
910. The purpose of IRO–003–2 is for systems. In developing the required 922. Northern Indiana contends that
a reliability coordinator to have a wide- modification, the ERO should consider the Commission’s proposed directive is
area view of its own and adjacent areas the suggestions of APPA, Entergy and unclear. It asks whether the Commission
to maintain situational awareness. Xcel. is requiring the reliability coordinator to
Wide-area view also facilitates a secure the system to an N–2 state, rather
d. Reliability Coordination—Operations than an N–1 state within the next-day
reliability coordinator’s ability to
Planning (IRO–004–1) planning analysis. It contends that
calculate SOL and IROL as well as
determine potential violations in its 916. The purpose of IRO–004–1 is to currently the Reliability Standard is N–
own area.296 require each reliability coordinator to 1, and requests clarification that the
911. In the NOPR, the Commission conduct next-day operations reliability Commission did not intend to mandate
proposed to approve the Reliability analyses to ensure that the system can an increase in security from N–1 to N–
Standard as mandatory and enforceable. be operated reliably in anticipated 2 in the NOPR.
In addition, pursuant to section normal and contingency system 923. California PUC agrees that there
215(d)(5) of the FPA and § 39.5(f) of our conditions. Operations plans must be is merit in requiring system operators to
regulations, the Commission proposed developed to return the system to a assess the outlook for the following day,
to direct NERC to submit a modification secure operating state after but nevertheless is concerned with the
that includes: (1) Measures and Levels contingencies and shared with other Commission’s proposed directive. Its
of Non-Compliance and (2) criteria to operating entities. main concern is that the list of
define the term ‘‘critical facilities’’ in a 917. In the NOPR, the Commission identified control actions can be too
reliability coordinator’s area and its proposed to approve Reliability long or too generic to be effective to
adjacent systems. Standard IRO–004–1 as mandatory and address the myriad potential system
enforceable. In addition, pursuant to contingencies that could arise on the
i. Comments section 215(d)(5) of the FPA and next day.
912. APPA agrees that IRO–003–2 is § 39.5(f) of our regulations, the 924. California Cogeneration states
sufficient for approval as a mandatory Commission proposed to direct NERC to that the proposed Reliability Standard
and enforceable Reliability Standard. submit a modification to IRO–004–1 allows reliability coordinators to require
However, APPA suggests that, instead of that requires the next-day analysis to data on gross load and generation
merely including criteria to define identify effective control actions that behind the site boundary meter, which
critical facilities as proposed, NERC and can be implemented within 30 minutes is contrary to a prior Commission
each Regional Entity should establish, during contingency conditions. order.298
document, use and make transparent the ii. Commission Determination
i. Comments
methodology, data and procedures they
use to determine ‘‘critical facilities.’’ 918. APPA agrees that IRO–004–1 is 925. For the reasons stated in the
913. Entergy agrees with the need for sufficient for approval as a mandatory NOPR,299 the Commission approves
the criteria, but cautions that it must be Reliability Standard and that the proposed Reliability Standard IRO–004–
Requirements are sufficiently clear and 1 as mandatory and enforceable. In
295 NOPR at P 511. objective to provide a basis for issuing
298 California Independent System Operator

296 Inits November 15, 2006, filing, NERC a remedial action directive. However, it
submitted IRO–003–2, which supersedes the Corp., 96 FERC ¶ 63,015 at 7 (2001). It states in part
contends that many Requirements lack ‘‘The intent of the Commission’s directive was to
Version 0 Reliability Standard. IRO–003–2 adds
Measures and Levels of Non-Compliance to the Measures and Levels of Non- remove the requirement to provide any behind-the-
Version 0 Reliability Standard. In this Final Rule, meter information, whether on generation or load.’’
we review the November version, IRO–003–2. 297 See NOPR at P 519. 299 See NOPR at P 529.
addition, the Commission directs the simulation should include only what to the system operators of the control
ERO to develop modifications to the will actually occur. options they have available.
Reliability Standard, as discussed 930. The proposed Reliability 934. We believe that our use of
below. Standards IRO–005–1 and TOP–004–0 NERC’s definition of bulk electric
926. We agree with Entergy that require that in the event of an IROL system in combination with its
system operators must make their violation, i.e. power flow on an interface registration process should assuage
decision to use the most effective exceeding its IROL, the system must be California Cogeneration’s concerns.
control action based on the prevailing returned to a secure state within 30 935. In response to APPA’s concern
system conditions, to return the system minutes regardless of the cause of the that NERC did not provide a Measure
to a secure state following a violation, so that the system is once for each Requirement, we reiterate that
contingency. Therefore, the chosen again capable of withstanding the next it is in the ERO’s discretion whether
control action may be different than contingency without resulting in each Requirement requires a
those identified in next-day operations cascading failures. corresponding Measure. The ERO
planning. We reiterate that our intent is 931. In response to Northern Indiana, should consider this issue through the
to require a comprehensive next-day our intent is not to mandate an increase Reliability Standards development
operations planning study that includes in security from N–1 to N–2, but rather process.
identification of effective solutions to is to ensure there is no reliability gap in 936. Accordingly, we approve
aid system operators in real-time the IROL-related Reliability Standards. Reliability Standard IRO–004–1 as
operations. To do this, the Commission believes it mandatory and enforceable. Further, we
927. We disagree with APPA’s is necessary to provide operators with direct the ERO to modify IRO–004–1
comment that day-ahead planning to control actions needed to mitigate an through the Reliability Standards
identify effective control actions would IROL violation while within the 30- development process to require the
not enhance system reliability because minute period after a first contingency. next-day analysis to identify control
we believe this is also the intent of the We are not requiring an increase to N– actions that can be implemented and
ERO for including such a Requirement 2, which would require planning the effective within 30 minutes after a
in this Reliability Standard.300 Our system for any two contingencies at all contingency. The Commission also
proposed directive is to augment the times. directs the ERO to consider adding
Requirement that the plans to alleviate 932. With respect to California PUC’s Measures and Levels of Non-
SOL and IROL violations are assessed to comment, we note that it is just as Compliance to the Reliability Standard
ensure that the control actions can be important for day-ahead operation as requested by APPA.
implemented and effective within 30 planners to review and derive system e. Reliability Coordination—Current
minutes after a contingency. operating limits to deal with a myriad Day Operations (IRO–005–1)
928. We agree with APPA that state of contingencies for different system
configurations and generation 937. IRO–005–1 ensures energy
estimators and real-time contingency
dispatches, as it is for them to assess the balance and transmission reliability for
analyses using real-time operating
feasibility of returning the system to a the current day by identifying tasks that
conditions produce more accurate study
secure operating state after these reliability coordinators must perform
results compared to those from next-day
contingencies have occurred. Similar to throughout the day.
operations planning analyses that are
reviewing and deriving SOLs and IROLs 938. In the NOPR, the Commission
based on day-ahead schedules and
to ascertain that system reliability will proposed to approve Reliability
forecast conditions. However, we
be maintained based on the most Standard IRO–005–1 as mandatory and
remain convinced that a proactive
onerous forecast conditions and critical enforceable. In addition, pursuant to
approach that includes identification of
contingencies, identifying corrective section 215(d)(5) of the FPA and
effective operating solutions to deal
control actions would not encompass § 39.5(f) of our regulations, the
with contingencies is far superior to a
each and every contingency and system Commission proposed to direct NERC to
reactive approach that identifies
condition. This is because previous submit a modification to IRO–005–1
solutions when the system conditions
operating experiences and established that includes Measures and Levels of
prevail in real-time operations. The
operating practices would have covered Non-Compliance. The Commission
former can identify solutions that may
a significant portion of the proposed that the Measures and Levels
not be otherwise available to the system
contingencies and the corresponding of Non-Compliance specific to IROL
operators—e.g. certain planned
control actions already. violations should be commensurate
generation or transmission outages are
933. We further note that for those with the magnitude, duration, frequency
approved conditional upon re-
few IROL contingencies under the and causes of the violation. Further, the
affirmation prior to their removal from
forecast and most onerous system Commission proposed to direct the ERO
service or a short recall time subject to
conditions, if operation planners to conduct a survey on IROL practices
certain system conditions developing in
equipped with a suite of off-line and actual operating experiences, and
real-time operations.
analytical tools, but without any indicated that it may propose further
929. We disagree with FirstEnergy modifications to IRO–005–1 based on
that IRO–004–1 should include the day- burden, distraction or interference from
real-time operations, cannot identify the the survey results.301
ahead planning process and reflect
activities inherent in a market operation effective control actions, it can be
301 NOPR at P 545 (‘‘We propose to direct NERC
because day-ahead planning includes argued that it would be unrealistic to
to perform a survey of present operating practices
financial activities that may not occur in expect system operators to do so with an and actual operating experience concerning drifting
real-time. The Commission believes additional requirement—i.e. in and out of IROL violations. As part of the survey,
that, for reliability purposes, the identification and implementation of an we will require reliability coordinators to report any
effective control action all within 30 violations of IROLs, their causes, the date and time
of the violations, and the duration in which actual
300 IRO–004–1 Purpose Statement states in part minutes. In addition, the control actions operations exceeded IROL to the ERO on a monthly
‘‘Plans must be developed to alleviate SOL and identified in the next-day analysis may basis for one year beginning two months after the
IROL violations.’’ quite often provide relevant information effective date of the Final Rule.’’)
i. Comments 945. TAPS raises an issue with provide guidance on the frequency,
939. FirstEnergy supports the Requirement R13 that states in part ‘‘[i]n duration and magnitude of IROL
approval of the proposed Reliability instances where there is a difference in violations, their causes and whether
Standard as mandatory and enforceable derived limits,* * * Load-Serving these IROL violations occur during
as interpreted by NERC (i.e., that Entities * * * shall always operate the normal or contingency conditions.
exceeding IROL for less than 30 minutes Bulk Electric System to the most 948. We note the support from
is not a violation), pending further limiting parameter.’’ TAPS further states FirstEnergy, MidAmerican, CAISO and
action through the NERC Reliability that, since LSEs do not operate the APPA for our proposed survey.
Standards development process. system within SOLs or IROLs, the only Regarding MidAmerican’s comment that
940. MidAmerican supports the thing such entities, particularly small reporting on IROL violations is a routine
Commission’s proposed survey and ones, can do is shed load. It contends practice, we note that the proposed
notes that based on its experience, IROL that if the Reliability Standard is Reliability Standards only require
violations have been faithfully reported mandatory, it should apply only within reporting on those violations that have
across NERC. the parameters proposed by NERC— exceeded IROLs for longer than 30
941. The CAISO urges the subject to its Bulk Electric System minutes. The current reporting
Commission to proceed with caution if definition and its June registry criteria. requirements and results will not
headed in the direction of absolute Further, given the apparent error in the provide an adequate assessment of the
compliance with IROL. However, it Reliability Standard, the Commission existing operating practices regarding
supports the survey to determine the should ask NERC to re-examine it. IROLs and the reliability risks and the
extent to which systems are actually ii. Commission Determination extent of drifting in and out of IROLs.
‘‘drifting’’ in and out of IROL limits. 949. In response to Entergy, the
942. APPA indicates its support of the 946. The Commission approves Commission believes that operating the
Commission’s directive to undertake a proposed Reliability Standard IRO–005– system within IROL under normal
survey regarding IROL practices and 1 as mandatory and enforceable. In system condition and exceeding IROL
experiences. However it feels that it addition, the Commission directs the only after a contingency and
should be NERC’s role to decide on the ERO to develop modifications to the subsequently returning the system to a
survey. It contends that, based on the Reliability Standard through the secure condition as soon as possible, but
survey results and using the Reliability Reliability Standards development no longer than 30 minutes, may be
Standard development process, NERC process, as discussed below. appropriate. This mode of operation
would decide what modifications to 947. The Commission clarifies the will minimize the system risk of being
IRO–005–2 are appropriate. intent of and need for the proposed one contingency away from potential
943. Entergy agrees that it is survey. We reiterate that the intent is to cascading failures.
appropriate to use a mitigation plan to learn about the operating experiences 950. ISO–NE asks that the ERO should
resolve an SOL or IROL violation when and practices of operating entities; promptly clarify the current definition
the actual contingency that causes an specifically, how they operate their for IROL violations. However, we do not
SOL or IROL violation is experienced. systems to respect IROLs in the normal share ISO–NE’s concern that
However, with an acceptable mitigation system conditions, i.e. prior to a transmission service providers may be
plan, it is not necessary to require contingency. The survey results will responsible for respecting SOLs and
transmission operators to keep facility facilitate future development and IROLs in real-time operation.
loading below a level where a potential modifications of IROL-related Requirement R14 only requires a
SOL or IROL violation would occur Reliability Standards to better clarify transmission service provider to use the
assuming a low probability of the and eliminate potential multiple SOLs and IROLs provided by the
contingency. Entergy requests interpretations of respecting IROLs that reliability coordinator in its tariff, it
clarification that the Commission’s may exist in the proposed Reliability does not require any action in the
guidance is not intended to preclude the Standards.303 In addition, the survey operating time frame.
use of such alternative procedures. The will identify the reliability risks and the 951. We do not share TAPS’ concern
Commission should be cautious not to frequency and number of operating regarding LSEs initiating load shedding
restrictively define SOL or IROL in a practices involving drifting in and out of as their own control action to respect
manner that causes the system operator IROL.304 The survey results will also IROLs or SOLs. The appropriate control
to take preemptive action through this actions to respect IROLs and SOLs are
Reliability Standard to address events Transmission Service Providers within its
Reliability Coordinator Area, SOLs or IROLs within the responsibilities of a reliability
that may technically be SOL or IROL its wide-area view. The Transmission Service coordinator and transmission operator.
violations, but which have a low Provider shall respect these SOLs or IROLs in If load shedding is required, it is the
probability of occurrence and can be accordance with filed tariffs and regional Total responsibility of a reliability coordinator
mitigated through other proven Transfer Calculation and Available Transfer
Calculation processes.’’ or a transmission operator to direct the
procedures. 303 NOPR at P 540: IRO–005–1 could be appropriate entities including LSEs to
944. ISO–NE agrees that NERC should interpreted as allowing a system operator to respect carry it out. However, we urge the ERO
promptly address the ambiguities in the IROLs in two possible ways: (1) Allowing IROL to to provide further clarification in this
current definition of an IROL. It has a be exceeded during normal operations, i.e., prior to
regard and include TAPS’ concern in
concern that the phrase ‘‘The a contingency, provided that corrective actions are
taken within 30 minutes or (2) exceeding IROL only developing the modification of this
Transmission Service Provider shall after a contingency and subsequently returning the Reliability Standard.
respect these SOLs and IROLs’’ in system to a secure condition as soon as possible, 952. Accordingly, the Commission
Requirement R14 may cause confusion but no longer than 30 minutes. Thus, the system
approves Reliability Standard IRO–005–
that this entity is expected to respect can be one contingency away from potential
cascading failure if operated under the first 1 as mandatory and enforceable.

SOLs and IROLs in the operating time interpretation and two contingencies away from
frame.302 cascading failure under the second interpretation. IROLs are exceeded, but each occurrence lasting
304 The term ‘‘drifting in and out of IROLs’’ refers less than 30 minutes. Currently, this mode of
302 IRO–005–1 Requirement R14 states ‘‘Each to operating the normal system (i.e. prior to a operation is not considered as a violation of NERC
Reliability Coordinator shall make known to contingency) with frequent occurrences in which Reliability Standards.
Further, because IRO–005–1 has no TLR procedure is an inappropriate and modifications to the Reliability
Measures or Levels of Non-Compliance, ineffective tool to mitigate IROL Standard as discussed below.
pursuant to section 215(d)(5) of the FPA violations; (2) identifies in a 962. The Commission remains
and § 39.5(f) of our regulations, the Requirement the available alternatives convinced, based on Blackout
Commission directs the ERO to develop to use of the TLR procedure to mitigate Recommendation No. 31,306 the
a modification to IRO–005–1 through an IROL violation and (3) includes submissions from APPA, Entergy,
the Reliability Standards development Measures and Levels of Non- MidAmerican, ISO–NE and Xcel, and
process that includes Measures and Compliance that address each NERC’s comments on the Staff
Levels of Non-Compliance. The Requirement. In addition, the Preliminary Assessment,307 that
Commission further directs that the Commission proposed to approve the proposed directives to include a clear
Measures and Levels of Non- WECC and ERCOT load relief warning that a TLR procedure is an
Compliance specific to IROL violations procedures as superior to the national inappropriate and ineffective tool to
must be commensurate with the standard. mitigate IROL violations and to identify
magnitude, duration, frequency and the available alternatives to use of the
causes of the violations and whether i. Comments
TLR procedure to mitigate an IROL
these occur during normal or 955. APPA agrees that IRO–006–3 is violation are the appropriate
contingency conditions. Finally, the sufficient for approval as a mandatory improvements to address the
Commission directs the ERO to conduct Reliability Standard. It suggests that the deficiencies in using TLR procedures to
a survey on IROL practices and actual ERO should consider development of mitigate actual IROL violations or actual
operating experiences by requiring detailed Measures and Levels of Non- emergency situations. The Commission
reliability coordinators to report any Compliance that address each endorses Blackout Recommendation No.
violations of IROL, their causes, the date Requirement in IRO–006–3. Until then, 31.
and time, the durations and magnitudes penalties should not be imposed except 963. The Commission agrees with
in which actual operations exceeds for egregious violations and the Entergy and MidAmerican that TLR
IROLs to the ERO on a monthly basis for associated penalties should be imposed procedures can be an effective
one year beginning two months after the by the Commission. mechanism to avoid potential IROL
effective date of the Final Rule. We may 956. APPA, Entergy and violations and potential emergencies.
propose further modifications to IRO– MidAmerican agree that the TLR Regarding this, we reiterate that our
005–1 based on the survey results. procedure is an inappropriate and concerns have always been on the use
ineffective tool to mitigate actual IROL of TLR to mitigate actual IROLs or
f. Reliability Coordination—
violations and that a clear warning to actual emergencies, and not on potential
Transmission Loading Relief (IRO–006–
that effect should be included. IROLs or emergencies, as indicated in
3)
MidAmerican specifically suggests that the Blackout Report, Staff Assessment
953. IRO–006–3 ensures that a the warning must also apply to actual and the NOPR.
reliability coordinator has a coordinated emergency situations in addition to 964. We do not understand Progress
method to alleviate loadings on the actual IROL violations. Energy’s disagreement because no
transmission system if it becomes 957. Similarly, ISO–NE supports the reason is provided.
congested to avoid limit violations. Commission’s conclusions with regard 965. Accordingly, in addition to
IRO–006–3 establishes a detailed to reliance on TLRs to address actual
Transmission Loading Relief (TLR) approving the Reliability Standard, the
IROL violations. Further, it supports the Commission directs the ERO to develop
process for use in the Eastern Commission’s proposal that the ERO
Interconnection to alleviate loadings on a modification to IRO–006–3 through
should modify the Reliability Standard the Reliability Standards development
the system by curtailing or changing to provide flexibility for ISOs and RTOs
transactions based on their priorities process that (1) includes a clear warning
to rely on redispatch as a means to that the TLR procedure is an
and according to different levels of TLR mitigate an IROL violation.
procedures.305 The proposed Reliability inappropriate and ineffective tool to
958. Xcel suggests that instead of the mitigate actual IROL violations and (2)
Standard includes a regional difference proposed modification of a clear
for reporting market flow information to identifies in a Requirement the available
warning, it should include a alternatives to mitigate an IROL
the Interchange Distribution Calculator requirement that TLR procedures
rather than tagged transaction violation other than use of the TLR
should not be used for alleviating actual procedure. In developing the required
information for the MISO and PJM IROL violations. It asserts that the latter
areas. It also includes by reference the modification, the ERO should consider
approach would be more measurable the suggestions of MidAmerican and
equivalent Interconnection-wide than the Commission’s proposed
congestion management methods used Xcel. In addition, the Commission
modification. approves the WECC and ERCOT load
in the WECC and ERCOT regions. 959. Entergy and MidAmerican
954. In the NOPR, the Commission relief procedures as superior to the
believe that TLR procedures can be an
proposed to approve Reliability national Reliability Standard. As
effective mechanism to avoid potential
Standard IRO–006–3 as mandatory and identified in the NOPR, the Commission
SOL and IROL violations or potential
enforceable. In addition, pursuant to directs the ERO to modify the WECC
emergency situations.
section 215(d)(5) of the FPA and 960. In contrast, Progress Energy and ERCOT procedures to ensure
§ 39.5(f) of our regulations, the disagrees with the Commission’s 306 Blackout Recommendation No. 31, at 163 is to
Commission proposed to direct NERC to reasoning on the ineffectiveness of using ‘‘Clarify that the transmission loading relief (TLR)
submit a modification to IRO–006–3 TLR procedures to alleviate actual IROL process should not be used in situations involving
that: (1) Includes a clear warning that a violations. an actual violation of an Operating Security Limit.’’
307 The NERC comments to Staff Assessment at 49

305 The equivalent Interconnection-wide ii. Commission Determination state that ‘‘NERC agrees that the TLR procedure
transmission loading relief procedures for use in alone is usually not effective as a control measure
WECC and ERCOT are known as ‘‘WSCC
961. The Commission approves IRO– to mitigate an IROL violation and explains that the
Unscheduled Flow Mitigation Plan’’ and Section 7 006–3 as mandatory and enforceable. In TLR procedure was not intended to be effective in
of the ‘‘ERCOT Protocols,’’ respectively. addition, we direct the ERO to develop this manner.’’
consistency with the standard form of ii. Comments and PJM’s proposal to modify NERC’s
the Reliability Standards including (a) Application of the Regional procedures and to not override seams
Requirements, Measures and Levels of Difference agreements. MidAmerican claims that
Non-Compliance.308 MISO–PJM comments amount to an
970. MISO–PJM contends that there is abrogation of existing seams agreements.
g. Regional Difference to IRO–006–3: unduly discriminatory treatment against MidAmerican states that the seams
PJM/MISO/SPP Enhanced Congestion market flows of MISO and PJM during agreements were negotiated in a give-
Management (Curtailment/Reload/ the application of the TLR Standard. and-take process between the parties
Reallocation) The RTOs argue that NERC should resulting in the existing waiver which
i. Background modify IRO–006–3 and the MISO and was proposed by PJM and MISO in
PJM regional difference to require response to Commission orders.
966. As explained in the NOPR, IRO–
modifying the market flow threshold MidAmerican states that if any changes
006–003 provides for a regional
used by the interchange distribution are sought to these waivers, they should
difference for MISO, PJM and SPP.309
calculator to assign relief obligations to be addressed in negotiation with the
According to NERC, the regional
MISO, PJM, and SPP from zero to a appropriate parties. MidAmerican
difference is needed to allow RTO
standard percentage that is technically suggests that any changes should be
market practices, simplify transaction
feasible to implement on a non- requested by way of the NERC process
information requirements for market
discriminatory basis, netting of market for developing Reliability Standards and
participants, and provide reliability
flow impacts, tag impacts, and that any negotiated agreements should
coordinators with appropriate
generation-to-load impacts, and be presented to the Commission for
information for security analysis and
reporting to the interchange distribution approval. Mid-Continent claims that
curtailments, reloads, reallocations and
calculator all net generation-to-load MISO–PJM have not provided valid
redispatch requirements.
967. The regional difference to IRO– impacts for both market and non-market reasons to replace the current Reliability
006–3 applies the congestion transmission providers. Constellation Standards or to take actions that would
management process included in Joint supports MISO–PJM’s argument that modify existing seams agreements
Operating Agreements filed by MISO, there is unduly discriminatory signed by MISO and PJM. Mid-
PJM and SPP and specified in seams treatment of the MISO and PJM market Continent asks the Commission not to
agreements reached among MISO, PJM, flows compared to the generation-to- short-circuit the NERC Reliability
and their neighboring non-market areas load impacts of non-market entities in Standards process which will give full
during the RTOs’ market formation and the application of the TLR standard. consideration to the reliability
expansions. Under the congestion 971. MISO–PJM indicates that they implications of MISO’s and PJM’s
management process in the waiver, each have raised the equity issue with the proposal.
RTO calculates an amount of energy NERC Operating Reliability 974. APPA agrees with the
(market flow) flowing across Subcommittee (Operating Commission’s proposed approach in
coordinated flowgates. These market Subcommittee), that their markets allowing MISO, PJM, NERC and other
flows are separated into their currently are being asked to curtail ‘‘relevant entities’’ to continue their
appropriate priorities based on the market flow impacts down to zero negotiations regarding this regional
RTO’s schedules and reservations and percent while tagged transactions and difference. APPA cautions that any
are available for curtailment under the generation-to-load impacts during TLR 5 agreement reached by NERC and
appropriate TLR Levels in the NERC are being asked to curtail impacts that approved by the Commission regarding
interchange distribution calculator. are five percent or greater. MISO–PJM a regional difference for this Reliability
Under the TLR method for curtailing states that the NERC Operating Standard should be governed by
interchange transactions and in the per Subcommittee has indicated that they reliability considerations and should
generator method for generation-to-load will address reliability issues only and not permit market design considerations
impacts, NERC uses a five percent that they are not the appropriate group to override NERC’s Reliability
curtailment threshold, but in the waiver, to address equity issues. Standards. MidAmerican suggests a
the RTO’s market flows with an impact process where the RTOs invite parties to
(b) Seams Agreements
of greater than zero percent on a reconsider the seams agreements, the
coordinated flowgate are represented 972. Several entities argue that the parties negotiate changes, the
and made available for curtailment Commission should not overturn the Commission approves new agreements
under the appropriate TLR priorities. existing IRO–006–3 regional difference. and waivers are then sought from NERC
968. In their comments on the Staff MidAmerican states that MISO and PJM to the extent necessary. MidAmerican
Preliminary Assessment, MISO–PJM should continue to pursue a negotiated argues that since the RTOs do not allege
contended that there is unduly solution to the issues outlined in MISO– any reliability problem there is no need
discriminatory treatment of the market PJM’s filings. Mid-Continent states that to reject or upend the existing NERC
flows of MISO and PJM versus the the Commission should reject the waiver.
generation-to-load impacts of non- MISO–PJM proposal to require NERC to
allow them to report only the (c) Modifying the Congestion
market entities because the waiver Management Process and Alternatives
subjects the RTOs to curtailment (and transactions with five percent or greater
impacts on flowgates rather than report for Temporary Application of the
the corresponding redispatch costs) in Waiver
circumstances where the non-market all transactions for curtailments, since
entities would not be subject to MISO and PJM offered to report all 975. Mid-Continent states that it
curtailment. transactions to avoid negative impacts agrees with the Commission’s proposal
969. In the NOPR, the Commission on the reliability of the transmission to not adopt MISO and PJM’s request to
did not propose to approve or remand system. Mid-Continent argues that not instruct NERC to modify the current
this regional difference. doing so would impact the reliability of waiver to the TLR in the RTOs and
the transmission system. believes that instead the Commission
308 See NOPR at P 564–65. 973. Mid-Continent asks the should direct NERC to address these
309 NOPR at P 568. Commission to not implement MISO issues through the Reliability Standards
development process with input from requires unanimous approval by the and SPP market flows to use a three
neighboring systems. Mid-Continent congestion management process Council percent threshold, to observe the impact
states that changes to the waiver must and that, though the 12 month field test on reliability, but will not address what
not discriminate against non-market to change the market flow threshold it refers to as ‘‘equity issues.’’ MISO–
regions; must not negatively impact the from zero percent to three percent has PJM explains the field test has been
reliability of neighboring systems and the support of MISO, PJM, SPP and approved by all the reciprocal entities
must be consistent with seams TVA, it does not have the unanimous that have signed seams agreements
agreements signed by the RTOs. approval of all signatories to the seams except MAPP. MISO–PJM state that, at
976. NRECA claims that issues agreements. MISO–PJM states that the end of the 12 months, a decision
associated with market flows and MAPPCOR (MAPP) has not agreed to will be made whether to use a three
generation-to-load impacts have not the field test recommended by the NERC percent threshold or some other
been resolved and is concerned that Operating Subcommittee and that threshold to address the reliability
MISO–PJM’s suggestion that MAPP has asserted that MISO should concerns. MISO–PJM explain that the
‘‘consensus’’ has been reached on the continue to honor their contractual same entities that make up the Mid-
issues is premature. NRECA is also obligation and report market flow Continent objected to the field test
concerned that implementation of the impacts down to zero percent for relief because they asserted MISO has a
MISO and PJM proposal could increase assignments as specified in the MISO– contractual obligation under the MAPP
reliance on TLRs. NRECA urges the MAPP Seams Operating Agreement. Seams Operating Agreement to continue
Commission to not short circuit or MISO is concerned that once the field reporting its market flows down to zero
circumvent the Reliability Standards test is complete and the NERC percent. MISO–PJM contend that
development process or the RTO Operating Subcommittee recommends because the MISO has agreed to honor
stakeholders process and states that the the use of a three percent threshold or its contractual obligation during the
Commission should permit the some other threshold to address the field test and will continue to use a zero
stakeholders to reach full consensus. reliability issue, the MISO may still percent threshold for all flowgates that
977. MISO–PJM indicates that they have a contractual obligation with are reciprocal between MISO and
have been working with both the NERC MAPP to use market flows down to zero MAPP, this means that the flowgates
Operating Subcommittee and the percent for relief assignments. MISO– under the control of the Mid-Continent
Congestion Management Process PJM states that this contractual parties will not participate in the field
Working Group (Congestion Working obligation can only be altered if MISO test and NERC will have no data to
Group) to achieve a consensus on these and MAPP can agree on a change to the show the impact of changing the market
changes, and that based on this, the Seams Operating Agreement but expects flow threshold to three percent on these
Commission stated in the NOPR that it resistance to change the Seams flowgates.
prefers that MISO, PJM and others Operating Agreement. MISO and PJM do 981. MISO–PJM state that as long as
continue negotiations to resolve these not believe they can address the equity the regional difference does not become
issues rather than imposing a solution issue by continuing discussions with a mandatory standard during the field
on market participants. MISO–PJM state the NERC Operating Subcommittee. test, they are satisfied that appropriate
that they have held extensive 979. MISO–PJM also state that by steps are being taken to address
discussions with a group composed of continuing to use market flows down to reliability.
NERC Operating Subcommittee and zero percent for relief assignments on
Congestion Working Group participants. (d) Reporting of Generator to Load
reciprocally coordinated flowgates
MISO–PJM indicates that detailed Impacts by Non Market Areas
between MISO and MAPP, there will be
analyses has been performed to evaluate situations where MISO is unable to meet 982. MISO–PJM supports
the effect of changing the market flow its relief obligation. MISO–PJM states modifications to the TLR process that
threshold from zero percent to five that they have sought unsuccessfully to would require all participants (both
percent in one percent increments and execute redispatch agreements with market and non-market) to report their
that the NERC Operating Subcommittee those parties who have direct counter- market flow impacts and generator-to-
has recommended that the market flow flow on the identified flowgates where load impacts to the interchange
threshold used by the interchange the MISO is unable to meet its relief distribution calculator and honor their
distribution calculator to assign relief obligation. MISO–PJM believe that the allocations when they report their firm
obligations to the MISO, PJM, and SPP Commission should address this versus their non-firm usage. MISO–PJM
be changed from zero percent to three continuing discriminatory treatment of believes that taking this step would also
percent for a 12 month interim period. the market impacts on flowgates. MISO– address the threshold equity issue and
MISO–PJM assert that at the end of the PJM state that of the three areas where the netting issue because all entities
12 months, a decision will be made MISO–PJM raised comments on would be subject to the same treatment.
whether to recommend a permanent discriminatory treatment of the markets, MISO–PJM requests that the
change to the market flow threshold only one area (changing the market flow Commission to either direct NERC to
from zero percent to three percent or a threshold for a 12 month field test) has initiate a process to modify the
change to some other value. MISO–PJM resulted in steps being taken to address interchange distribution calculator such
state that according to the NERC the discriminatory treatment and that that market flows and generator-to-load
Operating Subcommittee, this even this one area can only be impacts from non-market areas are both
recommendation is to only address the considered a partial success because reported to the interchange distribution
reliability issue raised by MISO, PJM there is only a solution to address the calculator and are subject to curtailment
and SPP so that they are able to meet reliability issue, but not the equity based on their priorities from the
their relief assignment during TLR. issue. allocations or that the Commission take
978. MISO–PJM also states that to 980. MISO–PJM explain in their action to do so.
receive congestion management process supplemental comments that NERC has 983. MISO–PJM states that the
Council endorsement and support for demonstrated a willingness to consider reporting of generator-to-load impacts
the change being developed by the the reliability issue by authorizing a 12 by the non-market entities is the one
NERC Operating Subcommittee group, it month field test allowing PJM, MISO area that is not currently under
discussion with a stakeholder group. (e) Accounting for Counter Flows market start up,312 the Commission
MISO–PJM explains that both the During TLR determined that the markets could not
market and non-market entities receive start without the MISO having at least
an allocation on flowgates and that both 986. MISO–PJM state that there have a specific, transparent plan for how it
the market entities and the non-market been discussions at the NERC Operating will handle the interface of multiple
entities use the allocations when selling Subcommittee about taking into account transmission tariffs and market-to-non-
firm transmission service. MISO–PJM counter-flows during TLR when market seams 313 and required the MISO
states that only the market entities assigning relief. MISO–PJM contends to file any resolution of seams, or a
report their market flows to the that by considering counter-flows, those status report of progress on seams
entities that are responsible for the
interchange distribution calculator and resolution including detailed plans as to
loading problem on a net basis will be
use their allocations to determine what how MISO will address seams absent
responsible for fixing the loading
portion of market flows will be agreements, within 60 days of the date
problem during TLR. MISO–PJM states
considered firm and believe that the of the order. The regional difference to
that the MISO, PJM and SPP markets
non-market entities could also report IRO–006–3 applies the congestion
operate on a net flow basis and,
their firm and non-firm generator-to- management process that was included
therefore, have additional reasons for
load usage to the interchange in the Joint Operating Agreement filed
wanting to consider counter-flows.
distribution calculator and receive relief by MISO, PJM and SPP and that was
MISO–PJM expects that by summer
assignments based on this usage. MISO– specified in the seams agreements
2007, the Task Force will have a
PJM indicates that this would remove reached between MISO, PJM, and their
recommendation on netting in the
the assumption that all generator-to-load interchange distribution calculator for neighboring non-market areas in order
impacts from the non-market entities the NERC Operating Subcommittee to to meet the Commission’s requirements
represent firm usage. MISO–PJM states consider. MISO–PJM state that it is described above.314
that reporting relief obligations by one premature to speculate on the outcome 989. The Commission recognizes
group of participants and not reporting of the discussions with the NERC MISO–PJM’s concerns that: (1) The
by the other results in conflicting Operating Subcommittee at this time. congestion management process could
actions during the TLR process because MISO–PJM clarifies that they are not be placing an undue burden on the RTO
market entities suffer the financial asking the Commission to take any regions to provide redispatch especially
consequences of redispatch at the same action on this issue but to let the NERC on remote flowgates where an RTO’s
time reliability is not being Operating Subcommittee address the dispatch has a small impact and (2)
accomplished due to off-setting actions technical merits of netting impacts in under the congestion management
by non-market entities. the interchange distribution calculator. process, the calculation of market flows
984. MISO–PJM states that, to address 987. Mid-Continent states that for relief assignments on Reciprocal
the discriminatory treatment of the eliminating the requirements to report Coordinated Flowgates between the
markets, the Commission could order flows in both directions may adversely MISO and MAPP could create situations
the TLR Reliability Standard to be impact reliability because the where MISO is unable to meet its relief
modified to have the market entities interchange distribution calculator will obligation without curtailing load. We
discontinue reporting their market flows not have enough information to assign also understand that these concerns are
to the interchange distribution responsibilities to the contributors of a exacerbated by the possibility of civil
calculator. MISO–PJM believes that constraint. penalties for non-compliance with the
instead of this order, the preference is requirement to use market flows down
to have the market entities continue iii. Commission Determination to zero percent for relief assignments on
reporting their market flow impacts and 988. The Commission will not reciprocal coordinated flowgates
the non-market entities report their approve or remand this regional between MISO and MAPPCOR.
generator-to-load impacts to the difference. The treatment of the market Especially during transitions when
interchange distribution calculator. The flows of MISO–PJM versus the markets with multiple control areas are
allocations would be used to set the generation-to-load impacts of non- started up, markets are expanded to
priority of these impacts. market entities in the application of the include other control areas, or non-
985. Mid-Continent states that the TLR standard has been addressed by the market control areas are consolidated,
regional difference requiring PJM and Commission in a number of cases.310 In this can have an effect on the loop flows
MISO to report all flows instead of net approving the plans of various experienced by neighboring regions and
flows was part of the commitments transmission owning utilities to join the redispatch required by the
MISO and PJM made to meet NERC’s PJM, the Commission attached several neighboring regions due to fewer tagged
tagging requirements. Mid-Continent conditions including a requirement that transactions reported to the interchange
contends that it is appropriate to treat certain non-market utilities be held distribution calculator. The Commission
harmless from effects of loop flow and recognizes that there are concerns by
MISO–PJM market flows differently
congestion resulting from the utilities’ neighboring entities to be held harmless
because they are greater than the system
RTO choices.311 Further, during MISO’s from increased redispatch responsibility
flows that resulted from control area-
caused by these transitions.
based system operation. Mid-Continent
further claims that MISO cannot achieve 310 See Alliance Companies, 100 FERC ¶ 61,137
312 See Midwest Independent Transmission
the redispatch the interchange (2001) and Midwest Independent Transmission
System Operator, Inc. and PJM Interconnection, System Operator, Inc., 108 FERC ¶ 61,163 (2004).
distribution calculator requires because L.L.C., 106 FERC ¶ 61,251 (2004). 313 To resolve this issue, the Commission
of MISO’s own actions since MISO does 311 Commonwealth Edison Company and encouraged market participants to use the PJM-
not report actual flows to the American Electric Power Service Corporation, 106 Midwest ISO joint operating agreement as a model
interchange distribution calculator and FERC ¶ 61,250 (2004). This order required ComEd or starting point for seams agreements, particularly
to demonstrate that its proposal held utilities in with respect to the seams with the various utilities
MISO and PJM’s congestion Wisconsin and Michigan harmless from all adverse in the MAPP region.
management tools do not utilize all impacts associated with loop flow or congestion 314 See Midwest Independent Transmission
redispatch options. that would result from its choice to join PJM. System Operator, Inc., 110 FERC ¶ 61,290 (2005).
990. The Commission concludes that 993. In addressing MISO–PJM’s claim j. Coordination of Real-Time Activities
the issues described by MISO–PJM (i.e., that the ERO should modify IRO–006– Between Reliability Coordinators (IRO–
defining the obligation of a certain 3 and the MISO–PJM regional difference 016–1)
region to provide redispatch when a to require netting generation-to-load
1002. IRO–016–1 establishes
flowgate becomes congested) are best impacts to recognize counterflow, we
Requirements for coordinated real-time
handled through seams agreements will let the ERO Operating
operations, including: (1) Notification of
rather than being subject to the NERC Subcommittee address the technical
problems to neighboring reliability
processes. We recognize that the two merits of netting flow impacts in the
coordinators and (2) discussions and
areas of seams agreements and interchange distribution calculator.
decisions for agreed-upon solutions for
Reliability Standards could overlap if h. Procedures, Processes, or Plans To implementation. It also requires a
the agreements reached do not allow for Support Coordination Between reliability coordinator to maintain
reliable outcomes where parties can Reliability Coordinators (IRO–014–1) records of its actions.
achieve the relief assigned. As such, the
994. The stated purpose of IRO–014– 1003. In the NOPR, the Commission
Commission will neither approve nor
1 is to ensure that each reliability proposed to approve IRO–016–1 as
remand the waiver of the regional
coordinator’s operations are coordinated mandatory and enforceable.
difference to IRO–006–3 while the 12-
month field test allowing PJM, MISO so that they will not have an adverse i. Comments
and SPP market flows to use a three reliability impact on other reliability
coordinator areas and to preserve the 1004. APPA agrees with the
percent threshold is being conducted.
reliability benefits of interconnected Commission’s proposed approval of
After the 12-month field test is
operation. Specifically, IRO–014–1 IRO–015–1 as mandatory and
complete, the Commission will
ensures energy balance and enforceable. However, it indicates that it
reexamine approving the waiver as a
transmission by requiring a reliability is unclear in Level of Non-Compliance
mandatory and enforceable Reliability
coordinator to have operating 2.1, how a reliability coordinator can
Standard.
procedures, processes or plans for the demonstrate that it coordinated with
991. The Commission instructs the exchange of operating information and other reliability coordinators without
RTOs to continue working with the non- coordination of operating plans. having retained evidence such as
market regions to develop revised seams 995. In the NOPR, the Commission detailed logs or telephone recordings of
agreements that allow for equitable and proposed to approve IRO–014–1 as having done so.316
feasible treatment of market flows in the mandatory and enforceable.
NERC TLR/redispatch process. The ii. Commission Determination
solution should not harm system i. Comments
1005. For the reasons stated in the
reliability and should not subject either 996. APPA agrees with the NOPR, the Commission approves IRO–
non-RTO transmission owners or the Commission’s proposed approval of 016–1 as mandatory and enforceable.
RTO markets to unreasonable redispatch IRO–014–1 as mandatory and 1006. We construe Level of Non-
responsibilities. We note that if enforceable. Compliance 2.1 as requiring evidence of
consensus cannot be reached, the RTOs coordination, but allowing flexibility on
may file a section 205 or section 206 ii. Commission Determination
the type of evidence.
proposal to revise the terms and 997. For the reasons stated in the
conditions of the congestion NOPR, the Commission approves IRO– 8. MOD: Modeling, Data, and Analysis
management process if the terms agreed 014–1 as mandatory and enforceable. 1007. The Modeling, Data and
on in the seams agreements and Joint i. Notifications and Information Analysis group of Reliability Standards
Operating Agreement have become Exchange Between Reliability is intended to standardize
unjust or unreasonable or may file to Coordinators (IRO–015–1) methodologies and system data needed
terminate the agreements as allowed in for traditional transmission system
the seams agreements. 998. IRO–015–1 establishes
Requirements for a reliability operation and expansion planning,
992. The Commission will not adopt coordinator to share and exchange reliability assessment and the
MISO–PJM’s proposal to require non- reliability-related information among its calculation of available transfer
market entities to report their generator- neighbors and participate in agreed- capability (ATC) in an open access
to-load impacts to the interchange upon conference calls and other environment. The 23 MOD Reliability
distribution calculator with the communication forums with adjacent Standards may be grouped into four
allocations used to set the priority of reliability coordinators. distinct categories. The first category
these impacts in this Reliability 999. In the NOPR, the Commission covers methodology and associated
Standards process. If NERC determines proposed to approve IRO–015–1 as documentation, review and validation
that this information and corresponding mandatory and enforceable. of Total Transfer Capability (TTC), ATC,
curtailment options are needed for Capacity Benefit Margin (CBM) and
reliability, NERC should file to modify i. Comments Transmission Reliability Margin (TRM)
IRO–006–3 to include these additions. 1000. APPA agrees with the calculations.317 The second category
However, the economic implications of Commission’s proposed approval of covers steady-state and dynamics data
the reporting of generator-to-load IRO–015–1 as mandatory and and models.318 The third category
impacts by non-market entities are not enforceable.
in the scope of the reliability process 316 IRO–016–1 Level of Non-Compliance 2.1
and are better addressed on a case-by- ii. Commission Determination states: ‘‘For potential, actual or expected events
case basis or, as appropriate, in the 1001. For the reasons stated in the which required Reliability Coordinator-to-
Reliability Coordinator coordination, the Reliability

proceeding on RTO Border Utility NOPR, the Commission approves IRO– Coordinator did coordinate, but did not have
Issues.315 015–1 as mandatory and enforceable. evidence that it coordinated with other Reliability
Coordinators.’’
315 See RTO Border Utility Issues, Notice of 317 MOD–001–0 through MOD–009–0.
and ISOs in the Eastern Interconnections (Docket
Technical Conference on Seams Issues for RTOs No. AD06–9–000) (issued Jan. 25, 2007). 318 MOD–010–0 through MOD–015–0.
covers actual and forecast demand concern with the Commission’s completes work on the MOD Reliability
data.319 The fourth category covers proposal not to act on the 13 fill-in-the- Standards.
verification of generator real and blank standards. EPSA considers the
b. MOD Standards Related to ATC, TTC,
reactive power capability.320 fill-in-the-blank standards vitally
1008. In the NOPR, the Commission CBM and TRM
important to reliability and competitive
proposed that one out of 23 MOD markets and worries that progress may i. OATT Reform and the MOD
Reliability Standards be approved be lost while the regions endeavor to file Standards
unconditionally, nine be approved with the additional required information.
direction for modification and 13 1014. As pointed out in the NOPR, the
remain pending with direction for ii. Commission Determination Commission has been considering ATC,
modification.321 The Commission, TTC, CBM and TRM calculation issues
1011. The Commission will adopt the in Docket Nos. RM05–17–000 and
describing these 13 pending standards NOPR proposal and retain the same
as fill-in-the-blank Reliability RM05–25–000, and addressed them in
disposition of the MOD Reliability Order No. 890. In order to maintain a
Standards, generally proposed to seek Standards that it proposed there. We
additional information before acting on consistent approach with regard to ATC
confirm in this Final Rule that one out issues, we confirm here the
them. Responding to CenterPoint’s of 23 MOD standards is approved
proposal to exempt ERCOT from the determinations made in Order No. 890.
unconditionally, nine are approved with Each such determination is addressed
MOD Reliability Standards that address direction for modification and 13
available transfer capability, the below.
remain pending with direction for
Commission explained that it would modification. We will discuss our 1015. In Order No. 890, the
consider any regional difference at the rationale for this decision in the Commission addressed the potential for
time NERC submits one for Commission Commission Determination section for undue discrimination by requiring
review. Therefore, the Commission each particular Reliability Standard. industry-wide consistency and
stated that if ERCOT wished to request transparency of all components of ATC
a regional difference, it should do so 1012. We reject ISO/RTO Council and calculation methodology and certain
through the ERO process. ISO–NE’s request that we defer our definitions, data and modeling
approval of Reliability Standards from assumptions. The Commission also
i. Comments the MOD group that incorporate indicated there that the lack of
1009. ISO/RTO Council and ISO–NE references to the 13 fill-in-the-blank consistent, industry-wide ATC
agree with the Commission’s proposal to standards. While we understand ISO/ calculation standards poses a threat to
neither approve nor remand the 13 RTO Council and ISO–NE’s concern the reliable operation of the Bulk-Power
MOD Reliability Standards until NERC about cross-referencing pending System, particularly with respect to the
supplies additional information. ISO/ Reliability Standards, the data that is inability of one transmission provider to
RTO Council and ISO–NE also needed will be provided as described in know with certainty its neighbors’
recommend that the Commission go the Common Issues section.322 In the system conditions affecting its own ATC
further and defer its approval of the interim, compliance with the pending values. As a result of this reliability
MOD Reliability Standards that Reliability Standards should continue component, the Commission asserted
incorporate references to the 13 fill-in- on a voluntary basis, and the that the proposed ATC reforms are also
the-blank Reliability Standards until Commission considers compliance with supported by FPA section 215, through
those 13 are approved unconditionally. them a matter of good utility practice. which the Commission has the authority
ISO/RTO Council and ISO–NE believe The Commission believes, moreover, to direct the ERO to submit a Reliability
that the following Reliability Standards that the blanks will be filled in in a Standard that the Commission considers
are dependent upon the 13 fill-in-the- timely manner, since in this rule we appropriate to implement FPA section
blank standards: MOD–010–0, MOD– require the ERO to develop a Work Plan 215.324
012–0, MOD–016–1, MOD–017–0, and submit a compliance filing
describing the process for collection of 1016. In Order No. 890, the
MOD–018–0, MOD–019–0, and MOD– Commission directed public utilities,
021–0 and as such, the Commission the information set forth in the deferred
standards. working through NERC and NAESB, to
should not approve and make them develop Reliability Standards and
enforceable at this time. ISO–NE warns 1013. In response to EPSA’s concern business practices to improve the
that these listed standards share the that opportunities for discrimination consistency and transparency of ATC
same infirmities as the 13 the and concerns about reliability remain calculations. The Commission required
Commission found it could not yet while we await additional information, public utilities, working through NERC,
approve. ISO–NE cautions that until the we emphasize that the Commission has to modify the ATC-related Reliability
missing information is provided in the provided specific direction regarding Standards within 270 days of
13 cross-referenced standards, it will be appropriate modifications to the MOD publication of Order No. 890 in the
impossible for the affected entities to standards here and in Order No. 890, Federal Register. The Commission also
determine what criteria they are and has required the submission of a directed public utilities to work through
expected to satisfy. Work Plan for completion of that work NAESB to develop business practices
1010. EPSA, in contrast to ISO/RTO within 90 days.323 Moreover, the OATT that complement NERC’s new
Council and ISO–NE, expresses its and OASIS transparency reforms Reliability Standards within 360 days of
adopted in Order No. 890 will ensure publication of Order No. 890 in the
319 MOD–016–0 through MOD–021–0. that opportunities for discrimination Federal Register. Finally, the
320 MOD–024–1 through MOD–025–1.
321 Approved: MOD–018–0; approved with
will be minimized while NERC Commission directed NERC and NAESB
modification: MOD–06–0, MOD–007–0, MOD–010– to file a joint status report on standards

322 See Common Issues Pertaining to Reliability
0, MOD–012–0, MOD–016–1, MOD–017–0, MOD– and business practices development,
019–0 through MOD–021–0; and pending: MOD– Standards: Fill-in-the-Blank Standards, supra
section II.E.5.
and a Work Plan for completion of this
001–0 through MOD–005–0, MOD–08–0, MOD–09–
0, MOD–011–0, MOD–013–1 through MOD–015–0, 323 OATT Reform Final Rule, Order No. 890,
MOD–024–1 and MOD–025–1. issued February 15, 2007. 324 FPA section 215(d)(5).
task, within 90 days of publication of against competitive power suppliers in related reliability concerns may remain
Order No. 890 in the Federal Register. access to the transmission system. TAPS during the interim Reliability Standards
1017. The electric utility industry has and EPSA note that in both the OATT modification process, in part because of
also acknowledged this problem and has Reform NOPR and the Reliability the discretion that transmission service
taken steps to address the lack of Standards NOPR, the Commission has providers will retain in calculating ATC
consistency and transparency in the articulated serious concerns about the values. We point out, however, that all
way ATC is calculated. NERC formed a lack of clarity, transparency and transmission providers are required to
Long-Term Available Flowgate Capacity uniformity in the critical calculations file a modified Attachment C to their
Task Force to review NERC’s standards pertaining to one of the most OATTs detailing their ATC calculation
on ATC, which issued a final report in fundamental aspects of the wholesale methodologies in advance of the
2005.325 Based on the recommendations bulk power transmission system, and development of the new Reliability
in the NERC Report, NERC has begun urge the Commission to make these Standards. All transmission providers
two Standards Authorization Request calculations transparent, consistent, and are required to comply with their
proceedings to revise the standards on better yet, regional. TAPS agrees with OATTs, and are subject to the filing of
ATC.326 NAESB has also begun a Staff’s concerns raised in the NOPR a complaint or Commission-initiated
proceeding to develop business practice about ATC, TTC, CBM and TRM enforcement action if discrimination
standards to enhance the processing of standards. Constellation particularly occurs. Regarding Constellation’s
transmission service requests that affect supports the proposed changes to MOD– recommendation that the Commission
ATC calculation. Following the issuance 001–0, MOD–004–0, MOD–006–0 and act in advance, and require transmission
of the OATT Reform NOPR on May 19, MOD–007–0 because these Reliability service providers to post the
2006, and the Reliability Standards Standards, as modified, will provide information that the Commission directs
NOPR on October 19, 2006, NERC more information to users regarding regarding ATC values, even if work
accelerated development of these ATC, TTC, existing transmission toward more consistency is not yet
standards in accordance with the commitments (ETC), AFC, CBM and complete, we clarify that we will require
guidelines provided in these NOPRs. TRM, and that information will begin transmission service providers to
NERC and NAESB representatives the process of providing consistent comply with existing ATC-related
participated in the Commission’s standards for their calculation. posting obligations on OASIS as
Technical Conference held on October 1019. Constellation agrees with EPSA supplemented by Order No. 890. These
12, 2006, and informed the Commission and cautions that it will take time for requirements are not subject to
on the status of Reliability Standards NERC to develop, and for the standardization by the ERO, and will be
development.327 NERC posted the Draft Commission to definitively approve, effective in accordance with the
Standard MOD–001–1, proposing ATC/ ATC-related standards. Constellation timeline stated in Order No. 890.
TTC/AFC (Available Flowgate therefore proposes that the Commission 1023. We disagree with MISO’s
Capability) revisions, on its Web site on should, upon issuance of a Final Rule, contention that the Reliability Standards
February 15, 2007.328 require transmission providers to post are an inappropriate venue for
the information that the Commission addressing ATC comparability issues.
(a) Comments directs regarding these values, even if ATC raises both comparability and
1018. EPSA commends the work toward more consistency is not yet reliability issues, and it would be
Commission for recognizing the direct complete. Constellation believes that irresponsible to take action under FPA
connection between the MOD group of this will aid in ensuring that users section 206 to require consistency in
Reliability Standards and the initiative request and receive more reliable ATC calculations without considering
to reform Order No. 888 to address transmission service on a the reliability impact of those decisions.
existing opportunities to discriminate nondiscriminatory basis. Therefore, the Commission in Order No.
1020. Contrary to the majority of 890 provided direction to public
325 The NERC Report made recommendations for commenters that support Commission utilities, working through NERC and
greater consistency and greater clarity in the action regarding ATC issues, MISO NAESB, regarding development of the
calculation of ATC/AFC. The task force also states that a Reliability Standard is not ATC-related Reliability Standards and
recommended greater communication and
coordination of ATC/AFC information to ensure
the place to address perceived business practices, and we repeat that
that neighboring entities exchange relevant comparability issues. MISO states that direction here.
information. See NERC, Long-Term AFC/ATC Task NERC is responsible for Reliability
Force Final Report (2005) (NERC Report) at 2, c. Documentation of Total Transfer
Standards, but not for tariffs and
available at: fttp://www.nerc.com/pub/sys/all_updl/ Capability and Available Transfer
business practices that deal with market
mc/ltatf/LTATF_Final_Report_Revised.pdf. Capability Calculation Methodologies
326 The first SAR proceeding proposes changes to and equity issues.
(MOD–001–0)
the existing standards on ATC to, among other
things, further establish consistency in the
(b) Commission Determination 1024. The purpose of MOD–001–0 is
calculation of ATC and to increase the clarity of 1021. We agree with the many to promote the consistent and uniform
each transmission provider’s ATC calculation commenters that recognize the direct application of transfer capability
methodology. The second SAR proceeding proposes
certain changes to NERC’s existing CBM and TRM connection between the MOD group of calculations among transmission system
standards and calls for greater regional consistency Reliability Standards and available users. The Reliability Standard requires
and transparency in how CBM and TRM are treated transfer capability methodologies each regional reliability organization to
in transmission providers’ ATC calculations. addressed in Order No. 890, in which develop a regional TTC and ATC
327 Technical Conference regarding Preventing
Undue Discrimination and Preference in

we developed policies to lessen, if not methodology in conjunction with its
Transmission Service under RM05–25 et al. fully eliminate, opportunities to members and to post the most recent
(October 12, 2006). discriminate against competitive power version of its TTC and ATC
328 That posting preceded by one day the issuance

suppliers in access to the transmission methodologies on a Web site accessible
of Order No. 890. Therefore, the posted draft system. by NERC, the regional reliability
Standard MOD–001–1 does not reflect the
requirements of Order No. 890, but rather is guided
1022. We recognize the concerns organization, and transmission users.
by the NOPR issued in the OATT Reform and raised by EPSA and Constellation that 1025. In the NOPR, the Commission
Reliability Standards proceedings. opportunities for discrimination and identified MOD–001–0 as a fill-in-the-
blank standard that requires each to consider modifications of MOD–001– ATC components, and certain data
regional reliability organization to 0 through the Reliability Standards inputs and assumptions are consistent,
develop its respective methods for development process as discussed the three ATC calculation
determining TTC and ATC and to make below. methodologies will produce predictable
those methodologies available to others and sufficiently accurate, consistent,
iii. Provide a Framework for ATC, TTC
for review. The NOPR stated that the equivalent and replicable results. It is
Commission would not propose to and ETC Calculation therefore not necessary to require a
approve or remand MOD–001–0 until (a) Comments single industry-wide ATC calculation
the ERO submits additional information. 1029. APPA supports the methodology.
1026. Although the Commission did Commission’s proposal that NERC 1032. In addition, consistent with
not propose any action with regard to modify MOD–001–0 to, at a minimum, Order No. 890, we note that there is
MOD–001–0, it addressed a number of provide a framework for ATC, TTC and neither a definition of AFC/TFC (Total
concerns regarding the Reliability ETC calculation. Flowgate Capability) in the ERO’s
Standard, consistent with those glossary nor an existing Reliability
proposed in the OATT Reform NOPR. (b) Commission Determination Standard that discusses AFC. Consistent
The Commission proposed that this 1030. We continue to believe that with our approach to achieving
standard should: (1) At a minimum, MOD–001–0 should, at a minimum, consistency and transparency, we direct
provide a framework for ATC, TTC and provide a framework for ATC, TTC and the ERO to develop AFC/TFC
ETC calculation; (2) require disclosure ETC calculations. This framework definitions and requirements used to
of algorithms and processes used in should consider industry-wide identify a particular set of transmission
ATC calculation; (3) identify a detailed consistency of all ATC components and facilities as flowgates. We extend the
list of information to be exchanged certain data inputs and exchange, same requirements for industry-wide
among transmission providers for the modeling assumptions, calculation consistency of all AFC components and
purposes of ATC modeling; (4) include frequency, and coordination of data certain data inputs and exchange,
requirements that the assumptions used relevant for the calculation of ATC. modeling assumptions, calculation
in ATC and AFC calculations be Consistent with Order No. 890, we do frequency, and coordination of data
consistent with those used for planning not require a single computational relevant for the calculation of AFC as
expansion or operation of the Bulk- process for calculating ATC for several we stated above for ATC. However, we
Power System to the maximum extent reasons. First, it is not our intent to remind transmission providers that our
practicable; 329 (5) include a require transmission providers to incur regulations require the posting of ATC
requirement that applicable entities the expense of developing and adopting values associated with a particular path,
make available assumptions and a new one-size-fits-all software package not AFC values associated with a
contingencies underlying ATC and TTC to calculate ATC without proven flowgate. Accordingly, transmission
calculations; (6) address only ATC benefits. More importantly, we find that providers using an AFC methodology
while the TTC should be addressed the potential for discrimination and must convert flowgate (AFC) values into
under FAC–012–1; and (7) identify to decline in reliability level does not lie path (ATC) values for OASIS posting. In
whom MOD–001–0 standards apply, primarily in the choice of an ATC order to display consistent posting of
i.e., users, owners and operators of the calculation methodology, but rather in ATC and TTC values on OASIS, we
Bulk-Power System.330 We will discuss the consistent application of its direct the ERO to develop a
the comments and Commission components, and input and exchange Requirement in the Reliability Standard
conclusions for each of these data, along with modeling assumptions. for conversion of AFC into ATC values
modifications separately below. Consistent and transparent ATC for use by transmission providers that
calculation will provide equivalent currently apply flowgate methodology.
i. Comments 1033. We underscore Order No. 890’s
1027. APPA agrees with the results between regions and will
objective of greater consistency in ETC
Commission that MOD–001–0 in its therefore prevent transmission service
calculations. The Commission directs
current form is a fill-in-the-blank providers from overselling transfer
the ERO to develop a consistent
standard, is not sufficient in its current capability that can stress conditions on
approach for determining the amount of
form and should not be accepted for their own and adjacent systems, and
transfer capability a transmission
approval as a mandatory Reliability jeopardize reliability. In addition, we
provider may set aside for its native
Standard until the accompanying are especially concerned with the lack
load and other committed uses. We
regional procedures are submitted and of data exchange between neighboring
expect that the ERO will address ETC
approved. transmission service providers, which is
through the MOD–001–0 Reliability
a prerequisite for accurate calculation of
ii. Commission Determination Standard rather than through a separate
ATC.
1031. The Commission understands Reliability Standard. By using MOD–
1028. The Commission adopts the 001–0, the ETC calculation principles
NOPR proposal not to approve or that the ERO currently is developing
three ATC calculation methodologies can be adjusted to apply to each of the
remand MOD–001–0 until the ERO three ATC methodologies being
submits additional information. (contract or rating path ATC, network
ATC, and network AFC).331 If all of the developed by the ERO. In order to
Consistent with Order No. 890, and provide specific direction to public
comments received in response to the utilities and the ERO, we determine that
331 October 12, 2006 Technical Conference
NOPR, the Commission directs the ERO regarding Preventing Undue Discrimination and
Preference in Transmission Service under RM05–25 ATC, uses a simulator to look not at each path, but
329 NOPR at P 609. et al. These three methodologies are different at each transmission element (line, substation, etc.)
330 Id. at P 610. We note that our observation computational processes to determine a and run first contingency simulations to establish
regarding applicable entities here also applies to transmission system’s ATC. The first, contract path, ATC on a network basis, rather than a path basis.
MOD–002–0, MOD–003–0, MOD–004–0, MOD– examines TTC for every A-to-B path on the system The third method, network AFC, uses a simulator
005–0, MOD–008–0, MOD–009–0, MOD–011–0, in concert with all others, reduces ATC by path for to examine critical flowgates over a wider area, then
MOD–013–0, MOD–014–0, MOD–015–0, MOD– ETC, TRM and CBM, as appropriate, and produces requires a second step to convert AFC values to
016–0, MOD–024–0 and MOD–025–0. ATC for each path. The second method, network particular path ATC values.
ETC should be defined to include iv. Require Disclosure of Algorithms (b) Commission Determination
committed uses of the transmission and Processes Used in ATC Calculation 1039. The Commission adopts the
system, including: (1) Native load (a) Comments NOPR proposal and reiterates the
commitments (including network requirement in Order No. 890 that the
service); (2) grandfathered transmission 1036. APPA supports the ERO must revise the MOD Reliability
rights; (3) firm and non-firm point-to- Commission’s proposal that NERC Standards to require the exchange of
point reservations; (4) rollover rights modify MOD–001–0 to require data and coordination among
associated with long-term firm service documentation including mathematical transmission providers. We direct the
and (5) other uses identified through the algorithms, process flow diagrams, data ERO to modify MOD–001–0 to ensure
ERO process. ETC should not be used to inputs and identification of flowgates. that the following data, at a minimum,
set aside transfer capability for any type be exchanged among transmission
of planning or contingency reserve; providers for the purposes of ATC
these are to be addressed through CBM 1037. The Commission adopts the modeling: (1) Load levels; (2)
and TRM.332 In addition, in the short- proposal from the NOPR to direct the transmission planned and contingency
term ATC calculation, all reserved but ERO to modify Reliability Standard outages; (3) generation planned and
unused transfer capability (non- MOD–001–0 to require disclosure of the contingency outages; (4) base generation
algorithms and processes used in ATC dispatch; (5) existing transmission
scheduled) must be released as non-firm
calculation. In addition, consistent with reservations, including counterflows; (6)
ATC.
Order No. 890, the Commission believes ATC recalculation frequency and times
1034. We reiterate the finding in that further clarification is necessary and (7) source/sink modeling
Order No. 890 that including all regarding the ATC calculation algorithm identification.334 The Commission
requests for transmission service in ETC for firm and non-firm ATC.333 concludes that the exchange of such
is likely to overstate usage of the system Currently, the ERO has no specifications data is necessary to support the reforms
and understate ATC. Accordingly, we for calculating non-firm ATC. We find requiring consistency in the
find that reservations that have the same that the same potential for determination of ATC adopted in this
point of receipt (POR) (generator) but discrimination exists for non-firm Final Rule. As explained above,
different point of delivery (POD) (load), transmission service as for firm service, transmission providers are required to
for the same time frame, should not be and greater uniformity in both firm and coordinate the calculation of TTC/TFC
modeled in the ETC calculation non-firm ATC calculations will and ATC/AFC with others, and this
simultaneously if their combined substantially reduce the remaining requires a standard means of exchanging
reserved transmission capacity exceeds potential for undue discrimination. data.
the generator’s nameplate capacity at a Therefore, we direct the ERO to modify vi. Include Requirements That the
POR. This will prevent unrealistic use Reliability Standard MOD–001–0 to Assumptions Used in ATC and AFC
of transmission capacity associated with require disclosure of the algorithms and Calculations Should Be Consistent, to
power output from a generator processes used in ATC calculation, and the Maximum Extent Practicable, With
identified as a POR. One approach that also to implement the following Those Used for Planning the Expansion
could be used is examining historical principles for firm and non-firm ATC or Operation of the Bulk-Power System
patterns of actual reservation use during calculations: (1) For firm ATC
(a) Commission Determination
a particular season, month, or time of calculations, the transmission provider
shall account only for firm 1040. The Commission adopts the
day. NOPR’s proposal to require
commitments and (2) for non-firm ATC
1035. In summary, we direct the ERO calculations, the transmission provider transmission providers to use data and
to modify MOD–001–0 to provide a shall account for both firm and non-firm modeling assumptions for short- and
framework for ATC, TTC and ETC commitments, postbacks of redirected long-term ATC calculations that are
calculation that, consistent with the service, unscheduled service and consistent with those used for the
discussion above: (1) Requires industry- counterflows. planning of operations and system
wide consistency of all ATC expansion, to the maximum extent
components and certain data inputs and v. Identify a Detailed List of Information practicable. This includes, for example:
To Be Exchanged Among Transmission (1) Load levels; (2) generation dispatch;
exchange, modeling assumptions,
Providers for the Purposes of ATC (3) transmission and generation
calculation frequency, and coordination
Modeling facilities maintenance schedules; (4)
of data relevant for the calculation of
ATC; (2) provides predictable and (a) Comments contingency outages; (5) topology; (6)
sufficiently accurate, consistent, transmission reservations; (7)
1038. APPA supports the assumptions regarding transmission and
equivalent, and replicable ATC
Commission’s proposal that NERC generation facility additions and
calculations regardless of the
modify MOD–001–0 to require retirements and (8) counterflows, which
methodology used by the region; (3) applicable entities to identify a detailed must be the same in the models used in
provides the definition of AFC and list of information to be shared. the transmission operational and
method for its conversion to ATC; (4)
planning studies performed for the
lays out clear instructions on how ETC 333 The NERC ATC definition does not
transmission providers’ native load. We
should be defined and (5) identifies to differentiate firm and non-firm ATC from the find that requiring consistency in the
whom MOD–001–0 Reliability following high level generic ATC definition: A
data and modeling assumptions used for
Standards apply, i.e., users, owners and measure of the transfer capability remaining in the
physical transmission network for further ATC calculation will remedy the
operators of the Bulk-Power System. commercial activity over and above already potential for undue discrimination by
committed uses. It is defined as Total Transfer eliminating discretion and ensuring
Capability less existing transmission commitments
(including retail customer service), less a Capacity comparability in the manner in which a
332 TRM also includes such things as loop flow
Benefit Margin, less a Transmission Reliability
and parallel path flow. Margin. 334 NOPR at P 169.
transmission provider operates and transmission outages, load forecasts, (beyond the operating horizon). In
plans its system to serve native load, interchange schedules, transmission addition, a transmission provider must
and the manner in which it calculates reservations, facility ratings and other include a process flow diagram that
ATC for service to third parties. necessary data. This process must also describes the various steps that it takes
1041. We clarify that we require consider whether ATC should be in performing the ATC calculation.
consistent use of assumptions calculated more frequently for
underlying operational planning for viii. Address Only ATC While TTC
constrained facilities. Should Be Addressed Under
short-term ATC and expansion planning 1045. In conclusion, we direct the
for long-term ATC calculation. We also FAC–012–1
ERO to modify MOD–001–0 to require
clarify that there must be a consistent that: (1) Assumptions used for short- (a) Comments
basis for or approach to determining term ATC calculations be consistent 1049. APPA concurs with the NOPR’s
load levels in each of these sets of with those used for operation planning proposal that TTC should be
calculations. For example, one approach to the maximum extent practicable; (2) standardized under FAC–012–1, and
may be for transmission providers to assumptions used for long-term ATC that there appears to be little or no
calculate load levels using an on- and calculations be consistent with those distinction between the definitions for
off-peak model for each month when used for system planning to the TTC (MOD–001–0) and TC (FAC–012–
evaluating yearly service requests and maximum extent practicable and (3) 1). APPA anticipates that this
calculating yearly ATC. The same (peak- ATC be updated by all transmission distinction will either be clarified or
and off-peak) or alternative approaches providers on a consistent time interval. eliminated through ongoing Reliability
may be used for monthly, weekly, daily Standards development activity.
and hourly ATC calculations. vii. Include a Requirement That 1050. Conversely, MidAmerican notes
Regardless of the ultimate choice, it is Applicable Entities Make Available that the transfer capability covered by
imperative that all transmission Assumptions and Contingencies FAC–012–1 may not relate to the TTC
providers use the same approach to Underlying ATC and TTC Calculations that is the subject of the MOD–001–0
modeling load levels to eliminate undue (a) Comments standard. MidAmerican opines that the
discrimination and enable the purpose of the FAC–012–1 standard is
meaningful exchange of data among 1046. APPA supports the
Commission’s proposal that NERC to ensure that each reliability
transmission providers. Accordingly, we coordinator and planning authority
direct the ERO to develop consistent modify MOD–001–0 to include a
requirement that applicable entities documents the methodology used to
requirements for modeling load levels in develop inter- and intra-regional
MOD–001–0. make available a comprehensive list of
assumptions and contingencies transfer capabilities used in the reliable
1042. With respect to modeling of planning and operation of the Bulk-
generation dispatch, we direct the ERO underlying ATC and TTC calculations.
Electric System. MidAmerican further
to develop requirements in MOD–001– (b) Commission Determination details that transfer capabilities that are
0 specifying how transmission providers covered by FAC–012–1 could be used
should determine which generators 1047. We adopt the NOPR’s proposal
that this Reliability Standard should by a reliability coordinator to operate
should be modeled in service, including the system in a temporary situation or
guidance on how independent include a requirement that applicable
entities make available a comprehensive by the planning authority as the basis
generation should be considered. for a sensitivity case. It adds that in
Accordingly, we direct the ERO to list of assumptions and contingencies
underlying ATC/AFC and TTC/TFC neither of these cases would these
revise Reliability Standard MOD–001–0 transfer capabilities necessarily be
by specifying that base generation calculations. While we require the
submission of contingency files under included in calculations for ATC that
dispatch will model: (1) All designated
MOD–010–0, here we only direct the would be used for offering transmission
network resources and other resources
ERO to consider development of a capacity for sale.
that are committed to or have the legal
obligation to run, as they are expected requirement that the transmission (b) Commission Determination
to run and (2) all uncommitted service provider declare what type of
1051. We adopt the NOPR proposal
resources that are deliverable within the contingencies it uses for specific
and require that TTC be addressed
control area, economically dispatched calculations of ATC/AFC and TTC/TFC,
under the Reliability Standard that deals
as necessary to meet balancing and release the contingency files upon
with transfer capability such as FAC–
requirements. request if not submitted with the data
012–1, rather than MOD–001–0. The
1043. Regarding transmission filed with the ERO in compliance with
FAC series of standards contain the
reservations modeling, we direct the MOD–010–0.
Reliability Standards that form the
ERO to develop requirements in 1048. In order to increase the
technical and procedural basis for
Reliability Standard MOD–001–0 that transparency of ATC calculations, we
calculating transfer capabilities. FAC–
specify: (1) A consistent approach on adopt the NOPR’s proposal and direct
008–1 provides the basis for
how to simulate reservations from the ERO to develop in MOD–001–0 a
determining the thermal ratings of
points of receipt to points of delivery requirement that each transmission
facilities while FAC–009–1 provides the
when sources and sinks are unknown service provider provide on OASIS its
basis for communicating those ratings.
and (2) how to model existing OATT Attachment C, in which Order
FAC–010–1 and FAC–011–1 provide the
reservations. No. 890 requires transmission providers
system operating limits methodologies
1044. Consistent with Order No. 890, to include a detailed description of the
for the planning and operational
the Commission directs the ERO to specific mathematical algorithm the
horizon respectively and FAC–014
modify Reliability Standard MOD–001– transmission provider uses to calculate
provides for the communication of those
0 to require ATC to be updated by all both firm and non-firm ATC for various
ratings.335
transmission providers on a consistent time frames such as: (1) The scheduling
time interval and in a manner that horizon (same day and real-time), (2) 335 FAC–010, FAC–011, and FAC–014 are
closely reflects the actual topology of operating horizon (day ahead and pre- addressed in Docket No. RM07–03 because they
the system, e.g., generation and schedule) and (3) planning horizon were submitted later than the original 107
1052. The Commission directs the calculation of transfer capabilities will technical assessments will be
ERO, through the Reliability Standards prevent over- and under-estimation of diminished if the collaborative efforts
development process, to modify FAC– the total transfer capability available for used for the past 50 years of
012–1 and any other appropriate sale. We agree with APPA that this interconnected operations are displaced
Reliability Standards to assure distinction should either be clarified or due to pressures to identify a single
consistency in the determination of eliminated through the ongoing entity or class of entities with direct
TTC/TFC for services provided under Reliability Standards development compliance responsibilities for regional
the pro forma OATT, and requires that process, and therefore direct the ERO to modeling standards. APPA states that
those processes be the same as those modify MOD–001–0 to address TTC identifying all users, owners and
used in operation and planning for under transfer capability-related operators as responsible entities does
native load and reliability assessment standards such as the FAC group of not answer the question either. APPA
studies. Changes to the process of Reliability Standards. expresses its intention that it will work
calculating TTC are appropriate if with NERC and with other stakeholders
implementation is coordinated with ix. Identify the Entities To Whom the to ensure that this industry-based
revisions to the other applicable MOD Standards Apply expertise is maintained and enhanced,
operating or planning standards. We (a) Comments while ensuring that responsible entities
acknowledge that reliability regions are identified in this and other NERC
1054. APPA agrees in part with the
have historically calculated transfer standards.
Commission’s conclusion that ‘‘NERC
capability using different approaches,
should identify the applicable entities (b) Commission Determination
and we agree that regional differences
in terms of users, owners and operators 1056. APPA is suggesting that
should be respected.336 However, as
of the Bulk-Power Systems.’’ 339 APPA, respective regional organizations, their
already discussed above regarding ATC,
however, is concerned that this technical staff, and committees of users,
TTC requirements will be determined in
approach may confuse rather than owners and operators of the Bulk-Power
the ERO Reliability Standards
clarify compliance responsibilities. System be charged with developing the
development process, and any request
According to APPA, a regional methodologies. We disagree. These
for a regional difference from the
Reliability Standards must take place organization in conjunction with Reliability Standards should be
through the ERO process. entities that plan, own, operate (and developed through the Commission-
1053. We disagree with use) transmission facilities within each approved Reliability Standards
MidAmerican’s opinion that transfer region must be involved in the development process which will
capabilities that are addressed by FAC– development of any regional TTC and identify the entities that should
012–1 are necessarily different from ATC methodology. In this context, implement the Reliability Standards, the
TTC used for ATC calculation. The APPA views the ‘‘regional reliability Requirements necessary to achieve the
NERC glossary defines transfer organization’’ as the technical arm of the goals identified in Order No. 890, and
capability (TC) 337 as essentially reliability region, made up of the the Measures necessary to monitor
identical to TTC.338 We believe that various committees whose members are compliance.
modeling principles for simulating users, owners and operators of the Bulk- 1057. The Commission agrees with
power transfers and determination of Power System, along with support from APPA that the collaborative efforts and
transfer capabilities should be the the regional reliability organization knowledge developed over decades of
subject of a single standard. Those staff. Further, APPA notes that interconnected operation should not be
principles should be the same regardless ultimately, it is these core users, owners wasted. We do not believe that will
of whether transfer capability is used for and operators of the Bulk-Power System happen through the Reliability
the purpose of operations, planning or that are responsible for the development Standards development process and that
offering for sale. By modeling principles of and adherence to the ATC all of the applicable entities will have
we refer to the way transfers are methodology, and that the regional significant roles to play in achieving the
simulated and the type of analysis that reliability organization, as an goal the Commission has set out in
should be performed, such as steady- organization, is responsible for ensuring Order No. 890. Therefore, we adopt the
state, dynamic stability or voltage that the methodology is developed proposal in the NOPR and direct the
stability. We are certain that consistent (under R1) and publicly posted (under ERO to modify MOD–001–0 to reflect
R2). the users, owners and operators to
Reliability Standards and we did not have sufficient 1055. In addition, APPA states that which the Reliability Standard will
time to allow appropriate review and comment. under the statutory framework apply.
336 For example, WECC has a documented open
established in FPA section 215, as
process for establishing TTC for the Western
interpreted by the Commission in Order x. Summary of Commission
Interconnection. Determination
337 Transfer Capability is defined in the NERC No. 672, it is clear that the compliance
glossary as ‘‘[t]he measure of the ability of monitor within each region is the 1058. Accordingly, the Commission
interconnected electric systems to move or transfer Regional Entity, and the Regional Entity neither accepts nor remands MOD–001–
power in a reliable manner from one area to another 0 until the ERO submits additional
over all transmission lines (or paths) between those
is not a user, owner or operator of the
areas under specified system conditions. The units Bulk-Power System. APPA notes that information. Although the Commission
of transfer capability are in terms of electric power, while regional delegation agreements does not propose any action with regard
generally expressed in megawatts (MW). The may be used to impose certain to MOD–001–0, we address above a
transfer capability from ‘Area A’ to ‘Area B’ is not number of concerns regarding the
generally equal to the transfer capability from ‘Area
reliability compliance functions upon
B’ to ‘Area A.’ ’’ NERC Glossary at 18. Regional Entities and their affiliates, no Reliability Standard, consistent with
338 Total Transfer Capability is defined in the Regional Entity should be charged with those set forth in Order No. 890. We
NERC glossary as ‘‘[t]he amount of electric power enforcing compliance against itself. direct the ERO to develop modifications
that can be moved or transferred reliably from one Ultimately, APPA is concerned that the to the Reliability Standard through the
area to another area of the interconnected
transmission systems by way of all transmission quality of regional modeling and Reliability Standards development
lines (or paths) between those areas under specified process that: (1) Provide a framework for
system conditions.’’ Id. 339 NOPR at P 610. ATC, TTC and ETC calculation,
developing industry-wide consistency accompanying regional procedures are in information for all transmission
of all ATC components; (2) require submitted and approved. customers (LSE, generator owner and
disclosure of algorithms, for both firm purchasing-selling entity) in the MOD–
and non-firm ATC and processes used 001–0 Standard. APPA argues that, as a
in the ATC calculation; (3) identify a 1062. The Commission adopts the result, MOD–003–0 may be redundant
detailed list of information to be NOPR proposal not to approve or and should be eliminated.
exchanged among transmission remand MOD–002–0 until the ERO
submits additional information. Because ii. Commission Determination
providers for the purposes of ATC
modeling; (4) include a requirement that the regional procedures have not been 1066. The Commission adopts the
the assumptions used in ATC and AFC submitted to the Commission, it is not NOPR proposal not to approve or
calculations should be consistent with possible to determine at this time remand MOD–003–0 until the ERO
those used for planning the expansion whether MOD–002–0 satisfies the submits additional information. Because
or operation of the Bulk-Power System statutory requirement that a proposed the regional procedures have not been
to the maximum extent practicable; (5) Reliability Standard be ‘‘just, submitted to the Commission, it is not
include a requirement that ATC be reasonable, not unduly discriminatory possible to determine at this time
updated by all transmission providers or preferential, and in the public whether MOD–003–0 satisfies the
on a consistent time interval; (6) include interest.’’ Accordingly, the Commission statutory requirement that a proposed
a requirement that applicable entities neither approves nor remands this Reliability Standard be ‘‘just,
make available assumptions and Reliability Standard until the regional reasonable, not unduly discriminatory
contingencies underlying ATC and TTC procedures are submitted. In the or preferential, and in the public
calculations; (7) address only ATC/AFC interim, compliance with MOD–002–0 interest.’’ Accordingly, the Commission
while TTC/TFC should be addressed should continue on a voluntary basis, neither accepts nor remands this
under transfer capability standards such and the Commission considers Reliability Standard until the regional
as FAC–012–1 and (8) identify the compliance with the Reliability procedures are submitted. In the
applicable entities in terms of users, Standard to be a matter of good utility interim, compliance with MOD–003–0
owners and operators of the Bulk-Power practice. should continue on a voluntary basis,
System. and the Commission considers
e. Regional Procedure for Input on Total compliance with the Reliability
d. Review of Transmission Service Transfer Capability and Available Standard to be a matter of good utility
Provider Total Transfer Capability and Transfer Capability Methodologies and practice.
Available Transfer Capability Values (MOD–003–0) 1067. We direct the ERO to consider
Calculations and Results (MOD–002–0) 1063. MOD–003–0 requires each APPA’s suggestion that MOD–003–0
regional reliability organization to: (1) may be redundant and should be
1059. MOD–002–0 concerns the Develop and document a procedure on eliminated if the ERO develops a
review of transmission service how a transmission user can present its modification to the MOD–001–0
providers’ compliance with the regional concerns or questions regarding TTC Reliability Standard through the
methodologies for calculating TTC and and ATC calculations including the TTC Reliability Standards development
ATC. It requires that the regional and ATC values, and how these process that includes reporting
reliability organization: (1) Develop and concerns will be addressed and (2) make requirements.
implement a procedure to periodically its procedure for receiving and
review and ensure that the TTC and f. Documentation of Regional Reliability
addressing these concerns available to Organization Capacity Benefit Margin
ATC calculations and resulting values other regional reliability organizations,
developed by transmission service Methodologies (MOD–004–0)
NERC and transmission users on its
providers comply with the regional TTC Web site. 1068. MOD–004–0 requires each
and ATC methodology and applicable 1064. In the NOPR, the Commission regional reliability organization to: (1)
regional criteria; (2) document the identified MOD–003–0 as a fill-in-the- Develop and document a regional
results of its periodic review and (3) blank standard that requires each CBM 340 methodology in conjunction
provide the results of its most current regional reliability organization to with its members and (2) post the most
reviews to NERC upon request. develop and document a procedure on recent version of its CBM methodology
1060. In the NOPR, the Commission how a transmission user can present its on a Web site accessible by NERC,
identified MOD–002–0 as a fill-in-the- concerns regarding the TTC and ATC regional reliability organizations and
blank standard that requires each methodologies of a transmission service transmission users.
regional reliability organization to provider. The NOPR stated that the 1069. In the NOPR, the Commission
develop and implement a procedure to Commission would not propose to identified MOD–004–0 as a fill-in-the-
periodically review and ensure that a approve or remand MOD–003–0 until blank standard that requires each
transmission service provider’s TTC and the ERO submits additional information. regional reliability organization to
ATC calculations comply with regional develop and document a regional CBM
TTC and ATC methodologies and i. Comments methodology. The NOPR stated that
criteria. The NOPR stated that the 1065. APPA agrees that MOD–003–0 because the regional CBM
Commission would not propose to is a fill-in-the-blank standard. It notes methodologies had not been submitted,
approve or remand MOD–002–0 until that it is not sufficient in its current the Commission would not propose to
the ERO submits additional information. form and should not be approved as a
340 The NERC glossary defines ‘‘capacity benefit
mandatory Reliability Standard until the
i. Comments margin’’ or ‘‘CBM’’ as the amount of firm
accompanying regional procedures are transmission transfer capability preserved by a
1061. APPA agrees that MOD–002–0 submitted and approved. In addition, transmission provider for load serving entities
is a fill-in-the-blank standard. It is not APPA hopes that if NERC develops the whose loads are located on the transmission service
provider’s system, to enable access by the load
sufficient in its current form and should MOD–001–0 Reliability Standard serving entity to generation from interconnected
not be approved as a mandatory properly, it will include a reporting systems to meet generation reliability requirements.
Reliability Standard until the procedure for addressing shortcomings NERC Glossary at 2.
approve or remand MOD–004–0 until related to CBM, including this standard market, alleviating the concern of
the ERO submits the additional and the other CBM-related standards. possible double-counting. MidAmerican
information. EEI believes that, similar to the peer also supports the Commission’s
1070. Although not proposing any review processes of the planning studies conclusion that double-counting would
action, the Commission nonetheless carried out under the TPL standards, be inappropriate, although
indicated that MOD–004–0 could be industry participants are best suited to MidAmerican states that it is not aware
improved by: (1) Providing more developing the totality of assumptions, of any cases of double-counting of
specific requirements on how CBM system conditions and other input margins.
should be determined and allocated to variables that support the calculations. 1076. TAPS notes the significant
interfaces and (2) including a provision 1074. EEI notes that, with respect to potential for abuse 343 that could result
ensuring that CBM, TRM and ETC the Commission’s particular concern from the current flexibility afforded
cannot be used for the same purpose, about criteria in determining resources transmission providers in the
such as the loss of an identical and loads used in the CBM calculation of CBM and TRM, and
generation unit. Further, the methodology, NERC’s ‘‘ATC Definitions proposes innovative approaches 344 to
Commission expressed concern that the and Determination’’ 342 document take CBM and (to the extent it is
Reliability Standard may unduly impact clearly delineates the purpose and intended to cover transmission required
competition because of the lack of intent of the calculation of CBM and for reserve sharing) TRM out of the
consistent criteria and clarity with TRM. EEI states that CBM is intended to hands of individual transmission
regard to the entity on whose behalf provide generation reliability, and TRM providers, and to therefore reduce the
CBM has been set aside. This lack of is intended to provide transmission opportunity for abuse.
consistent criteria has the potential to reliability. EEI believes that, to the
result in the transmission provider’s extent capacity capable of supplying
setting aside capacity that it might not CBM is located in the vicinity of the 1077. The Commission adopts the
otherwise need to set aside, thus designated facility experiencing an NOPR proposal not to approve or
increasing costs for native load outage, transmission may or may not be remand MOD–004–0 until the ERO
customers and blocking third party uses available under the native load submits additional information. Because
of the transmission system. reservation normally used for the the regional procedures have not been
facility. Therefore, EEI argues, CBM may submitted to the Commission, it is not
i. Comments possible to determine at this time
be needed on an interface where
1071. APPA agrees with the capacity is available for use as CBM, whether MOD–004–0 satisfies the
Commission that MOD–004–0 should and not allowing all generation to be statutory requirement that a proposed
not be approved as a mandatory considered in this manner may unduly Reliability Standard be ‘‘just,
Reliability Standard until the relevant increase the generation reserve reasonable, not unduly discriminatory
regional procedures are submitted and requirement within the transmission or preferential, and in the public
approved.341 provider’s system. interest.’’ Accordingly, the Commission
1072. FirstEnergy states that 1075. EEI agrees with the neither accepts nor remands this
transmission capacity margins such as Commission’s concern about double- Reliability Standard until the regional
CBM and TRM are vitally important to counting TRM for those transmission procedures are submitted. In the
the reliability of the system, and any providers who do not opt to use CBM. interim, compliance with MOD–004–0
methodology that would unduly limit However, EEI argues that for should continue on a voluntary basis,
these margins could create a danger of transmission providers who do opt to and the Commission considers
limiting transmission capacity over use CBM, it may be appropriate in some compliance with the Reliability
interconnected facilities that would circumstances to use the same Standard to be a matter of good utility
limit the ability of balancing authorities generation unit outage to determine the practice. Consistent with Order No. 890
and others to obtain generation reserves impact on both generation and and comments received in response to
needed from the grid during transmission reliability because the the NOPR, the Commission directs the
contingency events. In contrast, TAPS impacts are different. EEI cautions that ERO, through the Reliability Standards
questions how TRM or, especially, artificially restricting such use is not development process, to modify MOD–
CBM, can be viewed as Reliability appropriate, especially before NERC’s 004–0 as discussed below.
Standards if they are optional for the development of TRM and CBM 1078. We agree with FirstEnergy that
transmission provider. standards and their presentation to CBM is important for system reliability
1073. MidAmerican supports greater FERC through the Reliability Standards by allowing the LSEs to meet their
uniformity of CBM definitions and development process. EEI recommends historical, state, RTO or regional
calculations and states that the revised that the Commission encourage generation reliability criteria
standard and/or new standards should transmission providers to make CBM requirement such as reserve margin, loss
support transparency and uniformity by and TRM capacity available to of load probability, loss of largest units,
encouraging increased availability of wholesale markets for purchase on a etc. We agree with EEI and
information and consistent data input non-firm basis, because doing so would MidAmerican that transparency of the
and modeling assumptions. EEI ensure that both CBM and TRM capacity studies supporting CBM determination
emphasizes that additional data and are available to the transmission will reduce the opportunity for
information-sharing requirements provider during system emergencies, as transmission service providers to
would improve the transparency of intended. EEI notes that at other times overestimate the amount of CBM and
various calculations and assumptions the transfer capability associated with misuse transfer capability. We therefore
TRM and CBM would be available to the direct the ERO to develop Requirements
341 APPA notes that it has expressed its own
concerns with CBM calculations and set-asides in 342 NERC, Available Transfer Capability 343 Documented by NERC’s April 14, 2005 Long-
its August 7, 2006 Initial Comments filed in Docket Definitions and Determination—A Framework for Term AFC/ATC Task Force Final Report.
No. RM05–25–000, at 31–55. APPA is hopeful these Determining Available Transfer Capabilities of the 344 TAPS refers the Commission to its August 7,
concerns can be addressed through NERC’s Interconnected Transmission Networks for a 2006 comments in Docket No. RM05–25–000 at 21–
Reliability Standards development process. Commercially Viable Electricity Market (June 1996). 24.
regarding transparency of the generation ERO to modify its standard in order to setting aside CBM and TRM for the
planning studies used to determine prevent setting aside transfer capability same purposes; (4) modify the standard
CBM values. We also clarify that CBM for the same purposes. by adding LSE as an applicable entity
should only be set aside upon request of 1081. We share TAPS’s concern that and (5) coordinate with NAESB
any LSE within a balancing area to meet there is a significant potential for abuse business practice standards.
its verifiable historical, state, RTO or as a result of the current flexibility 1084. We direct the ERO to consider
regional generation reliability criteria afforded to transmission providers in APPA’s suggestion that MOD–004–0
requirement such as reserve margin, loss the calculation of both CBM and TRM. may be redundant and should be
of load probability, loss of largest units, In response to TAPS’s concern, we eliminated if the ERO develops a
etc. We expect verification of the CBM clarify that in accordance with the modification to the MOD–002–0
values to be part of the Requirements OATT Reform Final Rule and the ERO Reliability Standard that includes
with appropriate Measures and Levels CBM definition, each LSE has the right reporting requirements
of Non-Compliance. to request CBM be set aside and use it
1079. We continue to believe this to meet its verifiable historical, state, g. Procedure for Verifying Capacity
Reliability Standard should be modified RTO or regional generation reliability Benefit Margin Values (MOD–005–1)
to include a provision ensuring that criteria requirement such as reserve 1085. MOD–005–1 specifies the
CBM, TRM and ETC cannot be used for margin, loss of load probability, loss of requirements regarding the periodic
the same purpose, such as loss of the largest units, etc. As such, the LSEs that review of a transmission service
identical generating unit. In order to request CBM be set aside must be provider’s adherence to the regional
limit misuse of transfer capability set identified as applicable entities with reliability organization’s CBM
aside as CBM, we direct the ERO to identified Requirements, including methodology. It requires each regional
provide more specific requirements for Requirements on generation studies to reliability organization to: (1) Develop
how CBM should be determined and verify the set aside, Measures and and implement a procedure to review at
allocated across transmission paths or Levels of Non-Compliance. We direct least annually the CBM calculations and
flowgates. As we stated in Order No. the ERO to modify the Reliability the resulting values determined by
890, we do not mandate a particular Standard accordingly. member transmission service providers;
methodology for allocating CBM to 1082. We agree with TAPS that there (2) document its CBM review procedure
paths or flowgates. For example, one is a need for clearer requirements in the and (3) make the results of the most
approach could be based on the location standard regarding to whom and how to current CBM review available to NERC
of the outside resources or spot market submit a request for CBM set-aside, and upon request.
hubs that a LSE has historically relied what the transmission service provider 1086. In the NOPR, the Commission
on during emergencies resulting from an should do if the sum of all CBM identified MOD–005–0 as a fill-in-the-
energy deficiency, but we agree with EEI requirements exceeds the amount of blank standard that requires each
that flexible rules should be allowed to available transfer capability. We direct regional reliability organization to
prevent unnecessary increase of the the ERO to address the reliability develop and implement a procedure to
generation reserve requirement within aspects in the Reliability Standards review CBM calculations and the
the transmission provider’s system. development process and explore with resulting values and to make the
Therefore, we support flexibility, but NAESB whether business practices documentation of the results of the CBM
expect that the ERO, using its Reliability would be required. review available to NERC and others.
Standards development process, will 1083. Accordingly, the Commission The NOPR stated that because the
adequately approach these complex neither accepts nor remands MOD–004– regional procedures had not been
technical issues and propose a new 0 until the ERO submits additional submitted, the Commission would not
version of MOD–004–0 that addresses information. In the interim, compliance propose to approve or remand MOD–
the methods for CBM determination and with MOD–004–0 should continue on a 005–0 until the ERO submits the
allocation on paths that will reduce voluntary basis, and the Commission additional information.
reliability and discrimination concerns. considers compliance with the
1080. In response to TAPS’s question Reliability Standard to be a matter of i. Comments
asking how CBM can be viewed as a good utility practice. Although the 1087. APPA agrees that MOD–005–0
Reliability Standard if it is optional to Commission did not propose any action is a fill-in-the blank standard, and that
the transmission provider, our with regard to MOD–004–0, it addressed in its current form, it is not sufficient
understanding is that transmission above a number of concerns regarding and should not be accepted for approval
providers that have opted not to use the Reliability Standard, consistent with as a mandatory Reliability Standard
CBM have instead set aside those set forth in Order No. 890. until the necessary regional procedures
transmission margin (needed to bring in Therefore, we direct the ERO to develop have been submitted and approved.
outside power to meet generation modifications to the Reliability APPA suggests that NERC modify
reliability criteria) either through ETC or Standard through the Reliability MOD–006–0, so that MOD–004–0 and
TRM. CBM is not the only way to Standards development process to: (1) MOD–005–0 could be eliminated.
reserve transmission capacity for a Clarify that CBM shall be set aside upon
margin. However, if the Reliability request of any LSE within a balancing ii. Commission Determination
Standard is not clear regarding the area to meet its verifiable historical, 1088. The Commission adopts the
method of calculating transmission state, RTO or regional generation NOPR proposal not to approve or
margins, it may cause double-counting reliability criteria; (2) develop remand MOD–005–0 until the ERO
of transmission margins and reduction requirements regarding transparency of submits additional information. Because
of ATC. As we stated in Order No. 890, the generation planning studies used to the regional procedures have not been
we find that clear specification of the determine CBM value; (3) modify the submitted to the Commission, it is not
permitted purposes for which entities current Requirements to make clear the possible to determine at this time
may reserve CBM and TRM will process for how CBM is allocated across whether MOD–005–0 satisfies the
virtually eliminate double-counting of transmission paths or flowgates; (3) statutory requirement that a proposed
TRM and CBM. Therefore, we direct the modify its standard in order to prevent Reliability Standard be ‘‘just,
reasonable, not unduly discriminatory with the Commission’s proposed sufficient generation does not mean that
or preferential, and in the public directives 345 that the standard should there is sufficient transmission capacity
interest.’’ Accordingly, the Commission address the use of CBM and TRM for the to deliver the energy to the LSE. WEPCO
neither accepts nor remands this same purpose. However, APPA believes states that the LSE may be remote from
Reliability Standard until the regional that the specificity of the Commission’s the bulk of the balancing authority, so
procedures are submitted. In the proposed directives to NERC, if there may be occasions when a LSE that
interim, compliance with MOD–005–0 implemented, would undermine NERC’s has sufficient generation resources
should continue on a voluntary basis, role as the approved ERO with the within its balancing authority to meet
and the Commission considers technical expertise to develop and the balancing Reliability Standards may
compliance with the Reliability revise standards for the Commission’s still need to reserve capacity for CBM.
Standard to be a matter of good utility subsequent review. APPA therefore In addition, EEI argues that the
practice. suggests that the Commission in its Commission’s viewpoint does not take
1089. As to APPA’s comment on Final Rule make clear to NERC its into account the availability of these
incorporating MOD–004 and MOD–005 concerns about MOD–006–0, but then resources unless they are under contract
into MOD–006, we direct the ERO to let NERC address those concerns with the LSE to provide this service. EEI
consider those comments through the through its Reliability Standard contends that the implication of this
Reliability Standards development development process. suggestion is to unduly restrict the
process. 1094. Regarding the Commission’s sources of generation capacity available
proposal that MOD–006–0 R1.2 be for CBM during times of generation
h. Procedure for Use of Capacity Benefit
modified ‘‘so that concurrent occurrence shortage, which results in the LSE’s
Margin Values (MOD–006–0)
of transmission constraints and a being captive to local generation that is
1090. The purpose of MOD–006–0 is generation deficiency is not a available and does not allow access to
to promote the consistent and uniform requirement for CBM usage,’’ WEPCO the market outside of the LSE’s
use of transmission CBM calculations asserts that the Commission is balancing authority. Additionally, EEI
among transmission system users. misinterpreting CBM. WEPCO states cautions that this action may require the
MOD–006–0 requires that each that if there is no transmission LSE to develop contractual agreements
transmission service provider document constraint then there is no need to use with local generation and thus increase
its procedure for the scheduling of CBM. In that case, transmission capacity costs to the LSE’s rate payers.
energy against a CBM reservation and exists for a LSE to import energy. If 1097. Given the strong direction on
make the procedure available on a Web there is a transmission constraint, CBM CBM issues in the OATT Reform NOPR,
site accessible by the regional reliability reserves transmission capacity that the TAPS assumes that the Commission
organization, NERC and transmission LSE can use to import energy for would not be approving the Version 0
users. reliability needs. standards on these competitively crucial
1091. In the NOPR, the Commission 1095. EEI points out that the explicit issues, but would continue to address
proposed to approve Reliability intention for CBM is that it be used only them forcefully in the OATT Reform
Standard MOD–006–0 as mandatory and during conditions where there are proceeding. TAPS notes that, although
enforceable. In addition, the emergency generation deficiencies. that is the course largely adopted by the
Commission proposed to direct NERC to However, EEI emphasizes that the NOPR in this proceeding, the NOPR 346
submit a modification to MOD–006–0 Commission’s recommendation does not proposes to approve MOD–006–0 and
that: (1) Includes a provision that will consider that the LSE’s supply and MOD–007–0, with directions to improve
ensure that CBM and TRM are not used demand balance varies season to season, these standards. TAPS notes that such
for the same purpose; (2) modifies over time, and with supply and demand action is inconsistent with the
Requirement R1.2 so that concurrent uncertainties. EEI says that the Commission’s general approach to ATC/
occurrence of generation deficiency and development of CBM quantities must be TTC/TRM/CBM standards in this docket
transmission constraints is not a carried out in a manner that sets aside and the OATT Reform NOPR. TAPS
required condition for CBM usage; (3) transmission capability for forecasted further states that, given the absence of
modifies Requirement R1.2 to define conditions and uncertainties much like clear access of non-transmission owner
‘‘generation deficiency’’ based on a the native load reservations necessary LSEs to CBM, the proposed expansion
specific energy emergency alert level for serving reasonably-forecasted native of MOD–007–0 to include such LSEs in
and (4) expands the applicability load. An argument may be made that the NOPR 347 seems bizarre.
section to include the entities that during a period of time when a LSE’s
actually use CBM, such as LSEs. expected reserves are substantially ii. Commission Determination
1092. In addition, the Commission greater than its targeted reserves, the 1098. The Commission adopts the
proposed that NERC should clarify the need for CBM set-aside decreases. NOPR proposal to approve MOD–006–0
requirements to address when and how However, should the LSE foresee that as mandatory and enforceable.
CBM can be used to reduce transmission this ‘‘excess’’ would occur substantially Consistent with Order No. 890 and
provider discretion with regard to CBM in the future, a reduction in CBM would comments received in response to the
usage. The Commission provided not be warranted since substantial NOPR, the Commission directs the ERO
guidance expressing its belief that CBM uncertainties still exist. to modify MOD–006–0 as discussed
should be used only when the LSE’s 1096. Additionally, regarding the below.
local generation capacity is insufficient Commission’s proposal that a LSE that 1099. Consistent with the views of
to meet balancing Reliability Standards, ‘‘has sufficient generation resources many commenters, we adopt the NOPR
and that CBM should have a zero value within its balancing authority to meet proposal that requires a provision that
in the calculation of non-firm ATC. the balancing Reliability Standards, will ensure that CBM and TRM are not
should not need to preserve capacity for used for the same purpose. As discussed
i. Comments CBM at all,’’ WEPCO argues that just under MOD–004–0 concerning the
1093. APPA supports the because the balancing authority has
Commission’s proposal to approve 346 Id. at P 642, 648.
MOD–006–0. Moreover, APPA agrees 345 NOPR at P 642. 347 Id. at P 647–48.
reservation of transfer capacity, we existing transmission operating and 1106. The Commission approves
believe that if the Reliability Standard is transmission planning Reliability MOD–006–0 as mandatory and
not clear regarding the conditions Standards. There is an explicit enforceable. In addition, the
specifying both the reservation and the requirement in the transmission Commission directs the ERO to develop
use of CBM, it may cause double- operating standards that generation a modification to Reliability Standard
counting. Such double-counting will reserves must be deliverable to load.349 MOD–006–0 through the Reliability
lead to an unnecessary reduction of Also, there is an explicit requirement in Standards development process that: (1)
ATC, and create opportunities for the transmission planning standards Includes a provision that will ensure
discrimination. Therefore, we direct the that all firm load must be supplied that CBM and TRM are not used for the
ERO to modify its standard to prevent under various system conditions with same purpose; (2) provides that CBM
use of CBM and TRM for the same and without contingencies.350 The should be used for emergency
purposes. We agree with APPA that the Commission is not prescribing how generation deficiencies; (3) modifies
ERO should use its Reliability Standards these requirements should be met. Requirement R1.2 to define ‘‘generation
development process to address the There are a variety of approaches to do deficiency’’ based on a specific energy
double-counting problem. so, including adequate transmission emergency alert level; (4) includes a
1100. We adopt the NOPR’s proposal capability, local or dynamic generation provision that CBM should have a zero
and direct the ERO to modify transfers into the area or DSM. To value in the calculation of non-firm
Requirement R1.2 so that a transmission clarify for EEI, our proposal does not ATC and (5) expands the applicability
constraint is not a required condition for take into account the availability of section to include the entities that
CBM usage. The glossary definition and these resources unless they are under actually use CBM, such as LSEs.
the use as defined in Order No. 890 is contract with the LSE to provide this
that CBM ‘‘is intended to be used by the i. Documentation of the Use of Capacity
service. We developed our NOPR Benefit Margin (MOD–007–0)
LSE only in time of emergency proposal on the rationale derived from
generation deficiencies.’’ 348 Therefore the CBM concept, and believe that if 1107. MOD–007–0 requires
we direct the ERO to modify the there are enough resources to meet transmission service providers that use
standard in the manner proposed in the generation reliability criteria within the CBM to report and post its use.
NOPR. balancing authority, there is no need to 1108. In the NOPR, the Commission
1101. We adopt the NOPR proposal request CBM. proposed to approve Reliability
that requires modification of Standard MOD–007–0 as mandatory and
1104. We also adopt the NOPR
Requirement R1.2 to define ‘‘generation enforceable. In addition, the
proposal to require the applicability
deficiency’’ based on a specific energy Commission proposed to direct NERC to
section to include the entities that
emergency alert level. This approach submit a modification to MOD–007–0
will provide clarity as to when the use actually use CBM, such as LSEs. The
that expands the applicability section to
of CBM may be permitted. We therefore current CBM definition in the NERC
include the entities that actually use
direct the ERO to modify the Reliability glossary determines that LSEs are users
CBM, such as LSEs.
Standard to include a specific energy of CBM. Load-serving entities determine
emergency alert level that will trigger when to use CBM, initiate CBM use and i. Comments
CBM usage. call for its end. Load-serving entities 1109. APPA supports the
1102. We also reiterate the direction therefore have to comply with the Commission’s proposed approval of
in Order No. 890 that CBM should have standard requirements that specify the MOD–007–0. However, it believes that
a zero value in the calculation of non- conditions under which CBM will be the issue of whether LSEs should be
firm ATC because non-firm service may used. We direct the ERO to modify the made subject to MOD–007–0 should be
be curtailed so that CBM can be used. standard accordingly. left to NERC in the first instance to
CBM is reserved as part of the firm 1105. With regard to TAPS’s decide. In so doing, NERC should
transfer capability so that it is available comments concerning its assumption consider expanding MOD–007–0 to
when needed for energy emergencies. that the Commission would not be cover not only LSEs, but also balancing
We determine that each LSE should be approving the Version 0 standards on authorities. Under NERC’s Functional
permitted to call for use of CBM, these issues, but would continue to Model, the balancing authority is the
provided all of the other Requirements address them in the OATT Reform entity that would schedule energy over
of R1.1 are met. We direct that CBM proceeding, the Commission finds that transmission capacity reserved as CBM.
may be implemented up to the reserved MOD–006–0 and MOD–007–0 do not Moreover, it is the balancing authority
value when a LSE is facing firm load establish CBM values, but rather address that would know the information
curtailments. CBM implementation and necessary to report an incident during
1103. We adopt the NOPR proposal documentation. The implementation of which the balancing authority had to
that CBM should be used only when the CBM has critical implications for the import energy from outside the
LSE’s local generation capacity is reliable operation of the Bulk-Power balancing authority’s own area from a
insufficient to meet balancing System and we find that these resource designated as operating
Reliability Standards, with the Reliability Standards should be reserves and change the net scheduled
clarification that the local generation is mandatory and enforceable. The interchange with the neighboring
that generation capacity that is either competitively significant issue is to balancing authorities to allow the
owned or contracted for by the LSE. We assure that there is no double-counting energy to flow into the balancing
disagree with WEPCO that just because of CBM and to determine the magnitude authority’s area.
the balancing authority has sufficient of CBM which is addressed in other
generation does not mean that there is Reliability Standards that the ii. Commission Determination
transmission capacity to deliver the Commission has not approved or 1110. The Commission approves
energy to the LSE. The Commission remanded. MOD–007–0 as mandatory and
finds that such a scenario would violate enforceable. Consistent with the
349 TOP–002–2. comments received in response to the
348 See NERC Glossary at 2. 350 TPL–002–0. NOPR, the Commission directs the ERO
to modify the standard as discussed currently calculated and allocated also employ proper sensitivity studies to
below. across paths, and what would be a other system variables for a two percent
1111. We also adopt the NOPR’s recommended approach for the future. margin to be sufficient. TRMs in the five
proposal to require the applicability to ten percent range are not necessarily
section to include the entities that i. Comments
unreasonable if a wide range of
actually use CBM and report on their 1116. APPA agrees that MOD–008–0 potential system operating conditions is
CBM use, such as LSEs. The current is a fill-in-the-blank standard, is not not studied. Regardless of the ultimate
CBM definition in the NERC glossary sufficient as currently drafted, and approach adopted in future standards,
determines when a LSE is a CBM user. should not be approved as a mandatory International Transmission proposes
The LSE determines how much CBM Reliability Standard until NERC and the that all entities follow a consistent
will be set aside, when CBM use will regional reliability organizations and framework when calculating TRM.
start and when it will end. The LSE regional entities develop the necessary 1119. MidAmerican responds with a
must therefore comply with the regional methodologies and the discussion of its current approach to
standard requirements that require Commission approves them. TRM calculation, which has been
reporting and posting of CBM use. We 1117. MISO adds that there should be performed in accordance with MAPP-
direct the ERO to modify the standard a consistent framework to be followed approved methodologies. MidAmerican
to include the entities that actually use by entities in determining TRM. It states states that these methodologies include
CBM, such as LSEs. In addition, we that relevant MOD standards should be an amount to allow for both the delivery
agree with APPA that the Reliability revised if such a framework is not of operating reserves and for
Standard should apply to balancing clearly delineated. However, MISO uncertainties. Since delivery of
authorities and direct the ERO to cautions that a Reliability Standard operating reserves keeps the
include balancing authorities within the should not be used to address a interconnected network in service,
entities to which this standard is perceived equity concern. MidAmerican benefiting all market participants,
applicable. also supports greater uniformity of TRM MidAmerican contends that it is
1112. Accordingly, the Commission definitions and calculations, and appropriate for TRM to include an
approves MOD–007–0 as mandatory and proposes that a revised standard and/or amount to allow for the delivery of
enforceable. In addition, the new standards should encourage operating reserves. The allowance for
Commission directs the ERO to develop transparency with increased availability uncertainty is calculated as a percentage
a modification through its Reliability of information, consistent data input of TTC required to protect reliability.
Standards development process that and certain modeling assumptions. All market participants benefit from the
expands the applicability of MOD–007– International Transmission agrees and provision of an appropriate margin for
0 to include the entities that actually proposes that TRM consistency should uncertainty because the reliability of the
use CBM, such as LSEs and balancing be addressed either on a regional basis interconnected network is maintained
authorities. or on an Interconnection-wide basis. and service interruptions are reasonably
1118. In response to the Commission’s minimized.
j. Documentation and Content of Each request for comments on the current 1120. With respect to applicable
Regional Transmission Reliability calculation of TRM, and recommended entities, APPA proposes the addition of
Margin Methodology (MOD–008–0) approaches for the future, International two new functional entities.
1113. MOD–008–0 requires the Transmission provides a description of Specifically, APPA believes that NERC
development and posting of a regional the MISO approach to TRM. should expand the applicability section
methodology for TRM, which is International Transmission states that of MOD–008–0 to include planning
transmission capacity that is reserved to during the operating horizon (next 48 authorities and reliability coordinators.
provide reasonable assurance that the hours), TRM is limited to a reserve APPA points out that these are the only
interconnected transmission network sharing component which only applies entities that can evaluate the amount of
will remain secure under various system to flowgates that are not based on error in their transfer capability
conditions. The Reliability Standard transmission outages (unit tripping and predictions.
requires each regional reliability transmission outages are considered a 1121. ERCOT states that the
organization to: (1) Develop and double contingency). International Commission’s concerns about TRM do
document a regional TRM methodology Transmission states that the logic not apply to ERCOT, because ERCOT
in conjunction with its members and (2) behind this approach is that there are has a balanced grid in which all
post on a Web site the most recent fewer uncertainties in the operating transmission is firm, no transmission is
version of its TRM methodology. horizon because schedules and market reserved and there are no transmission
1114. In the NOPR, the Commission flows are known. International paths.
identified MOD–008–0 as a fill-in-the- Transmission explains that during the
blank standard, proposing that because planning horizon (next 48 hours), a two ii. Commission Determination
the regional methodologies had not been percent TRM component for uncertainty 1122. The Commission does not
submitted, the Commission would not is used on all flowgates, including those approve or remand MOD–008–0 until
propose to approve or remand MOD– requiring reserve sharing TRM. In the ERO submits additional information.
008–0 until the ERO submitted the addition, other assumptions regarding Consistent with Order No. 890 and
additional information. The the sale of transmission service enter comments received in response to the
Commission expressed concern about into the need for TRM to cover NOPR, the Commission directs the ERO
the lack of: (1) Clear requirements on ‘‘uncertainties.’’ In addition, to modify MOD–008–0 through the
how TRM should be calculated and International Transmission cautions that Reliability Standards development
allocated across paths and (2) consistent MISO’s minimal two percent margin process, as discussed below.
criteria and clarity with regard to the may not be sufficient for long-term 1123. Consistent with the NOPR
entity on whose behalf TRM had been planning horizon requests (i.e., over 13 proposal and Order No. 890, the
set aside. months) if planning ‘‘assumptions’’ are Commission directs the ERO to modify
1115. The Commission requested not reasonable. International standard MOD–008–0 to clarify how
comment in the NOPR on how TRM is Transmission argues that MISO must TRM should be calculated and allocated
across paths or flowgates. We for a regional exemption from the regional methodologies and the
understand that the standards drafting applicable Reliability Standards must Commission approves them.
process is underway as a joint project take place in the Reliability Standards
with NAESB. We agree with development process.
International Transmission, 1127. The Commission neither 1131. The Commission will not
MidAmerican and MISO about the need accepts nor remands MOD–008–0 until approve or remand MOD–009–0 until
for more uniformity and transparency in the ERO submits additional information. the ERO submits additional information.
TRM calculation methodology and use, In the interim, compliance with MOD– Because the regional procedures have
in order to eliminate potential reliability 008–0 should continue on a voluntary not been submitted to the Commission,
and discrimination concerns. Consistent basis, and the Commission considers it is not possible to determine at this
with Order No. 890, the Commission compliance with the Reliability time whether MOD–009–0 satisfies the
directs the ERO to specify the Standard to be a matter of good utility statutory requirement that a proposed
parameters for entities to use in practice. Although the Commission did Reliability Standard be ‘‘just,
determining uncertainties for which not propose any action with regard to reasonable, not unduly discriminatory
TRM can be set aside and used, such as: MOD–008–0, it addressed above a or preferential, and in the public
(1) Load forecast and load distribution number of concerns regarding the interest.’’ Accordingly, the Commission
error; (2) variations in facility loadings; Reliability Standard, consistent with neither approves nor remands this
(3) uncertainty in transmission system those proposed in Order No. 890. Reliability Standard until the regional
topology; (4) loop flow impact; (5) Accordingly, we direct the ERO to procedures are submitted. In the
variations in generation dispatch; (6) develop modifications to the Reliability interim, compliance with MOD–009–0
automatic reserve sharing and (7) other Standard through the Reliability should continue on a voluntary basis,
uncertainties as identified through the Standards development process and the Commission considers
NERC Reliability Standards including: (1) Clear requirements on compliance with the Reliability
development process. We find that clear how TRM should be calculated, Standard to be a matter of good utility
specification in this Final Rule of the including a methodology for practice.
permitted purposes for which entities determining the maximum TRM value,
and allocated across paths; (2) clear l. Steady-State Data for Modeling and
may reserve CBM and TRM will also
requirements for permitted purposes for Simulation of Interconnected
virtually eliminate double-counting of
which TRM can be set aside and used; Transmission System (MOD–010–0)
TRM and CBM. Therefore, we direct the
ERO to determine clear requirements (3) clear requirements for availability of 1132. The purpose of this Reliability
regarding permitted uses for TRM documentation that supports TRM Standard is to establish consistent data
through its Reliability Standards determination and (4) expanding the requirements, reporting procedures and
development process. applicability to add planning authorities system models for use in reliability
1124. We agree with the commenters and reliability coordinators and any analysis. MOD–010–0 requires the
that the percentage reduction of line other appropriate entity identified in the transmission owner, transmission
rating can be one way to establish an Reliability Standards development planner, generator owner and resource
appropriate maximum TRM if thermal process. planner to provide steady-state data,
considerations are the only limiting such as equipment characteristics,
factors. While this is a relatively simple k. Procedure for Verifying Transmission system data, and existing and future
method, it ignores limitations relative to Reliability Margin Values (MOD–009–0) interchange schedules to the regional
voltage or stability limitations which are 1128. MOD–009–0 requires each reliability organization, NERC, and
the more typical reasons for regional reliability organization to other specified entities.
transmission limitations. If adopted as develop and implement a procedure to 1133. In the NOPR, the Commission
the Reliability Standard method, it review TRM calculations and the proposed to approve Reliability
should not restrict a transmission resulting values determined by member Standard MOD–010–0 as mandatory and
provider from using a more transmission providers to ensure enforceable. In addition, the
sophisticated method that may allow for compliance with the regional TRM Commission proposed to direct NERC to
greater ATC without reducing overall methodology. submit a modification to MOD–010–0
reliability. However, we disagree with 1129. In the NOPR, the Commission that: (1) Adds a new requirement for
the use of an arbitrary percentage over identified MOD–009–0 as a fill-in-the- transmission owners to provide the list
a long time frame that is not based on blank standard that requires each of contingencies they use in performing
either proven historical need or regional reliability organization to system operation and planning studies
sensitivity studies that support that develop a procedure for review of TRM and (2) expands the applicability
determination. Therefore, consistent calculations and the resulting values. In section to include the planning
with our OATT Reform Final Rule, we the NOPR, the Commission stated that authority.
direct the ERO to develop requirements because the regional procedures had not
regarding transparency of the been submitted, the Commission would i. Comments
documentation that supports TRM not propose to approve or remand 1134. APPA agrees with the
determination. MOD–009–0 until the ERO submits the Commission that MOD–010–0 is
1125. We agree with APPA that NERC additional information. sufficient for approval as a mandatory
should revise the applicability section and enforceable Reliability Standard.
of this standard to add planning i. Comments APPA believes, however, that the
authorities and reliability coordinators, 1130. APPA agrees that MOD–009–0 Commission’s proposed directives to
and in addition, any other entities that is a fill-in-the-blank standard, is not NERC to revise this standard are unduly
may be identified in the Reliability sufficient as currently drafted, and prescriptive, and may not in fact be the
Standards development process. should not be approved as a mandatory best way to revise the standard.
1126. Regarding ERCOT’s statement Reliability Standard until NERC and the 1135. ISO/RTO Council and ISO–NE
that TRM does not apply to ERCOT, we regional reliability organizations and do not support adoption of this standard
reiterate our position that any request regional entities develop the necessary because its requirements refer several
times to the data requirements and TANC recommends that the such lists are currently developed or
reporting procedures specified in MOD– Commission clarify that the list of the maintained today. Rather, the
011–0, which has been identified by the contingencies that are used in contingencies are reflected in the
Commission as a fill-in the-blank performing system operation and computerized models used by
standard. ISO/RTO Council and ISO–NE planning studies include all the transmission providers for both
argue that demonstrating compliance contingencies, N–1, N–2, as well as transmission planning and operations.
with MOD–010–0 is dependent on an multiple contingencies. The models are regularly updated as
unapproved standard, that the 1140. MidAmerican cautions that a new facilities are installed. If
unapproved standard lacks some list of contingencies could be used in a transmission operators are required to
required criteria or procedures that must ‘‘cook-book’’ manner to reach the wrong develop such lists, they would be so
be developed by the regional reliability conclusions. A contingency must be long and subject to constant change that
organization, that MOD–010–0 cannot modeled in specific and appropriate they would not only be burdensome to
be effectively implemented, and that conditions to understand the reliability develop and maintain, but also unlikely
responsible entities therefore should not issues associated with the to provide useful information for other
be subject to compliance with an contingency.351 Similarly, NERC states transmission owners.
incomplete standard. that there may be a need to better 1143. In its opposition to releasing a
1136. Constellation strongly supports understand the reliability need for list of contingencies, PG&E states that
the Commission’s proposals with transmission owners to provide a list of performing transmission planning
respect to MOD–010–O and MOD–012– contingencies and to whom the list studies is an ambiguous part of the
0 because these proposals, together with should be provided. duties of a transmission owner under
other initiatives, such as OATT reform, 1141. Northern Indiana and the NERC Functional Model. Further
represent additional steps not only to MidAmerican note that such a list of clarification and refinement of the
achieving a reliable bulk power system, contingencies should be considered a responsibilities of each entity under the
but also to reducing undue particularly sensitive form of CEII since NERC Functional Model may indicate
discrimination in transmission services. it would be a list of events that, when that such studies are among a
Constellation supports the they occur, cause critical situations on transmission owner’s duties. Until that
Commission’s proposals because they a system. Northern Indiana and happens, however, requiring
will involve generation owners in MidAmerican argue that the transmission owners to provide
facility ratings discussions and Commission should include the need to contingencies used in performing
discussions of other limiting provide for protection against public system operation and planning studies
components and will provide more disclosure through the NERC is inappropriate.
clarity in the requirements of the administrative process in its discussion 1144. SoCal Edison and TVA state
Reliability Standard, making of any final Reliability Standard. In that the entity that should be
enforcement more objective and robust. addition, California Cogeneration states responsible for providing a list of
1137. Many commenters submitted that Requirements R1 and R2 of this contingencies in performing planning
comments both supporting and standard should not apply to entities and operation studies is the
opposing the Commission’s proposal to that have no material impact on the transmission planner, not the
modify the standard to require listing grid. California Cogeneration warns that transmission owner. APPA also believes
the contingencies that transmission the standard may also require generator that the transmission operator should be
owners use when they perform system owners to provide data on behind-the- one of the entities required to list
operation and planning studies. meter operations, the provision of contingencies used to perform studies,
1138. FirstEnergy supports the and that the transmission owner
which should be seriously limited, and
Commission’s proposal to require function should be removed as an
data on future interchange schedules,
transmission owners to provide the list applicable entity. APPA further notes
the confidentiality of which should be
of contingencies used in performing that the transmission owner does no
system operation and planning studies. maintained.
1142. PG&E and Xcel oppose the studies regarding operations or
FirstEnergy emphasizes that such a planning. A transmission owner merely
proposed modification requiring a list of
requirement, however, should owns transmission facilities and
contingencies stating that the
accommodate various electronic formats maintains those facilities. Moreover,
requirement is unnecessary and would
that are commonly used in industry APPA argues that existing studies
simulation tools. FirstEnergy states that be unduly burdensome. Xcel also states
performed by the transmission planner
compliance with this Reliability that the modification would not prove
for the regional reliability organization
Standard should not require to be useful to neighboring systems. No
or planning authority will include a list
transmission owners to replace existing 351 MidAmerican further cautions that other
of contingencies.
computer and/or software systems, and contingencies exist that must be studied under still- 1145. Regarding the Commission’s
that the new standard should also different conditions. Advanced applications proposal to expand the applicability
require the regional reliability associated with real-time contingency analysis section of this Reliability Standard to
organizations (or Regional Entities) to review an extensive list of events in combination include the planning authority, APPA
with other events. Ahead of time, there is no way
coordinate the lists of contingencies to be sure exactly which events are the worst in any disagrees and recites the comments of
across wide-areas. given operating condition. A single reliability MRO, Reliability First and PG&E on the
1139. In its support of the standard cannot contain all the coordination that is Staff Preliminary Assessment,352 that to
Commission’s proposal, MidAmerican needed to allow a system to fully understand all the require the planning authority to
reliability challenges of a neighboring system. Thus,
and TANC stress that a requirement that MidAmerican contends that a better approach is to provide all of this information is
the transmission owner provide a list of continue the joint operational and long-term duplicative and unnecessary. APPA
contingencies to neighboring systems planning that planning authorities, reliability believes that NERC, as the entity
will benefit reliability by enabling coordinators and other regional entities are charged with developing standards, is
currently conducting with transmission planners,
neighboring systems to accurately study transmission owners and others to ensure that the best-suited to address all of these
the effects of contingencies on their own interconnected network is operated and planned in
systems. In its concurring comments, a coordinated way. 352 NOPR at P 663.
concerns and to develop a consensus Because of the lack of information on not have a material impact on grid
standard using its Reliability Standard contingency outages and the automatic reliability should be automatically
development process. actions that result from these exempt from providing the data
1146. TAPS states that this standard contingencies, planners have not been required by this Reliability Standard.
would impose unnecessary costs on able to analyze neighboring conditions The Commission believes that all
small systems without improving accurately, thereby potentially entities that are required to register
reliability if applied without the jeopardizing reliability on their own and under the registration process that we
limitation of NERC’s bulk electric surrounding systems. This requirement have approved must provide data
system definition and NERC’s June will make transmission planning data requested by the ERO or the Regional
registry criteria. TAPS opines that more transparent, consistent with Order Entity.
modeling will be complicated by the No. 890 requiring greater openness of 1155. We agree with APPA, SoCal
incorporation of low voltage or radial the transmission planning process. Edison and TVA that the functional
transmission facilities or small 1150. With respect to TANC’s entity responsible for providing the list
generators that have no material impact recommendation to modify the standard of contingencies in performing planning
on bulk transmission system reliability, to require utilities to provide lists of all studies should be the transmission
without improving the results. TAPS contingencies they use to operate and planner, instead of the transmission
further argues that NERC and the plan their systems (N–1, N–2, multiple), owner, as proposed in the NOPR. We
Regional Entities—not the we clarify that our requirement specifies also agree with APPA that the
Commission—should determine the contingency files used for all operations transmission operator should be one of
level of modeling required for and planning. We do not limit the the entities required to list
reliability. provision of contingency information to contingencies used to perform
single, double or multiple outages. operational studies. Transmission
Utilities must provide lists of all the operators are usually responsible for
1147. The Commission approves contingencies they use in operations compiling the operational contingency
MOD–010–0. In addition, the and planning, provided in their original lists for both normal and conservative
Commission requires the ERO to modify format, regardless of how this data is operation. Therefore, we direct the ERO
MOD–010–0 as described below. organized. to modify MOD–010–0 to include
1148. As an initial matter, the 1151. In response to MidAmerican, transmission operators as an applicable
Commission disagrees that MOD–010–0 NERC and TANC’s concerns that the entity.
cannot be implemented until MOD– contingency lists could be used as a 1156. We adopt our NOPR proposal
011–0 is modified. We have directed ‘‘cook-book,’’ our expectation is that that the planning authority should be
that data collection and reporting utility planners that use these files will included in this Reliability Standard
procedures not be interrupted while have sufficient experience to use them because the planning authority is the
MOD–011–0 is being modified. appropriately. We expect that most entity responsible for the coordination
Therefore it is possible to implement utility planners are already familiar and integration of transmission facilities
MOD–010–0. Failure to have the data with their neighbors’ system topologies, and resource plans, as well as one of the
needed for the steady-state analysis and have the means, such as bus entities responsible for the integrity and
would halt regional reliability abbreviation directories and switching consistency of the data. We disagree
assessment processes and hinder diagrams, to identify facilities listed in with APPA that it is duplicative and
planners from accurately predicting contingency files. unnecessary to require the planning
future system conditions, which would 1152. We agree with FirstEnergy’s authority to provide all of this
be detrimental to system reliability. We comments regarding the importance of information. However, we direct the
therefore direct the ERO to use its using existing data collection systems so ERO, as the entity charged with
authority pursuant to § 39.2(d) of our as to not impose any additional costs on developing Reliability Standards, to
regulations to require users, owners and entities. They may file the contingency address all of these concerns and to
operators to provide to the Regional files in the electronic format in which develop a consensus standard using its
Entity the information related to data they were created, along with any Reliability Standard development
gathering, data maintenance, reliability necessary decoding instructions. We process.
assessments and other process-type therefore disagree with PG&E, TAPS and 1157. Accordingly, the Commission
functions. As we discuss below in the Xcel that this Reliability Standard will approves MOD–010–0 as mandatory and
section on MOD–011–0, we direct the be unduly burdensome since it only enforceable. In addition, the
ERO to develop a Work Plan that will requires the provision of files that must Commission directs the ERO to develop
facilitate ongoing collection of the be developed during the utility’s usual a modification to MOD–010–0 through
steady-state modeling and simulation planning and operations study process. the Reliability Standards development
data set forth in MOD–011–0, and 1153. Consistent with California process that: (1) Adds a new
submit a compliance filing with that Cogeneration, Northern Indiana and requirement in MOD–010–1 for
Work Plan. MidAmerican’s concerns, we determine transmission planners to provide the
1149. Supported by many that those data that a company contingency lists they use in performing
commenters, we adopt the NOPR considers confidential, commercially- system operation and planning studies,
proposal to direct the ERO to modify sensitive or security-sensitive should be contained in the electronic format in
MOD–010–0 to require filing of all of released in accordance with the CEII which they were created, along with any
the contingencies that are used in process or subject to confidentiality necessary decoding instructions and (2)
performing steady-state system agreements. We direct the ERO to expands the applicability section to
operation and planning studies. We address confidentiality issues and include transmission operators and the
believe that access to such information modify the Reliability Standard as planning authority. We also direct the
will enable planners to accurately study necessary through its Reliability ERO to address confidentiality and
the effects of contingencies occurring in Standards development process. small entity issues through the
neighboring systems on their own 1154. We disagree with commenters Reliability Standards development
systems, which will benefit reliability. that generators or small entities that do process.
m. Maintenance and Distribution of 1164. In response to concerns raised i. Comments

Steady-State Data Requirements and in MOD–010–0 about implementing
Reporting Procedures (MOD–011–0) MOD–010–0 without the data to be 1168. APPA and PG&E agree that the
collected when MOD–011–0 is Commission should approve MOD–012–
1158. The purpose of MOD–011–0 is 0 as a mandatory and enforceable
to establish consistent data modified, we direct the ERO to develop
a Work Plan that will facilitate ongoing Reliability Standard. However, PG&E
requirements, reporting procedures and requests the Commission to approve this
system models for use in reliability collection of the steady-state modeling
and simulation data specified in MOD– standard without any modifications. In
analysis. This Reliability Standard addition, APPA states that the
requires the regional reliability 011–0.
Commission’s proposed directives to
organizations to develop comprehensive 1165. Accordingly, the Commission
NERC to revise this standard are unduly
steady-state data requirements and neither accepts nor remands MOD–011–
prescriptive, and may not in fact be the
reporting procedures needed to model 0 until the ERO submits additional
best way to revise the standard. APPA
and analyze the steady-state conditions information. Because the regional
notes that NERC, as the technical expert
for each Interconnection. procedures have not been submitted to
1159. In the NOPR, the Commission body charged with developing
the Commission, it is not possible to
identified MOD–011–0 as a fill-in-the- standards, is the entity best suited to
determine at this time whether MOD–
blank standard that requires each hear all of these concerns, and to
011–0 satisfies the statutory requirement
regional reliability organization to develop a consensus standard using its
that a proposed Reliability Standard be
develop comprehensive steady-state Reliability Standards development
‘‘just, reasonable, not unduly
data requirements and reporting discriminatory or preferential, and in process.
procedures needed to model and the public interest.’’ In the interim, 1169. ISO/RTO Council and ISO–NE
analyze the steady-state conditions for compliance with MOD–011–0 should disagree with the Commission’s
each Interconnection. The NOPR stated continue on a voluntary basis, and the proposal to approve this standard, and
that because the regional methodologies Commission considers compliance with state that the MOD–012–0 requirements
had not been submitted, the the Reliability Standard to be a matter refer several times to the ‘‘data
Commission would not propose to of good utility practice. We direct the requirements and reporting procedures
approve or remand MOD–011–0 until ERO to modify the Reliability Standard of MOD–013–0,’’ which has been
the ERO submits the additional through the Reliability Standards identified by the Commission as a fill-
information. In addition, the NOPR development process to expand the in-the-blank standard, and is pending.
suggested that the planning authority applicability section to include the Consequently, they argue that MOD–
plays a significant role in integration of planning authority. Additionally, we 012–0 cannot be effectively
data and thus should be included in the direct the ERO to develop a Work Plan implemented, and responsible entities
applicability section of MOD–011–0. and submit a compliance filing that will should therefore not be subject to
i. Comments facilitate ongoing collection of the compliance with an incomplete
steady-state modeling and simulation standard.
1160. APPA agrees with the data specified in MOD–011–0.
Commission that this standard is a fill- 1170. With respect to the
in-the-blank standard, is not sufficient n. Dynamics Data for Modeling and Commission’s proposal for adding a
as currently drafted and should not be Simulation of the Interconnected new requirement to this standard,
approved as a mandatory reliability Transmission System (MOD–012–0) FirstEnergy notes that it is appropriate
standard until NERC and the Regional for the Commission to require
Entities develop the necessary 1166. The purpose of MOD–012–0 is transmission owners to provide the list
methodologies and the Commission to establish consistent data of faults or disturbances used in
approves them. requirements, reporting procedures and performing dynamics system studies.
1161. TANC supports replacing the system models for use in reliability However, FirstEnergy cautions that such
term regional reliability organization analysis. MOD–012–0 requires requirement should accommodate
with an entity from the NERC transmission owners, transmission various electronic formats that are
Functional Model. planners, generator owners and resource commonly used in industry simulation
planners to provide dynamic system tools. FirstEnergy states that compliance
ii. Commission Determination modeling and simulation data, such as with this provision should not require
1162. The Commission will not equipment characteristics and system transmission owners to replace existing
approve or remand MOD–011–0 until data, to the regional reliability computer and/or software systems, and
the ERO submits additional information. organization, NERC and other specified that the new standard should also
The Commission directs the ERO to entities. require the regional reliability
modify MOD–011–0 as discussed below. 1167. In the NOPR, the Commission organizations (or Regional Entities) to
1163. We reiterate our position stated proposed to approve Reliability coordinate the lists of faults or
in the NOPR that the planning authority Standard MOD–012–0 as mandatory and disturbances across wide-areas.
should be included in this Reliability enforceable. In addition, the 1171. MidAmerican agrees that
Standard because the planning authority Commission proposed to direct NERC to requiring transmission owners to
is the entity responsible for the submit a modification to MOD–012–0 provide a list of faults or disturbances
coordination and integration of that: (1) Adds a new requirement for to neighboring systems would provide
transmission facilities and resource transmission owners to provide the list for additional coordination between
planning, as well as one of the entities of faults or disturbances they use in neighboring utilities, and therefore,
responsible for the integrity and performing dynamics system modeling

would be an improvement to the
consistency of the data. Therefore, we analysis for system operation and
standard.
direct the ERO to add the planning planning and (2) expands the
authority to the applicability section of applicability section to include the However, MidAmerican warns that a
this Reliability Standard. planning authority. list of faults and disturbances could be
used in a ‘‘cook-book’’ manner to reach transmission owner merely owns transmission planning data more
the wrong conclusions.353 transmission facilities and maintains transparent, consistent with Order No.
1172. Northern Indiana and them. 890, which calls for greater openness of
MidAmerican note that such a list of 1176. California Cogeneration states the transmission planning process on a
faults and disturbances should be that this standard raises concerns about regional basis.
considered a particularly sensitive form data collection and the cost of 1180. In response to MidAmerican’s
of CEII since it would be a list of events compliance, and therefore a mechanism concern that fault and disturbance
that, when they occur, cause critical for determining no material impact and information could be used as a ‘‘cook-
problems on the system. Northern a provision for exemption is essential book,’’ our expectation is that utility
Indiana and MidAmerican request the for this standard. California planners who use this data have
Commission to protect sensitive Cogeneration also believes that it is sufficient experience to use it and
information through the NERC unclear what data is included in interpret the results correctly. We
administrative process discussed in the ‘‘dynamics system modeling and expect that most utility planners are
TOP–005–1 Reliability Standard. simulation data,’’ and whether already familiar with their neighbors’
1173. Xcel raises the same concern it independent generators would have system topologies, and will be capable
stated about MOD–010–0 that the such data. of identifying facilities on fault and
proposed modification related to a list disturbance lists.
ii. Commission Determination 1181. We agree with FirstEnergy’s
of faults and disturbances is unduly
burdensome and would not prove useful 1177. The Commission approves concerns regarding the importance of
to neighboring systems. Xcel states that MOD–012–0 as mandatory and using existing data collection systems so
no such lists are currently developed or enforceable. The Commission directs as to not impose any additional costs on
maintained today, but that the faults the ERO to modify MOD–012–0 as entities. They may file the fault and
and disturbances are reflected in the discussed below. disturbance information in the
1178. As an initial matter, the electronic format in which they were
computerized models used by
Commission disagrees that MOD–012–0 created, along with any necessary
transmission providers for both
cannot be implemented until MOD– decoding instructions. Compliance with
transmission planning and operations,
013–1 is modified. We have directed this provision should not require
which are regularly updated as new
that data collection and reporting transmission planners to replace
facilities are installed. Xcel cautions
procedures not be interrupted while existing computer and/or software
that the lists, as proposed by the
MOD–013–1 is being revised, therefore systems. Therefore, we disagree with
Commission, would be so long and
it is possible to implement MOD–012– PG&E and Xcel that this standard
subject to constant change that they
0. Failure to provide the data needed for modification will be unduly
would not only be burdensome to dynamics system modeling and
develop and maintain, but also unlikely burdensome.
simulation would halt regional 1182. Consistent with California
to provide usable information for other reliability assessment processes and Cogeneration, Northern Indiana and
transmission owners. impede planners from accurately
1174. PG&E disagrees with the MidAmerican’s concerns, we determine
predicting future system conditions, that the data that a company considers
Commission’s proposal related to lists of which would be detrimental to system confidential, market-sensitive or
faults and disturbances, and repeats its reliability. We therefore direct the ERO security-sensitive should be released in
comments from MOD–010–0 that this to use its authority pursuant to § 39.2(d) accordance with the CEII process or
new requirement is unnecessary. of our regulations to require users, subject to confidentiality agreements.
1175. Regarding the functional owners and operators to provide to the We direct the ERO to address
entities to which this standard applies, Regional Entities the information related confidentiality issues and modify the
APPA notes that the transmission to data gathering, data maintenance, standard as necessary through its
operator and transmission planner, as reliability assessments and other Reliability Standards development
functions required to provide process type functions. As we will process.
information regarding stability studies, discuss in the next section on MOD– 1183. We disagree with commenters
should be added to the list of applicable 013–1, we require the ERO to develop that generators or small entities that do
entities, while transmission owners a Work Plan and submit a compliance not have a material impact on grid
should be removed from such list. filing that will facilitate ongoing reliability should be automatically
Under the NERC Functional Model, collection of the dynamics system exempt from providing the data
transmission owners do not perform any modeling and simulation data specified required by this Reliability Standard.
studies related to MOD–012–0. Rather, a by the deferred MOD–013–1 Reliability The Commission believes that all
353 MidAmerican further discusses that the
Standard, which is necessary for entities that are required to register
Commission should recognize that caution must be implementation of MOD–012–0. under the registration process that we
taken in assuming that no other faults and 1179. Supported by several have approved must provide data
disturbances exist that must be studied under other commenters, we adopt the NOPR requested by the ERO or the Regional
conditions. MidAmerican states that like with proposal and direct the ERO to modify Entity.
MOD–010–0, ahead of time, there is no way to be
sure exactly which faults and disturbances are the
MOD–012–0 by adding a new 1184. We agree with APPA that the
worst under given operating conditions. A single requirement to provide a list of the functional entity responsible for
reliability standard cannot contain all the faults and disturbances used in providing the fault and disturbance list
coordination needed to allow each system operator performing dynamics system studies for should be the transmission planner,
to fully understand all the reliability challenges of
a neighboring system. Perhaps a better approach is
system operation and planning. We instead of the transmission owner, as
to continue the joint operational and long-term believe that access to such information proposed in the NOPR. We also agree
planning that is currently being conducted by will enable planners to accurately study with APPA that the transmission
planning authorities, reliability coordinators and the effects of disturbances occurring in operator should be added to the list of
other regional entities with transmission planners,
transmission owners and others to ensure that the
neighboring systems on their own applicable entities in the Reliability
interconnected network is operated and planned in systems, which will benefit reliability. Standards development process.
a coordinated way. This requirement will also make Therefore, we direct the ERO to modify
MOD–012–0 to require the transmission comprehensive dynamics data technical review and approval of any
planner to provide fault and disturbance requirements and reporting procedures estimates at the regional level.
lists. needed to model and analyze the 1192. MidAmerican explains that
1185. We adopt our NOPR proposal dynamic behavior and response for each there may be safety or system conditions
that planning authorities should be of the three NERC Interconnections. The and/or the loss of records that do not
included in this Reliability Standard NOPR stated that because the regional permit gathering unit-specific
because the planning authority is the methodologies had not been submitted, information, and that in such cases,
entity responsible for the coordination the Commission would not propose to computations and engineering reports of
and integration of transmission facilities approve or remand MOD–013–1 until estimated capability should be
and resource plans, as well as one of the the ERO submits additional information. sufficient. MidAmerican also requests
entities responsible for the integrity and In addition, in the NOPR we agreed that that if there is a farm of similar
consistency of the data. We therefore the Reliability Standard should apply to generation units (such as wind turbines)
direct the ERO to add the planning the planning authority. or synchronous condensers located in
authority to the list of applicable the same general area, providing unit-
entities. 1189. In the NOPR, the Commission specific information for a number of
1186. Accordingly, the Commission expressed a concern regarding the 1990 identical units is not necessary. Instead,
approves MOD–012–0 as mandatory and cut-off date,354 and shared PG&E’s MidAmerican proposes that information
enforceable. In addition, the concern that the difficulty in obtaining about a sample of the identical units
Commission directs the ERO to develop unit-specific data is not limited to the (such as two) should be sufficient to
a modification to MOD–012–0 through age, but may also be due to other factors provide enough unit-specific
the Reliability Standards development such as unit configuration. The information to be representative of the
process that: (1) Adds a new Commission requested comment farm. MidAmerican also notes that if
requirement for transmission planners whether it is reasonable to permit units are located in a part of the system
to provide the list of faults and entities to estimate dynamics data if that does not typically demonstrate
disturbances they use in performing they are unable to obtain unit specific instability, the value of unit-specific
dynamic stability analysis in the data for any reason. The Commission data is reduced, and that there are a
electronic format in which they were believes that to achieve the goal of this number of such circumstances in which
created, along with any necessary Reliability Standard of having the provision of unit-specific data should
decoding instructions and (2) expands ability to accurately model and analyze not be required.
the applicability section to include the dynamic behavior and response of 1193. International Transmission,
transmission operators, planning each Interconnection, it is necessary to stating that the age of the unit alone may
authorities and transmission planners. have accurate data. Inaccurate data can not be the only reason why unit-specific
We expect the ERO to address lead to unrealistic simulations and data might be unavailable, cautions that
confidentiality issues and modify the inappropriate actions by responsible there should be a requirement in every
Reliability Standard as necessary entities which may jeopardize the case that unit data actually be sought for
through the Reliability Standards reliability of the Bulk-Power System. all generating units before estimates of
development process. dynamics data are used. International
i. Comments
Transmission believes that achieving
o. Maintenance and Distribution of
1190. APPA agrees with the the most accurate possible picture of the
Dynamics Data Requirements and
Commission that MOD–013–1 is a fill- dynamic behavior of the
Reporting Procedures (MOD–013–1)
in-the-blank standard, is not sufficient Interconnection requires the use of
1187. MOD–013–1 requires the as currently drafted, and should not be actual data, and that, at a minimum,
regional reliability organizations within approved as a mandatory Reliability entities should be required to document
an Interconnection to develop Standard until NERC and the regional the steps taken to obtain unit-specific
comprehensive dynamics data reliability organizations/Regional data.
requirements and reporting procedures Entities develop the necessary regional 1194. APPA, however, expresses its
needed to model and analyze the methodologies and the Commission concern regarding the difficulties in
dynamic behavior and response of each approves them. obtaining accurate unit-specific data to
Interconnection. More specifically, the model dynamic behavior. APPA
regional reliability organization, in 1191. In response to the Commission’s recommends to NERC that the regional
coordination with its transmission request for comments on whether it is reliability organizations/Regional
owners, transmission planners, reasonable to permit entities to estimate Entities and the reliability coordinators
generator owners and resource planners dynamics data if they are unable to review this type of data on a case-by-
within an Interconnection, is required obtain unit specific data for any reason, case basis to test it for accuracy and to
to: (1) Participate in development of many commenters responded that it is determine whether estimated data will
documentation for their Interconnection reasonable to allow estimation of produce outputs from the models within
data requirements and reporting dynamics data for older units where acceptable limits. International
procedures; (2) participate in the review data is not available.355 The Small Transmission confirms that testing is
of those data requirements and reporting Entities Forum expects that the easily accomplished, and provides up-
procedures at least every five years and Reliability Standard ultimately will to-date dynamics data reflective of the
(3) make the data requirements and include requirements that such natural degradation of generating units
reporting procedures available to NERC estimates be based on sound over their lifetimes. However,
and other specified entities upon engineering principles and be subject to International Transmission says that
request. this effort could be tied to the Generator
1188. In the NOPR, the Commission 354 Requirement R1.1.1 allows for the use of
Model Validation Reliability Standards
identified MOD–013–1 as a fill-in-the- estimated or typical manufacturer’s data on pre-
1990 units to model dynamic behavior when unit-
(MOD–024–1 and MOD–025–1).
blank standard that requires each specific data is unavailable. 1195. TANC agrees with the
regional reliability organization within 355 EEI, LPPC, MidAmerican, Small Entities Commission that the standard
an Interconnection to develop Forum and TVA. requirement is arbitrary in imposing the
1990 cut-off with regard to modeling understands that this is the current Interconnection to develop, coordinate
dynamic behavior. TANC believes that approach with any generator that is and maintain a library of solved
this requirement allows for the use of manufactured in quantity such as Interconnection-specific steady-state
estimated or typical manufacturer’s data multiple generators used in combined models. The NOPR stated that because
on pre-1990 units to model dynamic cycle plants. the regional procedures had not been
behavior when unit-specific data is 1200. We adopt our NOPR proposal submitted, the Commission would not
unavailable. TANC notes that difficulty and direct the ERO to expand the propose to approve or remand MOD–
in obtaining unit specific data is not applicability section in this Reliability 014–0 until the ERO submits the
limited to the age of the unit but also Standard to include planning additional information. In addition, in
unit configuration. TANC therefore authorities because they are the entities the NOPR the Commission stated its
recommends that the 1990 cut-off be responsible for the coordination and belief that the Reliability Standard
removed from the proposed Reliability integration of transmission facilities and should be modified to include a
Standard because there is no justifiable resource plans, as well as one of the requirement to verify that steady-state
basis for the arbitrary cut-off and that entities responsible for the integrity and models are accurate.
the Reliability Standard be revised to consistency of the data. 1204. In the NOPR, the Commission
allow the generally-accepted use of 1201. Accordingly, the Commission expressed concern about creating a
estimated or typical manufacturer data neither accepts nor remands MOD–013– duplicate effort if both the transmission
where unit-specific data is impractical 1 until the ERO submits additional owner and the regional reliability
to obtain. TVA agrees that the 1990 cut- information. Because the regional organization separately develop the
off date is unnecessary. procedures have not been submitted to steady-state base cases required for the
1196. In contrast to those who support the Commission, it is not possible to FERC Form 715 filing and for MOD–
rejecting the 1990 cut-off requirement, determine at this time whether MOD– 014–0. The NOPR suggested that the
FirstEnergy states that unit-specific data 013–1 satisfies the statutory requirement
Reliability Standard contain a
should be required for all units installed that a proposed Reliability Standard be
requirement specifying the time period
after 1990. EEI confirms that unit- ‘‘just, reasonable, not unduly
and planning years be identical to those
specific information should be available discriminatory or preferential, and in
found in FERC Form 715.356 Further,
for most units placed in service since the public interest.’’ In the interim,
the Commission requested comments on
1990. compliance with MOD–013–1 should
any incompatibility between
continue on a voluntary basis, and the
ii. Commission Determination requirements under FERC Form 715 and
Commission considers compliance with
1197. The Commission will not MOD–014–0.
the Reliability Standard to be a matter
approve or remand MOD–013–1 until of good utility practice. Although the i. Comments
the ERO submits additional information. Commission does not approve or
The Commission directs the ERO to remand MOD–013–1, we direct the ERO 1205. APPA agrees with the
modify MOD–013–1 through the to modify it through the Reliability Commission that MOD–014–0, a fill-in-
Reliability Standards development Standards development process to: (1) the-blank standard, is not sufficient as
process as discussed below. Permit entities to estimate dynamics currently drafted, and should not be
1198. We agree with many data if they are unable to obtain unit approved as a mandatory Reliability
commenters and direct the ERO to specific data for any reason; (2) require Standard until NERC and the regional
modify the Reliability Standard to verification of the dynamic models with reliability organizations/Regional
permit entities to estimate dynamics actual disturbance data and (3) expand Entities develop the necessary regional
data if they are unable to obtain unit- the applicability section to include the methodologies and the Commission
specific data for any reason, not just for planning authority, transmission approves them.
units constructed prior to 1990. operator and transmission planner. As 1206. NRC suggests that a periodic
Achieving the most accurate possible discussed above in MOD–012–0, we verification against field data needs to
picture of the dynamic behavior of the direct the ERO to develop a Work Plan be included in this Reliability Standard.
Interconnection requires the use of that will facilitate ongoing collection of 1207. Regarding the Commission’s
actual data. We disagree with the dynamics system modeling and request for comments on any
FirstEnergy and EEI and reject the 1990 simulation data specified in MOD–013– incompatibility between requirements
cut-off date, because the age of the unit 1, and submit a compliance filing under FERC Form 715 and MOD–014–
alone may not be the only reason why containing this Work Plan to the 0, International Transmission states that
unit-specific data is unavailable. We Commission. the language in MOD–014–0 would
agree with the Small Entities Forum that allow the regional reliability
the Reliability Standard should include p. Development of Steady-State System organization and the transmission
Requirements that such estimates be Models (MOD–014–0) owner to develop separate base cases.
based on sound engineering principles 1202. MOD–014–0 requires the International Transmission notes that its
and be subject to technical review and regional reliability organizations within experience with current practice
approval of any estimates at the regional each Interconnection to coordinate and suggests, however, that this is not a
level. That said, the Commission directs jointly develop and maintain a library of significant concern. Transmission
that this Reliability Standard be solved Interconnection-specific steady- owners now develop the information for
modified to require that the results of state models. These models are to inclusion in a regional base case, and
these dynamics models be compared include near- and long-term planning the regional base case is rolled up into
with actual disturbance data to verify horizons representing system conditions a FERC Form 715 filing by a regional
the accuracy of the models. for various demand levels. The models entity. International Transmission
1199. With respect to small units are to be updated annually. expects that this process would
installed in wind farms, we agree with 1203. In the NOPR, the Commission continue in the future.
MidAmerican that data for one unit to identified MOD–014–0 as a fill-in-the-
represent all identical units at wind blank standard that requires the regional 356 FERC Form 715 is available at http://
farms is acceptable. The Commission reliability organizations within an www.ferc.gov/docs-filing/eforms.asp#715.
1208. MISO believes that FERC and the actual system response should models while MOD–014–0 is being
should revisit the need for transmission be specified in the Reliability Standard. modified.
owners to have base case information The Commission believes that the
available for replication. MISO states maximum discrepancy between the q. Development of Dynamics System
that the current Interconnection trend is actual system performance and the Models (MOD–015–0)
for transmission owners to work model should be small enough that 1216. MOD–015–0 requires the
together more closely in developing decisions made by planning entities regional reliability organizations within
large assessments based on a large based on output from the model would each Interconnection to coordinate and
model, and that these large assessments be consistent with the decisions of jointly develop and maintain a library of
are better guides to the overall operating entities based on actual initialized (with no faults and
capability of the transmission grid to system response. We direct the ERO to disturbances) Interconnection-specific
move power. MISO believes that these modify MOD–014–0 through the dynamics system models. These models
assessments should be filed as part of Reliability Standards development represent near-term years and the years
FERC Form 715. process to require that actual system chosen from the longer-term planning
1209. Although Northern Indiana events be simulated and if the model horizon.
does not see any duplication or output is not within the accuracy
incompatibility with FERC Form 715, required, the model shall be modified to 1217. In the NOPR, the Commission
Northern Indiana is concerned that the achieve the necessary accuracy. identified MOD–015–0 as a fill-in-the-
proposed Reliability Standard envisions 1213. We believe that steady-state blank standard that requires the regional
the use of steady-state models and model validation should not be reliability organizations within an
benchmarking for long-term planning. interrupted while MOD–014–0 is being Interconnection to develop, coordinate
Northern Indiana believes that modified. The lack of accurate models and maintain a library of initialized
benchmarking of planning models needed for the simulations would halt Interconnection-specific dynamics
should be directed towards validation of regional reliability assessment processes system models. The NOPR stated that
line constraints and general comparison and hinder planners from accurately because the regional procedures had not
of modeled to actual load levels. predicting future system conditions, been submitted, the Commission would
Northern Indiana suggests that this which would be detrimental to system not propose to approve or remand
could be accomplished through reliability. We therefore direct the ERO MOD–015–0 until the ERO submits the
validation processes that would first to use its authority pursuant to § 39.2(d) additional information. In addition, the
evaluate the data used to model the of our regulations to require users, Commission stated that MOD–015–0
transformers and the lines and owners and operators to provide the should include a requirement to verify
determine that such data is correct, and validated models to regional reliability accuracy of dynamics system models.
then compare the loads in total against organizations. We direct the ERO to
develop a Work Plan that will facilitate i. Comments
the actual loads, followed by an
examination of individual load points ongoing validation of steady-state 1218. APPA agrees that MOD–015–0
on a system. models and submit a compliance filing is a fill-in-the-blank standard, is not
containing the Work Plan with the sufficient as currently drafted and
ii. Commission Determination Commission. should not be approved as a mandatory
1210. The Commission will not 1214. Consistent with many reliability standard until NERC and the
approve or remand MOD–014–0 until commenters’ responses, we find changes regional reliability organizations/
the ERO submits additional information. to FERC Form 715 are not necessary at Regional Entities develop the necessary
Because the regional procedures have this time, because there is no conflict regional methodologies and the
not been submitted to the Commission, between data gathering and model Commission approves them.
it is not possible to determine at this construction with the FERC Form 715
time whether MOD–014–0 satisfies the process. 1219. EEI agrees with the
statutory requirement that a proposed 1215. The Commission neither Commission’s proposal that a new
Reliability Standard be ‘‘just, accepts nor remands MOD–014–0. requirement for verification of the
reasonable, not unduly discriminatory Because the regional procedures have accuracy of dynamics system models
or preferential, and in the public not been submitted to the Commission, should be a part of this Reliability
interest.’’ The Commission directs the it is not possible to determine at this Standard. In addition, EEI states that the
ERO to modify MOD–014–0 as time whether MOD–014–0 satisfies the validation of models is a valid concern,
discussed below. statutory requirement that a proposed but that any requirement in this area
1211. We maintain our position set Reliability Standard be ‘‘just, should be carefully considered, and that
forth in the NOPR that analysis of the reasonable, not unduly discriminatory any requirement should be related to
Interconnection system behavior or preferential, and in the public using the models to replicate events that
requires the use of accurate steady-state interest.’’ In the interim, compliance occur on the system instead of
models. Therefore, we direct the ERO to with MOD–014–0 should continue on a developing separate testing procedures
modify the Reliability Standard to voluntary basis, and the Commission to verify the models. EEI believes that it
include a requirement that the models considers compliance with the would not be reasonable to subject
be validated against actual system Reliability Standard to be a matter of generation units to artificial
responses. We understand that NERC is good utility practice. We direct the ERO disturbances to validate the models.
incorporating recommendations from to: (1) modify the Reliability Standard NRC recommends periodic verification
the Blackout Report 357 and developing through the Reliability Standards against field data. APPA notes that if
models for the Eastern Interconnection. development process to require actual NERC modifies MOD–015–0 as APPA
1212. Further, the maximum system events be simulated and model anticipates, a requirement to verify the
discrepancy between the model results output validated against actual system accuracy of the dynamics system model
responses and (2) develop a Work Plan would be included and the Regional
357 Recommendation Number 24 of the Blackout and submit a compliance filing that will Entity would be the compliance
Report at 160. enable validation of the steady-state monitor.
ii. Commission Determination Reliability Standard be ‘‘just, argue that NERC, as the standards-
1220. The Commission will not reasonable, not unduly discriminatory setting entity, should make the decision.
approve or remand MOD–015–0 until or preferential, and in the public 1229. TAPS does not oppose the
interest.’’ In the interim, compliance proposed applicability of MOD–016–1,
the ERO submits additional information.
with MOD–015–0 should continue on a but opposes regional interpretations that
Because the regional procedures have
voluntary basis, and the Commission apply the standard more broadly. TAPS
not been submitted to the Commission,
considers compliance with the criticizes SERC’s supplement to MOD–
it is not possible to determine at this
Reliability Standard to be a matter of 016–1 that makes the standard
time whether MOD–015–0 satisfies the
good utility practice. We direct the ERO applicable to LSEs, even though LSEs
statutory requirement that a proposed
to: (1) Modify the Reliability Standard do not have the ability to identify the
Reliability Standard be ‘‘just,
through the Reliability Standards scope and details of the data required to
reasonable, not unduly discriminatory
development process to require be reported for system modeling and
or preferential, and in the public
verification of the accuracy of dynamics reliability analyses. TAPS contends that
interest.’’ The Commission directs the there are no physical differences that
ERO to modify MOD–015–0 through the system models and (2) develop a Work
Plan and submit a compliance filing that make SERC LSEs more capable in this
Reliability Standards development regard than LSEs in other regions. TAPS
process as discussed below. will facilitate ongoing verification of the
accuracy of dynamics system models recommends that the Commission
1221. We maintain our position set
while MOD–015–0 is being modified. clarify that it expects standards to be
forth in the NOPR that the analysis of applied in a consistent and uniform
Interconnection system behavior r. Documentation of Data Reporting manner as written, and will look closely
requires the use of accurate dynamics Requirements for Actual and Forecast at regional variations not justified by
system models. Therefore, we direct the Demands, Net Energy for Load and physical differences.
ERO to modify the Reliability Standard Controllable Demand-Side Management 1230. In contrast to APPA,
to include a requirement that the (MOD–016–1) FirstEnergy and TAPS, EEI believes that
models be validated against actual the standard assigns appropriate
1224. The purpose of MOD–016–1 is
system responses. We agree with EEI responsibility, and that the transmission
to ensure that past and forecasted
and NRC and confirm our position that planner should not be added to the
demand data is available for validation
a requirement to verify that dynamics applicability section of this standard.
of past events and future system
system models are accurate should be a According to EEI, the transmission
assessments. MOD–016–1 requires the
part of this Reliability Standard. We planner has no specific responsibilities
planning authority and the regional
agree with EEI that this new for ensuring data integrity in day-to-day
reliability organization to have
requirement should be related to using practice. EEI understands that data
documentation identifying the scope
the models to replicate events that occur integrity falls within the daily
and details of the actual and forecast
on the system instead of developing responsibilities of data management
demand and load data, and controllable
separate testing procedures to verify the functions, such as metering. EEI states
DSM data to be reported for system
models. We direct the ERO to modify that the NERC Functional Model does
modeling and reliability analysis.
the standard to require actual system not describe technical functions at this
events be simulated and dynamics level of detail. EEI notes, as it also notes
system model output be validated in its comments on the TPL standards,
Standard MOD–016–1 as mandatory and
against actual system responses. that load-related DSM data of the type
enforceable. In addition, the
1222. We believe that dynamics and specificity stated in the NOPR, such
system model validation should not be as load control of customer-owned
submit a modification to MOD–016–1
interrupted while MOD–015–0 is in the appliances, is related to distribution
that expands the applicability section to
modification process. The lack of system and operations planning, and
include the transmission planner.
accurate models needed for the not to transmission system planning.
simulations would halt regional i. Comments
reliability assessment processes and ii. Commission Determination
1226. APPA agrees that MOD–016–1
hinder planners from accurately is sufficient for approval as a mandatory 1231. The Commission approves
predicting future system conditions, and enforceable reliability standard. MOD–016–1 as mandatory and
which would be detrimental to system 1227. In contrast, ISO/RTO Council enforceable. In addition, the
reliability. We therefore direct the ERO and ISO–NE do not support adoption of Commission directs the ERO to modify
to use its authority pursuant to § 39.2(d) this standard because it is contingent on MOD–016–1 as discussed below.
of our regulations to require users, standards that are pending approval by 1232. As an initial matter, we disagree
owners and operators to provide to the the Commission based on their that MOD–016–1 cannot be
Regional Entity the validated dynamics characterization as applying only to implemented until other unapproved
system models while MOD–015–0 is regional reliability organizations, or standards are modified. As previously
being modified. We require the ERO to because they have been categorized as stated, we are requiring the ERO to
develop a Work Plan that will enable fill-in-the-blank standards.358 ISO/RTO provide a Work Plan and compliance
continual validation of dynamics system Council and ISO–NE agree that as a filing regarding collection of
models and submit a compliance filing result, MOD–016–1 cannot be information specified under standards
with the Commission. effectively implemented. that are deferred, and believe there
1223. The Commission neither 1228. APPA and FirstEnergy agree should be no difficulties complying
accepts nor remands MOD–015–0 until with the Commission’s proposal to with this Reliability Standard. We
the ERO submits additional information. direct NERC to add the transmission reiterate that continual collection of
Because the regional procedures have planner function to the applicability data is necessary to maintain system
not been submitted to the Commission, section of the standard, although they reliability, and approval of MOD–016–1
it is not possible to determine at this will help to achieve this objective.
time whether MOD–015–0 satisfies the 358 TPL–005–0, TPL–006–0, MOD–011–0, MOD– 1233. Supported by many
statutory requirement that a proposed 013–0, MOD–014–0 and MOD–015–0. commenters, the Commission directs
the ERO to modify MOD–016–1 and demand data is available for past event humidity, the standard be revised to
expand the applicability section to validation and future system include a more generic term, such as
include the transmission planner, on the assessment. MOD–017–0 requires LSEs, ‘‘peak producing weather conditions.’’
basis that under the NERC Functional planning authorities and resource Alcoa requests that the Commission
Model the transmission planner is planners to annually provide aggregated clarify that these requirements would
responsible for collecting system information on: (1) Integrated hourly only apply to load that varies with
modeling data, including actual and demands; (2) actual monthly and annual temperature and humidity.359
forecast load, to evaluate transmission peak demand (MW) and net load energy 1242. Regarding the Commission’s
expansion plans. We disagree with EEI (GWh) for the prior year; (3) monthly proposal for reporting of the accuracy,
that this Reliability Standard should not peak demand forecasts and net load error and bias of load forecasts
be applied to the transmission planner energy for the next two years and (4) compared to actual loads while taking
because load-related data for annual peak demand forecasts (summer temperature and humidity variations
controllable DSM is not only needed for and winter) and annual net load energy into account, APPA disagrees that the
distribution and transmission for at least five and up to ten years into Commission should direct NERC to
operations, but is also necessary for the the future. modify MOD–017–0 to include these
transmission planner to take 1237. In the NOPR, the Commission requirements. APPA argues that
controllable DSM into account in proposed to approve Reliability requiring the type and granularity of
planning the transmission system. Standard MOD–017–0 as mandatory and forecast information and data the
Requirement R1.1 relates to data enforceable. In addition, the Commission proposes would not
submittal, and requires data to be Commission proposed to direct NERC to necessarily increase the reliability of
consistent with that supplied for the submit a modification to MOD–017–0 load forecasts. APPA believes that it
TPL–005 and TPL–006 standards, which that includes new requirements for: (1) should be up to NERC, as the expert
clearly apply to transmission planners. Reporting of temperature and humidity standards-setting entity, to decide
We approve the ERO’s definition in the along with peak loads and (2) reporting whether such information would yield
glossary of DSM as ‘‘all activities or of the accuracy, error and bias of load enough useful data to make it worth
programs undertaken by a Load-Serving forecasts compared to actual loads while mandating.
Entity or its customers to influence the taking temperature and humidity 1243. TAPS is concerned that the
amount or timing of electricity they variations into account. NOPR’s recommendation for reporting
use.’’ Only activities or programs that the accuracy, error and bias of load
i. Comments forecasts compared to actual loads may
meet the ERO definition, with the
modification directed below, may be 1238. APPA agrees that the be interpreted to mean that measuring
treated as DSM for purposes of the Commission should approve MOD–017– compliance is a function of forecast
Reliability Standards. Recognizing the 0 as mandatory and enforceable. accuracy. TAPS contends that reliance
potential role that industrial customers 1239. In contrast to APPA, ISO–NE on percentage-based deviations as a
who do not take service through an LSE does not support approval of this measurement of compliance is
and load aggregators, for example, may standard because MOD–017–0 depends inappropriate when applied to very
play in meeting the Reliability on MOD–016–0, which further depends small entities because an error that in
Standards, we direct the ERO to modify on various unapproved standards. ISO– absolute terms is too small to affect the
the definition of DSM. Specifically, we NE believes that this makes MOD–017– Bulk-Power System might be a
direct the ERO to add to its definition 0 dependent on unapproved standards, significant percentage of the entity’s
of DSM ‘‘any other entities’’ that and that consequently, MOD–017–0 load.
undertake activities or programs to cannot be effectively implemented. 1244. EEI notes that the direction of
influence the amount or timing of Similarly, ISO/RTO Council states that the NOPR proposal seems to suggest an
electricity they use without violating if the Commission does not approve expansion of the current reporting
other Reliability Standard Requirement. MOD–016–0, then MOD–017–0 will processes required under the Energy
1234. In response to TAPS’s criticism refer to an unapproved standard. Information Administration section 411
of SERC’s desire to expand its regional 1240. Although MidAmerican does process. EEI suggests that such a
standards relative to actual and forecast not oppose the Commission’s proposal proposal should consider whether the
load to include LSEs, we clarify that we regarding reporting of temperature and section 411 process itself requires
can only act on the standards before us. humidity along with peak loads, it finds change or provides for an adequate level
We do not make a decision on SERC’s it of only limited value. MidAmerican of reporting, and the extent to which an
standards in this rule. We therefore notes that there are typically other explicit NERC process requirement
recommend that TAPS raise this issue explanatory variables, such as economic could distract or confuse industry
in the Reliability Standards variables, that are needed to understand participants.
development process. the relationship between system load 1245. FirstEnergy states that the
1235. The Commission approves and temperature and humidity. In transmission planner should be added
Reliability Standard MOD–016–1 as addition, the relationship and the to the list of applicable entities for this
mandatory and enforceable and directs importance of temperatures are different standard. FirstEnergy also states that it
the ERO to develop a modification to for every utility, which limits the may be reasonable to interpret or apply
MOD–016–0 through the Reliability effectiveness of standardization. this Reliability Standard in a manner to
Standards development process to FirstEnergy suggests that NERC should permit an affected entity that is a
include the transmission planner in the allow for a transition period for entities subsidiary in a utility holding company
applicability section. that currently do not track temperature corporate structure to satisfy its
and humidity along with peak load.
s. Aggregated Actual and Forecast 1241. Xcel states that in many areas 359 Alcoa states that because its smelting load (the
Demands and Net Energy for Load of the country, humidity is not a vast majority of its load) does not vary in
(MOD–017–0) weather-indicator for peak load. Xcel accordance with temperature and humidity,
comparing Alcoa’s load forecasts to actual loads
1236. The purpose of MOD–017–0 is therefore suggests that instead of taking this information into account would be
to ensure that past and forecasted including a reporting requirement for burdensome without being useful.
reporting requirements by means of a be served. Understanding the accuracy, load forecasts alone will not increase
corporate affiliate. Adopting this error and bias of the forecast and taking the reliability of load forecasts, and, as
interpretation or application would action to minimize them would improve a result, will not affect system
promote efficiency and decrease the Reliability Standards and achieve reliability. Understanding of the
confusion in circumstances where the goal. differences without action based on that
several utility subsidiaries in the same 1250. The Commission also directs understanding would not change
corporate family are subject to this the ERO to modify the Reliability anything. Therefore, we direct the ERO
Reliability Standard. Standad to require reporting of to add a Requirement that addresses
1246. MISO recommends that the temperature and humidity along with correcting forecasts based on prior
Commission direct NERC to change the peak load because actual load must be inaccuracies, errors and bias.
requirement of this standard so that weather normalized for meaningful 1254. Regarding TAPS’s concern that
aggregated actual hourly demand data comparison with forecasted values.361 accuracy of reporting may be used as a
(at the balancing authority level) are to In response to MidAmerican’s compliance Measure, we clarify that the
be provided within 30 calendar days of observation that it sees little value in compliance Measures for this Reliability
a request from NERC. MISO believes collecting this data, we believe that Standard do not measure accuracy as a
that load aggregated at this level should collecting it will allow all load data to compliance Measure. Any change in the
be sufficient for the modeling activities be weather-normalized, which will Measures would be arrived at in the
associated with system reliability. MISO provide greater confidence when Reliability Standards development
understands that hourly data is comparing data accuracy, which process.
collected by those utilities that have ultimately will enhance reliability. As a 1255. The Commission acknowledges
balancing authority responsibilities, and result, we reject Xcel’s proposal that the EEI’s concern that a requirement for
that these utilities can report aggregated standard be revised to include only the additional information may impose an
hourly loads for their responsibility area generic term ‘‘peak producing weather expansion of existing Energy
within 30 days. MISO notes that some conditions’’ because it is too generic for Information Administration section 411
balancing authority utilities provide a mandatory Reliability Standard. reporting requirements.362 We believe,
energy services to smaller municipal or 1251. We also reject Alcoa’s proposal however, that the ERO can ensure that
distribution cooperative utilities where that the reporting of temperature and the additional reporting of temperature
the metering system records only the humidity along with peak loads should and humidity along with peak loads
peak demand and total energy supplied apply only to load that varies with does not conflict with or jeopardize the
over approximately 30 days. MISO temperature and humidity because it Energy Information Administration
cautions that the balancing authority essentially is a request for an exemption section 411 reporting process.
will usually have hourly data for from the requirements of the Reliability 1256. We agree with FirstEnergy that
demand and energy within a segment of Standard and should therefore be transmission planners should be added
the network, but may have no hourly directed to the ERO as part of the as reporting entities, and direct the ERO
metering on a specific customer served Reliability Standards development to modify the standard accordingly. We
by that segment. process. We agree, however, with APPA agree that in the NERC Functional
that certain types of load are not Model, the transmission planner is
sensitive to temperature and humidity. responsible for collecting system
1247. The Commission approves We therefore find that the ERO should modeling data including actual and
MOD–017–0 as mandatory and address Alcoa’s concerns in its forecast demands to evaluate
enforceable. In addition, the Reliability Standards development transmission expansion plans.
Commission directs the ERO to modify process. 1257. The Commission disagrees in
MOD–017–0 as discussed below. 1252. The Commission adopts the general with MISO’s recommendation to
1248. As an initial matter, we disagree NOPR proposal directing the ERO to allow some exceptions to the
that MOD–017–0 cannot be modify the Reliability Standard to requirement to provide hourly demand
implemented because it is dependent on require reporting of the accuracy, error data. However, the metering for some
MOD–016–0, which further depends on and bias of load forecasts compared to customer classes may not be designed to
various unapproved standards. As actual loads with due regard to provide certain types of data. The
previously stated, we direct the ERO to temperature and humidity variations. Commission therefore directs the ERO
provide a Work Plan and compliance This requirement will measure the to consider MISO’s concerns in the
filing regarding the collection of closeness of the load forecast to the Reliability Standards development
information specified under standards actual value. We understand that load process.
that are deferred, and believe there forecasting is a primary factor in 1258. The Commission approves
should be no difficulty complying with achieving Reliable Operation. Reliability Standard MOD–017–0 as
this Reliability Standard. We reiterate Underestimating load growth can result mandatory and enforceable. In addition,
that ongoing collection of data is in insufficient or inadequate generation the Commission directs the ERO to
necessary to maintain system reliability, and transmission facilities, causing develop a modification to MOD–017–0
and approval of MOD–017–0 will help unreliability in real-time operations. through the Reliability Standards
achieve this goal. Measuring the accuracy, error and bias development process that includes
1249. As a general matter, the requirements for: (1) Reporting of
of load forecasts is important
Commission is required to insure that temperature and humidity along with
information for system planners to
the Reliability Standards are sufficient the peak loads; (2) reporting of accuracy,
include in their studies, and also
to adequately protect Bulk-Power
improves load forecasts themselves.
System reliability.360 One of the main 1253. The Commission agrees with 362 Form EIA–411, ‘‘Coordinated Bulk Power
drivers in achieving Reliable Operation APPA that accuracy, error and bias of
Supply Program Report’’ collects information about
is to accurately predict the firm regional electric supply and demand projections for
a five-year advance period as well as information
transactions and native load that must 361 See Brattle Group Report on PJM Load on the transmission system and supporting
Forecast Model, available at http://www.pjm.com/ facilities. See http://www.eia.doe.gov/cneaf/
360 Order No. 672 at P 329. planning/res-adequacy/load-forecast.html. electricity/page/forms.html.
error and bias of load forecasts be no difficulties complying with this consider adding requirements that
compared to actual loads taking Reliability Standard. We reiterate that would require resource planners to
temperature and humidity variations ongoing collection of data is necessary analyze differences between actual and
into account; (3) addressing methods to to maintain system reliability, and forecasted demands for the five years of
correct forecasts to minimize prior approval of MOD–018–0 will help to actual controllable load required in
inaccuracies, errors and bias and (4) achieve this goal. MOD–019–0 and identify what
including the transmission planner in 1266. Regarding TAPS’s concern that corrective actions were taken to improve
the applicability section. small entities should not be required to controllable load forecasting for the 10-
comply with MOD–018–0 because their year planning horizon.
t. Treatment of Nonmember Demand forecasts are not significant for system 1272. EEI and FirstEnergy state that
Data and Uncertainties in the Forecasts reliability purposes, the Commission determining the precise availability and
of Demand and Energy for Load (MOD– directs the ERO to address this matter in capability of direct load control is a
018–0) the Reliability Standards development difficult management and customer
1259. The purpose of MOD–018–0 is process. relations exercise, and therefore, this
to ensure that past and forecasted requirement should not be included in
u. Reporting of Interruptible Demands
demand data are available for past event the Reliability Standard. EEI states that,
and Direct Control Load Management
validation and future system unlike other technical requirements for
(MOD–019–0)
assessment. MOD–018–0 requires LSEs, generation resources to be tested for
planning authorities, transmission 1267. The purpose of MOD–019–0 is various capabilities and limits under
planners and resource planners to to ensure that past and forecasted different types of stresses, there are no
submit load data reports that: (1) demand data is available for past event similar requirements for load control
Indicate whether the demand data validation and future system equipment. Elsewhere in these
includes the regional reliability assessment. The Reliability Standard comments, EEI supports explicit
organization’s non-members’ demands requires that LSEs, planning authorities, recognition that load control should be
and (2) addresses how assumptions, transmission planners and resource recognized on the same terms as
methods and uncertainties are treated. planners annually provide their generation resources for setting reserve
1260. In the NOPR, the Commission forecasts of interruptible demands and requirements. However, EEI cautions
proposed to approve MOD–018–0 as direct control load management to against imposing requirements to verify
mandatory and enforceable. NERC, the regional reliability load control devices and interruptible
organization and other entities as loads, because the practical
i. Comments specified in MOD–016–1, Requirement complexities of conducting such testing
1261. APPA agrees that MOD–018–0 R1. The data should contain the and verification, including customer
is sufficient for approval as a mandatory forecasts for at least five years, and up notification, the need to plan, manage,
and enforceable reliability standard. to ten years. and coordinate testing with critical
1262. In contrast to APPA, ISO/RTO 1268. In the NOPR, the Commission commercial and industrial customer
Council and ISO–NE view MOD–018–0 proposed to approve Reliability activities, and the need to conduct such
as dependent upon fill-in-the-blank Standard MOD–019–0 as mandatory and tests at times of peak load, make this an
NERC standards, and as such, argue that enforceable. In addition, the extremely difficult operational
the Commission should refrain from Commission proposed to direct NERC to challenge.
approving the Reliability Standard at submit a modification to MOD–019–0 1273. International Transmission
this time. ISO–NE states that approval of that includes new requirements for notes that many load control
this standard would create dependency reporting of the accuracy, error and bias applications are not individually
of MOD–018–0 on other unapproved of controllable load 363 forecasts. metered, which means impact can only
standards. Consequently, ISO–NE i. Comments be estimated within a LSE’s service
contends that MOD–018–0 cannot be territory. International Transmission
effectively implemented. 1269. APPA agrees that MOD–019–0 believes that accurate reporting may not
1263. TAPS reiterates a similar should be approved as mandatory and be feasible.
concern it expressed with regard to enforceable. However, APPA states that 1274. TAPS raises concern that the
MOD–017–0. TAPS notes that the proper entity to decide whether the Commission’s recommendation in the
uncertainty in a small entity’s forecast is recommended changes to the standards NOPR may be interpreted to make
insignificant. TAPS recommends that should be made is NERC, through forecast accuracy a component of
load forecast uncertainty should be Reliability Standards development Reliability Standards compliance. TAPS
addressed at an aggregate level on a process. cautions that reliance on percentage-
1270. The ISO/RTO Council and ISO– based deviations as a measurement of
regional basis (as is often done in the
NE note that MOD–019–0 is dependent, compliance is inappropriate when
establishment of reserve obligations).
through MOD–016, on various applied to very small entities because an
ii. Commission Determination unapproved standards. Consequently, error that in absolute terms is too small
1264. The Commission approves they contend that MOD–019–0 cannot to affect the Bulk-Power System might
MOD–018–0 as mandatory and be effectively implemented. be a significant percentage of the
enforceable. 1271. APPA proposes that NERC entity’s load. The percentage deviation
1265. As an initial matter, we disagree consider modifying MOD–019–0 to from a forecasted peak of a small (e.g.,
that MOD–018–0 cannot be include new requirements for reporting 10 MW) entity will almost always be
implemented because it is dependent on on the accuracy, error and bias of significantly higher than the percentage
various unapproved standards. As controllable load forecasts. APPA deviation of a large (more than 10,000
previously stated, we direct the ERO to further believes that NERC should MW) entity, but the smaller system’s
provide a Work Plan and compliance 363 While MOD–019–0 and MOD–020–0 use two
deviation will have little if any impact
filing regarding the collection of separate terms, interruptible load and direct control
on the bulk transmission system. In
information specified for standards that load management, the NOPR uses ‘‘controllable other contexts, the Commission has
are deferred, and believe there should load’’ to refer to both of them. recognized that reliance solely on
percentage deviations as compliance 1278. We direct the ERO to include Commission. APPA does not oppose
measures can produce discriminatory APPA’s proposal in the Reliability NERC’s consideration of possible
results, and has applied MW minimums Standards development process to add a changes to MOD–020–0 regarding the
to minimize the discrimination that new requirement to MOD–019–0 that reporting of the accuracy, error and bias
would otherwise result. would oblige resource planners to of controllable load forecasts.
analyze differences between actual and 1284. EEI and FirstEnergy state that
ii. Commission Determination forecasted demands for the five years of for practical reasons, determining the
1275. The Commission approves actual controllable load and identify precise availability and capability of
MOD–019–0 as mandatory and what corrective actions should be taken direct load control is a difficult
enforceable. In addition, the to improve controllable load forecasting management and customer relations
Commission directs the ERO to modify for the 10-year planning horizon. exercise. Unlike other technical
MOD–019–0 as discussed below. 1279. Regarding TAPS’ concern that requirements for generation resources to
1276. As an initial matter, we disagree reporting accuracy could be used as a be tested for various capabilities and
that MOD–019–0 cannot be compliance Measure, we clarify that limits under different types of stresses,
implemented because it is dependent on compliance Measures for this Reliability there are no similar requirements for
MOD–016–0, which further depends on Standard do not include accuracy as a load control equipment. The practical
various unapproved standards. As compliance measure. Any change in this complexities of conducting such testing
previously stated, we direct the ERO to policy would be arrived at in the ERO and verification, including customer
provide a Work Plan and compliance Reliability Standards development notification, the need to plan, manage
filing regarding the collection of process. and coordinate testing with critical
information specified under related 1280. Accordingly, the Commission commercial and industrial customer
standards that are deferred, and believe approves MOD–019–0 as mandatory and activities, and the need to conduct such
there should be no difficulties enforceable. In addition, the tests at times of peak load make this an
complying with this Reliability Commission directs the ERO to develop extremely difficult operational
Standard. We reiterate that ongoing a modification to MOD–019–0 through challenge.
the Reliability Standards development 1285. LPPC opposes the
collection of data is necessary to
process to require: (1) Reporting of the Commission’s proposal for modification
maintain system reliability, and
accuracy, error and bias of controllable to report the accuracy of load forecasts.
approval of MOD–019–0 will help to
load forecasts and (2) analyzing LPPC points out that load reduction
achieve this goal. We therefore direct
differences between actual and forecasts are imprecise by nature, and,
the ERO to use its authority pursuant to
forecasted demands for the five years of consequently, some utilities do not
§ 39.2(d) of our regulations to require undertake them. LPPC also notes that
users, owners and operators to provide actual controllable load and identify
what corrective actions should be taken interruptible loads are often on one-year
to the Regional Entity information contracts and, in some regions,
related to forecasts of interruptible to improve controllable load forecasting
for the 10-year planning horizon. instances of entities actually exercising
demands and direct control load load reduction are rare; in these areas,
management. v. Providing Interruptible Demand and system operators often do not separately
1277. The Commission adopts the Direct Control Load Management Data forecast interruptible load reductions,
NOPR proposal directing the ERO to to System Operators and Reliability and reporting on the accuracy of
modify this standard to require Coordinators (MOD–020–0) forecasts on interruptible load
reporting of the accuracy, error and bias 1281. The purpose of MOD–020–0 is reductions, even if interruptible load
of controllable load forecasts. This to ensure that past and forecasted forecasts were done, is of little value.
requirement will enable planners to get demand data are available for validation LPPC states that in other areas, such as
a more reliable picture of the amount of of past events and future system New York, interruptible load reductions
controllable load that is actually assessment. The Reliability Standard are more predictable, because many
available, therefore allowing planners to requires that each LSE, planning large loads have signed interruptible
conduct more accurate system reliability authority, transmission planner and load contracts and have a history of
assessments. The Commission finds that resource planner identify its amount of: exercising load reductions. LPPC notes
controllable load can be as reliable as (1) Interruptible demand and (2) direct that system operators in areas similar to
other resources, and therefore should control load management to New York have sufficient data so that
also be subject to the same reporting transmission operators, balancing forecasting for interruptible loads is a
requirements. Although we recognize authorities and reliability coordinators useful exercise, and as a result, a
that verifying load control devices and upon request. requirement to report on the accuracy of
interruptible loads may be complex, we 1282. In the NOPR, the Commission forecasts in these regions would be of
do not believe that it is overly so. proposed to approve Reliability some value, but not elsewhere.
Further, we believe that the ERO, Standard MOD–020–0 as mandatory and Consequently, LPPC recommends that
through its Reliability Standards enforceable. In addition, the the requirement should be region-
development process can develop Commission proposed to direct NERC to specific and should only apply to
innovative solutions to the submit a modification to MOD–020–0 entities that separately forecast
Commission’s concern. We also note that includes a new requirement interruptible loads. LPPC further notes
that EEI is concerned about such testing concerning the reporting of the that energy efficiency programs are
at times of peak load. We clarify that we accuracy, error and bias of controllable often built into the larger assumptions
are not requiring the testing to be load forecasts in its Reliability in the forecast and are not separately
conducted at peak load conditions. Standards development process. forecasted.
Consequently, we reject the proposals of 1286. TAPS is concerned that the

EEI, FirstEnergy and International i. Comments Commission’s recommendation in the
Transmission to discard the requirement 1283. APPA supports approval of NOPR may be interpreted to make
for reporting of the accuracy, error and MOD–020–0 as mandatory and forecast accuracy a component of
bias of controllable load forecasts. enforceable, as proposed by the Reliability Standards compliance.
However, it asserts that reliance on policy would be arrived at in the ERO provide more consistent and uniform
percentage-based deviations as a Reliability Standards development evaluation of demand response data to
measurement of compliance is process. facilitate system operator confidence in
inappropriate when applied to very 1290. The Commission approves relying on such resources for various
small entities because an error that in Reliability Standard MOD–020–0 as reliability purposes. In addition, APPA
absolute terms is too small to affect the mandatory and enforceable and directs believes that NERC should consider
Bulk-Power System might be a the ERO to develop a modification to adding requirements to MOD–021–0
significant percentage of the entity’s MOD–020–0 through the Reliability that would provide information to allow
load. The percentage deviation from a Standards development process to resource planners to analyze the causes
forecasted peak of a small (e.g., 10 MW) require reporting of the accuracy, error of differences between actual and
entity will almost always be and bias of controllable load forecasts. forecasted demands, and to identify any
significantly higher than the percentage w. Documentation of the Accounting corrective actions that should be taken
deviation of a large (more than 10,000 Methodology for the Effects of to improve forecasted demand
MW) entity, but the smaller system’s Controllable Demand-Side Management
responses for future forecasts. APPA
deviation will have little if any impact believes that all of these proposals
in Demand and Energy Forecasts (MOD–
on the bulk transmission system. In should be submitted to NERC as the
021–0)
other contexts, the Commission has standards-setting body with technical
recognized that reliance solely on 1291. MOD–021–0 requires LSEs, expertise, and vetted through its
percentage deviations as a compliance transmission planners and resource Reliability Standards development
measure can produce discriminatory planners to clearly document how each process, rather than being imposed by
results, and has applied MW minimums addresses the demand and energy Commission fiat.
to minimize the discrimination that effects of DSM programs. The standard 1296. FirstEnergy adds that MOD–
would otherwise result. also requires an applicable entity to 019–0, MOD–020–0 and MOD–021–0
include information detailing how DSM should be combined because they all
ii. Commission Determination measures are addressed in the forecasts address load forecast inputs, and that
1287. The Commission approves of its peak demand and annual net combining these standards will
MOD–020–0 as mandatory and energy for load in the data reporting eliminate any inconsistencies and make
enforceable. In addition, the procedures of MOD–016–0, compliance easier and more efficient.
Commission directs the ERO to modify Requirement R1.
MOD–020–0 as discussed below. 1292. In the NOPR, the Commission ii. Commission Determination
1288. We adopt the proposal to direct proposed to approve Reliability 1297. The Commission approves
the addition of a requirement for Standard MOD–021–0 as mandatory and MOD–021–0 as mandatory and
reporting of the accuracy, error and bias enforceable. In addition, the enforceable. In addition, the
of controllable load forecasts because Commission proposed to direct NERC to Commission directs the ERO to develop
we believe that reporting of this submit a modification to MOD–021–0 a modification to MOD–021–0 through
information will provide applicable that: (1) Includes a requirement the Reliability Standards development
entities with advanced knowledge about standardizing principles on reporting process as discussed below.
the exact amount of available and validation of DSM program 1298. As an initial matter, we disagree
controllable load, which will improve information and (2) modifies the title that MOD–021–0 cannot be
the accuracy of system reliability and purpose statement to remove the implemented because it is based on
assessments. The Commission finds that word ‘‘controllable.’’ MOD–016–0, and through it on various
controllable load in some cases may be unapproved standards, which creates an
as reliable as other resources and i. Comments implementation problem. As previously
therefore must also be subject to the 1293. APPA supports the stated, we direct the ERO to provide a
same reporting requirements. We Commission’s approval of MOD–021–0 Work Plan and compliance filing
recognize that determining the precise as mandatory and enforceable. regarding collection of information
availability and capability of direct load 1294. In contrast, ISO–NE and ISO/ specified under related standards that
control is a difficult management and RTO Council oppose adoption of this are deferred, and believe there should
customer relations exercise, but we do standard by the Commission. ISO–NE be no difficulty complying with this
not believe that it will be overly so. argues that the LSE, transmission Reliability Standard. We reiterate that
Further, we believe that the ERO, planner and resource planner should ongoing collection of data is necessary
through its Reliability Standards each include information regarding how to maintain system reliability, and
development process can develop DSM measures are addressed in the approval of MOD–21–0 will help to
innovative solutions to the forecasts of its peak demand and annual achieve this goal. Therefore, we direct
Commission’s concern. Regarding net energy for load in the data reporting the ERO to use its authority pursuant to
LPPC’s suggestion that this requirement procedures of MOD–016–0 R1. § 39.2(d) of our regulations to require
should be region-specific and should Therefore, they contend that, because users, owners and operators to provide
only apply to entities that separately MOD–016–0 is dependent on various to the Regional Entity the information
forecast interruptible loads, we note that unapproved Reliability Standards, required by this Reliability Standard.
if a region does not forecast MOD–021–0 is also dependent on 1299. We agree with FirstEnergy and
interruptible loads, this Reliability unapproved Reliability Standards. SMA that standardization of principles
Standard does not apply. Consequently, ISO–NE contends that on reporting and validating DSM
1289. Regarding TAPS’ concern that MOD–021–0 cannot be effectively program information will provide
forecast accuracy may be interpreted as implemented. consistent and uniform evaluation of
a component of Reliability Standards 1295. FirstEnergy and SMA support demand response to facilitate system
compliance, we clarify that compliance the Commission’s proposal to require operator confidence in relying on such
Measures for this Reliability Standard consistent and uniform methods for resources, which will further increase
do not measure accuracy as a reporting and validating demand-side accuracy of transmission system
compliance measure. Any change in this information. SMA notes that this will reliability assessment and consequently
enhance overall reliability. We direct stated that because the regional problem is compounded if a test takes
the ERO to modify this Reliability procedures had not been submitted, it some time to complete, and all
Standard to allow resource planners to would not propose to approve or neighboring generating owners were
analyze the causes of differences remand MOD–024–1 until the ERO required to comply at the same time.
between actual and forecasted demands, submits the additional information. In The end result would be a lack of
and to identify any corrective actions addition, the Commission expressed regulating capability in a region.
that should be taken to improve concern that the Reliability Standard is 1308. Constellation encourages the
forecasted demand responses for future not sufficiently clear because it does not Commission and NERC to take extra
forecasts. Therefore, we adopt the NOPR define test conditions, e.g., ambient care in distinguishing between those
proposal and direct the ERO to modify temperature, river water temperature or requirements in each Reliability
MOD–021–0 by adding a requirement methodologies for calculating de-rating Standard that are core requirements as
for standardization of principles on factors for conditions such as higher opposed to supporting information,
reporting and validating DSM program ambient temperatures than the test explanatory statements or
information. temperature. Further, the NOPR stated administrative processes. For example,
1300. With respect to FirstEnergy’s that Requirement R2 provides that the Constellation points out that in MOD–
suggestion to combine MOD–019–0, ‘‘regional reliability organization shall 024–1, NERC proposes that a
MOD–020–0 and MOD–021–0, we provide generator gross and net real verification process be made into a
understand that the ERO intends to power capability verification within 30 Reliability Standard with full
consolidate Reliability Standards and calendar days of approval’’ and noted enforceability. Although Constellation
encourage FirstEnergy to make its that it is not clear what approval is agrees that the verification process
suggestion in the Reliability Standards required and when the 30-day period spelled out in this Reliability Standard
development process. starts. is important and should be performed
1301. The Commission directs the by the industry, the Reliability
ERO to modify the title and purpose i. Comments
Standard, alone, exclusively provides
statement to remove the word 1305. APPA agrees that MOD–024–1 for an administrative process and,
‘‘controllable.’’ We note that no is a fill-in-the-blank standard, is not therefore, if not strictly complied with,
commenter disagrees. sufficient as currently drafted, and does not necessarily foreshadow an
1302. The Commission approves should not be approved as a mandatory immediate, real-time reliability problem
Reliability Standard MOD–021–0 as Reliability Standard until NERC and the on the bulk electric system.
mandatory and enforceable. We direct regional reliability organizations/ Constellation is concerned that the
the ERO to develop a modification to Regional Entities develop the necessary Levels of Non-Compliance associated
MOD–021–0 through the Reliability regional methodologies and the with MOD–024–1 and MOD–025–1 are
Standards development process to (1) Commission approves them. based on arbitrary percentages that have
add a Requirement standardizing 1306. APPA also states that the results little to do with the impact a failure to
principles on reporting and validation of field-testing will enable NERC to perform would have on reliability.
of DSM program information; (2) allow refine this Reliability Standard in an Constellation believes that these
resource planners to analyze the causes appropriate manner. APPA further problems ultimately will reduce the
of differences between actual and believes that NERC should consider effectiveness of the Reliability
forecasted demands, and to identify any modifying this Reliability Standard to Standards. Consequently, Constellation
corrective actions that should be taken provide requirements for this requests that the Commission recognize
to improve forecasted demand information on an Interconnection-wide these concerns and direct NERC to take
responses for future forecasts and (3) basis, in the same manner that IRO– them into consideration during the
modify the title and purpose statement 006–2 sets the requirement for Reliability Standards development
to remove the word ‘‘controllable.’’ transmission loading relief in each process.
x. Verification of Generator Gross and Interconnection.
1307. Northern Indiana urges the ii. Commission Determination
Net Real Power Capability (MOD–024–
1) Commission to reconsider the proposed 1309. The Commission will not
1303. The purpose of MOD–024–1 is changes at this time in favor of approve or remand MOD–024–1 until
to ensure that accurate information on continuation of the currently-effective the ERO submits additional information.
generation gross and net real power Reliability Standard. Northern Indiana In order to continue verifying and
capability is used for reliability states that the NOPR’s suggestion that reporting gross and net real power
assessments. The Reliability Standard there should be greater specificity and generating capability needed for
requires the regional reliability definition of test conditions could reliability assessment and future plans,
organization to establish and maintain potentially create reliability issues, we direct the ERO to develop a Work
procedures to address verification of rather than protect against them. Plan and submit a compliance filing.
generator gross and net real power Northern Indiana explains that certain 1310. The Commission remains
capability. It also requires a generator types of testing, and their preparation, concerned that the Reliability Standard
owner to follow its regional reliability can be accomplished more quickly than is not sufficiently clear because it does
organization’s procedure for verifying others, with test duration varying from not define the test conditions and
and reporting gross and net real power several minutes to several days.364 The methodologies for calculating de-rating
generating capability. 364 Northern Indiana states that the longer the undergoing tests at the same time in order to meet
1304. In the NOPR, the Commission duration, the more stressed the units—and the the test criteria. For example, a temperature trigger
identified MOD–024–1 as a fill-in-the- system—during these testing intervals. For of 90 degrees Fahrenheit for a net demonstrated
blank standard that requires the regional example, Commission staff recommends the use of capacity test could result in all neighboring
reliability organization to establish and ambient air temperature and river water generating owners taking their units off of
temperature as triggering tests to verify generator automatic generator control to reach maximum net
maintain procedures to address gross and net real power capability. However, demonstrated capacity for the test. By taking units
verification of generator gross and net temperature-driven test triggers would result in off automatic generator control, the generating
real power capability. The Commission several neighboring systems in the same region owners’ regulating capabilities are lost.
factors. The Commission does not agree this information. In the interim, MidAmerican suggests that any such
with APPA that NERC should consider compliance with MOD–024–0 should requirement should allow existing units
modifying this Reliability Standard to continue on a voluntary basis, and the to be grandfathered in as they are
provide requirements for this Commission considers compliance with currently rated so that a new minimum
information on an Interconnection-wide it to be a matter of good utility practice. reactive power standard is only
basis, in the same manner that IRO– applicable to new generating units or
y. Verification of Generator Gross and
006–3 sets the requirements for units that are being significantly
Net Reactive Power Capability (MOD–
transmission loading relief in each upgraded.
025–1) 1318. Northern Indiana cautions the
Interconnection. We believe, however,
that while the overall methodology for 1314. MOD–025–1 requires the Commission against the establishment
verification of generator gross and net regional reliability organization to of a minimum capability, because it
real power capability should be the establish and maintain procedures to could diminish a unit’s ability to
same, test conditions (such as ambient address verification of generator gross contribute to Interconnection reliability,
temperature, river water temperature, and net reactive power capability. The and to maintain its own stability.
etc.) can vary. Reliability Standard also requires the Northern Indiana points out that all
1311. In the NOPR, the Commission regional reliability organization to generators have reactive capability
stated that the Reliability Standard provide its generator gross and net curves from design manufacturers, and
could be improved by defining test reactive power capability verification these curves provide operators with a
conditions, e.g., ambient temperature, and reporting procedures, and any range that is considered by the
river water temperature, and changes to those procedures, to the manufacturer to be a safe operating
methodologies for calculating de-rating generator owners, generator operators, limit. Northern Indiana contends that
factors for conditions such as higher transmission operators, planning the continued use of reactive capability
ambient temperatures than the test authorities and transmission planners curves is superior to establishment of an
temperature. With the test information affected by the procedure within 30 MVAR capability, and that operators
and methodologies, the generator output calendar days of approval of the effectively use these curves to maintain
that can be expected to be available at Reliability Standard. unit stability, while also contributing to
forecasted weather conditions can be 1315. In the NOPR, the Commission the reliability of the Interconnection.
determined. The Commission agrees identified MOD–025–1 as a fill-in-the- Northern Indiana believes that
with Northern Indiana that testing all blank standard that requires the regional continued reliance on manufacturer
units at the same time is not feasible. reliability organization to establish and reactive capability curves is a
However, the Commission did not maintain procedures to address technically sound means to achieve the
propose simultaneous testing. Rather, verification of generator gross and net Reliability Standard’s stated reliability
we direct the ERO to develop reactive power capability. The NOPR goal in a manner superior to the
appropriate requirements to document stated that because the regional establishment of MVAR capability.
test conditions and the relationships procedures had not been submitted, the 1319. Similarly to Northern Indiana,
between test conditions and generator Commission would not propose to Wisconsin Electric encourages the
output so that the amount of power that approve or remand MOD–025–1 until Commission to withdraw this suggested
can be expected to be delivered from a the ERO submits the additional modifications to NERC’s Reliability
generator at different conditions, such information. In addition, the Standard for several reasons. Wisconsin
as peak summer conditions, can be Commission suggested that MOD–025–1 Electric believes that a requirement to
determined. Similarly, we respond to could be clearer by requiring a test and verify the minimum reactive
Constellation that any modification of minimum reactive power (MVAR) capability at multiple points over the
the Levels of Non-Compliance in this capability throughout a unit’s real operating range as part of the additional
Reliability Standard should be reviewed power operating range. Further, the minimum MVAR capability requirement
in the ERO Reliability Standards NOPR stated that requirement R2 would be a significant and unnecessary
development process. provides that the ‘‘regional reliability burden on utilities. In Wisconsin
1312. We repeat our concern that organizations shall provide generator Electric’s experience, a reactive power
Requirement R2, which specifies that gross and net real power capability test at a single operating point is
the ‘‘regional reliability organization verification within 30 calendar days of sufficient and more practical to achieve.
shall provide generator gross and net approval’’ and noted that it is not clear 1320. SoCal Edison recommends that
real power capability verification within what approval is required and when the the Commission specifically state the
30 calendar days of approval,’’ is not 30-day period starts. effective date for compliance with each
clear. The requirement lacks a definition Reliability Standard in its Final Rule.
of what approval is required and when i. Comments SoCal Edison states that the effective
the 30-day period starts. Therefore, we 1316. APPA agrees that the date is critical and gives the example of
direct the ERO to modify this Reliability Commission should not approve this MOD–025–1, with effective dates
Standard by adding information that Reliability Standard until NERC and the phased in over several years after they
will clarify this requirement. regional reliability organizations/ are adopted by the NERC board of
1313. The Commission neither Regional Entities develop the necessary trustees, and well after the date the
accepts nor remands MOD–024–1 until regional methodologies and the Final Rule will be issued.
the ERO submits additional information. Commission approves them.
Although the Commission did not 1317. MidAmerican notes that the ii. Commission Determination
propose any action with regard to Reliability Standard will be clearer if 1321. The Commission will not
MOD–024–1, it addressed above a minimum reactive power capability is approve or remand MOD–025–1 until
number of concerns regarding the required throughout a unit’s real power the ERO submits additional information.
Reliability Standard. We therefore direct operating range. However, making this a In order to continue verifying and
the ERO to use its authority pursuant to Requirement for existing units would be reporting gross and net reactive power
§ 39.2(d) of our regulations to require a hardship for units not built with the generating capability needed for
users, owners and operators to provide Requirement in mind. Therefore, reliability assessment and future plans,
we direct the ERO to develop a Work operators, reliability coordinators and operator training are discussed in PER–
Plan as defined in the Common Issues balancing authorities with the intention 002–0.365
section. of ensuring the safe and reliable 1331. Accordingly, the Commission
1322. We disagree with commenters operation of the interconnected grid approves PER–001–0 as mandatory and
that verifying generator reactive through the retention of suitably trained enforceable. We find that the Reliability
capability is a particularly difficult and qualified personnel in positions Standard is just, reasonable, not unduly
issue. The capability of generators to that can impact the reliable operation of discriminatory or preferential and in the
produce reactive power is essential for the Bulk-Power System. The PER public interest.
real-time analysis and planning. The Reliability Standards address: (1) b. Operating Personnel Training (PER–
Reliability Standard addressing this Operating personnel responsibility and 002–0)
issue requires a generator to verify authority; (2) operating personnel
reactive capability only at the unit’s full 1332. PER–002–0 requires that
training; (3) operating personnel
MW loading. However, other than transmission operator and balancing
credentials and (4) reliability
baseload units, most generating units authority personnel are adequately
coordination staffing.
rarely operate at full MW loading. It is trained. The Reliability Standard: (1)
unclear what reactive capability is a. Operating Personnel Responsibility Directs each transmission operator and
available throughout a unit’s real power and Authority (PER–001–0) balancing authority to have a training
(MW) operating range. Therefore, we program for all operating personnel who
believe a clearer standard would require 1326. PER–001–0 requires that occupy positions that either have
a verification of MVAR capability transmission operator and balancing primary responsibility, directly or
throughout a unit’s real power (MW) authority personnel have the indirectly, for the real-time operation of
operating range. However, we share responsibility and authority to direct the Bulk-Power System or who are
concern with several commenters that actions in real-time. PER–001–0 also directly responsible for complying with
such a requirement for all generators requires clear documentation that the NERC Reliability Standards; (2) lists
may not be necessary. Therefore, we operating personnel have the criteria that must be met by the training
adjust the proposal in the NOPR and responsibility and authority to program and (3) requires that operating
direct the ERO to modify MOD–025–1 to implement real-time action to ensure personnel receive at least five days of
require verification of reactive power the stable and reliable operation of the training in emergency operations each
capability at multiple points over a Bulk-Power System. year using realistic simulations.
unit’s operating range. 1333. In the NOPR, the Commission
1323. We maintain the concern we proposed to approve Reliability
proposed to approve PER–001–0 as
expressed in the NOPR that Standard PER–002–0 as mandatory and
mandatory and enforceable.
Requirement R2 provides that the enforceable. In addition, the
‘‘regional reliability organization shall i. Comments Commission proposed to direct that
provide generator gross and net reactive NERC submit a modification to PER–
power capability verification within 30 1328. APPA agrees that PER–001–0 is 002–0 that: (1) Identifies the
calendar days of approval’’ and note sufficient for approval as a mandatory expectations of the training for each job
that it is not clear what approval is and enforceable Reliability Standard. function; (2) develops training programs
required and when the 30-day period 1329. ISO–NE supports the adoption tailored to each job function with
starts. We direct the ERO to provide of this Reliability Standard provided consideration of the individual training
clarification on this requirement. that the Commission does not mandate needs of the personnel; (3) expands the
1324. The Commission neither that the tasks performed by local control applicability to include reliability
accepts nor remands MOD–025–1 until centers be included in the definition of coordinators, generator operators, and
the ERO submits additional information. transmission operators. It explains that operations planning and operations
Although the Commission did not to do so would suggest that the local support staff with a direct impact on the
propose any action with regard to control center has independent reliable operation of the Bulk-Power
MOD–025–1, it addresses above a autonomy in operating the Bulk-Power System; (4) uses the Systematic
number of concerns regarding the System, which conflicts with the ‘‘one Approach to Training (SAT)
Reliability Standard. We direct the ERO set of hands on the wheel’’ philosophy methodology in its development of new
to develop a Work Plan to verify and supported by Order No. 2000 and the training programs and (5) includes
report on generator gross and net operating agreements approved by the performance metrics associated with the
reactive power capability while this Commission to establish ISO–NE as effectiveness of the training program. In
Reliability Standard is being modified New England’s RTO. addition, the Commission requested
and to modify this Reliability Standard comments on the benefits and
through the Reliability Standards ii. Commission Determination appropriateness of required ‘‘hands-on’’
development process to: (1) Require training using simulators in dealing
verification of a reactive power 1330. The Commission agrees with with system emergencies.
capability at multiple points over a the ‘‘one set of hands on the wheel’’
philosophy described by ISO–NE as it i. General Issues
unit’s operating range and (2) clarify
Requirement R2 with a definition of applies to operations of the Bulk-Power (a) Comments
what approval is needed and when the System and has no intention of
1334. EEI supports the Commission’s
30-day period starts. deviating from it. Nothing in the
direction for personnel training and
Commission’s proposed modifications
9. PER: Personnel Performance, Training generally agrees with the Commission’s
outlined in the NOPR in regard to the
proposal for PER–002–0. EEI states
and Qualifications PER Reliability Standards is intended to

NERC is developing a new Reliability
1325. The four proposed Personnel conflict with this philosophy. A generic
Standard, PER–005–0, which could be
Performance, Training and discussion of the local control centers is
Qualifications (PER) Reliability included in the Applicability Issues 365 See Applicability Issues: Use of the NERC
Standards are applicable to transmission section and specific implications to Functional Model, supra section II.C.4.
filed with the Commission as early as that the term is open to broad transmission and generation operation
July 2007. According to EEI, this new interpretation in actual practice, subject employees that are located in remote
Reliability Standard will respond to the to various contracts, operating locations that are not directly involved
issues raised in the NOPR regarding agreements and ISO/RTO procedures. It in the real-time scheduling of
PER–002–0. EEI notes that the ERO states, for example, a local control transactions or Bulk-Power System
plans to retire Reliability Standards center operator may take instructions monitoring and control do not need to
PER–002–0 and PER–004–1 when from and act on those instructions, be certified for real-time operations
proposed PER–005–0 is adopted. It whereas the ‘‘transmission operator’’ because they are not involved in the
recommends that the Commission under the Functional Model may be type of functions in which regimented
consider consolidating all training viewed as a more centralized authority training in the Reliability Standards
requirements into a single Reliability such as a larger regional system would be useful. It suggests that a bright
Standard to simplify the Reliability operator. EEI contends that some define line should be drawn between the
Standards catalog. local control center as a transmission training of actual system operators and
1335. Additional comments received operator, while others disagree. the training for operators of generation
have been grouped as follows: Local 1339. ISO–NE states the scope of plants that are not responsible for
control center personnel; applicability PER–002–0 need not be expanded scheduling. LPPC also states that the
to generator operators; applicability to because local control center personnel Commission should clarify the scope of
operations planning and operations in its footprint implement tasks training that the transmission control
support staff; implications to small delegated to them by ISO–NE for center real-time operations personnel
systems; training performance metrics; operation of designated transmission should receive.
use of SAT methodology; and use of facilities. NPCC argues that expanding 1342. Entergy asserts that the training
simulators separately, followed by an PER–002–0 beyond the entities program should be tailored to the
overall conclusion and summary. identified under the NERC Functional functions local control center operators,
Model (i.e., transmission operators, generator operators and operations
(b) Commission Determination reliability coordinators and balancing planning staff perform that impact the
1336. EEI’s comments concerning a authorities) will require substantial cost reliable operation of the Bulk-Power
possible PER–005–0 are beyond the and time but add little value. It states System for both normal and emergency
scope of this proceeding. The that there are no certification exams for operations.
Commission will not require the ERO to any entities other than transmission
consolidate all training requirements operators, reliability coordinators and
into a single Reliability Standard. We balancing authorities and to develop 1343. In our discussion above
believe that such matters should be left and implement such exams and to have regarding the Functional Model, we
to the discretion of the ERO through its the additional personnel certified would emphasized our concern that there
Reliability Standards development take several years. It also states that should be no unintentional gaps or
process. these personnel already function under redundancies in responsibility for
the authority of NERC-certified compliance with the Requirements of
ii. Local Control Center Personnel operators and act only at the direction Reliability Standards. This concern
1337. In the NOPR, the Commission of certified operators. It concludes that arises particularly in the context of
noted that decisionmaking and an entity that does not exercise RTOs, ISOs and other pooled resources
implementation may be performed by operational authority should not be that may have separate divisions
separate groups in an ISO or RTO subject to the same requirements as the performing decisionmaking functions
context, as well as other organizations decisionmaker. and implementing functions within the
that pool resources.366 The Commission 1340. Northern Indiana states that it is transmission operator classification. The
proposed that all control centers and not uncommon in the industry for topic of training is one such area of
organizations that are necessary for the employees who perform switching concern. While PER–002–0 applies to
actual implementation of the decision or operations to be supervised by NERC- transmission operators, it is important
are needed for operation and certified operators and that such for reliability that personnel involved in
maintenance made by the ISO, RTO or employees are subject to round-the- both decisionmaking and
pooled resource organization should be clock review by, and communication implementation receive proper training.
part of the transmission or generator with, their NERC-certified transmission 1344. Clearly, in a region where an
operator function. Although the NOPR operators. Similarly, SoCal Edison notes RTO or ISO performs the transmission
discussed this matter in the context of that large utilities can have operators operator function, its personnel with
the Communication (COM) Reliability strategically located throughout a vast primary responsibility for real-time
Standards, the NOPR indicated that the service territory at switching centers operations must receive formal training
proposal would apply in the training with SCADA capability and that these pursuant to PER–002–0. In addition,
and certification context, as well.367 operators follow the directives of one personnel who are responsible for
control center responsible for Bulk- implementing instructions at a local
(a) Comments Power System reliability. SoCal Edison control center also affect the reliability
1338. EEI states that the term disagrees that the operators of these of the Bulk Power System. These
‘‘operating personnel’’ as used in the switching centers, simply because the entities may take independent action
PER group of Reliability Standards switching center has SCADA capability, under certain circumstances, for
needs clarification because it may be must be NERC-certified. example, to protect assets, personnel
interpreted to mean any person with a 1341. LPPC states that the training safety and during system restorations.
capability to take a unilateral action that and certification requirements should Whether the RTO or the local control
can have a potentially significant effect apply only to transmission and center is ultimately responsible for
on the Bulk-Power System. EEI states generation personnel that are located in compliance is a separate issue
the transmission control center (i.e., addressed above, but regardless of
366 NOPR at P 236–37. responsible for real-time Bulk-Power which entity registers for that
367 Id. at P 237, 779. System operations). It argues that responsibility, these local control center
employees must receive formal training independently to carry out tasks that 1352. Other commenters, including
consistent with their roles, require real-time operation of the Bulk- Xcel, California PUC and Entergy, state
responsibilities and tasks. Thus, while Power System including protecting that the Reliability Standard should not
we direct the ERO to develop assets, protecting personnel safety, apply to generator operators. Xcel
modifications to PER–002–0 to include adhering to regulatory requirements and argues that generator operators take
formal training for local control center establishing stable islands during their direction from transmission
personnel, that training should be system restoration. operators, balancing authorities and
tailored to the needs of the positions. 1349. Several commenters express reliability coordinators, which limits
1345. As noted by SoCal Edison, there concern about requiring local control their ability to exercise independent
are different operating structures and center operators to become fully trained action impacting the reliability of the
therefore there is a need to clarify to to the same extent as transmission Bulk-Power System. Entergy argues that
which control centers we direct the operators, balancing authorities and expanding the applicability to generator
Reliability Standard apply. For example, reliability coordinators. This is not the operators would provide little benefit to
for a large utility within an RTO or ISO Commission’s intent. As we stated in those personnel in the performance of
footprint there may be one centrally- the NOPR, the proposed modifications their own functions, and could distract
located control center whose function is do not imply a ‘‘one-size-fits-all’’ them from those functions. It also argues
to supervise several distributed control approach but rather ensure the creation that such training would be extremely
centers, each with remote monitoring of training programs that are structured costly and would divert necessary
and control capability. In this type of and tailored to the different functions resources from more important
structure, the personnel of the centrally- and needs of the personnel involved.369 reliability objectives.
located control center should receive Therefore the Commission agrees with 1353. California PUC states that the
formal training in accordance with the Entergy that the training program requirement to include power plant
Reliability Standard. Personnel at the should be tailored to the functions local operators in the applicability of this
distributed control centers also need to control center operators, generator Reliability Standard exceeds anything
be trained, but the responsibility for this contemplated in the regulation of the
operators and operations planning staff
training is outside the scope of the Bulk-Power System under previous
perform that impact the reliable
Reliability Standard.368 NERC guidelines and what is authorized
operation of the Bulk-Power System for
1346. Another organizational by statute. It contends that impacts of
both normal and emergency operations.
structure, typically representative of generator operator actions on the Bulk-
relatively smaller entities, consists of a iii. Applicability to Generator Operators Power System are of a much smaller
single control center that implements magnitude and consequence than those
1350. The Commission proposed in of system operators. Further, it states
operating instructions from its the NOPR a modification to PER–002–
transmission operator, e.g., an RTO, ISO that other authorities, such as balancing
0 to include real-time operations authorities and state governments, may
or pooled resource. Similar to the personnel from reliability coordinators,
discussion above, operators at these have acted in regard to training of power
generator operators, operations planning plant operators and, therefore, the
control centers also may take and operations support staff in training
independent action to protect assets, Commission should not act where other
programs with a time-phased effective authorities have already done so. In a
safety and system restoration. Such date.370
control center personnel must also similar vein, the Nevada Companies
receive formal training pursuant to (a) Comments state that the activities of generating
PER–002–0. station operations personnel are limited
1351. PG&E and FirstEnergy support to the confines of the specific generating
1347. Consistent with the comments the Commission’s goal of ensuring
of SoCal Edison and Northern Indiana, station. Knowledge of or exposure to
appropriate training for generator interconnected grid operating principles
the Commission understands that it is operators. FirstEnergy, however,
common practice to have traveling is simply not applicable to the tasks
believes that there is some confusion normally performed at the generating
operators located in the local control between the Functional Model and the
centers who carry out field switching stations.
Reliability Standard requirements 1354. Reliant states that the proposed
operations and station inspections at the concerning the generator operator modification fails to clarify how
direction of the local control center classification. FirstEnergy explains that, generator operators are to satisfy the
operators. These personnel are not in some contexts, ‘‘generator operator’’ training program requirement or the
involved with the transmission operator refers to operations personnel who are scope of generator operator personnel
at the ISO or RTO or at organizations centrally-located at a generation control that must be trained. It states that the
with pooled resources, and as such, center (i.e., fleet operators) while in proposed modification could be
should not be subject to Reliability other contexts it refers to generator interpreted to require generator
Standard PER–002–0. operators located at the generation plant operators to train the plant operator as
1348. The Commission disagrees with (i.e., unit operator). Further, according well as the dispatcher in the generator
those commenters who contend that, to FirstEnergy, the NERC glossary operator’s local control center. Reliant
because operators at local control defines ‘‘generator operator’’ as the believes, however, that plant operators
centers take direction from NERC- entity that operates generating unit(s) should not be subject to the Reliability
certified operators at the ISO or RTO, and performs the functions of supplying Standard’s training program
they do not need to be addressed by the energy and interconnected operations requirement because personnel
training requirements of PER–002–0. services. FirstEnergy requests that the employed in plant operating positions
Rather, as discussed above, these Commission direct NERC to revise the are trained in the operation of plant
operators maintain authority to act Reliability Standard to recognize this equipment and take direction with
368 The Commission expects the entity registered
distinction. respect to the operation of the plant
as the transmission operator to ensure that these
from management personnel as well as
personnel are competent for the tasks that they 369 See NOPR at P 773, 775. from the local control center.
perform. 370 Id. at P 772. Accordingly, it reasons that, because
these employees take direction with 1357. FirstEnergy states that there are sufficient training to take appropriate
respect to plant operations from no universal certification or training action to ensure reliability of the Bulk-
elsewhere, they do not have primary programs for generator operators; Power System. Thus, we direct the ERO
responsibility for the real-time operation therefore a reasonable transition period to develop a modification to make PER–
of the Bulk-Power System and should should be established to allow time for 002–0 applicable to generator operators.
not be responsible for complying with generator operators to comply with this 1361. We agree with FirstEnergy and
Reliability Standards. Reliant suggests Reliability Standard. It also states that others that some clarification is required
that PER–002–0 should specifically nuclear units are already subject to NRC regarding which generator operator
target generator operator personnel that training requirements and that personnel should be subject to formal
develop dispatch instructions and the compliance with NRC requirements training under the Reliability Standard.
Reliability Standard should be modified should satisfy this Reliability Standard. As noted above, a generator operator
to accommodate generator operator 1358. APPA, Process Electricity typically receives instructions from a
entities that are members of ISOs and Committee and TAPS are concerned balancing authority. Some generator
RTOs with established NERC-approved that, unless a size limitation is included operators are structured in such a way
certification programs. However, it for the generator operators, a substantial that they have a centrally-located
should exclude those personnel who number of generator operator personnel dispatch center that receives direction
simply take direction on plant will have to be enrolled in training and then develops specific dispatch
operations. programs. They argue that while a instructions for plant operators under
1355. Dynegy, MISO and Wisconsin generator plays an important role in the their control. For example, a balancing
Electric state that these Reliability reliable operations of the bulk electric authority may direct a centrally-located
Standards should not be extended to all system, the generator operator takes dispatch center to deliver 300 MW to
real-time operation positions of a commands from the transmission the grid, and the dispatch center would
generator operator. They state that many operator, balancing authority or determine the best way to deliver that
real-time operation positions are staffed reliability coordinator. TAPS opposes generation from its portfolio of units. In
by long-tenured union personnel who the expanded applicability, especially this type of structure, it is the personnel
routinely operate generating units and in the case of small systems, because it of the centrally-located dispatch center
take directions from a centralized believes that the requirement would be that must receive formal training in
generation control center or the local costly with no benefits to reliability. accordance with the Reliability
RTO/ISO. They analogize this type of 1359. Process Electricity Committee is Standard. Plant operators located at the
certification and training requirement concerned about the effect of the generator plant site also need to be
with requiring the outside field force of expanded requirements on end users trained but the responsibility for this
a transmission operator, including who have on-site generation. It argues training is outside the scope of the
positions that operate and switch that the training requirements would Reliability Standard.372
electric transmission lines pursuant to present an added cost for end users with 1362. Other generator operators may
instructions from a centralized no apparent added benefit and that, in be structured in such a way that the
transmission control group, to be NERC- the long term, end users may be dispatch center and the single
certified. Dynegy and MISO support a discouraged from developing on-site generation plant are at the same site. In
more limited extension of these generation, which in turn would leave this structure as well, some personnel
Reliability Standards to real-time industrial electricity users more will perform dispatch activities while
operation personnel located in a vulnerable to failures elsewhere on the others are designated as plant operators.
centralized generation control center energy grid. Again, it is the dispatch personnel that
that interfaces with the plants and the (b) Commission Determination must receive formal training in
local RTO/ISO but not to personnel at accordance with the Reliability
the plant level. 1360. The Commission explained in
the NOPR that transmission operators Standard. Plant operators also need to
1356. Some commenters address the
and balancing authorities are not the be trained but the responsibility for this
appropriate scope of training for
only entities that have operating training is outside the scope of the
generator operators. For example,
personnel in positions that directly Reliability Standard.
MidAmerican states that experience and
impact the reliable operation of the 1363. We disagree with Nevada
knowledge necessary for transmission
Bulk-Power System; and included Companies, Xcel and others that assert
operators may go well beyond what is
generator operators among those that that generator operator training will
needed for generation operations. It
have such an impact.371 Xcel and others provide limited benefit. Rather, we
contends that a NERC-approved training
oppose extending the applicability of conclude that, with the above focused
course specific to these functions would
PER–002–0 to generator operators, direction regarding the applicability of
be an appropriate alternative. Entergy
because they take directions from the Reliability Standard to generator
comments that, if training of generator
balancing authorities and others, which operator personnel, the benefits to the
operator personnel is required, it should
limits their ability to impact reliability. Bulk-Power System will be maximized
focus on the functions generator
operators must perform, not on the Although a generator may be given and the cost of formal training limited.
functions that others perform. SDG&E direction from the balancing authority, Further, our direction addresses
states that training for generator it is essential that generator operator California PUC’s concerns regarding
operators and others who may directly personnel have appropriate training to application to plant operators. In any
impact the reliable operations of the understand those instructions, event, the existence of local training
Bulk-Power System need not be particularly in an emergency situation requirements in some regions does not
identical to or as extensive as that in which instructions may be succinct supplant the need for uniform training
required of transmission system and require immediate action. Further, requirements for all generator operators
operators, but should be tailored in if communication is lost, the generator 372 The Commission expects the entity registered
scope, contents and duration so as to be operator personnel should have had as the generator operator to ensure that plant
appropriate to the personnel and the operators are competent for the tasks that they
object of promoting system reliability. 371 NOPR at P 771. perform.
developed in a Reliability Standard with iv. Applicability to Operations Planning NERC-certified transmission operator,
continent-wide applicability. and Operations Support Staff there is no need for duplicative training
1364. Further, the Commission agrees 1367. As mentioned above, the for supporting personnel. Entergy
with MidAmerican, SDG&E and others Commission proposed in the NOPR to comments that, if such training is
that the experience and knowledge direct the ERO to develop a required, it should focus on the
modification to PER–002–0 to require functions operations planning and
required by transmission operators
training of operations planning and operations support staff must perform,
about Bulk-Power System operations
not on the functions that others perform.
goes well beyond what is needed by operations support staff of transmission
1372. Northern Indiana states that
generation operators; therefore, training operators and balancing authorities who
expanding application of the Reliability
for generator operators need not be as have a direct impact on the reliable Standard to operations support staff
extensive as that required for operation of the Bulk-Power System. ‘‘with a direct impact on the reliable
transmission operators. Accordingly, the (a) Comments operation of the Bulk-Power System’’ is
training requirements developed by the ambiguous. It states that NERC surveyed
ERO should be tailored in their scope, 1368. Several commenters, including
certified operators for its job function
content and duration so as to be EEI and APPA, oppose the proposed
analysis related to this Reliability
appropriate to generation operations applicability of the Reliability Standard
Standard with results due at the end of
personnel and the objective of to operations planning and operations
January 2007. Northern Indiana
promoting system reliability. Thus, in support staff. Other commenters
recommends that the results of this
addition to modifying the Reliability contend that the Commission’s proposal
survey be considered in the
Standard to identify generator operators is ambiguous and should be clarified.
development and clarification of this
1369. EEI states that the extension of
as applicable entities, we direct the ERO proposed Reliability Standard. Further,
the applicability to ‘‘operations support
to develop specific Requirements Northern Indiana is concerned about
personnel’’ could result in a dramatic
addressing the scope, content and which specific job functions will be
expansion of industry training addressed and which will be exempt,
duration appropriate for generator
requirements with uncertain benefits to and about what ‘‘direct’’ versus
operator personnel.
system reliability. It requests that the ‘‘indirect’’ impact means.
1365. FirstEnergy states that nuclear Commission reconsider this proposal or
plant operators are already subject to provide some additional clarity on the (b) Commission Determination
NRC training requirements and thus definition of the term. APPA also 1373. The Commission directs the
suggests that compliance with NRC expresses concern about expanding the ERO to develop a modification to PER–
requirements should satisfy this applicability to operations planning and 002–0 that extends applicability to the
Reliability Standard. FirstEnergy does operations support staff, especially if operations planning and operations
not identify the content of the NRC the Commission adopts its proposed support staff of transmission operators
training requirements, and the interpretation of the bulk electric system and balancing authorities, as clarified
Commission is unaware whether the because this would become quite below. Most commenters express
NRC training requirements adequately onerous for small utilities. Wisconsin concern about extending the
address the interaction between a Electric states that the Commission’s applicability of the Reliability Standard
nuclear power plant and the Bulk-Power proposal does not address how to because they believe ‘‘operations
System. Accordingly, without drawing identify the operations planning and planning’’ and ‘‘operations support’’ are
any conclusion on the matter, the operations support personnel who not well-defined and could encompass
Commission directs that the ERO would be subject to the Reliability a significant number of operations
consider FirstEnergy’s comments in the Standard and how to develop personnel. In the NOPR, the
Reliability Standards development compliance measures for them. It Commission stated that the Reliability
process. contends that the proposed modification Standard should apply to operations
is ambiguous and should not be planning and operations support staff
1366. Commenters’ concerns
implemented. that have a direct impact on the reliable
regarding the need for a size limitation 1370. Avista states that individuals operation of the Bulk-Power System.373
on generator operators should be who are responsible for assessing a We clarify that these personnel include
satisfied by our determination that the company’s compliance with the those who carry out outage coordination
applicability of particular entities Reliability Standards may simply have and assessments in accordance with
should be determined based on the ERO an administrative and coordination role, Reliability Standards IRO–004–1 and
compliance registry criteria, which but have no direct responsibility for TOP–002–2, and those who determine
APPA and TAPS support. We believe reliable operations of the Bulk-Power SOLs and IROLs or operating
that limiting the applicability of System. It argues that such individuals, nomograms in accordance with
Reliability Standards to NERC’s while operations support staff, should Reliability Standards IRO–005–1 and
definition of bulk electric system will not be subject to the proposed TOP–004–0. The Commission directs
alleviate much of Process Electricity Reliability Standard. It therefore the ERO to include in PER–002–0,
Committee’s concern regarding the requests that the Commission clarify personnel who carry out the above
effect of the expanded requirements on that personnel subject to the Reliability functions.
end users who have on-site generation. Standard may include operations 1374. In addition, the Commission is
For larger end users who have on-site planning and operations support staff. aware that the personnel responsible for
generation, the Commission believes 1371. Entergy believes it is ensuring that critical reliability
that there is an added benefit to unnecessary to require all staff applications of the EMS, such as state
including them in the Reliability supporting the transmission operator to estimator, contingency analysis and
Standards because they sell into the be trained in the transmission operator’s alarm processing packages, are
market and should be treated on a Reliability Standards responsibilities. It available, up-to-date in terms of system
similar basis as any other generator of a states that as long as the supporting
similar size. personnel work under the direction of a 373 NOPR at P 780.
data and produce useable results can as part of this Reliability Standard. mandated and that responsible entities
also have an impact on the Reliable While it believes performance metrics under this Reliability Standard should
Operation of the Bulk-Power System. are generally useful, it states that in this be allowed the flexibility to use the
Because these employees’ impact on case it would be difficult to develop the most appropriate training methodology
Reliable Operation is not as clear, we appropriate metrics. MidAmerican available. Northern Indiana requests
direct the ERO to consider, through the believes that the proposed performance clarification on about our proposal on
Reliability Standards development metrics are not essential to ensuring the the use of SAT methodology.
process, whether personnel that perform appropriateness of training because the
these additional functions should be Reliability Standard already requires
included in mandatory training NERC approval of all training activities, 1383. The Commission understands
pursuant to PER–002–0. and specifically requires training in that the new operator training
1375. APPA and EEI oppose the certain areas. Reliability Standard PER–005–1–0
proposed extension of the Reliability 1379. MISO and Wisconsin Electric currently under development by the
Standard to operations planning and state that it is unclear how a Reliability ERO would endorse the use of SAT. In
operations support staff, claiming that it Standard to measure the effectiveness of response to ISO–NE, training based on
could dramatically expand industry a training program would apply to an SAT is a proven approach to identify
training requirements with uncertain organization that contracts for training the skills and knowledge necessary to
benefits to system reliability. Our services, and that there are many accomplish particular tasks, evaluate
clarification above adequately addresses training requirements found in other each operator’s competency to carry out
these concerns because we have Reliability Standards covering the topics those tasks, determine any competency
identified a specific set of such and amount of training. They argue that competency gaps, and design,
personnel that have a direct impact on the proposed modification is overly- implement and evaluate a training plan
reliable operations. With the above prescriptive and deviates from a to address such gaps. Since SAT is the
clarification, our directive is not as fundamental training concept that most appropriate training methodology
expansive as EEI and APPA training should be tailored to the available, we believe this addresses
contemplate, and is more clearly organization and to the individual. ISO–NE’s comments. Northern Indiana
connected with Bulk-Power System requests clarification about the details of
reliability. Further, since the (b) Commission Conclusion our proposal for SAT methodology. The
Commission is not adopting the 1380. Xcel, MISO and MidAmerican Commission has not directed how the
proposed interpretation of the ERO’s state that performance metrics to assess SAT methodology should be
definition of bulk electric system, as the effectiveness of training programs implemented, but we expect it to be
discussed in the Applicability section are unnecessary. The Commission developed through the Reliability
above, the directed modification to believes that, if quantifiable Standards development process. We
PER–002–0 should not be onerous to performance metrics can be developed encourage Northern Indiana to become
small entities as suggested by APPA. to gauge the effectiveness of a Reliability involved in the process. Thus, we adopt
1376. Several commenters express Standard, these performance metrics the NOPR proposal to direct that the
concern that the operations planning should be developed, tracked and used ERO develop a modification to PER–
and operations support staffs will be to continually improve an applicable 002–2 (or a new Reliability Standard)
required to be trained on the entity’s performance and the Reliability that uses the SAT methodology.
transmission operators’ responsibilities. Standard itself. The Commission directs
The Commission clarifies that this is not the ERO to explore the feasibility of vii. Use of Simulators for Training
the case. Training programs for developing meaningful performance 1384. The Commission explained in
operations planning and operations metrics for assessing the effectiveness of the NOPR that Requirement R4 of the
support staff must be tailored to the training programs, and if feasible, to Reliability Standard requires training in
needs of the function, the tasks develop such metrics for the Reliability emergency operations using realistic
performed and personnel involved. Standard as part of the Reliability simulations of system emergencies and
Standards development process. noted that there are various options
v. Training Performance Metrics available for providing operator training
1377. In the NOPR, we noted the vi. Use of Systematic Approach to simulator capability, including
assertion by ISO/RTO Council that there Training (SAT) Methodology contracting for this service from others
is no definition for ‘‘adequately trained 1381. In the NOPR, the Commission who have developed the capability. The
operating personnel.’’ ISO/RTO Council required the ERO to use the SAT Commission requested comments on the
suggested adoption of performance methodology in identifying the benefits and appropriateness of required
metrics to ensure that training results in requirements for a training program ‘‘hands-on’’ training using simulators in
competent operating personnel.374 The because SAT is a proven approach to: dealing with system emergencies.376
Commission agreed and proposed to identify the tasks and associated skills
require that the ERO modify PER–002– and knowledge necessary to accomplish (a) Comments
0 to include performance metrics to those tasks; determine the competency 1385. While most commenters
assess the effectiveness of the training levels of each operator to carryout those recognize the benefits of simulator
program. The Commission also stated tasks; determine the competency gaps; training, they differ on whether
that such performance metrics are not a and design, implement and evaluate a simulator training should be mandatory.
substitute for an SAT developed training plan to address each operator’s 1386. NERC comments that there can
training program. competency.375 be significant value gained by training
operating personnel for emergencies
(a) Comments (a) Comments under realistic conditions using training

1378. Xcel does not agree that 1382. ISO–NE states that the use of simulators and requests that comments
performance metrics should be included SAT methodology should not be on this matter be directed to the
374 Id. at P 776. 375 Id. at P 775. 376 Id. at P 778.
Reliability Standards development develop and labor intensive to maintain. to identify the expectations of the
process for consideration. APPA It recommends that full-scale simulators training for each job function and
believes that significant reliability should be an option but not a develop training programs tailored to
benefits could result from the use of requirement for small entities. It each job function with consideration of
simulators by reliability coordinators, proposes instead that the Commission the individual training needs of the
transmission operators and balancing allow small entities to continue to use personnel. However, in responding to
authorities that have operational control training aids such as generic operator the proposals to expand the
over a significant portion of load and training simulators, EXCEL-based applicability of the Reliability Standard,
resources. It does not believe, however, interactive training tools and table-top many commenters acknowledged the
that requiring simulator training for training exercises. Likewise, Alcoa also need to have clear training expectations
smaller entities that do not have does not believe that simulators are and training programs tailored to
operational control over facilities that necessary to provide operating specific job functions. The Commission
manage SOLs and IROLs would be an personnel with training for system finds that these two modifications will
effective use of resources. APPA emergencies. It supports alternative enhance the training by focusing on
supports NERC’s investigating the training methods, such as table-top expectations and tailoring the training
benefits of simulator training but exercises or realistic simulated exercises to specific job functions; therefore, the
recommends that any training that take into account the physical and Commission adopts these modifications
requirements closely consider the costs electrical characteristics of the trainee’s to the Reliability Standard.
and benefits of simulator training. system. Further, it believes that costs
1387. SoCal Edison and MISO state associated with simulators would not be 1394. Accordingly, the Commission
that, although simulators are valuable justified by the impact on reliability. approves Reliability Standard PER–002–
training tools, not all entities should be 1390. Xcel states that to the extent 0. In addition, pursuant to section
compelled to have simulators. MISO that Reliability Standard PER–002–0 is 215(d)(5) of the FPA and § 39.5(f) of our
comments that simulators will become applicable to generator operators, the regulations, the Commission directs the
even more critical in the coming years industry should be able to develop its ERO to develop a modification to PER–
as experienced operators, with first- own ways of administering training 002–0 through the Reliability Standards
hand knowledge of their respective instead of being required to develop development process that: (1) Identifies
systems, retire. Recognizing that not simulators. the expectations of the training for each
every company can or should build a job function; (2) develops training
(b) Commission Determination programs tailored to each job function
simulator because of the resources
simulators require, MISO suggests that 1391. Most commenters including with consideration of the individual
the Reliability Standards codify a NERC agree that hands-on training using training needs of the personnel; (3)
requirement for operators of companies simulators can add significant value to expands the Applicability section to
that do not own a simulator to have training for emergencies. Yet, we share include (a) reliability coordinators, (b)
access to a training simulator. MISO the commenters’ concerns regarding the local transmission control center
states that while simulators are valuable high cost to develop and maintain full- operator personnel (as specified in the
training resources, focusing emergency scale simulators and take these concerns above discussion), (c) generator
training solely on full-scale simulators into consideration. The Commission operators centrally-located at a
may lead to problems when unforeseen finds that significant reliability benefits generation control center with a direct
situations arise. It reasons that generic, may be derived from requiring simulator impact on the reliable operation of the
low-cost simulators that teach concepts training for reliability coordinators, Bulk-Power System and (d) operations
are a valuable training resource for transmission operators and balancing planning and operations support staff
developing skills transferable to events authorities that have operational control who carry out outage planning and
that do not follow a script. over a significant portion of load and assessments and those who develop
1388. SDG&E states that simulators generation. SOLs, IROLs or operating nomograms
would enhance the overall training 1392. This does not mean that these for real-time operations; (4) uses the
experience but cautions that simulators entities must develop and maintain full- Systematic Approach to Training (SAT)
that accurately model individual scale simulators but rather they should methodology in its development of new
systems are resource-consuming while have access to training on simulators. training programs and (5) includes the
less resource-consuming, generic Further, because the cost is likely to use of simulators by reliability
simulators may not mirror the trainee’s outweigh the reliability benefits for coordinators, transmission operators
actual system. As such, it believes that small entities, the Commission agrees and balancing authorities that have
the use of simulators should be with Alcoa and Otter Tail that small operational control over a significant
encouraged but not mandated. entities should continue to use training portion of load and generation.
Similarly, International Transmission aids such as generic operator training
contends that simulators are a useful simulators and realistic table-top 1395. Further, the Commission directs
tool in the training of operators and exercises. Accordingly, the Commission the ERO to determine whether it is
support personnel. However it cautions directs the ERO to develop a feasible to develop meaningful
that simulators are not the only means requirement for the use of simulators performance metrics associated with the
to provide realistic simulation-based dependent on the entity’s role and size, effectiveness of a training program
training. It argues that because as discussed above. required by PER–002–0 and, if so,
alternative simulation-based training develop such performance metrics. The
means are available and because viii. Summary of Commission Commission also directs the ERO to
dedicated training simulators are very Determination consider through the Reliability
expensive, the use of dedicated training 1393. The Commission notes that no Standards development process,
simulators should not be required under commenters specifically addressed the whether personnel that support EMS
the Reliability Standards. proposed modifications directing the applications as discussed above should
1389. Otter Tail states that full-scale ERO to expand the Applicability section be included in mandatory training
simulators are effective but costly to to include reliability coordinators, and pursuant to the Reliability Standard.
c. Operating Personnel Credentials adequately demonstrated by the operators to be considered through the
(PER–003–0) completion of NERC-approved annual Reliability Standards development
1396. PER–003–0 requires certification tests. MidAmerican process. Alcoa disagrees with the
transmission operators, balancing believes that applicable tests should be proposed modification because
authorities and reliability coordinators tailored to specific job duties to ensure generator operators take direction from
to have NERC-certified staff for all effectiveness and Reliability Standard a NERC-certified transmission operator,
operating positions that have a primary compliance. balancing authority or reliability
1400. Dynegy, MISO, Reliant and coordinator and do not operate
responsibility for real-time operations or
Wisconsin Electric are concerned about independently of those entities.
are directly responsible for complying
extension of this Reliability Standard to Similarly, Xcel states generator
with the Reliability Standards. NERC
generator operators if it results in every operators have limited ability to take
grants certification to operating power plant control room being staffed independent action that affects Bulk-
personnel through a separate program by NERC-certified operators. Dynegy Power System reliability. It also states
documented in the NERC System supports a limited extension of the that it is not clear whether ‘‘generator
Operator Certification Manual and Reliability Standard to real-time operator’’ means plant operator or the
administered by an independent operational personnel located in a transmission operator responsible for
personnel certification governance centralized generation control center generation.
committee. that interfaces with the plants and the 1403. Northern Indiana and SoCal
1397. In the NOPR, the Commission local RTO/ISO. Reliant believes that, Edison oppose a certification
proposed to approve Reliability under certain circumstances, the requirement for all real-time operating
Standard PER–003–0 as mandatory and dispatcher in the generator operator’s positions in a transmission control
enforceable. In addition, the local control center should not be center that performs switching
Commission proposed to direct NERC to subject to NERC certification operations via SCADA for the Bulk-
submit a modification to PER–003–0 requirements. It explains that, for Power System, because these personnel
that: (1) Includes generator operators as example, in PJM the dispatcher in a are supervised by NERC-certified
applicable entities; (2) specifies the generator operator local control center is operators. Northern Indiana states that
minimum competencies that must be a PJM-certified generation dispatcher the costs would far outweigh the
demonstrated to become and remain a and that, like the employees in plant reliability benefits, if any, that would
certified operator; and (3) identifies the operating positions, these dispatchers result from such a certification
minimum competencies operating do not take unilateral action but instead requirement. SoCal Edison recommends
personnel must demonstrate to be act only upon PJM’s instructions. that PER–003–0 apply to operators who
certified. 1401. LPPC states that certification have the authority and are empowered
i. Comments requirements for real-time operations to exercise independent judgment, and
Reliability Standards should only be who take or direct actions to secure
1398. In addressing this Reliability required for transmission and Bulk-Power System reliability. It
Standard, many commenters made the generation personnel that are located in recommends that operators who switch
same arguments they made in the transmission control center (i.e., Bulk-Power System facilities when their
connection with the operator training responsible for real-time Bulk-Power actions are approved and overseen by
Requirements set forth in Reliability System operations). It argues that certified operators should be excluded.
Standard PER–002–0. Comments transmission and generation operation 1404. APPA states that if it is required
specifically relevant to operator employees that are located in remote to send its employees for NERC training
certification are reproduced here for locations that are not directly involved and certification, it would risk losing
completeness. in the real-time scheduling of those employees to larger utilities that
1399. EEI, FirstEnergy and PG&E transactions or Bulk-Power System can afford to pay more, simply because
agree that the Reliability Standard monitoring and control do not need to those employees would have acquired a
should apply to generator operators. be certified for real-time operations desirable occupational credential. It
FirstEnergy believes that the Functional Reliability Standards because they are argues that given the substantial
Model and the Reliability Standards not involved in the type of functions in workforce issues facing public power
development process should be used to which regimented training in the systems in the next few years, imposing
clarify any confusion about which Reliability Standards would be useful. unneeded certification requirements
generator operator and transmission LPPC states that requiring certification could exacerbate an already challenging
operator functions are addressed under would be an inefficient result and labor force situation.
this Reliability Standard. To further would distract these personnel from 1405. Northern Indiana adds that
reduce confusion and the need for their own highly-specialized tasks. because some of these employees are
potentially duplicative training, EEI and 1402. Although APPA states that members of labor unions and subject to
PG&E comment that operators should PER–003–0 is sufficient for approval as existing collective bargaining
not be required to maintain multiple a mandatory and enforceable Reliability agreements, it would have to renegotiate
certifications. SDG&E states that new Standard, it opposes the proposed these agreements to provide for the
certification obligations for generator modification to make generator certification of these employees, and to
operators must be tailored to the needs operators subject to the Reliability provide for the hiring of relief staff
of the function and should reflect the Standard. Alcoa, Entergy, Northern necessary to permit these employees to
limited opportunities of generator Indiana and Xcel also oppose subjecting maintain their certification.
operators to have an impact on system generator operators to the Reliability 1406. PG&E states that, once the
reliability. Thus, it argues that generator Standard. Given that there is no size certification requirements are developed
operators should not be subject to the limitation limiting applicability for by NERC and approved by the
same certification requirements as generator operators, APPA asks the Commission, sufficient time must be
transmission operators. MidAmerican Commission to reconsider the proposed permitted for generator operators to
echoes this point and adds that modification and, instead, allow the attain the necessary certification. It
minimum competencies are currently applicability of PER–003–0 to generator argues that time will be needed to
develop the process, create appropriate and remain a certified operator and to PER–002–0; (2) includes requirements
documentation and perform training for identify the minimum competencies pertaining to personnel credentials for
appropriate personnel. PG&E contends operating personnel must demonstrate reliability coordinators similar to those
that generator operators should not be to be certified. The Commission finds in PER–003–0 and (3) includes
penalized for failing to achieve that these modifications improve the Measures and Levels of Non-
certification if they do not have a Reliability Standard by focusing on Compliance that address staffing
reasonable period of time to implement necessary competencies. Accordingly, requirements and the requirement for
the training programs. the Commission directs the ERO to five days of emergency training.
1407. EEI believes that the ERO’s develop these modifications to the
Reliability Standards development i. Comments
process should be used to sort out the 1410. We find that the Reliability 1413. APPA notes that the revised
applicability issues. It states that using Standard serves an important reliability Reliability Standard PER–004–1 filed by
this process will allow for sufficient goal in requiring applicable entities to NERC on November 15, 2006 partially
clarity to reduce the risk of confusion staff all operating positions that have a fulfills the directive to include Measures
and thus prevent the need for primary responsibility for real-time and Levels of Non-Compliance. It states
interpretations that could change over operations or are directly responsible for that NERC should be directed to include
time. EEI believes this is especially complying with the Reliability Measures and Levels of Non-
important with this PER class of Standards with NERC-certified staff. Compliance related to all Requirements.
Reliability Standards because operators Accordingly, the Commission approves 1414. FirstEnergy seeks revisions to
should have unambiguous guidance on Reliability Standard PER–003–0. In the terms ‘‘shall have a comprehensive
what they are expected to do. It states addition, pursuant to section 215(d)(5) understanding’’ and ‘‘shall have
that the Reliability Standards should be of the FPA and § 39.5(f) of our extensive knowledge.’’ It states that it
written so that operating personnel regulations, the Commission directs the will be difficult for entities to
clearly understand their roles and ERO to develop a modification to PER– demonstrate compliance with these
responsibilities, and whether or not a 003–0 through the Reliability Standards terms. In addition, FirstEnergy suggests
specific certification is required. EEI development process that: (1) Specifies that the reliability coordinator staffing
also states that operators should not be the minimum competencies that must requirements should be located in the
required to maintain multiple be demonstrated to become and remain IRO Reliability Standards.
certifications. a certified operator and (2) identifies the 1415. Xcel states that emergency
minimum competencies operating training requirements should be
ii. Commission Determination expressed in hour increments rather
personnel must demonstrate to be
1408. Northern Indiana and APPA certified. The Commission also directs than days to allow for flexibility in
raise persuasive arguments regarding the ERO to consider grandfathering scheduling training and coordinating
labor relations and labor retention certification requirements for with rotating shift schedules.
issues that may arise if generator transmission operator personnel in the
operators are required to be NERC- ii. Commission Determination
Reliability Standards development
certified. The Commission understands process. 1416. No comments were received on
theses concerns and is persuaded not to the proposed modifications to include
require generator operators or d. Reliability Coordination—Staffing formal training requirements for
transmission operators at local control (PER–004–1) reliability coordinators similar to those
centers to be NERC-certified at this time. 1411. PER–004–1 ensures that addressed under the personnel training
In addition, the Commission reliability coordinator personnel are Reliability Standard PER–002–0 and to
understands that there are some long adequately trained, NERC-certified and include requirements pertaining to
tenured unionized transmission staffed 24-hours a day, seven days a personnel credentials for reliability
operators who are very capable week, with properly trained and coordinators similar to those in PER–
operators but who are unable to secure certified individuals.377 Further, 003–0. The Commission finds that these
certification. This is not a new problem reliability coordinator operating modifications will improve the
and has been addressed in various personnel must have a comprehensive Reliability Standard because they
collective bargaining negotiations understanding of the area of the Bulk- include training requirements for the
through grandfathering such capable Power System for which they are reliability coordinator who has the
operators who are unable to become responsible. highest level of authority to assure
certified. However, the Commission 1412. In the NOPR, the Commission Reliable Operation of the Bulk-Power
directs that if grandfathering is proposed to approve Reliability System. Accordingly, the Commission
implemented, the entity must attest that Standard PER–004–0 as mandatory and directs the ERO to develop
the operators are competent. The enforceable. In addition, pursuant to modifications to the Reliability
Commission directs the ERO to consider section 215(d)(5) of the FPA and Standard that address these matters.
grandfathering certification § 39.5(f) of our regulations, the 1417. With regard to APPA’s
requirements for these personnel so that Commission proposed to direct NERC to comments, consistent with our
the industry can retain the knowledge submit a modification to PER–004–0 discussion above regarding Measures
and skill of these long-tenured that: (1) Includes formal training and Levels of Non-Compliance, we
operators. Personnel that are subject to requirements for reliability coordinators leave it to the discretion of the ERO
such grandfathering still must comply similar to those addressed under the whether it is necessary that each
with applicable training requirements personnel training Reliability Standard Requirement of this Reliability Standard
pursuant to PER–002–0. have a corresponding Measure.
1409. No comments were received on 377 In its November 15, 2006, filing, NERC 1418. We find that the Reliability
the proposed modifications to direct the submitted PER–004–1, which supercedes the Standard adequately addresses
Version 0 Reliability Standard. PER–004–1 adds
ERO to modify the Reliability Standard Measures and Levels of Non-Compliance to the
reliability coordinator staffing.
to specify the minimum competencies Version 0 Reliability Standard. In this Final Rule, Accordingly, the Commission approves
that must be demonstrated to become we review the November version, PER–004–1. Reliability Standard PER–004–1. In
addition, pursuant to section 215(d)(5) informed immediately upon the for recovery time. APPA acknowledges
of the FPA and § 39.5(f) of our detection of failures in relays or that in the NOPR, we stated that ‘‘the
regulations, the Commission directs the protection system elements on the Bulk- Reliability Standards on mitigating
ERO to develop a modification through Power System that would threaten IROL violations are not specific enough
the Reliability Standards development reliable operation, so that these entities and system operators or field protection
process to PER–004–1 that: (1) Includes could carry out appropriate corrective and control personnel would not be
formal training requirements for control actions consistent with those alerted about failures of relays and
reliability coordinators similar to those used in mitigating IROL violations and protection systems on critical
addressed under the personnel training (3) clarifying that, after being informed elements.’’ APPA, however, states that:
Reliability Standard PER–002–0 and (2) of failures in relays or protection system ‘‘If this is the Commission’s view, then
includes requirements pertaining to elements on the Bulk-Power System, it should instruct NERC to re-examine
personnel credentials for reliability transmission operators or generator the interaction between these two sets of
coordinators similar to those in PER– operators carry out corrective control standards [IROL and SOL and proposed
003–0. Further, we direct the ERO to actions that return a system to a stable PRCs] on remand, and to develop the
consider the suggestions of FirstEnergy state as soon as possible, but no longer most efficient solution to this problem.
and Xcel in the Reliability Standards than 30 minutes after receiving a notice The Commission should not itself
development process. of failure. undertake to resolve this problem by
issuing directives for specific revisions
10. PRC: Protection and Control i. Comments
to PRC–001–1, especially if the result
1419. Protection and Control systems 1422. While Constellation supports might be to have local level personnel
(PRC) on Bulk-Power System elements the Commission’s proposed directives countermanding the instruction of RC
are an integral part of reliable grid because they represent additional steps personnel at a time when the system is
operation. Protection systems are to achieving reliability of the Bulk- unstable.’’ APPA asserts that the
designed to detect and isolate faulty Power System and eliminating undue Commission should modify its proposed
elements on a system, thereby limiting discrimination, MISO questions the directives to allow NERC, as technical
the severity and spread of system need for the Commission’s proposals. expert, to address the problems in the
disturbances, and preventing possible MISO notes that virtually all protection Reliability Standard that the
damage to protected elements. The schemes have backups. MISO asks Commission has identified.
function, settings and limitations of a whether the Commission wants 1427. Dynegy states that in many
protection system are critical in facilities to be removed from service if situations, depending on the particular
establishing SOLs and IROLs. The PRC one of the redundant relaying packages relay or protection system failure, an
Reliability Standards apply to has a problem, or whether some other operator may not be able to complete
transmission operators, transmission action should be taken besides such corrective control actions that return the
owners, generator operators, generator removal. system to a stable state within 30
owners, distribution providers and 1423. With regard to the NOPR’s minutes, including troubleshooting of
regional reliability organizations and direction to the ERO to include relays or restoring any tripped facilities.
cover a wide range of topics related to Measures and Levels of Non- Dynegy find that a 30-minute time
the protection and control of power Compliance, APPA states that the new period may thus be overly rigid and
systems. Measures only partially address the punitive. Wisconsin Electric also
Requirements, and in some cases, requests further clarification of the 30-
a. System Protection Coordination reference non-existent Requirements. minute time limit to carry out corrective
(PRC–001–1) For example, rather than referencing actions after a relay failure. It has
1420. PRC–001–1 378 ensures that Requirement R5.1, new Measure M1 additional concerns about older relays
protection systems are coordinated incorrectly refers to non-existent (e.g., electromechanical relays) since it
among operating entities by requiring Requirement R8.1. Similarly, rather than is impossible to know when and
transmission and generator operators to referencing Requirement R5.2, new whether these older relays have failed.
notify appropriate entities of relay or Measure M2 incorrectly refers to non- Wisconsin Electric also states that the
equipment failures that could affect existent Requirement R8.2. NOPR is not clear about which relays
system reliability. In addition, 1424. APPA states that while it agrees threaten reliable system operation.
transmission and generator operators that PRC–001–1 is sufficient for 1428. Northern Indiana states that the
must coordinate with appropriate approval, since the new Measures only NOPR appears to require immediate
entities when new protection systems partially address the Requirements, and corrective actions whenever failures on
are installed, or when existing in some cases refer to non-existent relays or protection systems are
protection systems are modified. Requirements, no penalties should be detected, without regard to whether the
1421. In the NOPR, the Commission levied for violations of Requirements specific failure detected reduces system
proposed to approve PRC–001–0 as that have no accompanying Measures. reliability. It seeks the Commission’s
mandatory and enforceable. In addition, 1425. WIRAB states that the clarification that we do not intend to
the Commission proposed to direct Requirements, Measures and Levels of question a certified transmission
NERC to submit modifications to PRC– Non-Compliance do not provide operator’s expertise in assessing
001–0 (proposed directives) that guidance for the length of time— whether a particular relay or protection
included: (1) Measures and Levels of currently stated as ‘‘as soon as system failure reduces system
Non-Compliance; (2) a requirement that possible’’—permitted for corrective reliability.
transmission and generator operators be actions. 1429. California PUC contends that
1426. APPA disagrees with the imposing a time restriction for returning
378 In its November 15, 2006, filing, NERC Commission’s second and third a system to a stable state may cause
submitted PRC–001–1, which supercedes the directives to NERC. APPA states that the more harm than good since additional
Version 0 Reliability Standard. PRC–001–1 adds
BAL and IRO Reliability Standards information and options may be
Version 0 Reliability Standard. In this Final Rule, already have specific standards to notify available as time elapses. It repeats its
we review the November version, PRC–001–1. affected entities and provide directions suggestion from its earlier comments on
the Staff Preliminary Assessment and development process, as discussed system reliability is not threatened, and
proposes the following alternative below. therefore, there is no need to take
language: ‘‘Transmission or generation 1435. The Commission observes that, corrective control actions within 30
operators shall carry out corrective collectively, the comments raise three minutes. We agree with MISO’s
control actions, i.e., returning the general questions: (1) Whether relay or conclusion for this scenario.
system to a stable state that respects equipment failures reduce system 1439. In the case, however, of a
system requirements as soon as reliability and, if so, in what system element protected by a single
possible, and no longer than 30 minutes, circumstances; (2) what are ‘‘corrective protection system with a failed relay
except where a longer response time is actions’’ required to return a system to that threatens system reliability, that
feasible, or where a longer response is a secure operating state and (3) when is scenario would require the use of
demonstrated to produce a better returning a system to a secure operating appropriate operating solutions
ultimate solution without unacceptable state ‘‘as soon as possible.’’ 379 The including removing a system element
interim risk.’’ Commission will discuss each question from service. Another possible solution
1430. A number of commenters raise in turn. is to operate a system at a lower SOL or
concerns that the proposal would be IROL that recognizes the degraded
(a) Whether Relay or Equipment
unnecessarily burdensome on generator protection performance.
Failures Reduce System Reliability and,
operators. For example, Progress
if So, in What Circumstances? (b) What Are Corrective Actions?
Electricity Committee asserts that the
Commission’s proposal to require 1436. Protection systems on Bulk- 1440. Corrective actions taken by
generator operators to return the system Power System elements are an integral transmission operators to return a
to a stable state as soon as possible and part of reliable operations. They are system to a secure operating state when
within no longer than 30 minutes may designed to detect and isolate faulty a protective relay or equipment failure
be too burdensome for non-energy elements on a power system, thereby reduces system reliability normally refer
company users with on-site generation. limiting the severity and spread of to ‘‘operator control actions’’, consisting
California Cogeneration asserts that disturbances and preventing possible of operator actions such as removing the
PRC–001–1 as a whole may impose damage to protected elements. If a facility without protection from service,
unreasonable burdens on generators protection system can no longer perform generation redispatch, transmission re-
with no material impact on the grid, as designed because of a failure of its configuration, etc. Corrective action
because most such generators will have relays, system reliability is reduced or must be completed as soon as possible,
no knowledge of the protection systems threatened. In deriving SOLs and IROLs, but no longer than 30 minutes after a
on the grid. moreover, the functions, settings, and notice of protection system failure.
1431. Allegheny states that since limitations of protection systems are Failure to complete corrective action
generator operators do not have the recognized and integrated. Systems are within 30 minutes will be considered a
same resources as transmission only reliable when protection systems violation of the relevant IROL or TOP
operators for taking corrective actions, perform as designed. This is what PRC– Reliability Standards. In contrast,
the Commission’s third proposed 001–1 means in linking a reduction in troubleshooting or replacing failed
directive should be modified to apply system reliability with a protection relay relays or equipment are performed by
only to transmission operators. failure or other equipment failure. field maintenance personnel and
Allegheny states that while a 1437. With respect to MISO’s normally take hours or even days to
transmission operator can direct a comment that virtually all protection complete. These actions are not
generator operator to take specific systems have backups and therefore the normally considered corrective actions
actions, the reverse is not the case. Commission’s proposals are not in the context of real-time operation of
1432. FirstEnergy contends that necessary, unless the backup protection the Bulk-Power System.
Requirement R2.1 essentially requires has the same design goals and 1441. We believe that ‘‘[t]he
generator operators to report all capabilities as the primary protection, a transmission operator shall take
protective relay or equipment failures, relay failure in the primary protection corrective action as soon as possible’’
since generator operators may not be may still threaten system reliability. refers to transmission operators taking
able to tell which failures will reduce Further, we note that while the PRC operator control actions. It does not
system reliability. FirstEnergy suggests Reliability Standards do not specifically refer to troubleshooting, repairing or
that R2.1 should be revised to require require protection systems consisting of replacing failed relays or equipment,
generator operators to report all redundant and independent protection etc., since these time-consuming
equipment failures or outages. groups for each critical element in the corrective actions would prolong the
FirstEnergy further suggests that PRC– Bulk-Power System, such requirements risk of cascading failures to the Bulk-
001–1 be revised to provide that if a are included as one potential solution in Power System.
company performs reasonable testing the TPL Reliability Standards.380 1442. Dynegy, Wisconsin Electric and
procedures, undiscoverable equipment 1438. Finally, MISO’s question seems Northern Indiana are concerned that the
failures will not be violations of R2.1. to imply that if there are redundant time required to troubleshoot, repair or
1433. MidAmerican states that the relaying packages providing redundant replace failed relays and equipment
term ‘‘immediately’’ in the protection, and a problem develops with would be substantially longer than the
Commission’s second directive is only one of those redundant packages, 30 minutes set forth in the
ambiguous and unenforceable. It Commission’s proposed directive. We
379 PRC–001–1 Requirement R2.2 provides: ‘‘If a
suggests a 30-minute time limit. believe we have alleviated this concern
protective relay or equipment failure reduces
system reliability, the Transmission Operator shall
in our discussion, above. In addition, in
ii. Commission Determination response to Northern Indiana, we clarify
notify its Reliability Coordinator and affected
1434. The Commission approves Transmission Operators and Balancing Authorities. that the responsibility for assessing
PRC–001–1 as mandatory and The Transmission Operator shall take corrective whether a particular relay or protective
action as soon as possible.’’
enforceable. We also direct NERC to 380 If delayed clearing results in reliability criteria system failure reduces system reliability
develop a modification to PRC–001–1 violations, one solution can be the use of redundant remains with transmission operators.
through the Reliability Standards relay systems. TPL–002–0 Table 1, footnote e. We direct the ERO to clarify the term
‘‘corrective action’’ consistent with this personnel not being alerted about failure i. Comments
discussion when it modifies PRC–001– of relays and protection systems on 1453. APPA agrees with the
1 in the Reliability Standards critical elements.’’ Our focus, rather, is Commission’s proposed course of
development process. that upon detection of failure of relays action. It states that there are significant
1443. We agree with Allegheny that and protection systems on critical and substantive differences between
generator operators do not have the elements, field personnel must report regional procedures due to the
same ability as transmission operators to the failures promptly to the
characteristics of various regional grids.
take corrective control actions on the transmission operators so that corrective
Further it suggests that NERC and the
Bulk-Power System, and we will modify operator control actions can be taken as
our third directive as set forth below. Regional Entities consider whether they
soon as possible and within 30 minutes.
We believe this also addresses Progress can attain greater consistency on an
Finally, with respect to APPA’s
Electricity Committee and California Interconnection-wide basis in
contention that our proposed directives
Cogeneration’s similar concerns. addressing the completion of this
would result in local-level personnel
(c) When Is ‘‘As Soon as Possible’’? undermining or not following the
1454. Alcoa suggests that the ERO—
instructions of reliability coordinator
1444. As explained above, the instead of a Regional Entity—should
personnel at a time when the system is
requirement for system operators to take unstable, we do not understand how define the requirements for DME and
corrective control action when local level personnel, who have no the type of report it generates. The
protective relay or equipment failure operating control of a transmission requirements and equipment
reduces system reliability should be operator’s system or a reliability specifications should be consistent
treated the same as the requirement for coordinator’s system could do so. throughout North America. In addition,
returning a system to a secure and 1450. The Commission approves Alcoa suggests that the criteria for
reliable state after an IROL violation, Reliability Standard PRC–001–1 as installation of such equipment should
i.e., as soon as possible, but no longer mandatory and enforceable. In addition, include the necessary monitoring and
than 30 minutes after a violation. A the Commission directs the ERO to recording that contribute to analysis and
longer time limit would place an entity develop modifications to PRC–001–1 enhance reliability.
in violation of relevant IROL or TOP through the Reliability Standards 1455. Otter Tail suggests that PRC–
Reliability Standards. development process that: (1) Correct 002–1 should be developed on an
1445. The Commission directs the the references for Requirements and (2) Interconnection-wide basis to ensure
ERO to consider FirstEnergy and include a requirement that upon the consistency and promote reliability of
California PUC’s comments about the detection of failures in relays or the Bulk-Power System.
maximum time for corrective action in protection system elements on the Bulk- ii. Commission Determination
the ERO Reliability Standards Power System that threaten reliable
development process. operation, relevant transmission 1456. For the reasons stated in the
1446. In response to MidAmerican’s operators must be informed promptly, NOPR, the Commission will not
request that we clarify the term but within a specified period of time approve or remand PRC–002–1.
‘‘immediately’’ in our proposed second that is developed in the Reliability 1457. We agree with APPA, Alcoa and
directive, we direct the ERO, in the Standards development process, Otter Tail that the ERO should consider
Reliability Standards development whereas generator operators must also whether greater consistency can be
process, to determine the appropriate promptly inform their transmission achieved in this Reliability Standard. In
amount of time after the detection of operators and (3) clarifies that, after Order No. 672, the Commission also
relay failures, in which relevant being informed of failures in relays or encouraged greater uniformity in the
transmission operators must be protection system elements that threaten development of Reliability Standards.381
informed of such failures. reliability of the Bulk-Power System, Consistent with that goal, the
1447. We agree with APPA that the transmission operators must carry out Commission directs the ERO to consider
added Measures and Levels of Non- corrective control actions, i.e., return a APPA, Alcoa and Otter Tail’s
Compliance incorrectly reference non- system to a stable state that respects suggestions in the Reliability Standards
existent requirements. We direct the system requirements as soon as possible development process as it modifies
ERO to revise the references and no longer than 30 minutes after they PRC–002–1 to provide missing
accordingly. receive notice of the failure. information needed for the Commission
1448. We disagree with APPA that to act on this Reliability Standard.
BAL and IRO Reliability Standards b. Define Regional Disturbance
Monitoring and Reporting Requirements c. Regional Procedure for Analysis of
already address matters contained in
(PRC–002–1) Misoperations of Transmission and
PRC–001–1, because BAL and IRO are
Generation Protection Systems (PRC–
not related to relay and equipment 1451. PRC–002–1 ensures that each
003–1)
failures, which are specifically regional reliability organization
addressed in PRC–001–1. establishes requirements to install 1458. PRC–003–1 ensures that all
1449. We disagree with APPA’s Disturbance Monitoring Equipment transmission and generation protection
assertion that ‘‘the Reliability Standards (DME) and report disturbance data to system misoperations are analyzed, and
on mitigating IROL violations are not facilitate analyses of events and verify corrective action plans are developed.
specific enough and system operators or system models. Misoperations occur when a protection
field protection and control personnel 1452. In the NOPR, the Commission system operates when it should not or
would not be alerted about failure of identified PRC–002–1 as a fill-in-the- does not operate when it should. This
relays and protection systems on critical blank standard. The NOPR stated that Reliability Standard requires each
elements.’’ The time allowed for because the regional requirements for regional reliability organization to
mitigating actual IROL violations is very installing DME had not been submitted, develop a procedure to monitor and
clear: as soon as possible and within 30 the Commission would not approve or review misoperations of protection
minutes. We clarify that our concern is remand PRC–002–1 until the ERO
not about ‘‘field protection and control submitted the additional information. 381 Order No. 672 at P 292.
systems and to develop and document i. Comments the Reliability Standards development
corrective actions. 1465. APPA agrees that PRC–004–1 is process as it modifies PRC–004–1.384
1459. In the NOPR, the Commission sufficient for approval as a mandatory Further, as the ERO reviews this
identified PRC–003–1 as a fill-in-the- and enforceable Reliability Standard. Reliability Standard in its five-year
blank standard. The NOPR stated that 1466. ISO–NE and ISO/RTO Council cycle of review, the Regional Entity,
oppose the Commission’s proposed rather the regional reliability
because the regional procedures had not
organization, should develop the
been submitted, the Commission approval of PRC–004–1 because it relies
procedures for corrective action plans.
proposed not to approve or remand on PRC–003–1, a fill-in-the-blank
PRC–003–1 until the ERO submitted the standard, which the Commission does e. Transmission and Generation
additional information. not propose to approve or remand until Protection System Maintenance and
the ERO submits additional information. Testing (PRC–005–1)
i. Comments 1467. ISO–NE further requests the 1471. PRC–005–1 ensures that all
Commission to direct NERC to modify transmission and generation protection
1460. APPA agrees with the
PRC–004–1 to include LSEs and systems affecting the reliability of the
Commission’s proposed course of
transmission operators in the Bulk-Power System are maintained and
action. It states that there are significant
applicability section. It states that based tested by requiring the transmission
and substantive differences between on current practice in the ISO–NE
regional procedures due to the owners, distribution providers, and
balancing area, transmission operators, generator owners to develop, document,
characteristics of various regional grids transmission owners, LSEs and
and industry structures. Further it and implement a protection system
distribution providers may individually maintenance program that may be
suggests that NERC and the Regional or jointly own and operate a protection reviewed by the regional reliability
Entities consider whether they can system. It therefore suggests that organization.
attain greater consistency on an transmission operators and LSEs should 1472. In the NOPR, the Commission
Interconnection-wide basis in also be included in the applicability proposed to approve PRC–005–1 as
completing this Reliability Standard. section. ISO–NE provides the same mandatory and enforceable. In addition,
ii. Commission Determination suggestion with regard to PRC–005–1, the Commission proposed to direct
PRC–008–0, PRC–011–0, PRC–015–0, NERC to submit a modification to PRC–
1461. For the reasons stated in the PRC–016–0, PRC–017–0 and PRC–021– 005–1 that includes a requirement that
NOPR, the Commission will not 1. maintenance and testing of a protection
approve or remand PRC–003–1. ii. Commission Determination system must be carried out within a
1462. We agree with APPA that the maximum allowable interval that is
1468. The Commission approves appropriate to the type of the protection
ERO should consider whether greater Reliability Standard PRC–004–1 as system and its impact on the reliability
consistency can be achieved in this mandatory and enforceable. of the Bulk-Power System.
Reliability Standard. In Order No. 672, 1469. We are not persuaded by ISO–
the Commission also encouraged greater NE and ISO/RTO Council’s assertion i. Comments
uniformity in the development of that PRC–004–1 should not be approved 1473. FirstEnergy states that NERC
Reliability Standards.382 Consistent because it refers to PRC–003–1, which is should establish a maximum
with that goal, the Commission directs a fill-in-the-blank standard. In part, we maintenance interval for protection
the ERO to consider APPA’s suggestions neither approve nor remand PRC–003– system equipment, and a national
in the Reliability Standards 1 because it applies to a regional limitation taking into account both relay
development process as it modifies reliability organization, and we are not type and functional versus calibration
PRC–003–1 to provide missing persuaded that a regional reliability testing. Entergy does not object to the
information needed for the Commission organization’s compliance with a development of maximum allowable
to act on this Reliability Standard. Reliability Standard can be enforced as maintenance intervals provided that
NERC proposes.383 This is not the case they are developed in NERC’s
d. Analysis and Reporting of
with PRC–004–1, which applies to Reliability Standards development
Transmission Protection System
transmission owners, distribution process.
Misoperations (PRC–004–1) 1474. FirstEnergy and ISO–NE suggest
providers, and generator owners. Since
1463. PRC–004–1 ensures that all PRC–004–1 is an existing Reliability that PRC–005–1, PRC–008–0, PRC–011–
transmission and generation protection Standard that has been followed on a 0 and PRC–017–0 should be combined
system misoperations affecting the voluntary basis, transmission owners, into a single Reliability Standard
reliability of the Bulk-Power System are distribution providers and generator relating to the maintenance of
analyzed and mitigated by requiring owners are on notice of requirements protection and control equipment.
transmission owners, generator owners related to misoperations of transmission ii. Commission Determination
and distribution providers that own a and generation protection systems. As
stated in the Common Issues section, a 1475. For the reasons stated in the
transmission protection system to NOPR, the Commission approves
analyze and document protection reference to an unapproved Reliability
Standard may be considered in an Reliability Standard PRC–005–1 as
system misoperations. These entities mandatory and enforceable.
must also develop corrective action enforcement action, but is not a reason
1476. In addition, for the reasons
plans in accordance with the regional to delay approving and enforcing this
discussed in the NOPR, the Commission
reliability organization’s procedures. Reliability Standard.
directs the ERO to develop a
1470. We direct the ERO to consider
1464. In the NOPR, the Commission modification to PRC–005–1 through the

ISO–NE’s suggestion that LSEs and
proposed to approve PRC–004–1 as transmission operators should be 384 The same suggestion and therefore same
mandatory and enforceable. included in the applicability section, in Commission response also applies to PRC–005–1,
PRC–008–0, PRC–011–0, PRC–015–0, PRC–016–0,
382 Id. at P 292. 383 NOPR at P 56–57. PRC–017–0 and PRC–021–1.
Reliability Standards development cascading events, assuming it is LSEs are generally aware of its
process that includes a requirement that properly coordinated with the dynamic requirements. As stated in the Common
maintenance and testing of a protection response of the system. Until this Issues section, a reference to an
system must be carried out within a Reliability Standard is submitted to the unapproved Reliability Standard may be
maximum allowable interval that is Commission for approval, we do not considered in an enforcement action,
appropriate to the type of the protection expect any lapse in the compliance with but is not a reason to delay approving
system and its impact on the reliability this Reliability Standard. As we stated and enforcing this Reliability Standard.
of the Bulk-Power System. We further in the NOPR, it is important that the The Commission expects that the data
direct the ERO to consider FirstEnergy’s existing regional reliability will be sent to the Regional Entities
and ISO–NE’s suggestion to combine organizations continue to fulfill their (instead of the regional reliability
PRC–005–1, PRC–008–0, PRC–011–0 current roles during this time of organizations) after they are approved.
and PRC–017–0 into a single Reliability transition. The Commission expects that
Standard through the Reliability this function will pass from the regional h. Underfrequency Load Shedding
Standards development process. reliability organization to the Regional Equipment Maintenance Programs
Entity after they are approved. (PRC–008–0)
f. Development and Documentation of
Regional UFLS Programs (PRC–006–0) g. Assuring Consistency With Regional 1487. PRC–008–0 requires
UFLS Program Requirements (PRC–007– transmission owners and distribution
1477. PRC–006–0 ensures the providers to implement UFLS
development of a regional UFLS 385 0)
equipment maintenance and testing
program that will be used as a last resort 1482. PRC–007–0 requires
programs and provide program results
to preserve the Bulk-Power System transmission owners, transmission
to the regional reliability organization.
during a major system failure that could operators, LSEs and distribution
cause system frequency to collapse. providers to provide, and annually 1488. In the NOPR, the Commission
PRC–006–0 requires the regional update, their underfrequency data to proposed to approve Reliability
reliability organization to develop, facilitate the regional reliability Standard PRC–008–0 as mandatory and
coordinate, document and assess UFLS organization’s maintenance of the UFLS enforceable. In addition, the
program design and effectiveness at program database. Commission proposed to direct NERC to
least every five years. 1483. In the NOPR, the Commission submit a modification to PRC–008–0
1478. In the NOPR, the Commission proposed to approve PRC–007–0 as that includes a requirement that
identified PRC–006–0 as a fill-in-the- mandatory and enforceable. maintenance and testing of UFLS
blank standard. The NOPR stated that programs must be carried out within a
i. Comments maximum allowable interval
because the regional procedures had not
been submitted, the Commission would 1484. APPA agrees that PRC–007–0 is appropriate to the relay type and the
not propose to approve or remand PRC– sufficient for approval as a mandatory potential impact on the Bulk-Power
006–0 until the ERO submits the and enforceable Reliability Standard. System.
additional information. The However, it states that actual
enforcement cannot take place until i. Comments
Commission commends the ERO and
regions’ initiative, outlined in the PRC–006–0 becomes effective. ISO–NE 1489. Entergy states that it does not
Reliability Standards Work Plan, in and ISO/RTO Council state that PRC– object to NERC’s development of
adopting an integrated and coordinated 007–0 should not be approved because maximum allowable maintenance
approach to protection for generators, it refers to PRC–006–0, which we are intervals for the purpose of evaluating
transmission lines and UFLS and not approving or remanding at this time. protection system and control programs
UVLS 386 programs as part of its work on ii. Commission Determination provided that they are developed in
fill-in-the-blank Reliability NERC’s Reliability Standards
1485. For the reasons stated in the
Standards.387 development process. FirstEnergy states
NOPR, the Commission approves
i. Comments that NERC should establish a maximum
Reliability Standard PRC–007–0 as
maintenance interval for protection
1479. APPA agrees with the mandatory and enforceable.
1486. We are not persuaded by APPA, system equipment and a ‘‘national
Commission’s proposed course of limitation taking into account both relay
action. It suggests that in completing ISO/RTO Council and ISO–NE that
PRC–007–0 cannot be acted on because type and functional versus calibration
this Reliability Standard, NERC should testing.’’
strive for greater consistency on an it relies on PRC–006–0. We proposed to
not approve or remand PRC–006–0 1490. ISO–NE and ISO/RTO Council
Interconnection-wide basis through the
partly because it applies to a regional contend that the Commission should
use of ‘‘base procedures’’ for each
reliability organization. The not approve PRC–008–0 until it
Interconnection.
Commission was not persuaded that a approves PRC–006–0, which the
ii. Commission Determination regional reliability organization’s Commission has identified as a fill-in-
1480. For the reasons stated in the compliance with a Reliability Standard the-blank standard. Similarly, APPA
NOPR, the Commission will not can be enforced as NERC proposed.388 contends that PRC–008–0 cannot be
approve or remand PRC–006–0. That is not the case with PRC–007–0, enforced until PRC–006–0 has become
1481. The Commission understands which applies to transmission owners, effective and the required regional UFLS
that UFLS, when properly coordinated transmission operators, distribution program documentation has been
with the dynamic response of the Bulk- providers and LSEs. Since PRC–007–0 is submitted by the applicable Regional
Power System, is one of the safety nets an existing Reliability Standard that has Entity. It also notes that the
that safeguards the system from been followed on a voluntary basis, applicability of PRC–008–0 is limited to
transmission owners, transmission transmission owners and distribution
385 Underfrequency load shedding. operators, distribution providers and providers who are required by their
386 Undervoltageload shedding. regional reliability organization to have
387 NOPR at P 367. 388 NOPR at P 56–57. a UFLS program.
ii. Commission Determination impact on the reliability of the Bulk- That is not the case with PRC–009–0,
Power System. which applies to transmission owners,
1491. FirstEnergy and Entergy agree transmission operators, LSEs and
with the Commission’s proposed i. UFLS Performance Following an
distribution providers with UFLS
directive, whereas APPA suggests that Underfrequency Event (PRC–009–0)
systems. Since PRC–009–0 is an existing
the need for the proposal should be 1494. PRC–009–0 ensures that the Reliability Standard that has been
established first via the Reliability performance of a UFLS system is followed on a voluntary basis, entities
Standards development process. analyzed and documented following an are aware whether they are required to
1492. We disagree with ISO/RTO underfrequency event by requiring the have a UFLS program in place.
Council and others that approval or transmission owner, transmission Reporting on their UFLS programs
enforcement of PRC–008–0 is linked to operator, LSE and distribution provider therefore should not be burdensome. As
approval of PRC–006–0. PRC–008–0 to document the deployment of their stated in the Common Issues section, a
requires that a ‘‘transmission provider UFLS systems in accordance with the reference to an unapproved Reliability
or distribution provider with a UFLS regional reliability organization’s Standard may be considered in an
program (as required by its Regional program. enforcement action, but is not a reason
Reliability Organization) shall have a 1495. In the NOPR, the Commission to delay approving and enforcing this
UFLS equipment and maintenance proposed to approve Reliability Reliability Standard. The Commission
testing program in place.’’ 389 PRC–006– Standard PRC–009–0 as mandatory and expects this documentation will be sent
0 requires each regional reliability enforceable. to the Regional Entities (instead of the
organization to develop, coordinate and regional reliability organizations) after
i. Comments
document a UFLS program that includes they are approved.
specified elements. Again, we proposed 1496. APPA agrees that PRC–009–0 is
sufficient for approval as a mandatory j. Assessment of the Design and
to neither approve nor remand PRC– Effectiveness of UVLS Program (PRC–
006–0 because it applies to a regional and enforceable Reliability Standard.
However, it states that actual 010–0)
reliability organization and the
Commission was not persuaded that a enforcement cannot take place until 1500. PRC–010–0 requires
regional reliability organization’s pending PRC–006–0 becomes effective transmission owners, transmission
compliance with a Reliability Standard and notes that the applicability of PRC– operators, LSEs and distribution
can be enforced as proposed by 009–0 is limited to entities that own or providers to periodically conduct and
NERC.390 That is not the case with PRC– operate a UFLS program recognized by document an assessment of the
008–0, which applies to transmission their regional reliability organization. effectiveness of their UVLS program at
owners and distribution providers. 1497. ISO–NE and ISO/RTO Council least every five years or as required by
Since PRC–008–0 is an existing contend that the Commission should changes in system conditions. The
Reliability Standard that has been not approve PRC–009–0 until it assessment must be conducted with the
followed on a voluntary basis, approves PRC–006–0, which the associated transmission planner and
transmission owners and distribution Commission has identified as a fill-in- planning authority.
the-blank standard. 1501. In the NOPR, the Commission
providers are aware whether they are
required to have a UFLS program in ii. Commission Determination Standard PRC–010–0 as mandatory and
place. We approve PRC–008–0 as
1498. For the reasons stated in the enforceable. In addition, the
mandatory and enforceable because it
NOPR, the Commission approves Commission proposed to direct NERC to
requires entities to have equipment
Reliability Standard PRC–009–0 as submit a modification to PRC–010–0
maintenance and testing of their UFLS
mandatory and enforceable.391 that requires that an integrated and
programs. As stated in the Common 1499. We disagree with ISO/RTO coordinated approach be included in all
Issues section, a reference to an Council and others that approval or protection systems on the Bulk-Power
unapproved Reliability Standard may be enforcement of PRC–009–0 is linked to System, including generators and
considered in an enforcement action, approval of PRC–006–0. PRC–009–0 transmission lines, generators’ low
but is not a reason to delay approving ensures that the performance of a UFLS voltage ride-through capabilities and
and enforcing this Reliability Standard. system is analyzed and documented UFLS and UVLS programs.
The Commission expects that the following an underfrequency event by 1502. The Commission commends the
program results will be sent to the requiring the transmission owner, initiative and efforts that have been
Regional Entities (instead of the regional transmission operator, LSE, and taken by NERC and the industry in
reliability organizations) after they are distribution provider to document the addressing UVLS requirements as
approved. deployment of their UFLS operations. recommended by the Blackout Report.
1493. The Commission approves PRC–006–0 requires each regional
Reliability Standard PRC–008–0 as i. Comments
reliability organization to develop,
mandatory and enforceable. In addition, coordinate and document a UFLS 1503. APPA agrees that PRC–010–0
the Commission directs the ERO to program that includes specified should be approved. While APPA agrees
develop a modification to PRC–008–0 elements. We proposed to neither and that NERC should re-examine this
through the Reliability Standards approve nor remand PRC–006–0 Reliability Standard to determine
development process that includes a because it applies to a regional whether a more integrated and
requirement that maintenance and reliability organization and the coordinated approach should be
testing of a protection system must be Commission was not persuaded that a included in protection systems on the
carried out within a maximum regional reliability organization’s Bulk-Power System, it also asks the
allowable interval that is appropriate to compliance with a Reliability Standard Commission not to require a specific
the type of the protection system and its can be enforced as NERC proposed.392 approach to UVLS and other protection
systems. According to APPA, NERC
389 See PRC–008–0, Requirement R1. 391 NOPR at P 877–80. should strive for greater consistency on
390 NOPR at P 56–57. 392 NOPR at P 56–57. an Interconnection-wide basis through
the use of a coordinated protection coordination among UVLS programs Commission’s concern about periodic
system for the Bulk-Power System in that address local system problems testing of UVLS equipment.
each Interconnection. makes sense, we believe that PRC–010– 1514. FirstEnergy comments that
1504. ISO–NE generally supports 0’s objective in requiring an integrated NERC should establish a maximum
approval of PRC–010–0, but opposes the and coordinated approach is to address maintenance interval for protection
Commission’s directive to modify the the possible adverse interactions of system equipment, and a ‘‘national
Reliability Standard to include an these protection systems among limitation taking into account both relay
integrated and coordinated approach in themselves and to determine whether type and functional versus calibration
all protection systems, particularly for they could aggravate or accelerate testing.’’ Entergy states that it does not
UVLS and UFLS, programs, because cascading events. We do not believe this object to NERC’s development of
such integration cannot be Reliability Standard is aimed at maximum allowable maintenance
technologically accomplished. universal coordination among UVLS intervals for the purpose of evaluating
1505. FirstEnergy indicates that UVLS programs that address local system protection system and control programs.
is primarily designed to address problems.
localized problems, and therefore ii. Commission Determination
1509. As identified in the NOPR,394
requiring the universal coordination of NERC is continuing to develop an 1515. The Commission approves
UVLS across the grid does not make integrated and coordinated approach to Reliability Standard PRC–011–0 as
sense. FirstEnergy states that it is not protection for generators, transmission mandatory and enforceable. In addition,
clear what type of coordination would lines and UFLS and UVLS programs we direct the ERO to develop
be useful for a UVLS program. within its work on the fill-in-the-blank modifications to the Reliability
ii. Commission Determination proposed Reliability Standards. Standard through the Reliability
1510. We appreciate MEAG’s Standards development process as
1506. We agree with APPA’s feedback to our response in the NOPR. discussed below.
comments and reiterate that the directed For the reasons discussed in the 1516. The Commission disagrees with
modification should be developed in the NOPR,395 as well as our explanation APPA that the decision whether a
Reliability Standards development above, the Commission approves modification is needed should be
process. With regard to APPA’s Reliability Standard PRC–010–0 as established first by the ERO in its
concerns, while we direct the ERO to mandatory and enforceable. In addition, Reliability Standards development
develop modifications that would the Commission directs the ERO to process. Our direction identifies an
require an integrated and coordinated develop a modification to PRC–010–0 appropriate goal necessary to assure the
approach to protection systems, we do through the Reliability Standards reliable operation of the Bulk-Power
not direct a specific approach to development process that requires that System. The details should be
accomplish such integration and an integrated and coordinated approach developed through the Reliability
coordination. Rather, the ERO should be included in all protection systems on Standards development process.
develop an appropriate approach the Bulk-Power System, including 1517. The Commission believes that
utilizing the Reliability Standards generators and transmission lines, the proposal is presently part of the
development process. generators’ low voltage ride-through process. The Commission approves
1507. With regard to ISO–NE’s Reliability Standard PRC–011–0 as
capabilities, and UFLS and UVLS
disagreement on integration of various mandatory and enforceable. In addition,
programs.
system protections ‘‘because such the Commission directs the ERO to
integration cannot be technologically k. UVLS System Maintenance and submit a modification to PRC–011–0
accomplished’’, we note that the Testing (PRC–011–0) through the Reliability Standards
evidence collected in the Blackout 1511. PRC–011–0 requires development process that includes a
Report indicates that ‘‘the relay transmission owners and distribution requirement that maintenance and
protection settings for the transmission providers to implement their UVLS testing of a protection system must be
lines, generators and underfrequency equipment maintenance and testing carried out within a maximum
load shedding in the northeast may not programs and provide program results allowable interval that is appropriate to
be entirely appropriate and are certainly to regional reliability organizations. the type of the protection system and its
not coordinated and integrated to 1512. In the NOPR, the Commission impact on the reliability of the Bulk-
reduce the likelihood and consequence proposed to approve PRC–011–0 as Power System.
of a cascade—nor were they intended to mandatory and enforceable. In addition,
do so.’’ In addition, the Blackout Report the Commission proposed to direct l. Special Protection System Review
stated that one of the common causes of NERC to submit a modification to PRC– Procedure (PRC–012–0)
major outages in North America is a lack 011–0 that includes a requirement that 1518. PRC–012–0 requires regional
of coordination on system protection. maintenance and testing of UVLS reliability organizations to ensure that
The Commission agrees with the programs must be carried out within a all special protection systems 396 are
protection experts who participated in maximum allowable interval properly designed, meet performance
the investigation, formulated Blackout appropriate to the relay type and the requirements and are coordinated with
Recommendation No. 21 and potential impact on the Bulk-Power other protection systems.
recommended that UVLS programs have System. In the NOPR, the Commission
an integrated approach.393 identified PRC–012–0 as a fill-in-the-
1508. Regarding FirstEnergy’s i. Comments blank standard. The NOPR stated that
question of whether universal 1513. APPA suggests that, instead of
a Commission directive, NERC should 396 A special protection system is designed to
393 ‘‘Recommend that NERC determine the goal automatically take corrective actions to protect a
be directed to consider whether this
and principles needed to establish an integrated particular system under both abnormal and
approach to relay protection for generators and
standard is needed to address the predetermined conditions, excluding the
transmission lines and the use of underfrequency coordinated tripping of circuit breakers to isolate
394 NOPR P 883.
and undervoltage load shedding programs.’’ faulted components, which is typically the purpose
Blackout Report at 159. 395 Id. P 891–92. of other protection devices.
because the regional review procedures requirements and are coordinated with that PRC–015–0 should be approved
on special protection systems have not other protection systems by requiring and made enforceable on the effective
been submitted, the Commission would the regional reliability organization to date of this rulemaking. As mentioned
not propose to approve or remand PRC– assess and document the operation, above, PRC–012–0 and PRC–013–0
012–0 until the ERO submits the coordination and compliance with apply solely to regional reliability
additional information. NERC Reliability Standards and organizations. PRC–012 is ‘‘process’’
effectiveness of special protection oriented, as it requires the regional
i. Comments
systems at least once every five years. reliability organization to develop a
1520. APPA agrees with the 1527. In the NOPR, the Commission review procedure that identifies
Commission’s proposed course of identified PRC–014–0 as a fill-in-the- information relevant to the regional
action. It further suggests that NERC, in blank Reliability Standard. The NOPR reliability organization review of a
completing PRC–012–0, should strive stated that because the regional special protection system. PRC–013–0
for greater consistency on an procedures on special protection system requires the regional reliability
Interconnection-wide basis through the assessment had not been submitted, the organization to maintain a database of
use of ‘‘base procedures’’ for each Commission would not propose to information on special protection
Interconnection. approve or remand PRC–014–0 until the systems. PRC–015–0 requires a
ii. Commission Determination ERO submitted the additional transmission owner, generator owner or
information. distribution provider that owns a
1521. For the reasons stated in the special protection system to maintain a
NOPR, the Commission will not i. Comments
list and provide data for existing and
approve or remand PRC–012–0. The 1528. APPA agrees with the planned special protection systems as
Commission urges the ERO should Commission’s proposed course of defined in PRC–013–0; and have
consider APPA’s suggestions in the action. It suggests further that in evidence that the entity reviewed new
Reliability Standards development completing PRC–014–0, NERC should or functionally modified special
process. strive for greater consistency on an protection systems in accordance with
m. Special Protection System Database Interconnection-wide basis through the the regional reliability organization
(PRC–013–0) use of ‘‘base procedures’’ for each procedures identified in PRC–012–0. As
Interconnection. stated in the Common Issues section, a
1522. PRC–013–0 ensures that all reference to an unapproved Reliability
special protection systems are properly ii. Commission Determination
Standard may be considered in an
designed, meet performance 1529. For the reasons stated in the enforcement action, but is not a reason
requirements and are coordinated with NOPR, the Commission will not to delay approving and enforcing this
other protection systems by requiring approve or remand PRC–014–0. The Reliability Standard. The Commission
the regional reliability organization to ERO should consider APPA’s expects that the data will be sent to the
maintain a database of information on suggestions in the Reliability Standards Regional Entities (instead of the regional
special protection systems. development process. reliability organizations) after they are
1523. In the NOPR, the Commission approved.
identified PRC–013–0 as a fill-in-the- o. Special Protection System Data and
Documentation (PRC–015–0) 1534. For the reasons discussed in the
blank standard. The NOPR stated that
1530. Proposed Reliability Standard NOPR and above, the Commission
because the regional procedures on
PRC–015–0 requires transmission concludes that Reliability Standard
maintaining special protection system
owners, generator owners and PRC–015–0 is just, reasonable, not
databases have not been submitted, the
distribution providers to maintain a unduly discriminatory or preferential
Commission would not approve or
listing, retain evidence of review and and in the public interest and approves
remand PRC–013–0 until the ERO
provide documentation of existing, new it as mandatory and enforceable.
submits the additional information.
or functionally modified special p. Special Protection System
i. Comments protection systems. Misoperations (PRC–016–0)
1524. APPA agrees with the 1531. In the NOPR, the Commission
Commission’s proposed course of proposed to approve PRC–015–0 as 1535. PRC–016–0 requires
action. It suggests further that in mandatory and enforceable. transmission owners, generator owners
completing PRC–013–0, NERC should and distribution providers to provide
i. Comments the regional reliability organization with
strive for greater consistency on an
Interconnection-wide basis through the 1532. APPA agrees that PRC–015–0 is documentation, analyses and corrective
use of ‘‘base procedures’’ for each sufficient for approval as a mandatory action plans for misoperation of special
Interconnection. Reliability Standard. However, it states protection systems.
that this Reliability Standard cannot be 1536. In the NOPR, the Commission
ii. Commission Determination enforced until two pending Reliability proposed to approve Reliability
1525. For the reasons stated in the Standards, PRC–012–0 and PRC–013–0, Standard PRC–016–0 as mandatory and
NOPR, the Commission will not become effective. Similarly, ISO/RTO enforceable. In addition, the
approve or remand PRC–013–0. The Council and ISO–NE contend that the Commission proposed to direct NERC to
ERO should consider APPA’s Commission should not approve PRC– submit a modification to PRC–016–0
suggestions in the Reliability Standards 15–0 until it approves PRC–012–0 and that includes a requirement that
development process. PRC–013–0, identified by the maintenance and testing of these special
Commission as fill-in-the-blank protection system programs be carried
n. Special Protection System out within a maximum allowable

standards.
Assessment (PRC–014–0) interval that is appropriate for the type
1526. PRC–014–0 ensures that special ii. Commission Determination of relays used and the impact of these
protection systems are properly 1533. We disagree with APPA, ISO/ special system protection systems on
designed, meet performance RTO Council and ISO–NE and conclude the reliability of the Bulk-Power System.
i. Comments interest, and approves it as mandatory 1547. The Commission approves

1537. While APPA agrees that PRC– and enforceable. Reliability Standard PRC–017–0 as
016–0 is sufficient for approval as a mandatory and enforceable. In addition,
q. Special Protection System
mandatory Reliability Standard, APPA, the Commission directs the ERO to
Maintenance and Testing (PRC–017–0)
ISO/RTO Council and ISO–NE state that develop a modification to PRC–017–0
1542. PRC–017–0 requires through the Reliability Standards
PRC–016–0 cannot be enforced until transmission owners, generator owners
pending Reliability Standard PRC–012– development process, that includes: (1)
and distribution providers to provide a requirement that maintenance and
0 has become effective. the regional reliability organization with
1538. FirstEnergy suggests that NERC testing of a protection system must be
documentation of special protection carried out within a maximum
clarify and provide guidance to system maintenance, testing and allowable interval that is appropriate for
transmission operators on the types of implementation plans. the type of the protection system and (2)
misoperations that have 1543. In the NOPR, the Commission a requirement that documentation
Interconnection-wide impacts and the proposed to approve PRC–017–0 as identified in Requirement R2 shall be
types of misoperations that need mandatory and enforceable. In addition, routinely provided to the ERO or
reporting. the Commission proposed to direct Regional Entity.
ii. Commission Determination NERC to submit a modification to PRC–
017–0 that: (1) Includes a requirement r. Disturbance Monitoring Equipment
1539. PRC–016–0 states that that maintenance and testing of these Installation and Data Reporting (PRC–
transmission owners, generator owners special protection system programs 018–1)
and distribution providers that own a must be carried out within a maximum 1548. PRC–018–1 ensures that
special protection system must analyze allowable interval that is appropriate to disturbance monitoring equipment is
the system operations and maintain a the type of relaying used and (2) installed and disturbance data is
record of misoperations in accordance identifies the impact of these special reported in accordance with
with the review procedure specified in protection system programs on the comprehensive requirements. PRC–018–
PRC–012–0. As we explained above in reliability of the Bulk-Power System. 1 contains several different effective
the context of PRC–015–0, applicable dates for specific requirements.
entities are expected to comply with i. Comments 1549. In the NOPR, the Commission
PRC–015–0, and the procedures 1544. APPA agrees that PRC–017–0 is proposed to approve PRC–018–1 as
specified in PRC–012–0 will continue to sufficient for approval as a mandatory mandatory and enforceable.
be maintained by the regional reliability and enforceable Reliability Standard. It
organizations pursuant to the ERO Rules also agrees that NERC and the industry i. Comments
of Procedure and the Commission’s should consider adoption of maximum 1550. While APPA agrees that PRC–
reliability information provision. We allowable maintenance intervals. With 018–1 is sufficient for approval as a
disagree with APPA, ISO/RTO Council respect to the Commission’s second mandatory Reliability Standard, it
and ISO–NE and conclude that PRC– directive, APPA points out that the contends that enforcement is not
016–0 is enforceable as of the effective documentation of the test results will possible until PRC–002–0, a fill-in-the-
date of this rulemaking. As stated in the identify the impact of the special blank standard, is effective. For the
Common Issues section, a reference to protection systems on the Bulk Electric same reason, ISO/RTO Council and
an unapproved Reliability Standard may System. ISO–NE state that the Reliability
be considered in an enforcement action, 1545. FirstEnergy states that NERC Standard should not be approved or
but is not a reason to delay approving should establish a maximum remanded at this time.
and enforcing this Reliability Standard. maintenance interval for protective
The Commission expects that the plans ii. Commission Determination
system equipment and a national
will be sent to the Regional Entities limitation, taking into account both 1551. The portion of PRC–018–1 that
(instead of the regional reliability relay type and functional versus NERC proposes will become effective on
organizations) after they are approved. calibration testing. Entergy does not the effective date of this Final Rule
1540. The Commission concludes that object to NERC’s development of states that transmission owners and
Reliability Standard PRC–016–0 is just, maximum allowable maintenance generator owners that own a disturbance
reasonable, not unduly discriminatory intervals for the purpose of evaluating monitoring system must assure that
or preferential, and in the public protection system and control programs. disturbance data is reported in
interest, and approves it as mandatory accordance with PRC–002–1 to facilitate
and enforceable. We observe that a ii. Commission Determination analyses of events. Applicable entities
maximum allowable interval for 1546. The commenters agree with the are expected to comply with PRC–018–
maintenance and testing of special Commission’s proposed directive on a 1, and the procedures specified in PRC–
protection systems is not relevant to maximum allowable interval for 002–1 will be provided pursuant to the
PRC–016–0, where the primary purpose maintenance and testing of protection data gathering provisions of the ERO’s
is to analyze and report all system equipment and we conclude that Rules of Procedure and the
misoperations of special protection such a modification is beneficial. Commission’s ability to obtain
systems. The Commission, therefore, However, we agree with APPA’s view information pursuant to section 215 of
will not adopt the proposal to require on our second proposed directive the FPA and Part 39 of the
the ERO to modify PRC–016–0 to assuming that the documentation is Commission’s regulations. Accordingly,
include a requirement for a maximum requested by either the regional we disagree with ISO/RTO Council and
allowable interval for maintenance and reliability organization or NERC. ISO–NE and conclude that the effective
testing. Therefore, we will modify our direction portions of PRC–018–1 are enforceable
1541. The Commission concludes that to require that the documentation be as of the effective date of this
Reliability Standard PRC–016–0 is just, routinely provided to the ERO or rulemaking. As stated in the Common
reasonable, not unduly discriminatory Regional Entity and not only when it is Issues section, a reference to an
or preferential and in the public requested. unapproved Reliability Standard may be
considered in an enforcement action, which the Commission has not Standards is to ensure that the
but is not a reason to delay approving approved or remanded. transmission system is operated within
and enforcing this Reliability Standard. operating limits. Specifically, these
1552. Accordingly, for reasons stated Reliability Standards cover the
in the NOPR and above, the 1561. For the reasons stated in the responsibilities and decision-making
Commission approves Reliability NOPR and above, the Commission authority for reliable operations,
Standard PRC–018–1 as mandatory and approves PRC–021–1 as mandatory and requirements for operations planning,
enforceable. enforceable. The referenced information planned outage coordination, real-time
will be provided pursuant to the data operations, provision of operating data,
s. Undervoltage Load Shedding Program gathering provisions of the ERO’s rules monitoring of system conditions,
Database (PRC–020–1) of procedure and the Commission’s reporting of operating limit violations
1553. PRC–020–1 ensures that a ability to obtain information pursuant to and actions to mitigate such violations.
regional database for UVLS programs is section 215 of the FPA and Part 39 of The Interconnection Reliability
available for Bulk-Power System studies the Commission’s regulations. As stated Operations and Coordination (IRO)
by requiring regional reliability in the Common Issues section, a group of Reliability Standards
organizations with any entities that have reference to an unapproved Reliability complement these proposed TOP
UVLS programs to maintain and Standard may be considered in an Reliability Standards.
annually update a database. enforcement action, but is not a reason
a. Reliability Responsibilities and
1554. In the NOPR, the Commission to delay approving and enforcing this Authorities (TOP–001–1)
identified PRC–020–1 as a fill-in-the- Reliability Standard.
blank standard. The NOPR stated that 1569. The reliability goal of TOP–
because the regional procedures on u. Undervoltage Load Shedding Program 001–1 is to ensure that system operators
maintaining UVLS databases have not Performance (PRC–022–1) have the authority to take actions and
been submitted, the Commission would 1562. PRC–022–1 requires direct others to take action to maintain
not propose to approve or remand PRC– transmission operators, LSEs, and Bulk-Power System facilities within
020–0 until the ERO submits the distribution providers to provide operating limits. TOP–001–1 requires
additional information. analysis, documentation and that: (a) Transmission operating
misoperation data on UVLS operations personnel must have the authority to
i. Comments to the regional reliability organization. direct actions in real-time; (b) the
1555. APPA disagrees that PRC–020– 1563. In the NOPR, the Commission transmission operator, balancing
1 is a regional fill-in-the-blank proposed to approve PRC–022–1 as authority, and generator operator must
Reliability Standard because it does not mandatory and enforceable. follow the directives of their reliability
require regional procedures. However, coordinator and (c) the balancing
i. Comments authority and generator operator must
APPA recognizes that PRC–020–1
requires the regional reliability 1564. APPA agrees that PRC–022–1 follow the directives of the transmission
organization to establish a database. should be approved as a mandatory and operator. In addition, the proposed
enforceable Reliability Standard. Reliability Standard requires the
ii. Commission Determination 1565. FirstEnergy comments that transmission operator, balancing
1556. APPA is correct that the reason Requirement R1.3 requires ‘‘a authority, generator operator,
for not approving or remanding this simulation of the event, if deemed distribution provider and LSE to take
Reliability Standard is because it appropriate by the RRO’’ and believes emergency actions when directed to do
applies solely to the regional reliability that the applicable entities such as so in order to keep the transmission
organization, and not because it is a fill- transmission operators may not be able system intact.
in-the-blank standard. For this reason, to simulate large system events. 1570. The Commission proposed in
the Commission will not approve or FirstEnergy suggests that Requirement the NOPR to approve the Reliability
remand PRC–020–1. R1.3 be revised to state that ‘‘a Standard as mandatory and enforceable
simulation of the event, if deemed and to direct NERC to submit a
t. Undervoltage Load Shedding Program modification to it that includes
appropriate, and assisted by the
Data (PRC–021–1) Measures and Levels of Non-
[regional reliability organization].’’
1557. PRC–021–1 ensures that data is Compliance. On November 15, 2006,
supplied to support the regional UVLS ii. Commission Determination NERC submitted revisions to the
database by requiring the transmission 1566. For the reasons discussed in the Reliability Standard to include
owner and distribution provider to NOPR, the Commission concludes that Measures and Levels of Non-
supply data related to their systems and Reliability Standard PRC–022–1 is just, Compliance.397
other related protection schemes to their reasonable, not unduly discriminatory
or preferential, and in the public i. Comments
regional reliability organization’s
database. interest and approves it as mandatory 1571. APPA notes that TOP–001–1, as
1558. In the NOPR, the Commission and enforceable. revised to include Measures and Levels
proposed to approve PRC–021–1 as 1567. The Commission directs the of Non-Compliance, fulfills the
mandatory and enforceable. ERO to consider FirstEnergy’s proposed directive in the NOPR.
suggestion in the Reliability Standards Accordingly, APPA agrees that the
i. Comments Commission should approve TOP–001–
development process.
1559. APPA agrees that PRC–021–1 1 as mandatory and enforceable.
should be approved as a mandatory and 11. TOP: Transmission Operations
enforceable Reliability Standard. 1568. The eight Transmission 397 In its November 15, 2006, filing, NERC
1560. The ISO–NE and ISO/RTO Operations (TOP) Reliability Standards submitted TOP–001–1, which supercedes the
Version 0 Reliability Standard. TOP–001–1 adds
Council contend that the Commission apply to transmission operators, Measures and Levels of Non-Compliance to the
should refrain from approving PRC– generator operators and balancing Version 0 Reliability Standard. In this Final Rule,
021–1 until it approves PRC–020–1 authorities. The goal of these Reliability we review the November version, TOP–001–1.
1572. California PUC asserts that emergency, reliability coordinators corresponding to Requirement 8. This
TOP–001 should not be adopted unless could issue directives on a regular basis. Requirement deals with actions to
the Commission provides for proper California Cogeneration therefore restore real and reactive power balance.
deference to existing authorities. It proposes that the Reliability Standard Given the importance of these matters to
states that the requirements contained clearly address which entities are reliable operations, the Commission
in TOP–001 are duplicative of what the exempt from such directives because directs the ERO to provide Measures
CAISO already requires under its they have no material impact on and Level of Non-Compliance for this
participating generator agreements. reliability. Requirement.
1573. FirstEnergy contends that TOP– 1577. FirstEnergy states that the term 1582. We disagree with California
001–1 contains ‘‘reliability directives’’ ‘‘safety’’ in Requirement R4 should be PUC’s assertion that the Commission
to be followed by various entities, but it clarified with respect to whether it should not adopt TOP–001–1 unless it
has no clear line of authority for means safety to the system/equipment, commits to a policy of ‘‘appropriate
specified directives. This could lead to public safety or both. deference’’ to existing authorities.
a generator receiving conflicting 1578. Requirement R6 of TOP–001–1 Approval of a continent-wide Reliability
directions. FirstEnergy maintains that requires an applicable entity to ‘‘render Standard should not be delayed because
TOP–001–1 should establish a clear line all available emergency assistance to it may overlap with a local or regional
of authority for issuing and complying others as requested.’’ Regarding this program. Rather, stakeholders should
with directives, but the reliability provision, FirstEnergy maintains that raise related concerns in the ERO
coordinator’s instructions should govern NERC should clarify that all instructions Reliability Standards development
in all instances. should be subject to the reliability process. Moreover, section 215(i)(3) of
1574. In a similar vein, MEAG Power coordinator’s direction and control to the FPA provides that ‘‘nothing in
is concerned that the scope of avoid causing unforeseen harm to other [section 215] shall be construed to
‘‘reliability directives’’ contained in the systems. Any entity requesting preempt any authority of any State to
Measures filed on November 15, 2006 is assistance must implement its take action to ensure the safety,
unclear. For example, Measure M4 emergency procedures before or in adequacy, and reliability of electric
states that ‘‘[e]ach Balancing Authority, unison with assistance from other service within that State, as long as such
Generator Operator, Distribution entities. However, FirstEnergy asserts action is not inconsistent with any
Provider and Load Serving Entity shall that it is not clear how a responding reliability standard.’’ In any event,
have and provide upon request evidence entity will determine whether the California PUC does not suggest how the
that * * * it complied with its requesting entity has implemented its Requirements in TOP–001–1 and the
Transmission Operator’s reliability comparable emergency procedures provisions of CAISO’s participating
directives.’’ While a directive by a before the responding entity honors the generator agreements will lead to
transmission operator to a LSE to request. FirstEnergy, therefore, states conflicting outcomes. To the extent a
increase its planning reserve margin that TOP–001–1 should require the potential conflict arises, we note that
from 15 percent to 20 percent or requesting party to report on whether all the CAISO’s participating generator
reconductor a transmission line might of its emergency procedures were agreements are subject to Commission
be within the realm of possibilities, implemented as part of its request for jurisdiction, and § 39.6 of the
such ‘‘reliability directives’’ would be emergency assistance. Commission’s regulations provides
inappropriate. MEAG Power therefore 1579. Santa Clara states that, in some procedures for resolving conflicts
recommends an alternative definition of instances, notifying the reliability between a requirement in a Reliability
‘‘reliability directive’’ that it believes coordinator that a transmission operator Standard and a provision of an
would specify an appropriate range of is removing facilities from service may agreement accepted for filing at the
directives. not be appropriate because the Commission.400
1575. MEAG Power also recommends transmission owner traditionally 1583. We agree with FirstEnergy that
a modification to TOP–001–1 clarifying notifies the balancing authority. Santa TOP–001–1 should establish a clear line
that an entity may be found non- Clara therefore requests that of authority. Requirement R3 of
compliant only if it fails to comply with Requirements R7.2 and R7.3 of the Reliability Standard IRO–001–0 clearly
a reliability directive issued to it by its Reliability Standard be revised to establishes the decision-making
host reliability coordinator. MEAG provide that the transmission operator authority of the reliability coordinator to
Power is concerned that the may notify the reliability coordinator or act and to direct actions to be taken by
requirements as currently written may balancing authority.399 operating entities to preserve the
apply to entities outside a reliability integrity and reliability of the Bulk-
ii. Commission Determination Power System. When an entity is faced
coordinator’s footprint.
1576. FirstEnergy and California 1580. The Commission approves with conflicting directives, it must
Cogeneration state that the definition of TOP–001–1 as mandatory and follow the reliability coordinator’s
‘‘emergency’’ is vague and should be enforceable. We address the concerns directives because the reliability
clarified. FirstEnergy states TOP–001 raised by commenters below. coordinator is the highest authority in
does not specify who decides when 1581. While the Commission agrees matters affecting reliability of the Bulk-
there is an emergency. California with APPA that TOP–001–1 should be Power System. Therefore no changes are
Cogeneration states that under approved, it does not agree that the new required to the Reliability Standard in
emergency conditions, it would be Measures and Levels of Non- this connection.
appropriate to require a QF to follow the Compliance fully address the 1584. We agree with MEAG Power
directives of a reliability coordinator.398 Commission’s concerns stated in the that a reliability directive to an LSE to
But California Cogeneration argues that NOPR. The modified Reliability increase its planning reserve to 15
because of the broad definition of Standard does not contain Measures or percent or to reconductor its
Levels of Non-Compliance transmission line is outside the scope of
398 California Cogeneration notes that the
curtailment of QFs in an emergency is allowed by 399 Santa Clara makes a similar argument 400 See 18 CFR 39.6 (Conflict of a Reliability
18 CFR 292.307. reagarding Requirement R3 of TOP–008–1. Standard with a Commission Order).
a TOP reliability directive. Reliability requirements related to safety of 1592. In the NOPR, the Commission
directives in the TOP group of persons. proposed to approve the Reliability
Reliability Standards deal with 1588. With regard to FirstEnergy’s Standard as mandatory and enforceable.
operational directives and not planning proposal that the entity requesting In addition, the Commission proposed
directives. emergency assistance be required to to direct that NERC submit a
1585. We disagree with MEAG Power report that it has implemented all of its modification that: (1) Includes Measures
that an entity may have to comply with own emergency procedures as part of its and Levels of Non-Compliance; (2)
a reliability directive issued to it by a request for emergency assistance, we deletes references to confidentiality
reliability coordinator other than its believe that such reporting is not agreements in Requirements R3 and R4,
host reliability coordinator. The appropriate during an emergency but addresses the issue separately to
operating hierarchy embodied in the situation. Requirement R6 of the ensure that necessary protections are in
Reliability Standard gives the reliability Reliability Standard clearly specifies place related to confidential information
that entities must provide available and (3) requires next-day analysis for all
coordinator responsibility and authority
emergency assistance provided the IROLs to identify and communicate
to issue reliability directives to its own
requesting entity has implemented its control actions to system operators that
transmission operators, balancing
comparable emergency procedures. can be implemented within 30 minutes
authorities and generator operators.
Given the nature of emergency following a contingency to return the
These entities must comply with these
situations where time is of the essence, system to a reliable operating state and
directives as stated in Requirement R3
compliance with this Requirement must prevent cascading outages.403
in TOP–001–1.401 An entity is only
be assessed after the fact as part of the 1593. The Commission also proposed
responsible for following directives
compliance audit, and not during an to interpret Requirement R7 of the
from its host reliability coordinator emergency. Reliability Standard as requiring that
unless authority is delegated to another 1589. With respect to Santa Clara’s each balancing authority plan to meet
reliability coordinator by the host proposal that Requirements R7.2 and capacity and energy reserve
reliability coordinator. R7.3 be revised to provide that the requirements, including deliverability/
1586. We agree with FirstEnergy and transmission operator may notify the capability for any single contingency.
California Cogeneration that the reliability coordinator or the balancing Although the NERC glossary defines
definition of ‘‘emergency’’ could be authority that it is removing facilities ‘‘contingency,’’ 404 the Commission
further clarified. We discuss this issue from service, the Commission directs expressed concern in the NOPR that the
in this Final Rule in connection with the ERO to consider Santa Clara’s phrase ‘‘single contingency’’ is open to
Reliability Standard EOP–001–0 and comments in the Reliability Standards interpretation, and ‘‘deliverability’’ is
conclude that emergency states need to development process. not defined. The Commission proposed
be defined and that criteria for entering 1590. Accordingly, the Commission in the NOPR to interpret contingency as
these states and authority for declaring approves Reliability Standard TOP– discussed in connection with the TPL
them need to be specified. We therefore 001–1. In addition, pursuant to section Reliability Standards and to interpret
direct the ERO to modify the Reliability 215(d)(5) of the FPA and § 39.5(f) of our deliverability as the ability to deliver
Standard accordingly. With respect to regulations, the Commission directs the the output from generation resources to
California Cogeneration’s argument ERO to develop a modification to TOP– firm load without any reliability criteria
regarding exemptions from the 001–1 through the Reliability Standards violations for plausible generation
requirement to respond to emergencies, development process that: (1) Includes dispatches.
the reliability coordinator must be in a Measures and Levels of Non-
position to take all necessary actions in Compliance for Requirement R8 and (2) i. Comments
response to an emergency and is in the considers adding other Measures and 1594. APPA states that NERC has
best position to determine which Levels of Non-Compliance in the added Measures for many but not all of
entities should respond to its directives. Reliability Standard. the Requirements of TOP–002–2 and
1587. In response to FirstEnergy’s b. Normal Operations Planning (TOP– needs to develop Measures for
request for clarification of the meaning 002–2) Requirements R2, R3, R4, R12 and R17.
of ‘‘safety’’ in the first sentence of 1595. Entergy and MidAmerican
1591. Reliability Standard TOP–002– support the Commission’s proposal to
Requirement R4, of TOP–001–1 and 2 requires transmission operators and
whether it refers to safety to the system/ delete references to confidentiality
balancing authorities to look ahead to agreements from the requirements and
equipment, public safety or both, the the next hour, day and season, and have
Commission notes that each term in the state that different approaches must be
operating plans ready to meet any explored to preserve the confidentiality
series set forth in this provision refers unscheduled changes in system
to a type of ‘‘requirement.’’ 402 The of data. MidAmerican adds that NERC
configuration and generation dispatch. should adopt an administrative
provision clearly differentiates between The Reliability Standard addresses the approach to keep the confidential
the safety of persons and equipment following matters: (1) Procedures to information from being disclosed before
requirements. Since equipment mitigate System Operating Limit (SOL) the confidentiality provisions are
requirements are mentioned separately, and Interconnection Reliability
safety must be read as referring to Operating Limit (IROL) violations; (2) 403 In its November 15, 2006, filing, NERC
verification of real and reactive reserve submitted TOP–002–2, which supercedes the
401 The Requirement states in part that ‘‘[e]ach earlier Reliability Standard. TOP–002–2 adds
capabilities; (3) communications; (4)
Transmission Operator, Balancing Authority, and Measures and Levels of Non-Compliance to the
Generator Operator shall comply with reliability modeling; (5) information exchange and Reliability Standard, and includes a modified
directives issued by the Reliability (6) data confidentiality restrictions. The Requirement R14. In this Final Rule, we review the
Coordinator* * *.’’ goal of TOP–002–1 is to ensure that November version, TOP–002–2.

402 Requirement R4 states: ‘‘Each Distribution 404 NERC defines ‘‘contingency’’ as ‘‘the
resources and operational plans are in
Provider * * * shall comply with all reliability unexpected failure or outage of a system
directives * * * unless such actions would violate
place to enable system operators to component, such as a generator, transmission line,
safety, equipment, regulatory or statutory maintain the Bulk-Power System in a circuit breaker, switch or other electric element.’’
requirements.’’ reliable state. NERC Glossary at 3.
deleted from the requirements. LPPC ‘‘transmission owner.’’ 405 It claims that not compromised and CEII information
asks the Commission to clarify that CEII such a change would be consistent with remains confidential.
remains confidential and states that the definition of the term ‘‘transmission 1602. As noted above, a number of
without such clarification there is a service provider,’’ which the NERC commenters express concerns with the
danger that sensitive information related glossary defines as: ‘‘[t]he entity that Commission’s proposal to require a
to the Bulk-Power System will become administers the transmission tariff and next-day analysis for all IROLs to
public. provides Transmission Service to identify and communicate control
1596. FirstEnergy and Entergy express Transmission Customers under actions to system operators.
concerns regarding identifying all applicable transmission service Identification and communication of
control actions in the next-day analysis agreements.’’ In performing this control actions that can be implemented
for all IROLs to identify and function, the transmission service within 30 minutes are required to
communicate control actions to system provider provides a business service ensure that system operators are aware
operators that can be implemented that entails executing contractual of and have options available to respond
within 30 minutes following a agreements with its customers to to system conditions following the first
contingency. They contend that system provide open access transmission contingency to restore the system to a
conditions can change significantly service, whereas SOLs and IROLs are secure state so that it can withstand the
between day-ahead analysis and real- technical in nature and do not translate next contingency. In addition, the
time operations, rendering potential into transmission service provider control actions identified in the next-
control actions irrelevant. Therefore functions. In contrast, transmission day analysis may quite often be
they state that operating entities should operators and transmission owners relevant, and informing the system
be held harmless for not having listed in perform planning and operations operators of the control options earlier
advance control actions taken in the functions and will need SOL and IROL on would be helpful. While the
face of real-time contingencies resulting data. operators may take other actions to
from unpredicted changing system 1599. NRC states that it is not clear preserve the system, they need to have
conditions. APPA states that such whether TOP–002–2 considers the N–1 at least one plan (control actions) that
requirements are not necessary given and the N–1–1 criteria consistent with will preserve the system from cascading.
that system operators use state TPL–002–0 and TPL–003–0, We believe this addresses FirstEnergy’s
estimators and other tools to identify respectively. NRC is concerned about concern regarding whether compliance
effective control actions that produce verifying that the Bulk-Power System requires the use of only the control
more accurate results than would be will provide the necessary voltages to actions identified in the day-ahead
achieved through the proposed day- the auxiliary power system busses after analysis. In response to APPA’s
ahead analysis. APPA and Entergy a nuclear power plant trip. It suggests comment on the use of state estimators
assert that it should be left to NERC, as that knowledge and verification of and other tools to identify effective
the technical expert charged with significant generator characteristics are control actions, we note that this
setting standards, to decide in the first essential to this end, especially capability will help operators in
instance whether such day-ahead verification of real and reactive assessing system responses, but they
analysis would be of sufficient benefit to capabilities, automatic voltage regulator will not identify the control actions
justify requiring it. status and operating limits. NRC also system operators will need to take in
proposes various revisions to TOP–002– real-time. Further, operators may not be
1597. MidAmerican is concerned that aware of available control actions, or
2.
the Commission’s proposal to interpret worse they may not have any control
the phrase ‘‘single contingency’’ as a ii. Commission Determination actions, other than firm load-shedding,
contingency that includes all multi- available to adjust the system after a
element pieces of the system that go out 1600. The Commission approves
Reliability Standard TOP–002–2 as first contingency occurs. Therefore, we
of service together in response to a direct the ERO to modify Reliability
single event is too restrictive on system mandatory and enforceable. In addition,
we direct the ERO to develop Standard TOP–002–2 to require the
operations. However, it also states that next-day analysis for all IROLs to
historically it has performed the studies modifications to the Reliability
Standard through the Reliability identify and communicate control
in accordance with the Commission’s actions to system operators that can be
proposal and will support that proposal Standards development process as
discussed below. implemented within 30 minutes
in the interest of reliability. following a contingency to return the
MidAmerican notes that where a 1601. We are adopting our proposal
regarding deletion of references to system to a reliable operating state and
multiple-element single contingency prevent cascading outages.
traverses neighboring systems, such confidentiality agreements from the
Requirements. As we explained in the 1603. With respect to NRC’s
contingencies must be coordinated with
NOPR, the effectiveness of a Reliability comments, system operators must
other systems. Further, it contends that
Standard should not be predicated upon operate the system in front of them at all
the Commission’s directive to have
the existence of a confidentiality times to be capable of withstanding a
operating plans to meet any scheduled
agreement.406 The ERO should address critical contingency (N–1) without
change in system configuration and
the confidentiality provision separately resulting in instability, uncontrolled
generation dispatch seems burdensome
to ensure that confidentiality of data is separation or cascading failures. After
if not impossible and requests
this N–1 contingency the operators must
clarification of the Commission’s intent
405 Requirement R12 provides: ‘‘The adjust the system as soon as possible
in this connection.
Transmission Service Provider shall include known and in no longer than 30 minutes so that
1598. ISO–NE recommends that the SOLs and IROLs within its area and neighboring the system can then withstand a new N–
reference to ‘‘transmission service areas in the determination of transfer capabilities, 1 contingency. Further discussion of
provider’’ in Requirement R12 of TOP– in accordance with filed tariffs, and/or regional
Total Transfer Capability and Available Transfer how this applies in the planning arena
002–2 should be replaced by Capability calculation processes.’’ is presented in connection with the TPL
‘‘transmission operator’’ and/or 406 NOPR at P 976. group of Reliability Standards.
1604. The Commission agrees with 1607. Commenters did not take issue generator operators that operate
NRC that the minimum voltages at with the proposed interpretation of the facilities greater than 50 MW and
nuclear plant auxiliary power system term ‘‘deliverability’’ as ‘‘the ability to balancing authorities to coordinate
buses should be assessed in next-day deliver the output from generation transmission and generator maintenance
analysis to ensure that adequate voltages resources to firm load without any schedules. Where a conflict in
can be maintained in accordance with reliability criteria violations for maintenance schedule arises, the
the nuclear plant minimum voltage plausible generation dispatches.’’ 408 reliability coordinator is authorized to
requirements. If this assessment projects The Commission adopts this proposed resolve the conflict.
that the minimum voltage requirements interpretation. In order to ensure the 1611. The Commission proposed in
cannot be met, the transmission necessary clarity, the term as used in the NOPR to approve Reliability
operators or balancing authorities must Requirement R7 of TOP–002–2 should Standard TOP–003–0 as mandatory and
notify the nuclear power plant as soon be understood in this manner. enforceable. The Commission also
as possible, but in no event later than 1608. With respect to the proposed to direct NERC to submit a
the commencement of the next day’s modifications to Requirement R12 of the modification to TOP–003–0 that: (1)
real-time operations. If during real-time Reliability Standard recommended by Includes a requirement to communicate
operations the transmission operator ISO–NE and NRC’s comments on scheduled outages well in advance to
cannot maintain the minimum voltage, Measure M7 and a new Measure M11, ensure reliability and accuracy of ATC
pre- or post-contingency, it must inform the Commission directs the ERO to calculation and (2) makes any facility
the nuclear plant operator accordingly consider these matters in the Reliability below the 100 kV or 50 MW thresholds
so that the appropriate corrective Standards development process. In that, in the opinion of the transmission
actions can be carried out by both the response to NRC’s suggestion regarding operator, balancing authority, or
nuclear plant operator and the periodic review of generators’ reactive reliability coordinator, will have a direct
transmission operator. The Commission capability, we note that Reliability impact on the operation of Bulk-Power
directs the ERO to modify Reliability Standard MOD–025–1 already requires System subject to Requirement R1 for
Standard TOP–002–2 to address these periodic review of generators’ reactive planned outage coordination.
two issues. capability. 1612. In addition, the Commission
1605. The Commission proposed in 1609. As we explained in the NOPR, noted in the NOPR that outage
the NOPR that simulations must be TOP–002–2 serves an important information is important to both reliable
consistent with the number of elements purpose in ensuring that resources and operation and to the calculation of ATC.
that will be removed from service as a operational plans are in place to enable This information is also needed to
result of the failure of a single system operators to maintain the Bulk- assure coordination of outages long
element.407 MidAmerican states that it Power System in a reliable state. before next day or current day
operates consistent with this proposal, Further, the requirements set forth in operations. The Commission proposed
in that it respects a single contingency the Reliability Standard are sufficiently that applicable scheduled outages be
as one that includes all multiple pieces clear and objective to provide guidance communicated to affected transmission
of the elements that go out of service for compliance. Accordingly, the operators and reliability coordinators
together in response to a single event. Commission approves Reliability with sufficient lead time to coordinate
Even though MidAmerican states that Standard TOP–002–2. In addition, outages. The Commission then
the Commission’s proposal is too pursuant to section 215(d)(5) of the FPA requested industry input on what
restrictive on system operation, it and § 39.5(f) of our regulations, the constitutes sufficient lead time for
supports the proposal in the interest of Commission directs the ERO to develop planned outages.
reliability. To do otherwise would not a modification to TOP–002–2 through
i. Comments
represent what actually happens in real- the Reliability Standards development
time operations to the detriment of process that: (1) Deletes references to 1613. MRO, APPA and others raise
Bulk-Power System reliability, which confidentiality agreements in concerns requiring the proposed
demonstrates the need to approach the Requirements R3 and R4, but addresses requirement to communicate scheduled
issue as we propose. We discuss this the issue separately to ensure that outages ‘‘well in advance.’’ APPA
issue further in connection with the TPL necessary protections are in place cautions that TOP–003–0 was generally
group of Reliability Standards, where related to confidential information; (2) designed to ensure that transmission
we direct the ERO to modify the TPL requires the next-day analysis for all operators receive accurate and timely
Reliability Standards to simulate what IROLs to identify and communicate information about transmission and
actually happens in the physical system, control actions to system operators that generation outages affecting ‘‘next-day
including multiple element failures. can be implemented within 30 minutes operations,’’ rather than the longer term
1606. We note with regard to following a contingency to return the outage planning information. MRO
MidAmerican’s comment on operating system to a reliable operating state and states that requiring outage information
plans to meet any scheduled change in prevent cascading outages; (3) requires well in advance reduces the entity’s
system configuration and generation next-day analysis of minimum voltages flexibility for other contingencies and
dispatch that we have not directed any at nuclear power plants auxiliary power changes. MRO also contends that the
action in this connection and therefore busses and (4) requires simulation phrase ‘‘well in advance’’ is vague, not
cannot provide any further clarification contingencies to match what will measurable, and may not be enforced
on this point. With regard to actually happen in the field. fairly and consistently. FirstEnergy
MidAmerican’s comment on states that NERC should specify the
coordinated efforts with neighboring c. Planned Outage Coordination (TOP– meaning of ‘‘well in advance’’ through
systems to deal with multiple element 003–0) its Reliability Standards development
single contingencies, we note that such 1610. Reliability Standard TOP–003– process with industry input. MRO
coordination is already required by IRO 0 requires transmission operators that recommends that the time period for
and TOP Reliability Standards. operate facilities greater than 100 kV, outage notification should be based on
the size of the generating facility and
407 NOPR at P 979. 408 Id. at P 974. voltage level of the transmission line so
that a larger facility has a longer lead R1 for planned outage coordination. 1622. Several commenters raised
time for outage notification. They maintain that such a modification concerns regarding the Commission’s
1614. While MISO agrees with the will provide the transmission operator proposal to require outage information
need for early notification of planned much needed flexibility. APPA, on the well in advance. Specifically, they argue
outages, it is concerned that an arbitrary other hand, opposes the proposal. APPA that the term ‘‘well in advance’’ is
lead time will cause entities to postpone states that the Commission should allow vague, that the requirement would
needed maintenance to accommodate the ERO in the first instance to consider reduce flexibility and that it would
the timeline, thereby reducing the whether to add this specific requirement cause entities to postpone needed
reliability of the Bulk-Power System. to TOP–003–0. If the Commission is maintenance work, thereby reducing
1615. LPPC states that business concerned that TOP–003–0 as it now reliability. In response to the
reasons often drive a longer lead time stands might ‘‘not include all facilities Commission’s request for comments on
for outage planning to allow market that have a significant impact on the lead time for planned outages, entities
participants to better understand the operation of the Bulk-Power System,’’ it provide information on current lead
congestion and market impacts of the should direct NERC to consider that time practices indicating that lead times
planned outage. LPPC believes that the issue on remand using its Reliability range from one week to 45 days. We
Commission should exercise caution Standards development process. direct the ERO to modify the Reliability
and avoid adopting a business practice 1619. Xcel notes that Requirement R4 Standard to incorporate an appropriate
as part of the Reliability Standard. of the Reliability Standard provides that lead time for planned outages. The ERO
Reliability concerns often dictate that an each reliability coordinator should should utilize the information filed by
outage should not be planned and set in resolve any potential conflicts in commenters in the Reliability Standards
stone too far in advance because the scheduling of planned outages. Xcel development process. In doing so the
circumstances may change. According argues that if a reliability coordinator ERO should take into consideration the
to LPPC, the Commission should refrain requires an entity to move its planned need for flexibility, as well the lead time
from prescribing a lead time that would outage to accommodate another entity’s required for coordination with other
cut into an operator’s flexibility, which unplanned outage, the entity that agrees entities and outage assessments. Proper
is needed to respond to real-time to move its planned outage to another coordination will ensure that priority is
situations. time should receive compensation. given to needed maintenance work for
1616. In response to the Commission’s critical facilities to ensure reliability.
question regarding the lead time for ii. Commission Determination 1623. With regard to TVA’s request to
planned outages, MidAmerican states 1620. The Commission approves include breaker outages within the
that although it believes that a TOP–003–0 as mandatory and meaning of the facilities that are subject
requirement for extending the lead time enforceable. We address the concerns to advance notice for planned outages,
will result in higher costs and less raised by commenters below. we direct the ERO to consider this
flexibility, a two-week advance notice 1621. In Order No. 890, the suggestion in the Reliability Standards
for planned outages of 345 kV facilities Commission directed that information development process.
and one-week advance notice for 161 concerning ATC calculations be
and 69 kV facilities is appropriate. TVA (a) Applicability
consistent and transparent.409 The
proposes one-week advance notice for timing of facility outages is one 1624. As noted above, the
all planned outages and recommends important piece of information in ATC Commission proposed to direct the ERO
that TOP–003–0 should be modified to calculations. In Order No. 890, the to modify TOP–003–0 to make any
include breaker outages within the Commission directed that specific data facility below the thresholds that, in the
meaning of the facilities that are subject be exchanged among transmission opinion of the transmission operator,
to advance notice for planned outages. providers, including transmission balancing authority, or reliability
1617. CAISO states that its current planned and contingency outages, for coordinator, will have a direct impact
tariff provides for three days of lead the purpose of ATC modeling.410 on the operation of Bulk-Power System
time for providing outage information Consistent with this determination in subject to Requirement R1 for planned
and that this is a standard practice Order No. 890, the Commission directs outage coordination.
throughout WECC. It maintains, the ERO to develop a modification to 1625. Entergy and FirstEnergy support
however, that the three-day lead time is TOP–003–0 that requires the the proposed modification to include
not sufficient for the needed review and any facility below the threshold that in
communication of scheduled outages to
coordination of outages. In fact, CAISO the opinion of the reliability
all affected entities well in advance to
states that many ISOs and RTOs are coordinator, balancing authority or
ensure reliability and accuracy of ATC
moving toward a lead time of either 30 transmission operator will have a direct
calculations.411 We believe this
days or 45 days prior to the beginning impact on the operation of the Bulk-
addresses LPPC’s concern regarding the
of the outage month. CAISO contends Power System. On the other hand,
interplay between reliability and
that rather than basing the outage APPA opposes this proposal and
business practices.
information on a certain kV level, the contends that the Commission should
emphasis should be on facilities that 409 See Order No. 890 at P 68–69, 207–213.
allow the ERO, as the expert entity
may have a significant effect on 410 Id.at P 292. charged with developing Reliability
congestion revenue rights resource 411 The Commission notes that PJM has Standards, to consider whether to add
adequacy. developed an outage scheduling process in this specific requirement. The
1618. Entergy and FirstEnergy support response to Commission directives to avoid the Commission disagrees because
possibility of undue discrimination. http://
the proposed modification to include www.pjm.com/committees/mrc/downloads/
registered entities below the thresholds
any facility below the thresholds that, in 20060630-item-06-draft-manual-14b-changes.pdf. currently defined in Requirement R1 of
the opinion of the transmission The outage scheduling process was developed the Reliability Standard may have an
operator, balancing authority, or through a stakeholder process and has been utilized impact on reliability and therefore
in the entire PJM footprint for a number of years.
reliability coordinator, will have a direct PJM’s outage scheduling program is one example of
should be required to submit data on
impact on the operation of the Bulk- the type of program that should be implemented their planned outages. The Commission
Power System subject to Requirement through the Reliability Standard. therefore directs the ERO to modify the
Reliability Standard to require that any Reliability Standard is to maintain Bulk- need to require a response time that is
facility below the thresholds that, in the Power System facilities within limits, quicker than 30 minutes, it should
opinion of the transmission operator, thereby protecting transmission, direct the ERO to consider this issue as
balancing authority, or reliability generation, distribution and customer part of the Reliability Standards
coordinator will have a direct impact on equipment and preventing cascading development process.
the reliability of the Bulk-Power System failures of the interconnected grid. 1632. Entergy and MidAmerican
be subject to Requirement R1 for 1629. The Commission proposed in support the Commission’s proposal to
planned outage coordination. the NOPR to approve the Reliability have NERC conduct a survey and report
Standard as mandatory and enforceable. the operating practices and actual
(b) Other Issues In addition, the Commission proposed experiences surrounding drifting in and
1626. In response to Xcel’s proposal to direct that NERC submit a out of IROL violations. MISO, on the
that entities that agree to reschedule modification that: (1) Includes Measures other hand, opposes the survey because
their previously-approved planned and Levels of Non-Compliance; (2) there are already requirements for
outages to accommodate another entity’s clarifies that the system should be reporting IROL violations elsewhere in
unplanned outage be compensated, the restored as soon as possible, taking no the Reliability Standards. APPA
Commission notes that whereas more than 30 minutes and (3) defines proposes that the Commission should
rescheduling of the outage is a high risk conditions under which the ask the ERO to determine if such
reliability matter, compensation is not system must be operated to respect information would improve reliable
and therefore is outside the scope of this multiple outages in Requirement R3. operations. If it is determined that such
proceeding. The Commission also proposed to direct information will improve reliability,
(c) Summary of Commission the ERO to perform a survey of the NERC should include this type of
Determination prevailing operating practices and information in compliance violation
actual operating experiences reporting procedures.
1627. Planned outage coordination is surrounding drifting in and out of IROL 1633. LPPC and Xcel recommend that
a necessary element of reliable limits. the Commission not require NERC to
operations, and TOP–003–0 promotes 1630. Requirement R3 requires that define in Requirement R3 the specific
that goal. Accordingly, the Commission each transmission operator shall, when high-risk conditions under which the
approves the Reliability Standard as practical, operate the system to respect system must be operated to respect
mandatory and enforceable. In addition, multiple outages as specified by the multiple outages. Xcel argues that it is
pursuant to section 215(d)(5) of the FPA regional reliability organization policy. unnecessary and impractical to attempt
and § 39.5(f) of our regulations, the The Commission noted in the NOPR to define in advance all of the possible
Commission directs the ERO to develop that Requirement R3 does not define scenarios that will result in a high-risk
a modification to TOP–003–0 through conditions under which multiple condition. Not all high-risk conditions
the Reliability Standards development outages must be considered. The NOPR can be defined at any one time because
process that: (1) Includes a new proposed to interpret such conditions changes in the system will introduce
requirement to communicate longer ‘‘to include high risk conditions such as new high-risk conditions. Even if a list
term outages well in advance to ensure hurricanes, ice storms or periods of high of high-risk conditions is developed,
reliability and accuracy of ATC solar magnetic disturbances during then, by definition, all other conditions
calculation; (2) makes any facility below which the probability of multiple not listed are excluded from
the voltage thresholds that, in the outages approaches that of a single consideration under this Reliability
opinion of the transmission operator, element outage.’’ 413 Standard. LPPC states that the proposed
balancing authority, or reliability modification to deal with high-risk
coordinator, will have a direct impact i. Comments
conditions is an unnecessarily
on the operation of Bulk-Power System, 1631. PG&E and APPA oppose a prescriptive approach and could be
subject to Requirement R1 for planned modification to the Reliability Standard detrimental to reliability by excluding
outage coordination and (3) incorporates that changes the requirement allowing scenarios that should be listed under
an appropriate lead time for planned operators to return the system to a this Requirement.
outages as discussed above. reliable operating state within 30 1634. California PUC states that the
d. Transmission Operations (TOP–004– minutes to a requirement that they do so Commission should not interpret
1) as soon as possible and in no longer hurricanes and ice storms as high risk
than 30 minutes. PG&E is concerned conditions for studying multiple outages
1628. This Reliability Standard that during emergencies operators because events such as hurricanes and
requires transmission operators to would be subject to uncertainty in ice storms actually reduce the stress on
operate the transmission system within complying with such a requirement, the Bulk-Power System. This is because
SOL and IROL.412 The N–1 operating which could lead to overly hasty such events cause outages at the local
criterion for the transmission system is responses with a corresponding distribution system level. California
also established in this Reliability detrimental effect on reliability. PG&E PUC maintains that since events such as
Standard. It provides that operating states that to avoid the confusion and hurricanes and ice storms rarely cause
configurations for which limits have not ambiguity from a subjective standard, cascading outages, the proper approach
yet been determined should be treated the Commission and NERC should only for dealing with such situations is to
as emergencies. The goal of the clarify that operators should seek to focus on system restoration planning
412 In its November 15, 2006, filing, NERC
return the system to a reliable operating rather than including them in the
submitted TOP–004–1, which has an effective date
state as soon as possible, but maintain contingency analysis that the proposed
of October 1, 2007, at which time it will supercede the current requirement of 30 minutes modification will require as a result of
the Version 0 Reliability Standard. TOP–004–1 adds as stated in Requirement R4 of TOP– including such natural events within
Measures and Levels of Non-Compliance to the 004–1. APPA states that if the the meaning of high risk conditions.
Version 0 Reliability Standard. Because TOP–004–
0 will be in effect until October 1, 2007 and TOP– Commission is concerned about the 1635. Santa Clara states that
004–1 thereafter, we address both versions of the Requirement R2 of the Reliability
Reliability Standard. 413 NOPR at P 997. Standard should be revised to include
frequency monitoring in addition to the modifications to the Reliability surrounding drifting in and out of IROL
monitoring of voltage, real and reactive Standard are needed. The survey will limits as discussed more fully in this
power flows. also indicate whether additional Final Rule in connection with the IRO
vigilance on the part of compliance group of Reliability Standards. As an
auditors is warranted in this area to example of the type of data that would
1636. The Commission approves ensure Bulk-Power System reliability. be appropriate in the survey, we would
TOP–004–0 as mandatory and 1639. As mentioned above, the expect to have reliability coordinators
enforceable until October 1, 2007, when Commission proposed to interpret report any violation of an IROL not
TOP–004–1 will be mandatory and ‘‘multiple outages’’ in the context of exceeding 30 minutes, its causes, the
enforceable. We address the concerns Requirement R3 to include multiple date and time of the violation, and the
raised by commenters below. element outages resulting from high-risk duration for which actual operations
1637. We adopt our proposal to conditions such as hurricanes, wild exceeded IROL to the ERO on a monthly
require the ERO to clarify that the fires, ice storms or periods of high solar basis for one year beginning two months
system should be restored as soon as magnetic disturbances during which the after the effective date of the Final Rule.
possible, taking no more than 30 probability of multiple outages The ERO should report the results to the
minutes. Requirement R4 of TOP–004– approaches that of a single element Commission in an informational filing
1 (as well as the Version 0 standard) outage. This is not an exhaustive list but within 18 months from the effective
provides that if a transmission operator is meant to contain illustrative date of this Final Rule.
enters an unknown state, i.e., any state examples, and the Reliability Standards
for which valid operating limits have development process should develop a e. Operational Reliability Information
not been determined, operations should procedure to identify applicable high (TOP–005–1)
be restored to respect proven reliable risk conditions. Under the high-risk 1643. Reliability Standard TOP–005–
power system limits within 30 minutes. conditions, the Commission 1 seeks to ensure that reliability
However, as we stated in the NOPR, this understands that systems are normally information is shared among reliability
language may be interpreted as a grace operated in a more secure manner so coordinators, transmission operators
period to the detriment of reliability.414 that the Bulk-Power System can and balancing authorities. It requires the
The Commission, therefore, directs that withstand multiple outages. These transmission operator and the balancing
the ERO develop a modification to multiple outages exceed the normal N– authority to provide operating data to
Requirement R4 providing that the 1 criterion because the probability of each other and to the reliability
system should be restored to respect multiple outages during high-risk coordinator, and it provides a list of
proven reliable power system limits as conditions approaches that of a single typical operating data that must be
soon as possible and in no longer than outage during normal conditions. This provided. TOP–005–1 also provides that
30 minutes. In response to PG&E’s point does not preclude development of each data recipient must execute a
that the phrase ‘‘as soon as possible’’ restoration plans as suggested by confidentiality agreement as a condition
would add confusion, we note that California PUC. Thus, we direct the ERO of receiving data from NERC’s
Measure M1 in TOP–004–1 would to develop a modification to the Interregional Security Network.415
measure performance against the 30- Reliability Standard that explicitly 1644. The Commission proposed in
minute period specified in Requirement incorporates this interpretation with the the NOPR to approve Reliability
R4. details identified in the Reliability Standard TOP–005–1 as mandatory and
1638. Entergy and MidAmerican Standards development process. enforceable. The Commission also
support our proposal to direct the ERO 1640. We direct the ERO to consider proposed to direct NERC to submit a
to conduct a survey and report the Santa Clara’s suggestion regarding modification to TOP–005–1 that: (1)
operating practices and actual changes to Requirement R2 in the Includes information about the
experiences surrounding drifting in and Reliability Standards development operational status of special protection
out of IROL violations. We disagree with process. systems and power system stabilizers in
MISO that TOP–007–0 covers reporting 1641. Accordingly, the Commission Attachment 1 and (2) deletes references
of ‘‘drifting’’ in and out of IROL approves Reliability Standard TOP– to confidentiality agreements, but
violations because that Reliability 004–0. Further, we approve TOP–004–1 addresses the issue separately to ensure
Standard only requires reporting of so that it will become mandatory and that necessary protections are in place
IROL violations exceeding 30 minutes. enforceable on the stated effective date related to confidential information.
With regard to APPA’s suggestion that of October 1, 2007. In addition,
NERC should determine whether such pursuant to section 215(d)(5) of the FPA i. Comments
information would improve reliable and § 39.5(f) of our regulations, the 1645. FirstEnergy states that TOP–
operations, we believe a survey is Commission directs the ERO to develop 005–1 should also apply to transmission
appropriate to determine actual a modification to the Reliability providers because some of the
practices, and simply modifying the Standard through the Reliability information listed in Attachment 1 to
compliance reporting procedures may Standards development process that: (1) the Reliability Standard is in their
not provide sufficient data to determine Modifies Requirement R4 to state that possession. Attachment 1 should be
the reliability impacts of such practices the system should be restored to respect modified so that it allows each entity to
and whether a modification to the proven limits as soon as possible, taking know what data it is expected to
Reliability Standard is appropriate. no more than 30 minutes and (2) defines provide. As currently written,
Accordingly, we direct the ERO to high risk conditions under which the Attachment 1 lists various entities that
conduct a survey on the operating system must be operated to respect are supposed to provide data without
practices and actual experiences multiple outages in Requirement R3,
surrounding drifting in and out of IROL consistent with the discussion above. 415 Interregional Security Network is a data
violations. Such a survey will provide 1642. In addition, the Commission exchange system that facilitates the exchange of
real-time and other operational data among
factual support for whether additional directs the ERO to perform a survey of reliability coordinators, balancing authorities and
the prevailing operating practices and transmission operators to help ensure reliable
414 See NOPR at P 995. actual operating experiences electric power system operations.
specifying who will provide which 1651. The Commission directs the transmission operators. Although
information. FirstEnergy states that ERO to consider FirstEnergy’s situational awareness tools, such as
transmission operators, for example, recommended modifications to state estimators, are critical for an ISO
may not have all the information listed Attachment 1 to the Reliability Standard and RTO, smaller balancing authorities
in item 1.5 of Attachment 1. and ISO–NE’s recommended revision to and transmission operators should
1646. APPA and Entergy agree that Requirement R4 in the Reliability provide necessary data to the reliability
TOP–005–1 should be modified to Standards development process. coordinator that monitors a wide region
include information about the 1652. Accordingly, the Commission using such tools.
operational status of special protection approves Reliability Standard TOP– 1656. Alcoa claims that developing
systems and power system stabilizers in 005–1. In addition, pursuant to section additional capability at the balancing
Attachment 1. However, APPA contends 215(d)(5) of the FPA and § 39.5(f) of our authority and transmission operator
that the Commission’s directive should regulations, the Commission directs the levels when such capability already
be revised so that this change is ERO to develop a modification to TOP– exists at the reliability coordinator level
developed through the Reliability 005–1 through the Reliability Standards will be redundant. Requiring state
Standards development process. development process that: (1) Includes estimation for a small balancing area
1647. ISO–NE recommends that the information about the operational status that is under an ISO would provide
reference to ‘‘purchasing-selling entity’’ of special protection systems and power little benefit for grid reliability since the
in Requirement R4 should be replaced system stabilizers in Attachment 1 and scope of the balancing area’s visibility is
with ‘‘generator owner, transmission (2) deletes references to confidentiality limited.
owner, and LSE.’’ 416 It argues that since agreements, but addresses the issue 1657. APPA does not support the
NERC’s glossary defines the term separately to ensure that necessary proposed requirement related to the
‘‘purchasing-selling entity’’ as ‘‘[t]he protections are in place related to provision of a minimum set of analytical
entity that purchases or sells, and takes confidential information. tools and claims that inclusion of
title to, energy, capacity, and specific analytical tools is
f. Monitoring System Conditions (TOP– counterproductive because the tools
Interconnected Operation services,’’
006–1) become obsolete within two to five
many entities can fall within this
category (e.g., commodity traders such 1653. TOP–006–1 requires operating years due to technical advances. APPA
as financial/power marketers) that may personnel to continuously monitor states that deciding whether to add a
possess little or none of the operational essential Bulk-Power System parameters new requirement for a minimum set of
or reliability data the host balancing such as line flows, circuit breaker status, analytical tools should be left to NERC
authority and transmission operator generator resources, relays, weather in the first instance. Similarly, TAPS
need to conduct reliability assessments. forecasts and frequency to ensure that argues that NERC should consider in the
1648. A number of commenters the facilities do not exceed their first instance whether minimum
discussed the Commission’s proposal to operating limits. analytical tools are necessary and for
delete references to confidentiality 1654. The Commission proposed in what subset of generator operators and
agreements in the Reliability Standard the NOPR to approve the Reliability transmission operators.
but to address the issue separately to Standard as mandatory and 1658. LPPC maintains that the
ensure that necessary protections are in enforceable.418 The Commission also Commission should require NERC to list
place related to confidential proposed to direct NERC to submit a the capabilities required rather than
information. Those comments are modification that: (1) Includes Measures specific tools because tools will change
summarized above in connection with and Levels of Non-Compliance; (2) over time.
the same proposal made by the includes a new Requirement related to 1659. APPA states that the ERO’s
Commission in the case of TOP–002–1. the provision of a minimum set of filing on November 15, 2006 includes
analytical tools that will aid in new Measures M1 through M6, which
ii. Commission Determination situational awareness and (3) clarifies only measure Requirements R1, R2, R4,
1649. For the reasons stated in the the meaning of ‘‘appropriate technical R5 and R7.
NOPR,417 we direct the ERO to develop information’’ concerning protective
a modification to TOP–005–1 through relays.
the Reliability Standards development 1660. The Commission approves
i. Comments TOP–006–1 as mandatory and
process regarding the operational status
of special protection systems and power 1655. Dominion supports including a enforceable. In addition, the
system stabilizers in Attachment 1. new requirement for a minimum set of Commission directs the ERO to develop
Several commenters agree with this analytical tools. It argues that such a modifications to TOP–006–1 through
directive, and we believe that this requirement will ensure that operators the Reliability Standards development
information will provide a more have a minimum set of tools with which process, as discussed below.
comprehensive list in Attachment 1. to perform their duties. The Reliability 1661. We adopt our proposal to
1650. We are adopting our proposal Standard should also specify metrics require the ERO to develop a
regarding deletion of references to that can be audited, such as minimum modification related to the provision of
confidentiality agreements from the availability times, so that these tools are a minimum set of analytical tools. In
Requirements. Our discussion of this adequately maintained. However, Alcoa response to LPPC and others, we note
matter in connection with TOP–002–1 states that requiring a minimum set of that our intent was not to identify
applies equally here. tools will be unduly onerous, especially specific sets of tools, but rather the
to smaller balancing authorities and minimum capabilities that are necessary
416 Requirement R4 states: ‘‘Each Purchasing- to enable operators to deal with real-
Selling Entity shall provide information as 418 In its November 15, 2006 filing, NERC time situations and to ensure reliable
requested by its Host Balancing Authorities and submitted TOP–006–1, which supersedes the operation of the Bulk-Power System. In
Transmission Operators to enable them to conduct Version 0 Reliability Standard. TOP–006–1 adds
operational reliability assessments and coordinate Measures and Levels of Non-Compliance to the
response to APPA that the inclusion of
reliable operations.’’ Version 0 Reliability Standard. In this Final Rule, specific analytical tools is
417 NOPR at P 1005. we review the November version, TOP–006–1. counterproductive because the tools
will become obsolete, we note that we 006–1. In addition, pursuant to section activities and should be combined with
are not seeking specific analytical tools, 215(d)(5) of the FPA and § 39.5(f) of our the requirements of TOP–008.
but rather minimum capabilities. regulations, the Commission directs the 1672. NRC states that some nuclear
1662. In regard to Alcoa’s concern ERO to develop a modification to TOP– power plant voltage requirements would
that this new Requirement would be 006–1 through the Reliability Standards result in SOL, i.e., the nuclear power
unduly onerous, especially for smaller development process that: (1) Includes a plant voltage limits would be an SOL as
balancing authorities and transmission new requirement related to the a result of the minimum and maximum
operators, the Commission’s intent is provision of minimum capabilities that voltages required at the nuclear power
not to subject smaller balancing are necessary to enable operators to deal plant switchyard, which typically has a
authorities and transmission operators with real-time situations and to ensure tighter operating band (a higher
to the same requirements placed on reliable operation of the Bulk-Power minimum and a lower maximum) than
larger balancing authorities and System and (2) clarifies the meaning of other nodes in the system. It therefore
transmission operators. As part of the ‘‘appropriate technical information’’ recommends adding a new requirement
modification of this Reliability Standard concerning protective relays. that states as follows: ‘‘Following
to develop a new requirement for
g. Reporting SOL and IROL Violations discovery of a potential contingency
minimum capability for analytical tools,
(TOP–007–0) that could result in an SOL being
the ERO should take into account what
exceeded at a nuclear power plant (e.g.,
would be required of smaller balancing 1667. TOP–007–0 requires that
at post-trip voltage), the transmission
authorities and transmission operators violations of SOL and IROL be promptly
owner shall notify the nuclear power
for the Reliable Operation of the Bulk- reported to the reliability coordinator so
plant operator as soon as possible but
Power System, instead of applying the that it can direct corrective action and
not longer than 30 minutes if the
same requirements as are placed on inform other affected systems. It also
contingency has not been corrected.’’
other reliability entities such as requires a transmission operator to
NRC also suggests modifying the
reliability coordinators and larger mitigate an IROL violation as soon as
Measures and Compliance sections and
balancing authorities and transmission possible but in no longer than 30
Table 1 to account for the new
operators. minutes. A transmission operator must
1663. We disagree with Alcoa that requirement, and provides specific
take ‘‘all appropriate actions up to and
developing additional capability at the language to be included in those places.
including shedding firm load’’ to return
balancing authority and transmission its system to a stable state within IROL. ii. Commission Determination
operator levels when such capability Finally, the Reliability Standard
already exists at the reliability requires that the reliability coordinator 1673. The Commission approves
coordinator level will be redundant. We take action to mitigate an SOL or IROL TOP–007–0 as mandatory and
are not seeking to duplicate the same violation if the transmission operator’s enforceable. We agree with APPA,
capability for each reliability entity, but actions are not effective. FirstEnergy and SoCal Edison that the
rather the new requirement should 1668. The Commission proposed in Reliability Standards would benefit
specify the minimum capability taking the NOPR to approve TOP–007–0 as from the elimination of overlapping
into account the role played by each mandatory and enforceable. matters in TOP–007–0 and TOP–008–1.
entity. For example, a reliability 1669. In the NOPR, the Commission The ERO indicates that it plans to
coordinator may need to have access to solicited comment on potentially address this as part of its Work Plan and
state estimator and contingency analysis overlapping matters addressed in this suffices.
whereas a generator operator may not Reliability Standards TOP–007–0 and 1674. NRC has raised some significant
need these capabilities.419 TOP–008–0. issues regarding the consideration of
1664. No commenters addressed our nuclear power plants voltage
proposal with respect to the meaning of i. Comments requirements. Consistent with our
‘‘appropriate technical information’’ 1670. NERC recognizes that there are general approach in this Final Rule, we
concerning protective relays in some redundancies and awkward direct the ERO to consider NRC’s
Requirement R3 of the Reliability relationships among the various comments in the Reliability Standards
Standard. To provide more clarity, Reliability Standards, which are the development process when addressing
criteria that define what ‘‘appropriate result of the translation from the TOP–007–0 as part of its Work Plan.
technical information’’ is necessary previous operating policies where each
should be specified so that operators 1675. Accordingly, the Commission
policy was treated as a separate set of approves Reliability Standard TOP–
can make better informed decisions. An concepts. NERC states that its 2007–
example of such information would be 007–0 as mandatory and enforceable.
2009 Reliability Standards Work Plan
the allowable reclosing angle set in the addresses work to be done to eliminate h. Response to Transmission Limit
existing relays and the maximum angle redundancies and better organize the Violations (TOP–008–1)
at specific points in the Bulk-Power Requirements across Reliability
System that would be acceptable to Standards so as to provide a more 1676. TOP–008–1 requires a
allow closing of lines during system logical presentation. transmission owner to take immediate
restoration. steps to mitigate SOL and IROL
1671. APPA states that the concerns
1665. The ERO should consider violations.
expressed in the NOPR about
APPA’s comment regarding the missing 1677. The Commission proposed in
overlapping matters between TOP–007–
Measures in the ERO’s Reliability the NOPR to approve Reliability
0 and TOP–008–0 should be referred to
Standards development process. Standard TOP–008–0 as mandatory and
the NERC Reliability Standards
1666. Accordingly, the Commission
development process to better comport enforceable. The Commission also

approves Reliability Standard TOP– proposed to direct that NERC submit a
with the statutory division of
419 We note that TOP–006–0 applies to responsibility. FirstEnergy and SoCal modification to TOP–008–0 that: (1)
transmission operators, balancing authorities, Edison state that Requirements R2 Includes Measures and Levels of Non-
generator operators and reliability coordinators. through R4 are clearly not reporting Compliance and (2) includes reliability
coordinators in the applicability 12. TPL: Transmission Planning that they allow unspecified amounts of
section.420 1684. The Transmission Planning planned or controlled loss of load.
i. Comments (TPL) group of Reliability Standards a. General Issues
consists of six Reliability Standards that 1686. Commenters raise a number of
1678. APPA questions whether TOP– are applicable to transmission planners, issues that apply generally to Reliability
008–1 should be modified to apply to planning authorities and regional Standards TPL–001–0 through TPL–
reliability coordinators. It claims that reliability organizations. These 004–0. These issues are related to the
the Requirement R3 simply mentions Reliability Standards are intended to transmission planning process,
that the reliability coordinator will ensure that the transmission system is sensitivity studies and critical system
receive information provided by the planned and designed to meet an conditions, element-based versus event-
transmission operator and does not play appropriate and specific set of reliability based contingencies, spares strategy,
any substantive role under TOP–008–1. criteria. Transmission planning is a and resource information for planning
MISO notes that the reliability process that involves a number of stages and sharing information with
coordinators’ responsibility related to including developing a model of the neighboring systems. We address these
IROL violations are outlined in Bulk-Power System, using this model to general issues here, and the conclusions
connection with IRO Reliability assess the performance of the system for reached will apply to our discussion of
Standards and the reasons for adding a range of operating conditions and individual TPL Reliability Standards.
the reliability coordinator as applicable contingencies, determining those
entity in multiple locations is unclear. operating conditions and contingencies i. Transmission Planning Process
1679. APPA states that NERC has not that have an undesirable reliability 1687. The Commission stated in the
submitted a Measure for the impact, identifying the nature of NOPR that the Reliability Standards are
Requirement R2 of the Reliability potential options, and the need to not intended to make the Bulk-Power
Standard. The new Measures M1 develop and evaluate a range of System failure-proof.424 In addition, we
through M5 included in TOP–008–1 solutions and selecting the preferred did not propose to modify the TPL
only measure Requirements R1, R3, and solution, taking into account the time Reliability Standards to require that the
R4. In addition, the data retention and needed to place the solution in service. system be able to withstand all
compliance levels reference Measures The proposed TPL Reliability Standards multiple-contingency and extreme
address: (1) The types of simulations contingency events without loss of load.
M1 through M5. Therefore, an entity
and assessments that must be performed Nonetheless, we stated that we believe
subject to TOP–008–1 could arguably
to ensure that reliable systems are that the planning-related Reliability
comply with Requirements R1, R3 and
developed to meet present and future Standards could be improved to better
R4 and be in compliance with the entire
system needs 422 and (2) the information account for probable contingencies
required to assess regional compliance when conducting planning studies.
ii. Commission Determination with planning criteria and for self- Much of our proposal was consistent
assessment of regional reliability.423 with the potential improvements NERC
1680. For the reasons stated in the 1685. The TPL group of Reliability recognized in its comments on the Staff
NOPR,421 the Commission approves Standards contains a table designated Preliminary Assessment. In addition, we
TOP–008–1 as mandatory and ‘‘Table 1’’ (Transmission System noted that a number of regions currently
enforceable. We address the concerns Standards—Normal and Emergency utilize superior planning practices that
raised by commenters below. Conditions), which is a key part of this may be characterized as ‘‘best practices’’
1681. We agree with APPA that the group of Reliability Standards. It lays and are more stringent than the
reliability coordinator merely receives out the system performance proposed TPL Reliability Standards.425
information provided by the requirements for a range of Accordingly, we proposed that the ERO
transmission operator and does not play contingencies grouped according to the submit to the Commission such regional
any substantive role under TOP–008–1. number of elements forced out of differences in transmission planning
We also agree with MISO that the service as a result of the contingency. criteria that are more stringent than
reliability coordinators’ responsibility For example: Category A applies to the those specified in the TPL group of
related to IROL violations are outlined normal system with no contingencies; Reliability Standards.
in connection with the IRO Reliability Category B applies to contingencies
resulting in the loss of a single element, (a) Comments
Standards and therefore there is no need
to modify the applicability section of defined as a generator, transmission 1688. EEI and APPA strongly believe
TOP–008–1 to include the reliability circuit, transformer, single DC pole with that the transmission planning
coordinator. or without a fault; Category C applies to processes performed under these
a contingency resulting in loss of two or Reliability Standards have served this
1682. The ERO should consider
more elements, such as any two circuits nation extremely well. The Reliability
APPA’s comment regarding the missing
on a multiple circuit tower line or both Standards have evolved with changes in
Measures in the ERO’s Reliability
poles of a bi-polar DC line; while industry structure, computer and
Standards development process.
Category D applies to extreme
1683. Accordingly, the Commission contingencies resulting in loss of 424 NOPR at P 1042.
approves Reliability Standard TOP– multiple elements, such as a substation 425 Examples include practices cited in NERC’s
008–1 as mandatory and enforceable. ‘‘Examples of Excellence’’ found in its Readiness
or all lines on a right-of-way. The Audits (available at http://www.nerc.com) and
system performance expectations for filings for jurisdictional utilities in Part 4 of FERC
420 In its November 15, 2006, filing, NERC
Category C contingencies are lower than Form No. 715, Transmission Planning Reliability
submitted TOP–008–1, which supersedes the those for Category B contingencies, in Criteria. Regional reliability organizations also
Version 0 Reliability Standard. TOP–008–1 adds specify requirements that exceed NERC Reliability
Measures and Levels of Non-Compliance to the Standards, such as WECC’s Minimum Operating
Version 0 Reliability Standard. In this Final Rule, 422 See TPL–001–0, TPL–002–0, TPL–003–0 and
Requirement Criteria and the NPCC Document A–
we review the November version, TOP–008–1. TPL–004–0. 02—Basic Criteria for Design and Operation of
421 See NOPR at P 1035–36. 423 See TPL–005–0 and TPL–006–0. Interconnected Power Systems.
communications technology, electric 1691. SDG&E supports the earmarked this group of Reliability
generation and transmission technology Commission’s proposal to direct NERC Standards for revision during the early
and a broad range of state and federal to submit for approval regional stages of the plan. The Commission
regulatory demands. EEI and APPA state transmission planning criteria that have directs the ERO to consider integrating
that it is unclear whether the been adopted and extensively used that Reliability Standards TPL–001–0
Commission is proposing a significant are more stringent than those specified through TPL–004–0 into a single
expansion of this reliability planning in the current TPL Reliability Standards. Reliability Standard through the
process, which would amount to a NCPA states that whenever a RTO/ISO Reliability Standards development
fundamental shift in the nature of that adopts criteria that differ from ERO or process.
process, or whether the Commission is regional standards, those criteria should 1694. The Commission agrees with
proposing a more specific description of be made public and transparent. SDG&E and NCPA that any criteria that
today’s comprehensive planning are more stringent than the ERO
(b) Commission Determination planning criteria should be made public
approach. EEI and APPA state that they
can interpret the Commission’s proposal 1692. EEI and APPA raise an and transparent. It is essential that such
either as suggesting that planning important question on the Commission’s criteria be accessible to and understood
should support a robust and flexible intent regarding the transmission by the entities to which they apply.
network that can ‘‘bend’’ to a broad planning process and proposed Accordingly, the Commission directs
range of critical system conditions, as modifications to the transmission the ERO to submit to the Commission in
practiced up to now, or that planning planning standards. They ask whether an informational filing, in addition to
should be ‘‘finely tuned’’ so that the Commission is proposing a regional criteria, all utility and RTO/ISO
reliability can be maintained under fundamental shift in the nature of the differences in transmission planning
conditions where both resources and planning process that would result in a criteria that are more stringent than
loads are highly controlled. They find move away from the current network those specified by the TPL group of
the source for the latter interpretation in design towards a much ‘‘tighter’’ Reliability Standards. We believe that
the Commission’s request that the transmission system through this information will provide us, as well
industry move toward more explicit substantially increased use of as the ERO and industry with an
requirements that transmission planners controllable resources and loads. The indication of the actual transmission
consider the effects of load control or Commission is not proposing a practices utilized in the industry today.
other forms of DSM, or conduct fundamental shift in the nature of the This should be used by the ERO in the
planning studies for far more planning process as it is practiced Reliability Standards development
combinations of resource alternatives. today. We clarify that all the proposed process.
EEI and APPA state that the existing modifications to the TPL group of
Reliability Standards are aimed at ii. Sensitivity studies and critical system
Reliability Standards fully meet the conditions
Commission’s criteria as set forth in ensuring Reliable Operation of the Bulk-
Order No. 672, unless the Commission Power System. To achieve this goal, it 1695. The Commission stated in the
envisions a very different transmission is necessary, among other things, to NOPR that it is not realistic to expect
system planning process or seeks to ensure that the planning process and the the ERO to develop Reliability
move away from current network design Reliability Standards produce a Bulk- Standards that anticipate every
toward the development of a much Power System that is robust enough to conceivable critical operating condition
‘‘tighter’’ transmission system through be able to withstand a range of probable applicable to unknown future
substantially higher saturations of contingencies while reliably serving configurations for regions with various
controllable resources and loads. customer demand and preventing the configurations and operating
1689. SDG&E notes that the NOPR’s identified outages, and flexible enough characteristics.426 The practical solution
characterization of the dual objectives of to accommodate a broad range of system implemented by many in the industry is
‘‘appropriateness’’ and ‘‘specificity’’ conditions over a planning horizon that to perform sensitivity studies that define
speaks, on the one hand, to the need for takes into account lead times to place and provide documentation of the
Reliability Standards that are tailored to facilities in service. Further, the reliability impact on the system. The
each transmission planner’s area of proposed modifications are intended to Commission therefore stated that it
responsibility, and, on the other hand, ensure that the planning requirements would be appropriate for planning
clear, consistent and workable rules. are specific enough to promote rigor and entities to conduct sensitivity studies to
SDG&E urges the Commission to be consistency in assessments and provide ‘‘bracket’’ the range of probable
mindful of the need to assess and clear and measurable rules for outcomes. Thus, without having to
balance these considerations in future mandatory and enforceable Reliability anticipate ‘‘every conceivable critical
iterations of the transmission planning Standards. The Commission therefore operating condition,’’ planning entities
Reliability Standards. agrees with SDG&E’s comments in this will have a means to identify an
1690. Northern Indiana states that the regard and on the need to balance appropriate range of critical operating
presentation of TPL–001–0 through ‘‘appropriateness’’ and ‘‘specificity.’’ conditions. Both staff and commenters
TPL–004–0 as individual Reliability 1693. The Commission agrees with on the Staff Preliminary Assessment
Standards creates a great deal of Northern Indiana that the Reliability noted that system conditions are as
confusion. In practice, most Standards TPL–001–0 through TPL– important as contingencies in evaluating
transmission planners take an integrated 004–0 would be improved if they were the performance of present and future
view of these Reliability Standards and integrated into a single Reliability systems.
treat them as if they were a single Standard. Such an approach conforms
standard. Accordingly, Northern more closely to common planning (a) Comments
Indiana suggests that the Commission practices, and integrating these 1696. Most of the commenters agree
ask NERC to file a substitute proposal Reliability Standards therefore could with the Commission’s proposal on
that would integrate the transmission enhance their practical effectiveness. sensitivity studies to determine critical
planning standards and improve their The Commission notes that the Work
clarity and quality. Plan submitted by the ERO has 426 NOPR at P 1047.
system conditions. These include should be reflected in future In regard to alternative dispatch
FirstEnergy, TVA, MidAmerican, Requirements. scenarios, MISO states that if a variation
Entergy and SDG&E. However, a few 1702. MISO agrees that planning from the expected dispatch leads to
commenters, including EEI, APPA, entities should have a process to unacceptable performance, it becomes
MISO and Northern Indiana, take the identify appropriate critical system an economic planning question, rather
view that such a requirement is conditions for planning purposes. than a planning standard issue, whether
unnecessary and overly prescriptive. However, it does not believe that the expansion should be undertaken or
1697. FirstEnergy states that it is Reliability Standard needs to be whether the dispatch becomes a
appropriate for the Commission to prescriptive in terms of the specific congestion cost.
require sensitivity analyses, because sensitivities that should be evaluated. If
an entity’s approach to selecting the (b) Commission Determination
assessing multiple sensitivities against a
set of system contingencies is prudent critical planning conditions is 1705. In response to Entergy’s
system planning. appropriate, sensitivities to variations comments, the Commission reiterates
1698. TVA agrees that an appropriate from these conditions are unnecessary. the statement from the NOPR 428 that the
range of critical operating conditions MISO and Northern Indiana state that results of the sensitivity studies would
that will ‘‘stress’’ the Bulk-Power requiring sensitivities in planning be used to document the selection of
System needs to be identified for use in studies as a mandatory standard critical system conditions and study
transmission planning. It states that practice could result in unnecessary years used in assessing system
sensitivity studies should be performed additional analysis that could conditions. The Commission notes that
and historic data analyzed to determine overwhelm the planning process and it is not the purpose of sensitivity
the most probable range of operating detract from more appropriate focused studies to identify remedial actions, but,
conditions that will stress the Bulk- analysis and evaluation of solutions. as stated in the NOPR, if different
Power System. 1703. EEI and APPA state that the scenarios that lead to criteria violations
1699. MidAmerican believes that the Commission’s proposal on sensitivity are probable they require mitigation
proposal to require sensitivity studies to studies would add an unnecessarily plans.429 Entergy goes on to state that
‘‘bracket’’ the range of probable redundant process that ignores the constructing facilities, the need for
totality of the studies contained in study which is determined through sensitivity
outcomes and determine critical system
libraries that inform planners’ decisions. studies, may not create a desirable
conditions is reasonable. It states that,
The historical libraries of system studies result, in that they may bias
while critical conditions may be
provide a strong base for selecting transmission plans towards a specific
determined in a similar manner for the
critical transmission system conditions. generator or set of generators and as a
different TPL Reliability Standards,
EEI believes that the knowledge and result may threaten reliability. The
different critical conditions are
experience of planners who have Commission disagrees that constructing
pertinent to each Reliability Standard.
conducted these studies provides well-planned facilities may threaten
For example, thermal overloads occur
reliable guidance and that a new array reliability. The planning process should
under peak load conditions and
of sensitivity analyses would offer no anticipate any inter-regional impacts,
dynamic instability occur under light additional benefit over existing
load conditions. and the net result should be higher local
practices. and inter-regional reliability. In any
1700. Entergy does not object to an 1704. Regarding specific variables to case, we are not requiring the
assessment of critical system conditions be included in sensitivity studies, EEI construction of additional facilities.
using the factors identified in the and APPA note that load power factors, 1706. MISO, EEI, APPA and others
NOPR,427 but it contends that the controllable loads and DSM at specific question the value of sensitivity studies
Commission’s guidance is problematic locations and outages of reactive devices and their role in mandatory Reliability
to the extent that it may require have much more to do with distribution Standards given the knowledge and
constructing facilities to address operations planning than long-term experience of planners and the
potential constraints identified through system planning. They state that while historical library of system studies. The
these assessments. Entergy states that transmission system planners will study Commission notes that while specificity
such construction may not create a a broad range of combinations of was not required in the regime of
desirable result and may instead substation loadings, system voluntary standards, it is required in a
threaten reliability. For example, configurations and resource regime of mandatory Reliability
assessing a system using alternative availabilities over the planning horizon, Standards to ensure consistency in
generation dispatch and transaction changes in the variables of the sort system assessment and provide clear
patterns could bias a transmission identified by the Commission have very and measurable requirements. Further,
provider in favor of transmission plans little influence on the long-term study as stated in the NOPR 430 and concurred
that benefit a specific generator or set of outcomes except for the loss of load that with by commenters to the Staff
generators. could occur under extreme Preliminary Assessment, system
1701. SDG&E sees the Commission’s circumstances. MISO believes that conditions are as important as
treatment of sensitivity studies and transmission reactive power devices contingencies in evaluating the
critical system conditions as requiring should be treated like any other performance of present and future
transmission planning entities to transmission facility and included in systems. Indeed, Table 1 lists the
exercise judgment in determining the the required contingency analysis. The contingencies to be evaluated, but there
scope, content and number of their current Reliability Standards are not is no corresponding requirement for
sensitivity studies so that they are explicit in this regard, and MISO agrees selecting critical system conditions.
appropriate given unique system that this would be an appropriate 1707. The Commission believes it is
characteristics and reasonably clarification. It believes that power important to clarify the type of analysis
anticipated contingencies. SDG&E state factor sensitivity studies are best suited
that this guidance is welcome and for operational planning studies rather 428 Id. at P 1061.
than long-term planning since corrective 429 Id. at n 324.
427 Id. at P 1061. actions have relatively short lead times. 430 Id. at P 1046.
required in determining critical system contingency can be a sudden happen in the actual power system and
conditions, which is the intent of the disturbance or an unanticipated failure not a generic listing of outages.
directed modifications on sensitivity of any system element. If a specific However, it states that the Commission
studies. The Commission proposed in portion of the system has been designed should provide further guidance in
the NOPR a range of variables to be such that the response to a failure defining an event so that planning
included in sensitivity studies, results in multiple lines, transformers, studies can assess electrical system
specifically: firm transfers, demand generators, circuit breakers, etc., being contingencies consistently and
levels, existing and planned facilities, removed from service, the Commission numerically. A simulation that
reactive power resources, control proposed that this is what should be faithfully duplicates reasonably
devices, load power factors, generation simulated.434 expected scenarios will necessarily
retirements, generation dispatch, involve the transmission planner’s
transaction patterns, controllable loads, (a) Comments
sound engineering judgment and
DSM and transmission outages 1709. National Grid, MidAmerican knowledge of elements that would be
including outages of reactive power and SDG&E support the principles set expected to be removed from service
devices.431 The Commission also stated forth in the NOPR. National Grid states during the contingency. SDG&E states
that it is not precluding other that event-based planning is a more that the updated TPL Reliability
approaches to defining and robust form of contingency analysis Standard should reflect and implement
documenting critical system conditions than element-based planning because these concerns.
that have proven to be effective. The the former focuses on contingencies 1712. EEI believes the planning
Commission also notes that in analyzing regardless of how many elements may Reliability Standards and practices
contingencies as part of Requirement be affected while the latter focuses on clearly reflect the language in FPA
R1.3.1 in Reliability Standards TPL– losses of specific elements that may not section 215 regarding ‘‘element based’’
002–0 through TPL–004–0, not all have a direct relationship to the severity planning. Planners study single
contingencies need be assessed for every of the impact on or risks to reliability. contingency and multiple contingency
system element but only those that As such it supports the Commission’s events covering a broad range of system
would produce the more severe statement that ‘‘simulations should elements and not a list of generic
reliability impacts with documentation faithfully duplicate what will happen in outages.
of selection rationale. The same applies the actual power system and not a 1713. TANC recommends that the
to the range of variables specified for generic listing of outages.’’ 435 Commission direct that transmission
sensitivity studies. The Commission 1710. MidAmerican states that it planning in the West be based on
expects that the full range of variables supports the Commission’s proposal to probability of an event occurring and
will be considered, but only those interpret a ‘‘single contingency’’ to the severity of the consequences, rather
deemed to be significant need to be include all elements of the system, than on a deterministic approach that
assessed and documentation provided irrespective of their number, that go out uses single and multiple contingency
that explains the rationale for the of service in response to failure of a categories as exemplified by Table 1. It
selection of variables assessed. single element, as it has historically states that WECC has assessed the
iii. Element-Based vs. Event-Based performed this analysis as a part of probability of an event occurring for
Contingencies normal planning in the interest of each category and assigned probabilities
reliability. MidAmerican is concerned, accordingly. TANC states that to be
1708. The Commission stated in the however, that this proposal may be too
NOPR that planning Reliability more cost effective and efficient,
restrictive for system planning, investments to remedy a problem
Standards must influence system design particularly with regard to the double
and not the other way around.432 To should be based on a combination of the
contingencies of Category C. It states probability of the occurrence of the
achieve this objective, planning that if a multi-element single
Reliability Standards should promote event and the severity of the associated
contingency occurs first, as part of consequences.
system designs that result in the system adjustment, the reliability
minimum set of elements being 1714. In response to the Commission’s
coordinator or transmission operator request in the NOPR for comment on
removed from service for will switch back the unfaulted elements
‘‘unanticipated failures of system whether planning for cyber security
to service prior to the next contingency. events should be addressed in the
elements.’’ 433 The NOPR goes on to say
Therefore this N–1–1 contingency at its planning Reliability Standards or in the
that the Commission believes that the
worst will consist of a single element Critical Infrastructure Protection (CIP)
simulations used in planning
outage followed by a multi-element Reliability Standards,436 MidAmerican,
assessments should faithfully duplicate
outage. Therefore MidAmerican states EEI, APPA, ISO–NE and SoCal Edison
what will happen in the actual power
that the extent of a multiple-element state they believe that events requiring
system and not a generic listing of
single contingency is better determined study under the CIP Reliability
outages. The Bulk-Power System also
through coordinated efforts of Standards should be included in that
must be operated, and planned to be
neighboring systems in conjunction specialized forum rather than the TPL
operated, within a number of conditions
with the planning authority and Reliability Standards. Such events are
after a contingency or cyber event. The
reliability coordinator. identified using approaches provided
431 Id. at P 1047.
1711. SDG&E agrees that further for in the CIP Reliability Standards.
432 Id. at P 1049. modifications to the TPL Reliability Therefore the best place to explore those
433 Section 215(a) of the FPA defines ‘‘Reliable Standards should be guided by the events and determine their impacts
Operation’’ as ‘‘operating the elements of the Bulk- NOPR’s directive that simulations using the full background of the
Power System within equipment and electric should faithfully duplicate what will
system thermal, voltage, and stability limits so that information about the events is the CIP
instability, uncontrolled separation, or cascading
434 With respect to failure, the element includes
Reliability Standards, although some of
failures of such system will not occur as a result these events will require
of sudden disturbance, including a Cybersecurity a single transmission line, transformer, generator or
Incident, or unanticipated failure of system single pole of a DC line.
elements’’ (emphasis added). 435 NOPR at P 1049. 436 Id. at P 1050.
implementation of elements from other single element that faithfully duplicates with the present deterministic planning
Reliability Standards. what will happen in the actual approach. Such performance metrics
1715. National Grid and International system.439 Such an approach is would assist us in determining whether
Transmission take the view that cyber necessary to ensure that planning will a probabilistic approach would result in
security incidents are no different than produce results that will enhance the equivalent or higher levels of Reliable
other events that remove single or reliability of that system. Thus, if the Operation than currently achieved.
multiple elements from service at a system is designed such that failure of 1720. In response to the comments
single time and require analysis of a single element removes from service received on how best to address
system impacts. Planning assessment for multiple elements in order to isolate the planning for cyber security events, it is
cyber security incidents therefore is faulted element, then that is what clear that the nature of risks as well as
most appropriately addressed in the should be simulated to assess system the contingencies and measures needed
TPL Reliability Standards. International performance. Accordingly, the to overcome them are best addressed in
Transmission states that although Table Commission directs the ERO to submit the CIP Reliability Standards because
1 of the TPL Reliability Standards does modifications to Category B of Table 1 this forum has the specialized
not list the initiating event, cyber consistent with this approach. Entities knowledge to deal with cyber security
security events could be included in the whose systems may have been planned matters. However, the system impacts of
list of contingencies as an initiating and designed on the basis of a different cyber security events are best addressed
event. National Grid cautions that approach to single contingencies should in the TPL group of Reliability
provisions detailing specific cyber work with the ERO in developing plans Standards, particularly TPL–004–0,
security protections should be to transition to this approach. alongside other similar common mode
addressed in CIP Reliability Standards, 1718. The Commission disagrees with failures. Emergency plans and
and emergency response procedures for EEI that the planning Reliability restoration procedures to deal with
response to cyber security events should Standards and practices clearly reflect cyber security events are best addressed
be addressed in EOP Reliability the language in FPA section 215 by the EOP Reliability Standards
Standards. regarding ‘‘element based’’ planning. because these Reliability Standards deal
Section 215(a) of the FPA defines with emergency plans and restoration
‘‘Reliable Operation’’ as ‘‘operating the procedures. The Commission directs the
1716. Several commenters 437 agree elements of the Bulk-Power System’’ ERO to consider appropriate revisions to
with the Commission’s statement in the within certain limits so that ‘‘instability, the Reliability Standards through its
NOPR 438 that ‘‘simulations should uncontrolled separation or cascading Reliability Standards development
faithfully duplicate what will happen in failures of that system will not occur as process to address these matters.
the actual power system and not a a result of sudden disturbances,
generic listing of outages.’’ It follows iv. Spare Equipment Strategy
including a cyber security incident, or
that in simulating the failure of a single unanticipated failure of system 1721. The Commission stated in the
element, as required in Category B of elements.’’ This definition specifies an NOPR that while Reliability Standards
TPL–002–0, all of the elements that are ultimate goal and does not dictate any TPL–002 through TPL–004 require
removed from service to isolate the specific type of planning. The approach consideration of planned outages at
single faulted element should be to a single contingency the Commission those demand levels for which planned
modeled in the simulation rather than has set forth above ensures that outages are performed, they do not
restricting the simulation to just the transmission planners analyze address situations where critical
single faulted element, as Table 1 of contingencies based on the actual equipment, such as a transformer or
TPL–002–0 implies. As SDG&E notes, number of elements that would be phase angle regulator, may be
this will require the transmission removed from service in the actual unavailable for a prolonged period.
planner’s sound engineering judgment power system for ‘‘an unanticipated Including such a requirement would
and knowledge of elements that would failure of system elements,’’ rather than ensure the coordination of contingency
be expected to be removed from service simulating only the limited number of plans, including the entity’s spare
during the single contingency. The outages listed in Table 1 of the TPL equipment strategy, to return facilities
Commission agrees with MidAmerican Reliability Standards. In short, the to service in a timely manner for
that for Category C contingencies of Commission’s approach speaks directly reliability. The Commission therefore
TPL–003–0, the worst N–1–1 to the problem that the statute requires proposed that the Reliability Standards
contingency would be a single element be addressed. be modified to include a new
outage followed by a multiple element 1719. In response to TANC’s proposal requirement to assess the reliability
outage, provided that following the first that the Commission direct that impact of an entity’s existing spare
N–1 contingency, capability exists to probabilistic approaches to transmission equipment strategy.
switch the unfaulted elements back into planning be adopted in the West, the (a) Comments
service promptly, i.e., within 30 Commission notes that proposals of this
minutes, as part of the adjustments that 1722. SDG&E states that it generally
type should be submitted to the ERO for
the Reliability Standard allows. supports a new requirement that would
approval as a regional difference. If such
1717. SDG&E agrees that simulations include assessing the reliability impact
a proposal is developed for the Western
should faithfully duplicate what will of an entity’s spare equipment strategy,
Interconnection, to assist the ERO and
happen in the actual power system and but several key features of this
the Commission in its assessment of
not a generic listing of outages, but it requirement need clear and thorough
such a proposal, we encourage WECC to
seeks Commission guidance on how an definition. For example, the
also submit operating information that
event should be defined. In the requirement should provide an
quantifies the level of actual
Commission’s view, a single industry-developed finite list of ‘‘critical

performance that has been achieved
contingency consists of a failure of a items,’’ and the meaning of ‘‘impact
439 A ‘‘single element’’ means a transmission line, IROL’’ would need further clarification.
437 NationalGrid, MidAmerican and SDG&E. a transformer, a generator or a single pole of a DC SDG&E submits that, absent a careful
438 NOPR at P 1049. line. delineation of the requirement and its
terms, this proposed modification will transformers, by requiring a full range of 215(i)(2) precludes ordering expansion
not enhance system reliability. single and multiple contingency studies of transmission or generation capacity,
1723. MidAmerican, LPPC, EEI, APPA with that equipment modeled off-line. section 215 clearly authorizes requiring
and SoCal Edison state that they TPL–002–0 and TPL–003–0 currently entities to take appropriate steps to
understand the Commission’s concern state explicitly in Requirement R1.3.12 ensure that their existing capacity
about spare equipment planning and that the assessments shall include operates reliably.
acquisition strategy. However, planned outages of bulk electric 1728. With regard to SDG&E’s
MidAmerican and LPPC note that equipment at those demand levels for suggestion to clarify specific elements of
typically spare equipment strategy is of which planned (including maintenance) this Reliability Standard, we direct the
more concern in operating studies than outages are performed. However, ERO to consider such suggestions in its
planning studies. MidAmerican states equipment such as transformers may not Reliability Standards development
that most equipment can be installed in be available for service for a year or process.
a year or less even if it is not on hand. more and therefore their unavailability
It maintains that it may be appropriate cannot be scheduled when system v. Resource Information for Planning
to add this requirement to the TPL conditions permit. 1729. The Commission in the NOPR
Reliability Standards because scarcity of 1726. The current Reliability requested comments on whether
new equipment due to recent disasters Standards do not require assessment of transmission planners and planning
has led to longer lead times. LPPC the reliability impacts that result from authorities are currently able to obtain
cautions the Commission that not having this long lead time and validate resource information on
associating spare equipment strategy equipment available under those system new generation and retirements for
with the planning Reliability Standards conditions likely to be experienced assessments over the ten year planning
could lead to Reliability Standards that during the course of the year when the horizon. Further, if transmission
overstep the limits of FPA section system is heavily stressed. Clearly the planners and planning authorities
215(i)(2) through proposing a Reliability consideration of planned outages is currently experience difficulty obtaining
Standard that would, indirectly, come inextricably linked with spare this information, the Commission asked
close to authorizing the ERO to order equipment strategy. Thus, if an entity’s how this potential information gap
the construction of transmission spare equipment strategy for the should be addressed.440
capacity. LPPC states that it is unclear permanent loss of a transformer is to use
how to separate: (1) Requiring a utility a ‘‘hot spare’’ or to relocate a (a) Comments
to assess its spare equipment strategy; transformer from another location in a
1730. The Commission noted in the
(2) requiring a utility to have spares on timely manner, the outage of the
NOPR that transmission planning
hand to meet anticipated reliability transformer need not be assessed under
requires information on forecasted loads
needs and (3) requiring a utility to use peak system conditions. However, if the
and probable generation plans to supply
spare equipment to meet the reliability spare equipment strategy entails
those loads.441 While the MOD
needs. acquisition of a replacement transformer
1724. EEI, APPA and SoCal Edison Reliability Standards require
that has a one-year or longer lead time,
question the need to address this issue information on forecasted loads, energy,
then the outage of the transformer must
in the context of a Reliability Standard. interruptible loads and direct control
be assessed under the most stressed
EEI states that, where delivery delay system conditions likely to be load management over the next ten
could occur for long lead time experienced. Accordingly, the years, there is no requirement to inform
equipment such as transformers, the Commission directs the ERO to modify transmission planners and planning
existing Reliability Standards provide the planning Reliability Standards to authorities of new or retiring generation
for study of the full range of single and require the assessment of planned resources. The Commission sought
multiple-event contingencies with that outages consistent with the entity’s comments on whether transmission
piece of equipment modeled off-line. spare equipment strategy. planners and planning authorities are
According to EEI, the Commission’s 1727. LPPC questions whether the currently able to obtain and validate
general concern regarding the current Commission’s proposal oversteps the resource information on new generation
policies and practices related to limits of FPA section 215(i)(2) because and retirements for assessments over the
equipment acquisition can be addressed assessing the impact on reliability of an ten year planning horizon and if not,
in the NERC forum without revising the entity’s decision concerning spare how this potential gap should be
Reliability Standards. This forum also equipment could force an entity to addressed.
will account for the need to protect construct transmission capability. FPA 1731. NERC stated that it and the
information on critical infrastructure section 215(i)(2) prohibits the ERO and regional reliability organizations have
facilities. the Commission from ordering the generally not had problems obtaining
construction of ‘‘additional’’ the data and information required for
(b) Commission Determination transmission capacity. A requirement to reliability assessments. NERC believes
1725. Several commenters stated that assess the reliability impacts of an that given its authority and
they understand the Commission’s entity’s spare equipment strategy is no responsibility as the ERO, it will be
concern about requiring a reliability different than a requirement to assess successful in obtaining all the data and
impact assessment of an entity’s spare the reliability impacts of any number of information it needs to conduct
equipment strategy, but they question contingencies. Even if an entity was reliability assessments without the need
the need to address this issue in the forced to conclude that its spare strategy to include these requirements in
Reliability Standards in general and the was inadequate, rectifying the problem Reliability Standards. In the event that
transmission planning Reliability would not require that the entity it and the regional reliability
Standards in particular. The construct ‘‘additional’’ transmission organizations are unsuccessful in

Commission disagrees with EEI that the capacity, only that it possess adequate obtaining such data and information,
existing Reliability Standards provide spares, or take other appropriate action,
for situations that cover the delivery of to ensure the reliable operation of its 440 NOPR at P 1060.
long lead time equipment, such as system. In short, while FPA section 441 Id.
the ERO will turn to the Commission for commercially sensitive information. of the country than the slow down of
assistance. This lack of information makes it new generation. Because required notice
1732. ISO–NE states that as the difficult for transmission planners to periods for retirements may be as little
planning authority it obtains resource reflect accurately the amount and as ninety days in some areas, it is
plans for additions, capacity changes, location of new generation in their imperative that transmission planners
deactivations and retirements for a ten transmission studies. CAISO agrees that use a robust statistical approach to
year planning horizon. Although these there is a gap in its ability to obtain this identify vulnerable sources of
plans cannot be expected to occur information particularly from adjacent generation and conduct such modeling
exactly as projected, they serve as useful balancing authorities. CAISO suggests as an integral part of the transmission
information in projecting needs for new that to bridge this gap, generator owners planning process.
resources or new or upgraded and operators should be required to 1738. MISO states that planning
transmission facilities. As the provide data about new and retiring assumptions around generation
administrator of wholesale electric generation to their planning authorities retirements are particularly difficult
markets, ISO–NE relies on the and that the planning authorities be because such assumptions are driven by
development of robust market rules required to share this information with complex economic factors that may or
accompanied by a regulated neighboring balancing authorities, may not prevail. While MISO has the
transmission planning process to subject to appropriate non-disclosure tools to project what unit may be more
achieve its goal of encouraging the agreements. CAISO notes that there likely to retire than others, it contends
availability of sufficient resources. ISO– currently exists no centralized database that the preferred approach is to have in
NE states that planning for the for the collection and dissemination of place tariff provisions that require
introduction and retirement of specific this information within the Western suppliers to announce retirement
resources ten years in advance not only Interconnection. intentions six months in advance of the
is unnecessary, it is inconsistent with 1735. National Grid states that retirement. This permits reliability
relying on markets to determine the forward capacity markets and the studies to be performed with certainty
most efficient allocation of resources to generation interconnection queue and corrective actions to be
meet system needs. provide some understanding about new implemented that could include placing
1733. FirstEnergy and SoCal Edison generation but only for five to seven the unit on contract to continue
state that currently they are able to years, even though transmission operations until appropriate operating
obtain information regarding new planning horizons are considerably measures or system expansions can be
generation from publicly available longer. National Grid and Northern made.
information and from the generator Indiana contend that it may be 1739. SoCal Edison states that
interconnection queue. Typically, a reasonable to conclude that certain areas business decisions by generator owners
generation application that is in the are prime locations for new resources, to retire or mothball units are outside of
interconnection agreement phase is particularly inexpensive and renewable SoCal Edison’s control, and generally
considered for transmission planning resources that are dependent on ‘‘non- SoCal Edison does not receive this
studies. New generation has a longer transportable’’ fuel supplies. National information in a timely manner for
lead time, and thus information on it Grid states that the Commission should transmission planning studies.
may be available sooner than embrace efforts of transmission planners 1740. National Grid urges the
information about retirements, which to facilitate new generation entry when Commission to support longer planning
have a much shorter lead time before such initiatives are expected to increase horizons. It states that in many respects,
they are announced. FirstEnergy states customer access to inexpensive, the ten year planning horizon may be
that despite the unpredictability of such renewable and diverse sources of too short a time frame for assessing
information, assessments can be supply. transmission needs, particularly with
conducted using assumptions of new 1736. Entergy believes that from a regard to long distance extra high
generation and retirements, and the transmission provider’s point of view it voltage facilities that pose considerable
results should recognize that the inputs would be desirable to have LSEs siting and permitting challenges.
were based on reasonably foreseeable provide ten or even five-year resource Establishing planning horizons that are
conditions. forecasts. Entergy recognizes that such a shorter than transmission construction
1734. In contrast, CAISO, National requirement may not be practical when lead times may create gaps where the
Grid and Northern Indiana state that LSEs depend significantly on short-term identification of a reliability need to
obtaining resource information has been purchases due to the abundance of which transmission may be the best
a challenge given that the Reliability independent power producers or in solution occurs too late to head off the
Standards impose no obligation on areas that have an locational marginal identified reliability violation. National
generation owners to provide pricing-like market structure. MISO Grid states that PJM is establishing a
information to planning authorities and states that its experience suggests that fifteen year planning horizon that will
transmission service providers about LSEs do not identify new generation accommodate large-scale projects that
new and retiring generation. Northern resources except in very general terms are needed for reliability and to support
Indiana states that this issue is among past the second or third year. In most regional transactions.
the greatest challenges for its cases LSEs show future capacity 1741. MISO and International
transmission planners. Because requirements served from generic base Transmission note that while it is
transmission planning is focused on load and peaking power resources or important for planners to have quality
matching the source to the sink, having from potential contract purchases with information on available resources, the
the sources unknown, in the case of no information on location. This enabling legislation for the ERO
future generation, creates a weakness in increases the difficulty of accurate long- specifically excludes authority
the entire transmission planning range transmission planning studies. regarding resource adequacy. MISO
process. Northern Indiana contends that 1737. National Grid states that it is states it is not certain how far the
weakness will be difficult to eliminate also vitally important to acknowledge Reliability Standards can go.
because information about siting of that generation retirements may pose a International Transmission states that,
future generation units is considered greater threat to reliability in some areas in the absence of a standard on resource
adequacy, transmission service been widely recognized. The set to achieve a number of goals, one of
providers must use their judgment on Commission agrees with National Grid which is system reliability. Our
potential new generation or retirements that establishing planning horizons that jurisdiction is to approve and enforce
to create base cases and plan the system are shorter than transmission lead times Reliability Standards that provide for an
accordingly. may create gaps where the identification adequate level of reliability for the Bulk-
1742. Reliant states that, while section of a reliability need to which Power System. The TPL group of
215 of the FPA requires the ERO to transmission may be the best solution Reliability Standards includes load
develop Reliability Standards that occurs too late to avert the identified growth, changes in the transmission
provide an adequate level of Bulk-Power reliability violation. Indeed, this point is topology, existing generation, generation
System reliability, the proposed supported by the fact that PJM is
retirements, and confirmed new
Reliability Standards surprisingly lack establishing a fifteen year planning
any substantive consideration of generation as inputs to the analyses.
horizon.442
planning reserve obligations to ensure 1746. In the absence of information When an entity does not meet a
capacity available to meet the needs of about future generation resources reliability criterion, including the
a reliable system. Reliant proposes that required for transmission planning the inability of generation to be deliverable
each regional reliability organization Commission notes that entities conduct to load, mitigation plans are required.
develop and enforce its own minimum assessments using assumptions based Although the Commission anticipates
planning reserve margin. Such a on the knowledge that certain areas are that some of those mitigation plans may
program would be critical to the prime locations for new resources, include new generation, we do not
development of new generation, particularly those resources that use require this.
demand response and distributed non-transportable fuels. National Grid 1749. Some entities have proposed
generation resources and allow each states that generation retirements may possible solutions to address the gap of
region to retain its own autonomy in pose a greater threat to reliability in inadequate and unreliable resource
developing its own resource adequacy some areas than the slowdown of new
information for long-term planning as
standards. generation construction. As a result, it
1743. Process Electricity Committee required by the TPL group of Reliability
states that it is imperative that
supports long-term planning as a vital transmission planners use robust Standards. CAISO suggests that
part of any economic and thorough set statistical approaches to identify generator owners and operators be
of Reliability Standards. However, it is vulnerable sources of generation and required to provide data on new
concerned that transmission service conduct such modeling as an integral generation and retirements to their
providers who are also market part of the transmission planning planning authorities. Entergy proposes
participants will have an incentive to process. The Commission understands requiring LSEs to provide this
exploit commercially sensitive data on this as a further endorsement of its information, but recognizes that this
generation plans to the disadvantage of proposal to require a full range of approach has its limitations. MISO
other competing suppliers. Process sensitivity studies discussed above. contends the preferred approach to
Electricity Committee asks the 1747. MISO, International retirements is to have in place tariff
Commission to clarify that transmission Transmission and Reliant raise provisions that require suppliers to
planners may not use the Reliability important issues about the absence of a announce retirement intentions six
Standard to obtain and exploit such Reliability Standard on resource months in advance of retirements.
information, and it urges the adequacy. Reliant points out the Process Electricity Committee is
Commission to take all appropriate inconsistency between the statutory concerned about the implications of
measures to guard against such abuse. requirement to provide an adequate sharing non-public transmission or
(b) Commission Determination level of Bulk-Power System reliability customer information which could then
and the lack of any substantive be exploited to the disadvantage of
1744. Several commenters addressed consideration of planning reserve
separately the availability of competing suppliers. The Commission’s
obligations to ensure capacity is
information on new generation Standards of Conduct addresses the
available to meet the needs of a reliable
resources and generation retirements, sharing of such information and
system. In the same vein, the
given that these have very different lead Commission notes that Requirement R7 generally prohibits the sharing of
times. NERC, ISO–NE and others appear of TOP–002–0 requires each balancing commercially sensitive information
to be able to acquire the resource authority to plan to meet capacity and between the transmission organization
information they need on new resources energy reserve requirements in the and affiliated merchant functions.443 In
and retirements for reliability operating time-frame but that there is no response to Process Electricity
assessments. Others, such as National explicit corresponding consideration Committee, the Commission will
Grid and MISO, have had difficulty in required of generation reserves in the continue to enforce the information
obtaining this information in a timely planning time-frame. sharing prohibition in the Standards of
manner, particularly as it relates to 1748. Section 215(a)(3) of the FPA Conduct.
generation retirements. makes clear that enforceable Reliability 1750. The responses to the
1745. The Commission disagrees with Standards may not address
ISO–NE’s statement that planning for Commission’s inquiry on these matters
requirements to enlarge facilities or are helpful. The comments further point
the introduction of resources ten years construct new generation capacity. We
in advance is not necessary. The out the importance of conducting a
have noted that when a state or wider range of sensitivity studies on
existing Reliability Standard requires appropriate jurisdictional entity has
that the planning horizon must take into generation scenarios. However, the
such a requirement, it should be
account the lead times for siting and Commission is not directing at this time
included in transmission planning
permitting of new long-distance analysis. Resource adequacy levels are any modifications to address the
transmission lines and other solutions Commission’s concerns.
that can exceed ten years. In short, the 442 See http://www.pjm.com/contributions/pjm-
need for long-term planning has already manuals/manuals.html. 443 See Order No. 2004.
vi. Sharing of Information With and other stakeholders who are coordination of plans, the Commission
Neighboring Systems members of WECC. Similarly, SDG&E directs the ERO to include these
1751. In the NOPR, the Commission maintains that it participates in other modifications to the Reliability
stated that, because neighboring systems California-based utility review groups. Standard through its Reliability
may be adversely impacted, such SDG&E finds that these existing Standards development process to
processes provide ample opportunities provide for the appropriate sharing of
systems should be involved in
for regular sharing of relevant information with neighboring systems.
determining and reviewing system
information with neighboring 1757. The Commission has taken
conditions and contingencies to be action on its OATT reform initiative in
transmission planning entities. It thus
assessed in connection with Order No. 890. In that order, the
recommends that the Reliability
Requirement R1.3 of TPL–001–0 to Commission encourages the formation
Standards development process take
TPL–004–0.444 of regional planning processes and
into account existing forums for
(a) Comments apprising neighboring utilities of economic planning studies.445 Sharing
current and anticipated transmission of information and peer review are the
1752. EEI, APPA, FirstEnergy, ERCOT
planning issues and projects. If the first steps in a regional planning
and SDG&E support or acknowledge the
Commission believes additional process. The Commission provides
value of sharing of various kinds of
communications are needed, SDG&E guidance and direction on these subjects
planning information with neighboring
strongly recommends that the in our discussion of Reliability Standard
systems. FirstEnergy states that the TPL–005–0.
Commission, through NERC or the
proposed requirement that system
applicable Regional Entity, specify in b. System Performance Under Normal
conditions and contingencies assessed
greater detail the nature and periodicity (No Contingency) Conditions (TPL–001–
be shared and reviewed by neighboring
of the information to be shared pursuant 0)
systems will improve communications
to the TPL Reliability Standards.
with interconnected companies. This 1754. SoCal Edison states that TPL– 1758. Reliability Standard TPL–001–0
process was established among former 001–0 is for systems operating under deals with planning related to system
ECAR companies through the ‘‘ECAR normal conditions, and as such there performance under normal conditions,
Peer Review Process,’’ and FirstEnergy should not be a need for any review by i.e., a situation where no system
recommends that regional reliability neighboring systems. contingency or no unexpected failure or
organizations be encouraged to establish outage of a system component has
a similar process going forward. EEI and (b) Commission Determination occurred.446 The Reliability Standard
APPA state that sharing of various kinds 1755. Most commenters agree with seeks to ensure that the Bulk-Power
of planning information, including the Commission’s proposal that System is planned to meet the system
expected generation additions and neighboring systems be involved in a performance requirements under these
retirements, planned outages, demand peer review of system assessments in normal conditions by requiring the
forecasts and estimates of firm transfers connection with Requirement R1.3 of transmission planner and the planning
will go a long way to improving the TPL–001–0 through TPL–004–0. Given authority to evaluate their transmission
quality and consistency of planning that neighboring systems assessments by system annually and document the
study efforts. However, it is not clear to one entity may identify possible ability of that system to meet the
EEI whether a formal Reliability interdependent or adverse impacts on performance requirements established
Standard would be the most effective its neighboring systems, this peer in the Reliability Standard under
approach. An alternative could be to review will provide an early conditions where no system
request that NERC oversee an informal opportunity to provide input and contingencies are present.447 Meeting
process to explore alternatives and coordinate plans. The Commission these requirements means two things.
report back to the Commission by a therefore disagrees with SoCal Edison’s First, when all system facilities are in
specific date. Although ERCOT states view that there is no need for any service and normal operating
that this proposal is a sensible review by neighboring systems for TPL– procedures are in effect, the system can
recommendation, it also states that it 001–0. For example, the planning be operated to supply projected
would not be appropriate for ERCOT authorities needs to be consistent in the customer demands and projected firm
since the transmission service provided line flow values that they use. (non-recallable reserved) transmission
there is not subject to interruption by 1756. While supporting the concept of services at all demand levels over the
the ISO, and outbound flows are also a peer review, EEI questions whether range of forecast system demands.
not interrupted if there is a shortage of making this a Requirement in a Secondly, the system remains stable and
capacity. Reliability Standard is the most effective within the applicable ratings for thermal
1753. SDG&E notes that under the approach or whether NERC should and voltage limits, no loss of demand or
auspices of the CAISO it regularly explore alternatives and report to the curtailed firm transfers occurs, and no
convenes stakeholder meetings with the Commission by a specific date. The cascading outages occur. TPL–001–0
general public, neighboring utilities, Commission sees no reason why peer applies both to near-term and longer-
generator owners, regulators and the reviews should not be part of a term planning horizons.
CAISO. In these meetings, SDG&E Reliability Standard since TPL–001–0 1759. The Requirements of TPL–001–
reviews the grid assessment process and through TPL–004–0 already include in 0 specify that the planning authority
receives comments from participants Requirement R1.3 a review of and transmission planner must
about all aspects of its process. As a assessments by the associated regional
member of WECC, SDG&E states that it reliability organization. The 445 Order No. 890 at P 526, 542.
also holds meetings to discuss inter-area Commission understands that some 446 The NERC Glossary defines a ‘‘contingency’’
projects that SDG&E has proposed to regions include peer review as part of as ‘‘[t]he unexpected failure or outage of a system
their procedures. Accordingly, to ensure component, such as a generator, transmission line,
construct. This review group consists of circuit breaker, switch or other electrical element.’’
neighboring utilities, generator owners that neighboring systems are not NERC Glossary at 3.
adversely affected and to provide an 447 The performance requirements are set forth in
444 NOPR at P 1063. early opportunity for input and Category A of Table I of the Reliability Standard.
demonstrate through a valid assessment recognize the varying timeframes of transmission system performance. These
that the Reliability Standard’s system overloads that result from various should be made requirements of the
performance requirements can be met. contingency events. Further, Reliability Standards so that they are
The assessment must be supported by a MidAmerican states that, while it is more obvious and easier to monitor.
current or past study and/or system appropriate that planning margins for APPA, LPPC and TANC recommend
simulation testing that addresses normal voltages be calculated in that changes to footnotes of Table 1 be
various categories of conditions to be accordance with VAR–001–1 as subject to the Reliability Standards
simulated as set forth in the Reliability proposed by the Commission, it would development process. They state that
Standard to verify system performance be better if the proposed modification the footnotes have been extensively
under normal conditions. When system provided that voltage criteria do not reviewed by technical experts at NERC
simulations indicate that the system conflict with VAR–001–1. Northern for several years and currently represent
cannot meet the performance Indiana agrees with the Commission’s a general consensus among these
requirements set forth in the Reliability position regarding consideration of industry technical experts. Changes to
Standard, a documented plan to achieve planned outages and states that it the footnotes impact Table 1 and have
system performance requirements must considers them currently in its a direct impact on the determination of
be prepared. The specific study transmission planning studies. the severity of consequences that were
elements selected from each of the International Transmission states that approved along with the original
categories for assessments are subject to both planned outages of critical Reliability Standard. Therefore, the
approval by the associated regional equipment and the extended forced Commission should give due weight to
reliability organization. outages of similar equipment should be the ERO and allow the Reliability
1760. The Commission proposed in considered. FirstEnergy states that Standards development process to
the NOPR to approve Reliability planned outages should be accounted resolve any existing ambiguities in the
Standard TPL–001–0 as mandatory and for at load levels and conditions under Table 1 footnotes.
enforceable. In addition, pursuant to which they commonly apply.
section 215(d)(5) of the FPA and 1763. Other commenters disagree that ii. Commission Determination
§ 39.5(f) of our regulations, we proposed planned outages of critical equipment 1765. The Commission approves
to direct NERC to submit a modification should be included in TPL–001–0.450 TPL–001–0 as a mandatory and
to TPL–001–0 that: (1) Requires that They contend that the Reliability enforceable Reliability Standard. In
critical system conditions be Standard has a very simple aim, namely, addition, we direct the ERO to develop
determined by conducting sensitivity to examine whether a system can modifications to TPL–001–0 through the
studies; (2) requires that system perform under normal system intact Reliability Standards development
conditions and contingencies assessed conditions, i.e., when all elements are in process, as discussed below.
be reviewed by neighboring systems; (3) service and operating as expected. The 1766. In assessing system conditions,
modifies Requirement R1.3 to substitute outages contemplated are appropriate Requirement R1.3.1 of TPL–001–0
the reference to regional reliability for TPL–002–0 through TPL–004–0 requires entities to cover ‘‘critical
organization with Regional Entity; (4) where the planned outage could be a system conditions and study years,’’ as
requires consideration of planned line outage caused by a maintenance deemed appropriate by the entity
outages of critical equipment; and (5) project that extends into a period where performing the study. As stated in the
modifies footnote (a) of Table 1 to not the system is heavily loaded. SDG&E NOPR, system conditions are as
apply emergency ratings to compare states that for near-term planned important as contingencies in evaluating
stresses on the system under normal outages, the transmission planning the performance of present and future
conditions as recommended by the entity should retain an appropriate systems,451 and yet TPL–001–0 does not
Transmission Issues Subcommittee of amount of latitude to plan the outage’s specify the rationale for determining
the NERC Planning Committee 448 and timing and details and to modify them critical system conditions and study
require that normal facility ratings be in as necessary. SDG&E comments that, for years. Consistent with our discussion of
accordance with Reliability Standard outages planned with a more distant the issue above regarding sensitivity
FAC–008–1 and that normal voltages be horizon (one year or longer), this studies and critical system conditions,
in accordance with Reliability Standard information can be accounted for in the Commission concludes that
VAR–001–1.449 sensitivity analyses. SoCal Edison states proposed modification (1), which
that no information will be available requires that critical system conditions
i. Comments about planned outages of critical be determined by conducting sensitivity
1761. APPA agrees with the equipment to be used for short-term studies, is justified. Accordingly, we
Commission that TPL–001–0 is (five years) or long-term (10 years) direct the ERO to modify the Reliability
sufficient for approval as a mandatory simulations. It may be possible to Standard to require that critical system
and enforceable standard. consider planned outages of critical conditions and study years be
1762. MidAmerican and others equipment if there is a major project determined by conducting sensitivity
generally support the Commission’s construction activity. If generators and studies with due consideration of the
proposal to improve TPL–001–0 but transmission lines are out for scheduled range of factors outlined above.
caution that: (1) Planned outages should maintenance during off-peak load 1767. Requirement R1.3 of TPL–001–
only be considered at load levels and conditions, then these outages should be 0 states that the planning authority and
conditions under which they commonly considered. transmission planner must provide
occur and (2) emergency ratings should 1764. EEI supports the Commission’s studies and simulations to support its
recommendation to modify footnote (a) planning assessments, and that the
448 See NERC Transmission Issues Subcommittee
in Table 1. International Transmission specific elements selected for the study
Report: Evaluation of Criteria, Methods and shall be acceptable to the associated

Practices Used in System Design, Planning and
states that the footnotes in Table 1 are
Analysis in Response to NERC Blackout not footnotes but rather requirements for regional reliability organization. Given
Recommendation 13c. Appendix B, November 28, that neighboring systems may be
2005. 450 See, e.g., EEI, APPA, SDG&E, Entergy, SoCal
449 NOPR at P 1065–67. Edison and TVA. 451 NOPR at P 1046.
adversely affected, our goal is to ensure under peak loading conditions likely to single element with or without a fault,
that they are involved in the be experienced. This approach will i.e., the occurrence of an event such as
determination and review of system ensure that system conditions are a short circuit, a broken wire or an
assessments to permit an early adequately assessed. intermittent connection. The Reliability
opportunity to provide input and 1770. While commenters generally Standard seeks to ensure that the future
coordinate plans. We discussed above agree with the Commission’s proposal to Bulk-Power System is planned to meet
the issue of information sharing as it modify footnote (a) of Table 1, they the system performance requirements,
applies to the TPL group of Reliability caution that any changes to the with the loss of one element, by
Standards generally and, consistent footnotes affect Table 1 and should be requiring that the transmission planner
with our conclusions there, we direct reviewed through NERC’s Reliability and planning authority annually
the ERO to modify TPL–001–0 to Standards development process. evaluate and document the ability of the
require a peer review of planning International Transmission states that transmission system to meet the
assessments with neighboring entities. the footnotes in Table 1 are not performance requirements where an
1768. The Commission received no footnotes but rather requirements for event results in the loss of a single
comments on its proposal that transmission system performance and element.452 Meeting these requirements
Requirement R1.3 be modified to therefore should be made Requirements means two things. First, it means that
substitute the reference to the regional in the Reliability Standard. The the system can be operated following
reliability organization with a reference Commission agrees with International the event to supply projected firm
to the Regional Entity. The Commission Transmission because this will promote customer demands and projected firm
has explained the need for this clarity in and consistent application of (non-recallable reserved) transmission
modification above, and therefore it the Reliability Standard. The services at all demand levels over the
directs the ERO to modify Requirement Commission therefore directs the ERO range of forecast system demands.
R1.3 of TPL–001–0 to substitute the to modify the Reliability Standard to Second, it means that the system
reference to the regional reliability address the concerns regarding footnote remains stable and within the
organization with a reference to the (a) of Table 1, including the applicable ratings for thermal and
Regional Entity. applicability of emergency ratings and voltage limits, no loss of demand or
1769. While some commenters consistency of normal ratings and curtailed firm transfers occurs, and no
support the consideration of planned voltages with values obtained from cascading outages occur.453 The
outages at load levels for conditions other Reliability Standards. As with any Reliability Standard applies both to
under which they are performed, others modification to a Reliability Standard, near-term and longer-term planning
disagree on the grounds that the goal of modifications to TPL–001–0 should be horizons.
TPL–001–0 is to ensure that the Bulk- developed through the ERO’s Reliability 1773. TPL–002–0 specifies that the
Power System can perform reliably Standards development process. planning authority and transmission
when all elements are in service and 1771. Accordingly, the Commission
planner must demonstrate through a
operating as expected. The Commission approves Reliability Standard TPL–001–
valid assessment that the Reliability
notes that Reliability Standards TPL– 0 as mandatory and enforceable. In
Standard’s system performance
002–0 through TPL–004–0 include addition, the Commission directs the
requirements can be met. The
consideration of planned outages, as ERO to develop a modification to TPL–
assessment must be supported by a
initial system conditions, at load levels 001–0 through the Reliability Standards
current or past study and/or system
for conditions under which they are development process that: (1) Requires
simulation testing that addresses
performed. Because these Reliability that critical system conditions and
various categories of conditions to be
Standards, and not TPL–001–0, will study years be determined by
govern the adequacy of the Bulk-Power conducting sensitivity studies with due simulated, as set forth in the Reliability
System under planned outage consideration of the range of factors Standard, to verify system performance
conditions, the Commission will not outlined above; (2) requires a peer under contingency conditions involving
adopt the NOPR proposal to require review of planning assessments with the failure of a single element with or
consideration of planned outages at load neighboring entities; (3) modifies without a fault. The Reliability Standard
levels for conditions under which they Requirement R1.3 to substitute the requires that planned outages of
are performed for Reliability Standard reference to regional reliability transmission equipment be considered
TPL–001–0. However, consistent with organization with Regional Entity; (4) for those demand levels for which
our discussion above on spare requires assessments of outages of planned outages are performed. When
equipment strategy, the Commission critical long lead time equipment, system simulations indicate that the
directs a modification to this Reliability consistent with the entity’s spare system cannot meet the performance
Standard to require assessments of equipment strategy; and (5) address the requirements stipulated in the
outages of critical long lead time concerns regarding footnote (a) of Table Reliability Standard, a documented plan
equipment, consistent with the entity’s 1, including the applicability of to achieve system performance
spare equipment strategy. Thus, for emergency ratings and consistency of requirements must be prepared. The
example, if an entity’s spare equipment normal ratings and voltages with values specific study elements selected from
strategy for the permanent loss of a obtained from other Reliability each of the categories for assessments
transformer is to use a ‘‘hot spare’’ or to Standards and the concerns raised by are subject to approval by the associated
relocate a transformer from another International Transmission in regard to regional reliability organization.
location in a timely manner, the outage the footnotes in Table 1. 1774. The Commission proposed in
of the transformer need not be assessed the NOPR to approve Reliability
under peak system conditions. c. System Performance Following Loss Standard TPL–002–0 as mandatory and
However, if the spare equipment of a Single Element (TPL–002–0)

452 The performance requirements are set forth in
strategy entails acquisition of a 1772. Reliability Standard TPL–002–0
Category B of Table 1 of the Reliability Standard.
replacement transformer that has a one- addresses system planning related to 453 Footnote b to Table 1 allows for the
year or longer lead time, then the outage performance under contingency interruption of firm load for consequential load
of the transformer must be assessed conditions involving the failure of a loss.
enforceable. In addition, pursuant to Standards applied to nuclear generation the benefits, if any, that would be
section 215(d)(5) of the FPA and should be consistent with NRC realized.
§ 39.5(f) of our regulations, we proposed requirements and that NRC rules should 1782. Entergy opposes the
to direct NERC to submit a modification control in the event of conflict. Commission’s proposed guidance
to TPL–002–0 that: (1) Requires that 1778. NRC notes that there appears to concerning footnote (b) to Table 1 for
critical system conditions be be significant variation in the two reasons. First, Entergy believes the
determined in the same manner as interpretation of this Reliability Commission should give due weight to
proposed for TPL–001–0; (2) requires Standard. It states that some of its the technical expertise of NERC and
the inclusion of the reliability impact of licensees interpret the TPL–002–0 permit NERC to address these matters
the entity’s existing spare equipment Reliability Standard to state that if a through Reliability Standards
strategy; (3) explicitly requires all licensee is operating in an N–1 development process. Second, the
generators to ride through the same set condition another single contingency Commission’s guidance suggests that it
of Category B and C contingencies as does not need to be considered. NRC views all transmission outages as having
required for wind generators in Order states that its interpretation has been the same level of importance to and
No. 661; (4) requires documentation of that the N–1 condition is always impact on the interconnected
load models used in system studies and analyzed from the conditions being transmission grid. Entergy states that the
supporting rationale for their use; (5) experienced. They state that this Commission should recognize that the
clarifies the phrase ‘‘permit operating Reliability Standard should be clarified effect of transmission outages can be
steps necessary to maintain system and recommend specific revisions to local in nature and have no impact on
control’’ and (6) clarifies footnote (b) to Requirements R1.6, R2.1, R2.2 and the reliability of the Bulk Power System.
Table 1 to allow no firm load or firm Levels of Non-Compliance. Removing the transmission operator’s
transactions to be interrupted except for 1779. Northern Indiana expresses ability to shed load or enact other
consequential load loss. concern about the statement in P 1062 system adjustments as appropriate for a
of the NOPR that ‘‘load models used in single contingency would result in
i. Comments system studies have a significant impact significant facility upgrade costs simply
1775. APPA agrees that TPL–002–0 is on system performance * * *.’’ to avoid the consequence of a local
sufficient for approval as a mandatory Northern Indiana believes the opposite outage. Entergy requests that the
and enforceable reliability standard. is true, i.e., system performance has a Commission clarify that its guidance
1776. In response to the Commission’s significant impact on load models. The does not constrain the transmission
proposal 454 that NERC modify TPL– goal of the models is to attempt to operator’s ability to determine the best
002–0, in part, because it does not capture system performance. course of action to take to address any
address situations in which critical 1780. MidAmerican supports the
equipment may be unavailable for a reliability constraint that may result
proposed clarifications to operating
prolonged period, Northern Indiana from these local outages.
steps and to footnote (b). International
states that systems depicted in planning 1783. PG&E disagrees with the
Transmission states that more
studies cannot possibly contain clarification should be provided for the Commission’s proposal to delete from
complete planned and forced outage thresholds of normal and emergency footnote (b) of this Reliability Standard
schedules for the next ten years. For this ratings. There are potential the phrase ‘‘to prepare for the next
reason TPL–003–0 deals with double inconsistencies with respect to whether contingency, system adjustments are
contingencies, i.e., contingencies that or not an entity can plan to operate permitted, including curtailments of
allow operator intervention after the above normal ratings, but below contracted Firm (non-recallable
first outage, and then capture system emergency ratings, and for how long. reserved) electric power transfers.’’ 455
response to an additional outage. 1781. Northern Indiana also takes PG&E states that this phrase permits
Operator intervention includes issue with the NOPR proposal that no critical system adjustments to reduce
coordination of contingency plans and load or transactions be interrupted the potential for and impact of future
may impact strategies for spare except for consequential load loss. contingencies. It would allow re-
equipment, particularly for critical Attempting to reduce the probability of scheduling power (but not load
equipment. load loss to zero would greatly increase shedding) as part of manual system
1777. EEI and MidAmerican support capital spending, and therefore increase adjustment after the first Category B
requiring all generators to ride through rates to customers, and all in the name contingency (first N–1) to bring the
the same contingencies as required for of achieving an unattainable goal. PG&E system back to a safe operating point
wind generators. Constellation notes disputes that the Reliability Standard before the next Category B contingency
that while it supports the Commission’s should provide limits on the magnitude (second N–1). This phrase is consistent
proposed modifications to TPL–002–0, and duration of consequential load loss. with the manual system adjustment
an explicit requirement that all Determining the magnitude and allowed in Category C.3.456 PG&E states
generators stay online during the same consequences of load loss is a factor in that, contrary to the Commission’s
set of Category B and C events, as is the economic evaluation during the interpretation, footnote (c) does not
required for wind generators, is too development of transmission expansion capture this phrase. The difference
broad. Constellation requests that the plans. This economic evaluation is not between footnote (b) as part of Category
Commission modify this requirement to an appropriate subject for this B and Category C.3 is that footnote (b)
recognize that NRC has specific Reliability Standard. Northern Indiana applies before the second N–1, whereas
requirements for how nuclear urges the Commission to acknowledge Category C.3 applies after the second N–
generation must respond to disturbances that planning studies by nature must 1. Without this phrase in footnote (b),
on the Bulk-Power System, and that balance infrastructure improvement and no manual system adjustment would be
those NRC rules should apply. expansion against site-specific and

455 Id.
at P 1084.
Moreover, Constellation generally regional load projections, using 456 From TPL Standards Table 1, Category C.3 is
recommends that the Reliability available resources. It questions whether Category B (B1, B2, B3 or B4) contingency, manual
the NOPR reflects a proper balance system adjustments, followed by another Category
454 NOPR at P 1081. between the many costs involved and B (B1, B2, B3 or B4) contingency.
allowed after a Category B contingency, rather identification of which facilities conditions being experienced. In other
which would be inconsistent with are deemed to be critical that have long words, allowing for the 30 minute
Category C.3. lead times for repair or replacement. system adjustment period, the system
1784. APPA and LPPC recommend Given that planned outage must be capable of withstanding an N–
that changes to the footnotes of Table 1 considerations of such long lead time 1 contingency, with load shedding
be subject to the NERC Reliability equipment are inexorably linked to available to system operators as a
Standards development process. They spare equipment strategy, consistent measure of last resort to prevent
state that the footnotes have been with our discussion of the issue above cascading failures. However, for
extensively reviewed by technical in connection with spare equipment planning purposes, a different analysis
experts at NERC for several years and strategy, the Commission directs the applies. The N–1 condition is a Category
currently represent a general consensus ERO to modify the Reliability Standard B event under TPL–002–0, and,
among these industry technical experts. to require assessments of planned following the N–1 contingency, the
Changes to the footnotes affect Table 1 outages of long lead time critical system must be stable and thermal
and have a direct impact on the equipment consistent with the entity’s loading and voltages be within
determination of the severity of spare equipment strategy. applicable limits. Some adjustment of
consequences that were approved along 1788. In the NOPR, the Commission generation or other controls is permitted
with the original standard. APPA also identified an implicit assumption in the to return loadings to within continuous
states that consideration of reliability TPL Reliability Standards that all ratings, provided the loadings before
impacts of spare equipment strategies generators are required to ride through adjustments are within the emergency
and obligations of all generators to have the same types of voltage disturbances or short-term ratings. Under TPL–002–0
the same voltage ride through and remain in service after the fault is the system is not required to be able to
capabilities are important changes that cleared. This implicit assumption withstand another N–1 contingency.
should not be made by Commission fiat. should be made explicit. Commenters That N–1 requirement is a Category C
agree with the proposed requirement for contingency which is addressed by
all generators to ride through the same TPL–003–0. The Commission has
1785. The Commission approves set of Category B and C events as addressed NRC’s comment concerning
TPL–002–0 as a mandatory and required for wind generators. The N–1 contingencies in real-time
enforceable Reliability Standard. In Commission understands that NRC has operation in TOP–002. In regard to the
addition, we direct the ERO to develop both degraded voltage and loss of specific revisions proposed by NRC, the
modifications to TPL–002–0 through the voltage requirements. The degraded Commission directs the ERO to consider
Reliability Standards development voltage requirement allows the voltage these as part of the Reliability Standards
process, as discussed below. at the auxiliary power system busses to development process.
1786. The Commission notes that, like go below the minimum value for a time 1790. In regard to Northern Indiana’s
Requirement R1.3.1 of TPL–001–0, frame that is usually much longer than comment concerning the load modeling
R1.3.2 of TPL–002–0 requires an entity normal fault clearing time.457 If a statement made in the NOPR, it should
assessing system performance to cover specific nuclear power plant has an be clear that the context of the
‘‘critical system conditions and study NRC requirement that would force it to discussion is system performance
years’’ as deemed appropriate by the trip off-line if its auxiliary power system during simulations. Load models used
entity performing the study, but it does voltage was depressed below some in simulations clearly should, to the
not specify the rationale for determining minimum voltage, the simulation extent feasible, represent the actual
critical system conditions and study should include the tripping of the plant performance of the aggregate mix of
years. The Commission directs the ERO in addition to the faulted facilities. In industrial, commercial and residential
to modify TPL–002–0 to require that this regard, the Commission agrees that loads. If the load model representations
critical system conditions and study NRC requirements should be used when used in simulations do not mirror the
years be determined in the same manner implementing the Reliability Standards. actual performance of loads, especially
as it directed with regard to TPL–001– Using NRC requirements as input will during dynamic simulations, but also
0. The Commission’s explanation of the assure that there is consistency between when carrying out voltage stability
need for that change applies equally the Reliability Standards and the NRC studies, the simulation results will not
here. requirement that the system is be accurate. Because load representation
1787. With regard to Northern accurately modeled. Accordingly, the in simulations has a significant impact
Indiana’s concerns, we disagree that the Commission directs the ERO to modify on simulation results and often load
proposal to address situations in which the Reliability Standard to explicitly models are not well known, it is
critical equipment may be unavailable require either that all generators are common practice for planners to
for a prolonged period requires planned capable of riding through the same set perform sensitivity studies with a range
and forced outage schedules for the next of Category B and C contingencies, as of load models. Accordingly, as
ten years. Reliability Standard TPL– required by wind generators in Order proposed in the NOPR, the Commission
002–0 requires consideration of planned No. 661, or that those generators that directs the ERO to modify the Reliability
outages at those demand levels for cannot ride through be simulated as Standard to require documentation of
which planned outages are performed tripping. If a generator trips due to low load models used in system studies and
but does not address situations in which voltage from a single contingency, the the supporting rationale for their use.
critical long lead time equipment, such initial trip of the faulted element and 1791. In the NOPR, the Commission
as a transformer or phase angle the resulting trip of the generator would set forth its rationale for proposing that
regulator, may be unavailable for a be governed by Category B the ERO clarify the phrase ‘‘permit
prolonged period that could extend into contingencies and performance criteria. operating steps necessary to maintain
periods where planned outages of such 1789. The Commission agrees with system control’’ in footnote (a) to Table
equipment would not normally be NRC that for operations purposes the N– 1.458 Specifically, the Commission
performed. Assessments of these 1 condition is always analyzed from the stated that the operating steps required
situations do not require outage
schedules for the next ten years but 457 10 CFR 50, Appendix a, GDC17. 458 NOPR at P 1083.
to relieve emergency loadings and argue otherwise, and in some cases cite consequential load loss.463 The
return the system to a normal state examples where, based on a balance of Commission notes that most utilities
should not include firm load shedding. economic and reliability considerations, have guidelines for the magnitude and
MidAmerican agrees with the it may be preferable to plan the bulk duration of load loss that is acceptable
Commission. International electric system in such a manner that on radial facilities before the facilities
Transmission states clarification is contemplates the interruption of some are looped to provide a second source
required on the thresholds for normal firm load customers in the event of a N– of supply to accommodate load growth.
and emergency ratings and, in 1 contingency. We view these NERC also stated that it recognizes that
particular, on whether an entity can arguments as based largely on the matter looped configurations are key to the
plan to operate above normal ratings but of economics, not reliability, with the reliable operation of the Interconnection
below emergency ratings and for how underlying premise that it is not and to meet reasonable expectations for
long. The Commission agrees that this economically feasible to invest in the reliable service to loads.464 The
issue requires clarification and therefore bulk electric system to the point that it Commission, therefore, suggests that the
directs the ERO to modify the standard can continue service to all firm load ERO consider developing a ceiling on
to clarify the phrase of footnote (a) that customers under some specific N–1 the amount and duration of
states ‘‘permit operating steps necessary scenarios. Therefore, they argue, the consequential load loss that will be
to maintain system control’’ to clarify ambiguities of footnote (b) should be acceptable. If the ERO determines that
the use of emergency ratings. interpreted to allow that an entity plan such a ceiling is appropriate, it should
1792. The Commission stated in the for some amount of load loss to avoid be developed through the ERO’s
NOPR that footnote (b) raises three costly infrastructure investments. Reliability Standards development
issues that need to be addressed.459 Two 1794. The Commission considers this process. Further, we note that the DOE
relate to the use of planned or matter to be a fundamental issue of thresholds for reporting disturbances on
controlled load interruption under transmission service. Indeed, the ERO’s Form EIA–417 would be one example of
certain circumstances, and the third definition of ‘‘firm transmission an appropriate starting point for
relates to the use of system adjustments service’’ specifically states that it is the developing such a ceiling. These
including curtailment of firm transfers ‘‘highest quality (priority) service thresholds for load loss are 300 MW for
to prepare for the next contingency. offered to customers under a filed rate 15 minutes or 50,000 customers for one
Northern Indiana and Entergy disagree schedule that anticipates no planned hour, whichever is greater.
with the Commission’s proposal to interruption.’’ 1797. The third issue with footnote (b)
modify footnote (b) to state that load 1795. Based on the record before us, relates to the Commission’s proposal in
shedding for a single contingency is not we believe that the transmission the NOPR to delete the footnote’s
permitted except in very special planning Reliability Standard should second sentence, which states ‘‘[t]o
not allow an entity to plan for the loss prepare for the next contingency, system
circumstances where such interruption
of non-consequential load in the event adjustments are permitted, including
is limited to the firm load associated
of a single contingency.461 The curtailments of contracted Firm (non-
with the failure (consequential load
Commission directs the ERO to clarify recallable reserved) electric power
loss). The commenters argue that the
the Reliability Standard. Regarding the transfers.’’ 465 PG&E disagrees with the
impact of transmission outages can be
comments of Entergy and Northern Commission’s proposal because it
local in nature and have no impact on
Indiana that the Reliability Standard allows re-scheduling power (but not
the reliability of the Bulk-Power System
should allow entities to plan for the loss load shedding) as part of manual
and that removing the option to shed
of firm service for a single contingency, adjustment after the first Category B
load in a local area for a single
the Commission finds that their contingency to bring the system back to
contingency would result in significant comments may be considered through a safe operating point. The Commission
facility upgrade costs and therefore the Reliability Standards development agrees that footnote (b) should permit
increased rates to customers simply to process. However, we strongly manual adjustments including
avoid a local outage. Entergy seeks discourage an approach that reflects the generation redispatch and transmission
clarification that the Commission does lowest common denominator.462 The reconfiguration, but not load shedding,
not intend to constrain the transmission Commission also clarifies that an entity to return the system to a normal
operator’s ability to determine the best may seek a regional difference to the operating state within the time period
course of action to address local Reliability Standard from the ERO for permitted by the emergency or short
reliability constraints. case-specific circumstances. term ratings. The Commission
1793. The NOPR proposed a 1796. PG&E disputes that the understands that this is the normal
modification that would clarify footnote Reliability Standard should provide practice used by most transmission
(b) as disallowing loss of such firm load limits on the magnitude and duration of planners. However, the system
or the curtailment of firm transactions consequential load loss, as this is an adjustments permitted in the statement
after a first contingency of the bulk economic evaluation and is not an above includes curtailments of
electric system. In its comments to the appropriate goal for this Reliability contracted firm, non-recallable reserved
Staff Preliminary Assessment, NERC Standard. The Commission disagrees. and electric power transfers and this is
agreed with this interpretation, Indeed in its comments to the Staff not acceptable for Category B single
representing that a practice that permits Preliminary Assessment, the ERO raised contingencies. Therefore, the ERO
the planned interruption of ‘‘firm the issue of what is an acceptable should modify the sentence to indicate
transmission service’’ is a magnitude and duration of that manual system adjustments, except
misapplication of the Reliability
Standard.460 Some commenters now NERC standards consider load shedding acceptable 463 NERC Comments to Staff Preliminary
for a single contingency.’’ NERC comments to the Assessment at 56–57.

459 Id.at P 1084. Staff Preliminary Assessment at 57–58. 464 ‘‘NERC recognizes that looped configurations
460 ‘‘NERC 461 Consequential load is the load that is directly are key to the reliable operation of the
standards, including footnote (b), are
not intended to endorse or approve planning the served by the elements that are removed from interconnection, and to meet reasonable
interconnection using radial configurations as a service as a result of the contingency. expectations for reliable service to loads.’’ Id. at 57.
preferred method for reliably serving load, nor do 462 See Order No. 672 at P 329. 465 NOPR at P 1083.
for shedding firm load or curtailment of and document the ability of its be exposed to risk of cascading outages.
firm transfers, are permitted after the transmission system to meet the For that reason some entities plan and
first contingency to bring the system performance requirements of Category C operate their systems so that they are
back to a normal operating state. The contingencies specified in Table 1 (i.e., able to withstand the simultaneous
Commission disagrees with PG&E’s events resulting in the loss of two or occurrence of the two contingencies
statement that the difference between more elements) for both the near-term (normally referred to as N–2) for major
footnote (b) as part of Category B and and the longer-term planning horizons. load pockets. The Commission sought
Category C.3 is that footnote (b) applies TPL–003–0 requires the preparation of a comments on the value and
before the second N–1 contingency, documented plan to achieve the appropriateness of including such a
whereas Category C.3 applies after the necessary performance requirements if requirement in TPL–003–0.
second N–1 contingency. Rather, the system is unable to meet the
i. Comments
manual adjustments referred to in both Category C performance criteria.
cases apply after the first N–1 1800. TPL–003–0 applies to each 1803. LPPC recommends that changes
contingency. The Commission, planning authority and transmission to footnotes of Table 1 be subject to the
therefore, directs the ERO to modify the planner. They must demonstrate NERC Reliability Standards
second sentence of footnote (b) to clarify annually through valid assessments that development process. It states that the
that manual system adjustments other their portion of the interconnected footnotes have been extensively
than shedding of firm load or transmission system is planned to meet reviewed by technical experts at NERC
curtailment of firm transfers are the performance requirements of for several years and currently represent
permitted to return the system to a Category C with all transmission a general consensus among these
normal operating state after the first facilities in service over a planning industry technical experts which should
contingency, provided these adjustment horizon that takes into account lead be given due weight by the Commission.
can be accomplished within the time times for corrective plans. The Changes to the footnotes impact Table 1
period allowed by the short term or Reliability Standard also requires the and have a direct impact on the
emergency ratings. applicable entities to consider planned determination of the severity of
1798. Accordingly, the Commission outages of transmission equipment for consequences that were approved along
approves Reliability Standard TPL–002– those demand levels for which they with the original Reliability Standard.
0 as mandatory and enforceable. In perform such outages. The Reliability 1804. FirstEnergy supports the
addition, the Commission directs the Standard defines various categories of proposed requirement to document
ERO to develop a modification to TPL– conditions to be simulated. The specific proxies of subsequent line trips due to
002–0 through the Reliability Standards study elements selected from each of the thermal overload and low voltage
development process that: (1) Requires categories for assessments, including the generation trips to evaluate potential
that critical system conditions be subset of Category C contingencies to be cascading conditions. FirstEnergy states
determined in the same manner as we evaluated, require approval by the it currently is required to account for
propose to require for TPL–001–0; (2) associated regional reliability these items in its planning process.
requires assessments of planned outages organization. 1805. EEI questions the value of
of long lead time critical equipment 1801. The Commission proposed in providing proxies when planners
consistent with the entity’s spare the NOPR to approve Reliability conduct thousands of studies based on
equipment strategy; (3) requires all Standard TPL–003–0 as mandatory and combinations of contingencies under a
generators to ride through the same set enforceable. In addition, pursuant to broad range of circumstances and
of Category B and C contingencies as section 215(d)(5) of the FPA and conditions, especially in longer-term
required by wind generators in Order § 39.5(f) of our regulations, we proposed planning horizons where the
No. 661, or to simulate those generators to direct NERC to submit a modification uncertainty around the value of any one
that cannot ride through as tripping; (4) to TPL–003–0 that: (1) Requires that variable is already very high. SoCal
requires documentation of load models critical system conditions be Edison states that one can determine the
used in system studies and supporting determined by conducting sensitivity cascading outages in load flow studies.
rationale for their use; (5) clarifies the studies (as elaborated in our discussion In transient stability studies, if the
phrase ‘‘permit operating steps of TPL–001–0); (2) makes certain outage is severe, then the thermal
necessary to maintain system control’’ clarifications to footnote (c) to Table 1; overload relays and undervoltage relays,
in footnote (a) and the use of emergency (3) requires the applicable entities to if modeled, will trip the load. If the load
ratings and (6) clarifies footnote (b) in define and document the proxies tripped was not planned to be tripped
regard to load loss following a single necessary to simulate cascading outages for this outage, then the planning
contingency, specifying the amount and and (4) tailors the purpose statement to authority should take the necessary
duration of consequential load loss and reflect the specific goal of the Reliability steps to avoid this situation, as
system adjustments permitted after the Standard. cascading is not allowed.
first contingency to return the system to 1802. The Commission also sought 1806. LPPC and Northern Indiana
a normal operating state, as discussed comments on one potential addition to oppose the proposal to require proxies
above. TPL–003–0. It noted that Category C3 of necessary to simulate cascading outages
this Reliability Standard involves a be defined and documented. Northern
d. System Performance Following Loss situation in which two single Indiana states that there is no consensus
of Two or More Elements (TPL–003–0) contingencies occur, with manual on what these proxies should be. LPPC
1799. Reliability Standard TPL–003–0 system adjustments permitted after the states that utility planners have
seeks to ensure that the future Bulk- first contingency to prepare for the next traditionally used their engineering
Power System is planned to meet the one (generally referred to as N–1–1). judgment to simulate a conservative
system performance requirements of a However, the Commission also noted estimate of the level of thermal overload
system with the loss of multiple that should the second contingency or low voltage that will cause the
elements. It does this by requiring that occur before the manual system likelihood of subsequent line or
the transmission planner and the adjustments can be completed, the local generator trips and cascading events.
planning authority annually evaluate area and potentially the system would LPPC states that this approach has been
successful, and NERC should not be particular sub-region to which such an for a major load pocket is very low, and
asked to second-guess the decisions of N–2 requirement would apply. the costs for addressing such a remote
operators in this area. That could result 1811. APPA and EEI believe such contingency would be significant. SoCal
in the adoption of less conservative, provisions would significantly expand Edison states the potential number of
least common denominator, design planning requirements for extremely multi-contingency events that could be
assumptions across all regions and unlikely events that in most cases are studied under TPL–003–0 is staggering.
reduce modeling flexibility and use of not cost effective to build into system Planners should be given flexibility to
engineering judgment. Proxies are planning decisions. They explain that select generation and transmission
typically tailored to specific systems the Reliability Standard currently elements that reflect a broad range of
because the development of proxies is includes the more likely situation, i.e., potential combinations without having
highly dependent on regional where two events occur in a time frame to commit resources to conduct
differences and localized knowledge. If that allows some time to adjust in potentially hundreds or thousands of
the Commission determines that response to the first event. APPA and contingency studies. Northern Indiana
independent review of utility outage EEI state that various planning entities contends that this requirement is in
simulation proxies is necessary, may, of course, study much more effect a third back-up capability, that it
Regional Entities should conduct that extreme events, including the would be prohibitive in terms of time
review, because they better understand hypothetical the Commission poses, and cost, and that it would take many
the regional and localized factors that especially if formal state or regional years to put the infrastructure it would
influence the proxies. planning requires such studies, and require into place.
1807. EEI requests that the actual preparation for extreme events is 1816. PG&E believes there is no need
Commission clarify the meaning of the viewed as cost-effective in a particular for a general requirement to withstand
term ‘‘controlled load interruption’’ and area. However, this level of planning the simultaneous occurrence of any two
the meaning of its statement that ‘‘to sensitivity is simply unnecessary for contingencies for major load pockets. It
avoid undue negative impact on many regions of the country. They ask states that IRO–005 provides for
competition, third party studies could that if the Commission envisions contingencies that are credible when
be permitted to implement the same or changes to provide for N–2 service to operating below IROL in current day
less controlled load interruption as used load pockets, a dialogue must first be operations. The TPL group of Reliability
by the transmission owner.’’ 466 initiated within the industry and with Standards already require provisions for
1808. NRC states that this Reliability state public utility commissions to specific circumstances based on
Standard should be clarified in regard to identify such load pockets, target the evaluations that take into account the
the N–1–1 condition. In addition, it required transmission investments probability of an outage occurring and
recommends specific changes to (which could be very substantial) and the associated consequences when
develop plans for allocating the costs of transmission plans are developed. PG&E
Requirements R1.6, R.1.2 and R2.2.
such investments. states that TPL–003–0, Category C.5
1809. A number of commenters 1812. FirstEnergy comments that, contingency already addresses the more
respond to the Commission’s request for although simultaneous C.3 independent probable simultaneous outages (due to
comments on the value and contingencies may pose potentially high common-mode failure) that could occur.
appropriateness of including the ability risk, they are most likely extremely low PG&E maintains that simultaneous
of the system to withstand two in probability. FirstEnergy states that it occurrence of other contingencies is not
simultaneous contingencies for major nevertheless routinely evaluates these credible. The principles incorporated in
load pockets. NERC states that this issue contingencies across its system for the Reliability Standards require that
has been recognized as needing facilities 200 kV and higher and evaluations of credibility be balanced
clarification, and it welcomes comments suggests that if this analysis is made a against potential impact, and investing
in the development of these revisions in requirement, it should be limited to an resources to prevent improbable events
accordance with its Reliability extra high voltage subset of the Bulk- diverts attention and focus from more
Standards development process. NERC Power System. critical Reliability Standards and more
states that it is developing a proposal for 1813. MISO believes that evaluation probable conditions.
a transmission availability data system of multiple contingency events should
that will provide a quantitative only reside in the planning arena and ii. Commission Determination
(probabilistic) basis for judging the not in the operations environment. It 1817. The Commission approves
likelihood of various multi-element states that the current Reliability proposed Reliability Standard TPL–
contingencies which will be helpful in Standard provides a reasonable and 003–0 as a mandatory and enforceable
determining the value of this proposal. time tested methodology. Reliability Standard. In addition, we
1810. APPA, LPPC and National Grid 1814. National Grid opposes applying direct the ERO to develop modifications
state that imposing N–2 planning may this N–2 criterion across the board. It to TPL–003–0 through the Reliability
be difficult to administer since there is states that N–2 planning is usually Standards development process, as
no consensus on what constitutes a relied upon when a particular area does discussed below.
‘‘major load pocket.’’ LPPC states that not have the resources or flexibility to 1818. The Commission notes that, like
the definition of major load pockets has adopt the N–1–1 approach. The Bulk- Requirement R1.3.1 of TPL–001–0,
been, and is still being debated. As there Power System is designed differently in Requirement R1.3.2 of TPL–003–0
is no nation-wide consensus on the every region, and there is no need to requires an entity assessing system
term’s definition, no list of major load impose N–2 planning where regions are performance to cover ‘‘critical system
pockets exists. Because load pockets satisfactorily implementing the N–1–1 conditions and study years’’ as deemed
and their boundaries change with the methodology. appropriate by the entity performing the
dynamically changing system and load 1815. SDG&E states that the N–2 study, but that the Requirement does
patterns, it is difficult to establish or consideration for major load pockets is not specify the rationale for determining
administer a rule that encompasses the neither of value nor appropriate for critical system conditions and study
transmission planning entities at large. years. The Commission directs the ERO
466 Id. at P 1097. The probability of such a contingency to modify TPL–003–0 to require that
critical system conditions and study less conservative, least common been and is still being debated. National
years be determined in the same manner denominator design assumptions across Grid states that N–2 planning is usually
as we directed with regard to TPL–001– all regions and reduce modeling relied upon when a particular area does
0, for the reasons as set forth in our flexibility and engineering judgment. To not have the resources and flexibility to
discussion of TPL–001–0. the contrary, the Commission believes adopt the N–1–1 approach. The
1819. The intent underlying the that such sharing of information will Commission agrees with National Grid
statement that ‘‘to avoid undue negative improve knowledge and understanding but notes that this is more applicable to
impact on competition, third party and promote a more rigorous approach the operating domain, something that
studies should be permitted to to analyzing cascading outages. The MISO opposes. PG&E states that this
implement the same or less controlled Commission agrees with LPPC that it approach is not necessary because
load interruption as used by the may be preferable for the Regional Category C5 already addresses more
transmission owner’’ is to ensure that Entities to conduct the review of probable simultaneous outages due to
third parties have access to the same proxies, because they better understand common mode failure. The Commission
options that the transmission owner the regional and localized factors that disagrees since Category C5 only deals
uses to alleviate reliability constraints influence the proxies. However, we with a loss of any two circuits on a
including those related to controlled expect the ERO to coordinate between multi-circuit tower line and not a
load shedding. For example, if a regions to assure that best practices are simultaneous loss of a line and a
transmission owner designs its system shared among the Regional Entities. generator which was envisaged by the
to result in a controlled load shedding Accordingly, the Commission directs request for comments. Many
of 300 MW for Category C the ERO to modify the Reliability commenters indicated that this was a
contingencies, designs proposed for Standard to require definition and very low probability event and the costs
third parties requesting documentation of proxies necessary to for addressing such an event would be
interconnections to that system must simulate cascading outages. significant. As a result, EEI states that a
also be permitted, but not required, to 1822. No comments were received on dialogue must first be initiated within
have 300 MW of controlled load the Commission’s proposal that the the industry and with state public
shedding for the same Category C purpose statement of TPL–003–0 be utility commissions to identify such
contingencies. The Commission directs tailored to reflect the specific goal of the load pockets, to target the required
the ERO to modify footnote (c) of Table Reliability Standard. The Commission potentially significant transmission
1 to the Reliability Standard to clarify directs that this modification be made. investments and to develop plans for
the term ‘‘controlled load interruption.’’ Reliability Standards should be clear allocating the costs of such investments.
In response to LPPC’s comments on and unambiguous, and a clear statement In light of these comments, the
modification procedures, the of a Reliability Standard’s purpose and Commission does not intend to
Commission agrees that changes to the goal is one of the features necessary to recommend action on this issue at this
footnotes of Table 1 should be achieve this end. time and, instead, directs the ERO to
1823. The NRC’s comments on TPL– consider the comments in possible
addressed through the ERO’s Reliability
003–0 parallel its comments on TPL– future revisions to the Reliability
Standards development process.
002–0. The Commission discussed those Standard.
1820. The Commission stated in the
comments above, and its conclusions 1826. Accordingly, the Commission
NOPR that the concern involved relates
there apply equally here. The approves Reliability Standard TPL–003–
to the use of thermal overloads or low
Commission, for the same reasons set 0 as mandatory and enforceable. In
voltage proxies to judge the likelihood
forth in our discussion of TPL–002–0, addition, the Commission directs the
of subsequent line or generator trips
directs the ERO to address NRC ERO to develop a modification to TPL–
leading to a cascading outage.467 The concerns through its Reliability 003–0 through the Reliability Standards
Commission agrees with SoCal Edison Standards development process. development process that: (1) Requires
that, if an entity models overload relays, 1824. The Commission received that critical system conditions be
undervoltage relays, all remedial action numerous comments on its request for determined in the same manner as we
schemes including those of neighboring comments on the appropriateness and propose to require for TPL–001–0; (2)
systems and has a good load value of including the ability of the modifies footnote (c) to Table 1 to
representation, then proxies are not system to withstand two simultaneous clarify the term ‘‘controlled load
required. However, due to modeling and Category B contingencies for major load interruption;’’ (3) requires applicable
simulation limitations this is often not pockets. The Commission stated that it entities to define and document the
the case and planners invariably use was aware that several entities currently proxies necessary to simulate cascading
proxies.468 Recognizing this and the apply this approach and notes that one outages and (4) tailors the purpose
range of proxies currently in use, the entity was actually commended by statement to reflect the specific goal of
Transmission Issues Subcommittee of NERC for doing so as part of its the Reliability Standard.
the NERC Planning Committee readiness review. FirstEnergy states that
recommended that proxies used in it routinely evaluates these e. System Performance Following
simulations be defined until such time contingencies across its system for 200 Extreme Events (TPL–004–0)
as improved analytical tools and models kV and higher. NERC states that this 1827. The goal of Reliability Standard
are available to simulate cascading issue has been recognized as requiring TPL–004–0 is to ensure that the future
events. clarification, and it welcomes comments Bulk-Power System is evaluated to
1821. The Commission disagrees with on these revisions in accordance with assess the risks and consequences of an
LPPC that defining and documenting the Reliability Standards development extreme event involving the loss of
proxies will result in the adoption of process. multiple elements. It seeks to do this by
1825. Many commenters state that, requiring the transmission planner and
467 Id.
at P 1098.
468 See
without a consensus on what constitutes the planning authority to evaluate and
WECC Disturbance Performance Table W–
1 and Figure W–1 of Allowable Effects on other
a major load pocket, little progress can document annually the risks and
Systems, NERC/WECC Planning Standards April be made in this regard. LPPC states that consequences of Category D
10, 2003. the definition of major load pockets has contingencies (i.e., extreme events
resulting in loss of two or more expansion of the list of extreme gas-fired generation; (2) a successful
elements or cascading) for the near-term contingencies to include natural cyber attack; (3) regulation that restricts
(five-year) planning horizon. disasters such as hurricanes and ice or eliminates the use of a river or lake
1828. TPL–004–0 applies to each storms. They state that the potential or other body of water as the cooling
planning authority and transmission contingencies resulting from this source for generation; (4) shutdown of a
planner. Each must demonstrate expansion are endless and therefore nuclear power plant and other facilities
annually through valid assessments that impractical to consider through a day or more prior to a hurricane,
its portion of the interconnected engineering studies. As a result, tornado or wildfire, or other event and
transmission system is evaluated for the additional requirements in this (5) the loss of older transmission lines,
risks and consequences of a number of Reliability Standard are unnecessary. which may not be constructed to meet
each of the extreme contingencies of EEI and APPA state that to the extent an entity’s present radial ice loading
Category D with all transmission that such events will happen, entities requirements, while the newer or
facilities in service over a planning historically have put heavy emphasis on stronger transmission lines remain in
horizon that takes into account lead emergency planning and procedures, service. The above examples are not an
times for corrective plans. TPL–004–0 which are addressed by the EOP group exhaustive list, however, the
also requires that planned outages of of Reliability Standards. Commission would not expect the range
transmission equipment be considered of scenarios to be much more extensive
for those demand levels for which ii. Commission Determination
than this, either. Thus, we are not
planned outages are performed. It 1832. The Commission approves expecting an endless list of scenarios
defines various categories of conditions proposed Reliability Standard TPL– and infinite number of combinations in
to be simulated. The associated regional 004–0 as mandatory and enforceable. In directing this modification. Each event
reliability organization must approve addition, we direct the ERO to develop is identifiable for each entity based on
the specific study elements selected modifications to TPL–004–0 through the its topology, facilities and generation
from each of the categories for Reliability Standards development mix. Accordingly, the Commission
assessment, including the subset of process, as discussed below. directs the ERO to expand the list of
Category D contingencies to be 1833. The Commission notes that, like events with examples of such events
evaluated. Requirement R1.3.1 of TPL–001–0, identified above.
1829. The Commission proposed in Requirement R1.3.2 of TPL–004–0 1836. The Commission received no
the NOPR to approve Reliability requires an entity assessing system comments on its proposal to modify the
Standard TPL–004–0 as mandatory and performance to cover ‘‘critical system purpose statement of TPL–004–0 to
enforceable. In addition, pursuant to conditions and study years’’ as deemed reflect the specific goal of the Reliability
section 215(d)(5) of the FPA and appropriate by the entity performing the Standard. The Commission directs that
§ 39.5(f) of our regulations, we proposed study, but it does not specify the this modification be made.
to direct NERC to submit a modification rationale for determining critical system 1837. Accordingly, the Commission
to TPL–004–0 that: (1) Requires that conditions and study years. The approves Reliability Standard TPL–004–
critical system conditions be Commission directs the ERO to modify 0 as mandatory and enforceable. In
determined in the same manner as TPL–004–0 to require that critical addition, the Commission directs the
proposed for TPL–001–0; (2) requires system conditions and study years be ERO to develop a modification to TPL–
the identification of options for determined in the same manner as we 004–0 through the Reliability Standards
reducing the probability or impacts of directed with regard to TPL–001–0 and development process that: (1) Requires
extreme events that cause cascading; (3) for the reasons stated there. that critical system conditions be
requires that, in determining the range 1834. MidAmerican states that it determined in the same manner as
of extreme events to be assessed, the supports the proposal to modify TPL– proposed for TPL–001–0; (2) requires
contingency list of Category D be 004–0 to require identification of the identification of options for
expanded to include recent events and options for reducing the probability or reducing the probability or impacts of
(4) tailors the purpose statement to impacts of extreme events that cause extreme events that cause cascading; (3)
reflect the specific goal of the Reliability cascading. Accordingly, for the reasons requires that, in determining the range
Standard. cited in the NOPR, the Commission of extreme events to be assessed, the
directs the ERO to modify the Reliability contingency list of Category D be
i. Comments Standard to make this modification to expanded to include recent events and
1830. MidAmerican supports the the Reliability Standard. (4) tailors the purpose statement to
Commission’s proposed modifications 1835. All commenters that responded reflect the specific goal of the Reliability
to the Reliability Standard as reasonable on the issue opposed the Commission’s Standard.
and agrees with the Commission that proposal to modify TPL–004–0 to
the Reliability Standard should not require that, in determining the range of f. Regional and Interregional Self-
require improvements for low the extreme events to be assessed, the Assessment Reliability Reports (TPL–
probability events that cannot be contingency list of Category D be 005–0)
justified.469 MidAmerican supports expanded to include recent events such 1838. Reliability Standard TPL–005–0
developing options for any events listed as hurricanes and ice storms. The seeks to ensure that each regional
in TPL–004–0 that result in cascading Commission is not persuaded by the reliability organization conducts
outages and suggests use of probabilistic commenters’ contention that expansion reliability assessments of its existing
estimates to determine which, if any, of of the extreme events list will lead to an and planned regional bulk electric
the TPL–004 extreme events options endless list of possibilities. The two that system annually by requiring it to assess
should be estimated to reduce their the Commission used are examples from and document the performance of its
probability or impacts. the general news media. While the power system for the current year, the
1831. FirstEnergy, EEI, APPA, TVA NOPR referred to two recent events, next five years, and to analyze trends for
and Northern Indiana all oppose the other examples include: (1) Loss of a the longer-term planning horizons.
large gas pipeline into a region or 1839. The Commission proposed in
469 See NOPR at P 1112. multiple regions that have significant the NOPR not to approve or remand
TPL–005–0, as it applies only to Reactive Control group of Reliability i. Applicability to Load-Serving Entities
regional reliability organizations. Standards is intended to replace the and Reliability Coordinators
i. Comments existing VAR–001–0 and consists of two (a) Comments
proposed Reliability Standards, VAR–
1840. EEI comments that TPL–005–0 001–1 and VAR–002–1, with new 1851. EEI agrees with the Commission
should be revised to remove the regional that the applicability of VAR–001–1
Requirements. These two new proposed
reliability organizations. should be expanded to include
Reliability Standards have been
reliability coordinators and LSEs.
ii. Commission Determination submitted by NERC as part of the 1852. MISO contends that the view
1841. Consistent with our discussion August 28, 2006 Supplemental Filing and role of generator operators,
in the Common Issues section above, we for Commission review. NERC requested transmission operators and reliability
will not approve or remand TPL–005–0 an effective date of February 2, 2007 for coordinators are different, and
until we receive additional information VAR–001–1, and August 2, 2007 for reliability coordinators’ monitoring and
from the ERO. VAR–002–1. response requirements are addressed
1842. In Order No. 890, the a. VAR–001–1 Voltage and Reactive elsewhere in the Reliability Standards.
Commission stated that there will be a 1853. In response to the Commission’s
Control
series of technical conferences and request in the NOPR for comments
regional meetings to obtain industry 1848. Reliability Standard VAR–001– concerning whether all LSEs are also
input to achieving the goal of regional 1 requires transmission operators to purchasing-selling entities, SoCal
planning.470 The Commission implement formal policies for Edison believes they are
encourages the ERO to monitor those monitoring and controlling voltage distinguishable. It states that a
proceedings and use the results as input levels, acquire sufficient reactive purchasing-selling entity, according to
to the Reliability Standards the functional model, makes financial
resources, specify criteria for generator
development process in revising deals across balancing authorities (from
voltage schedules, know the status of all
Reliability Standard TPL–005–0 to source to sink). Within the area of a
transmission reactive power resources,
address regional planning and related large balancing authority, such as the
operate or direct the operation of CAISO, an LSE can serve load from a
processes. devices that regulate voltage and correct resource within the balancing authority,
g. Assessment Data From Regional IROL or SOL violations resulting from so that there is no requirement to tag
Reliability Organizations (TPL–006–0) reactive resource deficiencies. VAR– this transaction, and technically there is
1843. Reliability Standard TPL–006–0 001–1 also requires purchasing-selling no purchasing-selling entity involved.
seeks to ensure that the data necessary entities to arrange for reactive resources 1854. APPA is concerned that
to conduct reliability assessments is to satisfy their reactive requirements. requiring VAR–001–1 to be applicable
available by requiring the regional 1849. In the NOPR, the Commission to LSEs would require LSEs to conduct
reliability organization to provide NERC proposed to approve VAR–001–1 as various studies and perform reliability
with Bulk-Power System data, reports, mandatory and enforceable. In addition, functions that have been assigned to
demand and energy forecasts, and other the Commission proposed to direct other functional entities. The role of
information necessary to assess NERC to submit a modification to VAR– LSEs in voltage stability assessments
reliability and compliance with NERC 001–1 that: (1) Expands the applicability should be limited to coordination and
Reliability Standards and relevant the provision of data. TAPS also
to include reliability coordinators and
regional planning criteria. questions the need to expand
LSEs; (2) includes detailed and
1844. The Commission proposed in applicability of these Reliability
definitive requirements on ‘‘established
the NOPR not to approve or remand Standards to LSEs. TAPS maintains that
limits’’ and ‘‘sufficient reactive purchasing and selling utilities are
TPL–006–0, as it applies only to
resources,’’ and identifies acceptable already subject to the Reliability
regional reliability organizations.
margins above the voltage instability Standards, and are required to satisfy
i. Comments points; (3) includes Requirements to any reactive requirements through
1845. EEI agrees that TPL–006–0 perform voltage stability assessments purchasing Ancillary Service No. 2
should be revised to remove the regional periodically during real-time operations under the OATT (or self-supply). TAPS
reliability organizations. and (4) includes controllable load believes that the addition of LSEs as an
among the reactive resources to satisfy additional applicable entity serves no
ii. Commission Determination reactive requirements. The Commission reliability purpose.
1846. Consistent with our discussion also requested comments concerning
in the Common Issues section above, the (b) Commission Determination
NERC’s assertion that all LSEs are also
Commission will not approve or remand purchasing-selling entities, and on the 1855. In a complex power grid such
TPL–006–0. acceptable ranges of net power factor as the one that exists in North America,
range at the interface at which the LSEs reliable operations can only be ensured
13. VAR: Voltage and Reactive Control by coordinated efforts from all operating
receive service from the Bulk-Power
1847. The Version 0 Voltage and System during normal and extreme load entities in long-term planning,
Reactive Control (VAR) Reliability operational planning and real-time
conditions.
Standard VAR–001–0 is intended to operations. To that end, the Staff
maintain Bulk-Power System facilities 1850. Most comments address the Preliminary Assessment recommended
within voltage and reactive power specific modifications and concerns and the NOPR proposed that the
limits, thereby protecting transmission, raised by the Commission in the NOPR. applicability of VAR–001–1 extend to
generation, distribution, and customer Below, we address each topic reliability coordinators and LSEs.
equipment and the reliable operation of separately, followed by an overall 1856. Since a reliability coordinator is
the Interconnection. The Voltage and conclusion and summary. the highest level of authority overseeing
the reliability of the Bulk-Power System,
470 Order No. 890 at P 443. the Commission believes that it is
important to include the reliability self-supply, the Commission disagrees power, which will affect the need to
coordinator as an applicable entity to that adding LSEs to this Reliability switch off capacitor banks at the
assure that adequate voltage and Standard serves no reliability purpose. delivery point to manage delivery power
reactive resources are being maintained. As discussed in the NOPR and the Staff factors.
As MISO points out, other Reliability Preliminary Assessment, LSEs are (b) Commission Determination
Standards address responsibilities of responsible for significantly more load
reliability coordinators, but we agree than purchasing-selling entities.471 The 1862. In the NOPR, the Commission
with EEI that it is important to include reactive power requirements can have asked for comments on acceptable
reliability coordinators in VAR–001–1 significant impact on the reliability of ranges of net power factor at the
as well. Reliability coordinators have the system and LSEs should be interface at which the LSEs receive
responsibilities in the IRO and TOP accountable for that impact in the same service from the Bulk-Power System
Reliability Standards, but not the ways that purchasing-selling entities are during normal and extreme load
specific responsibilities for voltage accountable, by providing reactive conditions. The Commission asked for
levels and reactive resources addressed resources, and also by providing these comments in response to concerns
by VAR–001–1, which have a great information to transmission operators to that during high loads, if the power
impact on system reliability. For allow transmission operators to factor at the interface between many
example, voltage levels and reactive accurately study the reactive power LSEs and the Bulk-Power System is so
resources are important factors to ensure needs for both the LSEs’ and low as to result in low voltages at key
that IROLs are valid and operating purchasing-selling entities’ load busses on the Bulk-Power System, then
voltages are within limits, and that characteristics.472 The Commission there is risk for voltage collapse. The
reliability coordinators should have recognizes that all transmission Commission believes that Reliability
responsibilities in VAR–001–1 to customers of public utilities are Standard VAR–001–1 is an appropriate
monitor that sufficient reactive required to purchase Ancillary Service place for the ERO to take steps to
resources are available for reliable No. 2 under the OATT or self-supply, address these concerns by setting out
system operations. Accordingly, the but the OATT does not require them to requirements for transmission owners
ERO should modify VAR–001–1 to provide information to transmission and LSEs to maintain an appropriate
include reliability coordinators as operators needed to accurately study power factor range at their interface. We
applicable entities and include a new reactive power needs. The Commission direct the ERO to develop appropriate
requirement(s) that identifies the modifications to this Reliability
directs the ERO to address the reactive
reliability coordinator’s monitoring Standard to address the power factor
power requirements for LSEs on a
responsibilities. range at the interface between LSEs and
comparable basis with purchasing-
1857. The Commission agrees with the Bulk-Power System.
selling entities. 1863. We direct the ERO to include
SoCal Edison that not all LSEs are
purchasing-selling entities, because not ii. Acceptable Ranges of Net Power APPA’s concern in the Reliability
all LSEs purchase or sell power from Factor Range Standards development process. We
outside of their balancing authority area. note that transmission operators
(a) Comments
This understanding is consistent with currently have access to data through
the NERC functional model and NERC 1860. SoCal Edison states that its their energy management systems to
glossary. Both LSEs and purchasing- Bulk-Power System facilities are determine a range of power factors at
selling entities should have some designed and operated to provide a which load operates during various
requirements to provide reactive power unity power factor during normal load conditions, and we suggest that the ERO
to appropriately compensate for the conditions, and that during extreme use this type of data as a starting point
demand they are meeting for their load conditions, this power factor could for developing this modification.
customers. Neither a purchasing-selling be in the range of 0.95 to 1.0. 1864. The Commission expects that
entity nor a LSE should depend on the 1861. APPA contends that it may be the appropriate power factor range
transmission operator to supply reactive difficult to reach an agreement on developed for the interface between the
power for their loads during normal or acceptable ranges of net power factors at bulk electric system and the LSE from
emergency conditions. the interfaces where LSEs receive VAR–001–1 would be used as an input
1858. VAR–001–1 recognizes that service from the Bulk-Power System to the transmission and operations
energy purchases of purchasing-selling because the acceptable range of power planning Reliability Standards. The
entities can increase reactive power factors at any particular point on the range of power factors developed in this
consumption on the Bulk-Power System electrical system varies based on many Reliability Standard provides the input
and the purchasing-selling entities must location-specific factors. APPA further to the range of power factors identified
supply what they consume. The states that system power factors will be in the modifications to the TPL
Commission agrees with APPA that affected by the transmission Reliability Standards. In the NOPR, the
LSEs would provide data for voltage infrastructure used to supply the load. Commission suggested that sensitivity
stability assessments. However, the As an example, APPA states that an studies for the TPL Reliability Standards
Commission also believes that LSEs overhead circuit may operate at a higher should consider the range of load power
have an active role in voltage and power factor than an underground cable factors.473
reactive control, since LSEs are due to a substantial amount of reactive iii. Requirements on ‘‘established
responsible for maintaining an agreed-to line charging, and that a transmission limits’’ and ‘‘sufficient reactive
power factor at the interface with the circuit carrying low levels of real power resources’’
Bulk-Power System. will tend to provide more reactive
1859. While the Commission (a) Comments
recognizes the point made by TAPS, 471 NOPR at P 1134. 1865. Dynegy supports the
472 Purchasing selling entities provide
that purchasing-selling entities are Commission’s proposal to include more
information concerning their load through the INT
required to satisfy any reactive series of Reliability Standards. Load serving entities definitive requirements on ‘‘established
requirements through purchasing would need to provide similar information through
Ancillary Service #2 under the OATT or this Reliability Standard. 473 NOPR at P 1047.
limits’’ and ‘‘sufficient reactive 1868. EEI suggests that, alternatively, reactive power needs. Rather, the
resources.’’ It recommends that VAR– the Commission should consider that Commission believes that the Reliability
001–1 be further modified to require the reactive power evaluations should be Standard would benefit from having
transmission operator to have more conducted within a process that is more defined requirements that clearly
detailed and definitive requirements documented in detail and includes a define what voltage limits are used and
when setting the voltage schedule and range of contingencies that might be how much reactive resources are needed
associated tolerance band that is to be reasonably anticipated, because this to ensure voltage instability will not
maintained by the generator operator. would avoid the ‘one size fits all’ occur under normal and emergency
Dynegy states that the transmission problem, where a prescriptive analytical conditions. For example, in the NOPR,
operator should not be allowed to methodology does not fit with a the Commission suggested that NERC
arbitrarily set these values, but rather particular system configuration. EEI consider WECC’s Reliability Criteria,
should be required to have a technical believes that this flexible approach which contain specific and definitive
basis for setting the required voltage would provide a more effective technical requirements on voltage and
schedule and tolerance band that takes planning tool for the industry, while margin application. While we are not
into account system needs and any satisfying the Commission’s concerns directing that the WECC reliability
limitations of the specific generator. over potentially inadequate reactive criteria be adopted, we believe they
Dynegy believes that such a requirement reserves. MRO notes that the need for, represent a good example of clearly-
would eliminate the potential for undue and method of providing for, reactive defined requirements for voltage and
discrimination, as well as the possibility resources varies greatly, and if this reactive margins.
of imposing overly conservative and Reliability Standard is expanded it must 1872. In sum, the Commission
burdensome voltage schedules and be done carefully. MRO believes that all believes that minimum requirements for
tolerance bands on generator operators entities should not be required to follow voltage levels and reactive resources
that could be detrimental to grid the same methodology to accomplish should be clearly defined by placing
reliability, or conversely, the imposition the goal of a reliable system. more detailed requirements on the terms
of too low a voltage schedule and too (b) Commission Determination ‘‘established limits’’ and ‘‘sufficient
wide a tolerance band that could also be reactive resources’’ in the Reliability
detrimental to grid reliability. 1869. In the NOPR, the Commission Standard as discussed in the NOPR and
expressed concern that the technical the Staff Preliminary Assessment. As
1866. While MISO supports the
requirements containing terms such as mentioned above, EEI’s concerns should
concept of including more detailed
‘‘established limits’’ or ‘‘sufficient be considered in the ERO’s Reliability
requirements, it believes that there
reactive resources’’ are not definitive Standards development process.
needs to be a definitive reason for
enough to address voltage instability
establishing voltage schedules and iv. Periodic Voltage Stability Analysis in
and ensure reliable operations.475 To
tolerances, and that any situations Real-Time Operations
address this concern, the NOPR
monitored in this Reliability Standard proposed directing the ERO to modify
need to be limited to core reliability (a) Comments
VAR–001–1 to include more detailed
requirements. and definitive requirements on 1873. SDG&E supports the NOPR
1867. EEI seeks clarification about ‘‘established limits’’ and ‘‘sufficient recommendation that a more effective
whether the Commission is suggesting reactive resources’’ and identify requirement could be based on WECC’s
that reactive requirements should aim acceptable margins (i.e. voltage and/or reliability criteria, which contain
for significantly greater precision, reactive power margins) above voltage specific and definitive technical
especially in terms of planning for instability points to prevent voltage requirements on voltage and margin
various emergency conditions. If so, EEI instability and to ensure reliable application. MidAmerican and
cautions the Commission against operations. We will keep this direction, PacifiCorp recommend that the ‘‘WECC
‘‘ ‘putting too many eggs’ ’’ in the and direct the ERO to include this Methods to address voltage stability and
reactive power ‘basket.’ ’’ 474 To the modification in this Reliability settling margins’’ should be consulted
extent compliance takes place pursuant Standard. when designing corresponding NERC
to all other modeling and planning 1870. We recognize that our proposed requirements.
assessments under the other Reliability modification does not identify what 1874. Xcel Energy recommends that
Standards, EEI strongly believes that the definitive requirements the Reliability this proposed modification instead
Commission should have some high Standard should use for ‘‘established address requirements to measure
level of confidence that the system’s limits’’ and ‘‘sufficient reactive reactive power margin for a variety of
reactive power needs can be met resources.’’ Rather, the ERO should topology conditions. MidAmerican
satisfactorily across a broad range of develop appropriate requirements that recommends that the Commission’s
contingencies that planners might address the Commission’s concerns proposal be modified to require real-
reasonably anticipate. Moreover, EEI through the ERO Reliability Standards time checks for voltage stability
believes that requirements to development process. The Commission assessments only in areas susceptible to
successfully predict reactive power believes that the concerns of Dynegy, voltage instability. Alternatively,
requirements in conditions of near- EEI and MISO are best addressed by the MidAmerican suggests that the
system collapse would require ERO in the Reliability Standards Commission ‘‘should exempt from these
significantly more creative guesswork development process. requirements areas that can demonstrate
than solid analysis and contingency 1871. In response to EEI’s concerns they are not susceptible to voltage
planning. For example, EEI notes that about a prescriptive analytical instability.’’
the combinations and permutations of methodology, we clarify that the 1875. APPA, SDG&E and EEI all state
how a voltage collapse could occur on Commission is not asking that the that they are not aware of commercially-
a system as large as the eastern Reliability Standard dictate what available tools to provide real-time
Interconnection are numerous. methodology must be used to determine transient stability assessments as part of
an integrated energy management
474 EEI at 99. 475 See NOPR at P 1140. system for operators. APPA notes that
premature reliance on various tools that that are dictated by transient stability. the technical capability requirements for
are now under development but not yet Transient stability IROLs are using controllable load as a reactive
operational may jeopardize reliability by determined using the results of off-line resource in the applicable Reliability
providing operators with a false sense of simulation studies, and no areas are Standards.
security and recommends leaving the exempt. In real-time operations, these
vi. Summary of Commission
decision to use such tools to NERC. EEI IROLs are monitored to ensure that they
Determination
points out that any tools to conduct the are not violated. Similarly, voltage
analyses recommended by the stability is conducted in the same 1881. Accordingly, the Commission
Commission will require adjustments manner, determining limits with off-line approves Reliability Standard VAR–
and modifications to improve their tools and monitoring limits in real-time 001–1 as mandatory and enforceable. In
capabilities. Therefore, EEI recommends operations. Areas that are susceptible to addition, pursuant to section 215(d)(5)
that the Commission consider its voltage instability are expected to run of the FPA and § 39.5(f) of our
proposals regarding these standards as studies frequently, and areas that have regulations, the Commission directs the
long-term industry objectives and of a not been susceptible to voltage ERO to develop a modification to VAR–
lower priority than other Reliability instability are expected to periodically 001–1 through the Reliability Standards
Standards. In addition, it is unclear to update their study results to ensure that development process that: (1) Expands
EEI whether the proposed voltage these limits are not encountered during the applicability to include reliability
stability assessments apply to steady- real-time operations. coordinators and LSEs; (2) includes
state or dynamic analyses, or whether detailed and definitive requirements on
these assessments are of a general v. Controllable Load ‘‘established limits’’ and ‘‘sufficient
nature. Since these analyses are (a) Comments reactive resources’’ as discussed above,
technically complex and involve a 1878. SMA supports adoption of the and identifies acceptable margins above
broad range of assumptions regarding proposal to include controllable load as the voltage instability points; (3)
system configurations, EEI suggests that a reactive resource. SMA notes that its includes Requirements to perform
the Commission provide further members’ facilities often include voltage stability analysis periodically,
guidance. significant capacitor banks, and further, using online techniques where
reducing load can reduce local reactive commercially available and offline
(b) Commission Determination techniques where online techniques are
1876. In response to the concerns of requirements.
1879. SoCal Edison suggests caution not available, to assist real-time
APPA, SDG&E and EEI on the operations, for areas susceptible to
regarding the Commission’s proposal to
availability of tools, the Commission voltage instability; (4) includes
include controllable load as a reactive
recognizes that transient voltage controllable load among the reactive
resource. It agrees that, when load is
stability analysis is often conducted as resources to satisfy reactive
reduced, voltage will increase and for
an offline study, and that steady-state requirements and (5) addresses the
voltage stability analysis can be done that reason controllable load can lessen
the need for reactive power. However, power factor range at the interface
online. The Commission clarifies that it between LSEs and the transmission grid.
does not wish to require anyone to use SoCal Edison believes that controllable
tools that are not validated for real-time load is typically an energy product and b. VAR–002–1
operations. Taking these comments into there are other impacts not considered 1882. Reliability Standard VAR–002–
consideration, the Commission clarifies by the Commission’s proposal to 1 requires generator operators to operate
its proposed modification from the include controllable load as a reactive in automatic voltage control mode, to
NOPR. For the Final Rule, we direct the resource. For example, activating maintain generator voltage or reactive
ERO, through its Reliability Standards controllable load for system voltage power output as directed by the
development process, to modify control lessens system demand, transmission operator, and to notify the
Reliability Standard VAR–001–1 to requiring generation to be backed down. transmission operator of a change in
include Requirements to perform It is not clear to SoCal Edison whether status or capability of any generator
voltage stability analysis periodically, any consideration has been given to the reactive power resource. The Reliability
using online techniques where potential reliability or commercial Standard requires generator owners to
commercially-available, and offline impacts of the Commission’s proposal. provide transmission operators with
simulation tools where online tools are (b) Commission Determination settings and data for generator step-up
not available, to assist real-time transformers. In the NOPR, the
1880. The Commission noted in the
operations. The ERO should consider Commission stated its belief that
NOPR that in many cases, load response
the available technologies and software Reliability Standard VAR–002–1 is just,
and demand-side investment can reduce
as it develops this modification to VAR– reasonable, not unduly discriminatory
001–1 and identify a process to assure the need for reactive power capability in
the system.476 Based on this assertion, or preferential and in the public
that the Reliability Standard is not interest; and proposed to approve it as
limiting the application of validated the Commission proposed to direct the
ERO to include controllable load among mandatory and enforceable.
software or other tools.
1877. With respect to MidAmerican’s the reactive resources to satisfy reactive i. Comments
suggestion of exempting areas that are requirements for incorporation into 1883. APPA and SDG&E agree that
not susceptible to voltage instability Reliability Standard VAR–001–1. While VAR–002–1 is sufficient for approval as
from the requirement to perform voltage we affirm this requirement, we expect a mandatory and enforceable Reliability
stability analysis, the Commission notes the ERO to consider the comments of Standard.
that such exemption is not appropriate. SoCal Edison with regard to reliability 1884. Dynegy believes that VAR–002–
We draw an analogy between transient and SMA in its process for developing 1 should be modified to require more
stability limits and voltage stability 476 See FERC Staff Report, Principles of Efficient
detailed and definitive requirements
limits. The requirement to perform and Reliable Reactive Power Supply and
when defining the time frame associated
voltage stability analysis is similar to Consumption (2005), available at http:// with an ‘‘incident’’ of non compliance
existing operating practices for IROLs www.ferc.gov/legal/staff-reports.asp. (i.e., each 4-second scan, 10-minute
integrated value, hourly integrated the NOPR Common Issues section 477 and implementation. The approval of
value). Dynegy states that, as written, and (4) modifies the definition of terms the glossary will provide continuity in
this Reliability Standard does not define concerning reserves (such as operating application of the glossary definitions
the time frame associated with an reserves) to include DSM, including industry-wide, and will eliminate
‘‘incident’’ of non-compliance, but controllable load. multiple interpretations of the same
apparently leaves this decision to the term or function, which may otherwise
a. Comments
transmission operator. Dynegy believes create miscommunication and
that either more detail should be added 1889. NERC supports the jeopardize Bulk-Power System
to the Reliability Standard to cure this Commission’s proposal to approve the reliability. The glossary should be
omission, or the Reliability Standard glossary. APPA supports the updated through the Reliability
should require the transmission Commission’s proposal to have NERC Standards development process
operator to have a technical basis for incorporate the statutory definitions of whenever a new or revised Reliability
setting the time frame that takes into the terms Bulk-Power System, Reliable Standard that includes a new defined
account system needs and any Operation and Reliability Standard into term is approved, or as needed to clarify
limitations of the generator. Dynegy the NERC glossary, as an aide to the compliance activities. For example, the
believes that this approach will development of future NERC Reliability ERO will need to update the glossary to
eliminate the potential for undue Standards. reflect modifications required by the
discrimination and the imposition of 1890. APPA suggests that the Commission in this Final Rule.478
overly conservative or excessively wide Commission permit NERC and industry 1895. The Commission directs the
time frame requirements, both of which to consider whether any modifications ERO to modify the glossary through the
could be detrimental to grid reliability. to the terms ‘‘transmission operator’’ Reliability Standards development
and ‘‘generation operator’’ are needed, process to include the statutory
ii. Commission Determination rather than directing NERC to modify definitions of the terms Bulk-Power
1885. In the NOPR, the Commission these terms. APPA’s initial reaction is System, Reliable Operation and
commended NERC and industry for its that the existing terms are adequate and Reliability Standard. However, this
efforts in expanding on the accommodate most elements of ISO, determination does not negate our
Requirements of VAR–002–1 from the RTO and pooled resource organization discussion in the Applicability section
predecessor standard, and noted that the operations. APPA believes that a of the Final Rule. While the glossary
submitted Reliability Standard includes broader and continuing inquiry is should be revised to include the
Measures and Levels of Non- required to address such situations. stautory definition of Bulk-Power
Compliance to ensure appropriate APPA anticipates that many such System, the Reliability Standards refer
generation operation to maintain concerns will arise as NERC and the to the bulk electric system, which is also
network voltage schedules. Accordingly, Regional Entities implement the initial defined in the glossary.
the Commission approves Reliability compliance program in June 2007, and 1896. The Commission directs the
Standard VAR–002–1 as mandatory and states that any additional changes to the ERO to submit a modification to the
enforceable. glossary should be driven by that glossary that enhances the definitions of
1886. Dynegy has suggested an experience. ‘‘transmission operator’’ and ‘‘generator
improvement to Reliability Standard 1891. APPA’s concerns regarding the operator’’ to reflect concerns of the
VAR–002–1, and NERC should consider Commission proposal to modify the commenters and the direction provided
this in its Reliability Standards definition of terms concerning reserves by the Commission in other sections of
development process. to include DSM (including controllable this Final Rule. The Commission is
load) are discussed above in reference to concerned that there not be any gaps or
14. Glossary of Terms Used in the BAL Reliability Standards. unecessary overlaps of responsibilities
Reliability Standards 1892. NERC supports the concerning any of the Requirements in
1887. NERC’s glossary is updated Commission’s proposal to direct NERC the Reliability Standards that are
whenever a new or revised Reliability to complete the necessary applicable to transmission operators and
Standard is approved that includes a improvements to the proposed generator operators.
new defined term. The glossary may Reliability Standards through the 1897. Further, we adopt the NOPR
also be approved by a separate action established NERC Reliability Standards proposal to require the ERO to submit
using NERC’s Reliability Standards development process. a modification to the glossary that
1893. Santa Clara submits that, to updates the definition of ‘‘operating
development process. NERC updated
eliminate any ambiguity about when reserves,’’ as required in our discussion
the glossary in its August 28, 2006
these definitions of these commonly- of BAL–002–0 and BAL–005–0.
Supplemental Filing.
used terms apply, a footnote should be 1898. Regarding Santa Clara’s concern
1888. In the NOPR, the Commission added to the glossary that states that the about terms in the glossary differing
proposed to approve the glossary. In definitions contained in the glossary are from definitions in tariffs, we clarify
addition, the Commission proposed to not intended to supersede any that the glossary governs Reliability
direct NERC to submit a modification to definitions in a tariff or contract Standards, while tariff definitions
the glossary that: (1) Includes the approved or accepted by the govern tariff issues. We recognize that
statutory definitions of Bulk-Power Commission. many items have different tariff
System, Reliable Operation, and
definitions from those in the NERC
Reliability Standard, as set forth in b. Commission Conclusion
glossary. However, we expect most of
section 215(a) of the FPA; (2) modifies 1894. The Commission approves the these terms to be consistent. If the
the definitions of ‘‘transmission glossary. The terms defined in the glossary definition creates a conflict
operator’’ and ‘‘generator operator’’ to glossary have an important role in between the Reliability Standards and a
include aspects unique to ISOs, RTOs establishing consistent understanding of Transmission Organization’s function,
and pooled resource organizations; (3) the Reliability Standards Requirements
modifies the definition of ‘‘bulk electric 478 See, e.g., MOD–001–0, TOP–002–1 and the
system’’ consistent with discussion in 477 NOPR at P 42–43. INT Reliability Standards.
rule, order, tariff, rate schedule, or and inform respondents that a response the Commission to manage a quality
agreement accepted, approved, or is not required unless the information compliance program as discussed in the
ordered by the Commission, then the collection displays a valid OMB control ERO’s Sanction Guidelines.482
Transmission Organization shall number on each information collection 1904. Portland General believes that
expeditiously notify the Commission, or provides a justification as to why the meeting the Requirements of mandatory
the Electric Reliability Organization and information collection number cannot Reliability Standards will place an
the relevant Regional Entity of the be displayed. In the case of information additional burden for documentation,
possible conflict pursuant to § 39.6 of collections published in regulations, the over and above compliance with the
the Commission’s regulations.479 control number is to be published in the substance of the Requirements. It claims
1899. In conclusion, the Commission Federal Register. that the NOPR failed to take this
approves the glossary. Further, pursuant 1902. Public Reporting Burden: In the
additional burden into account in its
to section 215(d)(5) of the FPA and NOPR, the Commission based its initial
cost estimate for compliance. WECC
§ 39.5(f) of our regulations, the estimates on the premise that the
disagrees with the Commission’s
Commission directs ERO to modify the proposed Reliability Standards have
estimate that compliance cost would be
glossary through the Reliability already been in effect for a substantial
Standards development process to: (1) period of time on a voluntary basis and $40 million annually on an aggregate
Include the statutory definitions of the consequently entities would have basis. It also disagrees with the
terms Bulk-Power System, Reliable already put them into practice. Seventy Commission’s assumption that there
Operation and Reliability Standard; (2) of the 125 commenters express concern would be no increased reporting burden
modify the definition of ‘‘transmission with the burden to be imposed by the or additional information requirements
operator’’ and ‘‘generator operator’’ to NOPR’s requirements. The majority of because the Reliability Standards
include aspects unique to ISO, RTO and these comments address the potential impose new documentation
pooled resource organizations and (3) impact the requirements would have on requirements that will create additional
modify the definition of ‘‘operating small entities but did not provide costs.
reserves’’ as discussed in BAL–002–0 specific estimates on this impact. 1905. In response to the comments
and BAL–005–0. Because these comments are also the and upon further review we have
subject of the analysis performed under revised our initial estimates as reflected
III. Information Collection Statement
the Regulatory Flexibility Act, the in the table below. While the ERO has
1900. The Office of Management and Commission has provided a response submitted several new Reliability
Budget (OMB) regulations require that under that section of this rulemaking. Standards and included additional
OMB approve certain reporting and Commenters also raise concerns about Measures for documenting compliance
recordkeeping (collections of the impact of specific Reliability with 20 existing Reliability Standards,
information) imposed by an agency.480 Standards, and the Commission has we continue to believe that the reporting
The information collection requirements addressed those concerns in the requirements embedded in the
in this Final Rule are identified under discussion of each Reliability Standard. Reliability Standards that are approved
the Commission data collection, FERC– Five commenters, Reliant, TAPS, in the Final Rule have been
725A ‘‘Bulk Power System Mandatory Wisconsin Electric, Portland General implemented on a voluntary basis for
Reliability Standards.’’ Under section and WECC questioned the many years in most instances.483 This
3507(d) of the Paperwork Reduction Act Commission’s initial burden estimates would not apply, however, to entities
of 1995,481 the proposed reporting as contained in the NOPR. that are new to reliability oversight. We
requirements in the subject rulemaking 1903. By Reliant’s estimate, it would encourage entities that are responsible
will be submitted to OMB for review. take at least four employees to prepare for compliance with mandatory
Interested persons may obtain and submit compliance filings and to Reliability Standards to develop a
information on the reporting monitor compliance on an on-going quality compliance program as
requirements by contacting the Federal basis. TAPS, while not providing a discussed in the ERO’s Sanction
Energy Regulatory Commission, 888 specific estimate on the burden, believes Guidelines. However, we believe that
First Street, NE, Washington, DC 20426 that the NOPR’s proposed application of the costs of such a program are distinct
(Attention: Michael Miller, Office of the mandatory Reliability Standards is from the reporting burdens that are
Executive Director, 202–502–8415) or overly-broad and would encompass estimated below.
from the Office of Management and several thousand municipal systems.
Budget (Attention: Desk Officer for the Wisconsin Electric states that the NOPR 1906. Further, our estimates below
Federal Energy Regulatory Commission, significantly understated the impact that reflect a revision in the number of
fax: 202–395–7285, e-mail: would be imposed by mandatory respondents, based on our
oira_submission@omb.eop.gov). Reliability Standards. Wisconsin determinations regarding
1901. The ‘‘public protection’’ Electric believes that a ‘‘typical control ‘‘applicability,’’ as discussed in section
provisions of the Paperwork Reduction area utility with its multiple functional II.C above.
Act of 1995 requires each agency to entity responsibilities’’ will need far 1907. Total Annual Hours for
display a currently valid control number more than the 100 hours estimated by Collection:
Number of Number of Hours per Total annual

Data collection respondents responses response hours
FERC–725A
Investor Owned Utilities ............................................................................ 170 1 2,080 353,600
Municipals and Cooperatives—Large ....................................................... 80 1 1,420 113,600
Municipals and Cooperatives—Small ....................................................... 670 1 710 475,700

Generator Operators ................................................................................ 360 1 500 180,000
479 18 CFR 39.6 (2006). 481 44 U.S.C. 3507(d) (2000). 483 NOPR at P 1157.
480 5 CFR 1320.11. 482 Wisconsin Electric at 9.
Number of Number of Hours per Total annual

Data collection respondents responses response hours
Power Marketers ...................................................................................... 159 1 100 15,900

Recordkeeping .......................................................................................... Investor Owned Utilities ........................ 35,360
Munis/Coops (Large) ........................ 11,360
Munis/Coops (Small) ........................ 47,570
Generator Owner/Ops. ........................ 18,000
Power Marketers ........................ 1,590
Totals ................................................................................................. ........................ ........................ ........................ 1,252,680
(FTE=Full Time Equivalent or 2,080 hours)
Total Hours = 1,138,800 (reporting) + Respondents: Business or other for procedural, for information gathering,
113,880 (recordkeeping) = 1,252,680 profit, not for profit institutions, state, analysis, and dissemination.485
hours. This estimated reporting burden local or tribal government and Federal
V. Regulatory Flexibility Act
will be significantly reduced once joint Government.
action agencies are established, which Frequency of Responses: On occasion. 1910. The Regulatory Flexibility Act
will reduce the number of small entities Necessity of Information: The Final of 1980 (RFA)486 generally requires a
that will be responsible for compliance Rule approves 83 Reliability Standards. description and analysis of Final Rules
with Reliability Standards. Compliance with such Reliability that will have significant economic
1908. Information Collection Costs: Standards will be mandatory and impact on a substantial number of small
The Commission sought comments enforceable for the applicable categories entities. The RFA does not mandate any
about the costs needed to comply with of entities identified in each Reliability particular outcome in a rulemaking. It
these requirements. As noted above, a Standard. These Reliability Standards only requires consideration of
number of commenters state that the are approved by the Commission alternatives that are less burdensome to
NOPR underestimated the burden of the pursuant to its authority under section small entities and an agency
rulemaking in terms of hours required to 215 of the FPA, which authorizes the explanation of why alternatives were
comply. However, no comments were Commission to approve a Reliability rejected.
received regarding the Commission’s Standard proposed by the ERO if the 1911. In drafting a rule an agency is
estimate of the projected cost of $200/ Commission determines that it is just required to: (1) Assess the effect that its
hour to comply with these and reasonable, not unduly regulation will have on small entities;
requirements. In further consideration, discriminatory or preferential and in the (2) analyze effective alternatives that
the Commission believes that the $200/ public interest. The Reliability may minimize a regulation’s impact and
hour projection is too high, and the Standards approved in this Final Rule (3) make the analyses available for
calculations below reflect an adjusted are necessary for the reliable operation public comment.487 In its NOPR, the
hourly figure. of the nation’s interconnected Bulk- agency must either include an initial
Cost to Comply: Power System. regulatory flexibility analysis (initial
Reporting = 1,138,800 @ $114/hour = For information on the requirements, RFA) 488 or certify that the proposed
$129,823,200 submitting comments on the collection rule will not have a ‘‘significant impact
1,138,800 hours @ $114 per hour of information and the associated on a substantial number of small
(average cost of attorney ($200 per burden estimates including suggestions entities.’’ 489
hour), consultant ($150), technical ($80) for reducing this burden, please send 1912. If in preparing the NOPR an
and administrative support ($25)). your comments to the Federal Energy agency determines that the proposal
Recordkeeping = 113,880 @ $17/hour Regulatory Commission, 888 First could have a significant impact on a
= $1,935,960 Street, NE., Washington, DC 20426 substantial number of small entities, the
113,880 hours @ $17 per hour (file/ (Attention: Michael Miller, Office of the agency shall ensure that small entities
record clerk @ $17 an hour) Executive Director, 202–502–8415) or will have an opportunity to participate
Total Costs: Reporting ($129,823,200) send comments to the Office of in the rulemaking procedure.490
+ Recordkeeping ($1,935,960) = Management and Budget (Attention: 1913. In its Final Rule, the agency
$131,759,160. Desk Officer for the Federal Energy must also either prepare a Final
Sources: ‘‘NERC Compliance Update: Regulatory Commission, fax: 202–395– Regulatory Flexibility Analysis (Final
What it might cost to comply’’, Herb 7285, e-mail RFA) or make the requisite certification.
Schrayshuen, NARUC-Electric oira_submission@omb.eop.gov). Based on the comments the agency
Reliability Staff Subcommittee, receives on the NOPR, it can alter its
IV. Environmental Analysis original position as expressed in the
November 12, 2006.
Janco Associates, Inc., 2005 1909. The Commission is required to NOPR but it is not required to make any
Information Technology Compensation prepare an Environmental Assessment substantive changes to the proposed
Study, January 2005. or an Environmental Impact Statement regulation.
Bureau of Labor Statistics, for any action that may have a 1914. The statute provides for judicial
Department of Labor, Occupational significant adverse effect on the human review of an agency’s final certification
Outlook Handbook, http://www.bls.gov/ environment.484 The actions taken here or Final RFA.491 An agency must file a
oco/ocos268.htm. fall within the categorical exclusion in
Titles: FERC–725A ‘‘Mandatory the Commission’s regulations for rules 485 18 CFR 380.4(a)(5).
486 5 U.S.C. 601–612 (2006).

Reliability Standards for the Bulk-Power that are clarifying, corrective or
487 5 U.S.C. 601–604.
System’’. 484 Regulations Implementing the National
488 5 U.S.C. 603(a).
Action: Proposed Collection of Environmental Policy Act, Order No. 486, 52 FR
489 5 U.S.C. 605(b).
Information. 47,897 (Dec. 17, 1987), FERC Stats. & Regs., 490 5 U.S.C. 609(a).
OMB Control Nos: To be determined. Regulations Preambles 1986–1990 ¶ 30,783 (1987). 491 5 U.S.C. 611.
Final RFA demonstrating a ‘‘reasonable, for applicable entities may vary based Commission’s proposed definition of
good-faith effort’’ to carry out the RFA on size or role.’’ 497 Additionally, in the bulk electric system in the NOPR
mandate.492 However, the RFA is a NOPR, the Commission supported the exceeds NERC’s definition and thereby
procedural, not a substantive, mandate. ERO’s proposal to permit the sweeps in many small facilities that are
An agency is only required to registration of ‘‘joint action agencies,’’ a unnecessary to the Reliable Operation of
demonstrate a reasonable, good faith concept designed to ease the burden of the Bulk-Power System. APPA/NRECA
effort to review the impact the proposed small entities by allowing one argue that, if the Commission adopts
rule would place on small entities, any organization to perform reliability- this definition, many small transmission
alternatives that would address the related activities for multiple entities. owners and operators of lower voltage
agency’s and small entities’ concerns The Commission proposed to direct the transmission systems will be
and their impact, provide small entities ERO to develop procedures that would unnecessarily required to bear the
the opportunity to comment on the permit a joint action agency or similar increased training costs to comply with
proposals, and review and address organization to accept compliance Reliability Standards, yet the NOPR
comments. An agency is not required to responsibility on behalf of its members. never considered these additional
adopt the least burdensome rule. 1917. Thus, in the NOPR, the burdens. APPA/NRECA also asserts
Further, the RFA does not require an Commission discussed the potential that, under this definition, many small
agency to assess the impact of a rule on disparate impact on small entities, distribution providers would also be
all small entities that may be affected by considered the implications and required to comply with the
the rule, only on those entities that the potential alternatives and solicited communication-related (COM)
agency directly regulates and that will comments on the limiting the Reliability Standards at additional costs
be directly impacted by the rule.493 application of the Reliability Standards that were never discussed. They request
to small entities. Further, the that the Commission address these
A. Notice of Proposed Rulemaking Information Collection Statement shortcomings.
1915. In the NOPR, the Commission discussed the difficulty estimating the 1920. APPA/NRECA also claims that
stated that the proposed Reliability number of small entities that would be the Commission substantially
Standards ‘‘may cause some small affected by the Reliability Standards. As underestimated the number of small
entities to experience significant such, the Commission was aware of the entities that would be impacted by the
economic impact.’’ 494 In response to the potential impacts on small entities and application of the Reliability Standards
ERO’s proposal to develop limits on the was actively considering alternatives as proposed in the NOPR. APPA/
applicability of specific Reliability that would lessen the impact on them NRECA asserts that 98 percent of public
Standards, the Commission stated that, while still ensuring reliability of the utilities and 99 percent of public
while it could not rule on the merits Bulk-Power System. cooperatives, along with numerous
until a specific proposal is submitted, small industrial facilities, small
the Commission stated that it believed 1. Comments qualifying facilities and small generators
that reasonable limits based on size may 1918. APPA and NRECA, in their joint would qualify under the small entity
be an acceptable alternative to ‘‘lessen comments, provide data about their definition and would be impacted by
the economic impact on the proposed membership. APPA states that, based on the rule. According to APPA/NRECA,
rule on small entities.’’ 495 The 2005 data, 1,971 public utilities or 98 most of these small entities would not
Commission emphasized that any such percent of the public utilities in the have a material impact on the reliability
limits must not weaken Bulk-Power United States had less than 4 million of the Bulk-Power System but, under the
System reliability. MW hours in sales which would qualify NOPR’s definition of Bulk-Power
1916. Further, under the Applicability them as small entities. Of these, 90 System, would be required to comply
Issues section of the NOPR, we devoted percent—or 1,775—are distribution-only with the Reliability Standards.
an entire subsection to the issues facing utilities, 48 are wholesale-only, and 148 1921. APPA/NRECA suggests that the
small entities.496 The Commission make both wholesale and retail sales.498 Commission can significantly reduce
stated that there may be instances in NRECA states that its membership the impact on small entities by
which small entity compliance with a includes 930 rural cooperatives most of ‘‘focusing on materiality.’’ They contend
particular Reliability Standard may be which are distribution utilities and that an overly-expansive reliability
critical to reliability. It explained that, almost all of which would qualify as regime would violate the FPA by
in such circumstances, it may be small entities. Additionally, according imposing unnecessary regulatory
appropriate to differentiate among to NRECA, 40 of its 65 generation and burdens on small entities and divert the
subsets of users, owners and operators. transmission cooperatives also qualify ERO’s and the Commission’s resources
As an example, the NOPR provided that as small entities.499 away from those entities that are crucial
‘‘the requirement to have adequate 1919. APPA/NRECA contends that the to Bulk-Power System reliability. APPA/
communications capabilities to address Commission did not include a complete NRECA asserts that the Commission can
real-time emergency conditions * * * initial RFA analysis as required and, ensure reliability without unnecessarily
may be necessary for all applicable without a full initial RFA, the burdening small entities by considering
entities regardless of size or role, Commission cannot lay a proper two alternatives. First, they urge the
although we understand that the foundation for eliciting public Commission to adopt NERC’s current
implementation of these requirements comments on the impacts of the rule on definition of bulk electric system.
small entities. Specifically, APPA/ Second, they ask the Commission to
492 United Cellular Corp. v. FCC, 254 F.3d 78, 88
NRECA contends that the NOPR failed reconsider the standard-by-standard
(D.C. Cir. 2001); Alenco Commuications, Inc. v. to include proposals that would approach to defining owners, users and
FCC, 201 F.3d 608, 625 (5th Cir. 2000). operators of the Bulk-Power System
minimize the impact on small entities.
493 Mid-Tex Electric Coop., Inc. v. FERC, 773 F.2d

They assert that, instead, the and, instead, accept the NERC
327 (D.C. Cir 1985).
494 NOPR at P 1175. compliance registry to identify the
495 Id. at 1176. 497 Id. at 51. entities that will be responsible for
496 Id. at 49–53 (Section B.3 ‘‘Applicability to 498 APPA/NRECA comments at 2. compliance with Reliability Standards.
Small Entities’’). 499 Id. APPA/NRECA, TAPS, and numerous
other commenters discuss these the NOPR’s proposed interpretation of Operation’’ means ‘‘operating the
proposals in their comments, which the the definition of the bulk electric elements of the bulk-power system
Commission addresses in the system, which as APPA/NRECA states within equipment and electric system,
Applicability Issues section of the Final would have had the greatest impact on thermal, voltage, and stability limits so
Rule.500 small entities. that instability, uncontrolled, or
1922. TAPS asserts that the 1925. In addition to the comments cascaded failures of such system will
Commission should apply the ERO’s received addressing these issues, not occur as a result of a sudden
registration thresholds and, ‘‘absent Commission staff has met with disturbance * * * or unanticipated
such limits, the Commission cannot representatives of small entities, failure of system elements.’’ 504 Thus,
satisfy its obligations under the including APPA and NRECA, and the purpose of each Reliability Standard
[RFA].’’ 501 Georgia Cities asserts that listened to their concerns on the approved by the Commission in this
the Commission should adopt potential impacts of the Final Rule and Final Rule is to provide for the Reliable
reasonable limits on the application of discussed possible alternatives. Operation of the Bulk-Power System
the Reliability Standards to small 1926. Since receiving APPA/NRECA’s and thereby minimize the risk of
entities, as it promised in its RFA comments on the RFA, the Commission instability, uncontrolled or cascading
statement. has compiled and reviewed available failure on the Bulk-Power System.
data on small entities and the impact of 1930. The Commission is approving
2. Commission Response the Final Rule on such entities. 83 of the proposed Reliability
1923. The Commission believes that Therefore, the Commission believes that Standards. Upon the effective date of
the NOPR provided a meaningful any inadequacy that may have existed the Final Rule, compliance with these
discussion of the impact that the in the NOPR’s initial RFA analysis has Reliability Standards will be mandatory
Reliability Standards could have on now been corrected. This Final RFA and and enforceable for applicable users,
small entities and discussed several the alternative proposals adopted herein owners and operators of the Bulk-Power
potential alternatives. In fact, the NOPR demonstrate the Commission’s System. The Commission believes that
contained an entire section on the consideration of the potential burdens these Reliability Standards form a solid
applicability of the proposed standards that the rulemaking could place on foundation on which to develop and
on small entities.502 In that section, the small entities. maintain the reliability of the North
Commission discussed various 1927. As discussed in the American Bulk-Power System.
alternatives to lessen the acknowledged Applicability section above, the
Commission adopts in the Final Rule 2. Objectives of and the Legal Basis for
potential impact on small entities. The the Final Rule
Commission indicated its receptiveness the current definition of bulk electric
to the ERO’s proposal to develop system. Any possible change to the 1931. This Final Rule requires
definition would occur in a future applicable users, owners and operators
threshold limits regarding the
Commission proceeding. Further, the of the Bulk-Power System to comply
applicability of specific Reliability
Commission has endorsed the ERO’s with mandatory and enforceable
Standards. The Commission also
compliance registry process to identify Reliability Standards. As discussed
suggested that, where it is necessary for
the entities that must comply with above, these Reliability Standards are
reliability that a Reliability Standard
mandatory Reliability Standards.503 By necessary to ensure the reliable
apply to small entities, implementation
adopting these alternative proposals, the operation of the North American Bulk-
of the requirements of such Reliability
Commission has been responsive to Power System.
Standards may vary based on size or 1932. EPAct 2005 added a new
role. In the NOPR, the Commission set small entity concerns and greatly
reduced the number of small entities section 215 to the FPA, which provides
forth another alternative to address the for a system of mandatory and
potential burden on small entities when that will be affected by the Final Rule.
enforceable Reliability Standards.
it proposed to direct the ERO to develop B. Final RFA Section 215(d)(1) of the FPA provides
procedures permitting a joint action that the ERO must file each Reliability
1. Description of the Reasons Why
agency or similar organization to accept Standard or modification to a Reliability
Action by the Agency Is Being
compliance responsibility on behalf of Standard that it proposes to be made
Considered
its members. effective, i.e., mandatory and
1924. As previously stated, the 1928. On April 4, 2006, as later
modified and supplemented, NERC— enforceable, with the Commission. As
purpose of the RFA is to ensure that mentioned above, on April 4, 2006, and
agencies consider the impact a proposed the ERO—submitted 107 Reliability
Standards for Commission approval as later modified and supplemented, the
rule would have on small entities and ERO submitted 107 Reliability
any potential alternatives that would pursuant to section 215(d) of the FPA.
The ERO’s submission includes the Standards for Commission approval
minimize that impact. The initial RFA pursuant to section 215(d) of the FPA.
analysis is designed to elicit informed ‘‘Version 0’’ standards with which the
1933. Section 215(d)(2) of the FPA
comments on the impacts to small electric industry has complied on a
provides that the Commission may
entities and alternatives. The voluntary basis as well as several new
approve, by rule or order, a proposed
Commission believes the NOPR Reliability Standards approved by NERC
Reliability Standard or modification to a
achieved this goal. After the NOPR was since its certification as the ERO.
1929. As set forth in section 215(a) of proposed Reliability Standard if it meets
issued, the Commission received over the statutory standard for approval,
125 comments and a majority of those the FPA, the term ‘‘Reliability
Standard’’ means a requirement, giving due weight to the technical
addressed small entity issues. Further, expertise of the ERO. Alternatively, the
almost all of the commenters addressed approved by the Commission to provide
for the Reliable Operation of the Bulk- Commission may remand a Reliability
500 See Applicability Issues: Bulk-Power System Power System. The term ‘‘Reliable Standard pursuant to section 215(d)(4)
v. Bulk Electric System and Applicability to Small of the FPA. Further, the Commission
Entities, supra sections II.C.1–2. 503 As noted previously, APPA, NRECA and TAPs may order the ERO to submit to the
501 TAPS at 13.
submitted supplemental comments supporting the
502 NOPR at P 49–53. ERO’s compliance registry process. 504 16 U.S.C. 824o(a)(4) (2006).
Commission a proposed Reliability the United States in 2005,506 and 3,029 Standards to a joint action agency or
Standard or a modification to a of these electric utilities qualify as small other organization.
Reliability Standard that addresses a entities under the SBA definition. Of 1940. As mentioned above, the SBA
specific matter if the Commission these 3,284 electric utility companies, defines a small electric utility as one
considers such a new or modified the EIA subdivides them as follows: (1) that has a total electric output of less
Reliability Standard appropriate to 883 cooperatives of which 852 are small than four million MWh in the
‘‘carry out’’ section 215 of the FPA.505 entity cooperatives; (2) 1,862 municipal proceeding year. Thus, the set of small
The Commission’s action in this Final utilities, of which 1842 are small entity entities that must comply with
Rule is based on its authority pursuant municipal utilities; (3) 127 political mandatory Reliability Standards would
to section 215 of the FPA. subdivisions, of which 114 are small be those that exceed the ERO registry
entity political subdivisions; (4) 159 criteria but still meet the SBA
3. Significant Issues Raised by power marketers, of which 97 definition. The Commission has
Comments, Agency Assessment of the individually could be considered small reviewed data compiled by EIA in Form
Comments and a Statement of Any entity power marketers; 507 (5) 219 EIA–861, NERC’s pre-registry data, and
Changes Made in the Proposed Rule as privately owned utilities, of which 104 information submitted by commenters,
a Result of the Comments could be considered small entity private and determined an estimate of the
1934. Numerous small entity utilities; (6) 25 state organizations, of number of small entities to which the
commenters oppose the NOPR which 16 are small entity state Final Rule will apply.
interpretation of bulk electric system organizations and (7) nine federal 1941. The Commission estimates that
and urge the Commission to adopt the organizations of which four are small the Reliability Standards approved in
ERO’s current definition of that term. entity federal organizations. the Final Rule will apply to
Further, small entity commenters 1939. As discussed above, the approximately 682 small entities
oppose the NOPR’s proposal to address Commission is relying on the ERO’s (excluding entities in Alaska and
applicability on a standard-by-standard compliance registry process to identify Hawaii) as follows: 670 small municipal
basis and, instead, ask that the which entities must comply with utilities and cooperatives and 12 small
Commission rely on the ERO’s mandatory and enforceable Reliability investor-owned utilities.
compliance registry process as the Standards. The ERO’s Compliance 1942. As discussed above, the ERO’s
means to identify entities responsible Registry Criteria describe how NERC Compliance Registry Criteria allows for
for complying with mandatory and will identify organizations that may be a joint action agency, G&T cooperative
enforceable Reliability Standards. candidates for registration and assign or similar organization to accept
Commenters assert that the them to the compliance registry.508 compliance responsibility on behalf of
Commission’s proposed changes would According to this document, the ERO its members. Once such organizations
greatly increase the number of small will register transmission owners and register with the ERO, the number of
entities that would be significantly operators with an integrated element small entities registered with the ERO
impacted by the Final Rule. associated with the Bulk-Power System will diminish and, thus, significantly
of 100 kV and above, or lower voltage reduce the impact of the Final Rule on
1935. As discussed above, the as defined by a Regional Entity. The small entities.
Commission is not adopting its ERO plans to register only those 1943. To be included in the
proposed interpretation of bulk electric distribution providers or LSEs that have compliance registry, the ERO will have
system contained in the NOPR. Rather, a peak load of 25 MW or greater and are made a determination that a specific
the Commission adopts the NERC directly connected to the bulk electric small entity has a material impact on
definition of bulk electric system. system or are designated as a the Bulk-Power System. Consequently,
Further, the Commission is relying on responsible entity as part of a required the compliance of such small entities is
NERC’s registration process to provide underfrequency load shedding program justifiable as necessary for Bulk-Power
as much certainty as possible regarding or a required undervoltage load System reliability.
the applicability and responsibility of shedding program. For generators, the
specific entities in the start-up phase of 5. Description of the Projected
ERO plans to register individual units of Reporting, Recordkeeping and Other
the mandatory Reliability Standards 20 MVA or greater that are directly
regime. Any change in these approaches Compliance Requirements for Small
connected to the bulk electric system, Entities
would be addressed in a separate generating plants with an aggregate
Commission proceeding. rating of 75 MVA or greater, any 1944. A complete summary of
1936. A complete summary of these blackstart unit material to a restoration comments and the Commission’s
comments and the Commission’s plan, or any generator ‘‘regardless of response has been previously addressed
response has been previously addressed size, that is material to the reliability of in the Information Collection Statement
in the Applicability section. the Bulk-Power System.’’ Further, the section.
4. Description and Estimate of the ERO will not register an entity that 6. Duplication of Other Federal Rules
Number of Small Entities To Which the meets the above criteria if it has
1945. There are no relevant Federal
Final Rule Will Apply transferred responsibility for
rules which may duplicate, overlap or
compliance with mandatory Reliability
conflict with the Final Rule.
1937. According to the SBA, a small
electric utility is defined as one that has 506 See Energy Information Administration
7. Description of Any Significant
a total electric output of less than four Database, Form EIA–861, Dept. of Energy (2005), Alternatives to the Final Rule
available at http://www.eia.doe.gov/cneaf/
million MWh in the preceeding year. electricity/page/eia861.html. 1946. In the Final Rule, the
1938. According to the DOE’s Energy 507 Most of these small entity power marketers
Commission adopts several significant
Information Administration (EIA), there and private utilities are affiliated with others and, alternatives that will minimize the
therefore, do not qualify as small entities under the
were 3,284 electric utility companies in SBA definition. burden on small entities. The
508 See NERC Statement of Compliance Registry Commission approves the current ERO
505 See 16 U.S.C. 824o(d)(5) (2006). Criteria (Revision 3) at 6–8. definition of bulk electric system, which
will reduce significantly the number of 1949. User assistance is available for Authority: 16 U.S.C. 824o.
small entities responsible for complying eLibrary and FERC’s Web site during
§ 40.1 Applicability.
with the Final Rule. The Commission normal business hours from our Help
also approves the ERO compliance line at (202) 502–8222 or the Public (a) This part applies to all users,
registry process to identify the entities Reference Room at (202) 502–8371 Press owners and operators of the Bulk-Power
responsible for compliance with 0, TTY (202) 502–8659. E-mail the System within the United States (other
mandatory and enforceable Reliability Public Reference Room at than Alaska or Hawaii), including, but
Standards. Further, the Commission public.referenceroom@ferc.gov. not limited to, entities described in
directs the ERO to submit a procedure section 201(f) of the Federal Power Act.
to permit a joint action agency or similar VII. Effective Date and Congressional
Notification (b) Each Reliability Standard made
organization to accept compliance
1950. These regulations are effective effective by § 40.2 must identify the
responsibility on behalf of its members.
June 4, 2007. The Commission has subset of users, owners and operators of
A complete summary of comments and
determined, with the concurrence of the the Bulk-Power System to which a
the Commission’s response has been
previously addressed in the Administrator of the Office of particular Reliability Standard applies.
Applicability Section. Information and Regulatory Affairs of § 40.2 Mandatory Reliability Standards.
OMB, that this rule is a ‘‘major rule’’ as
VI. Document Availability (a) Each applicable user, owner or
defined in section 351 of the Small
1947. In addition to publishing the Business Regulatory Enforcement operator of the Bulk-Power System must
full text of this document in the Federal Fairness Act of 1996. comply with Commission-approved
Register, the Commission provides all Reliability Standards developed by the
interested persons an opportunity to List of Subjects in 18 CFR Part 40 Electric Reliability Organization.
view and/or print the contents of this Electric power; reporting and (b) A proposed modification to a
document via the Internet through recordkeeping requirements. Reliability Standard proposed to
FERC’s Home Page (http://www.ferc.gov) By the Commission. become effective pursuant to § 39.5 of
and in FERC’s Public Reference Room Philis J. Posey, this Chapter will not be effective until
during normal business hours (8:30 a.m. approved by the Commission.
Acting Secretary.
to 5 p.m. Eastern time) at 888 First
Street, N.E., Room 2A, Washington DC ■ In consideration of the foregoing, the § 40.3 Availability of Reliability Standards.
20426. Commission amends Chapter I, Title 18,
1948. From FERC’s Home Page on the Code of Federal Regulations, by adding The Electric Reliability Organization
Internet, this information is available on Part 40 to read as follows: must post on its Web site the currently
eLibrary. The full text of this document effective Reliability Standards as
is available on eLibrary in PDF and PART 40—MANDATORY RELIABILITY approved and enforceable by the
Microsoft Word format for viewing, STANDARDS FOR THE BULK-POWER Commission. The effective date of the
printing, and/or downloading. To access SYSTEM Reliability Standards must be included
this document in eLibrary, type the in the posting.
Sec.
docket number excluding the last three 40.1 Applicability. Note: The following appendices will not be
digits of this document in the docket 40.2 Mandatory Reliability Standards. published in the Code of Federal
number field. 40.3 Availability of Reliability Standards. Regulations.
APPENDIX A.—DISPOSITION OF RELIABILITY STANDARDS, GLOSSARY AND REGIONAL DIFFERENCES

Reliability standard Title Proposed disposition
BAL–001–0 .................... Real Power Balancing Control Performance ........................................ Approve.

BAL–002–0 .................... Disturbance Control Performance ......................................................... Approve; direct modification.
BAL–003–0 .................... Frequency Response and Bias ............................................................. Approve; direct modification.
BAL–004–0 .................... Time Error Correction ............................................................................ Approve; direct modification.
BAL–005–0 .................... Automatic Generation Control ............................................................... Approve; direct modification.
BAL–006–1 .................... Inadvertent Interchange ........................................................................ Approve; direct modification.
CIP–001–1 .................... Sabotage Reporting .............................................................................. Approve; direct modification.
COM–001–1 .................. Telecommunications ............................................................................. Approve; direct modification.
COM–002–2 .................. Communications and Coordination ....................................................... Approve; direct modification.
EOP–001–0 ................... Emergency Operations Planning .......................................................... Approve; direct modification.
EOP–002–2 ................... Capacity and Energy Emergencies ....................................................... Approve; direct modification.
EOP–003–1 ................... Load Shedding Plans ............................................................................ Approve; direct modification.
EOP–004–1 ................... Disturbance Reporting .......................................................................... Approve; direct modification.
EOP–005–1 ................... System Restoration Plans ..................................................................... Approve; direct modification.
EOP–006–1 ................... Reliability Coordination—System Restoration ...................................... Approve; direct modification.
EOP–007–0 ................... Establish, Maintain, and Document a Regional Blackstart Capability Pending.
Plan.
EOP–008–0 ................... Plans for Loss of Control Center Functionality ..................................... Approve; direct modification.
EOP–009–0 ................... Documentation of Blackstart Generating Unit Test Results ................. Approve.
FAC–001–0 ................... Facility Connection Requirements ........................................................ Approve.
FAC–002–0 ................... Coordination of Plans for New Facilities ............................................... Approve; direct modification.
FAC–003–1 ................... Transmission Vegetation Management Program .................................. Approve; direct modification.
FAC–004–0 ................... Methodologies for Determining Electrical Facility Ratings .................... Withdrawn.
FAC–005–0 ................... Electrical Facility Ratings for System Modeling .................................... Withdrawn.
FAC–008–1 ................... Facility Ratings Methodology ................................................................ Approve; direct modification.
FAC–009–1 ................... Establish and Communicate Facility Ratings ........................................ Approve.
FAC–012–1 ................... Transfer Capabilities Methodology ........................................................ Pending.
APPENDIX A.—DISPOSITION OF RELIABILITY STANDARDS, GLOSSARY AND REGIONAL DIFFERENCES—Continued

FAC–013–1 ................... Establish and Communicate Transfer Capabilities ............................... Approve; direct modification.
INT–001–2 ..................... Interchange Transaction Tagging ......................................................... Approve; direct modification.
INT–002–0 ..................... Interchange Transaction Tag Communication and Assessment .......... Withdrawn.
INT–003–2 ..................... Interchange Transaction Implementation .............................................. Approve.
INT–004–1 ..................... Interchange Transaction Modifications ................................................. Approve.
INT–005–1 ..................... Interchange Authority Distributes Arranged Interchange ...................... Approve.
INT–006–1 ..................... Response to Interchange Authority ...................................................... Approve; direct modification.
INT–007–1 ..................... Interchange Confirmation ...................................................................... Approve.
INT–008–1 ..................... Interchange Authority Distributes Status .............................................. Approve.
INT–009–1 ..................... Implementation of Interchange ............................................................. Approve.
INT–010–1 ..................... Interchange Coordination Exceptions ................................................... Approve.
IRO–001–1 .................... Reliability Coordination—Responsibilities and Authorities .................... Approve; direct modification.
IRO–002–1 .................... Reliability Coordination—Facilities ........................................................ Approve; direct modification.
IRO–003–2 .................... Reliability Coordination—Wide Area View ............................................ Approve; direct modification.
IRO–004–1 .................... Reliability Coordination—Operations Planning ..................................... Approve; direct modification.
IRO–005–1 .................... Reliability Coordination—Current Day Operations ................................ Approve; direct modification.
IRO–006–3 .................... Reliability Coordination—Transmission Loading Relief ........................ Approve; direct modification.
IRO–014–1 .................... Procedures, Processes, or Plans to Support Coordination Between Approve.
Reliability Coordinators.
IRO–015–1 .................... Notifications and Information Exchange Between Reliability Coordina- Approve.
tors.
IRO–016–1 .................... Coordination of Real-time Activities Between Reliability Coordinators Approve.
MOD–001–0 .................. Documentation of TTC and ATC Calculation Methodologies ............... Pending; direct modification.
MOD–002–0 .................. Review of TTC and ATC Calculations and Results .............................. Pending.
MOD–003–0 .................. Procedure for Input on TTC and ATC Methodologies and Values ...... Pending.
MOD–004–0 .................. Documentation of Regional CBM Methodologies ................................. Pending; direct modification.
MOD–005–0 .................. Procedure for Verifying CBM Values .................................................... Pending.
MOD–006–0 .................. Procedures for Use of CBM Values ...................................................... Approve; direct modification.
MOD–007–0 .................. Documentation of the Use of CBM ....................................................... Approve; direct modification.
MOD–008–0 .................. Documentation and Content of Each Regional TRM Methodology ...... Pending; direct modification.
MOD–009–0 .................. Procedure for Verifying TRM Values .................................................... Pending.
MOD–010–0 .................. Steady-State Data for Transmission System Modeling and Simulation Approve; direct modification.
MOD–011–0 .................. Regional Steady-State Data Requirements and Reporting Procedures Pending; direct modification.
MOD–012–0 .................. Dynamics Data for Transmission System Modeling and Simulation .... Approve; direct modification.
MOD–013–1 .................. RRO Dynamics Data Requirements and Reporting Procedures .......... Pending; direct modification.
MOD–014–0 .................. Development of Interconnection-Specific Steady State System Mod- Pending; direct modification.
els.
MOD–015–0 .................. Development of Interconnection-Specific Dynamics System Models ... Pending; direct modification.
MOD–016–1 .................. Actual and Forecast Demands, Net Energy for Load, Controllable Approve; direct modification.
DSM.
MOD–017–0 .................. Aggregated Actual and Forecast Demands and Net Energy for Load Approve; direct modification.
MOD–018–0 .................. Reports of Actual and Forecast Demand Data ..................................... Approve.
MOD–019–0 .................. Forecasts of Interruptible Demands and DCLM Data .......................... Approve; direct modification.
MOD–020–0 .................. Providing Interruptible Demands and DCLM Data ............................... Approve; direct modification.
MOD–021–0 .................. Accounting Methodology for Effects of Controllable DSM in Forecasts Approve; direct modification.
MOD–024–1 .................. Verification of Generator Gross and Net Real Power Capability ......... Pending.
MOD–025–1 .................. Verification of Generator Gross and Net Reactive Power Capability ... Pending; direct modification.
PER–001–0 ................... Operating Personnel Responsibility and Authority ............................... Approve.
PER–002–0 ................... Operating Personnel Training ............................................................... Approve; direct modification.
PER–003–0 ................... Operating Personnel Credentials .......................................................... Approve; direct modification.
PER–004–1 ................... Reliability Coordination—Staffing .......................................................... Approve; direct modification.
PRC–001–1 ................... System Protection Coordination ........................................................... Approve; direct modification.
PRC–002–1 ................... Define and Document Disturbance Monitoring Equipment Require- Pending.
ments.
PRC–003–1 ................... Regional Requirements for Analysis of Misoperations of Trans- Pending.
mission and Generation Protection Systems.
PRC–004–1 ................... Analysis and Mitigation of Transmission and Generation Protection Approve.
System Misoperations.
PRC–005–1 ................... Transmission and Generation Protection System Maintenance and Approve; direct modification.
Testing.
PRC–006–0 ................... Development and Documentation of Regional UFLS Programs .......... Pending.
PRC–007–0 ................... Assuring Consistency with Regional UFLS Program ........................... Approve.
PRC–008–0 ................... Underfrequency Load Shedding Equipment Maintenance Programs .. Approve; direct modification.
PRC–009–0 ................... UFLS Performance Following an Underfrequency Event ..................... Approve.
PRC–010–0 ................... Assessment of the Design and Effectiveness of UVLS Program ......... Approve; direct modification.
PRC–011–0 ................... UVLS System Maintenance and Testing .............................................. Approve; direct modification.
PRC–012–0 ................... Special Protection System Review Procedure ..................................... Pending.
PRC–013–0 ................... Special Protection System Database ................................................... Pending.

PRC–014–0 ................... Special Protection System Assessment ............................................... Pending.
PRC–015–0 ................... Special Protection System Data and Documentation ........................... Approve.
PRC–016–0 ................... Special Protection System Misoperations ............................................. Approve.
PRC–017–0 ................... Special Protection System Maintenance and Testing .......................... Approve; direct modification.
APPENDIX A.—DISPOSITION OF RELIABILITY STANDARDS, GLOSSARY AND REGIONAL DIFFERENCES—Continued

PRC–018–1 ................... Disturbance Monitoring Equipment Installation and Data Reporting .... Approve.
PRC–020–1 ................... Undervoltage Load Shedding Program Database ................................ Pending.
PRC–021–1 ................... Undervoltage Load Shedding Program Data ........................................ Approve.
PRC–022–1 ................... Undervoltage Load Shedding Program Performance ........................... Approve.
TOP–001–1 ................... Reliability Responsibilities and Authorities ............................................ Approve; direct modification.
TOP–002–2 ................... Normal Operations Planning ................................................................. Approve; direct modification.
TOP–003–0 ................... Planned Outage Coordination ............................................................... Approve; direct modification.
TOP–004–1 ................... Transmission Operations ...................................................................... Approve; direct modification.
TOP–005–1 ................... Operational Reliability Information ........................................................ Approve; direct modification.
TOP–006–1 ................... Monitoring System Conditions .............................................................. Approve; direct modification.
TOP–007–0 ................... Reporting SOL and IROL Violations ..................................................... Approve.
TOP–008–1 ................... Response to Transmission Limit Violations .......................................... Approve.
TPL–001–0 .................... System Performance Under Normal Conditions ................................... Approve; direct modification.
TPL–002–0 .................... System Performance Following Loss of a Single BES Element .......... Approve; direct modification.
TPL–003–0 .................... System Performance Following Loss of Two or More BES Elements Approve; direct modification.
TPL–004–0 .................... System Performance Following Extreme BES Events ......................... Approve; direct modification.
TPL–005–0 .................... Regional and Interregional Self-Assessment Reliability Reports ......... Pending.
TPL–006–0 .................... Assessment Data from Regional Reliability Organizations .................. Pending.
VAR–001–1 ................... Voltage and Reactive Control ............................................................... Approve; direct modification.
VAR–002–1 ................... Generator Operations for Maintaining Network Voltage Schedules ..... Approve.
Glossary ........................ Glossary of Terms Used in Reliability Standards ................................. Approve; direct modification.
Regional Difference ....... BAL–001:ERCOT:CPS2 ........................................................................ Approve; direct modification.
Regional Difference ....... BAL–006: MISO RTO inadvertent Interchange Accounting ................. Approve.
Regional Difference ....... BAL–006: MISO/SPP Financial Inadvertent Settlement ....................... Approve.
Regional Difference ....... INT–001/4: WECC Tagging Dynamic Schedules and Inadvertent Pending.
Payback.
Regional Difference ....... INT–001/3:MISO Energy Flow Information ........................................... Approve.
Regional Difference ....... INT–003: MISO/SPP Scheduling Agent ............................................... Approve.
Regional Difference ....... INT–003: MISO Enhanced Scheduling Agent ...................................... Approve.
Regional Difference ....... IRO–006: PJM/MISO/SPP Enhanced Congestion Management ......... Pending.
APPENDIX B.—COMMENTERS ON NOTICE OF PROPOSED RULEMAKING

Abbreviation Entity
Alberta ESO ....................................................................... Alberta Electric System Operator.

ALCOA ............................................................................... Alcoa, Inc. and Alcoa Power Generating Company.
Allegheny ............................................................................ Allegheny Power and Allegheny Energy Supply Company, LLC.
AMP Ohio ........................................................................... American Municipal Power—Ohio, Inc.
APPA .................................................................................. American Public Power Association.
APPA/NRECA .................................................................... APPA/NRECA.
ATC .................................................................................... American Transmission Company, LLC.
Avista/Puget ....................................................................... Avista Corporation and Puget Sound Energy, Inc.
BPA .................................................................................... Bonneville Power Administration.
CAISO ................................................................................ California Independent System Operator Corporation.
California Cogernation ....................................................... Cogeneration Association of California and the Energy Producers and Users Coali-
tion.
California PUC ................................................................... Public Utilities Commission of the State of California.
CEA .................................................................................... Canadian Electricity Association.
Cleveland Public Power ..................................................... City of Cleveland, Division of Cleveland Public Power.
Comverge ........................................................................... Comverge, Inc.
Connecticut Attorney General* .......................................... Richard Blumenthal, Attorney General for the State of Connecticut.
Connecticut DPUC* ............................................................ Connecticut Department of Public Utility Control.
Constellation ....................................................................... Constellation Energy Group.
Dominion ............................................................................ Dominion Resources Services, Inc.
Duke ................................................................................... Duke Energy Corporation.
Dynegy ............................................................................... Dynegy, Inc.
EEI ...................................................................................... Edison Electric Institute.
ELCON ............................................................................... Electricity Consumers Resource Council.
Entergy ............................................................................... Entergy Services, Inc.
EPSA .................................................................................. Electric Power Supply Association.
ERCOT ............................................................................... Electric Reliability Council of Texas, Inc.
Fertilizer Institute ................................................................ Fertilizer Institute.
FirstEnergy ......................................................................... FirstEnergy Service Company.
Georgia Cities .................................................................... City of Acworth.
City of Adel.
City of Blakely.
City of Cairo.
City of Calhoun.
City of Camilla.
City of College Park.
APPENDIX B.—COMMENTERS ON NOTICE OF PROPOSED RULEMAKING—Continued

Abbreviation Entity
City of Commerce.
City of Doerun.
City of Douglas.
City of East Point.
City of Ellaville.
City of Fairburn.
City of Forsyth.
City of Fort Valley.
City of Grantville.
City of Hogansville.
City of Lafayette.
City of Lagrange.
City of Lawrenceville.
City of Mansfield.
City of Monticello.
City of Moultrie.
City of Norcross.
City of Oxford.
City of Palmetto.
City of Quitman.
City of Sanderville.
City of Sylvester.
City of Thomaston.
City of Thomasville.
City of Washington.
City of West Point.
Crisp County Power Commission.
City of Whigham.
Fitzgerald Water, Light and Bond Commission.
Marietta Power and Water.
Georgia Operators ............................................................. Georgia System Operators Corp.
International Transmission ................................................. International Transmission Company.
ISO/RTO Council ............................................................... ISO/RTO Council.
ISO–NE .............................................................................. ISO New England, Inc.
KCP&L ................................................................................ Kansas City Power and Light Company.
LPPC .................................................................................. Large Public Power Council.
Manitoba ............................................................................. Manitoba Hydro.
Marshall Municipal Utility Group Massachusetts DTE ....... Massachusetts Department of Telecommunications and Energy.
MEAG Power ..................................................................... MEAG Power.
MidAmerican ...................................................................... MidAmerican Electric Operating Companies.
Mid-Continent ..................................................................... Mid-Continent Systems Group.
MISO–PJM ......................................................................... Midwest Independent Transmission System Operator, Inc. and PJM Interconnection,
L.L.C.
MRO ................................................................................... Midwest Reliability Organization.
NARUC ............................................................................... National Association of Regulatory Utility Commissioners.
National Grid ...................................................................... National Grid USA.
NCPA ................................................................................. Northern California Power Agency.
NERC ................................................................................. North American Electric Reliability Corp.
New England Conference of Public Utilities New England Conference of Public Utilities Commissioners, Inc.
Commissioners*.
New York Commission ....................................................... New York State Public Service Commission.
New York Public Power ..................................................... New York Association of Public Power.
New York TOs .................................................................... New York Transmission Owners.
Nevada Companies ............................................................ Nevada Power Company and Sierra Pacific Power Company.
Northeast Utilities ............................................................... Northeast Utilities Service Company.
Northern Indiana ................................................................ Northern Indiana Public Service Company.
Northwest Requirements Utilities ....................................... Northwest Requirements Utilities.
NPCC ................................................................................. Northeast Power Coordinating Council: Cross-Border Regional Entity, Inc.
NRC .................................................................................... United States Nuclear Regulatory Commission.
NRECA ............................................................................... National Rural Electric Cooperative Association.
NYSRC ............................................................................... New York State Reliability Council, LLC.
NY Major Consumers ......................................................... Multiple Intervenors, an unincorporated association of approximately 55 large indus-
trial, commercial and institutional end-use energy consumers with facilities in New
York.
Ontario IESO ...................................................................... Ontario Independent Electricity System Operator.
Otter Tail ............................................................................ Otter Tail Power Company.
PG&E ................................................................................. Pacific Gas and Electric Company.
Portland General ................................................................ Portland General Electric Company.

Process Electricity Committee ........................................... Process Gas Consumers Group Electricity Committee.
Progress Energy ................................................................ Progress Energy, Inc.
ReliabilityFirst ..................................................................... ReliabilityFirst Corporation.
Reliant ................................................................................ Reliant Energy, Inc.
APPENDIX B.—COMMENTERS ON NOTICE OF PROPOSED RULEMAKING—Continued

Abbreviation Entity
Santa Clara ........................................................................ City of Santa Clara, California.

SDG&E ............................................................................... San Diego Gas and Electric Company.
SERC ................................................................................. SERC Reliability Corporation.
Six Cities ............................................................................ Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California.
SMA .................................................................................... Steel Manufacturers Association.
Small Entities Forum .......................................................... ReliabilityFirst Corporation Small Entities Forum.
SoCal Edison ..................................................................... Southern California Edison Company.
South Carolina E&G ........................................................... South Carolina Electric and Gas Company.
Southern ............................................................................. Southern Company Services, Inc.
Southwest TDUs ................................................................ Southwest Transmission Dependent Utility Group.
STI Capital ......................................................................... STI Capital Company.
Tacoma .............................................................................. Tacoma Power.
TANC .................................................................................. Transmission Agency of Northern California.
TAPS .................................................................................. Transmission Access Policy Study Group.
TVA .................................................................................... Tennessee Valley Authority.
Utah Municipal Power ........................................................ Utah Associated Municipal Power Systems.
Valley Group ...................................................................... The Valley Group, Inc.
WECC ................................................................................ Western Electricity Coordinating Council.
WIRAB advice .................................................................... Western Interconnection Regional Advisory Body.
Wisconsin Electric .............................................................. Wisconsin Electric Power Company.
Xcel .................................................................................... Xcel Energy Services.
*Comments filed out-of-time.
APPENDIX C: ABBREVIATIONS IN THIS DOCUMENT
ACE .................................................................................................................................. Area Control Error.

AGC ................................................................................................................................. Automatic Generation Control.
ANSI ................................................................................................................................. American National Standards Institute.
ATC .................................................................................................................................. Available Transfer Capability.
BCP .................................................................................................................................. Blackstart Capability Plan.
CBM ................................................................................................................................. Capacity Benefit Margin.
CPS .................................................................................................................................. Control Performance Standard.
DC .................................................................................................................................... Direct Current.
DCS .................................................................................................................................. Disturbance Control Standard.
DSM ................................................................................................................................. Demand-Side Management.
ERO ................................................................................................................................. Electric Reliability Organization.
GWh ................................................................................................................................. Gigawatt hour.
IEEE ................................................................................................................................. Institute of Electrical and Electronics Engineers.
IROL ................................................................................................................................. Interconnection Reliability Operating Limits.
LSE .................................................................................................................................. Load-serving Entity.
MVAR ............................................................................................................................... Mega Volt Ampere Reactive.
MW ................................................................................................................................... Mega Watt.
ROW ................................................................................................................................ Right of Way.
SOL .................................................................................................................................. System Operating Limit.
SPS .................................................................................................................................. Special Protection System.
TIS .................................................................................................................................... Transmission Issues Subcommittee.
TLR .................................................................................................................................. Transmission Loading Relief.
TRM ................................................................................................................................. Transmission Reliability Margin.
TTC .................................................................................................................................. Total Transfer Capability.
UFLS ................................................................................................................................ Underfrequency Load Shedding.
UVLS ................................................................................................................................ Undervoltage Load Shedding.
[FR Doc. E7–5284 Filed 4–3–07; 8:45 am]

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Rule: Electric Utilities (Federal Power Act) : Bulk-Power System Mandatory Reliability Standards

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Wednesday,

3. Ambiguities and Potential Multiple Interpretations ............................................................................................................ 264

3. COM: Communications ......................................................................................................................................................... 473

14 The filed proposed Reliability Standards are

32 Under section 215, a transmission organization

b. Commission Determination CFR 39.5(c).

50 NOPR at P 66. For these same reasons, the

assumptions and due process for

63 18 functions. It asks that the Commission operational authority and thus

71 We note that NERC has available on its Web

76 OrderNo. 672 at P 654.

concerned how a June 2007 effective and direct modification pursuant to

proposals. 91 16 U.S.C. 824o(d)(5). Period, section II.D.4.

regular meetings to coordinate on issues 113 FERC ¶ 61,239 (2005).

119 ‘‘Levels of Non-Compliance’’ are established

to these particular circumstances, while the ERO

Reliability Standard. Standards, there was a conscious b. Commission Determination

support of the Reliability Standards joint action agencies whose integrated

include study and testing requirements. be technically capable of providing 1Dec06.pdf.

deviation in frequency and should not problems.164 166 NOPR at P 153.

MW/0.1 Hz, set into a balancing authority ACE

170 The actual frequency response is the increase

correction’’ as ‘‘an offset to the Interconnection’s

the minimum required automatic reserve requirement given widely

that this is largely a financial matter. In to meet their Commission directed

the sabotage reporting procedures to be an exclusive designation.

coordinators, balancing authorities and on an essential nexus between the

Standard should specify that 1) already requirements for simulation-

sabotage. shared among SCADA systems so that

Standard applies to Bulk-Power System Standards development process to better

account of physical differences as one is sufficient to prevent outages due to vegetation

networked system, there may be other components. 274 16 U.S.C. 824o(a)(4).

granularity of information provided to high voltage direct current (HVDC) tie is

to be able to determine their reliability interchange authority so that the

i. Comments Commission should merely instruct questions the value of specifying

i. Comments 005 through INT–009. 861. The Commission remains

authority the necessary transaction requires reliability coordinators and i. Comments

298 California Independent System Operator

cascading failure if operated under the first 1 as mandatory and enforceable.

307 The NERC comments to Staff Assessment at 49

Reliability Coordinator coordination, the Reliability

modification: MOD–06–0, MOD–007–0, MOD–010– to file a joint status report on standards

Undue Discrimination and Preference in

328 That posting preceded by one day the issuance

341 APPA notes that it has expressed its own

m. Maintenance and Distribution of 1164. In response to concerns raised i. Comments

responsible for the integrity and performing dynamics system modeling

farms is acceptable. The Commission reliability organizations within an www.ferc.gov/docs-filing/eforms.asp#715.

Consequently, we reject the proposals of 1286. TAPS is concerned that the

and Qualifications PER Reliability Standards is intended to

(a) Comments (a) Comments under realistic conditions using training

1464. In the NOPR, the Commission modification to PRC–005–1 through the

n. Special Protection System out within a maximum allowable

i. Comments interest, and approves it as mandatory 1547. The Commission approves

18 CFR 292.307. reagarding Requirement R3 of TOP–008–1. Standard with a Commission Order).

Coordinator* * *.’’ goal of TOP–002–1 is to ensure that November version, TOP–002–2.

development process to better comport enforceable. The Commission also

Commission’s view, a single industry-developed finite list of ‘‘critical

Standards in particular. The construct ‘‘additional’’ transmission organizations are unsuccessful in

Report: Evaluation of Criteria, Methods and shall be acceptable to the associated

However, if the spare equipment of a Single Element (TPL–002–0)

those NRC rules should apply. expansion against site-specific and

for a single contingency.’’ NERC comments to the Assessment at 56–57.