[Federal Register: July 25, 2007 (Volume 72, Number 142)]
[Rules and Regulations]
[Page 40717-40737]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy07-3]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM06-16-001; Order No. 693-A]
Mandatory Reliability Standards for the Bulk-Power System
Issued July 19, 2007.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule; order on rehearing.
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SUMMARY: The Commission denies rehearing and otherwise reaffirms its
determinations in Order No. 693. 72 FR 16,416 (April 4, 2007). We
further clarify certain portions of the Preamble to that order. Order
No. 693 approved 83 of 107 proposed Reliability Standards, six of the
eight proposed regional differences, and the Glossary of Terms Used in
Reliability Standards developed by the North American Electric
Reliability Corporation, which the Commission has certified as the
Electric Reliability Organization (ERO) responsible for developing and
enforcing mandatory Reliability Standards. Order No. 693 also required
the ERO to submit significant improvements to 56 of the 83 Reliability
Standards that are being approved as mandatory and enforceable.
Finally, Order No. 693 provided that the remaining 24 Reliability
Standards will remain pending at the Commission until further
information is provided. Order No. 693 adds a new part to the
Commission's regulations, which states that this part applies to all
users, owners and operators of the Bulk-Power System within the United
States (other than Alaska or Hawaii) and requires that each Reliability
Standard identify the subset of users, owners and operators to which
that particular Reliability Standard applies. The new regulations also
require that each Reliability Standard that is approved by the
Commission will be maintained on the ERO's Internet website for public
inspection.
DATES: Effective Date: The final rule became effective on June 18,
2007.
FOR FURTHER INFORMATION CONTACT:
Jonathan First (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8529.
Christy Walsh (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6523.
Robert Snow (Technical Information), Office of Energy Markets and
Reliability, Division of Reliability, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6716.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.
Order on Rehearing
[[Page 40718]]
Paragraph
I. Introduction............................................. 1
A. Summary of Order No. 693............................. 3
B. Procedural Matters................................... 4
II. Discussion.............................................. 7
A. Applicability Issues................................. 7
1. Bulk-Power System v. Bulk Electric System........ 7
2. NERC Registry.................................... 20
3. Use of the NERC Functional Model................. 48
B. Mandatory Reliability Standards...................... 57
1. Prioritizing Modifications to Reliability 57
Standards..........................................
2. Trial Period..................................... 61
C. Common Issues Pertaining to Reliability Standards.... 65
1. Blackout Report Recommendation on Liability 65
Limitations........................................
2. Fill-in-the-Blank Standards...................... 70
D. Discussion of Individual Reliability Standards....... 82
1. EOP-001-0........................................ 82
2. EOP-002-2........................................ 86
3. EOP-008-0........................................ 90
4. FAC-003-1........................................ 95
5. IRO-001-1........................................ 100
6. IRO-005-1 and IRO-005-2.......................... 120
7. MOD-013-1........................................ 123
8. PRC-007-0, PRC-008-0, and PRC-009-0.............. 132
9. TOP-008-1........................................ 153
III. Information Collection Statement....................... 156
IV. Document Availability................................... 157
I. Introduction
1. On March 16, 2007, the Commission issued a Final Rule (Order No.
693) \1\ approving, pursuant to section 215 of the Federal Power Act
(FPA),\2\ 83 of 107 proposed Reliability Standards, six of the eight
proposed regional differences, and the Glossary of Terms Used in
Reliability Standards (glossary) developed by the North American
Electric Reliability Corporation (NERC), which the Commission has
certified as the Electric Reliability Organization (ERO) responsible
for developing and enforcing mandatory Reliability Standards. However,
the Commission stated that, although it believed it is in the public
interest to make these Reliability Standards mandatory and enforceable,
it also found that much work remains to be done. Specifically, it
stated that many of these Reliability Standards require significant
improvement to address, among other things, the recommendations of the
Blackout Report.\3\ Therefore, pursuant to section 215(d)(5), we
required the ERO to submit significant improvements to 56 of the 83
Reliability Standards that are being approved as mandatory and
enforceable. The Commission stated that the remaining 24 Reliability
Standards will remain pending at the Commission until further
information is provided.
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\1\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, 72 FR 16,416 (Apr. 4, 2007), FERC Stats. & Regs. ]
31,242 (2007).
\2\ 16 U.S.C. 824o (2000).
\3\ U.S.-Canada Power System Outage Task Force, Final Report on
the August 14 Blackout in the United States and Canada: Causes and
Recommendations (April 2004) (Blackout Report). The Blackout Report
is available on the Internet at http://www.ferc.gov/cust-protect/moi/blackout.asp
.
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2. Order No. 693 added a new part to the Commission's regulations,
which states that this part applies to all users, owners and operators
of the Bulk-Power System within the United States (other than Alaska or
Hawaii) and requires that each Reliability Standard identify the subset
of users, owners and operators to which that particular Reliability
Standard applies. The new regulations also require that each
Reliability Standard that is approved by the Commission will be
maintained on the ERO's Internet Web site for public inspection.
A. Summary of Order No. 693
3. In Order No. 693, the Commission stated that there were four
possible courses of action that it would take with regard to each
proposed Reliability Standard: (1) Approve; (2) approve as mandatory
and enforceable; and direct modification pursuant to section 215(d)(5);
(3) request additional information; or (4) remand. As mentioned above,
the Commission approved 83 Reliability Standards and directed NERC to
develop modifications to 56 of the approved Reliability Standards. In
approving the Reliability Standards, Order No. 693 stated that, for an
initial period, the Commission would rely on the NERC definition of
bulk electric system, rather than the statutory Bulk-Power System, and
NERC's registration process to provide as much certainty as possible
regarding the applicability to and the responsibility of specific
entities to comply with the Reliability Standards in the start-up phase
of a mandatory Reliability Standard regime.\4\ Further, while the
Commission did not institute a formal ``trial period,'' it directed the
ERO and Regional Entities to ``focus their resources'' on the ``most
serious violations'' during an initial period through December 31,
2007.\5\
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\4\ Order No. 693 at P 75.
\5\ Id. at P 221-22.
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B. Procedural Matters
4. The following entities have filed timely requests for rehearing
or for clarification of Order No. 693: American Public Power
Association (APPA); Avista Corporation, Portland General Electric
Company, and Puget Sound Energy, Inc. (collectively, Avista); City of
Santa Clara, California (Santa Clara); Cogeneration Association of
California and the Energy Producers and Users Coalition (California
Cogeneration); ISO-New England, Inc. (ISO-New England); Midwest
Independent Transmission System Operator, Inc. (Midwest ISO); National
Association of Regulatory Utility Commissioners (NARUC); National Rural
Electric Cooperative Association (NRECA); Pacific Northwest Security
Coordinator (PNSC); Transmission Agency of Northern California (TANC);
and Xcel Energy Services, Inc. (Xcel).
5. PNSC's rehearing request is deficient because it fails to
include a Statement of Issues section separate from its arguments, as
required by Rule
[[Page 40719]]
713 of the Commission's Rules of Practice and Procedure.\6\ Rule
713(c)(2) requires that a rehearing request must include a separate
section entitled ``Statement of Issues'' listing each issue presented
to the Commission in a separately enumerated paragraph that includes
representative Commission and court precedent on which the participant
is relying.\7\ Under Rule 713, any issue not so listed will be deemed
waived. Accordingly, we will dismiss PNSC's rehearing request.\8\
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\6\ 18 CFR 385.713(c)(2) (2006). See Revision of Rules of
Practice and Procedure Regarding Issue Identification, Order No.
663, 70 FR 55,723 (September 23, 2005), FERC Stats. and Regs. ]
31,193 (2005). See also, Order 663-A, effective March 23, 2006,
which amends Order No. 663 to limit its applicability to rehearing
requests. Revision of Rules of Practice and Procedure Regarding
Issue Identification, Order No. 663-A, 71 FR 14,640 (March 23,
2006), FERC Stats. and Regs. ] 31,211 (2006) (codified at 18 CFR
385.713(c)(2) (2006)).
\7\ As explained in Order No. 663, supra, the purpose of this
requirement is to benefit all participants in a proceeding by
ensuring that the filer, the Commission, and all other participants
understand the issues raised by the filer, and to enable the
Commission to respond to these issues. Having a clearly articulated
Statement of Issues ensures that issues are properly raised before
the Commission and avoids the waste of time and resources involved
in litigating appeals regarding whether the courts of appeals lack
jurisdiction because the issues on appeal were not clearly
identified before the Commission. See Order No. 663 at P 3-4.
\8\ See, e.g., Duke Power Co., LLC, 116 FERC ] 61,171 (2006);
and South Carolina Electric & Gas Co., 116 FERC ] 61,218 (2006).
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6. In any event, PNSC's arguments on rehearing are beyond the scope
of this proceeding. PNSC asks the Commission to clarify that PNSC is in
compliance with IRO-001 because it has written agreements delineating
the responsibilities and authority of the operating personnel who staff
its reliability center. Whether any one entity is in compliance with a
Reliability Standard is not an issue in the rulemaking.
II. Discussion
A. Applicability Issues
1. Bulk-Power System v. Bulk Electric System
7. Section 215 of the FPA defines the term ``Bulk-Power System'' as
follows:
(A) facilities and control systems necessary for operating an
interconnected electric energy transmission network (or any portion
thereof) and (B) electric energy from generating facilities needed
to maintain transmission system reliability. The term does not
include facilities used in the local distribution of electric
energy.
8. The NERC glossary, in contrast, states that Reliability
Standards apply to the ``bulk electric system,'' which is defined by
its regions in terms of a voltage threshold and configuration, as
follows:
As defined by the Regional Reliability Organization, the
electrical generation resources, transmission lines,
interconnections with neighboring systems, and associated equipment,
generally operated at voltages of 100 kV or higher. Radial
transmission facilities serving only load with one transmission
source are generally not included in this definition.
9. In Order No. 693, the Commission stated that, for an initial
period, it would rely on the NERC definition of bulk electric system
and NERC's registration process to provide as much certainty as
possible regarding the applicability to and the responsibility of
specific entities to comply with the Reliability Standards in the
start-up phase of a mandatory Reliability Standard regime.\9\ However,
the Commission stated that it was concerned about the need to address
the potential for gaps in coverage of facilities. The Commission
intends to address this matter in future proceedings. As a first step
in enabling the Commission to understand the reach of the Reliability
Standards, we directed the ERO to provide the Commission with an
informational filing that includes a complete set of regional
definitions of bulk electric system and any regional documents that
identify critical facilities to which the Reliability Standards apply
(i.e., facilities below a 100 kV threshold that have been identified by
the regions as critical to system reliability).
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\9\ Order No. 693 at P 75.
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10. However, the Commission disagreed with commenters who suggested
that there is no intentional distinction between Bulk-Power System and
bulk electric system. This distinction was evidenced by the fact that
``Congress did not borrow the term of art--bulk electric system--but
instead chose to create a new term, Bulk-Power System, with a
definition that is distinct from the term of art used by industry.''
\10\ Thus, the Commission ``confirmed'' that the Bulk-Power System
reaches farther than those facilities that are included in NERC's
definition of the bulk electric system, although choosing to rely on
the NERC definition for determining the immediate applicability of the
approved Reliability Standards. The Commission indicated that it
remained concerned about potential gaps in coverage of facilities and
that any change in applicability would be addressed in future
Commission proceedings.
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\10\ Id. at P 76.
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a. Requests for Rehearing
11. NRECA asks that the Commission clarify that it has not
definitively decided that the term Bulk-Power System as defined in
section 215 of the FPA encompasses more than NERC's definition of bulk
electric system. Rather, NRECA understands that the Commission deferred
on determining whether its jurisdiction expands beyond the bounds of
the bulk electric system. NRECA is concerned that Order No. 693 may
suggest that the Bulk-Power System is broader than the bulk electric
system out of a misapprehension that NERC's definition imposes a
rigorous 100 kV ``cutoff'' when, according to NRECA, it actually
provides for more flexibility. Alternatively, if the Commission has
definitively interpreted the term Bulk-Power System to encompass more
than the bulk electric system, NRECA seeks rehearing.
12. In support of its request for rehearing, NRECA raises three
arguments that the Commission erred in determining that the statutory
definition of Bulk-Power System is broader than NERC's definition of
bulk electric system. First, it contends that such a determination
violates a rule of law that the parts of a statute should be construed
in accordance with the statute's overall legislative purpose.\11\ NRECA
explains that section 215 was intended to replace the prior voluntary
reliability standards with a mandatory scheme but, to the best of
NRECA's knowledge, no participant in the drafting of the legislation
expressed the view that Congress intended to expand NERC's scope.\12\
NRECA states that, if the issue had been presented, it would have
prompted a legislative record. The absence of such record confirms that
an intent to expand NERC's scope was never expressed.
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\11\ NRECA at 7-11, citing United States v. Public Utilities
Commission of California, 345 U.S. 295, 315 (1953).
\12\ NRECA at 7-8.
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13. Second, NRECA contends that an expansive definition of Bulk-
Power System is contrary to the text of section 215, which narrows the
Commission's reach. Specifically, NRECA contends that the statutory
definition of Bulk-Power System makes clear that the term does not
encompass all transmission facilities but, rather, only those
facilities and control systems ``necessary for operating an
interconnected electric energy transmission network.'' It also points
to the statutory definitions of Reliability Standard and Reliable
[[Page 40720]]
Operation that refer to protecting the system from instability,
uncontrolled separation or cascading failures. NRECA infers from this
that there is no reason to conclude that Congress included in the
definition of Bulk-Power System any facilities other than those that
could materially contribute to instability, uncontrolled separation or
cascading outages.
14. Third, NRECA posits that, if Congress borrows a term of art
that has an established meaning, the established meaning is to
apply.\13\ NRECA claims that the terms Bulk-Power System and bulk
electric system have been used interchangeably for decades and cites
examples from both industry documents and Commission orders. According
to NRECA, Congress did not adopt NERC's exact definition of bulk
electric system because it was insufficiently specific for legislation.
NRECA asserts that ``Congress used more and different words than NERC
in order to provide clarity, but the definition of Bulk-Power System
incorporated the exact same facilities as NERC and the regions had
always included in their working definition of bulk electric system * *
*'' \14\
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\13\ Id. at 11-16, citing Morissette v. United States, 342 U.S.
246, 263 (1952).
\14\ NRECA at 16.
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15. NARUC seeks clarification that the Commission will ``continue
relying on NERC's definition of Bulk-Power System'' and NERC's
registration process beyond the initial period during which mandatory
Reliability Standards are in effect.\15\ It states that section 215 of
the FPA was enacted based on an industry consensus that it would apply
to facilities and entities covered by the historical definition of
Bulk-Power System. According to NARUC, the term applies to higher-
voltage, network facilities that integrate regional transmission
networks to ensure the reliability of interconnected system operations.
NARUC states that NERC's definition of Bulk-Power System is consistent
with section 215 and that a broader interpretation is inconsistent with
Congressional intent because such a definition could sweep in
facilities such as load centers and local transmission facilities that
do not have a material impact on system reliability.
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\15\ NARUC at 3. NARUC refers repeatedly to ``NERC's definition
of Bulk-Power System.'' It is not clear from NARUC's pleading
whether this is simply a typographical error or it seeks to make a
point that NERC's definition of bulk electric system is equivalent
to the statutory term Bulk-Power System.
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16. NARUC also seeks clarification that, if the Commission
determines that NERC's current definition requires revision, NERC
should revise the definition using its American National Standards
Institute (ANSI)-accredited process. Further, NARUC expresses concern
that the Commission has directed the ERO to submit a complete set of
regional definitions of bulk electric system and, thus, asks the
Commission to clarify that it will continue to defer to the ERO's and
Regional Entities' determinations concerning which facilities and
entities materially affect the reliability of the interconnected
transmission network and should be included in the compliance registry.
b. Commission Determination
17. The Commission will grant NRECA's request for clarification,
and thus dismisses its request for rehearing. We agree with NRECA that
NERC's definition of bulk electric system does not impose a 100 kV
cutoff and provides some flexibility in its application.\16\ Although
Order No. 693 stated that the Commission believes that the Bulk-Power
System reaches farther than those facilities that are included in
NERC's definition of the bulk electric system, the Commission has not
definitively defined the extent of the facilities covered by the Bulk-
Power System. As we stated in Order No. 693, the Commission intends to
address concerns regarding the scope of the term Bulk-Power System in
future proceedings. NRECA and others will not be legally precluded from
presenting arguments in such a proceeding that the terms Bulk-Power
System and bulk electric system encompass the same facilities.
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\16\ See Mandatory Reliability Standards for the Bulk Power
System, Notice of Proposed Rulemaking, 71 FR 64,770 (Nov. 3, 2006),
FERC Stats. & Regs., ] 32,608 at P 63 (2006).
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18. The Commission notes NRECA's assertion that the Commission's
determination that the Bulk-Power System reaches farther than the bulk
electric system is contrary to the text of section 215 of the FPA.
Because the Commission has not definitively defined the extent of the
facilities covered by the Bulk-Power System, the Commission believes
that this determination is best made in the context of a Commission
proceeding determining the extent of the Bulk-Power System. We make no
finding on the matter at this time. The Commission defers judgment on
this matter to a later proceeding so that the Commission can develop a
record on which to base its final determination.
19. In response to NARUC, the Commission will continue to rely on
NERC's definition of bulk electric system, with the appropriate
regional differences, and NERC's registration process until the
Commission determines in future proceedings the extent of the Bulk-
Power System. The requirement that the ERO file a complete set of
regional differences was to enable the Commission to understand the
current reach of the Reliability Standards. However, we do not agree
with NARUC that NERC should be allowed to define Bulk-Power System
using its American National Standards Institute (ANSI)-accredited
process. The statutory term Bulk-Power System defines the jurisdiction
of the Commission. Although the Commission has chosen to defer, for the
time being, to the ERO as to which entities must comply with
Reliability Standards, the fundamental matter of determining the extent
of Commission's jurisdiction cannot and will not be delegated to the
ERO.
2. NERC Registry
20. Order No. 693 accepted the ERO's compliance registry process as
an appropriate approach to identify the set of entities that are
responsible for compliance with a particular Reliability Standard.\17\
Further, Order No. 693 explained that NERC has developed a Statement of
Compliance Registry Criteria that describes how NERC will identify
organizations that may be candidates for registration and assign them
to the compliance registry. NERC's compliance registry process
identifies and registers entities based on categories of functions
within the Bulk-Power System and related Commission-approved
Reliability Standards. For example, NERC plans to register individual
generator units of 20 MVA or greater that are directly connected to the
bulk electric system, generating plants with an aggregate rating of 75
MVA or greater, any blackstart unit material to a restoration plan, or
any generator ``regardless of size, that is material to the reliability
of the Bulk-Power System.'' The Commission accepted the Statement of
Compliance Registry Criteria, stating that ``[w]e believe that NERC has
set reasonable criteria for registration* * *''.\18\
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\17\ Order No. 693 at P 92-101.
\18\ Id. at P 95.
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21. Further, Order No. 693 noted that the Commission's regulations
then exempted most qualifying facilities (QFs) from specific provisions
of the FPA including section 215.\19\ The Commission, however,
expressed concerned whether it is appropriate to
[[Page 40721]]
grant QFs a complete exemption from compliance with Reliability
Standards that apply to other generator owners and operators, and noted
that the Commission was concurrently issuing a notice of proposed
rulemaking proposing to amend the Commission's regulation that exempts
most QFs from section 215 of the FPA. The Commission has since issued a
final rule eliminating the exemption of QFs from the requirements of
section 215 of the FPA.\20\
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\19\ 18 CFR 292.601(c) (2006).
\20\ Applicability of Federal Power Act Section 215 to
Qualifying Small Power Production and Cogeneration Facilities, Order
No. 696, FERC Statutes and Regulations ] 31,248 (2007).
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c. Requests for Rehearing
22. California Cogeneration argues that the Commission improperly
relied on the ERO's compliance registry process. It contends that the
Commission, rather than determining who the ``users'' of the Bulk-Power
System are, has improperly delegated this task to the ERO and Regional
Entities. California Cogeneration notes that the NERC registry criteria
were submitted for information purposes only. Further, it contends that
these criteria are being applied inconsistently among the Regional
Entities, noting in particular that Western Electricity Coordinating
Council (WECC) has developed supplemental criteria that may result in
the registration of entities not captured by the ERO criteria.\21\ It
also points to discrepancies in ERCOT's registration process.
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\21\ California Cogeneration at 5, Referencing WECC Supplemental
Registration Criteria and Dispute Resolution Process, available at
http://www.wecc.biz.
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23. California Cogeneration also argues that Reliability Standards
that are not clear in how they are applied or are applied
inconsistently are not just and reasonable. It contends that the
examples of regional variation in the registration process demonstrate
a lack of required clarity and consistency.
24. NRECA asks the Commission to clarify that, in expanding the
applicability of certain Reliability Standards,\22\ it has not departed
from the compliance registry concept or sought to dictate actions by
the ERO. Alternatively, the Commission should grant rehearing.
According to NRECA, it appears possible, even likely, that the
Commission was not specifying that additional entities register, but
was merely specifying that the ERO should consider whether entities
otherwise required to register (because they meet or exceed specified
thresholds, or because they had been to shown to have a material impact
on grid reliability) should also be subject to these particular
Reliability Standards.\23\ If that is the Commission's intended
meaning, NRECA requests that the Commission specify the requested
clarification and resolve the matter (subject to subsequent
consideration by the ERO). However, if the Commission intends to impose
a broader obligation, i.e., to encompass additional entities in the
Reliability Standards, then NRECA seeks rehearing.
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\22\ NRECA at 20-23. Specifically, NRECA cites the Commission's
requirement that (1) COM-001-1, or some replacement Reliability
Standard addressing black start capability, and COM-002-2 apply to
all distribution providers, (2) TOP-003-0 apply to all load-serving
entities, even those below specified thresholds, based on the
opinion of the transmission operator, balancing authority, or
reliability coordinator, and (3) VAR-001-1 apply to all load-serving
entities. See Order No. 693 at P 487, 492, 512, 540, 1624, 1626,
1848, 1858 and 1990.
\23\ NRECA at 20, citing see, e.g., Order No. 693 at P 512
(``APPA's concern that 2,000 public power systems would have to be
added to the compliance registry is misplaced, since, as we explain
in our Applicability discussed above, we are approving NERC's
registry process, including the registry criteria'').
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25. Further, NRECA argues that the Commission should not, as it
recognized in Order No. 672-A, prescribe either the text or the
substance of a Reliability Standard, including which entities are
subject to the Reliability Standards, because that responsibility is
reserved to the ERO, subject to the Commission's review. NRECA
maintains that the Commission lacks the authority to dictate what a
Reliability Standard requires or who it encompasses, as the Commission
has recognized previously in Order No. 672-A. NRECA notes that Order
No. 693 states that the Commission ``agrees that a direction for
modification should not be so overly prescriptive as to preclude the
consideration of viable alternatives in the ERO's Reliability Standards
development process * * *. Thus, in some instances, while we provide
specific details regarding the Commission's expectations, we intend by
doing so to provide useful guidance to assist in the Reliability
Standards development process, not to impede it.'' \24\
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\24\ Order No. 693 at P 185-86.
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26. Beyond that, NRECA asserts that the Reliability Standards
should not apply at all to entities whose scope of activities is too
limited to have a material impact on grid reliability. In other words,
the specific Reliability Standards should not apply to a distribution
provider or a load-serving entity just because it is a distribution
provider or a load-serving entity; instead, the Reliability Standards
at issue, as well as the Reliability Standards generally, should not
apply unless an entity has a material impact on grid reliability.
According to NRECA, this concept is central to NERC's compliance
registry, and the Commission has not articulated a sound basis for
departing from it, notwithstanding the Commission's lack of authority
to do so.
27. With respect to COM-001-1 or some replacement standard
addressing black start capability, and COM-002-2, for example, NRECA
asserts that some entities are functionally irrelevant for black start
activities. It argues that having to coordinate black start operations
with a large number of small entities, most, if not all, of which are
served through interconnections with larger and bigger entities in the
hierarchy of the Functional Model, would hinder, rather than
facilitate, black start operations. NRECA maintains that the Commission
should defer to the ERO's technical expertise.
28. NRECA raises similar concerns with respect to TOP-003-1.
According to NRECA, read literally, the Commission appears to recommend
delegating the determination of whether entities that fall below the
threshold of NERC's definition of bulk electric system should be
subject to the standard to ``the opinion of the transmission operator,
balancing authority, or reliability coordinator.'' If so, NRECA asserts
that this approach would appear to override both the compliance
registry and the ERO, and the Commission would effectively delegate
authority that it does not have to entities that could well face
incentives to favor their own interests over those of load-serving
entities that could be made subject to the Reliability Standards. The
Commission cannot delegate authority it does not have in the first
place, and the determination should be that of the ERO and the Regional
Entity. While NRECA agrees that the ERO and the Regional Entities may
and should take the views of the transmission operators, balancing
authorities, and reliability coordinators into account, it argues that
this is considerably different than simply abdicating the matter to
them.
29. NRECA has similar concerns with the treatment of VAR-001-1 with
respect to the Commission's ``direct[ing] the ERO to address the
reactive power requirements of load-serving entities on a comparable
basis with purchasing-selling entities.'' While NRECA agrees that this
may be an appropriate matter for the ERO to consider, it argues that
the Commission should not be dictating a particular action, nor should
the Commission be overriding the compliance registry approach that it
elsewhere endorses in its Final Rule.
[[Page 40722]]
30. Accordingly, NRECA requests the Commission to clarify that it
has not overridden the compliance registry with respect to COM-001-1,
COM-002-2, and TOP-003-0, nor dictated specific changes to those
Reliability Standards. Alternatively, NRECA seeks rehearing. Absent the
requested clarification, NRECA asserts that the Commission has sought
to prescribe the substance of a Reliability Standard in excess of its
statutory authority under section 215, contrary to its own recognition
of the limitations on its authority in Order No. 672-A, and contrary to
Order No. 693 itself. NRECA maintains that the proposed changes could
undermine rather than enhance reliability for the reasons stated, and
thus involve matters where the Commission should and is required to
defer to the ERO's technical expertise.
31. Xcel notes that, pursuant to NERC's registry criteria, NERC
will generally register individual generator units of 20 MVA or greater
that are directly connected to the bulk electric system. According to
Xcel, under NERC's criteria, generators that are connected to
distribution facilities are generally exempt from registration as they
are not connected to the Bulk-Power System. Xcel seeks rehearing of the
Commission's decision to accept this aspect of the ERO's registration
process, contending that generating facilities that are connected at a
distribution voltage but deliver energy to the transmission system can
affect transmission system reliability and, thus, should be subject to
mandatory Reliability Standards. Further, Xcel contends that the
exclusion of facilities connected at a distribution level creates
inappropriate incentives for entities to interconnect generating
facilities at the distribution level rather than the transmission
level.
32. TANC requests clarification of the Commission's statement that:
we believe our concerns can be addressed by having the ERO, through
its compliance registry process, ensure that each user, owner and
operator of the Bulk-Power System is registered for each Requirement
in the Reliability Standards that relate to transmission owners to
assure there are no gaps in coverage of the type discussed
here.[\25\]
---------------------------------------------------------------------------
\25\ Id. at P 145.
33. According to TANC, this statement seems to require all entities
subject to the Reliability Standards to register for each requirement
applicable to transmission owners, which it states is inconsistent with
the Commission's goal of preventing overlap and negates the
transmission owner classification in the NERC Functional Model.
Therefore, TANC asks the Commission to clarify that only those entities
that meet the description of transmission owner provided in NERC's
compliance registry and the NERC Functional Model descriptions are
required to register as responsible entities for the Requirements
applicable to transmission owners.
34. TANC asks that the Commission specify that, where an existing
contract between two parties provides that one is the transmission
owner, but the other has agreed to perform the TOP functions, the
latter entity be listed in the compliance registry as the responsible
entity for the TOP Reliability Standards. Further, TANC maintains that
the transmission owner should not be the default entity ultimately
responsible for compliance with the TOP Reliability Standards.
According to TANC, only the entity accepting responsibility to perform
the tasks delegated to it in the agreement should be accountable for
the responsibilities assigned to it in the agreement. TANC asserts
that, where entities have assigned responsibilities by contract, there
is no reason to register those responsibilities to another entity.
35. California Cogeneration claims that Order No. 693 failed to
adequately address the unique characteristics of QFs. It states that
reliance on the registry process, which is based on the 14 functions
identified in the NERC functional model, does not adequately
distinguish among different types of generators, including size and
location, and their impact on reliability. California Cogeneration
states that the Commission, as a remedy to these infirmities, should
direct NERC to immediately initiate a stakeholder process to revise the
Reliability Standards to identify in greater detail the entities that
are responsible for compliance and revise requirements to recognize the
operational constraints of different generators. It states that this
process should be completed before Reliability Standards become
enforceable. Further, California Cogeneration states that the
stakeholder process should also develop criteria for determining
whether an entity has a ``material impact'' on reliability.
36. Finally, California Cogeneration states that the Commission was
not responsive to issues raised by California Cogeneration in its
rulemaking comments regarding individual Reliability Standards that
apply to generator owners and operators and needed revisions if they
are to be applied to cogenerators. It states that some of these
Reliability Standards seem to require information regarding gross
generation or load behind the customer's point of interconnection,
contrary to an earlier Commission order.\26\ While the Commission
directed the ERO to consider these concerns during its three-year Work
Plan to review each Reliability Standard, California Cogeneration
contends this approach does not suffice because cogenerators must
comply with the Reliability Standards in the interim.
---------------------------------------------------------------------------
\26\ California Cogeneration at 12, citing California
Independent System Operator, Corp., 96 FERC ] 63,015 (2001) (Initial
Decision); Opinion No. 464, 104 FERC ] 61,196 (2003) (affirming
Initial Decision).
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d. Commission Determination
37. The Commission denies California Cogeneration's request for
rehearing concerning the definition of users of the Bulk-Power System.
The Commission has not improperly delegated this definition to the ERO
and Regional Entities. While NERC proposed the registry criteria, the
Commission reviewed the criteria and approved them as appropriate under
section 215 of the FPA. Further, the Commission has provided a method
by which any entity that disagrees with NERC's determination to place
it in the compliance registry may submit a challenge in writing to NERC
and, if still not satisfied, may lodge an appeal with the
Commission.\27\ Therefore, the Commission has the ultimate ability to
determine whether an entity should be on the NERC registry.
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\27\ See Order No. 693 at P 101; ERO Certification Order at P
679.
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38. With regard to the fact that certain Regional Entities have
created supplemental criteria to determine which entities should be on
the registry, we agree with California Cogeneration that this is not
appropriate.\28\ Order No. 693 accepted NERC's compliance
[[Page 40723]]
registration process ``to provide as much certainty as possible
regarding the applicability and responsibility of specific entities
under the approved standards.'' \29\ NERC's Statement of Compliance
Registry does not reference supplemental compliance registries created
by Regional Entities. While both the Commission and the ERO have made
it clear that an entity that falls below the minimum registry criteria
may be included on the compliance registry on a facility-by-facility
basis, nonetheless NERC's compliance registry places the burden on the
Regional Entity to reasonably demonstrate that the organization is a
user, owner or operator of the Bulk-Power System.\30\ This language
contemplates a case-by-case registration of entities outside the NERC
criteria, provided that a reasonable demonstration of the need to
register the entity \31\ is made by the Regional Entity.\32\
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\28\ We note that the example cited by California Cogeneration
appears to assert that the NERC registry criteria incorporates a
bright line test as to which entities should be registered:
The application of the different sets of criteria to a 30 MW
generator interconnected at 69 kv illustrates the inconsistency in
treatment. Under NERC's criteria, the generator is interconnected at
less than 100 kv, and it is not therefore a user of the bulk
electric system. The generator would be eliminated from registration
by the first step of NERC's process. WECC's Supplemental Criteria,
however, state that a generator greater than 20 MW must be
registered regardless of the voltage at which it is interconnected.
California Cogeneration at 5. We disagree with this
interpretation. NERC's compliance registry would also allow the ERO
and Regional Entities to register ``[a]ny generator, regardless of
size, that is a blackstart unit material to and designated as part
of a transmission operator entity's restoration plan, or; * * *
[a]ny generator, regardless of size, that is material to the
reliability of the bulk power system.'' NERC Statement of Compliance
Registry at 7.
\29\ Order No. 693 at P 33.
\30\ NERC Statement of Compliance Registry at 10, n.1.
\31\ The entity registered would also have to be a user, owner
or operator of NERC's definition of bulk electric system.
\32\ The Commission notes that no Regional Entity has filed a
supplemental registry with the Commission. The Commission makes its
determination to reject regional registry criteria without prejudice
to a Regional Entity creating supplemental registry criteria,
provided that the Regional Entity affords due process to those
entities that would be subject to them, and requests ERO and
Commission approval of such criteria.
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39. In response to NRECA, in directing the ERO to expand the
applicability of certain Reliability Standards, the Commission did not
intend to expand the applicability beyond those entities that are on
the compliance registry. Rather, we indicated where the Commission
believed there was a reliability concern in not applying certain
Reliability Standards to a category of registered entities. For
example, in COM-001-0, where the Commission directed the ERO to add
distribution providers that are essential to the implementation of a
black start plan to the Applicability section, this would include only
those distribution providers that are on the compliance registry.
40. The Commission agrees with NRECA to the extent that we do not
wish that a direction for modification be so overly prescriptive as to
preclude the consideration of viable alternatives in the ERO's
Reliability Standards development process. However, as stated in Order
No. 693, in identifying a specific matter to be addressed in a
modification to a Reliability Standard, it is important that the
Commission provide sufficient guidance so that the ERO has an
understanding of the Commission's concerns and an appropriate, but not
necessarily exclusive, outcome to address those concerns. Without such
direction and guidance, the ERO might not know how to respond
adequately to a Commission proposal to modify a Reliability
Standard.\33\ Thus, in some instances, while we provided specific
details regarding the Commission's expectations, we intended by doing
so to provide useful guidance to assist in the Reliability Standards
development process, not to impede it.
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\33\ Order No. 693 at P 185.
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41. With respect to the specific Reliability Standards cited by
NRECA, the Commission first notes that NRECA does not appear to request
rehearing on the substance of the directed modifications, but argues
that the Commission was too prescriptive procedurally. In many
instances, the Commission provided guidance to the ERO and stated that
it could develop an alternative to our direction, so long as the
alternative is as effective and efficient as the Commission's proposal.
However, with respect to the Reliability Standards cited by NRECA, the
Commission has identified specific concerns about the gap in
applicability in the Reliability Standard. For example, as to COM-001-1
and COM-002-2, the Commission was concerned about having a reliability
gap during normal and emergency operations. Section 215(d)(5) of the
FPA states:
The Commission, upon its own motion or upon complaint, may order
the Electric Reliability Organization to submit to the Commission a
proposed reliability standard or a modification to a reliability
standard that addresses a specific matter if the Commission
considers such a new or modified reliability standard appropriate to
carry out this section.
In the instances cited by NRECA, the Commission has identified a
deficiency in the applicability of the Reliability Standard. To correct
this deficiency, the ERO must add the specific entity to the
Applicability section of the Reliability Standard.
42. TOP-003-0 contains Requirements that can have a significant
impact on both the reliability of the Bulk-Power System and on
competition with regard to available transfer capability (ATC). The
Commission's approval of TOP-003-0 does not override either the
compliance registry or the ERO. The planning authority or transmission
planner should inform its Regional Entity if it is not receiving
cooperation in getting the information it requires. We note that
section 39.2(d) of our regulations requires each user, owner or
operator of the Bulk-Power System to provide the Commission, the ERO
and the applicable Regional Entity such information as is necessary to
implement section 215 of the FPA. If a problem arises in obtaining
information necessary to calculate ATC, the Commission may revisit this
matter in the future. For example, if entities are unable to obtain the
required information under TOP-003-0, the Commission might require the
ERO, through the Reliability Standards development process, to develop
a provision to ensure that all jurisdictional entities that must
provide information pursuant to TOP-003-0 because of a particular
reliability need are added to the registry, even if only to meet the
requirements of TOP-003-0.
43. The Commission denies Xcel's request for rehearing. As noted by
Xcel, NERC's registry criteria state that the ERO and Regional Entities
will ``generally'' register generators greater than 20 MVA and will
``generally'' exempt generators that are connected to distribution
facilities. The use of the term ``generally'' allows the ERO and
Regional Entities flexibility to register a generator meeting those
descriptions if the ERO or a Regional Entity determines that the
facility is needed for Bulk-Power System reliability. Further, Order
No. 693 specifically provided for such an outcome.\34\ Therefore, those
generating facilities that Xcel is concerned about, which are connected
at a distribution voltage but deliver energy to the transmission
system, may be required to comply with Reliability Standards depending
on a possible case-by-case determination by the ERO or a Regional
Entity. Xcel does not provide any support for its claim that this
general exclusion of facilities connected at a distribution level
creates inappropriate incentives for entities to interconnect
generating facilities at the distribution level rather than the
transmission level.
---------------------------------------------------------------------------
\34\ Id. at P 101. ``Finally, the Commission agrees that,
despite the existence of a voltage or demand threshold for a
particular Reliability Standard, the ERO or Regional Entity should
be permitted to include an otherwise exempt facility on a facility-
by-facility basis if it determines that the facility is needed for
Bulk-Power System reliability.''
---------------------------------------------------------------------------
44. In response to TANC's concern that Order No. 693 appears to
require all entities subject to the Reliability Standards to register
for each requirement applicable to transmission owners, we disagree.
This statement was made only to ensure that there are no gaps or
unnecessary redundancies with regard to the entity or entities
responsible for compliance. The
[[Page 40724]]
Commission did not intend to imply that each user, owner and operator
of the Bulk-Power System must comply with those Reliability Standards
which apply to transmission owners. Rather, the Commission intended for
the ERO to ensure that there is clarity in the registering of entities
and that the registration process results in no gaps or unnecessary
redundancies.
45. Further, the Commission clarifies that it did not intend to
change existing contracts, agreements or other understandings as to who
is responsible for a particular function under a Reliability
Standard.\35\ The Commission believes that allowing an organization to
accept compliance responsibility on behalf of its members should cover
TAPS' concerns regarding a situation in which two entities have a
contract regarding which will perform functions under the Reliability
Standards.\36\ NERC has filed procedures for allowing such agreements
in Docket No. RM06-16-003. The Commission will rule on the particulars
of those procedures in that proceeding.
---------------------------------------------------------------------------
\35\ See id. at P 107.
\36\ See id. at P 107-09.
---------------------------------------------------------------------------
46. The Commission denies California Cogeneration's request for
rehearing with respect to exemption of QFs from compliance with
mandatory Reliability Standards. As stated in Order No. 696, for
reliability purposes, there is no meaningful distinction between QF and
non-QF generators that would warrant generic exemption of QFs from
mandatory Reliability Standards.\37\ Therefore, we disagree with
California Cogeneration that Order No. 693 failed to adequately address
the unique characteristics of QFs.
---------------------------------------------------------------------------
\37\ Order No. 696 at P 28.
---------------------------------------------------------------------------
47. Whether a generation facility should be subject to Reliability
Standards should depend on whether electric energy from the generation
facility is needed to maintain the reliability of the Bulk-Power
System. The registration criteria adopted by NERC and approved by the
Commission, as well as the compliance registry process adopted by NERC
and approved by the Commission, are designed to ensure that only those
facilities needed to maintain the reliability of the Bulk-Power System
are subject to the Reliability Standards. The ultimate decision with
respect to individual generation units or plants is, and must be, made
on a case-by-case basis. Thus, whether a particular QF or type of QF
should be exempt from Reliability Standards is an issue that is more
appropriately raised in the context of NERC's establishment of registry
criteria for owners and operators of generators, and in the context of
NERC's compliance registry process. The reliability of the Bulk-Power
System will be better protected by addressing this issue in the NERC
compliance registry process, which will ensure that no generator that
is needed to maintain the reliability of the Bulk-Power System will be
exempt from Reliability Standards, while excusing those generators that
are not needed to maintain reliability. Therefore, the Commission
rejects California Cogeneration's request that it direct NERC to
immediately initiate a stakeholder process to revise the Reliability
Standards to identify in greater detail the entities that are
responsible for compliance and revise requirements to recognize the
operational constraints of QF generators.
3. Use of the NERC Functional Model
48. Order No. 693 explained that NERC has developed a ``Functional
Model'' that defines the set of functions that must be performed to
ensure the reliability of the Bulk-Power System. The Functional Model
identifies 14 functions and the name of a corresponding entity
responsible for fulfilling each function. While the Commission had
proposed to require that NERC file future revisions to the Functional
Model, Order No. 693 determined that such filing was not necessary.\38\
The Commission made this determination based on the characterization
offered by numerous commenters that the Functional Model is an evolving
guidance document that is not intended to convey firm rights and
responsibilities. Further, the Commission agreed with commenters that
the applicability section of a particular Reliability Standard should
be the ultimate determinant of applicability of each Reliability
Standard. While some commenters asked that all revisions to the
Functional Model be developed through NERC's ANSI-accredited process,
the Commission left to the discretion of the ERO the appropriate means
of allowing stakeholder input when revising the Functional Model.
---------------------------------------------------------------------------
\38\ Order No. 693 at P 127-29.
---------------------------------------------------------------------------
e. Requests for Rehearing
49. TANC requests rehearing of the Commission's determination that
future modifications of the Functional Model do not need to be
submitted to the Commission for approval. TANC contends that the
Functional Model is more than just a guidance document and, rather, is
fundamental to determining the applicability of each Reliability
Standard. It asserts that the ERO's compliance registry process that is
used to identify users, owners and operators of the Bulk-Power System
that must comply with Reliability Standards relies on the Functional
Model. Thus, according to TANC, a change in the Functional Model
affects the applicability and enforcement of each Reliability Standard.
50. Further, TANC contends that the Reliability Standards are not
``complete,'' a quality objective identified by NERC in the development
of Reliability Standards, because the Reliability Standards are
dependent on an external document. TANC is concerned that revising the
Functional Model could result in additional entities having to comply
with Reliability Standards without affording these entities adequate
notice of what is expected of them. It notes that terms used in the
Functional Model are also defined in the NERC glossary, which was
approved by the Commission. Thus, TANC requests that the Commission
require the ERO to submit revisions to the Functional Model for
Commission approval, either as revisions to the Functional Model or
revised terms in the NERC glossary, after development through the ERO's
full Reliability Standards development process.
51. Midwest ISO contends that the Commission erred in failing to
require NERC to define the distinct roles of the ``planning
coordinator'' and ``planning authority.'' According to Midwest ISO,
while NERC used the term planning authority when it developed the
``Version 0'' Reliability Standards, it was recognized that there was
``[no] common understanding of who or what the Planning Authority
was.'' \39\ Further, Midwest ISO explains that many Reliability
Standards describe roles for both the planning authority and
transmission planner. Midwest ISO states that, while the latest
revision to the Functional Model substitutes the term ``planning
coordinator'' for ``planning authority,'' this has not resolved the
problem because the responsibilities of the planning coordinator ``are
both more limited and wide-area in nature'' and may not be simply
substituted for those of planning authority. Midwest ISO notes that
certain Regional Entities are registering entities based on the
planning authority function as previously defined, and Midwest ISO asks
rhetorically whether the ERO can hold a company accountable to a set of
Reliability
[[Page 40725]]
Standards applicable to an entity that it no longer recognizes as
valid.
---------------------------------------------------------------------------
\39\ Midwest ISO at 4.
---------------------------------------------------------------------------
52. Midwest ISO maintains that the Commission did not adequately
address Midwest ISO's concerns when it stated in Order No. 693 that the
ERO can address such concerns as it updates and revises the Functional
Model. According to Midwest ISO, the Reliability Standards state that
regions should work closely with the planning coordinators on a common
understanding of roles and responsibilities, but such a process will be
lengthy and perhaps futile without Commission guidance. Further,
Midwest ISO states that, while NERC will address this issue in the long
term, the Commission's failure to provide interim clarification or
direct NERC to specify the role of the planning coordinator is an
error.
f. Commission Determination
53. The Commission denies TANC's request for rehearing. The
Commission disagrees with TANC that the Commission-approved Reliability
Standards are incomplete. As stated in Order No. 693, the applicability
section of a particular Reliability Standard should be the ultimate
determinant of applicability of each Reliability Standard.\40\ Further,
the Commission notes that we required the ERO to update the Glossary of
Terms Used in Reliability Standards through the Reliability Standards
development process whenever a new or revised Reliability Standard
includes a new defined term.\41\
---------------------------------------------------------------------------
\40\ Order No. 693 at P 127.
\41\ Id. at P 1893.
---------------------------------------------------------------------------
54. The Commission disagrees with TANC that the Functional Model is
used to identify users, owners and operators of the Bulk-Power System
that must comply with Reliability Standards. The compliance registry
criteria are used to determine which entities must be listed on the
compliance registry, and therefore must comply with Reliability
Standards. Changes in the Functional Model cannot require additional
entities to comply with Reliability Standards. Consistent with our
explanation in Order No. 693, if an entity is registered as a result of
a change that emanated from a revision of the Functional Model, the
entity would have an opportunity to seek review by the ERO and the
Commission. Accordingly, we deny the request for rehearing and will not
require NERC to file revisions to the Functional Model.
55. Further, we reject Midwest ISO's contention that the Commission
erred in failing to provide guidance in directing NERC to define the
distinct roles of the planning authority and planning coordinator.
First, as recognized by Midwest ISO, NERC will address this issue as
part of its long range plan. This is consistent with the Commission's
statement in Order No. 693 that ``given that the Functional Model is an
evolving guidance document, the ERO can address such concerns as it
updates and revises the Functional Model.'' \42\ Midwest ISO has
provided insufficient support for its contention that addressing this
matter may be lengthy and futile without Commission intervention.
Moreover, consistent with Order No. 693, any ambiguity regarding roles
and the responsibility of a particular entity for compliance with a
particular Reliability Standard is a matter that should be addressed in
the registration of a particular entity.
---------------------------------------------------------------------------
\42\ Id. at P 129.
---------------------------------------------------------------------------
56. Finally, we disagree with Midwest ISO's suggestion that it is
inappropriate to register entities as planning authorities given that
the applicability provisions of the Commission-approved Reliability
Standards refer to the planning authority and not the planning
coordinator. Consistent with our discussion above, revisions to the
Functional Model do not convey rights and responsibilities but, rather,
the modification to the applicability provision of a Reliability
Standard or NERC glossary ultimately determines an entity's
obligations.
B. Mandatory Reliability Standards
1. Prioritizing Modifications to Reliability Standards
57. In Order No. 693, the Commission directed the ERO to submit a
revised Work Plan to: (1) Reflect modification directives contained in
Order No. 693; (2) include the timeline for completion of ATC-related
Reliability Standards as ordered in Order No. 890; and (3) account for
the views of its stakeholders, including those raised in this
proceeding. The Commission required that the ERO set specific delivery
dates, explaining that ``[a] Work Plan with specific target dates will
provide a valuable tool and incentive to timely address the
modifications directed in this Final Rule.'' \43\ Further, Order No.
693 stated that:
---------------------------------------------------------------------------
\43\ Id. at P 207.
the ERO should make every effort to meet such delivery dates.
However, we understand that there may be certain cases in which the
ERO is not able to meet [the] Commission's deadline. In those
instances, the ERO must inform the Commission of its inability to
meet the specified delivery date and explain why it will not meet
---------------------------------------------------------------------------
the deadline and when it expects to complete its work.[\44\]
\44\ Id.
---------------------------------------------------------------------------
g. Requests for Rehearing
58. NRECA asks for clarification, or alternatively rehearing, that
Order No. 693 does not allow the imposition and enforcement of
deadlines that preclude the ERO from satisfying the due process
requirements set forth in section 215 of the FPA or applying its own
expertise. NRECA states that a deadline ``may be reasonable or
unreasonable, and its reasonableness needs to be determined within
context'' taking into account the complexity of the matter and other
considerations.\45\ NRECA contends that the imposition and enforcement
of an unreasonable deadline conflicts with section 215 as well as Order
No. 672. Thus, NRECA seeks clarification that the Commission's
assertion of authority to establish deadlines for ERO action represents
no more than the authority to ``exhort'' the ERO to move expeditiously,
consistent with its statutory due process obligations. ``However, if
the Commission is purporting in the Final Rule to reserve the power to
specify an unreasonable deadline, that undermines due process and
ignores the ERO's technical expertise in contravention of the
requirements of section 215, then NRECA seeks rehearing of the
Commission's determination.'' \46\
---------------------------------------------------------------------------
\45\ NRECA at 17.
\46\ Id. at 18.
---------------------------------------------------------------------------
h. Commission Determination
59. The Commission agrees that it should not impose deadlines that
preclude the ERO from satisfying the due process requirements set forth
in section 215 of the FPA, and has provided in several previous orders
that, in complying with a deadline, NERC must also meet the
requirements of the FPA and the Commission's regulations. In our
January 2007 Compliance Order, we made it clear that a revision to
NERC's expedited Reliability Standards development process must ``make
it clear that the Commission can order expedited standard development
in a specific time frame and that NERC must adhere to that time frame
and still allow for due process.'' \47\ On rehearing, we further
clarified that ``any ERO process that provides `reasonable notice and
opportunity for comment, due process, openness, and balance of
interests' as required by section 215(c)(2)(D) of the FPA, and that
also can meet a Commission-imposed deadline pursuant
[[Page 40726]]
to section 39.5(g) of the Commission's regulations, will comply with
this directive.'' \48\
---------------------------------------------------------------------------
\47\ North American Electric Reliability Corp., 118 FERC ]
61,030 at P 27 (2007) (January 2007 Compliance Order) (emphasis
added).
\48\ North American Electric Reliability Corp., 119 FERC ]
61,046 at P 13 (2007).
---------------------------------------------------------------------------
60. Finally, in Order No. 693, the Commission stated that the ERO
should make every effort to meet Commission-ordered delivery dates.
However, we acknowledged that ``there may be certain cases in which the
ERO is not able to meet [the] Commission's deadline. In those
instances, the ERO must inform the Commission of its inability to meet
the specified delivery date and explain why it will not meet the
deadline and when it expects to complete its work.'' \49\
---------------------------------------------------------------------------
\49\ Order No. 693 at P 207.
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2. Trial Period
61. In Order No. 693, while the Commission did not institute a
formal ``trial period,'' it directed the ERO and Regional Entities to
``focus their resources'' on the ``most serious violations'' during an
initial period through December 31, 2007.\50\ Order No. 693 stated that
this use of enforcement discretion should apply to all users, owners
and operators of the Bulk-Power System. The Commission explained that
the goal should be to ensure that, at the outset, the ERO and Regional
Entities can assess a monetary penalty in a situation where, for
example, an entity's non-compliance places Bulk-Power System
reliability at risk. This approach would allow the ERO, Regional
Entities and other entities time to ensure that the compliance
monitoring and enforcement processes work as intended and that all
entities have time to implement new processes.
---------------------------------------------------------------------------
\50\ Id. at P 221-22.
---------------------------------------------------------------------------
i. Requests for Rehearing
62. Xcel states that, while it supports the Commission's decision
that the ERO and Regional Entities should have the enforcement
discretion to calculate but not collect penalties during an initial
period, it asks that the Commission provide greater clarity and
guidance regarding the circumstances when penalties should be collected
and when they should not. It asks that the Commission be as specific as
possible in defining the circumstances under which the ERO and Regional
Entities should exercise their enforcement discretion. It suggests that
the Commission clarify that to assess a penalty a violation must be, at
a minimum, (i) an intentional violation of a well-understood
Reliability Standard and (ii) a violation that causes substantial harm.
j. Commission Determination
63. The Commission denies Xcel's request for clarification. First,
the Commission believes that Xcel's requested clarification would not
always capture the most serious violations. Moreover, the Commission in
Order No. 693 intentionally declined to develop a threshold that would
place limits on the ERO's and Regional Entities' exercise of
enforcement discretion; and we decline to do so here as well. Although
we clearly allowed for ``the ERO or a Regional Entity to take an
enforcement action against an entity whose violation causes a
significant disturbance,'' we also provided that the ERO and Regional
Entities can assess a monetary penalty in a situation where, for
example, an entity's non-compliance places Bulk-Power System
reliability at risk.\51\ We did not require that there be actual harm
to the Bulk-Power System for the ERO to assess a penalty during the
transition period.
---------------------------------------------------------------------------
\51\ Id.
---------------------------------------------------------------------------
64. The Commission believes that it is better to allow the ERO and
Regional Entities to use their expertise in determining which
violations constitute the most serious. Likewise, the ERO and Regional
Entities are in the best position to know how to best use their finite
enforcement resources. This will require case-by-case analysis of the
circumstances surrounding a situation. Therefore, we will not stipulate
a single set of circumstances under which the ERO and Regional Entities
should use their enforcement discretion for the initial transition
period.
C. Common Issues Pertaining to Reliability Standards
1. Blackout Report Recommendation on Liability Limitations
65. In Order No. 693, consistent with Order No. 890, the Commission
did not adopt new liability protections.\52\ The Commission stated that
it did not believe any further action is needed to implement Blackout
Report Recommendation No. 8 because the Task Force found that no
further action is needed.\53\ Further, the Blackout Report indicated
that some states already have appropriate protection against liability
suits.\54\ Finally, the Commission stated that, in Order No. 888, as
affirmed by Order No. 890, the Commission declined to adopt a uniform
federal liability standard and decided that, while it was appropriate
to protect the transmission provider through force majeure and
indemnification provisions from damages or liability when service is
provided by the transmission provider without negligence, it would
leave the determination of liability in other instances to other
proceedings.\55\
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\52\ Id. at P 237; Preventing Undue Discrimination and
Preference in Transmission Service, Order No. 890, 72 FR 12,266
(March 15, 2007), FERC Stats. & Regs. ] 31,241 (2007) at P 1671-77.
\53\ U.S.-Canada Power System Outage Task Force, Final Report on
Implementation of Task Force Recommendations at 22 (Oct. 3, 2006),
available at http://www.oe.energy.gov/news/blackout.htm (``Action
Required to Fully Implement Recommendation 8: No further action
under this recommendation is needed.'').
\54\ Id. (``In the United States, some state regulators have
informally expressed the view that there is appropriate protection
against liability suits for parties who shed load according to
approved guidelines'').
\55\ Order No. 888-B, 81 FERC ] 61,248 at 62,081 (1997), order
on reh'g, Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in
relevant part sub nom. Transmission Access Policy Study Group v.
FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v.
FERC, 535 U.S. 1 (2002).
---------------------------------------------------------------------------
k. Requests for Rehearing
66. Avista seeks rehearing on the Commission's determination not to
provide further liability limitations and questions whether it is fair,
just and reasonable to deny transmission operators that are not
regional transmission organizations (RTOs) or independent system
operators (ISOs) the protections afforded to RTOs and ISOs and at the
same time impose mandatory Reliability Standards with significant fines
and penalties as an enforcement mechanism.\56\ Avista argues that the
Commission has limited the scope of liability in the pro forma open
access transmission tariff (OATT) to instances of gross negligence or
intentional misconduct and also limited damages by excluding
consequential, indirect or punitive damages for RTOs and ISOs.
According to Avista, not providing these same limitations to other
transmission operators is, on its face, arbitrary, and may have
unintended adverse consequences to the ratepayers of any transmission
operator whose operating employee's decisions initiate a large
cascading outage, if available insurance is not adequate to cover the
risk. Avista argues that enforcement of mandatory Reliability Standards
should not depend both on risk of massive liability exposure and upon
multi-million dollar civil fines and penalties.
---------------------------------------------------------------------------
\56\ Avista and PSE also requested rehearing of this issue in
Docket Nos. RM05-25-001 and RM05-17-001.
---------------------------------------------------------------------------
l. Commission Determination
67. The Commission denies rehearing. The Commission has already
ruled that the liability standard the Commission has approved for RTOs
and ISOs is not
[[Page 40727]]
appropriate for other transmission providers.\57\ Further, we also
found without merit assertions that increased liability protections in
the pro forma OATT should be viewed as a necessary element of the
implementation of the Commission's reliability authority.\58\ In the
Reliability Policy Statement,\59\ the Commission stated that it would
consider, on a case-by-case basis, proposals by public utilities to
amend their OATTs to include limitations on liability. The Commission
further noted that, while this issue has not been resolved on a
standardized basis, the Commission has entertained RTO transmission
providers' specific proposals to amend their OATTs to include
provisions addressing limitations on liability.\60\
---------------------------------------------------------------------------
\57\ Order No. 890 at P 1675. We note that this discussion
concerns civil liability only, not liability for penalties imposed
by the ERO, Regional Entities or the Commission.
\58\ Id. at P 1677.
\59\ Policy Statement on Matters Related to Bulk Power System
Reliability, 107 FERC ] 61,052 (2004) (Reliability Policy
Statement).
\60\ Reliability Policy Statement at P 40 (citations omitted).
---------------------------------------------------------------------------
68. In subsequent orders, the Commission found that the gross
negligence and intentional wrongdoing indemnification and liability
standard is appropriate for RTOs and ISOs. However, the Commission has
declined to extend this protection to all transmission providers. In
Southwest Power Pool, Inc., the Commission explicitly stated ``that our
acceptance here of the gross negligence and intentional wrongdoing
indemnity standard is limited to SPP, in its role as an RTO, and its
TOs; we do not intend to extend such protection to all transmission
providers.'' \61\ In Southern Company Services, Inc., the Commission
stated that:
---------------------------------------------------------------------------
\61\ 112 FERC ] 61,100 at P 39 (2005).
Having considered Southern Companies' proposed limitation on
liability and indemnification provisions pursuant to our Reliability
Policy Statement cited above, we find that Southern Companies have
not shown that they are similarly situated to the RTOs/ISOs they
cite in support. While Southern Companies claim that they `may not
be protected by any State-regulated limitations on liability,'
Southern Companies offer no evidence to support this concern. The
Commission has provided such liability protection to RTOs/ISOs
because they were created by and solely regulated by the Commission,
and otherwise would be without limitations on liability. Southern
Companies have proffered no evidence of any change in circumstances
vis-[agrave]-vis their liability exposure post-Order No. 888.\62\
---------------------------------------------------------------------------
\62\ 113 FERC ] 61,239 at P 7 (2005).
69. Further, we disagree with Avista that there is a risk of
massive liability exposure. It offers no new arguments that demonstrate
that non-RTO and non-ISO transmission providers are unable to rely on
state laws, i.e., the state laws provide inadequate protection. Avista
has not persuaded us to change our policy regarding liability
protections applicable to non-RTO and non-ISO transmission providers.
Therefore, we deny rehearing.
2. Fill-in-the-Blank Standards
70. In Order No. 693, the Commission required supplemental
information for any Reliability Standard that currently requires a
regional reliability organization to fill in missing criteria or
procedures.\63\ The Commission explained that, where important
information has not yet been provided, it would not approve or remand
such Reliability Standards until the ERO submits further information.
Until such information is provided, compliance with the so-called fill-
in-the-blank standards should continue on a voluntary basis, and the
Commission considers compliance with such Reliability Standards to be a
matter of good utility practice. Further, the Commission stated:
---------------------------------------------------------------------------
\63\ Order No. 693 at P 297-302.
In our Reliability Policy Statement, we explained that
compliance with NERC Reliability Standards (or more stringent
regional standards) is expected as a matter of good utility practice
as that term is used in the pro forma OATT. The Commission continues
to expect compliance with such Reliability Standards as a matter of
good utility practice. That being said, the Commission agrees that
retaining a dual mechanism to enforce Reliability Standards both as
good utility practice and under section 215 of the FPA is
inappropriate; the OATT only applies to entities subject to our
jurisdiction as public utilities under the FPA, while section 215
defines more broadly our jurisdiction with respect to mandatory
Reliability Standards. We therefore do not intend to enforce, as an
OATT violation, compliance with any Reliability Standard that has
not been approved by the Commission under section 215.\64\
---------------------------------------------------------------------------
\64\ Id. at P 302 (footnote omitted).
---------------------------------------------------------------------------
m. Requests for Rehearing
71. While APPA believes that Order No. 693 correctly deferred
consideration of the ``fill-in-the-blank'' standards, it requests
rehearing of the Commission's approval of other Reliability Standards
that incorporate the ``fill-in-the-blank'' standards. APPA argues that
the Commission cannot, lawfully, approve Reliability Standards for
immediate enforcement that incorporate those same unreviewed and
unapproved regional Reliability Standards.
72. According to APPA, approving a Reliability Standard that
references an unapproved fill-in-the-blank standard requires compliance
with regional Reliability Standards that the Commission has not
reviewed or approved. APPA asserts that the Commission cannot determine
if a Reliability Standard that references a pending Reliability
Standard is ``just, reasonable, not unduly discriminatory or
preferential, and in the public interest'' for the same reasons that
the Commission articulated in determining that it lacked important
information needed to evaluate ``fill-in-the-blank'' standards.
73. APPA also argues that the approved Reliability Standards that
reference a fill-in-the-blank standard do not promote uniformity and
consistency as required by Order No. 672. APPA asserts that the
Commission cannot determine if such Reliability Standards are
justified, because the regional standard is more stringent than
continent-wide Reliability Standards or is necessitated by a physical
difference in the Bulk-Power System, without reviewing the regional
standard in question to determine whether one of those two findings is
appropriate. APPA also maintains that the Commission cannot conclude
that the processes by which the regional practices involved in the
referenced fill-in-the-blank standards were developed meet statutory
requirements. APPA raises concerns about due process and fundamental
fairness, asserting that small entities have often not been included in
past regional processes, and may not have received prior notice of the
standards with which they must now comply.
74. APPA also argues the Commission is incorrect that ``many of
these Reliability Standards either refer to the process of collecting
data or reference Requirements that entities are generally aware of
because they have already been following these Reliability Standards on
a voluntary basis.'' According to APPA, Reliability Standards may sweep
in many small entities that have not been members of regional
reliability organizations and have not necessarily complied with
standards on a voluntary basis.
75. APPA argues that the Commission's approval of Reliability
Standards that make enforceable unreviewed ``fill-in-the-blank''
standards could trigger registration of a large number of small
entities. According to APPA, unless it can be assumed that no change in
the scope or content of the fill-in-the-blank standards will result
from the ongoing process
[[Page 40728]]
NERC and the Regional Entities are undertaking to fill in the blanks,
mandatory enforcement of the ``before'' version is likely to sweep in
different entities and subject them to different standards than will
the ``after'' version. Further, APPA asserts that, by posing the
potential to sweep a large number of small entities onto the compliance
registry before the applicable regional standard is approved, the
Commission's decision calls into question its adherence in Order No.
693 to the Regulatory Flexibility Act requirements because, absent
review of the undisclosed incorporated ``fill-in-the-blank'' standards,
the Commission cannot estimate the number of small systems these
Reliability Standards will affect. Further, APPA maintains that the
Commission cannot make the requisite determination that a small
entity's compliance with an unapproved ``fill-in-the-blank'' standard
has a material impact on reliability, and the Commission cannot find
such compliance necessary for Bulk-Power System reliability.
76. Finally, APPA maintains that, even though the Commission stated
that the fact that a Reliability Standard references a fill-in-the-
blank standard ``may be considered in an enforcement action,'' \65\ the
Commission should not have approved such Reliability Standards.
According to APPA, the ability of an entity to raise this issue in an
enforcement action occurs too late to avoid the harm to many small
entities in being required to register and comply with what it calls
unapproved regional underfrequency load shedding (UFLS) programs that
have not been developed through Commission-approved processes meeting
the statutory standard, and which may well differ from the final
standard that the Commission approves to fill in the blanks. Nor,
according to APPA, does the ability to raise issues relating to fill-
in-the-blank standards in an enforcement action avoid the potential for
significant distraction of NERC and Regional Entities from more crucial
reliability-related duties to instead deal with compliance by numerous
small entities that have no material impact on the grid with regional
standards that are in a state of flux. APPA also asserts that this
statement cannot overcome the fundamental legal deficiency with
approving a Reliability Standard that references a fill-in-the-blank
standard--that the Commission lacks authority to approve regional
reliability standards that require compliance with regional UFLS
standards it has neither reviewed nor approved.
---------------------------------------------------------------------------
\65\ Id. at P 300.
---------------------------------------------------------------------------
77. Xcel contends that the statement that the Commission does not
intend to enforce, as an OATT violation, compliance with any
Reliability Standard that has not been approved by the Commission under
section 215 is confusing. By stating that the Commission does not
intend to enforce as an OATT violation compliance with a Reliability
Standard that has not been approved by the Commission under section
215, Xcel is concerned that the Commission may intend to enforce as an
OATT violation non-compliance with a Reliability Standard that has been
approved by the Commission under section 215. Xcel seeks clarification
or rehearing on this issue.
n. Commission Determination
78. The Commission denies APPA's request for rehearing and provides
further clarification. The Commission continues to believe that the
fact that a Reliability Standard simply references a Reliability
Standard that was not approved or remanded in Order No. 693 does not
alone justify not approving the former Reliability Standard. Rather,
such a reference may be considered in an enforcement action, if
relevant, but is not a reason to delay approval of the Reliability
Standard. Further, we clarify that, in an enforcement proceeding, such
a reference can be considered regarding whether a particular
Requirement or part of a Requirement in an otherwise approved
Reliability Standard is enforceable.\66\ The Commission did not err in
approving Reliability Standards that reference a pending Reliability
Standard because they contain the appropriate level of specificity
necessary to provide notice to users, owners and operators of the Bulk-
Power System as to what is required. We will discuss the issue raised
by APPA in regard to the Protection and Control Systems (PRC) group of
Reliability Standards in our discussion of individual Reliability
Standards below.
---------------------------------------------------------------------------
\66\ See discussion of PRC-007, PRC-008, and PRC-009, infra.
---------------------------------------------------------------------------
79. In approving a Reliability Standard that references a fill-in-
the-blank standard, the Commission is not requiring compliance with the
unapproved Reliability Standard. Therefore, it is immaterial how the
regional differences discussed in the unapproved Reliability Standard
were created. Rather, as addressed more fully in our discussion on the
PRC group of Reliability Standards below, the Commission, ERO and
Regional Entities will only enforce the data requirements and any
requirement that can be independently enforced in those Reliability
Standards, and will not enforce compliance with regional criteria
created by a regional reliability organization pursuant to an
unapproved fill-in-the-blank standard.\67\
---------------------------------------------------------------------------
\67\ This is similar to our action in Order No. 693, where we
approved certain Reliability Standards, but acknowledged that a
particular requirement may be unenforceable. See Order No. 693 at P
147, 157-58.
---------------------------------------------------------------------------
80. APPA's contention that approving a Reliability Standard that
references a fill-in-the-blank standard could trigger additional small
entity registration is speculative. At this time, registration is
governed by NERC's definition of bulk electric system and its
compliance registry criteria. Nothing in a Reliability Standard can
cause an entity to be registered if it would otherwise not be required
to do so.
81. In response to Xcel, the Commission clarifies that it does not
intend to enforce as a violation of good utility practice non-
compliance with a Reliability Standard that has been approved by the
Commission under section 215. However, where the OATT contains a
specific requirement that may be related to a Reliability Standard, for
example, an independent obligation under the OATT to calculate
transmission capacity, the Commission does not limit its ability to
take enforcement action separately against a violation of a Reliability
Standard and a violation of a specific OATT provision. Such
determinations will be based on the facts of a specific circumstance.
D. Discussion of Individual Reliability Standards
1. EOP-001-0
82. Reliability Standard EOP-001-0 requires each transmission
operator and balancing authority to develop, maintain and implement a
set of plans to mitigate operating emergencies. These plans must be
coordinated with other transmission operators and balancing authorities
and the reliability coordinator.
83. Order No. 693 approved Reliability Standard EOP-001-0. In
addition, the Commission directed the ERO to develop a modification to
EOP-001-0 that, among other things, includes the reliability
coordinator as an applicable entity. In pertinent part, the Commission
found the reliability coordinator to be a necessary entity under EOP-
001-0 and directed the ERO to modify the Reliability Standard to
include the reliability coordinator as an
[[Page 40729]]
applicable entity.\68\ Recognizing the importance NERC attributes to
the reliability coordinator in connection with matters covered by EOP-
001-0, the Commission was persuaded that specific responsibilities for
the reliability coordinator in the development and coordination of
emergency plans must be included as part of this Reliability Standard.
The Commission reasoned that, while balancing authorities and
transmission operators are capable of developing, maintaining and
implementing plans to mitigate operating emergencies for their specific
areas of responsibility, unlike reliability coordinators, they do not
have a wide-area view.
---------------------------------------------------------------------------
\68\ Id. at P 566.
---------------------------------------------------------------------------
o. Requests for Rehearing
84. Midwest ISO disagrees with the Commission's mandate to the ERO
to make EOP-001-0 applicable to the reliability coordinator. It notes
that the Commission correctly did not provide guidance on the
reliability coordinators' role in the emergency planning process and
appears to have left this issue up to the industry experts. Midwest ISO
argues that the industry had already addressed any potential role of
the reliability coordinator in emergency planning by declining to make
the reliability coordinator an applicable entity in EOP-001-0.
p. Commission Determination
85. The Commission affirms its determination to mandate that the
ERO make EOP-001-0 applicable to the reliability coordinator function
because it is the highest level of authority responsible for reliable
operation of the Bulk-Power System and has a wide-area view. Midwest
ISO has not substantively disputed that Requirements for mitigation of
emergencies will benefit from including a role for the entity with a
wide-area view. The ERO may consider other equivalent alternatives and
consider industry concerns in its modification of EOP-001-0.
2. EOP-002-2
86. EOP-002-2 applies to balancing authorities and reliability
coordinators and is intended to ensure that they are prepared for
capacity and energy emergencies. This Reliability Standard requires
that balancing authorities have the authority to bring all necessary
generation on line, communicate about energy and capacity emergencies
with the reliability coordinator and coordinate with other balancing
authorities. EOP-002-2 includes an attachment that describes an
emergency procedure to be initiated by a reliability coordinator that
declares one of four energy emergency alert levels to provide
assistance to the load-serving entity.
87. Order No. 693 approved Reliability Standard EOP-002-2. In
addition, the Commission directed the ERO to develop a modification to
EOP-002-2 that, among other things, would modify the Reliability
Standard to ensure that the Transmission Loading Relief (TLR) procedure
is not used to mitigate actual Interconnection Reliability Operating
Limit (IROL) violations. The Commission found that the TLR procedure
may be appropriate and effective for use in managing potential IROL
violations, but that the TLR procedure is an inappropriate and
ineffective tool for mitigating actual IROL violations or for use in
emergency situations as called for in EOP-002-2. Accordingly, the
Commission directed the ERO to modify the Reliability Standard to
ensure that the TLR procedure is not used to mitigate actual IROL
violations.\69\
---------------------------------------------------------------------------
\69\ Order No. 693 at P 583.
---------------------------------------------------------------------------
q. Requests for Rehearing
88. Midwest ISO requests that the Commission clarify which of the
following conditions constitutes a ``potential IROL'' violation for
purposes of EOP-002-2: (1) The operating limit has been exceeded, but
30 minutes has not elapsed and the operator may yet return the system
to normal; or (2) the operating limit has not been exceeded, but
appears that it may be if action is not taken quickly. Midwest ISO
believes that the second circumstance is the one the Commission
identified as being appropriate for TLR mitigation, but reasons that
the terminology can be interpreted differently by different operators
applying historically different operating practices.
r. Commission Determination
89. The Commission clarifies that a potential IROL violation refers
to the second circumstance provided by Midwest ISO, in which ``the
operating limit has not been exceeded, but appears that it may be if
action is not taken quickly.'' In such a situation, use of TLR
procedures may be appropriate depending on the circumstances. Moreover,
actions undertaken under the TLR procedure are not fast and predictable
enough for use in situations in which an operating security limit is
being violated.
3. EOP-008-0
90. EOP-008-0 addresses plans for loss of control center
functionality. It requires each reliability coordinator, transmission
operator and balancing authority to have a plan to continue reliable
operations and to maintain situational awareness in the event its
control center is no longer operable.
91. Order No. 693 approved Reliability Standard EOP-008-0. In
addition, the Commission directed the ERO to develop a modification to
EOP-008-0 that, among other things, includes a Requirement that
provides for backup capabilities that, at a minimum, requires
transmission operators and balancing authorities that have operational
control over significant portions of generation and load to have
minimum backup capabilities, but may do so through contracting for
these services instead of through dedicated backup control centers.\70\
---------------------------------------------------------------------------
\70\ Id. at P 672.
---------------------------------------------------------------------------
s. Requests for Rehearing
92. Midwest ISO supports the outcome of Order No. 693 with regard
to Commission mandates in EOP-008-0. However, it notes that ambiguities
and potential misunderstandings could result from imprecise adjectives
in the Reliability Standards. Specifically, for purposes of EOP-008-0,
Midwest ISO advocates that the Commission should define an amount of
load or generation that constitutes a ``significant'' portion of
generation and load that would require entities to have minimum backup
capabilities through backup control centers. Alternatively, Midwest ISO
proposes that NERC could be directed to create a ``safe-harbor'' limit
below which a system would not be considered significant unless found
to be so by the Regional Entity or the ERO.
t. Commission Determination
93. The Commission reiterates its direction in Order No. 693 that
the goal of this Reliability Standard is to provide the continuation of
Reliable Operation and the maintenance of situational awareness in the
event that the primary control center is no longer operational.\71\ To
that end, every registered reliability coordinator, balancing
authority, transmission operator, and centrally dispatched generator
operator should have a plan and means of achieving the outcome of the
plan upon the loss of their respective control centers. The Commission
has identified three requirements as a minimum for the plans--
independence from the primary
[[Page 40730]]
control center, capability to operate for a prolonged period
corresponding to the time it would take to replace the primary control
center, and the provision of a minimum set of tools and facilities to
replicate the critical reliability functions of the primary control
center. The Reliability Standard should provide specific Requirements,
based on the size or impact to Reliable Operation, to achieve the
Commission's requirements.
---------------------------------------------------------------------------
\71\ See Order No. 693 at P 659.
---------------------------------------------------------------------------
94. The Commission declines to define a ``safe harbor'' limit
requested by Midwest ISO. We directed the ERO, through the Reliability
Standards development process, to identify what Requirements are
necessary on which size entities to achieve the Commission's directives
and the goal of this Reliability Standard. Since there are many equally
efficient ways of achieving the Commission's direction, we will not
identify any specific method or safe harbor.
4. FAC-003-1
95. FAC-003-1 addresses vegetation management on transmission
rights-of-way. As proposed, FAC-003-1 would apply to transmission lines
operated at 200 kV or higher voltage (and lower-voltage transmission
lines which have been deemed critical to reliability by a regional
reliability organization). It would require each transmission owner to
have a documented vegetation management program in place, including
records of its implementation. Each program must be developed for the
geographical area and specific design configurations of the
transmission owner's system.
96. Order No. 693 approved Reliability Standard FAC-003-1. In
addition, while we did not direct the ERO to submit a modification to
the general limitation on applicability to facilities above 200 kV, we
required the ERO to address Commission concerns regarding the
applicability threshold through the ERO's Reliability Standards
development process.\72\ The Commission was concerned that the bright-
line applicability threshold of 200 kV in this Reliability Standard
would exclude a significant number of transmission lines that could
impact Bulk-Power System reliability. We stated that, in proposing to
require the ERO to modify the Reliability Standard to apply to Bulk-
Power System transmission lines that have an impact on reliability as
determined by the ERO, we did not intend to make this Reliability
Standard applicable to fewer facilities than it is currently, but to
extend the applicability to lower-voltage facilities that have an
impact on reliability.
---------------------------------------------------------------------------
\72\ Id. at P 735.
---------------------------------------------------------------------------
u. Requests for Rehearing
97. NRECA asks that the Commission clarify that Order No. 693 did
not mandate that FAC-003-1 apply to lines below 200 kV. NRECA believes
that a fair reading of Order No. 693 is that the Commission only
directed the ERO to give additional consideration to having FAC-003-1
apply to lines below 200 kV and did not purport to require such a
modification.\73\ However, NRECA claims that other portions of Order
No. 693 appear to go further, such as where the Commission states that
it is requiring the Reliability Standard ``to include a greater number
of entities* * *''. \74\ In view of the potential ambiguity, NRECA
requests that the Commission clarify that it is not dictating a
particular outcome to the ERO's deliberations, as such a directive
would be contrary to section 215 of the FPA, Order Nos. 672 and 672-A,
and other portions of Order No. 693. Alternatively, NRECA requests
rehearing.
---------------------------------------------------------------------------
\73\ NRECA at 23, citing Order No. 693 at P 706 (``We will not
direct NERC to submit a modification to the general limitation on
applicability as proposed in the NOPR. However, we will require the
ERO to address the proposed modification through its Reliability
Standards development process'').
\74\ NRECA at 23, citing Order No. 693 at P 711.
---------------------------------------------------------------------------
v. Commission Determination
98. We will grant NRECA's request for clarification. First, in
Order No. 693, we specifically stated that ``[w]e will not direct NERC
to submit a modification to the general limitation on applicability [in
FAC-003-1] as proposed in the NOPR.'' \75\ Further, as a general
matter, we stated that a direction for modification should not preclude
the consideration of viable alternatives in the ERO's Reliability
Standards development process.\76\
---------------------------------------------------------------------------
\75\ Order No. 693 at P 706.
\76\ Id. at P 185-86.
---------------------------------------------------------------------------
99. In Order No. 693, the Commission stated that it was concerned
that the bright-line applicability threshold of 200 kV would exclude a
significant number of transmission lines that could impact Bulk-Power
System reliability. We noted that, at that time no regional reliability
organization had used its discretion to designate lower voltage lines
under the proposed Reliability Standard, even though there are lower
voltage lines involving IROL.\77\ The Commission was concerned that
this approach would not require all transmission lines that could
impact Bulk-Power System reliability to be included under this
Reliability Standard. While the Commission did not mandate that FAC-
003-1 apply to lines below 200 kV, the Commission did require the ERO
to address the Commission's concerns through its Reliability Standards
development process.
---------------------------------------------------------------------------
\77\ The Commission notes that the Regional Entities have since
filed their definitions of bulk electric system and that at least
one Regional Entity, WECC, has designated lower voltage facilities
that must comply with the Reliability Standards.
---------------------------------------------------------------------------
5. IRO-001-1
100. IRO-001-1 requires that a reliability coordinator have
reliability plans, coordination agreements and the authority to act and
direct reliability entities to maintain reliable system operations
under normal, contingency and emergency conditions. Requirement R3
provides that a reliability coordinator ``shall have clear decision-
making authority to act and direct actions to be taken'' by applicable
entities to ``preserve the integrity and reliability of the bulk
electric system and these actions shall be taken without delay but no
longer than 30 minutes.''
101. Order No. 693 approved Reliability Standard IRO-001-1. In
Order No. 693, the Commission declined to adopt a change suggested by
Santa Clara that would only require the commencement of corrective
control action within a 30-minute limit. We found that the requirement
to take action without delay and within the 30-minute limit is
important to minimize the amount of time the system operates in an
insecure mode and is vulnerable to cascading outages.\78\
---------------------------------------------------------------------------
\78\ Id. at P 898.
---------------------------------------------------------------------------
w. Requests for Rehearing
102. Santa Clara seeks rehearing of the Commission's determination
not to order the ERO to modify Reliability Standard IRO-001-1. Santa
Clara is concerned that the 30-minute time period during which entities
must take remedial action under this Reliability Standard could be too
short with respect to physical actions that must be taken where the
facilities which are subject to these actions cannot be readily
accessed within the 30-minute time period.\79\
---------------------------------------------------------------------------
\79\ In its comments to the NOPR, Santa Clara requested that
this requirement of IRO-001-1 be revised to read: ``Actions shall be
commenced without delay, but in any event, shall commence within 30
minutes.'' Santa Clara Comments, December 28, 2006 at 30.
---------------------------------------------------------------------------
103. First, Santa Clara maintains that the reliability coordinator
could direct that load be dropped within Silicon Valley Power's (SVP)
service territory.\80\ According to Santa Clara, those
[[Page 40731]]
directives could only be implemented through a physical activity, such
as opening breakers within certain substations, and cannot be
accomplished at all times using an electronic signal from SVP's control
center. Therefore, Santa Clara claims that, while SVP personnel would
respond to the reliability coordinator's directive immediately, the
required action might not be able to be accomplished within 30 minutes.
---------------------------------------------------------------------------
\80\ SVP is the utility division of Santa Clara.
---------------------------------------------------------------------------
104. As another example, Santa Clara states that SVP has a program
through which certain SVP retail customers can commit to reduce base
load by 10 percent where an emergency exists in its control area.
However, Santa Clara maintains that reducing load by shutting down
power to specific buildings can take longer than 30 minutes. Santa
Clara states that it is not seeking to have the language in IRO-001-1
modified as it requested in comments to the NOPR. Rather, it seeks to
have the Commission grant rehearing to direct NERC to modify IRO-001-1
and allow Santa Clara to work with NERC to develop clarifications and
refinements to IRO-001-1 to remedy its concerns.
105. Avista seeks clarification of the intent of Order No. 693 as
to whether the authority of a reliability coordinator to issue
directives to reliability entities arises out of (i) reliability
coordinator contracts or (ii) Commission-approved Reliability Standards
without reliance on reliability coordinator contracts. According to
Avista, if the authority of a reliability coordinator is non-
contractual and arises out of Commission-approved Reliability
Standards, the Commission must make sure that such authority is
accompanied by equitable treatment of reliability entities. For
example, Avista states that the Commission should require equitable
compensation for re-dispatch of generation required by the reliability
coordinator and emphasizes the need for fair and impartial procedures
and methodologies are adopted to ensure that such equitable treatment
is provided.
106. Avista states the Commission's statement in Order No. 693 that
it ``clarifies that it did not intend to change existing contracts,
impose new organizational structures or otherwise affect existing
agreements that set forth the responsibilities of various entities''
\81\ applies to existing agreements that affect reliability coordinator
functions. According to Avista, provisions of IRO-001-1 seem to imply
that, as to the source and scope of authority for a reliability
coordinator to issue directives, existing contracts may have been
superseded, or rendered moot or unnecessary, by Order No. 693. In
particular, Avista contends that Requirement R8 of IRO-001-1 seems to
suggest that contracts are unnecessary to authorize reliability
coordinators to issue directives.\82\
---------------------------------------------------------------------------
\81\ Order No. 693 at P 141.
\82\ Requirement R8 states: ``R8. Transmission Operators,
Balancing Authorities, Generator Operators, Transmission Service
Providers, Load-Serving Entities, and Purchasing-Selling Entities
shall comply with Reliability Coordinator directives unless such
actions would violate safety, equipment, or regulatory or statutory
requirements. Under these circumstances, the Transmission Operator,
Balancing Authority, Generator Operator, Transmission Service
Provider, Load-Serving Entity, or Purchasing-Selling Entity shall
immediately inform the Reliability Coordinator of the inability to
perform the directive so that the Reliability Coordinator may
implement alternate remedial actions.''
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107. Avista asserts that, if transmission operators or balancing
authorities or other reliability entities are subject to a non-
contractual duty imposed by the Commission under Order No. 693 to
comply with the directives of a reliability coordinator, the Commission
should clearly indicate such a requirement. It notes that, in another
proceeding, Western Electricity Coordinating Council (WECC) seems to
suggest that it believes that when the reliability coordination
Reliability Standards become mandatory, the existing contracts
regarding reliability or security coordination no longer will be
relevant and will not be necessary to authorize reliability
coordinators to issue mandatory directives to reliability entities.\83\
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\83\ Supplemental Comments of the Western Electricity
Coordinating Council (WECC) filed March 12, 2007, in Docket No.
RR06-3-001 at 13 (``Currently the BAs [balancing authorities] and
TOPs [transmission operators] have a contractual obligation to
comply with such directives, except in narrow, enumerated
circumstances. Once the reliability standards are mandatory, BAs and
TOPs must obey such directives or be subject to major penalties or
other sanctions.'') (footnote omitted).
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108. On the other hand, Avista maintains that additional provisions
of IRO-001-1 suggest that reliability coordinators must have contracts
or other written evidence in place that delineate and evidence their
authority over reliability entities. For example, Avista cites measure
M2 of IRO-001-1, which states that each reliability coordinator shall
have and provide upon request evidence that could include, but is not
limited to, job descriptions, signed agreements, an authority letter
signed by an officer of the company, or other equivalent evidence that
will be used to confirm that the reliability coordinator has the
authority to act as described in Requirement 3. According to Avista,
this provision suggests that the source of authority to issue
directives lies in a contractual relationship between the reliability
coordinator and each reliability entity covered by the requirements of
Requirement R3.\84\ In Avista's view, the language in the Purpose
section indicates that the purpose of IRO-001-1 is to establish
authority of reliability coordinators over reliability entities through
contracts, in addition to establishing internal authority through
delegations of authority and plans presumably through Requirement R2.
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\84\ Requirement R3 states, ``The Reliability Coordinator shall
have clear decision-making authority to act and to direct actions to
be taken by Transmission Operators, Balancing Authorities,
Generation Operators, Transmission Service Providers, Load Serving
Entities and Purchasing-Selling Entities within its Reliability
Coordinator Area to preserve the integrity and reliability of the
Bulk Electric System.''
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109. Avista asserts that the security coordinator in the Pacific
Northwest, PNSC, does not have contractual relationships with
reliability entities other than control area operators. Avista contends
that, if the authority of a reliability coordinator to issue directives
to reliability entities arises out of reliability coordinator
contracts, the reliability coordinator will need to enter into
contractual relationships with each of the reliability entities within
its area--which would expand the scope of and parties to the current
PNSC contracts. Further, Avista states that existing contracts may not
contain provisions regarding the authority of reliability coordinators
to issue directives to reliability entities that fully track the
Reliability Standards.\85\
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\85\ For example, Avista contends that Requirements R8 and R3 of
IRO-001-1, when read together, contain very broad language.
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110. Therefore, Avista requests rehearing and asks that the
Commission require that (1) reliability coordinators develop and file
contracts or tariffs that govern their reliability coordination
authority and activities, and (2) such contracts or tariffs ensure
equitable treatment of reliability entities by reliability coordinators
and provide adequate procedures and methodologies to help ensure such
equitable treatment. Avista also seeks rehearing for the purpose of
expanding the time to transition from the current, voluntary
contractual arrangements to the arrangements contemplated by Order No.
693.
111. Specifically, Avista asserts that the Commission should
require reliability coordinators to file such contracts or tariffs
under section 205 of the FPA. In this regard, Avista states that the
Commission should, as a first
[[Page 40732]]
step, require reliability coordinators to submit for filing their
existing contracts, such as the contracts between PNSC and the control
area operators. According to Avista, filing of these contracts or
tariffs under section 205 should ensure the equitable treatment of
reliability entities, provide a mechanism for redress in the event of
inequitable treatment, and provide a basis for the Commission's
determination that the Reliability Standards approved by Order No. 693
are just and reasonable.
x. Commission Determination
112. In response to Avista, the Commission clarifies that a
reliability coordinator's authority to issue directives arises out of
the Commission's approval of Reliability Standards that mandate
compliance with such directives. Avista is correct that contracts are
unnecessary to authorize reliability coordinators to issue directives.
Under the voluntary reliability scheme in place prior to section 215 of
the FPA, a contractual basis was needed to assure that entities would
comply with a reliability coordinator's directive. Pursuant to the
current, mandatory reliability scheme established by statute, contracts
are no longer needed. We view the concerns raised by Avista as part of
the transition from a voluntary to mandatory scheme. Although, as noted
by Avisa, IRO-001-1 retains references to contracts, we view these as
vestiges of an earlier program that no longer control given the
current, mandatory mechanism.
113. Avista's assertion that, if transmission operators, balancing
authorities or other reliability entities are subject to a non-
contractual duty imposed by the Commission under Order No. 693 to
comply with the directives of a reliability coordinator, the Commission
should have clearly indicated such a requirement, is not justified.
First, the Commission believes that this duty was clearly laid out in
the Reliability Standards themselves. However, the duty to comply with
Reliability Standards is imposed by section 215 of the FPA, not by
contract. The Reliability Standards approved by the Commission include
requirements that certain users, owners and operators of the Bulk-Power
System follow directions given by the reliability coordinators.\86\ The
duty to follow such directions lies in the duty to comply with
Reliability Standards as laid out in section 215 of the FPA and the
Commission's regulations.
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\86\ For example, Requirement R9 of IRO-001-1 states that
transmission operators, balancing authorities, generator operators,
transmission service providers, load-serving entities, and
purchasing-selling entities shall comply with Reliability
Coordinator directives unless such actions would violate safety,
equipment, or regulatory or statutory requirements.
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114. The Commission notes that Avista uses the Commission's
statement that it ``clarifies that it did not intend to change existing
contracts, impose new organizational structures or otherwise affect
existing agreements that set forth the responsibilities of various
entities'' \87\ for the proposition that the Commission did not intend
to change or otherwise affect existing agreements about reliability
coordinator functions. We disagree with Avista on this point. The
Commission made this statement regarding the responsibility for
functions in the Functional Model, especially regarding ISOs, RTOs or
any organizations that pool resources. In that statement, we clarified
that we were not changing any contract to which an ISO, RTO or pooled
resource organization is a party as to who must comply with specific
requirements of the Reliability Standards.
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\87\ Order No. 693 at P 141.
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115. In response to Avista's arguments regarding Measure M2 of IRO-
001-1, the Commission does not believe that this measure imposes a
requirement that reliability coordinators must have contracts in place.
Measure M-2 of IRO-001-1 requires each reliability coordinator to have
and provide upon request evidence that it has the authority to have
clear decision-making authority to act and to direct actions to be
taken by certain users, owners and operators within its area to
preserve the integrity and reliability of the bulk electric system.
Neither the Reliability Standard nor the Commission prescribed the form
of such evidence.
116. Avista's concerns regarding whether existing contracts,
including those regarding the contracts with PNSC, and whether
contracts, generally, have been superseded or rendered moot or
unnecessary by Order No. 693 are beyond the scope of this proceeding.
This proceeding established mandatory Reliability Standards, including
those pertaining to directions by reliability coordinators. Reliability
coordinator contracts are not before the Commission in this proceeding.
Therefore, the Commission cannot rule here on any issue regarding such
contracts.
117. The Commission denies Avista's request that the Commission
require reliability coordinators to develop and file contracts or
tariffs that govern their reliability coordination authority and
activities. The Commission understands that reliability must be a
primary goal. Each user, owner and operator of the Bulk-Power System
must be in compliance with the Reliability Standards so that everyone
can have the benefits of using the system. As stated above, the
Reliability Standards do not prescribe the form through which each
reliability coordinator must provide evidence of its clear decision-
making authority to act and to direct actions to be taken by certain
entities. To that end, it is unnecessary to require each reliability
coordinator to file a contract or tariff.
118. We deny Santa Clara's request for rehearing. In Order No. 693,
the Commission noted that various commenters provided specific
suggestions to improve or otherwise modify a Reliability Standard that
address issues not raised in the NOPR. In such circumstances, the
Commission directed the ERO to consider such comments as it modifies
the Reliability Standards during the three-year review cycle
contemplated by NERC's Work Plan through the ERO Reliability Standards
development process. The Commission, however, did not direct any
outcome other than that the comments receive consideration.\88\
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\88\ See id. at P 188.
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119. However, the Commission denied Santa Clara's specific request
to modify Requirement R3 of IRO-001-1, explaining that, when system
integrity or reliability is jeopardized, e.g., when IROLs or SOLs are
exceeded, the relevant reliability entities must take corrective
control actions to return the system to a secure and reliable state as
soon as possible but not longer than 30 minutes.\89\ The Commission
believes that this reaction time has been vetted through the industry
and that the 30-minute time limit for action is important to minimize
the amount of time the system operates in an insecure mode and is
vulnerable to cascading outages.
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\89\ Id. at P 898.
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6. IRO-005-1 and IRO-005-2
120. IRO-005-1 ensures energy balance and transmission reliability
for the current day by identifying tasks that reliability coordinators
must perform throughout the day. Order No. 693 approved Reliability
Standard IRO-005-1.
y. Requests for Rehearing
121. TANC requests clarification as to whether the Commission
intended to approve IRO-005-1 or IRO-005-2 in Order No. 693. Although
the Commission states that it approves IRO-005-1,\90\ TANC notes that
NERC submitted a later version, IRO-005-2, in
[[Page 40733]]
its November filing. Therefore, TANC seeks clarification that the
Commission intended to approve IRO-005-1, rather than the more recently
filed IRO-005-2.
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\90\ See Id. at P 945, 951.
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z. Commission Determination
122. The Commission grants TANC's request for clarification. As
stated in Order No. 693, the Commission approved version one of IRO-
005.\91\
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\91\ The Commission notes that many provisions of IRO-005-2 only
become effective when BAL-002 is retired. If and when NERC proposes
to retire BAL-002, we will make a determination on IRO-005-2.
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7. MOD-013-1
123. MOD-013-1 requires the regional reliability organizations
within an Interconnection to develop comprehensive dynamics data
requirements and reporting procedures needed to model and analyze the
dynamic behavior and response of each Interconnection. More
specifically, the regional reliability organization, in coordination
with its transmission owners, transmission planners, generator owners
and resource planners within an Interconnection, is required to: (1)
Participate in development of documentation for their Interconnection
data requirements and reporting procedures; (2) participate in the
review of those data requirements and reporting procedures at least
every five years; and (3) make the data requirements and reporting
procedures available to NERC and other specified entities upon request.
124. Because MOD-013-1 is a fill-in-the-blank standard, the
Commission stated that it will not approve or remand MOD-013-1 until
the ERO submits additional information. However, the Commission
directed the ERO to develop a modification to MOD-013-1 to (1) permit
entities to estimate dynamics data if they are unable to obtain unit
specific data for any reason; (2) require verification of the dynamic
models with actual disturbance data and (3) expand the applicability
section to include the planning authority, transmission operator and
transmission planner.
aa. Requests for Rehearing
125. TANC requests that the Commission clarify that it erred in
directing the ERO to apply MOD-013-1 to transmission operators and
transmission planners. Although the Commission left Reliability
Standard MOD-013-1 pending, TANC asserts that the Commission stated
that it would adopt the NOPR proposal to expand the applicability
section to include planning authorities, but in a later summary
paragraph directed the ERO to apply the standard to transmission
operators and transmission planners, in addition to planning
authorities.\92\ TANC states that the inclusion of transmission
operators and transmission planners was neither mentioned in the NOPR
nor discussed in Order No. 693. In the alternative, TANC requests
rehearing.
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\92\ Compare Order No. 693 at P 1199; 1200.
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126. ISO-New England requests rehearing of the Commission's
determination to (1) permit entities to estimate dynamics data if they
are unable to obtain unit specific data for any reason; (2) require
verification of the dynamic models with actual disturbance data; and
(3) expand the applicability section to include the planning authority,
transmission operator and transmission planner. ISO-New England states
that the Commission's direction to the ERO to modify MOD-013-1 appears
internally inconsistent with other positions the Commission took in
Order No. 693. First, ISO-New England notes that the Commission
required the ERO to modify MOD-013-1 because it would allow the use of
estimated data but, at the same time, required ``verification of the
dynamic models with actual disturbance data.''
127. Second, ISO-New England observes that the Commission stated in
Order No. 693 that ``[f]ailure to provide the data needed for dynamics
system modeling and simulation would halt regional reliability
assessment processes and impede planners from accurately predicting
future system conditions, which would be detrimental to system
reliability.'' \93\ Further, ISO-New England points to the Commission's
statement in Order No. 693 that it believes ``to achieve the goal of
this Reliability Standard of having the ability to accurately model and
analyze the dynamic behavior and response of each Interconnection, it
is necessary to have accurate data.'' \94\ In sum, ISO-New England
argues that just as the Commission has recognized the importance of
accurate data with respect to the administration of other NERC
Reliability Standards, the Commission should equally recognize the
importance with regard to MOD-013-1.
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\93\ Id. at P 1177.
\94\ Id. at P 1188.
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128. Further, ISO-New England argues that the Blackout Report
suggests that actual data should be required.\95\ Specifically, ISO-New
England points to the Blackout Report's recommendation to improve the
quality of system modeling data and data exchange practices. ISO-New
England notes that the Blackout Report indicates that ``after-the-fact
models developed to simulate August 14 conditions and events found that
the dynamic modeling assumptions for generator and load power factors
in regional planning and operating models were frequently inaccurate.''
\96\ Further, ISO-New England states that the Task Force commented
that, during the investigation process, it too found that data was
frequently not available.\97\ Consequently, ISO-New England maintains
that the Task Force recommended the collection of validated data.\98\
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\95\ ISO-New England at 4, citing Blackout Report at 160-61.
\96\ Blackout Report at 160.
\97\ Id. at 161.
\98\ ISO-New England at 4, citing Blackout Report at 160-61.
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129. Finally, ISO-New England states that Order No. 693 leaves too
much unclear in terms of its direction that entities should be
permitted to estimate dynamics data if unit specific data is
unavailable ``for any reason.'' According to ISO-New England, this
exemption appears ``overbroad'' and could serve as the basis for an
asset owner's rejection of any reasonable request for the unit specific
data. ISO-New England requests that, if the Commission retains its
direction to permit entities to estimate dynamics data, that it narrow
the scope of the exemption that asset owners may employ in providing
unit specific data.
bb. Commission Determination
130. The Commission denies TANC's request for rehearing. TANC
correctly identifies that the Commission did not approve or remand MOD-
013-1, but provided direction to the ERO concerning the addition of
entities not already identified in the Reliability Standard. Although
we acknowledge that Order No. 693 did not include a discussion of the
addition of transmission operators and transmission planners in the
applicability section of this Reliability Standard, in directing the
ERO to apply MOD-013-1 to transmission operators and transmission
planners, we recognized that transmission operators and transmission
planners would be required to perform coordination functions under
Requirement R1 of MOD-013-1. Therefore, the Commission directed the ERO
to specifically include transmission operators and transmission
planners in the applicability section of MOD-013-1 so as to be clear
what the Commission considers to be the minimum applicability of this
[[Page 40734]]
Reliability Standard and to make the Reliability Standard internally
consistent.
131. In response to ISO-New England's concerns, the Commission
notes that the data referenced in Requirement R1.1 include ``items such
as inertia constant, damping coefficient, saturation parameters, and
direct and quadrature axis reactances and time constants, excitation
systems, voltage regulators, turbine-governor systems, power system
stabilizers, and other associated generation equipment.'' Much of these
data will be estimated from similar classes of facilities prior to the
facilities going into service. The Commission clarifies that its
determination to permit entities to estimate dynamics data if they are
unable to obtain unit specific data for any reason is limited to the
initial analysis of dynamics data. While we continue to believe that
``[a]chieving the most accurate possible picture of the dynamic
behavior of the Interconnection requires the use of actual data,'' \99\
we acknowledge that, in certain circumstances, actual data may not be
initially available and only obtained through ``verification of the
dynamic models with actual disturbance data.'' In addition, in Order
No. 693, we determined that ``the Reliability Standard should include
Requirements that such estimates be based on sound engineering
principles and be subject to technical review and approval of any
estimates at the regional level.'' \100 \This procedure would allow
peer review and approval at a regional level such that an entity could
not avoid using sound engineering principles in obtaining the initial
data for the model.
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\99\ Order No. 693 at P 1197.
\100\ Id.
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8. PRC-007-0, PRC-008-0, and PRC-009-0
132. PRC-007-0 requires transmission owners, transmission
operators, load-serving entities and distribution providers to provide,
and annually update, their underfrequency data to facilitate the
regional reliability organization's maintenance of the UFLS program
database.\101\ PRC-008-0 requires transmission owners and distribution
providers to implement UFLS equipment maintenance and testing programs
and provide program results to the regional reliability organization.
PRC-009-0 ensures that the performance of a UFLS system is analyzed and
documented following an underfrequency event by requiring the
transmission owner, transmission operator, load-serving entity and
distribution provider to document the deployment of their UFLS systems
in accordance with the regional reliability organization's program.
Order No. 693 approved Reliability Standards PRC-007-0, PRC-008-0,\102\
and PRC-009-0.\103\
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\101\ A UFLS program is a ``safety net'' that will automatically
drop load at specific locations in the power system in an effort to
re-establish the balance between generation and load to avoid
cascading.
\102\ The Commission also directed the ERO to develop a
modification to PRC-008-0 that includes a requirement that
maintenance and testing of a protection system must be carried out
within a maximum allowable interval that is appropriate to the type
of the protection system and its impact on the reliability of the
Bulk-Power System. The Commission's direction to modify PRC-008-0 is
not at issue in this proceeding.
\103\ Order No. 693 at P 1484, 1491, and 1498.
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133. These Reliability Standards reference PRC-006-0, which the
Commission did not approve or remand because the regional procedures
required by the Reliability Standard had not been submitted and because
it applies to regional reliability organizations.\104\ The Commission
reasoned that since PRC-007-0, PRC-008-0, and PRC-009-0 are existing
Reliability Standards that have been followed on a voluntary basis,
transmission owners, transmission operators, distribution providers and
load-serving entities are generally aware of their requirements. In
addition, the Commission stated that a reference in an approved
Reliability Standard to an unapproved Reliability Standard may be
considered in an enforcement action, but is not a reason to delay
approving and enforcing this Reliability Standard.
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\104\ Id. at P 1479.
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cc. Request for Rehearing
134. APPA requests rehearing of Commission approval of PRC-007-0,
PRC-008-0, and PRC-009-0. As discussed more fully in the section
concerning ``Fill-in-the-Blank Standards above,\105\ APPA believes that
each of these three Reliability Standards cannot be approved because it
references a fill-in-the-blank standard that was not approved or
remanded by the Commission.
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\105\ See section II.C.2., 2. Fill-in-the-Blank Standards,
supra.
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135. According to APPA, PRC-006-0 is the Reliability Standard that
requires the development of regional UFLS programs and contains
detailed and exacting requirements that the regions develop and apply
to applicable entities. According to APPA, PRC-006-0 is the source of
the design and documentation of regional UFLS programs and is not
merely administrative or a simple codification of established industry
practice. Rather, APPA asserts that PRC-006-0 sets forth very specific
requirements that each regional UFLS program must meet.
136. APPA asserts that PRC-007-0, PRC-008-0 and PRC-009-0 go much
further than imposing data requirements. APPA states that PRC-007-0
requires, among other things, that any transmission owner and
distribution provider with a UFLS program must ensure that its UFLS
program is consistent with its regional reliability organization's UFLS
program requirements. PRC-008-0 requires transmission owners and
distribution providers to implement UFLS equipment maintenance and
testing programs and provide program results to the regional
reliability organization. Finally, APPA maintains that PRC- 009-0
requires a transmission owner, transmission operator, load-serving
entity, and distribution provider that owns or operates a UFLS program
to analyze performance under that unapproved program. According to
APPA, because the required UFLS program has not been approved or
reviewed by the Commission under PRC-006-0, users, owners and operators
of the Bulk-Power System cannot be required to have a program
consistent with it.
137. APPA maintains that the fact that these three Reliability
Standards apply to specific users, owners and operators of the Bulk-
Power System, rather than a regional reliability organization, does not
justify approval of a reliability standard that requires users, owners
and operators of the Bulk-Power System to comply with regional UFLS
programs that have not been approved by NERC, and have not been shown
to meet the procedural and substantive requirements of section 215 of
the FPA and Order No. 672 for Reliability Standards that qualify for
approval and enforcement by the ERO and this Commission. Further, APPA
contends that, although the Commission appears to have approved these
Reliability Standards in part because they have ``been followed on a
voluntary basis,'' many small entities have often not been part of
regional reliability organizations and have not necessarily been aware
of, much less followed, regional programs on a voluntary basis.
dd. Commission Determination
138. We deny APPA's request for rehearing and affirm our approval
of Reliability Standards PRC-007-0, PRC-008-0 and PRC-009-0. However,
as explained below, we clarify that the limited provisions that relate
to the regional UFLS program developed under PRC-006-0 are not
enforceable
[[Page 40735]]
until the Commission approves PRC-006-0.\106\ Specifically, any entity
that is responsible for compliance with PRC-007-0, PRC-008-0 or PRC-
009-0 that currently does not have a UFLS program is not required to
develop such a program until PRC-006-0 is approved. Likewise, a
responsible entity with an existing UFLS program is not required to
comply with a regional UFLS program until the Commission approves PRC-
006-0. An explanation for this determination follows.
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\106\ Such provisions would similarly be enforceable if NERC
develops and the Commission approves a substitute for PRC-006-0.
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139. Each of the requirements in PRC-007-0, PRC-008-0 and PRC-009-
0, with the exception of Requirement R1 in PRC-007-0, apply only to
those entities that have a UFLS program. Therefore, contrary to APPA's
assertion, PRC-007-0, PRC-008-0 and PRC-009-0 do not require any entity
that does not have a UFLS program to develop one. That requirement
would fall under PRC-006-0. To be clear, the Commission will not impose
a penalty for the failure to have a UFLS program until such time as
PRC-006-0 or a suitable substitute, and the attendant regional UFLS
programs, are approved.
140. However, we disagree with APPA that the fact that Requirement
R1 references the regional UFLS program precludes us from approving
PRC-007-0, PRC-008-0 and PRC-009-0, which provide for updating an
entity's UFLS program (PRC-007-0), maintaining the entity's UFLS
facilities (PRC-008-0), and reporting on events that involve the
entity's UFLS (PRC-009-0). Rather, we uphold our earlier decision to
approve these three Reliability Standards with the clarification that
Requirement R1 of PRC-007-0 is not enforceable until the Commission
approves PRC-006-0. We further clarify, consistent with our discussion
above, that, until PRC-006-0 is approved, an entity that does not
currently have a UFLS program is not required to develop one or to
comply with PRC-007-0, PRC-008-0 and PRC-009-0. However, an applicable
entity that currently has a UFLS program must continue to maintain that
program as required by these three Reliability Standards. As discussed
below, the Requirements of PRC-007-0, PRC-008-0 and PRC-009-0 are
necessary for Bulk-Power System reliability and are not dependent on
PRC-006-0.
141. PRC-007-0, Requirement R2 states that the applicable entities
``shall provide, and annually update, its underfrequency data as
necessary for its Regional Reliability Organization to maintain and
update a UFLS program database.'' \107\ It is vital to maintain this
safety net that each registered transmission owner, transmission
operator, distribution provider and load-serving entity with a UFLS
system has a program to annually review the location of their UFLS
devices and the magnitude of load that can be collectively activated as
necessary.\108\ The reason for the annual review is that it is not
unusual for loads to be switched among distribution feeders and, with
load growth, additional distribution feeders may need to be included to
meet the requirements of the entities' UFLS program. In addition, it is
necessary to verify that sensitive and critical loads such as hospitals
and high impact facilities continue to be excluded from the load
shedding program. While it may be necessary to shed load to preserve
the Bulk-Power System, it is also good public policy to limit the
nature of the facilities that could be interrupted.
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\107\ While Requirement R2 identifies the regional reliability
organization, we note that this information should go to the
Regional Entity or the ERO as the entities with statutory authority
under section 215 of the FPA.
\108\ Blackout Report at 62.
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142. PRC-008-0, Requirement R1 states that the applicable entities
``shall have a UFLS equipment maintenance and testing program in
place.'' These programs are in place to assure that this last resort
system, which has been proven to be necessary to limit the geographic
scope of blackouts, operates as expected when required to in accordance
with the reliability assessments.
143. PRC-009-0, Requirement R1 identifies what analysis must be
completed by the applicable entities after an underfrequency event. It
states that ``[t]he analysis shall address the performance of UFLS
equipment and program effectiveness following system events resulting
in system frequency excursions below the initializing set points of the
UFLS program.'' This requirement assures that actual data on the
operation of the UFLS system can be correlated with simulations to
provide a check on how well the UFLS system is performing its last
resort function.
144. Requirement R1 of PRC-007-0 requires the transmission owner
and distribution provider to ``ensure that its UFLS program is
consistent with its Regional Reliability Organization's UFLS program
requirements.'' Because the regional UFLS program would be developed
pursuant to PRC-006-0, and the Commission has not approved or remanded
that Reliability Standard, we agree with APPA that Requirement R1
cannot be enforced as written until the Commission approves PRC-006-0,
because Requirement R1 would essentially require compliance with an
unapproved Reliability Standard. Because Requirement R1 of PRC-007-0 is
not enforceable until the Commission approves PRC-006-0, a transmission
owner's or distribution provider's UFLS program cannot be judged for
compliance with the unapproved regional UFLS program.
145. While the Commission will not enforce compliance with PRC-006-
0, the possible reduction in the amount of load available for
underfrequency load shedding can negatively impact the Reliable
Operation of the Bulk-Power System. Because of the importance of the
UFLS programs and the fact that there currently are no Commission-
approved Reliability Standards by which to judge individual UFLS
programs, the Commission believes it is important to monitor the
current UFLS programs so that we can consider if they provide an
adequate safety net for the Bulk-Power System. Therefore, the
Commission directs the ERO to collect the frequency and magnitude of
load in UFLS systems from applicable entities for this summer, from
date of order through September 30, 2007, and perform an analysis as to
the ability of the existing system to provide the required last resort
function within 90 days of this order. This analysis should consider if
the existing UFLS plans together provide an adequate safety net for the
Bulk-Power System.
146. In discussing potential ambiguities in the proposed
Reliability Standards in Order No. 693, the Commission stated that,
even if some clarification of a particular Reliability Standard would
be desirable at the outset, making it mandatory allows the ERO and the
Regional Entities to provide that clarification on a going-forward
basis while still requiring compliance with Reliability Standards that
have an important reliability goal.\109\ We believe that this principle
applies equally to a Reliability Standard where one Requirement may not
be enforceable, but the Reliability Standard must be approved to enable
enforcement of other Requirements.
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\109\ Order No. 693 at P 277. See also Order No. 693 at P 147,
157-58, explaining that the Commission was approving and requiring
modification to five Reliability Standards that apply partially to a
regional reliability organization.
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147. The reliability goal of PRC-007-0, PRC-008-0 and PRC-009-0 is
to provide last resort system preservation measures by implementing an
UFLS program. The Commission believes that this is an important
reliability goal. The Commission understands that, until
[[Page 40736]]
PRC-006-0 is approved, the UFLS program implemented will not be the one
envisioned in PRC-006-0. We believe that, where a user, owner or
operator does have a UFLS program, the data retention and reporting
requirements incorporated in these Reliability Standards serve an
extremely important goal of providing last resort system preservation
measures. NERC can analyze the information to monitor whether the last
resort system preservation measures are sufficient in the aggregate for
the entire Bulk-Power System. Although the ERO and Regional Entities
cannot penalize a user, owner or operator for an insufficient UFLS
program until the Commission approves PRC-006-0, collection, analysis
and submission of the UFLS information described above will provide
NERC and the Commission with invaluable information regarding the
reliability of the Bulk-Power System.
148. We further believe that, other than R1 in Reliability Standard
PRC-007-0, the Requirements in the PRC Reliability Standards are
independently enforceable. For example, R2 of Reliability Standard PRC-
007-0 requires a transmission owner or distribution provider with a
UFLS program to provide, and annually update, its underfrequency data.
Although R2 contains the phrase ``(as required by its Regional
Reliability Organization),'' the Commission believes that it is of
vital importance for the transmission owner and distribution provider
to update its UFLS data annually and provide it to the ERO. Because we
have not approved any regional programs, this parenthetical currently
has no meaning in the context of the approved Reliability Standard.
Therefore, the Commission believes that these three Reliability
Standards only apply to those entities that have a UFLS program,
irrespective of whether a region requires it.
149. The Commission also denies rehearing of our approval of PRC-
008-0. This Reliability Standard requires each transmission owner and
distribution provider with a UFLS program to have a UFLS program in
place that includes UFLS equipment identification and the schedule for
UFLS equipment testing and maintenance. PRC-008-0 further requires each
transmission owner and distribution provider with a UFLS program to
implement its UFLS equipment maintenance and testing program and
provide UFLS maintenance and testing program results to its regional
reliability organization and NERC on request. In this Reliability
Standard, any transmission owner or distribution provider that already
has a UFLS program must develop its own equipment maintenance and
testing program that complies with PRC-008-0. The Commission believes
it is of great importance to Bulk-Power System reliability for such
entities to perform such maintenance and testing. Because the
maintenance and testing programs do not rely on regional reliability
organization requirements, but are, rather, developed by the applicable
entity itself, the Commission continues to believe that this
Reliability Standard is enforceable regardless of whether the
Commission has approved PRC-006-0.
150. Finally, the Commission does not believe that the fact that
PRC-006-0 has not been approved or remanded necessitates granting
rehearing of our approval of PRC-009-0. This Reliability Standard
requires a transmission owner, transmission operator, load-serving
entity and distribution provider that owns or operates a UFLS program
to analyze and document its UFLS program performance in accordance with
its regional reliability organization's UFLS program. The Commission
acknowledges, as stated above, that currently there is no Commission-
approved UFLS program. However, R1 of PRC-009-0 also includes
independent criteria by which a user, owner or operator of the Bulk-
Power System must analyze its UFLS program. R1 states that:
The analysis shall address the performance of UFLS equipment and
program effectiveness following system events resulting in system
frequency excursions below the initializing set points of the UFLS
program. The analysis shall include, but not be limited to:
R1.1. A description of the event including initiating
conditions.
R1.2. A review of the UFLS set points and tripping times.
R1.3. A simulation of the event.
R1.4. A summary of the findings.
151. R2 of PRC-009-0 further requires the transmission owner,
transmission operator, load-serving entity and distribution provider to
provide documentation of the analysis of the UFLS program to its
regional reliability organization and NERC on request after a system
event. This analysis will better enable NERC to analyze system events
and determine what actions need to be taken to ensure the Reliability
of the Bulk-Power System.
152. Therefore, the Commission denies rehearing of our approval of
PRC-007-0, PRC-008-0 and PRC-009-0. To be clear, we recognize that R1
of PRC-007-0 is not enforceable until the Commission approves PRC-006-
0. Because, prior to that approval of PRC-006-0, PRC-007-0, PRC-008-0
and PRC-009-0 only apply to those entities that already have a UFLS
program, these Reliability Standards do not require any entity that
does not have a UFLS program to develop one, and the Commission will
not impose a penalty for an entity's failure to have a UFLS program
until the Commission approves PRC-006-0. Further, until PRC-006-0 has
been approved, a UFLS program cannot be judged for compliance with an
unapproved regional UFLS program. Therefore, the Commission clarifies
that, until PRC-006-has been approved, only the data retention and
reporting requirements, as well as the requirements for maintenance,
testing requirements and analysis of UFLS performance following a
triggering event in PRC-007-0, PRC-008-0 and PRC-009-0, are mandatory
and enforceable.
9. TOP-008-1
153. TOP-008-1 requires a transmission operator to take immediate
steps to mitigate System Operating Limit (SOL) and Interconnection
Reliability Operating Limit (IROL) violations. Order No. 693 approved
Reliability Standard TOP-008-1.\110\ Order No. 693 summarized TOP-008-1
as requiring a transmission owner to take immediate steps to mitigate
SOL and IROL violations.\111\
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\110\ Id. at P 1679.
\111\ See id. at P 1675.
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ee. Requests for Rehearing
154. TANC requests clarification that the Commission intended to
use the term transmission operator, rather than transmission owner, as
the correct applicable entity in Reliability Standard TOP-008-1.\112\
TANC states that the text of the ERO-proposed Reliability Standard
lists the transmission operator as the only entity to which TOP-008-1
applies. Alternatively, TANC requests rehearing.
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\112\ See id.
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ff. Commission Determination
155. The Commission will grant TANC's request for clarification.
TANC is correct that the Commission's use of the term transmission
owner, rather than transmission operator, was in error. The
transmission operator is the correct applicable entity in Reliability
Standard TOP-008-1.
III. Information Collection Statement
156. Order No. 693 contains information collection requirements for
which the Commission obtained approval from the Office of Management
and Budget (OMB). Given that this
[[Page 40737]]
Order on Rehearing does not revise the regulation text of Order No. 693
and makes only minor clarifications to Order No. 693, OMB approval for
this order is not necessary. However, the Commission will send a copy
of this order to OMB for informational purposes.
IV. Document Availability
157. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
158. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number, excluding the last three digits of this document, in the docket
number field.
159. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from our Help line at (202) 502-8222
or the Public Reference Room at (202) 502-8371 Press 0, TTY (202) 502-
8659. E-Mail the Public Reference Room at
public.referenceroom@ferc.gov.
By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. E7-14340 Filed 7-24-07; 8:45 am]
BILLING CODE 6717-01-P