Mandatory Reliability Standards:

Federal Register: July 23, 2010 (Volume 75, Number 141)

Rules and Regulations

Page 43059-43062

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr23jy10-7

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission 18 CFR Parts 38 and 40

Docket Nos. RM08-19-003, RM05-5-019; Order No. 729-B

Mandatory Reliability Standards for the Calculation of Available

Transfer Capability, Capacity Benefit Margins, Transmission Reliability

Margins, Total Transfer Capability, and Existing Transmission

Commitments; Mandatory Reliability Standards for the Bulk-Power System; and Standards for Business Practices and Communications Protocols for

Public Utilities

July 15, 2010.

AGENCY: Federal Energy Regulatory Commission.

ACTION: Order on Rehearing and Reconsideration.

Page 43060

SUMMARY: In this order, the Commission grants several requests for rehearing of Order No. 729-A, which, inter alia, provided clarification of the implementation timeline for the six Modeling Data, and Analysis

Reliability Standards submitted by the North American Electric

Reliability Corporation and approved by the Commission in Order No. 729. As discussed below, the Commission grants rehearing on the implementation timeline. In addition, the Commission is revising the implementation deadline for compliance with the related North American

Energy Standards Board business practice standards incorporated by reference in Order No. 676-E, so that the deadlines for compliance with the requirements of Order Nos. 729 and 676-E remain consistent.

DATES: Effective Date: This rule will become effective August 23, 2010.

Accordingly, the North American Electric Reliability Corporation

Reliability Standards approved in Order No. 729 shall be implemented on

April 1, 2011. The related North American Energy Standards Board business practice standards shall be implemented on the same date as the Reliability Standards, as discussed below.

FOR FURTHER INFORMATION CONTACT:

Cory Lankford (Legal Information), Office of the General Counsel,

Federal Energy Regulatory Commission, 888 First Street, NE.,

Washington, DC 20426. (202) 502-6711.

Christopher Young (Technical Information), Office of Electric

Reliability, Federal Energy Regulatory Commission, 888 First Street,

NE., Washington, DC 20426. (202) 502-6403.

Valerie Roth (Technical Information), Office of Energy Policy

Innovations, Federal Energy Regulatory Commission, 888 First Street,

NE., Washington, DC 20426. (202) 502-8538.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, Philip

D. Moeller, John R. Norris, and Cheryl A. LaFleur.

In the matter of: RM08-19-003, Mandatory Reliability Standards for the Calculation of Available Transfer Capability, Capacity Benefit

Margins, Transmission Reliability Margins, Total Transfer Capability, and Existing Transmission Commitments; Mandatory Reliability Standards for the Bulk-Power System.

RM05-5-019, Standards for Business Practices and Communication

Protocols for Public Utilities.

Order No. 729-B

Order on Rehearing and Reconsideration

Issued July 15, 2010 1. In this order, the Commission grants several requests for rehearing of Order No. 729-A, which, inter alia, provided clarification of the implementation timeline for six Modeling Data, and Analysis

(MOD) Reliability Standards submitted by the North American Electric

Reliability Corporation (NERC) and approved by the Commission in Order

No. 729.\1\ As discussed below, the Commission grants rehearing on the implementation timeline. In addition, the Commission is revising the implementation deadline for compliance with the related North American

Energy Standards Board (NAESB) business practice standards incorporated by reference in Order No. 676-E,\2\ so that the deadlines for compliance with the requirements of Order Nos. 729 and 676-E remain consistent.

\1\ Mandatory Reliability Standards for the Calculation of

Available Transfer Capability, Capacity Benefit Margins,

Transmission Reliability Margins, Total Transfer Capability, and

Existing Transmission Commitments and Mandatory Reliability

Standards for the Bulk-Power System, Order No. 729, 129 FERC ] 61,155 (2009), order on reh'g, Order No. 729-A, 131 FERC ] 61,109

(2010).

\2\ Standards for Business Practices and Communication Protocol for Public Utilities, Order No. 676-E, 74 FR 63288 (Dec. 3, 2009),

FERC Stats. & Regs. ] 31,299, at P 126 (Nov. 24, 2009).

1. Background 2. On November 24, 2009, the Commission issued Order No. 729, which approved six MOD Reliability Standards submitted to the Commission by the North American Electric Reliability Corporation (NERC), the

   Commission-certified Electric Reliability Organization (ERO) for the

   United States.\3\ The approved Reliability Standards pertain to methodologies for the consistent and transparent calculation of available transfer capability or available flowgate capability.

   Pursuant to section 215(d)(5) of the Federal Power Act (FPA),\4\ the

   Commission directed the ERO to develop certain modifications to the MOD

   Reliability Standards. The Commission also directed NERC to retire the existing MOD Reliability Standards replaced by the versions approved in the Final Rule once the new versions became effective.

   \3\ North American Electric Reliability Corp., 116 FERC ] 61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd sub nom. Alcoa Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).

   \4\ 16 U.S.C. 824o(d)(5) (2006).

   3. On the same date, the Commission issued Order No. 676-E, which revised the Commission's regulations to incorporate by reference in its regulations the latest version (Version 002.1) of certain business practice standards adopted by the Wholesale Electric Quadrant (WEQ) of

   NAESB. In addition, the Commission directed public utilities to file any necessary tariff revisions, including any revisions to Attachment C to their Open Access Transmission Tariff (OATT), at least ninety days before the prescribed date of compliance with the revised business practice standards, which was meant to be coincident with the implementation date for compliance with the MOD Reliability Standards approved in Order No. 729.

2. Discussion 4. In Order No. 729, the Commission directed that the Reliability

   Standards become effective according to the schedule proposed by the

   ERO.\5\ Thus, the Commission stated that the MOD Reliability Standards shall become effective on the first calendar quarter that is twelve months beyond the date that the Reliability Standards are approved ``by all applicable regulatory authorities.'' \6\ The Commission found that this implementation schedule struck a reasonable balance between the need for timely reform and the needs of transmission service providers and transmission operators to make adjustments to their calculations of available transfer capability, capacity benefit margin and transfer reserve margin. In response to comments on its notice of proposed rulemaking, the Commission clarified that, under this plan, the

   Reliability Standards shall become effective on the first day of the first quarter occurring 365 days after approval by all applicable regulatory authorities. Approval by the Commission would be effective 60 days after the date of publication of the Final Rule in the Federal

   Register.\7\

   \5\ Order No. 729, 129 FERC ] 61,155 at P 95.

   \6\ Id.

   \7\ Id.

   5. Order No. 676-E set the implementation date for compliance with the NAESB business practice standards coincident with the implementation date of the MOD Reliability Standards approved in Order

      No. 729. Accordingly, public utilities subject to the NAESB business practice standards were directed to comply with these Version 002.1 business practice standards as of the first day of the first quarter occurring 365 days after approval of the MOD Reliability Standards by all applicable regulatory authorities. Implementation of some of

      Page 43061

      the NAESB business standards will require tariff revisions. The

      Commission also directed public utilities to submit necessary tariff revisions, including any revisions to Attachment C of their OATT, at least ninety days before the prescribed date for compliance with the revised standards. 6. In response to several requests for clarification, the

      Commission issued Order No. 729-A, which, among other things, clarified the implementation timeline of the MOD Reliability Standards. Again, the Commission accepted the clarification offered by the ERO in its comments and clarified that the Reliability Standards shall become effective within the United States on the first day of the first quarter occurring 365 days after Order No. 729 was published in the

      Federal Register, i.e., January 1, 2011.\8\

      \8\ Order No. 729-A, 131 FERC ] 61,109 at P 7.

   7. The Commission also recognized that compliance with these MOD

      Reliability Standards requires an exchange of information and data among neighboring transmission service providers. The Commission stated that, in some instances, a transmission service provider within the

      United States may need to exchange information and data with a neighboring transmission service provider located in a jurisdiction where the Reliability Standard is not yet enforceable, such as some

      Canadian provinces. In this situation, the Commission determined that the transmission service provider within the United States must share information with the transmission service provider located in another jurisdiction pursuant to the requirements of the MOD Reliability

      Standards. But, the Commission clarified, the transmission service providers and transmission operators within the continental United

      States who must rely on information and data from utilities located in another country to comply with these Reliability Standards shall not be penalized solely for the failure of a utility located in another jurisdiction to provide such information and data, until such time that the MOD Reliability Standards become mandatory in that foreign jurisdiction.

      Requests for Rehearing 8. Several petitioners requested rehearing of the clarified implementation schedule. Bonneville Power Administration (Bonneville), the Large Public Power Council (LPPC), Southwest Area Transmission

      Subregional Planning Group (SWAT), and WestConnect request a July 1, 2011, implementation date. Bonneville suggests that the Commission do this by clarifying that the effective date of the MOD Reliability

      Standards is the first day of the first quarter occurring 365 days after publication of Order No. 729-A in the Federal Register, i.e.,

      July 1, 2011. By contrast, LPPC and WestConnect argue that their members reasonably presumed a July 1, 2011, implementation date when the Canadian authorities failed to approve the MOD Reliability

      Standards within three months of the Commission's approval and have been acting in reliance of that date. SWAT simply states that a July 1, 2011, effective date is consistent with the notice given to industry in

      Order No. 729 and that for the sake of the reliable operation of the

      Bulk-Power System and efficient and orderly implementation of the new

      MOD Reliability Standards, the effective date in the United States should be set as July 1, 2011. If the Commission rejects the proposed

      July 1, 2011, effective date, all of these petitioners request, in the alternative, that the Commission set the effective date no earlier than

      April 1, 2011, which is the first day of the first quarter occurring 365 days after Commission approval of the MOD Reliability Standards. 9. Other petitioners advocate for an April 1, 2011, effective date.

      Midwest Independent Transmission System Operation, Inc. (MISO),

      NorthWestern Corp. (NorthWestern), PJM Interconnection, L.L.C. (PJM) and Southwest Power Pool, Inc. (SPP) argue that they have relied upon

      April 1, 2011, as the earliest possible effective date of the MOD

      Reliability Standards. MISO argues that Order No. 729-A's acceleration of the Order No. 729 compliance deadline is unexpected, unnecessary, and likely to impose unreasonable burdens on responsible entities who planned for compliance no earlier than April 1, 2011. PJM also contends that it has expended resources in reliance upon an April 1, 2011, effective date and that an accelerated effective date creates a substantial hardship for PJM. Accordingly, these petitioners urge the

      Commission to grant rehearing and set April 1, 2011, as the effective date for the MOD Reliability Standards. 10. In support of their arguments, petitioners comment on how the effective dates for other requirements are linked to the implementation schedule of the MOD Reliability Standards. MISO, NorthWestern, SWAT and

      Westconnect state that Order No. 729 aligned the effective date of the

      MOD Reliability Standards with the effective date of the NAESB WEQ business practice standards Version 002.1. MISO and Northwestern also point out that, in Order No. 676-E, the Commission directed utilities to file a revised Attachment C to their Open Access Transmission Tariff

      (OATT) on or before 275 days after approval of the MOD Reliability

      Standards. These petitioners argue that the Commission's decision in

      Order No. 729-A to accelerate the implementation of the MOD Reliability

      Standards has disrupted the coordinated implementation of the NAESB business practice standards and the OATT Attachment C revisions. 11. In addition, MISO expresses concern about the Commission's statement in Order No. 729-A that transmission service providers within the United States who rely upon information and data from transmission service providers within Canadian provinces to comply with these

      Reliability Standards shall not be penalized solely for the failure of a utility located in another jurisdiction to provide such information and data, until such time that the MOD Reliability Standards become effective in that foreign jurisdiction. MISO expresses concerns that the last clause of this statement could be read to mean that once the standards have become mandatory in Canada, transmission operators within the United States could be subjected to penalties if the

      Canadian transmission operators fail, for whatever reason, to supply the information mandated by the Reliability Standards. Accordingly,

      MISO requests clarification that Order No. 729-A did not create automatic liability for transmission operators that comply with their own data requirements, but do not receive needed data from other transmission operators. 12. Finally, MISO requests that the Commission act expeditiously and issue an order on rehearing by July 1, 2010. MISO states that the compliance deadline under the Order No. 729-A framework, i.e.,

      September 9, 2010, is rapidly approaching. MISO argues that expedited action will provide MISO and others with needed certainty and allow them to schedule their compliance efforts accordingly.

      Commission Determination 13. Upon further consideration, the Commission has determined that the implementation schedule of the MOD Reliability Standards should be keyed to the date of approval of the Reliability Standards, as originally contemplated in Order No. 729, and not the date of publication of Order No. 729 in the Federal Register. Accordingly, the

      Page 43062

      Commission grants rehearing of its determination in Order No. 729-A and directs that the MOD Reliability Standards shall become effective within the United States as of the first day of the first quarter occurring 365 days after their approval by the Commission, i.e., April 1, 2011. 14. Thus, the Commission rejects arguments raised by Bonneville,

      LPPC, SWAT and WestConnect that the implementation of the MOD

      Reliability Standards should be delayed because the original implementation plan contemplated approval of all applicable regulatory authorities, including certain Canadian provinces, and those entities did not act within the same quarter as the Commission. It is unclear whether and when the Canadian provinces will act on these MOD

      Reliability Standards. This uncertainty is the reason why the

      Commission granted clarification in Order No. 729-A. Although the

      Commission appreciates that industry acted in reliance of the original implementation plan, we believe that the most reasonable clarification of the Commission's directive in Order No. 729 is to make the MOD

      Reliability Standards effective within the United States on the first day of the first quarter occurring 365 days following approval by the

      Commission, i.e., April 1, 2011. 15. When the Commission issued Order No. 676-E, it purposely set an implementation timeline for compliance with the NAESB business practice standards that was identical to the one prescribed in Order No. 729 for the related NERC reliability standards.\9\ In this order and in Order

      No. 729-A, the Commission has modified the compliance schedule for the

      MOD Reliability Standards such that it no longer matches the compliance schedule for the WEQ Version 002.1 Business Practice Standards that the

      Commission incorporated by reference in Order No. 676-E. Thus, to maintain the consistency that the Commission determined was appropriate in Order Nos. 676-E and 729, we will modify the compliance deadline that we prescribed in Order No. 676-E to match the compliance deadline that we are prescribing for the MOD Reliability Standards within the continental United States.\10\ Thus, the NAESB business practice standards shall become effective on the same date as the MOD

      Reliability Standards.

      \9\ See Order No. 676-E, FERC Stats. & Regs. ] 31,299 at P 126;

      Order No. 729 at P 95.

      \10\ In contrast to the compliance dates the Commission is establishing for the NERC MOD Reliability Standards, the compliance date for the WEQ Version 002.1 Business Practice Standards do not establish a separate compliance date for transactions outside of the continental United States.

   16. Consistent with our determination in Order No. 676-E, public utilities shall file any necessary tariff revisions, including any revisions to Attachment C of their OATT, at least ninety days before the prescribed date for compliance with the revised NAESB business practice standards.\11\ Consistent with our prior practice, if a public utility fails to file the required tariff revisions prior to the compliance date, it nonetheless must abide by the NAESB Version 002.1

       WEQ standards even before it has updated its tariff to incorporate these changes.

       \11\ Order No. 676-E, FERC Stats. & Regs. ] 31,299 at P 128.

   17. In response to MISO's request, the Commission clarifies that

       Order No. 729-A did not create automatic liability for transmission operators that comply with their own data requirements, but do not receive needed data from other transmission operators. The Commission intended, in Order No. 729-A, to clarify that to the extent transmission providers within the United States rely on information provided by transmission providers in other countries to complete their calculations of available transfer or flowgate capability, and the transmission providers in other countries do not provide sufficiently transparent information for the transmission providers within the

       United States to complete their implementation documents, the transmission operators within the United States would not violate the

       MOD Reliability Standards approved in Order No. 729 as a result of that lack of information from counterparts in other countries.

3. Information Collection Statement 18. The Office of Management and Budget (OMB) regulations require that OMB approve certain information collection requirements imposed by an agency.\12\ The revisions to the information collection requirements for transmission service providers and transmission operators adopted in Order No. 729 were approved under OMB Control No. 1902-0244. This order clarifies these requirements in order to more clearly state the obligations imposed in Order No. 729, but does not substantively alter those requirements. OMB approval of this order is therefore unnecessary. However, the Commission will send a copy of this order to

   OMB for informational purposes only.

   \12\ 5 CFR 1320 (2010).

4. Document Availability 19. 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. 20. 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. 21. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502- 8371, TTY (202) 502-8659. E-mail the Public Reference Room at public.referenceroom@ferc.gov.

5. Effective Date and Congressional Notification 22. Rehearings and clarifications adopted in this Order on

   Rehearing and Reconsideration will become effective August 23, 2010.

   By the Commission. Commissioner LaFleur voting present.

   Kimberly D. Bose,

   Secretary.

   FR Doc. 2010-17735 Filed 7-22-10; 8:45 am

   BILLING CODE 6717-01-P