[Federal Register Volume 76, Number 80 (Tuesday, April 26, 2011)]
[Proposed Rules]
[Pages 23222-23225]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10010]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-29-000]


Electric Reliability Organization Interpretation of Transmission 
Operations Reliability

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: Under section 215 of the Federal Power Act (FPA), the Federal 
Energy Regulatory Commission (Commission) proposes to approve the North 
American Electric Reliability Corporation's (NERC's) proposed 
interpretation of Reliability Standard, TOP-001-1, Requirement R8.

DATES: Comments are due June 27, 2011.

ADDRESSES: You may submit comments, identified by docket number and in 
accordance with the requirements posted on the Commission's web site, 
http://www.ferc.gov. Comments may be submitted by any of the following 
methods:
     Electronic Submission: Documents created electronically 
using word processing software should be filed in native applications 
or print-to-PDF format, and not in a scanned format, at http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver an original copy of their 
comments to: Federal Energy Regulatory Commission, Secretary of the 
Commission, 888 First Street, NE., Washington, DC 20426. These 
requirements can be found on the Commission's Web site, see, e.g., the 
``Quick Reference Guide for Paper Submissions,'' available at http://www.ferc.gov/docs-filing/efiling.asp, or via phone from FERC Online 
Support at 202-502-6652 or toll-free at 1-866-208-3676.

FOR FURTHER INFORMATION CONTACT:
Robert T. Stroh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8473.
Eugene Blick (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8066.
David O'Connor (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-6695.

SUPPLEMENTARY INFORMATION: Before Commissioners: Jon Wellinghoff, 
Chairman; Marc Spitzer, Philip D. Moeller, John R. Norris, and Cheryl 
A. LaFleur.

Notice of Proposed Rulemaking (Issued April 21, 2011)

    1. Under section 215 of the Federal Power Act (FPA),\1\ the Federal 
Energy Regulatory Commission (Commission) proposes to approve the North 
American Electric Reliability Corporation's (NERC's) proposed 
interpretation of Requirement R8 in Commission-approved NERC 
Reliability Standard TOP-001-1 -- Reliability Responsibilities and 
Authorities.\2\ The Commission proposes to approve the interpretation 
as discussed below.
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    \1\ 16 U.S.C. 824o (2006).
    \2\ The Commission is not proposing any new or modified text to 
its regulations. As provided in 18 CFR part 40, proposed 
interpretation of a Reliability Standard will not become effective 
until approved by the Commission, and the ERO must post on its Web 
site each effective Reliability Standard.
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I. Background

    2. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards, which are subject to Commission review and 
approval. If approved, the Reliability Standards are enforced by the 
ERO, subject to Commission oversight, or by the Commission 
independently.
    3. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO \3\ and, subsequently, certified 
NERC as the ERO.\4\ On March 16, 2007, the Commission issued Order No. 
693, approving 83 of the 107 Reliability Standards filed by NERC, 
including Reliability Standard TOP-001-1.\5\
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    \3\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \4\ 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).
    \5\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
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    4. NERC's Rules of Procedure provide that a person that is 
``directly and materially affected'' by Bulk-Power System reliability 
may request an interpretation of a Reliability Standard.\6\ The ERO's 
``standards process manager'' will assemble a team with relevant 
expertise to address the requested interpretation and also form a 
ballot pool. NERC's Rules provide that, within 45 days, the team will 
draft an interpretation of the Reliability Standard, with subsequent 
balloting. If approved by ballot, the interpretation is appended to the 
Reliability Standard and filed with the applicable regulatory authority 
for regulatory approval.
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    \6\ NERC Rules of Procedure, Appendix 3A, Reliability Standards 
Development Procedure, Version 6.1, at 27-29 (2010).
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A. Reliability Standard TOP-001-1

    5. Reliability Standard TOP-001-1 (Reliability Responsibilities and 
Authorities) centers on the responsibilities of balancing authorities 
and transmission operators during a system emergency. Specifically, the 
stated purpose of Reliability Standard TOP-001-1 is to ensure 
reliability entities have clear decision-making authority and 
capabilities to take appropriate actions or direct the actions of 
others to return the transmission

[[Page 23223]]

system to normal conditions during an emergency. Requirement R8 of the 
standard provides:

    During a system emergency, the Balancing Authority and 
Transmission Operator shall immediately take action to restore the 
Real and Reactive Power Balance. If the Balancing Authority or 
Transmission Operator is unable to restore Real and Reactive Power 
Balance it shall request emergency assistance from the Reliability 
Coordinator. If corrective action or emergency assistance is not 
adequate to mitigate the Real and Reactive Power Balance, then the 
Reliability Coordinator, Balancing Authority, and Transmission 
Operator shall implement firm load shedding.\7\
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    \7\ Reliability Standard TOP-001-1, Requirement R8.
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B. NERC Proposed Interpretation

    6. NERC submitted its petition for approval for an interpretation 
of Requirement R8 in Commission-approved Reliability Standard TOP-001-1 
on July 16, 2010. Consistent with the NERC Rules of Procedure, NERC 
states that it assembled a team to respond to the request for 
interpretation and presented the proposed interpretation to industry 
ballot, using a process similar to the process it uses for the 
development of Reliability Standards.\8\ According to NERC, the 
interpretation was developed and approved by industry stakeholders 
using the NERC Reliability Standards Development Procedure and approved 
by the NERC Board of Trustees (Board). In the NERC Petition, NERC 
explains that it received a request from Florida Municipal Power Pool 
(FMPP) seeking an interpretation of Reliability Standard TOP-001-1, 
Requirement R8. Specifically, FMPP requested clarification on several 
aspects of Requirement R8. FMPP asked the following:
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    \8\ NERC Reliability Standards Development Procedure at 27-29.

    Balancing real power is not a function of a [Transmission 
Operator] and balancing reactive power is not a function of a 
[Balancing Authority]. For Requirement R8 is the Balancing Authority 
responsibility to immediately take corrective action to restore Real 
Power Balance and is the [Transmission Operator] responsibility to 
immediately take corrective action to restore Reactive Power 
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Balance? \9\

    \9\ NERC Petition at 5.
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    7. In response to FMPP's interpretation request, NERC provided the 
following:

    The answer to both questions is yes. According to the NERC 
Glossary of Terms Used in Reliability Standards, the Transmission 
Operator is responsible for the reliability of its ``local'' 
transmission system, and operates or directs the operations of the 
transmission facilities. Similarly, the Balancing Authority is 
responsible for maintaining load-interchange-generation balance, 
i.e., real power balance. In the context of this requirement, the 
Transmission Operator is the functional entity that balances 
reactive power. Reactive power balancing can be accomplished by 
issuing instructions to the Balancing Authority or Generator 
Operators to alter reactive power injection. Based on NERC 
Reliability Standard BAL-005-1b Requirement R6, the Transmission 
Operator has no requirement to compute an Area Control Error (ACE) 
signal or to balance real power. Based on NERC Reliability Standard 
VAR-001-1 Requirement R8, the Balancing Authority is not required to 
resolve reactive power balance issues. According to TOP-001-
Requirement R3, the Balancing Authority is only required to comply 
with Transmission Operator or Reliability Coordinator instructions 
to change injections of reactive power.\10\

    \10\ Id. at 5-6
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    8. NERC contends that the interpretation is consistent with the 
stated purpose of the Reliability Standard, which is to ensure 
reliability entities have clear decision-making authority and 
capabilities to take appropriate actions or direct the actions of 
others to return the transmission system to normal conditions during an 
emergency. NERC adds that the interpretation clarifies the 
responsibilities of balancing authorities and transmission operators 
during a system emergency by referencing the NERC Glossary of Terms 
Used in Reliability Standards as well as other relevant Reliability 
Standards.\11\
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    \11\ Id. at 6.
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    9. On February 14, 2011, NERC made a supplemental filing in 
response to a Commission staff data request.\12\ With regard to whether 
Requirement R8 obligates a joint response in a system emergency, NERC 
explained that Requirement R8 does not use the word ``joint'' or 
otherwise infer joint responsibility during system emergencies. Rather, 
NERC responded that the balancing authority and transmission operator 
have separate responsibilities to restore real and reactive power 
balance during system emergencies. NERC also stated that the use of 
``and'' between the two entities should not construe communication or 
coordination. NERC added that the Blackout Report \13\ correctly 
identifies communication and coordination issues as reliability issues 
and that communication and coordination are addressed in the 
Communications (COM) Reliability Standards.\14\
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    \12\ Response of the North American Electric Reliability 
Corporation to Request for Additional Information Regarding 
Interpretation to Reliability Standard TOP-001-1, Requirement R8 
(NERC Response).
    \13\ Final Report on the August 14, 2003 Blackout in the United 
States and Canada (Blackout Report).
    \14\ NERC Response at 4-7.
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II. Proposed Determination

    10. We propose to approve NERC's interpretation of Reliability 
Standard TOP-001-1, Requirement R8. We believe that the ERO has 
presented a reasonable interpretation consistent with the language of 
the Reliability Standard. In addition, as discussed below, we note that 
a balancing authority and transmission operator each have coordination 
and communication functions that are necessary for maintaining real and 
reactive power balance.

Discussion

    11. We propose to approve NERC's interpretation of TOP-001-1, 
Requirement R8. As explained by NERC, the interpretation supports the 
stated purpose of the Reliability Standard, i.e., ensuring that 
reliability entities have clear decision-making authority and 
capabilities to take appropriate actions or direct the actions of 
others to return the transmission system to normal conditions during an 
emergency.\15\ The interpretation also clarifies the responsibilities 
of a balancing authority and transmission operator during a system 
emergency. Further, the language is consistent with the language of the 
requirement. Accordingly, the Commission proposes to approve the ERO's 
interpretation of TOP-001-1, Requirement R8.
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    \15\ Id. at 6.
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    12. We agree, as discussed in the interpretation, that the 
balancing authority is responsible for restoring real power balance 
during a system emergency and the transmission operator is responsible 
for restoring reactive power balance during a system emergency. 
However, during a system emergency, communication and coordination 
between the transmission operator and balancing authority can be 
essential to restore real and reactive power balance. For example, 
during an emergency, the balancing authority may rely on the real power 
output of a generator to fulfill its responsibility, while the 
transmission operator may expect the same generator unit to reduce real 
power to generate greater reactive power output.\16\
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    \16\ The Blackout Report described such a scenario, explaining 
that a generator unit tripped because the unit's protection system 
detected the Var output, i.e., reactive power, exceeded the unit's 
capability. Blackout Report at 27. The Blackout Report also 
explained that no generator units were asked to reduce their real 
power output to produce more reactive power. Id. at 47.

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[[Page 23224]]

    13. NERC acknowledges the need for such communication and 
coordination. NERC maintains that this coordination and communication 
is required through two currently-effective Communication (COM) 
Reliability Standards: (1) COM-001-1.1-Telecommunications and (2) COM-
002-2--Communication and Coordination.\17\
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    \17\ NERC Response at 6-7. NERC also identifies several ongoing 
Reliability Standards projects that are intended to strengthen the 
requirements around communication and coordination between 
functional entities.
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    14. We agree with NERC that the currently effective COM Reliability 
Standards provide for such communication and coordination. For example, 
Reliability Standard COM-002-2, Requirement R1 provides that 
transmission operators, balancing authorities and generator operators 
must have communication links with one another and must be staffed to 
address a real-time emergency. Reliability Standard EOP-001-0, 
Requirements R3, R4.3 and R7 also contain provisions relevant to such 
communication and coordination in emergencies. These provisions require 
balancing authorities and transmission operators to develop plans to 
mitigate operating emergencies including coordination among adjacent 
transmission operators and balancing authorities.
    15. Accordingly, for the reasons discussed above, we propose to 
approve NERC's proposed interpretation of TOP-001-1, Requirement R8.

III. Information Collection Statement

    16. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping requirements 
(collections of information) imposed by an agency.\18\ The information 
contained here is also subject to review under section 3507(d) of the 
Paperwork Reduction Act of 1995.\19\
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    \18\ 5 CFR 1320.11.
    \19\ 44 U.S.C. 3507(d).
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    17. As stated above, the Commission approved, in Order No. 693, 
Reliability Standard TOP-001-1 that is the subject of the current 
rulemaking. This proposed rulemaking proposes to approve the 
interpretation of the previously approved Reliability Standard, which 
was developed by NERC as the ERO. The proposed interpretation, as 
clarified, relates to an existing Reliability Standard, and the 
Commission does not expect it to affect entities' current reporting 
burden.\20\ Accordingly, we will submit this proposed rule to OMB for 
informational purposes only.
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    \20\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1901-
1907.
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    18. For the purposes of reviewing this interpretation, the 
Commission seeks information concerning whether the interpretation will 
affect respondents' burden or cost.
    Title: Mandatory Reliability Standards for the Bulk-Power System.
    Action: FERC-725A.
    OMB Control No.: 1902-0244.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: On Occasion.
    19. Necessity of the Information: This proposed rule would approve 
the proposed interpretation of Reliability Standard, TOP-001-1, 
Requirement R8. The proposed rule would find the interpretation just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest. The TOP-001-1 Reliability Standard helps ensure the 
reliable operation of the North American Bulk-Power System by ensuring 
``reliability entities have clear decision-making authority and 
capabilities to take appropriate actions or direct the actions of 
others to return the transmission system to normal conditions during an 
emergency.'' \21\
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    \21\ The purpose of Standard TOP-001-1, according to the NERC 
Web site at http://www.nerc.com/files/TOP-001-1.pdf.
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    20. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, e-mail: 
DataClearance@ferc.gov, Phone: (202) 502-8663, fax: (202) 273-0873].
    For submitting comments concerning the collection of information 
and the associated burden estimate, please submit your comments to FERC 
and to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, Washington, DC 20503 [Attention: Desk Officer 
for the Federal Energy Regulatory Commission, phone: (202) 395-7345, 
fax: (202) 395-7285]. Due to security concerns, comments should be sent 
electronically to the following e-mail address at OMB: oira 
submission@omb.eop.gov. Please refer to OMB Control No. 1902-0244, and 
the docket number of this proposed rule in your submission.

IV. Environmental Analysis

    21. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\22\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. Included in the exclusion are rules that are clarifying, 
corrective, or procedural or that do not substantially change the 
effect of the regulations being amended.\23\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \22\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 ] 30,783 (1987).
    \23\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act

    22. The Regulatory Flexibility Act of 1980 (RFA) \24\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on a substantial number of small 
entities. The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of a small business.\25\ 
The SBA has established a size standard for electric utilities, stating 
that a firm is small if, including its affiliates, it is primarily 
engaged in the transmission, generation and/or distribution of electric 
energy for sale and its total electric output for the preceding twelve 
months did not exceed four million megawatt hours.\26\ The RFA is not 
implicated by this proposed rule because the interpretations discussed 
herein will not have a significant economic impact on a substantial 
number of small entities.
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    \24\ 5 U.S.C. 601-612.
    \25\ 13 CFR 121.101.
    \26\ 13 CFR 121.201, Section 22, Utilities, & n.1.
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    23. The Commission approved Reliability Standard TOP-001-1 in 2007 
in Order No. 693. The proposed rulemaking in the immediate docket 
addresses an interpretation of Requirement R8 of previously-approved 
TOP-001-1. The proposed interpretation clarifies current compliance 
obligations of balancing authorities and transmission operators and 
therefore, does not create an additional regulatory impact on small 
entities.

VI. Comment Procedures

    24. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this

[[Page 23225]]

notice to be adopted, including any related matters or alternative 
proposals that commenters may wish to discuss. Comments are due 60 days 
from publication in the Federal Register. Comments must refer to Docket 
No. RM10-29-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments.
    25. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    26. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street NE., Washington, DC 20426.
    27. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VII. Document Availability

    28. 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.
    29. 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.
    30. 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.

    By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-10010 Filed 4-25-11; 8:45 am]
BILLING CODE 6717-01-P