Federal Register, Volume 76 Issue 207 (Wednesday, October 26, 2011)

[Federal Register Volume 76, Number 207 (Wednesday, October 26, 2011)]
[Proposed Rules]
[Pages 66229-66235]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27624]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM11-18-000]

Transmission Planning Reliability Standards

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Transmission Planning (TPL) Reliability Standards are intended
to ensure that the transmission system is planned and designed to meet
an appropriate and specific set of reliability criteria. Reliability
Standard TPL-002-0a references a table which identifies different
categories of contingencies and allowable system impacts in the
planning process. The table includes a footnote regarding planned or
controlled interruption of electric supply where a single contingency
occurs on a transmission system. North American Electric Reliability
Corporation (NERC), the Commission-certified Electric

[[Page 66230]]

Reliability Organization, requests approval of a revision to the
footnote. In this notice, the Commission proposes to remand NERC's
proposed revision to the footnote.

DATES: Comments are due December 27, 2011.

ADDRESSES: You may submit comments, identified by docket number by any
of the following methods:
Agency Web Site: http://www.ferc.gov. Documents created
electronically using word processing software should be filed in native
applications or print-to-PDF format and not in a scanned format.
Mail/Hand Delivery: Commenters unable to file comments
electronically must mail or hand deliver comments to: Federal Energy
Regulatory Commission, Secretary of the Commission, 888 First Street,
NE., Washington, DC 20426.

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.

SUPPLEMENTARY INFORMATION:

Notice of Proposed Rulemaking

October 20, 2011.
1. On March 31, 2011, the North American Electric Reliability
Corporation (NERC) filed a petition seeking approval of Table 1,
footnote `b' of four Reliability Standards: Transmission Planning: TPL-
001-1--System Performance Under Normal (No Contingency) Conditions
(Category A), TPL-002-1b--System Performance Following Loss of a Single
Bulk Electric System Element (Category B), TPL-003-1a--System
Performance Following Loss of Two or More Bulk Electric System Elements
(Category C), and TPL-004-1- System Performance Following Extreme
Events Resulting in the Loss of Two or More Bulk Electric System
Elements (Category D).\1\ Pursuant to section 215(d)(4) of the Federal
Power Act (FPA) \2\, the Commission proposes to remand the proposed
Table 1, footnote b. As discussed below, the Commission believes that
the proposed Reliability Standard does not meet the statutory criteria
for approval that it be just, reasonable, not unduly discriminatory or
preferential, and in the public interest.\3\ The Commission seeks
comments on its proposal.
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\1\ While footnote `b' appears in all four of the above
referenced TPL Reliability Standards, its relevance and practical
applicability is limited to TPL-002-0a.
\2\ 18 U.S.C. 824o(d)(4) (2006).
\3\ 16 U.S.C. 824o(d)(2) (2006).
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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. Approved 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 \4\ and, subsequently, certified
NERC as the ERO.\5\ On March 16, 2007, the Commission issued Order No.
693, approving 83 of the 107 Reliability Standards filed by NERC,
including Reliability Standard TPL-002-0, Table 1, footnote `b.' \6\ In
addition, pursuant to section 215(d)(5) of the FPA,\7\ the Commission
directed NERC to develop modifications to 56 of the 83 approved
Reliability Standards, including footnote `b' of Reliability Standard
TPL-002-0.\8\
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\4\ 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).
\5\ 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 (D.C. Cir. 2009).
\6\ 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).
\7\ 16 U.S.C. 824o(d)(5)(2006).
\8\ Order No. 693, FERC Stats & Regs. ] 31,242 at P 1797.
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A. Transmission Planning (TPL) Reliability Standards

4. Currently-effective Reliability Standard TPL-002-0a addresses
Bulk-Power System planning and related system performance for single
element contingency conditions. Requirement R1 of TPL-002-0a requires
that each Planning Authority and Transmission Planner ``demonstrate
through a valid assessment that its portion of the interconnected
transmission system is planned such that the Network can be operated to
supply projected customer demands and projected Firm Transmission
Services, at all demand levels over the range of forecast system
demands, under the contingency conditions as defined in Category B of
Table I.'' \9\ Table I identifies different categories of contingencies
and allowable system impacts in the planning process. With regard to
system impacts, Table I further provides that a Category B (single)
contingency must not result in cascading outages, loss of demand or
curtailed firm transfers, system instability or exceeded voltage or
thermal limits. With regard to the clause regarding loss of demand,
current footnote `b' of Table 1 states:
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\9\ Reliability Standard TPL-002-0a, Requirement R1.

Planned or controlled interruption of electric supply to radial
customers or some local Network customers, connected to or supplied
by the Faulted element or by the affected area, may occur in certain
areas without impacting the overall reliability of the
interconnected transmission systems. To prepare for the next
contingency, system adjustments are permitted, including
curtailments of contracted Firm (non-recallable reserved) electric
power Transfers.

B. Order No. 693 Directive

5. In Order No. 693, the Commission stated that it believes that
the transmission planning Reliability Standard should not allow an
entity to plan for the loss of non-consequential firm load in the event
of a single contingency.\10\ The Commission directed the ERO to develop
certain modifications, including a clarification of Table 1, footnote
`b'. The Commission stated that:
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\10\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1794.
Non-consequential load loss includes the removal, by any means, of
any planned firm load that is not directly served by the elements
that are removed from service as a result of the contingency.
Currently-effective footnote `b' deals with both consequential load
loss and non-consequential load loss. NERC's proposed footnote `b'
characterizes both types of load loss as ``Firm Demand.'' The focus
of this NOPR is NERC's proposed treatment of non-consequential load
loss or planned interruption of ``Firm Demand.''

Based on the record before us, we believe that the transmission
planning Reliability Standard should not allow an entity to plan for
the loss of non-consequential load in the event of a single
contingency. The Commission directs the ERO to clarify the
Reliability Standard. Regarding the comments of Entergy and Northern
Indiana that the Reliability Standard should allow entities to plan
for the loss of firm service for a single contingency, the
Commission finds that their comments may be considered through the
Reliability Standards development process. However, we strongly
discourage an approach that reflects the lowest common denominator.
The Commission also clarifies that an entity may seek a regional
difference to the Reliability Standard from the ERO for case-
specific circumstances.\11\
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\11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1794
(footnotes omitted).

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[[Page 66231]]

6. In a subsequent clarifying order, the Commission stated that it
believed that a regional difference, or a case-specific exception
process that can be technically justified, to plan for the loss of firm
service ``at the fringes of various systems'' would be an acceptable
approach in limited circumstances.\12\ Specifically, the Commission
clarified that:
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\12\ Mandatory Reliability Standards for the Bulk Power System,
131 FERC ] 61,231, at P 21 (2010) (June 2010 Order).

Moreover, the Commission, in * * * Order No. 693, then provided
a clarification that an entity may seek a regional difference to the
Reliability Standard from the ERO for case-specific circumstances.
We believe that a regional difference, or a case-specific exception
process that can be technically justified, to plan for the loss of
firm service ``at the fringes of various systems'' would be an
acceptable approach. Thus, the Commission did not dictate a single
solution as NERC and others now claim. In any event, NERC must
provide a strong technical justification for its proposal.\13\
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\13\ Id.
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C. NERC's Petition for Approval of TPL-002-0a, Footnote b

7. On March 31, 2011, NERC filed a petition seeking approval of its
proposal to revise and clarify footnote `b' ``in regard to load loss
following a single contingency.'' \14\ NERC stated that it did not
eliminate the ability of an entity to plan for the loss of non-
consequential load in the event of a single contingency but drafted a
footnote that, according to NERC, ``meets the Commission's directive
while simultaneously meeting the needs of industry and respecting
jurisdictional bounds.'' \15\ NERC states that its proposed footnote
`b' establishes the requirements for the limited circumstances when and
how an entity can plan to interrupt Firm Demand for Category B
contingencies. It allows for planned interruption of Firm Demand when
``subject to review in an open and transparent stakeholder process.''
\16\ NERC's proposed footnote `b' states:
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\14\ NERC Petition at 10.
\15\ Id.
\16\ Id.

An objective of the planning process should be to minimize the
likelihood and magnitude of interruption of firm transfers or Firm
Demand following Contingency events. Curtailment of firm transfers
is allowed when achieved through the appropriate redispatch of
resources obligated to re-dispatch, where it can be demonstrated
that Facilities, internal and external to the Transmission Planner's
planning region, remain within applicable Facility Ratings and the
re-dispatch does not result in the shedding of any Firm Demand. It
is recognized that Firm Demand will be interrupted if it is: (1)
Directly served by the Elements removed from service as a result of
the Contingency, or (2) Interruptible Demand or Demand-Side
Management Load. Furthermore, in limited circumstances Firm Demand
may need to be interrupted to address BES performance requirements.
When interruption of Firm Demand is utilized within the planning
process to address [Bulk Electric System] performance requirements,
such interruption is limited to circumstances where the use of
Demand interruption are documented, including alternatives
evaluated; and where the Demand interruption is subject to review in
an open and transparent stakeholder process that includes addressing
stakeholder comments.

D. Supplemental Information

8. On June 7, 2011, in response to a Commission deficiency letter,
NERC explained that ``the approach proposed in footnote `b' is equally
efficient because many of the stakeholder processes that will be used
in footnote `b' planning decisions are already in place, as implemented
by FERC in Order No. 890 and in state regulatory jurisdictions.'' \17\
NERC also pointed to state public utility commission processes or
processes existing in local jurisdictions that address transmission
planning issues that could serve to provide a case-specific review of
the planned interruption of Firm Demand. NERC added that an ERO-
sponsored planning process is not likely to be efficient or effective
because of extensive jurisdictional issues between NERC, the
Commission, and the many authorities having jurisdiction that would
have to be resolved before implementation could occur. NERC added that
an ERO-specific process would lead to conflicts among federal,
provincial, state and local governing bodies that have jurisdiction
over various parts of the planning, siting and construction process.
NERC also believes that a NERC-centered process would duplicate
planning actions occurring elsewhere (e.g., where resource allocation
decisions are actually being made), and such a process could lead to
inconsistent results. NERC concluded that a more reasonable and
expeditious path would be to rely on existing stakeholder processes.
According to NERC, such processes would more likely engage the
appropriate local-level decision-makers and policy-makers.
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\17\ NERC Data Response at 4.
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9. With respect to review and oversight by NERC and the Regional
Entities, NERC submitted that an ERO-specific process would place the
ERO in the position of managing and actively participating in a
planning process, which conflicts with its role as the compliance
monitor and enforcement authority. NERC also stated that neither the
ERO nor the Regional Entities will review decisions regarding planned
interruptions. Their role will be limited to reviewing whether the
registered entity participated in a stakeholder process when planning
to interrupt Firm Demand. NERC explained that Regional Entities will
have oversight after-the-fact by auditing the entity's implementation
of footnote `b' to determine if the entity planned on interrupting Firm
Demand and whether the decision by the entity to rely on planned
interruption of Firm Demand was vetted through the stakeholder process
and qualified as one of the situations identified in footnote b.
10. Furthermore, NERC stated that an objective of the planning
process should be to minimize the likelihood and magnitude of planned
Firm Demand interruptions. NERC recognizes that there may be
topological or system configurations where allowing planned
interruptions of Firm Demand may provide more reliable service. NERC
contends that due to the wide variety of system configurations and
regulatory compacts, it is not feasible for the ERO to develop a one-
size-fits-all criterion for limiting the planned firm load
interruptions for Category B events. According to NERC, the standards
drafting team evaluated setting a certain magnitude of planned
interruption of Firm Demand, but there was no analytical data to
support a single value, and it would be viewed as arbitrary.

II. Discussion

11. The Commission proposes to remand NERC's proposal to modify
Reliability Standard TPL-002-0a, Table 1, footnote `b.' The Commission
believes that NERC's proposal does not meet the directives in Order No.
693 and the June 2010 Order and does not clarify or define the
circumstances in which an entity can plan to interrupt Firm Demand for
a single contingency. Specifically, the Commission is concerned that
the procedural and substantive parameters of NERC's proposed
stakeholder process are too undefined to provide assurances that the
process will be effective in determining when it is appropriate to plan
for interrupting Firm Demand, does not contain NERC-defined criteria on
circumstances to determine when an exception for planned interruption
of Firm Demand is permissible, and could result in inconsistent results
in implementation. In proposing a stakeholder process without
specification of any technical means by which exceptions are to be
evaluated,

[[Page 66232]]

the proposed footnote effectively turns the processes into a
reliability standards development process outside of NERC's existing
procedures. Furthermore, the Commission believes that regardless of the
process used, the result could lead to inconsistent reliability
requirements within and across reliability regions. While the
Commission recognizes that some variation among regions or entities is
reasonable given varying grid topography and other legitimate
considerations, there are no technical or other criteria to determine
whether varied results are arbitrary or based on meaningful
distinctions. While the Commission acknowledges that NERC has
flexibility in developing alternative approaches, we believe that the
proposed approach is not equally efficient or effective as the
Commission's directives and that NERC has failed to provide a strong
technical justification for its proposal.
12. As an initial matter, the Commission is concerned that the
process lacks parameters. The standard requires that, when planning to
interrupt Firm Demand, the Firm Demand interruption must be ``subject
to review in an open and transparent stakeholder process that includes
addressing stakeholder comments.'' \18\ However, without any
substantive parameters governing the stakeholder process, the
enforceability of this obligation by NERC and the Regional Entities'
would be limited to a review to ensure only that a stakeholder process
occurred. Indeed, NERC's explanation appears to confirm this concern,
as NERC explained that Regional Entities' involvement is limited to
oversight after-the-fact by auditing the entity's implementation of
footnote `b' to determine if the entity planned on interrupting Firm
Demand and whether the decision by the entity to rely on planned
interruption of Firm Demand was vetted through the stakeholder process
and qualified as one of the situations identified in footnote `b'.
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\18\ NERC Petition at 10.
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13. Further, the Commission is concerned that the NERC proposal
leaves undefined the circumstances in which it is allowable to plan for
Firm Demand to be interrupted in response to a Category B contingency.
The TPL-002-0a Reliability Standard requires Planning Authorities and
Transmission Planners to demonstrate through a valid assessment that
the transmission system is planned and can be operated to supply
projected Firm Demand at all demand levels over a range of forecasted
system demands.\19\ Moreover, the planner must consider all single
contingencies applicable to Table I, Category B and demonstrate that
system performance is met. For those instances where system performance
is not met, the planner must provide a written summary of its plans to
achieve system performance including implementation schedules, in
service dates of facilities and implementation lead times.\20\ In
regard to NERC's proposal, the Commission is concerned that footnote
`b' would function as a means to override the reliability objective and
system performance requirements of the TPL Reliability Standard without
any technical or other criteria specified to determine when planning to
interrupt Firm Demand would be allowable. In this case NERC has
provided no technically sound means of determining situations in which
planning to interrupt Firm Demand would be allowable, and instead has
removed such decision-making to an unspecified stakeholder process
without any assurance that such processes will deploy technically sound
means of approving or denying exceptions. Without any technical or
other criteria specified to determine when planning to interrupt Firm
Demand would be allowable, the Commission is concerned that multiple
stakeholder processes across the country engaging in such
determinations could lead to inconsistent and arbitrary exceptions
including, potentially, allowing entities to plan to interrupt any
amount of Firm Demand in any location and at any voltage level. While
the Commission recognizes that some variation among regions or entities
is reasonable given varying grid topography and other legitimate
considerations, there are no technical or other criteria to determine
whether varied results are arbitrary or based on meaningful
distinctions. The Commission is thus concerned that there may be a lack
of consistency in determinations to allow the planned interruption of
Firm Demand. The proposed stakeholder process does not have any
parameters except for openness and transparency. As a result, multiple
processes that could be adopted across the country would likely lead to
inconsistent determinations to allow for the planned interruption of
Firm Demand.
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\19\ Reliability Standard TPL-002-0a, Requirement R1.
\20\ Reliability Standard TPL-002-0a, Requirements R1.5 and R2.
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14. The Commission believes that a remand would give NERC and
industry flexibility to develop an approach that would address the
issues identified by the Commission with the proposed footnote `b'
stakeholder process including, as discussed below, definition of the
process and criteria or guidelines for the process.

A. Lack of Technical or Other Criteria

15. NERC's proposal does not prescribe the criteria that would
define the parameters of permissible interruption of Firm Demand. In
Order No. 693 the Commission expressed concern that, as a general rule,
footnote `b' should not allow an entity to plan for the loss of non-
consequential load in the event of a single contingency and directed
NERC to clarify the standard. The Commission stated in the June 2010
Order that a regional difference or a case-specific exception process
that could be technically justified would be acceptable. While the
Commission allows NERC to propose an equally effective and efficient
solution to a Commission's proposed solution, the Commission does not
believe that the proposal is equally effective and efficient. First,
NERC's proposed footnote `b' contains no constraints and could allow an
entity to plan to interrupt any amount of Firm Demand, in any location
or at any voltage level as needed for any single contingency, provided
that it is documented and subjected to a stakeholder process. This
result is contrary to the underlying standard and our prior orders.\21\
Further, NERC did not technically justify its proposal, instead relying
on the benefit of having transparency in the process. The Commission
does not believe transparency in this instance can substitute for a
technical justification.
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\21\ See Order No. 693, see also June 2010 Order.
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16. In its supplemental filing, NERC states that it is not feasible
for the ERO to develop a one-size-fits-all criterion for limiting the
planned interruption of Firm Demand due to the wide variety of system
configurations and regulatory compacts.\22\ NERC states that the
standards drafting team believes there is no analytical data to support
a single level and therefore any single value was viewed as arbitrary.
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\22\ NERC Data Response at 6.
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17. We are not persuaded by NERC's reasoning. First, both NERC and
the Commission have developed thresholds in other reliability contexts
that have overcome similar claims of arbitrariness. For example, the
threshold for conducting vegetation management pursuant to Reliability
Standard FAC-003-1 applies to all transmission lines operated at 200 kV
and above.\23\ In the

[[Page 66233]]

same vein, NERC's Statement of Compliance Registry Criteria has
numerous thresholds for determining eligibility for registration.\24\
The Commission did not suggest a one size fits all exceptions process.
If the ERO were to perform an exception process, it might include
flexibility in decisions based on disparate topology or on other
matters since it could utilize its technical expertise to determine the
reliability impact from one region to another. Moreover, the
Commission's proposal to remand revised footnote `b' due to a lack of
criteria does not preclude NERC from developing another alternative,
provided that it is equally ``efficient and effective.''
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\23\ Reliability Standard FAC-003-1.
\24\ See, e.g., NERC Statement of Registry Criteria, Section
III. The Commission approved Statement of Registry Criteria in Order
No. 693.
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18. Finally, the Commission understands that there are a wide
variety of system configurations and regulatory compacts. NERC
indicates that the standards drafting team considered a variety of
limits; however, it is not clear whether NERC considered a blend of
quantitative and qualitative thresholds. For example, a standard could
require a process with a quantitative limitation on how much Firm
Demand could be planned for interruption and that standard could
provide an exception process where a registered entity would submit
documents and explanation to the ERO or a Regional Entity for approval
based upon certain considerations.\25\ In short, we believe that a more
defined process would be needed but, by itself, would not be adequate
without NERC-defined technical or other criteria to determine planned
interruption of Firm Demand. The Commission seeks comment on these
proposals.
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\25\ While we encourage NERC to exercise flexibility in
designing an appropriate standard, under this example, the exception
process could consist of a stakeholder process that has some level
of due process as long as that process does not allow the entity
that proposes its exception to make the decision on whether to grant
the exception.
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B. Stakeholder Process

19. The Commission believes that NERC's proposed footnote `b'
stakeholder process does not meet Order No. 693 and the June 2010 Order
directive. According to NERC, the type of stakeholder process used
under its proposed footnote `b' can vary from one planning entity to
the next. NERC offers several stakeholder processes as examples, such
as the Order 890-type process, a state public utility commission or
local jurisdiction process, or a Regional Transmission Organization/
Independent System Operator (RTO/ISO) stakeholder process.
20. First, because NERC's proposed footnote `b' does not define the
stakeholder process, the express terms of the standard would allow an
applicable entity to form or participate in any stakeholder process and
be compliant with the proposed standard. Second, as we have mentioned,
NERC has offered no technical justification for exceptions to be
granted through the stakeholder process and therefore no means for the
Commission to judge whether the process will protect the reliability of
the Bulk-Power System. Nothing in the proposed footnote `b' restricts
the stakeholder process, other than that it must be an open and
transparent stakeholder process that includes addressing stakeholder
comments. The Commission is concerned that any meeting that is open to
stakeholders could meet this standard. Further, because the stakeholder
process is not defined, the proposal could allow a transmission planner
to develop a process that provides insufficient process and
transparency and still comply with the standard. The Commission
believes that such process would be insufficient because it allows any
stakeholder process to essentially become a reliability standards
development processes outside of NERC's existing procedures.
Furthermore, the Commission believes that regardless of the stakeholder
process used, the outcome could lead to inconsistent results, with no
technical or other criteria to determine whether varied results are
arbitrary or based on meaningful distinctions. The Commission seeks
comment on whether a stakeholder process is the appropriate vehicle to
approve or deny exceptions to allow entities to plan to interrupt Firm
Demand for a single contingency and if so, whether the proposed
footnote `b' would require any stakeholder due process.
21. Nor does the standard describe what would be entailed in
addressing the stakeholder comments. As described above, the process
under the standard does not provide for any technical rigor to address
stakeholder concerns. While the standard requires transparency and an
opportunity for stakeholder comments on the transmission planner's
proposed plan to interrupt Firm Demand, it does not mandate any
particular stakeholder involvement, nor does it mandate that interested
governmental authorities be afforded notice and an opportunity to
comment. As we read the proposed standard, a responsible entity could
define when it would plan to interrupt Firm Demand on its own, then ask
for stakeholder input on that plan. While the standard requires the
responsible entity to ``address'' stakeholder comments, the responsible
entity is not required to specify or support the technical basis upon
which it rendered a decision. The Commission believes that the
stakeholder process in proposed footnote `b' would allow the
transmission planner to define the circumstances when it would rely on
planned interruption of Firm Demand, provide that definition for review
by regulators and other stakeholders, receive comments from regulators
and stakeholders requesting a more narrow definition, and explain to
the regulators and stakeholders why it is declining the request and
maintaining the broader definition, even if every other transmission
planner facing similar circumstances would reach the opposite
conclusion.
22. In Order No. 693 and the June 2010 Order, the Commission stated
that a regional difference or a case-specific exception process, among
other things, would be an acceptable approach. With regard to a case-
specific process, NERC replied it would ``create undesirable delays and
uncertainty in the transmission planning process.'' \26\ However, the
proposed footnote `b' does not provide a time limitation by which
planning decisions to interrupt Firm Demand must be made. The
Commission is not persuaded that NERC's proposed approach ameliorates
this concern. The Commission seeks comment on whether an exceptions
process that provides defined criteria, with some allowance or
consideration for unique circumstances, could be crafted that would
resolve NERC's concerns of ``undesirable delays'' and ``uncertainty.''
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\26\ NERC Data Response at 2.
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23. In sum, the Commission is concerned that the stakeholder
process set forth in the NERC proposal is not sufficiently defined,
rendering it potentially unenforceable. As mentioned above, the
proposed stakeholder process includes no parameters other than openness
and transparency. NERC states that it and the Regional Entities will
review a responsible entity's decision to plan to interrupt Firm Demand
using an after-the-fact audit, to determine if the entity's
implementation of footnote `b' to plan Firm Demand interruption and
whether the decision by the entity was vetted through the stakeholder
process and qualified as one of the situations

[[Page 66234]]

identified in footnote `b.' \27\ The Commission believes that this
could result in a transmission planner invoking a process that provides
for minimal stakeholder involvement, providing scant reasons to reject
any stakeholder input and then defending its decision by claiming that
it has satisfied the provision. While the Compliance Enforcement
Authority would verify that the process fulfilled the letter of NERC's
proposed footnote `b'--that some open, transparent stakeholder process
was involved and that the responsible entity in some way addressed
stakeholder concerns--there is no mechanism for the ERO or a Regional
Entity to enforce a finding that the evidence does not support an
acceptable instance of planned interruption of Firm Demand. The
Commission seeks comment on the concerns raised above.
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\27\ NERC Data Response at 7-8.
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C. Commission Proposal

24. The Commission believes that NERC's proposed footnote `b' does
not meet the Commission's Order No. 693 directives, nor is it an
equally effective and efficient alternative. On this basis, the
Commission proposes to remand the proposal to NERC.
25. The Commission also proposes to provide further guidance on
acceptable approaches to footnote `b'. We seek comment on all of the
options below. In addition, while the Commission is proposing certain
options for revising footnote `b', we also seek comment on other
potential options to solve the concerns outlined in this NOPR. As noted
above, the Commission understands that there are a wide variety of
system configurations and regulatory compacts. We believe that a more
defined process than that provided in the proposed footnote `b' would
be needed but, by itself, would not be adequate without NERC-defined
technical or other criteria to determine an acceptable planned
interruption of Firm Demand at the fringes of the system.\28\
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\28\ Any exceptions process to determine specific requests for
planned interruption of Firm Demand may not necessarily be limited
to the fringes of the system.
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26. We acknowledge that the standards drafting team considered a
variety of limits; however, setting some form of criteria within the
standard itself for planning to interrupt Firm Demand may be an
acceptable approach to setting criteria for footnote `b' and would be
an option for NERC to consider. We also seek comment on whether
existing protocols could provide guidance to NERC in devising criteria.
For example, the Department of Energy's Electric Emergency Incident and
Disturbance Report (Form OE-417) requires, among other things, an
entity to report the uncontrolled loss of 300 Megawatts or more of firm
system loads for more than 15 minutes from a single incident, load
shedding of 100 Megawatts or more implemented under emergency
operational policy, and the loss of service for more than 1 hour to
50,000 customers. While these are reporting requirements for the
operational timeframe, and may include distribution level load
shedding, the Commission requests comments on whether they could also
serve as a basis for setting limits on when an entity can plan to
interrupt Firm Demand on the Bulk-Power System. Another existing
document that could provide guidance on how to set a limit on the
planned interruption of Firm Demand is NERC's Statement of Compliance
Registry Criteria, which uses, for example, 25 MW as a threshold in
determining when a load-serving entity or distribution provider should
register with NERC. We seek comments on this proposed option, and any
other external documents that could be used to guide a revision to
footnote `b.'
27. Second, as stated above, it is not clear whether NERC
considered a blend of quantitative and qualitative thresholds. The
Commission seeks comments on whether this would be an option for
providing criteria that would be generally applicable, but also for
allowing for certain cases that may exceed the criteria. For example, a
standard could require a process with a quantitative limitation on how
much Firm Demand could be planned for interruption and that standard
could provide an exception process where a registered entity would
submit documents and explanation to the ERO or a Regional Entity for
approval based upon certain considerations. NERC has raised concerns
about conflicts among federal, provincial, state and local governing
bodies that have jurisdiction over various parts of the planning,
siting and construction process. The Commission believes that this
approach may satisfy the need for technical criteria that we have
described, while accounting for NERC's concerns about the difficulty of
developing a one-size-fits-all criterion for limiting planned Firm
Demand interruptions and the appropriateness and feasibility of
managing and actively participating in each planning process. As NERC
states, the objective of footnote `b' should be to minimize the
likelihood and magnitude of planned Firm Demand interruptions. The
Commission believes that setting generally applicable criteria for when
an applicable entity can plan to shed Firm Demand, coupled with an
exceptions process overseen by NERC and the Regional Entities, could
mean that few exception requests must be processed by NERC and the
Regional Entities. We seek comment on this option, and which entities
should be involved in the review and subsequent determination as to
whether an exception should be allowed.
28. NERC has raised concerns about conflicts among federal,
provincial, state and local governing bodies that have jurisdiction
over various parts of the planning, siting and construction process.
There also may be concerns about the costs of planning to avoid Firm
Demand shedding. The Commission seeks comment on whether a feasible
option would be to revise footnote `b' to allow for the planned
interruption of Firm Demand in circumstances where the transmission
planner can show that it has customer or community consent and there is
no adverse impact to the Bulk-Power System. This presumably would not
require affirmative consent by every individual retail customer, but we
recognize that either term, customer or community, would need to be
adequately defined. The Commission therefore seeks comments on who
might be able to represent the customer or community in this option and
how customer or community consent might be demonstrated. Additionally,
we seek comment on how it would be determined that firm demand shedding
with customer consent would not adversely impact the Bulk-Power System.
However, we also seek comment on whether a customer who would otherwise
consent to having its planning authority or transmission planner plan
to interrupt Firm Demand pursuant to this option could instead select
interruptible or conditional firm service under the tariff to address
cost concerns.
29. Finally, regardless of how NERC revises footnote `b' to resolve
the concerns outlined in this NOPR and in previous orders, the
Commission notes that NERC will need to support the revision to
footnote `b.' If there is a threshold component to the revised
footnote, the Commission believes that NERC would need to support the
threshold and show that instability, uncontrolled separation, or
cascading failures of the system will not occur as a result of planning
to shed Firm Demand up to the threshold. In addition, if there is an
individual exception option, the Commission

[[Page 66235]]

believes that the applicable entities should be required to find that
there is no adverse impact to the Bulk-Power System from the exception
and that it is considered in wide-area coordination and operations.
Further, we believe that any exception should be subject to further
review by the Regional Entity, NERC, and the Commission. This does not
necessarily mean that the Regional Entity, NERC, or the Commission
should have to approve the exception, but that any of the three could
later audit its implementation.
30. In conclusion, while the Commission provides three options for
revising footnote `b' in this Notice of Proposed Rulemaking, we seek
comments on the feasibility of the options and on ways in which the
options might be improved. In addition, we seek comment on whether
there are other ways for NERC to solve the concerns outlined above in
an equally effective and efficient manner.

III. Information Collection Statement

31. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting and recordkeeping (collections of
information) imposed by an agency.\29\ The information contained here
is also subject to review under section 3507(d) of the Paperwork
Reduction Act of 1995.\30\
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\29\ 5 CFR 1320.11.
\30\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

32. As stated above, the subject of this NOPR is NERC's proposed
modification to Table 1, footnote `b' applicable in four TPL
Reliability Standards. This NOPR proposes to remand the footnote `b'
modification to NERC. By remanding footnote `b' the applicable
Reliability Standards and any information collection requirements are
unchanged. Therefore, the Commission will submit this NOPR to OMB for
informational purposes only.
33. 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:
data.clearance@ferc.gov, phone: (202) 502-8663, or fax: (202) 273-
0873].

IV. Regulatory Flexibility Act

34. The Regulatory Flexibility Act of 1980 (RFA) \31\ 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.\32\
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.\33\ The RFA is not
implicated by this NOPR because the Commission is remanding footnote'
b' and not proposing any modifications to the existing burden or
reporting requirements. With no changes to the Reliability Standards as
approved, the Commission certifies that this NOPR will not have a
significant economic impact on a substantial number of small entities.
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\31\ 5 U.S.C. 601-612.
\32\ 13 CFR 121.201.
\33\ Id. n.22.
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V. Comment Procedures

35. The Commission invites interested persons to submit comments on
the matters and issues proposed in this 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. RM11-18-000, and must
include the commenter's name, the organization they represent, if
applicable, and their address in their comments.
36. 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.
37. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street, NE.,
Washington, DC 20426.
38. 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.

VI. Document Availability

39. 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.
40. 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.
41. 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 direction of the Commission. Commissioner Spitzer is not
participating.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2011-27624 Filed 10-25-11; 8:45 am]
BILLING CODE 6717-01-P