[Federal Register: October 27, 2008 (Volume 73, Number 208)]
[Rules and Regulations]
[Page 63769-63794]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc08-18]
[[Page 63769]]
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Part II
Department of Energy
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Federal Energy Regulatory Commission
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18 CFR Part 40
Mandatory Reliability Standard for Nuclear Plant Interface
Coordination; Final Rule
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM08-3-000; Order No. 716]
Mandatory Reliability Standard for Nuclear Plant Interface
Coordination
Issued October 16, 2008.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
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SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the
Commission approves the Nuclear Plant Interface Coordination
Reliability Standard developed by the North American Electric
Reliability Corporation (NERC). In addition, pursuant to section
215(d)(5) of the FPA, the Commission directs NERC to develop a
modification to the Reliability Standard to address a specific concern.
The Reliability Standard requires a nuclear plant generator operator
and its suppliers of back-up power and related transmission and/or
distribution services to coordinate concerning nuclear licensing
requirements for safe nuclear plant operation and shutdown and system
operating limits. The Commission also approves four related definitions
for addition to the NERC Glossary of Terms, and directs various changes
to proposed violation risk factors, which measure the potential impact
of violations of the Reliability Standard on the reliability of the
Bulk-Power System.
DATES: Effective Dates: The final rule will become effective November
26, 2008.
FOR FURTHER INFORMATION CONTACT:
Robert Snow (Technical Information), Office of Electric Reliability,
Division of Reliability Standards, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6716;
Michael Gandolfo (Technical Information), Office of Electric
Reliability, Division of Reliability Standards, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426,
(202) 502-6817;
Richard M. Wartchow (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8744;
Christy Walsh (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6523.
SUPPLEMENTARY INFORMATION:
Table of Contents Paragraph Nos.
I. Background...................................... 2
A. Proposed Reliability Standard NUC-001-1..... 2
B. Proposed NERC Glossary Definitions.......... 9
C. Notice of Proposed Rulemaking............... 10
D. Procedural Matters.......................... 12
II. Discussion..................................... 13
A. Approval of NUC-001-1....................... 14
B. Applicability............................... 20
1. Notification of Parties to Interface 22
Agreements.
2. Transmission Entities and Agreements on 32
NPIRs.
3. Dispute Resolution...................... 74
C. Form of Agreements.......................... 83
D. Enforcement and Conflicts with Other 89
Regulations.
E. Scope of Agreements......................... 95
1. Commission Questions.................... 98
2. Other Scope Related Issues.............. 105
F. Coordination................................ 117
1. Coordination Among Transmission Entities 119
2. Addressing System Changes............... 128
G. Violation Risk Factors...................... 132
1. General Violation Risk Factor Issues.... 137
2. Requirement-Specific Issues............. 151
H. Violation Severity Levels................... 188
III. Information Collection Statement.............. 193
IV. Environmental Analysis......................... 203
V. Regulatory Flexibility Act Analysis............. 204
VI. Document Availability.......................... 207
Appendix A: List of Comments to Notice of Proposed
Rulemaking.
Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.
1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the
Commission approves the Nuclear Plant Interface Coordination
Reliability Standard (NUC-001-1) developed by the North American
Electric Reliability Corporation (NERC), the Commission-certified
Electric Reliability Organization (ERO). In addition, pursuant to
section 215(d)(5) of the FPA, the Commission directs NERC to develop a
modification to the Reliability Standard to address a specific
concern.\2\ The Reliability Standard requires a nuclear plant generator
operator and its suppliers of back-up power and transmission and/or
distribution services to coordinate concerning nuclear licensing
requirements for safe nuclear plant operation and shutdown and system
operating limits (SOLs).\3\
[[Page 63771]]
The Commission also approves four related definitions for addition to
the NERC Glossary of Terms,\4\ and directs various changes to proposed
violation risk factors, which measure the potential impact of
violations of the Reliability Standard on the reliability of the Bulk-
Power System.\5\
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\1\ 16 U.S.C. 824o (2006).
\2\ 16 U.S.C. 824o(d)(5).
\3\ NERC proposes to define nuclear plant generator operator as
any generator operator or generator owner that is a nuclear plant
licensee responsible for operation of a nuclear facility licensed to
produce commercial power. See the discussion of NERC's proposed
Glossary terms below. The Reliability Standard itself defines those
suppliers who provide such generation, transmission and distribution
services pursuant to agreements under NUC-001-1 as ``transmission
entities,'' as discussed below.
\4\ See, e.g., Mandatory Reliability Standards for the Bulk-
Power System, Order No. 693, RM06-16-000, 72 FR 16416, FERC Stats. &
Regs. ] 31,242, at P 1893 (Apr. 4, 2007), order on reh'g, Order No.
693-A, 120 FERC ] 61,053 (2007) (approving the NERC Glossary of
Terms Used in Reliability Standards (as revised) (Glossary)
originally filed April 4, 2006).
\5\ The Commission is not proposing any new or modified text to
its regulations. Rather, as set forth in 18 CFR Part 40, a proposed
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
A. Proposed Reliability Standard NUC-001-1
2. On November 19, 2007, NERC filed its petition for Commission
approval of the Nuclear Plant Interface Coordination Reliability
Standard, designated NUC-001-1 (November 19, 2007 Petition).\6\ NERC
supplemented the filing on December 11, 2007 (December 11, 2007
Supplement) to propose four related NERC Glossary terms: ``Nuclear
Plant Generator Operator,'' ``Nuclear Plant Off-site Power Supply (Off-
site Power),'' ``Nuclear Plant Licensing Requirements (NPLRs),'' and
``Nuclear Plant Interface Requirements (NPIRs).'' In the November 19,
2007 Petition, NERC stated that the proposed Reliability Standard
addresses the coordination of interface requirements for two domains:
(i) Bulk-Power System planning and operations and (ii) nuclear power
plant licensing requirements for off-site power necessary to enable
safe nuclear plant operation and shutdown.
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\6\ NUC-001-1 is attached in Appendix A to the March 20 Notice
of Proposed Rulemaking (NOPR) in this proceeding, and is available
on the Commission's eLibrary document retrieval system in Docket No.
RM08-3-000 and also on NERC's Web site, http://www.nerc.com. See 18
CFR Part 40, Mandatory Reliability Standard for Nuclear Plant
Interface Coordination, NOPR, Docket No. RM08-3-000, 73 FR 16,586
(March 28, 2008), FERC Stats. and Regs. ] 32,629 (2008).
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3. Reliability Standard NUC-001-1 applies to nuclear plant
generator operators and ``transmission entities.'' To account for the
variations in nuclear plant design and grid interconnection
characteristics, the Reliability Standard defines transmission entities
as ``all entities that are responsible for providing services related
to Nuclear Plant Interface Requirements (NPIRs)'' and lists eleven
types of functional entities that could provide services related to
NPIRs.\7\
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\7\ The list of functional entities consists of transmission
operators, transmission owners, transmission planners, transmission
service providers, balancing authorities, reliability coordinators,
planning authorities, distribution providers, load-serving entities,
generator owners and generator operators. Applicability issues are
addressed in a separate section, below.
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4. In the November 19, 2007 Petition, NERC explained that nuclear
plant generator operators and transmission entities operate according
to separate, established reliability and safety procedures. To provide
for coordination of these separate procedures, the ERO developed NUC-
001-1 to require a nuclear plant generator operator to coordinate
operations and planning with its transmission entities by developing
procedures that reflect nuclear plant licensing requirements and
SOLs,\8\ including interconnection reliability operating limits
(IROLs), affecting nuclear plant operations.\9\ The Reliability
Standard requires nuclear plant generator operators and transmission
entities to develop expectations and procedures for coordinating
operations to meet the nuclear plant licensing requirements, as well as
SOLs and IROLs, and to develop agreements or arrangements, which may
include mutually agreed upon procedures or protocols, reflecting those
expectations and procedures. These agreements or arrangements are known
as interface agreements. The resulting operations and planning
requirements developed in the agreements to address the nuclear plant
licensing requirements, SOLs and IROLs are called nuclear plant
interface requirements or NPIRs.\10\ NERC stated that Requirements R3
through R8, which state that the interface agreement parties will
address the NPIRs in planning, operations, and facility upgrade and
outage coordination, provide additional specificity on these
expectations.
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\8\ The NERC Glossary defines system operating limit or SOL as
``the value * * * that satisfies the most limiting of the prescribed
operating criteria for a specified system configuration to ensure
operation within acceptable reliability criteria. * * * ''
\9\ The NERC Glossary defines IROL as a ``system operating limit
that, if violated, could lead to instability, uncontrolled
separation, or Cascading Outages that adversely impact the
reliability of the bulk electric system.''
\10\ See NUC-001-1, Requirement R2 and the proposed NERC
Glossary term, Nuclear Plant Interface Requirements (NPIR).
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5. In the November 19, 2007 Petition, NERC noted that nuclear plant
generator operators must already fulfill nuclear licensing requirements
for off-site power.\11\ NERC stated that, while various forms of
agreements exist to meet the nuclear power plant general design
criterion for off-site power, NUC-001-1 places a new, mandatory and
enforceable obligation under section 215 of the FPA on both nuclear
plant generator operators and transmission entities. NUC-001-1 requires
these entities to inform one another of limits and requirements on
their systems and to enter into agreements to coordinate and operate
their systems to address nuclear plant licensing requirements and
related system limits.
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\11\ The Nuclear Regulatory Commission (NRC), which regulates
facilities that are associated with reactor safety or emergency
response at a nuclear generation plant, has regulatory requirements
for offsite power systems, as provided in the NRC regulations, 10
CFR Part 50, Appendix A--General Design Criteria for Nuclear Power
Plants, criterion 17.
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6. The nuclear plant licensing requirements addressed in the
Reliability Standard include requirements for off-site power to enable
safe operation and shutdown during an electric system or plant event
and requirements for avoiding nuclear safety issues as a result of
changes in electric system conditions during a disturbance, transient,
or normal conditions. NERC cited general design criterion 17 for
nuclear power plants, which requires nuclear plant generator operators
to obtain off-site electric power that will provide sufficient capacity
to permit safety systems to function, assure that reactor coolant
design limits are not exceeded, prevent core cooling, and maintain
containment integrity and other vital functions.
7. NERC stated that NUC-001-1, in combination with the nuclear
license general design criteria requirements, achieves the vital public
interest of assuring safe nuclear power generation. According to NERC,
the Reliability Standard is beneficial to nuclear plant generator
operators because it will assist them in meeting nuclear plant
licensing requirements to safely produce nuclear power. It is also
beneficial to Bulk-Power System users, due to the significant support
that nuclear power plants provide to the Reliable Operation of the
Bulk-Power System.
8. NERC requested that NUC-001-1 take effect in areas subject to
the Commission's jurisdiction on the first day of the first full
calendar quarter falling 15 months after Commission approval.
B. Proposed NERC Glossary Definitions
9. In the December 11, 2007 Supplement, NERC proposed to add the
following four terms to the NERC Glossary:
[[Page 63772]]
Nuclear Plant Generator Operator: Any Generator Operator or
Generator Owner that is a [n]uclear [p]lant [l]icensee responsible
for operation of a nuclear facility licensed to produce commercial
power.
Nuclear Plant Off-site Power Supply or Off-site Power: The
electric power supply provided from the electric system to the
nuclear power plant distribution system as required per the nuclear
power plant license.
Nuclear Plant Licensing Requirements (NPLRs): Requirements
included in the design basis of the nuclear plant and statutorily
mandated for the operation of the plant, including nuclear power
plant licensing requirements for: (1) Off-site power supply to
enable safe shutdown of the plant during an electric system or plant
event; and (2) Avoiding preventable challenges to nuclear safety as
a result of an electric system disturbance, transient, or condition.
Nuclear Plant Interface Requirements (NPIRs): The requirements,
based on NPLRs and Bulk Electric System requirements, that have been
mutually agreed to by the Nuclear Plant Generator Operator and the
applicable Transmission Entities.
C. Notice of Proposed Rulemaking
10. On March 20, 2008, the Commission issued a Notice of Proposed
Rulemaking (NOPR), which proposed to approve Reliability Standard NUC-
001-1 as mandatory and enforceable. In the NOPR, the Commission also
raised a number of concerns and asked for clarification from the ERO
and comments from the public. The Commission proposed to approve the
NERC definitions and proposed revisions to the violation risk factors
for NUC-001-1.
11. As described more fully below, the ERO and other interested
parties provided comments in response to the NOPR. These comments are
summarized and addressed in the discussion portion of this Final Rule.
D. Procedural Matters
12. The NOPR required that comments be filed within 30 days after
publication in the Federal Register, or April 28, 2008. On April 16,
2008, the Commission granted a motion filed by EEI and NEI extending
the comment date to May 13, 2008. Approximately 23 entities filed
comments, including several late-filed comments. The Commission accepts
these late filed comments. Appendix A provides a list of the
commenters.
II. Discussion
13. In this Final Rule, the Commission approves Reliability
Standard, NUC-001-1, effective as proposed by the ERO. In addition,
pursuant to section 215(d)(5) of the FPA, the Commission directs the
ERO to develop a modification to one provision, Requirement R9.3.5, to
clarify the impact of the Requirement on two important operating
procedures, in response to comments received. This Final Rule largely
accepts the explanations and clarifications provided in the ERO's
comments and addresses the positions raised by NERC and the other
commenters on the specific issues raised in the NOPR. As proposed in
the NOPR, this Final Rule does not take any action on the regional
difference, because it applies outside of the United States and is not
applicable to any facilities within the Commission's jurisdiction.\12\
The Final Rule directs modifications to the violation risk factors for
the Reliability Standard, as discussed below. Finally, the Final Rule
approves the additional Glossary terms.
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\12\ NERC proposes to adopt as a regional difference for Canada
a separate definition of nuclear plant licensing requirements that
does not reference regulatory requirements for off-site power supply
for safe plant shutdown because Canada does not have regulatory
standards for off-site power comparable to those established by the
NRC.
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A. Approval of NUC-001-1
14. NERC and other commenters generally support the NOPR proposal
to approve Reliability Standard NUC-001-1.\13\ EEI, Ameren, Dominion,
and Ontario IESO and Hydro One state that they support approval of the
Reliability Standard as improving coordination between nuclear plant
generator operators and transmission entities.
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\13\ See, e.g., Constellation, Detroit Edison, Dominion, EEI,
Entergy, Exelon, Ontario IESO and Hydro One, Midwest ISO, and
Ontario Power comments.
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15. In contrast, CenterPoint Energy asserts that NUC-001-1 is
flawed and unnecessary, arguing that it deals with contractual matters
that should be addressed through a tariff or standard agreement, not a
Reliability Standard, to ensure that nuclear plant generator operators
do not receive unreasonable competitive advantages over other
competitors.\14\ CenterPoint Energy also states that the Commission
should mitigate potential market power and transparency concerns
created by the Reliability Standard in regions where an independent
transmission operator is not the entity that performs interconnected
operations with the nuclear plant generator operators.\15\ CenterPoint
Energy is concerned that a requirement in a NPIR could result in a
change in transmission operations and cause significant reliability or
market disruptions. According to CenterPoint Energy, this could be
mitigated by a requirement that nuclear plant generator operators
retain documentation ``whenever a nuclear plant operator effectively
alters transmission operating decisions of the independent operator due
to alleged NPIR concerns.'' \16\
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\14\ CenterPoint Energy comments at 1.
\15\ Id. at 3.
\16\ Id. at 4.
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16. National Grid emphasizes that NUC-001-1 is intended to address
technical aspects of the interface between transmission entities and
nuclear plant generator operators as opposed to the commercial aspects.
According to National Grid, the proposed Reliability Standard obliges
all responsible entities to work together on creating NPIRs suitable to
each nuclear power plant, whether the service provided to the nuclear
power plant is subject to federal or state jurisdiction. According to
National Grid, execution of an interface agreement and subsequent
compliance with NPIRs should not change the jurisdictional status of
the services provided. National Grid also requests that the Commission
direct the ERO and its Regional Entities to ensure that nuclear plant
generator operators look to the proper transmission entities for the
provision of NPIR-related services and that they bear incremental costs
of NPIR compliance.
Commission Determination
17. Pursuant to section 215(d) of the FPA, the Commission approves
Reliability Standard NUC-001-1 as mandatory and enforceable. The
Commission finds that coordination of nuclear licensing requirements
and grid operating limits through auditable interface agreements will
ensure that an important resource is operated safely and reliably,
while minimizing grid disturbances from separation of nuclear power
plants from the grid, due to the loss or degradation of auxiliary power
supply. Further, the Commission disagrees with CenterPoint Energy that
the Reliability Standard is flawed and unnecessary. Nuclear power
plants represent an important power resource and provide reliability
support throughout the Bulk-Power System. Unlike other large units,
nuclear power plants are subject to separate regulatory oversight that
mandates stringent operating and auxiliary power requirements, which,
if not met, require the plant to separate from the grid. We find that
NUC-001-1 is an appropriate means to ensure that the particular
requirements faced by nuclear power plants are met, maximizing the
reliability support to be provided while minimizing the potential for
grid disruption caused by separation.
18. CenterPoint Energy provides no evidence to support its claims
that assertions by nuclear plant generator operators concerning NPIRs
could be
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used to affect grid or market operations. We note that the NRC oversees
a nuclear power plant's development of and compliance with its
licensing requirements related to facilities that are associated with
reactor safety or emergency response through its regulatory
proceedings. NUC-001-1 supplements NRC oversight of nuclear plant
facilities by providing oversight of the transmission entities that
operate facilities on the Bulk-Power System providing off-site power
supply and delivery service to meet nuclear plant licensing
requirements.
19. Neither National Grid nor CenterPoint Energy has provided any
information on how the NPIRs could result in undue negative impact on
competition. Because all jurisdictional tariffs have requirements for
the provision of non-discriminatory service, the Commission does not
anticipate that transmission entities would agree to NPIRs that do not
provide for comparable service. While comparable service includes
appropriate cost allocations, that subject is outside of the scope of
this proceeding.\17\ In regard to National Grid's non-cost-related
comments, National Grid has not suggested any way in which the
Reliability Standard could change the jurisdictional status of service
provided to a nuclear plant generator operator, and therefore, we do
not see a need to address this concern here.
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\17\ See NERC November 19, 2007 Petition, Exhibit B, Record of
Proposed Reliability Standard Development, ``Consideration of
Comments, Draft 2 SAR on Nuclear Plant Offsite Power Reliability,
May 23, 2005'' at 3 of 25 (agreeing that the Nuclear Reliability
Standard does not address cost recovery issues).
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B. Applicability
20. Reliability Standard NUC-001-1 applies to nuclear plant
generator operators and transmission entities, such as off-site power
suppliers and entities that provide distribution and transmission
services that affect plant operations. NERC states that the Reliability
Standard meets the criteria that it apply to users, owners and
operators of the Bulk-Power System because it will apply to
transmission entities, which are responsible for providing NPIR-related
services. Therefore, these entities are subject to the Reliability
Standard and may be registered pursuant to the NERC compliance registry
process.
21. The Commission approves the applicability provisions of NUC-
001-1 as appropriately identifying the applicable entities, while
providing the flexibility to accommodate differing design criteria,
grid configurations and services procured by the various nuclear power
plants addressed. The Commission finds appropriate the ERO's use of the
term transmission entities in NUC-001-1 to refer to the subset of
registered entities that provide services to nuclear plant generator
operators. Similarly, the term nuclear plant generator operators refers
to the subset of generator owners and generator operators that are NRC
licensees. While the Commission prefers that Reliability Standards
apply to all entities within a functional category defined in the
Registry Criteria, it has approved appropriate limitations incorporated
into an applicability provision.\18\ We address the specific questions
raised by the Commission in the NOPR, as well as responses and
comments, on an issue-by-issue basis below.
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\18\ See, e.g., MOD-010-0 (limiting applicability to members of
NERC functional classes specified in the MOD-011-0, Requirement R1);
and PRC-007-0 (limiting applicability to members of functional
classes owning and operating an underfrequency load shedding
program).
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1. Notification of Parties to Interface Agreements
22. Requirement R1 of NUC-001-1 provides: ``[t]he Nuclear Plant
Generator Operator shall provide the proposed NPIRs in writing to the
applicable transmission entities and shall verify receipt.'' In the
NOPR, the Commission indicates its understanding that Requirement R1
means that if a nuclear plant generator operator fails to provide all
appropriate NPIRs to an applicable transmission entity, the operator
will not be in compliance with the Reliability Standard.\19\ Further,
the Commission observed that a nuclear plant generator operator will
know, as a result of the NRC licensing process, which applicable
entities to contact and what services are needed to meet NRC
requirements.
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\19\ NOPR at P 21.
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a. Comments
23. NERC and Entergy agree that it is unlikely that a nuclear plant
generator operator would fail to obtain appropriate services and
identify and contact transmission entities. They concur that a nuclear
plant generator operator will know the applicable services it needs
through the NRC licensing process. NERC explains that, as an NRC
licensing requirement, the nuclear plant generator operator would have
previously coordinated with transmission entities.
24. Entergy describes the NRC licensing process and explains that a
nuclear plant generator operator will know the capability of its
offsite power supplier to supply the power required during operations
as well as situations that could result in a loss of off-site power.
Entergy concludes that ``it is very unlikely'' that a nuclear plant
generator operator would fail to contact the entities necessary to
receive the appropriate services.
25. NEI agrees with the Commission's observation that nuclear plant
generator operators are capable of identifying and contacting the
appropriate transmission entities. However, NEI opposes any proposal to
expand this notification requirement into an affirmative requirement
that nuclear plant generator operators must ``obtain appropriate
services'' from transmission entities. NEI requests that the Commission
clarify that this is a notification requirement, not a requirement to
obtain services (that, according to NEI, should not be included in the
Reliability Standard).
26. According to NEI, the obligations of the nuclear plant
generator operator to provide notice to transmission entities should be
limited to those entities known or reasonably knowable by the nuclear
plant generator operator, since the identity of some transmission
entities could be proprietary. NEI argues that transmission entities
that have been notified by the nuclear plant generator operator that
they are responsible for providing services relating to NPIRs should
then have the obligation to provide further notice to other applicable
transmission entities that provide services to the first transmission
entities.
27. ATC proposes replacing the phrase ``proposed NPIRs'' with a
reference to nuclear plant licensing requirements including an explicit
recognition of a transmission entity's ability to propose transmission
system operating limits to be addressed as NPIRs in the interface
agreement. According to ATC, this will remedy the current conundrum,
where a nuclear power plant is obligated to ``propose NPIRs,'' while
NPIRs are defined as having been agreed to by both parties.
b. Commission Determination
28. The Commission accepts NERC's proposal to require nuclear plant
generator operators to identify entities that provide services related
to off-site power supply or delivery. With NERC's and other industry
representatives' assurances, the Commission is satisfied that the
appropriate transmission entities can be identified based on the
nuclear plant generator operators' historical compliance with NRC
licensing requirements to obtain off-site
[[Page 63774]]
power and develop solutions with grid operators to avoid service
interruptions from foreseeable grid disturbances.
29. The Commission does not share the concern expressed by
commenters that Requirement R1 imposes an affirmative obligation on a
nuclear plant generator operator to obtain appropriate services.
Requirement R1 obligates a nuclear plant generator operator to provide
proposed NPIRs in writing to transmission entities. The nuclear plant
generator operator is already obligated to obtain service to meet NPIRs
that are based on nuclear plant licensing requirements enforced by the
NRC. We note that Requirement R2 does contain an affirmative obligation
that the nuclear plant generator operator and transmission entities
develop and execute an interface agreement to implement NPIRs. With
this understanding, we find that the nuclear plant generator operators'
role in providing notice of proposed NPIRs to all applicable
transmission entities is appropriate. A nuclear plant generator
operator may be found in noncompliance for failing to provide notice to
an entity responsible for providing services relating to its off-site
power-related licensing requirements.
30. NERC and industry representatives clarify that the entities
that the nuclear plant generator operator is to provide with proposed
NPIRs are known to the nuclear plant generator operator based on the
nuclear plant generator operator's historic need to obtain service to
meet their license requirements. The Commission does not share NEI's
concern that the nuclear plant generator operator may not know upstream
utilities that provide service to the primary service providers. We
note that Requirement R1 obligates a nuclear plant generator operator
to contact entities that provide services to meet NPIRs, which are
based on nuclear licensing requirements for off-site power supply and
avoiding foreseeable grid disruptions. Any upstream service providers
that provide services related to NPIRs must be identified by the
nuclear plant generator operator in the NPIRs. Otherwise there is no
obligation to identify non-primary service providers.
31. As for ATC's concern with the use of the phrase ``proposed
NPIRs'' as opposed to a reference to nuclear plant licensing
requirements that will form the basis for NPIRs, the Commission finds
the current Requirements are sufficiently clear and flexible to
accommodate counterproposals by transmission entities to address system
limits during interface agreement development.\20\
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\20\ The Commission notes that ATC originally suggested the
language ``proposed NPIRs'' as an alternative to the original draft
language ``current'' NPIRs. NERC November 19, 2007 Petition, Exhibit
B, ``Consideration of Comments on 1st Draft of Nuclear Plant Off-
site Power Coordination Standard,'' at 15 of 69 (Aug. 15, 2006).
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2. Transmission Entities and Agreements on NPIRs
32. NUC-001-1 applies to nuclear plant generator operators and
transmission entities. The Applicability section of the Reliability
Standard (i) defines transmission entities as ``all entities that are
responsible for providing services related to Nuclear Plant Interface
Requirements (NPIRs),'' and (ii) lists 11 types of entities, identified
in the NERC registry criteria based on the NERC Functional Model,\21\
that may serve as transmission entities.
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\21\ NERC Statement of Compliance Registry Criteria (Revision
3), filed with its Supplemental Information Filing, Docket No. RM06-
16-000 (Feb. 6, 2007), approved in Order No. 693 at P 92-96; NERC
Functional Model, Version 3 (approved by NERC Board of Trustees,
Feb. 13, 2007).
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33. NERC explained in its November 19, 2007 Petition:
Because the relationship of each nuclear plant generator
operator with its provider of transmission-related services is
unique, it will be important and necessary for the registration
process to identify on a plant-by-plant basis the specific
transmission entities required to identify NPIRs and develop the
requisite agreement. Once the agreement becomes final, all
applicable nuclear plant generator operator and transmission
entities for each agreement will be identified by name and specific
function. The respective Regional Entity will then be responsible
for ensuring that each nuclear plant generator operator and
transmission entities identified in the agreement(s) is registered
on the NERC Compliance Registry for the applicable function(s). NERC
will work with the Regional Entities to ensure that all nuclear
plant generator operator and transmission entities included in the
agreements that result from the NPIRs are listed in the Compliance
Registry for this specific reliability standard.\22\
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\22\ NERC November 19, 2007 Petition at 12-13.
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a. NOPR Proposals
34. In the NOPR, the Commission proposed to accept the
identification and registration process described by NERC in the
November 19, 2007 Petition with the understanding that NERC will use
its authority under the compliance registry process to register all
users, owners, and operators of the Bulk-Power System that provide
transmission or generating services relating to off-site power supply
or delivery.\23\ Further, the Commission requested clarification from
the ERO, as well as public comment, on three issues: (i) How NERC's
plan to identify transmission entities on a ``plant-by-plant basis'' in
the compliance registration process relates to the definition of bulk
electric system; (ii) whether NUC-001-1 is enforceable against a
transmission entity upon execution of an interface agreement or some
earlier time; and (iii) how the Reliability Standard will be
implemented for an entity that both operates a nuclear power plant and
is responsible to provide services related to NPIRs.
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\23\ See id. at 12.
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i. Identification of Entities Subject to NUC-001-1 Through the
Compliance Registry
(1) NOPR
35. As mentioned above, the Commission proposed in the NOPR to
accept NERC's Applicability approach for NUC-001-1 with the
understanding that NERC would use its authority under the compliance
registry process to register all users, owners and operators of the
Bulk-Power System that provide transmission or generating services
relating to off-site power supply or delivery.\24\ Further, the NOPR
noted that certain auxiliary power suppliers and transmission service
providers may serve nuclear power plants through facilities that fall
outside the definition of bulk electric system. The NOPR stated that:
---------------------------------------------------------------------------
\24\ NOPR at P 25-26.
The Commission understands that NERC and the Regional Entities
will register these and other service providers that provide
interconnection and/or auxiliary power facilities vital to nuclear
plant operation through NERC's authority to register an owner or
operator of an otherwise exempt facility that is needed for Bulk-
Power System reliability, on a facility-by-facility basis. Once
registered, the transmission entity providing such services to a
nuclear generating plant may be subject to other Reliability
Standards applicable to the functional class within the NERC
functional model for which the transmission entity has been
registered, as deemed appropriate through the registration process.
With this understanding, the Commission proposes to accept the scope
of the definition of transmission entities as appropriate.\25\
---------------------------------------------------------------------------
\25\ Id. P 26 (footnotes omitted).
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(2) Comments
36. NERC states that it concurs with the Commission's understanding
that NERC will use its authority under the compliance registry process
to register all users, owners and operators of the Bulk-Power System
that provide transmission or generating services relating to off-site
power supply or
[[Page 63775]]
delivery. NERC will register the owner of an otherwise exempt facility
on a facility-by-facility basis. Further, NERC agrees that, once
registered, the transmission entity may be subject to other Reliability
Standards applicable to the functional class within the NERC Functional
Model, as deemed appropriate through the registration process, with an
exception for low-voltage facilities, as discussed in section
II(B)(2)(b) below.
37. EEI generally agrees with the Commission's conclusion that,
once registered, a transmission entity providing services to a nuclear
generating plant may be subject to other Reliability Standards
applicable to the function for which the transmission entity has been
registered. EEI also supports NERC's interpretation that identification
as a transmission entity under NUC-001-1 Requirements should not change
a party's obligations under other Reliability Standards.
38. NEI suggests that entities that are not currently subject to
NERC registration, jurisdiction, and enforcement authority should be
able to sign an interface agreement without submitting to NERC
jurisdiction. NEI states that such an entity may be bound to comply
with the interface agreement, but should not automatically be subject
to all other NERC Reliability Standards and enforcement authority. NEI
predicts that subjecting entities to NERC jurisdiction and enforcement
authority will dissuade parties from signing interface agreements,
contrary to the intent of this Reliability Standard. The applicability
of the other Reliability Standards should be determined by the
governing statute and regulations, and the terms of the other
Reliability Standards, and should not be incorporated through this
Reliability Standard. According to NEI, the Regional Entity
registration process, not the execution of an interface agreement,
determines whether an entity is subject to NUC-001-1. NEI asks the
Commission to clarify that entities that sign an interface agreement
are not automatically subject to NERC jurisdiction for Reliability
Standards beyond NUC-001-1.
39. Southern suggests that it may not be appropriate to apply
certain Reliability Standards requirements to nuclear plant generator
operators, in particular those relating to ``functions of supplying
energy and Interconnected Operations Services.'' On the other hand,
entities registered as a generator owner or generator operator may
fulfill the requirements set forth in NERC's definitions of these
terms, but may not be licensed by the NRC and may not be ``responsible
for operation of a nuclear facility.'' Southern asks the Commission to
direct NERC to review the application of its registration requirements
to nuclear plant generator operators.
40. Several commenters object to the use of the term transmission
entities. Wisconsin Electric suggests that NUC-001-1 does not follow
the NERC Functional Model, due to use of the term transmission
entities. TVA makes a similar objection to the term nuclear plant
generator operator, which does not appear in the NERC functional model,
and suggests use of the term generator operators of nuclear plants with
the Applicability section only listing generator operator. Southern
suggests that, under the definition of nuclear plant generator
operator, there may be licensees that do not meet the definition of a
generator operator or generator owner, as nuclear plant generator
operator is defined. According to Southern, some NRC licensees may be
responsible for operating nuclear facilities but may not meet NERC's
definitions of a generator owner or generator operator.
41. Constellation agrees that the nuclear plant generator operator
must take the lead in identifying transmission entities, but urges the
Commission to implement a dispute resolution process to assist the
nuclear plant generator operators. Constellation is concerned that,
under NUC-001-1, the nuclear plant generator operator will have the
primary burden of ensuring that the parties enter into NPIR agreements;
however, Constellation also argues that a transmission entity must be
appropriately identified and have entered into an NPIR agreement before
it is formally included in the NERC Compliance Registry.
(3) Commission Determination
42. The Commission accepts NERC's approach to determining
applicable entities. The Commission agrees with the ERO that the
identification of transmission entities, which may fit any one of 11
functional categories described in the NERC Functional Model, provides
the ERO with needed breadth and flexibility in identifying and
registering all users, owners and operators of the Bulk-Power System
that provide services related to NPIRs.
43. Further, the ERO makes clear that, in implementation, it plans
to register an owner or operator of an otherwise exempt facility that
is needed for Bulk-Power System reliability, on a facility-by-facility
basis. Once registered, a transmission entity may be subject to other
applicable Reliability Standards, as deemed appropriate through the
registration process. The Commission agrees that it is appropriate that
a registered transmission entity comply with other applicable
Reliability Standards for the functional category for which it is
registered. This approach will support Bulk-Power System reliability
and better assure that a transmission entity is capable of satisfying
responsibilities set forth in an interface agreement.
44. NEI requests clarification that entities that sign an interface
agreement are not automatically subject to ERO jurisdiction for
Reliability Standards beyond NUC-001-1. As discussed above, the
Commission agrees with the ERO that Reliability Standards beyond NUC-
001-1 should apply to a newly-registered transmission entity, for the
functional category for which it is registered. Further, we observe
that the ERO indicates that it will make this determination ``as deemed
appropriate through the registration process.'' We understand this to
mean that the ERO has reserved some flexibility in determining which
Reliability Standards are to be applied to a newly-registered
transmission entity, and the ERO may consider individual circumstances
in the process. The Commission agrees with NEI that the applicability
of particular Reliability Standards beyond NUC-001-1 should not be
decided in this proceeding. Rather, we leave it to the ERO to make such
determinations in the first instance in the registration process.
45. Southern comments that it may not be appropriate to require
nuclear plant generator operators to comply with certain Reliability
Standards that apply to generator owners and generator operators. The
Commission, however, is not convinced that a blanket waiver is
warranted. Rather, similar to our explanation immediately above, the
ERO may consider the individual circumstances of a generator owner or
generator operator and determine whether, for example, a registered
entity is needed for Bulk-Power System reliability and operates
facilities that are addressed in a particular Reliability Standard.
46. Southern has not provided any specific examples of nuclear
plant licensees that would not meet NERC's definition of nuclear plant
generator operator. The Commission addresses NERC's registry
determinations in appropriate proceedings on appeal. A registry
proceeding may address whether a generator owner or operator meets the
NERC registry criteria or should otherwise be registered based on a
finding that the facility is material to Bulk-Power System reliability.
We also
[[Page 63776]]
reject the concerns raised by Wisconsin Electric and TVA that the terms
transmission entity and nuclear plant generator operator do not appear
in the NERC Functional Model. While the NERC Functional Model is a
useful guidance document, ``the Applicability section of a particular
Reliability Standard should be the ultimate determinant of
applicability of each Reliability Standard.'' \26\ Moreover, the ERO's
definition of transmission entity is linked to the functional
categories set forth in the NERC Functional Model.\27\ Likewise, the
nuclear plant generator operator can simply be viewed as a sub-category
of the generator operator function.
---------------------------------------------------------------------------
\26\ Order No. 693 at P 127.
\27\ See Reliability Standard NUC-001-1, Section A.4.2.
---------------------------------------------------------------------------
b. Applicability to Small Entities and Low Voltage Facilities
i. NOPR
47. In the NOPR, the Commission noted that some nuclear power
plants may obtain auxiliary power through lower voltage facilities that
are not included in a Regional Entity's definition of bulk electric
system and that other nuclear power plants may retain alternate sources
of auxiliary power provided through lower voltage facilities operated
by a small utility or cooperative that is not included in a Regional
Entity's definition of bulk electric system.\28\ The Commission sought
clarification from NERC on how it would register such entities and how
this relates to the definition of bulk electric system.
---------------------------------------------------------------------------
\28\ NOPR at P 26.
---------------------------------------------------------------------------
ii. Comments
48. NERC clarifies that ``for lower voltage facilities that provide
such services to a Nuclear Power Plant, the registration of those
entities and the applicability of the NERC Reliability Standards
therein to that functional class of entities will be limited to those
facilities identified by the Nuclear Plant Generator Operator in its
NPIRs.'' \29\
---------------------------------------------------------------------------
\29\ NERC comments at 8.
---------------------------------------------------------------------------
49. Constellation anticipates that some transmission entities, in
particular those that are not previously registered, may be reluctant
to enter into nuclear interface agreements. Constellation is concerned
that small generators that are currently exempt from registration may
be unwilling to continue to provide services or enter into new
agreements for services if provision of such services causes them to be
registered by NERC. Constellation cites the cost burdens and risk of
penalties as having a chilling effect on these entities' willingness to
continue to provide their discrete services to nuclear power plants.
Constellation suggests that the curtailment of such services could
impair the ability of nuclear plant generator operators to meet their
license requirements. To address these concerns, Constellation requests
that the Commission direct NERC to evaluate these risks and to propose
mechanisms to ensure that small entities will not be deterred from
providing services.
50. Entergy explains that under the NRC license requirements, a
nuclear power plant is required to have two sources of off-site power.
For one of Entergy's plants, one of those sources relies, at certain
times, on reactive power support from a small hydropower facility that
generates power at a distribution level voltage, and Entergy and the
facility have entered into an agreement for that reactive power
support. According to Entergy, this facility is not currently
registered or part of the bulk electric system. Entergy expresses
concern that if this entity becomes subject to NUC-001-1, it may cancel
its current service agreement with Entergy because the risk of
potential penalties and future compliance costs could be too high, thus
jeopardizing Entergy's NRC license. Therefore, Entergy asks the
Commission to clarify that if an entity does not currently qualify for
inclusion on the NERC Compliance Registry, provision of NPIR-related
services will not subject that entity to registration.
iii. Commission Determination
51. The Commission accepts NERC's clarification that registration
of lower voltage facilities and the applicability of NUC-001-1 will be
limited to those facilities identified by the nuclear plant generator
operator in its NPIRs.\30\ We would expect that any NPIRs agreed to
between a nuclear plant generator operator and transmission entity
would include all facilities needed to transmit offsite power and
auxiliary power to the nuclear facility. The Commission remains
sensitive to the need for NERC to register operators of lower-voltage
facilities used to deliver off-site power.\31\ The NOPR stated the
Commission's understanding that NERC would register entities operating
facilities not currently identified in the Regional Entities'
definition of bulk electric system that are needed for Bulk-Power
System reliability, through NERC's authority to register an owner or
operator of an otherwise exempt facility that is needed for Bulk-Power
System reliability, on a facility-by-facility basis.\32\ We note that
it is in the best interest of the nuclear plant generator operator to
have any such facility identified in the NPIRs.
---------------------------------------------------------------------------
\30\ This approach for lower voltage facilities is consistent
with our determination in prior proceedings that the ERO may
register an entity that falls below the minimum registry criteria on
a facility-by-facility basis. See Order No. 693-A at P 38.
\31\ See NOPR at P 22 and 26.
\32\ Id. P 26 (citing Order No. 693-A at P 38; NERC Statement of
Compliance Registry, Revision 3.1 at 8).
---------------------------------------------------------------------------
52. We find that NERC's approach should mitigate the concerns of
commenters who speculate that small entities may wish to cease
providing services rather than become subject to other Reliability
Standards applicable to the functional class in which they would be
registered. In this manner, application of the Reliability Standard to
smaller entities operating lower voltage facilities that were not
previously registered is limited to the facilities used to provide
services to the nuclear plant generator operator. Commenters' other
concerns largely address smaller entities' potential reluctance to
continue providing service--that is, so long as these entities are
users, owners or operators of the Bulk-Power System they may be
registered by NERC and subject to the Reliability Standard. An entity
that has failed to execute an interface agreement will be found in
violation of the Reliability Standard.
53. We believe that limited registration of smaller entities, in
combination with NERC's use of the registry process and tying
enforceability to the receipt of a proposed NPIR (rather than execution
of a formal agreement), should limit the majority of concerns raised by
commenters on behalf of small entities. Entergy's concern with
obtaining reactive power is mitigated by the fact that the Commission's
policies recognize alternate sources for ancillary services--reactive
power is a required ancillary service to be provided by transmission
providers--and the Commission's policies also provide for merchant
ancillary service sales where appropriate. However, these issues are
best resolved in appropriate registration proceedings.
54. The Commission notes that in addition to smaller, previously
unregistered entities, larger currently-registered entities may also
provide service over lower voltage facilities that may be material to
the reliability of the Bulk-Power System. These entities' lower-voltage
facilities highlight a potential gap in applicability, because it could
be argued that those facilities are
[[Page 63777]]
not currently subject to the Reliability Standards since they may fall
outside a Regional Entity's definition of the bulk electric system.
This potential gap is illustrated where a larger entity essentially
provides a transmission service, but the applicability of NUC-001-1 and
other Reliability Standards is uncertain, because service is provided
over lower voltage facilities. We direct the ERO to review the impact
on the Bulk-Power System for registration purposes of any entity
providing service related to NPIRs over a lower-voltage facility
similar to other facilities used to provide service, regardless of
whether such service is provided by a currently-registered entity or a
previously unregistered entity.\33\
---------------------------------------------------------------------------
\33\ The Commission notes, however, that the NUC-001-1 drafting
team has described such cases of distribution level supply as ``the
exception, not the rule.'' See NERC Nuclear Reliability Standard
drafting team, Consideration of Comments on 2nd Draft of Nuclear
Off-site Power Supply Standard, at 54 (Feb. 7, 2007), filed in
November 19, 2007 Petition, Exhibit B, Record of Development of
Proposed Reliability Standard.
---------------------------------------------------------------------------
c. Critical Facilities
i. NOPR
55. In the NOPR, the Commission asked whether NERC would, in
registering entities not otherwise registered, consider lower voltage
facilities needed to serve NPIRs to be critical facilities.
ii. Comments
56. NERC responded that it does not currently have an approved NERC
Glossary definition for ``critical facility'' per Order No. 693's
directive.\34\ Consequently NERC states it will refrain from using the
term in its response and until such time as the definition is developed
and approved. However, NERC notes that a nuclear power plant would be
unable to operate without transmission services from lower voltage
facilities supplying off-site power, and the absence of such services
would result in the real and reactive output of the plant being
unavailable to the system. NERC states that the determination of
whether a plant is material to the reliability of the Bulk-Power System
is determined at the Regional Entity level, but notes that nuclear
power plants typically provide both real and reactive power to the
transmission grid.
---------------------------------------------------------------------------
\34\ Section III.d.2 of the NERC compliance registry states that
the functions transmission owner and transmission operator shall
include an entity ``that owns/operates a transmission element below
100 kV associated with a facility that is included on a critical
facilities list that is defined by the Regional Entity.''
---------------------------------------------------------------------------
57. SCE&G states that it finds the Commission's reference in the
NOPR to ``critical facilities'' to be troubling, since NUC-001-1 should
not affect the characterization of a facility as critical and such
determination should be made by NERC. According to SCE&G, the existing
NERC definition of ``critical asset,'' combined with the methodology in
Reliability Standard CIP-002-1 is the correct method to determine if a
facility is ``critical'' to the bulk electric system. SCE&G also
maintains that NUC-001-1 does not affect the characterization of a
critical facility, which is determined instead by the NERC definition
of critical asset and the methodology provided in CIP-002-1.
iii. Commission Determination
58. The Commission notes that the term ``critical facility'' under
Order No. 693 is a facility not otherwise included in a Regional
Entity's definition of the bulk electric system but that has been
identified by the Regional Entity as being critical to the system
reliability.\35\ This is different from the definition of ``critical
asset'' under CIP-002-1. The Commission accepts NERC's explanation of
whether it would consider lower voltage facilities needed to serve
NPIRs to be critical facilities when it registers new entities and
notes that the definition of the term ``critical facility'' will be
resolved in a future proceeding.
---------------------------------------------------------------------------
\35\ Order No. 693 at P 77.
---------------------------------------------------------------------------
d. Timing of NUC-001-1 Enforceability to Transmission Entities
i. NOPR
59. In the NOPR, the Commission sought comment on its understanding
that NUC-001-1 would become applicable to, and enforceable against, a
transmission entity only when the transmission entity executed an
interface agreement. In other words, the provider of NPIR-related
service would become a transmission entity, as that term is defined by
NUC-001-1, subject to NUC-001-1 and other Reliability Standards, upon
execution of the interface agreement.
ii. Comments
60. In response to the Commission's question on timing, NERC
clarified that the interface agreement with a nuclear plant generator
operator is not the mechanism that determines whether an entity is a
transmission entity subject to NUC-001-1. Instead, a nuclear plant
generator operator initiates the identification by proposing an NPIR to
an applicable transmission entity, and, at this point, the identified
transmission entity is placed on the Compliance Registry and becomes
subject to the requirements of NUC-001-1, not when the agreement
required in Requirement R2 is established.\36\
---------------------------------------------------------------------------
\36\ NERC comments at 11.
---------------------------------------------------------------------------
61. Several commenters support approaches similar to the NERC
position.\37\ These commenters generally agree that NUC-001-1 applies
to a transmission entity once it has been notified of an NPIR by the
nuclear plant generator operator. EEI, for instance, states its
understanding that the NUC-001-1 drafting team and NERC staff intended
that a nuclear plant generator operator would identify the transmission
entities for each nuclear power plant under NUC-001-1, whether or not
they had already entered into an agreement. NEI recommends that a
potential transmission entity should be deemed a transmission entity
subject to the requirements of NUC-001-1 once it becomes registered as
a transmission entity under NUC-001-1 and receives proposed NPIRs from
the nuclear plant generator operator pursuant to Requirement R1. NEI
states that transmission entity status should continue unless and until
NERC determines otherwise, based on a full and fair analysis of the
facts and evidence presented by the affected parties.\38\
---------------------------------------------------------------------------
\37\ See EEI, Exelon, Detroit Edison, and NEI comments.
\38\ See also Detroit Edison comments.
---------------------------------------------------------------------------
62. EEI states that, for a newly identified entity that is not on
the Compliance Registry, the Regional Entities should examine whether
an entity is properly classified as a transmission entity before
registering the entity and thus requiring it to comply with the
Reliability Standard. Entergy concurs that the NERC registration
process, rather than the execution of an interface agreement,
determines whether an entity is subject to NUC-001-1.
63. The commenters supporting the NERC clarification generally
state that holding that NUC-001-1 is only applicable to a transmission
entity after it executes an interface agreement would be inequitable
because, in the event of disagreement, the nuclear plant generator
operator could be held in violation, while the transmission owner would
not.\39\ NEI states that the need to prompt all potential transmission
entities to conform to NUC-001-1 is particularly important where
potential transmission entities have no corporate affiliation with the
nuclear plant generator operator, because such an entity may wish to
avoid executing an
[[Page 63778]]
interface agreement to avoid exposure to NUC-001-1.
---------------------------------------------------------------------------
\39\ See EEI, Exelon, and NEI comments; See also Constellation
comments at 8.
---------------------------------------------------------------------------
64. EEI notes that, in some cases, the failure to agree may be the
result of good-faith differences between the parties such that
sanctions should not be imposed, except as a last resort. NEI also
suggests that no enforcement action, other than arbitration through a
Regional Entity, should be taken in the absence of agreement, but asks
the Commission to clarify that while the Reliability Standard may not
be enforceable by NERC or the Commission without an agreement, the
contractual service commitments may be enforceable by other means.
Constellation requests clarification that only Requirement R1 is
enforceable against the nuclear plant generator operator until the NPIR
agreement is executed, because the other requirements involve
implementation of an agreement, which the nuclear plant generator
operator cannot do unilaterally.
65. NEI emphasizes that licensing requirements should already be
known to affected transmission entities and argues that existing
procedures must remain in effect both prior to and after the effective
date of the agreement under NUC-001-1. According to NEI, registration
based on notification by the nuclear plant generator operator is
appropriate because nuclear plant generator operators are in the best
position to interpret nuclear plant licensing requirements and system
needs affecting operations. According to NEI, NUC-001-1 should be
enforceable against the transmission service providers whose
commitments to provide services formed part of the basis for the
original plant license regardless of whether an interface agreement has
been executed. NEI suggests that Requirement R3 should be applicable
regardless of the parties' compliance efforts to date.
66. According to NEI, the NRC requires each nuclear license
applicant to perform stability studies for the transmission grid that
delivers offsite power to the nuclear power plant and demonstrate that
the loss of the largest operating unit on the grid would not result in
loss of grid stability or affect the delivery of offsite power to the
nuclear power plant.\40\ NEI also notes that the types of studies
performed and the conclusions are documented in the safety analysis
report for each nuclear power plant. NEI suggests that nuclear plant
licensees and transmission service providers are already obliged to
provide assurances with respect to the capability and stability of
offsite power sources for the nuclear plant.
---------------------------------------------------------------------------
\40\ NEI comments at 4 (citing Chapter 8 of the NRC Standard
Review Plan (NUREG 0800)).
---------------------------------------------------------------------------
67. In contrast, ConEdison, SCE&G, and ISO/RTO Council argue that
NUC-001-1 should not be enforceable against transmission entities until
an interface agreement is executed. According to ISO/RTO Council,
representatives of NERC's functional classes become transmission
entities by agreeing to meet an NPIR through an interface agreement.
SCE&G questions whether it is appropriate to define as a transmission
entity any entity that enters into an interface agreement with a
nuclear plant generator operator. It asks the Commission to clarify the
standards which will apply to every entity entering into an interface
agreement.
iii. Commission Determination
68. Based on the ERO's and others' comments, the Commission does
not adopt the understanding put forth in the NOPR. NERC and others have
made clear that NUC-001-1 was intended to apply to transmission
entities following receipt of notification from the nuclear plant
generator operator, rather than after execution of the interface
agreement. The applicability of NUC-001-1 is determined by the function
performed by the entity--that is, an entity that provides services
relating to a nuclear plant generator operator's nuclear plant
licensing requirements is subject to NUC-001-1 on the latter of the
effective date of the Reliability Standard or when a proposed NPIR is
provided by the nuclear plant generator operator. This is consistent
with other Reliability Standards where an entity is subject to a
Reliability Standard based on the factual determination of whether it
operates certain facilities or provides a certain service, not based on
the consent of the entity.
69. We believe that this interpretation resolves the concerns of
commenters who predict that entities supplying services to enable
nuclear plant generator operators to meet nuclear plant licensing
requirements would balk at executing an interface agreement if they
become subject to NUC-001-1. This should not occur since transmission
entities will be identified as providing services relating to NPIRs by
a nuclear plant generator operator and will become subject to NUC-001-1
when they receive notice, not when they finalize an agreement.
e. Applicability in Integrated Systems
i. NOPR
70. In the NOPR, the Commission voiced its concerns regarding the
implementation of NUC-001-1 in a situation where a single entity is
both the nuclear plant generator operator and the transmission entity,
such as a vertically-integrated utility. We sought comment on whether
an agreement or arrangement would be required in such a case and, if
so, what type of arrangement was required to comply with the
Reliability Standard.
ii. Comments
71. In response, NERC states that NUC-001-1 may accommodate various
industry structures and situations, including an integrated utility
structure. According to NERC, NUC-001-1 requires appropriate agreements
or arrangements to ensure that mutually agreed upon NPIRs are
established. Because the necessary agreement or arrangement can include
``mutually agreed upon procedures or protocols'' per Footnote 1 of
Requirement R2, they need not necessarily be in the form of a formally
executed agreement between officers of separate companies. NERC notes
that compliance measures M3 through M8 ensure that auditable
documentation of such arrangements exist. NERC concludes that these
requirements may be met by a single entity.
72. Most commenters addressing the issue concur that a formal
signed contract between the departments of an integrated utility is not
necessary.\41\ However, Detroit Edison and Midwest ISO state that
department or business unit representatives should execute an interface
agreement or other evidence of participation to comply with NUC-001-1.
Thus, these commenters propose that compliance could be demonstrated
through agreements featuring varying degrees of formality. NEI argues
instead that an integrated entity could set forth in writing the
procedures to be followed by each unit as consistent with Requirement
R2 and such internal documentation would be provided in an audit. SCE&G
states that compliance may be achieved through internal coordination
between the generation and transmission components of an integrated
utility and, where appropriate, a formal agreement between an
integrated utility and outside entities.
[[Page 63779]]
iii. Commission Determination
---------------------------------------------------------------------------
\41\ See EEI, Entergy, Southern, NEI, and SCE&G comments.
---------------------------------------------------------------------------
73. The Commission accepts NERC's clarification that NUC-001-1
applies to nuclear plant generator operators and transmission entities
where both parties are in a single integrated system. NERC clarified
that a formal agreement is not necessary to have an agreement,
procedures, or protocols in place that will comply with Requirement R2.
Based on this clarification and industry comments, we accept NERC's
conclusion that the Requirements of NUC-001-1 can be met by a single
entity that is both the nuclear plant generator operator and the
transmission entity. The Commission directs the ERO, in enforcing NUC-
001-1, to require that an integrated entity provides documentation of
its arrangements, including appropriate procedures and protocols,
ensuring that its business units perform the functions under NUC-001-1
that would otherwise be met by separate entities. This will ensure that
an integrated entity's compliance with NUC-001-1 is auditable in a
manner comparable to other entities that are subject to the Reliability
Standard.
3. Dispute Resolution
a. NOPR Proposal
74. In the NOPR, the Commission sought input on circumstances
involving an off-site power supplier or other transmission entity that
disagrees with a nuclear plant generator operator that it needs to
execute an interface agreement. The Commission asked how NERC should
resolve the impasse and whether NERC should propose to register the
entity (if it was not already registered) without an executed interface
agreement.
b. Comments
75. NERC states that, if a transmission entity and nuclear plant
generator operator fail to agree to an NPIR, it may require mediation
or arbitration of the dispute as part of a mitigation or remedial
action strategy. If a nuclear plant generator operator and a
transmission entity fail to reach agreement, NERC clarifies that it
proposes to find each entity in non-compliance with Requirement R2.
According to NERC, the nuclear plant generator operator and
transmission entity would be subject to penalties, sanctions,
mitigation, and remedial actions until agreement is reached. NERC notes
that its March 4, 2008 submission of violation severity levels
identified the failure to reach an agreement under Requirement R2 as a
Severe violation severity level.
76. Several commenters support use of a dispute resolution process
before NERC or a Regional Entity in the case of disagreement over
NPIRs.\42\ Dominion, ISO/RTO Council and Midwest ISO call for a formal
dispute resolution process to resolve issues if parties cannot reach
agreement. Constellation expresses concern that the nuclear plant
generator operator would have the primary burden of ensuring the
parties enter into NPIR agreements, based on the understanding
reflected in the NOPR, and states that an early intervention process is
essential for NERC and the Commission to provide assistance to parties
facing difficulty reaching agreement. Constellation also asks that the
Commission require NERC to establish and file within 60 days a proposed
dispute resolution process to assist parties in reaching agreement.
ISO/RTO Council requests the Commission to define a clear process with
definitive criteria for resolving disputes between nuclear plant
generator operators and transmission entities over the scope of the
NPIRs.
---------------------------------------------------------------------------
\42\ See ISO/RTO Council, Ontario Power, Midwest ISO, and NEI
comments.
---------------------------------------------------------------------------
77. Midwest ISO and National Grid express additional concerns over
disagreement on individual NPIRs. Midwest ISO states that it is unclear
what will occur if a named transmission entity disagrees that it has
the role identified by the nuclear plant generator operator or if there
is disagreement regarding the necessity for, or impacts of, the
proposed NPIRs. Midwest ISO anticipates disputes among the various
transmission entities and nuclear plant generator operators about which
tariff, service agreement, or operating agreement provisions may be
relied on to meet NUC-001-1 requirements.
78. Midwest ISO cites differing views as to the exact definition of
NPIRs among nuclear plant generator operators and other stakeholders
and therefore requests that the definition of NPIRs be clarified.
National Grid states that disagreement should not forestall
implementation of non-controversial NPIRs, but that it is nevertheless
unclear whether NPIRs proposed by one side or the other shall have any
force or effect while subject to a dispute resolution procedure.
79. NEI proposes that, if the parties were to fail to reach
agreement on an interface agreement within 30 days, the Regional Entity
could provide a dispute resolution mechanism. According to NEI, NERC
could provide for subsequent appeals. However, NEI states that failure
to enter into an interface agreement should not be considered a
violation or failure to comply, as long as the parties are negotiating
in good faith and following NERC's proposed dispute resolution and
appeal processes.
c. Commission Determination
80. The Commission accepts the ERO's explanation of its
registration and compliance options when parties fail to come to an
agreement. Should parties fail to come to an agreement and thus find
themselves in violation of the requirement that they have such an
agreement in place, NERC states that it may require mediation or
arbitration as a remedial action. We agree that ordering such dispute
resolution processes may be an appropriate response in some instances
in which there is no immediate risk to grid reliability and support
NERC requiring the use of arbitration or mediation on a voluntary basis
where appropriate.\43\
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\43\ Where there is an immediate reliability risk, we direct the
ERO to take appropriate action to address the risk.
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81. National Grid's concerns are speculative. However, if the
parties cannot agree on proposed NPIRs, then NERC may require mediation
or arbitration as a remedial action. We do not see the need at this
time for NERC to develop formal arbitration procedures to govern all
dispute resolution proceedings. The ERO has the discretion to adopt
such procedures as are appropriate to the circumstances, in the event
that the parties do not themselves propose acceptable procedures.\44\
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\44\ Should NERC require the parties to engage in dispute
resolution procedures as a remedial action or in lieu of, or along
with, other sanctions upon a finding that the parties are in
violation of the Reliability Standard, NERC must notify the
Commission as it would for any imposition of a remedy to a
violation. See NERC Rules of Procedure, section 408.1.
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82. We anticipate that Midwest ISO's concerns regarding NPIR
negotiations should be resolved by the parties themselves. Given that
the parties have already been able to agree to the services needed to
meet NRC licensing requirements, the same parties should be able to
successfully identify the services provided, confirm that they address
NRC criteria for off-site power and system limits, and document such
services in an auditable format consistent with the NUC-001-1
Requirements.
C. Form of Agreements
1. Comments
83. Several commenters request clarification that existing
arrangements may be relied on to meet NUC-001-1 requirements to have an
interface
[[Page 63780]]
agreement in place to address NPIRs.\45\ These commenters suggest that
nuclear plant generator operators and transmission entities may rely on
existing interface agreements and thus that NUC-001-1 does not require
execution of a new agreement, and may incorporate by reference matters
covered in other agreements or tariff provisions.
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\45\ See Constellation, Dominion, and ISO/RTO Council comments.
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84. The ISO/RTO Council, in particular, asks the Commission to
clarify that any entity designated as a transmission entity will be
allowed to rely on existing tariffs and contracts to satisfy the
mandates of Requirements R2 and R9 and will not be required to execute
entirely new agreements that merely duplicate tariff and contractual
arrangements that already are in place, allowing nuclear power plants
to maintain compliance with existing NRC license criteria. ISO/RTO
Council states:
To the extent that an RTO or ISO--or indeed any other
transmission operator--provides these services to generators, the
services generally are reflected in existing tariffs and agreements
between specific transmission operators and generators. For example,
in New York, generators and [NYISO] execute a service agreement
under the NYISO's Market Administration and Control Area Services
Tariff (``Services Tariff''), which governs, among other things, the
NYISO's ``provision of Control Area Services * * * including
services related to ensuring the reliable operation of the NYS Power
System.'' The service agreement requires the NYISO and its
counterparties, including generators, to follow NYISO tariffs and
procedures. The Services Tariff requires the NYISO to ``develop, and
modify as appropriate, procedures for the * * * reliable operation
of the NYCA in accordance with the terms and conditions of the
Tariff.'' These procedures are set forth in detail in the NYISO
manuals, and already cover the core elements of the agreements
mandated pursuant to R9 of NUC-001-1. The technical requirements
outlined in R9.2, including identification of system parameters and
configurations and applicable limits, largely are reflected in the
NYISO's Transmission and Dispatch Manual. The requirements outlined
in R9.3 with respect to operations and maintenance coordination
largely are reflected in the NYISO's Outage Scheduling manual. These
manuals define the NYISO's obligations to specific generators,
including nuclear generators, pursuant to the terms of the Services
Tariff.\46\
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\46\ ISO/RTO Council comments at 4-5.
85. According to ISO/RTO Council, new service agreements between
transmission operators and nuclear plant generator operators under NUC-
001-1 should also be incorporated into the applicable transmission
operator tariffs or manuals. International Transmission requests
clarification on whether parties will be expected already to have a
signed agreement which meets the requirements of NUC-001-1 in place on
the date on which the Reliability Standard becomes effective.
Constellation requests confirmation that multi-party agreements will be
accommodated.
86. EEI also requests that the Commission clarify that nuclear
plant generator operators and transmission entities, affiliated and
unaffiliated, do not need to enter into new agreements if an existing
agreement between the parties is sufficient for compliance with NUC-
001-1. National Grid states that NERC should provide additional
guidance on what responsible entities must do to comply with the
Reliability Standard within fifteen months of regulatory approval.
National Grid characterizes NERC's position as proposing that parties
establish an ``overall coordination platform'' to meet the NPIRs.
2. Commission Determination
87. Based on NERC's statement that parties may rely on less formal
procedures and protocols, the Commission finds that NUC-001-1 does not
dictate any particular format for the interface agreement. Nuclear
plant generator operators and transmission entities may rely on pre-
existing arrangements so long as the parties can document the fact that
they have agreed that the pre-existing arrangements address all of the
NPIRs, cover all required facilities and otherwise fulfill the
requirements of NUC-001-1.\47\ This includes multi-party agreements.
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\47\ Nuclear plant generator operators and transmission entities
that choose to rely on generally-applicable tariffs should make
provision to ensure that the tariff terms and conditions continue to
meet the parties' needs should the tariff or nuclear licensing
requirements change, and document such an arrangement.
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88. In response to ISO/RTO Council's request, we clarify that, as
with any transmission entity, a regional service provider may rely on
existing tariff provisions. However, the Commission understands that,
in a region served by a regional service provider such as a regional
transmission organization (RTO) or independent system operator (ISO),
the regional authority will be required to meet NPIRs that require
service over its system. Within the geographical boundaries of their
service territory, potential transmission entities may also provide
service over lower voltage facilities that are not covered by the RTO
or ISO tariff. In such a case, we direct the ERO to assess whether the
entity providing service over the lower voltage facilities is also
subject to NUC-001-1, as discussed in section II(B)(2)(b), above,
concerning Transmission Entities and Agreements on NPIRs. If such an
entity is providing service that is not covered by the tariff, the
nuclear plant generator operator would need to take steps to identify
these entities as providing services related to an NPIR and thereby
ensure compliance with NUC-001-1 on these lower-voltage facilities
pursuant to our discussion in section II(B)(2)(b) above.
D. Enforcement and Conflicts With Other Regulations
1. Comments
89. Comments regarding the enforcement of NUC-001-1 addressed both
potential conflicts with the Commission's standards of conduct rules,
and potential conflicts with NRC requirements.
90. EEI requests clarification that the communications required to
comply with NUC-001-1 are permitted under the Commission's standards of
conduct rules. The Commission previously clarified that transmission
providers may communicate with affiliated nuclear power plants
regarding certain matters related to the safety and reliability of the
transmission system and of the nuclear power plants in order to comply
with requirements of the NRC. EEI asks the Commission to clarify that
their provisions apply equally to unaffiliated entities that must
comply with NUC-001-1 and that a transmission entity is not subject to
enforcement under the standards of conduct, applicable tariff or other
authority for providing information in compliance with NUC-001-1.\48\
---------------------------------------------------------------------------
\48\ EEI comments at 9.
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91. NEI states that while the NUC-001-1 requirements are structured
to help identify potential conflicts and coordinate their resolution
through changes to the NPIRs, unforeseen situations could arise that
are not adequately covered in the NPIRs and interface agreements under
NUC-001-1. NEI argues that penalties should not be imposed if a nuclear
plant generator operator fails to comply with a NUC-001-1 interface
agreement or other Reliability Standard because the nuclear plant
generator operator complied instead with NRC requirements. NEI
recommends that NUC-001-1 be revised to recognize the primary
obligation of nuclear plant generator operators to protect public
health and safety through compliance with NRC regulations and the
nuclear plant
[[Page 63781]]
license, and proposes revised language.\49\
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\49\ NEI proposes that an additional paragraph be added to NUC-
001-1 to address this potential conflict between the Commission and
the NRC: ``FERC recognizes the necessity of nuclear plant generator
operators to protect the public health and safety through compliance
with NRC regulations and license obligations. A nuclear power
generator operator's compliance with NPIRs is excused if necessary
to comply with NRC regulations or license obligations.
Notwithstanding any other provisions of FERC rules or regulations,
any penalty that might be imposed arising from compliance by a
nuclear plant generator operator arising from compliance with NRC
regulations or license obligations shall not be imposed.'' NEI
comments at 11.
---------------------------------------------------------------------------
92. Similarly, Duke states that while it does not object to NUC-
001-1, the Commission should clearly define the boundary between NRC
nuclear safety requirements and Commission grid reliability
requirements. According to Duke, because NRC licensing criteria address
health and safety issues, those criteria should take precedence and a
nuclear plant generator operator should not be penalized for non-
compliance with a conflicting interface agreement or other Reliability
Standard provision. Duke cites unforeseen circumstances as well as
specific examples where NRC safety criteria may take precedence.\50\
Also, Constellation requests assurance that, when there are overlapping
requirements, registered entities will be subject to a single penalty
only.
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\50\ Duke proposed the following examples: (a) The inability of
a nuclear generator to exceed its license power limits to respond to
underfrequency events, (b) specific license requirements for support
from the grid, such as priority off site power after a blackout, and
(c) license-required separation in response to degraded grid voltage
or frequency conditions.
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2. Commission Determination
93. In response to EEI's request for clarification that
communications required to comply with this Reliability Standard are
permitted under the Commission's standards of conduct regulations, the
Commission notes that it is addressing this subject through its
rulemaking on standards of conduct in Docket No. RM07-1-000.\51\ A
number of commenters in that docket sought clarification as to whether
communications involving the Reliability Standards are exempt from
standards of conduct prohibitions. The Final Rule to adopt revised
standards of conduct, issued by the Commission, addresses the subject
of exemptions.
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\51\ Standards of Conduct for Transmission Providers, Notice of
Proposed Rulemaking, Docket No. RM07-1-000, 73 FR 16228 (Mar. 27,
2008), FERC Stats. and Regs. ] 32,630 (2008). Revisions to the
Standards of Conduct for Transmission Providers, Final Rule, Docket
No. RM07-1-000, 125 FERC ] 61,062 (2008).
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94. Comments suggesting that mitigating circumstances may warrant
waiver of penalties are beyond the scope of this proceeding and should
be addressed in an appropriate enforcement proceeding. The Commission
understands that the NPIRs are specifically identified to enable a
nuclear plant generator operator to meet its NRC licensing requirements
at all times. As such, there should be no question of priority of the
NRC criteria and NUC-001-1 Requirements. As to Duke's examples, all of
the existing Reliability Standards have a sound engineering basis and
do not require exceeding defined power limits, identify priorities, and
account for known interactions such as separation of any generating
facility due to degraded grid voltage or frequency.
E. Scope of Agreements
1. NOPR
95. The NOPR noted that the Requirements of NUC-001-1 specify
various contractual terms, including certain studies and procedures, to
be addressed through interface agreements but do not describe specific
substantive terms to be included in the agreements. In response, the
NOPR expressed concern whether NUC-001-1 established an appropriate
scope for the interface agreements. In its November 19, 2007 Petition,
NERC stated that the NUC-001-1 drafting team adopted a consensus
approach to coordinating nuclear power plant and transmission grid
operations.\52\ According to NERC, the consensus approach provides a
platform for coordination at the interface that allows both nuclear
plant generator operators and transmission entities to respect their
main system drivers. Therefore, according to NERC, the NUC-001-1
drafting team adopted the interface agreement as a model for
coordination and placed the obligation on nuclear plant generator
operators and transmission entities to coordinate operational
requirements by consensus.
---------------------------------------------------------------------------
\52\ November 19, 2007 Petition at 26.
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96. In recognition of the successful working model of existing
interface agreements, the NOPR proposed to accept NUC-001-1 and find
appropriate the proposed level of detail defining substantive
provisions to be included in interface agreements.
2. Commission Determination
97. The Commission generally finds the scope of the Nuclear
Reliability Standard requirements adequate to address the development
and implementation of interface agreements between nuclear plant
generator operators and transmission entities, subject to the
discussion of particular issues below.
a. Commission Questions
i. Interim Revisions
(1) NOPR
98. The NOPR proposed to approve the provisions for updating
interface agreements, but requested comment on whether NUC-001-1
adequately provides for revisions to reflect interim changes.
(2) Comments
99. In response to the NOPR's inquiry whether NUC-001-1 includes
sufficient provision for updates outside of the three-year review
process, NERC states that it believes that the combination of
Requirements R7, R8, R9.3.4, R9.4, and R9.4.1 adequately provides for
the updating of NPIRs outside the three-year review window as
circumstances warrant. Entergy concurs, asserting that NUC-001
adequately provides for interim updates to interface agreements.
Southern states that it is feasible for interface agreements ``to
provide for negotiation and amendments to address emerging transmission
and generating system limits and revised nuclear plant licensing
requirements prior to, or contemporaneously with, implementing
operations solutions'' \53\ to address permanent, but not temporary,
changes. Southern indicates that amendment of the agreement would not
be practical in temporary situations because an ``emerging'' system
limit will be resolved within a relatively short period of time.
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\53\ Southern comments at 8-9.
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(3) Commission Determination
100. Based on the comments received, the Commission finds that NUC-
001-1 makes adequate provision for interim updates. While not all
system changes can be anticipated, the Commission expects that
significant changes to the parties' operating relationship would be
formalized and documented in an auditable format as interim changes in
an addendum or revisions to the agreement, as appropriate.
b. Amendments to Operational Procedures
i. NOPR
101. The NOPR noted the Commission's preference that new
operational procedures be reflected in the interface agreements prior
to being implemented upon nuclear power plant start-up or
reauthorization, or shortly thereafter. The Commission requested
comment whether interface agreements
[[Page 63782]]
could provide for negotiation and amendments to address emerging
transmission and generating system limits and revised nuclear plant
licensing requirements prior to, or contemporaneously with,
implementing operations solutions.
ii. Comments
102. NEI states that NRC regulations include extensive requirements
and processes for changes to nuclear power plants and their operations.
Thus, NEI opposes a requirement to revise the interface agreement prior
to making changes to a nuclear power plant or its operations. NEI
suggests that implementation details to address changes in the grid
configuration would be addressed in procedures, and should not require
revisions to an interface agreement, while Requirements R7 and R8
require parties to review design changes to determine their impact on
NPIRs.
103. Entergy responded that NPIRs are amended on a flexible time
horizon under each individual interface agreement, and that this
approach provides both entities with the flexibility to respond to
emerging issues.
iii. Commission Determination
104. Based on the comments received, the Commission finds that NUC-
001-1 makes adequate provision for updates to address changing
transmission and generator limits or revised nuclear plant licensing
requirements before operating solutions are implemented.
3. Other Scope Related Issues
a. Requirement R9.3.5
105. Commenters raise concerns regarding Requirement R9.3.5, which
were not anticipated in the NOPR. According to NEI, Requirement R9.3.5
mixes two separate events incorporated in nuclear power plant design
and license conditions: (i) Coping times for station blackouts and (ii)
restoration of off-site power.\54\ NEI explains that station blackouts
include a loss of off-site power and select emergency alternating
current (AC) power sources (generally on-site). In the case of such an
event, NEI explains that the nuclear plant generator operator has
responsibility to restore the emergency AC power sources within the
demonstrated coping time. NEI states, however, that a transmission
entity should assign off-site power restoration priority independent of
coping time and that NERC should clarify Requirement R9.3.5 references
to station blackout and off-site power restoration priority.
Specifically, NEI recommends appending the requirement with the phrase
``to ensure restoration of Off-site Power is afforded priority
reflecting that reliance on emergency AC power sources is not
preferred.'' \55\
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\54\ Requirement R9 establishes a minimum set of elements to be
addressed in interface agreements. Requirement R9.3.5 states that
the operations and maintenance coordination elements should include
``Provision to consider nuclear plant coping times required by the
nuclear plant licensing requirements and their relation to the
coordination of grid and nuclear plant restoration following a
nuclear plant loss of off-site power.'' See also TVA comments,
Enclosure at 1.
\55\ NEI comments at 11-12.
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106. Southern states that the phrase ``coping times'' in
Requirement R9.3.5 is ambiguous because the term has various meanings
in the nuclear context and does not necessarily equate to a specific
time period. Southern proposes the following alternative language for
NERC consideration: ``Provision to consider the [nuclear plant
licensing requirements] related to the coordination of grid and nuclear
plant restoration following a nuclear plant loss of Off-site Power.''
\56\
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\56\ Southern comments at 8.
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i. Commission Determination
107. Based on the industry comments received, it appears that the
references in Requirement R9.3.5 to coping times for station blackouts
and restoration of off-site power are ambiguous--insofar as commenters
suggest that the relationship between the two issues is not clear, and
thus, is not adequately addressed as presented in Requirement R9.3.5.
Therefore, we direct the ERO to modify Requirement 9.3.5 to clarify
references to coping times and off-site power restoration to address
the concerns raised in the comments through its Reliability Standards
development process. This approach permits a full vetting of new
suggestions raised by commenters in NOPR comments and encourages
interested entities to participate in the ERO Reliability Standards
development process rather than wait to express their views until a
proposed new or modified Reliability Standard is filed with the
Commission.\57\ We agree with commenters that the provision is
inartfully drafted and needs to be clarified; however, there does not
appear to be any reason that parties to an interface agreement should
not coordinate concerning both issues as an interim measure. The
Commission directs NERC to develop a modification to Requirement
R9.3.5, as discussed above. In addition, to ensure the matter is
addressed expeditiously, we direct NERC to submit a timeline for
developing and filing the modification as a compliance filing to be
made within 30 days of the date of this Final Rule.
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\57\ Order No. 693 at P 188.
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b. Personnel Training
108. International Transmission requests clarification whether
Requirement R9.4.5 regarding personnel training applies to the
transmission entity, the nuclear plant generator operator or both, and
whether this requirement can be satisfied by existing training programs
related to SOLs or IROLs. Midwest ISO requests that the Commission
require the ERO to modify Requirement R9.3.6 to clearly provide that it
only requires each entity to train its own operating personnel on the
content of the applicable agreements, procedures and other documents
related to NUC-001-1.
i. Commission Determination
109. The Commission clarifies that employees of nuclear plant
generator operators and transmission entities should receive the
training necessary to execute the terms of the interface agreement, and
such training should be specified in the interface agreement between
the parties. In addition, employees operating facilities used to
provide services to meet NPIRs should be properly trained to
Reliability Standard training requirements that apply to those
facilities or the function served by the employees.
c. Planning
110. Midwest ISO proposes that the type of planning mandated by
Requirement R9.2.3 should be more specifically defined. According to
Midwest ISO, adherence to NUC-001-1 requires near real-time planning to
support the NPIRs. Midwest ISO notes that other NERC Reliability
Standards require mid-term and long-term planning.
i. Commission Determination
111. The Commission declines to address Midwest ISO's request to
clarify the planning required under Requirement R9.2.3. Because NPIRs
are based on NRC licensing requirements, the scope of planning mandated
by Requirement R9.2.3 will largely be determined by the nuclear plant
licensing requirements. As such, the determination is beyond the scope
of this proceeding and is best resolved in the interface agreement
development process between parties who are familiar with the
facilities involved. In general, the Commission believes that the NPIRs
needed to ensure the operation of nuclear power plants must
[[Page 63783]]
be included in the planning process for all time frames as appropriate.
d. Requests for Limits on Scope of Interface Agreements
112. Several commenters request limits to the scope of nuclear
plant licensing requirements and SOLs that may become the subject of
NPIRs addressed in an interface agreement. CenterPoint Energy objects
to Requirements R3 through R9 insofar as they do not limit the types of
information or actions that are to be requested and provided. Dominion
states that NUC-001-1 should not duplicate requirements that are
already stipulated in other Commission-approved Reliability Standards.
113. Southern is concerned that the stated purpose of NUC-001-1,
together with certain of its provisions, may impose operational
requirements on a nuclear plant generator operator beyond those
established in NRC licensing requirements.\58\ According to Southern,
the development and implementation of interface arrangements and any
supplemental procedures should be left to the discretion and judgment
of transmission entities and nuclear plant generator operators,
operating within their respective regulatory frameworks. Southern
recommends that the Commission direct NERC to amend the proposed
Nuclear Reliability Standard, as appropriate, to avoid conflicts with
NRC licensing requirements, and clarify that nothing in NUC-001-1 or
the NOPR is intended to create any such conflict.
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\58\ See also National Grid comments.
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114. ConEdison also notes that transmission entities that provide
services under the agreement should receive fair compensation.
According to ConEdison, the requirements contained in the NOPR would
require the various transmission entities provide additional services
or a heightened level of services already provided to the nuclear plant
generator operator.
i. Commission Determination
115. The Commission declines to direct the clarification proposed
in the comments. We believe that these concerns expressed by the
commenters are unfounded. Because NPIRs are based on NRC licensing
requirements, the scope of procedures to be developed will largely be
limited to procedures needed to address the nuclear plant licensing
requirements. In addition, by agreement of the nuclear plant generator
operator and transmission entities, parties will develop protocols and
may make system improvements to address system limits that present
preventable challenges to off-site power supply caused by grid
disturbances. Thus, the basis for the NPIRs, and the terms of the
interface agreements, is limited to what is needed to ensure reliable
operation or safe shutdown of the nuclear power plant. Because the
procedures embodied in NPIRs are developed by agreement of the parties,
we do not share Southern's concern that additional operating
requirements could be imposed on a nuclear plant generator operator.
116. As previously discussed, ConEdison's and others' arguments
that transmission entities should receive compensation if they provide
services relating to NPIRs are beyond the scope of this proceeding.
These matters are appropriately left to the parties to the interface
agreements to resolve.
F. Coordination
117. Requirements R7 and R8 require communication between nuclear
plant generator operators and transmission entities regarding
significant changes in design, configuration, operation, or limits of
their facilities:
Requirement R7: Per the Agreements developed in accordance with
this standard, the Nuclear Plant Generator Operator shall inform the
applicable Transmission Entities of actual or proposed changes to
nuclear plant design, configuration, operations, limits, protection
systems, or capabilities that may impact the ability of the electric
system to meet the NPIRs.
Requirement R8: Per the Agreements developed in accordance with
this standard, the applicable Transmission Entities shall inform the
Nuclear Plant Generator Operator of actual or proposed changes to
electric system design, configuration, operations, limits,
protection systems, or capabilities that may impact the ability of
the electric system to meet the NPIRs.
118. In addition, Requirement R6 obligates interface agreement
parties to coordinate outages and maintenance activities; Requirement
R9.3.6 requires coordination of physical and cyber-security
protections; and Requirement R9.3.7 requires coordination of special
protection systems and load shedding. Thus, these Requirements provide
for communication between a nuclear plant generator operator and its
individual transmission entities, as well as the reverse for
communication from the transmission entities to the nuclear plant
generator operator.
1. Coordination Among Transmission Entities
a. NOPR Proposal
119. The NOPR expressed concern that NUC-001-1 Requirements do not
explicitly provide for communication and coordination among the various
transmission entities that is necessary to facilitate the provision of
generation and transmission services to support the nuclear power plant
operations. The NOPR stated the Commission's understanding that,
historically, control area operators provided the necessary
coordination and communication with neighboring entities, including
RTO-type grid operators and other interconnected utilities and load
serving entities, when necessary. The NOPR stated the Commission's
expectation that the parties to nuclear plant interface agreements
would continue to provide for coordination among transmission entities,
pursuant to the Requirements of NUC-001-1, in particular the
Requirement R9.3.1 obligation to provide for coordination of interface
facilities in the interface agreement. Interface agreement parties may
continue to designate former integrated control area operators when
appropriate or may revise their approach, reflecting changes under
restructuring to grid operations when necessary, consistent with
coordination responsibilities provided for in existing Reliability
Standards. Based on such an understanding, the NOPR proposed to accept
the coordination provisions as requiring all appropriate coordination
among transmission entities and requested comment.
b. Comments
120. NEI states that NUC-001-1 includes adequate coordination
provisions, in particular through Requirement R9.4, together with the
other Reliability Standards. NEI notes that transmission service
providers have historically provided coordination and NUC-001-1 will
not impose new burdens. Detroit Edison agrees that transmission
entities should coordinate as necessary to ensure full compliance with
NUC-001-1. According to Entergy, the proposed Nuclear Reliability
Standard, in conjunction with other Reliability Standards, ensures that
all necessary parties are involved in the interface agreements.
121. International Transmission notes that current practice under
existing coordination agreements is to communicate when the
transmission system is one event away from violating a SOL or IROL so
that each party is advised of the possible effects on the other of
responsive actions and the risks of a contingency. International
Transmission states that clarification is needed on whether
implementation of communication protocols established in the interface
agreement will constitute compliance with NUC-001-1.
[[Page 63784]]
International Transmission is concerned that the occurrence of a
contingency would be treated as a violation of the NPIRs or NUC-001-1.
122. Southern is concerned that the NOPR's general description of
certain coordination provisions \59\ may be interpreted as requiring a
nuclear plant generator operator to actually coordinate responses on
the transmission system. According to Southern, the nuclear plant
generator operator does not typically operate the system and,
therefore, it would not be appropriate to require the nuclear plant
generator operator to be responsible for coordination of responses on
the transmission system. Southern states that such an interpretation
would be inappropriate because it would go beyond the purpose of NUC-
001-1 and the responsibilities of the respective parties. According to
Southern, a transmission provider will respond to the issues listed
because it actually operates the system. Therefore, the Commission
should clarify that the standard does not require nuclear plant
generator operators to coordinate responses on the transmission system.
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\59\ NOPR at P 14.
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123. NEI similarly objects to the Requirements that require
interface agreements to provide for coordination of operational and
maintenance issues. According to NEI, coordinating responses goes
beyond the purpose of NUC-001-1 and the responsibilities of the
respective parties. NEI suggests that rather than coordinating
responses to unusual circumstances, it is more accurate to state that
an interface agreement must include elements to address the operations
and maintenance coordination of unusual conditions.
c. Commission Determination
124. The Commission confirms its understanding that coordination
under the Reliability Standard includes coordination among transmission
entities. No party objected to the Commission's interpretation that the
coordination required under Requirement R9.3.1 includes designating an
entity to coordinate among various transmission entities providing
unbundled services, and that such a role had been previously filled by
former control area operators. Therefore, we adopt that proposal.
125. International Transmission's request for clarification whether
a contingency may be considered a violation of an NPIR raises issues
concerning what level of service is adequate to meet the NPIRs
addressed in an interface agreement. Furthermore, International
Transmission has not stated how communication protocols, as presented
in NUC-001-1, would imply that the occurrence of a contingency would
violate NUC-001-1. Such issues are best resolved by those parties
during the development of the agreement.
126. As for Southern's objection to the parties to an interface
agreement coordinating responses to system events, we see nothing
objectionable to the requirement that the parties to an interface
agreement have procedures and protocols in place to respond to changing
system conditions, consistent with nuclear license requirements and SOL
procedures, as well as the remaining Reliability Standards. Nothing in
the Reliability Standard or the NOPR description suggests that the
nuclear plant generator operator is to be the party to coordinate
transmission system responses.
127. Similarly, with respect to NEI's concern that the parties to
an interface agreement be required to coordinate operational and
maintenance issues where necessary, we conclude that a generator and a
transmission system operator may agree to coordinate maintenance
schedules in order to address system conditions, so long as the
agreement is consistent, in this case, with the generator's license
requirements, the Reliability Standards, and the standards of
conduct.\60\
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\60\ Standards of Conduct for Transmission Providers, Notice of
Proposed Rulemaking, Docket No. RM07-1-000, 73 FR 16228 (Mar. 27,
2008), FERC Stats. and Regs. ] 32,630 (2008). Revisions to the
Standards of Conduct for Transmission Providers, Final Rule, Docket
No. RM07-1-000, 125 FERC ] 61,062 (2008).
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2. Addressing System Changes
128. Requirements R7 and R8 require parties to inform each other of
design, configuration, operations, limits, protection systems, or
capabilities that that may impact their ability to meet NPIRs.
a. Comments
129. Entergy asks the Commission to clarify the level of proposed
change that would trigger a Requirement R7 and R8 information exchange.
According to Entergy, proposals to change a plant's ``design,
configuration, operations, limits, protection systems, or
capabilities'' are evaluated routinely, due to the multitude of complex
systems within a nuclear power plant, and the long lifetimes of such
facilities. Entergy points out that the NRC has extensive general
design criteria and requirements for changes.\61\ Entergy notes that
proposals may never be approved, scheduled, or implemented and suggests
that transmission system and facility proposals may be subject to
similar concerns.
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\61\ See 10 CFR Part 50, Appendix B and 10 CFR 50.59.
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130. Entergy notes the limitations in the Requirements that the
proposed changes to be reported are those that ``may impact the ability
of the electric system to meet the NPIRs,'' but claims that the
description lacks clarity. Entergy suggests that nuclear plant
generator operators and transmission entities will not be able to
implement the Requirements without a determination of what changes to
communicate and questions whether every discussion about a possible
design change, technological improvement, or sale of facilities must be
communicated. Entergy proposes that the Commission bypass agreement of
the parties to an interface agreement and establish a limitation to
include proposed changes that are formally approved, scheduled for
implementation, and could significantly impact the ability of the Bulk-
Power System to meet the NPIRs.
b. Commission Determination
131. The Commission declines to direct the clarification requested
by Entergy. The Commission disagrees that the requirement to
communicate changes that ``may impact the ability of the electric
system to meet the NPIRs'' is not a clear requirement. It is an example
of ``what'' is required, not ``how'' it should be performed which
should be included in the agreements. The Commission believes that
there are many plant-specific issues and does not expect they will be
individually addressed in the Reliability Standard. However, it is
clear what is required and the compliance audits will check that the
entities have sufficiently covered them in their agreements.
G. Violation Risk Factors
132. As part of its compliance and enforcement program, NERC must
assign a lower, medium or high violation risk factor to each
Requirement of each mandatory Reliability Standard to associate a
violation of the Requirement with its potential impact on the
reliability of the Bulk-Power System. Violation risk factors are
defined as follows:
High Risk Requirement: (a) Is a requirement that, if violated,
could directly cause or contribute to Bulk-Power System instability,
separation, or a cascading sequence of failures, or could place the
Bulk-Power System at an unacceptable risk of instability,
separation, or cascading failures; or (b) is a requirement in a
planning time frame that, if violated, could, under emergency,
abnormal, or restorative
[[Page 63785]]
conditions anticipated by the preparations, directly cause or
contribute to Bulk-Power System instability, separation, or a
cascading sequence of failures, or could place the Bulk-Power System
at an unacceptable risk of instability, separation, or cascading
failures, or could hinder restoration to a normal condition.
Medium Risk Requirement: (a) Is a requirement that, if violated,
could directly affect the electrical state or the capability of the
Bulk-Power System, or the ability to effectively monitor and control
the Bulk-Power System, but is unlikely to lead to Bulk-Power System
instability, separation, or cascading failures; or (b) is a
requirement in a planning time frame that, if violated, could, under
emergency, abnormal, or restorative conditions anticipated by the
preparations, directly affect the electrical state or capability of
the Bulk-Power System, or the ability to effectively monitor,
control, or restore the Bulk-Power System, but is unlikely, under
emergency, abnormal, or restoration conditions anticipated by the
preparations, to lead to Bulk-Power System instability, separation,
or cascading failures, nor to hinder restoration to a normal
condition.
Lower Risk Requirement: Is administrative in nature and (a) is a
requirement that, if violated, would not be expected to affect the
electrical state or capability of the Bulk-Power System, or the
ability to effectively monitor and control the Bulk-Power System; or
(b) is a requirement in a planning time frame that, if violated,
would not, under the emergency, abnormal, or restorative conditions
anticipated by the preparations, be expected to affect the
electrical state or capability of the Bulk-Power System, or the
ability to effectively monitor, control, or restore the Bulk-Power
System.\62\
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\62\ North American Electric Reliability Corp., 119 FERC ]
61,145, at P 9 (Violation Risk Factor Order), order on reh'g, 120
FERC ] 61,145 (2007) (Violation Risk Factor Rehearing Order).
133. In its November 19, 2007 Petition, NERC identified and
proposed violation risk factors for each Requirement of Reliability
Standard NUC-001.\63\ The NOPR reviewed NERC's proposal consistent with
the terms proposed in the Violation Risk Factor Order, in which the
Commission addressed violation risk factors filed by NERC for Version 0
and Version 1 Reliability Standards.\64\
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\63\ NERC proposes a lower violation risk factor for
Requirements R1, R2 and R9 and a medium violation risk factor for
Requirements R3 through R8.
\64\ See Violation Risk Factor Order at P 19-36 (discussing five
guidelines to evaluate the validity of each violation risk factor
assignment).
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NOPR Proposal
134. In the NOPR, the Commission disagreed with NERC's suggestion
that NUC-001-1 Requirements were primarily administrative in nature and
proposed to direct the ERO to raise violation risk factors for several
Requirements. The NOPR stated the Commission's general view that a
Reliability Standard to ensure safe and reliable nuclear power plant
operation and shutdown merits medium or high violation risk factors,
rather than lower, due to the reliability benefits of nuclear power and
the impact of separating a plant from the grid.
135. The NOPR noted that NUC-001-1 Requirements co-mingle
administrative tasks with more critical requirements to ensure safe
nuclear power plant operation and shutdown. These Requirements also
provide for the safe and reliable operation of the grid, response to
potential emergency conditions and implementation of procedures to
address changing and emergency conditions. The NOPR sought comment on
the Commission's proposals to raise violation risk factors for NUC-001-
1, Requirements R2 (from lower to medium), R4, R5, R7, and R8 (medium
to high), and R9 (lower to medium).
136. The NOPR also stated the Commission's understanding that NERC
would apply the violation risk factor for the main Requirement to any
violation of a sub-Requirement, unless separate violation risk factors
are assigned to the Requirement and the sub-Requirement.
1. General Violation Risk Factor Issues
a. Comments
137. NERC and other commenters object to what they characterize as
the general basis described in the NOPR for justifying changes to
violation risk factors.\65\ They object to the Commission's reliance on
cited reliability benefits of nuclear power and the impact of
separating a plant from the grid to justify raising the risk factors.
NERC and EEI state that, despite the unique characteristics of nuclear
power generation the reliability benefits of nuclear power and the
impact of separation from the grid are not different from the
reliability impacts of a large output fossil generating facility. EEI
further states that these reliability concerns are addressed in other
Reliability Standards that apply to all generators, regardless of fuel
type.
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\65\ See generally Ameren, ATC, Detroit Edison, EEI, Entergy,
Exelon, ISO/RTO Council, Ontario Power, Southern, and SCE&G
comments.
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138. Duke echoes these concerns, stating that violation risk
factors (and violation severity levels) should establish penalty ranges
that are proportionate to the potential impact of violations on the
Bulk-Power System (medium or lower), but should not expose nuclear
plant generator operators and transmission entities to extreme
penalties simply because nuclear power plants are large units.
139. Ameren maintains that NUC-001-1 is administrative in nature,
not operational and the Commission should not revise the violation risk
factors.
140. Detroit Edison argues that the Commission's proposal to
increase the violation risk factors undermines the integrity and value
of the NERC Reliability Standards development process and states that
the Commission has not justified its departure from the determinations
reached through that process.\66\ EEI similarly believes that any
proposal to change violation risk factors or other aspects of
Reliability Standards must be considered through NERC's ANSI-approved
Reliability Standards development process.\67\
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\66\ See also Ontario IESO and Hydro One, and SCE&G comments.
\67\ Southern supports the EEI comments on violation risk
factors. Ameren, Exelon, and Ontario Power support directing
revisions through the Reliability Standards development process.
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141. Constellation requests assurance that when there are
overlapping requirements, registered entities will be subject to a
single penalty only.
142. Finally, EEI comments that any proposal to change violation
risk factors or other aspects of Reliability Standards must be
considered through NERC's Reliability Standard development process. It
points out that the Commission adopted this approach in Order No. 706,
stating that ``where a directive for modification appears to be
determinative of the outcome, the Commission provided guidance to the
ERO standards development process but permitted consideration of an
equivalent alternative approach that adequately addresses the
Commission's underlying goal or concern `as efficiently or effectively
as the Commission proposal.' \68\
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\68\ EEI comments at 8.
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b. Commission Determination
143. The Commission declines to adopt the procedures proposed by
the commenters. The Commission has previously determined that violation
risk factors are not a part of the Reliability Standards.\69\ NERC has
had an opportunity to fully vet the NUC-001-1 violation risk factors
through the Reliability Standards development process. The Commission
believes that, for those violation risk factors that do not comport
with the Commission's previously-articulated guidelines for analyzing
violation risk factor
[[Page 63786]]
designations, there is little benefit in once again allowing the
Reliability Standards development process to reconsider a designation
based on the Commission's concerns. Therefore, we will not allow NERC
to reconsider the violation risk factor designations in this instance
but, rather, direct below that NERC make specific modifications to its
designations. NERC must submit a compliance filing with the revised
violation risk factors no later than 90 days before the date the
relevant Reliability Standard becomes enforceable.
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\69\ Violation Risk Factor Rehearing Order, 120 FERC ] 61,145 at
P 11-16, citing North American Reliability Corp., 118 FERC ] 61,030,
at P 91, order on clarification and reh'g, 119 FERC ] 61,046 (2007).
---------------------------------------------------------------------------
144. That being said, NERC may choose the procedural vehicle to
change the violation risk factors consistent with the Commission's
directives. NERC may use the Reliability Standards development process,
so long as it meets Commission-imposed deadlines.\70\ In this instance,
the Commission sees no vital reason to direct the ERO to use section
1403 of its Rules of Procedure to revise the violation risk factors
discussed below, so long as the revised violation risk factors address
the Commission's concerns and are filed no less than 90 days before the
effective date of the relevant Reliability Standard.
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\70\ See North American Electric Reliability Corp., 118 FERC ]
61,030, at P 91, order on compliance, 119 FERC ] 61,046, at P 33
(2007).
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145. Coordinating operations and planning between the nuclear power
plant and its transmission entities serves two purposes; safety of the
nuclear power plant and reliability of the Bulk-Power System. With
regard to safety, the Blackout Report highlighted the importance of
coordinated operations and planning between the Bulk-Power System and
nuclear power plants, stating ``[a]s the design and operation of the
electricity grid is taken into account when evaluating the safety
analysis of nuclear power plants, changes to the electricity grid must
be evaluated for the impact on plant safety.'' \71\ With regard to
reliability, since the NPIR supports many of the requirements necessary
for the nuclear power plant to operate connected to the bulk electric
system, not having an NPIR could result in the long-term outage of one
or all nuclear power plants at a particular site to which the NPIR is
applicable. This is relevant because the bulk electric system is not
required to be planned to have multiple nuclear power plants out of
service during peak load periods. As a result, the Commission disagrees
with commenters that object to its reliance on the impact of a nuclear
power plant separating from the grid to justify elevating violation
risk factors for requirements of the Reliability Standard. While the
Commission recognizes that the power produced from nuclear and non-
nuclear power plants is the same, the conditions under which nuclear
power plants can safely operate are inherently different than non-
nuclear power plants because a nuclear power plant must meet all
licensing requirements established by the NRC to remain connected to
the grid.
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\71\ See U.S.-Canada Power System Outage Task Force, Final
Report on the August 14, 2003 Blackout in the United States and
Canada: Causes and Recommendations, at 129 (April 2004) (Blackout
Report).
---------------------------------------------------------------------------
146. The Commission is concerned that a lack of coordination of
operations and planning between a nuclear power plant and its
transmission entities with respect to the interface capabilities and
requirements has the potential to result in both the unanticipated
separation and the long term outage of one or all nuclear power plants
at a site from the Bulk-Power System. The former has the potential to
place the Bulk-Power System at risk for cascading outages while the
latter may result in inadequate system capabilities to meet the
projected firm load in either the planning or operating horizon. For
example, once disconnected, before a nuclear power plant can reconnect
to the Bulk-Power System, not only must Bulk-Power System conditions be
suitable, but the nuclear power plant must also complete certain
activities relevant to ensuring the safety of the plant to resume power
production. Since nuclear power plants are typically designed as base
load plants, the Commission is concerned that while the Bulk-Power
System may typically be able to withstand the disconnection of a
nuclear power plant for a reasonable period until such time Bulk-Power
System conditions allow for reconnection and the nuclear power plant is
permitted to reconnect, a prolonged disconnection of a nuclear power
plant because its NPIRs are not satisfied may not be sustainable
without affecting system capabilities, thus putting the Bulk-Power
System at risk for instability, separation, or cascading outages.
147. The Commission also disagrees with arguments that elevated
violation risk factors for Requirements of the Reliability Standard are
not justified because the reliability concern of instability,
separation, or cascading outages are already addressed in other
Reliability Standards. The Commission agrees with commenters that, as
required by other Reliability Standards, the Bulk-Power System is
planned and operated such that there will not be any interruptions of
firm transmission service after one event, such as the loss of a
generator, nuclear fueled or otherwise.\72\ However, the Commission has
previously determined that it is not appropriate to mitigate perceived
content issues among Reliability Standards, as suggested by commenters
in this instance as the duplication of reliability objectives, through
the violation risk factor assignment.\73\ A violation risk factor
represents the potential reliability risk a violation of a requirement
presents to the Bulk-Power System. This assessed reliability risk is
independent of, and not contingent upon, compliance with other
Reliability Standard requirements. The Commission recognizes the
complementary nature of some Reliability Standard Requirements and the
fact that some requirements may share the same reliability objective.
In fact, the Commission expects the assignment of a violation risk
factor corresponding to requirements that address similar reliability
goals in different Reliability Standards to be treated comparably.\74\
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\72\ See Order No. 693 at P 1794 (``[b]ased 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
recognized that load directly connected to a fault would be removed
from service. See also TPL-001-000, Table 1, ``Transmission Planning
Standards--Normal and Emergency Conditions.''
\73\ North American Electric Reliability Corp., 121 FERC ]
61,179, at P 16 (2007) (Order on Violation Risk Factor Compliance
Filing).
\74\ Violation Risk Factor Order, 119 FERC ] 61,145 at P 25.
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148. Commenters also argue that elevated violation risk factors are
not justified because the proposed Reliability Standard is
administrative in nature, not operational. The Commission disagrees.
While the Commission recognized in the NOPR that many of the
requirements of the Nuclear Reliability Standard are administrative in
nature, these same requirements provide for the development of
procedures to ensure the safe and reliable operation of the grid, and
responses to potential emergency conditions.\75\ As such, we disagree
with arguments that the proposed standard focuses on nuclear safety
through the administrative requirement of establishing agreements and
not grid reliability.
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\75\ NOPR at P 51.
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149. Constellation's request for assurance that, when there are
overlapping requirements, registered entities will be subject to a
single penalty is a compliance issue and is thus best addressed on a
case-by-case basis in the context of a compliance
[[Page 63787]]
proceeding. We note that each instance of non-compliance with a
Requirement is a separate violation. This is consistent with the FPA
which establishes the statutory maximum penalty amount of $1 million on
a per day, per violation basis as reflected in the order certifying
NERC as the ERO.\76\ However, the Commission approved NERC's Sanction
Guidelines that allow NERC, in the context of a compliance proceeding,
to use its discretion in the determination of monetary penalties for a
violation of a Requirement of a Reliability Standard.\77\
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\76\ 16 U.S.C. 825o-1(b) (2006). See also North American
Electric Reliability Corp., 116 FERC ] 61,062, at P 412
(Certification Order), order on reh'g and compliance, 117 FERC ]
61,126 (2006).
\77\ Section 3.10 of the NERC Sanction Guidelines states in
part, ``NERC or the regional entity can determine and levy a
separate penalty or sanction, or direct remedial action, upon a
violator for each individual violator for each individual violation.
However, in instances of multiple violations related to a single act
or common incidence of noncompliance, NERC or the regional entity
will generally determine and issue a single aggregate penalty,
sanction, or remedial action directive bearing reasonable
relationship to the aggregate of the related violations.''
---------------------------------------------------------------------------
150. EEI's argument that Order No. 706 requires changes to the
violation risk factors to be considered through the Reliability
Standards development process is flawed. The passages in Order No. 706
cited by EEI concern modification of the Reliability Standard itself.
As the Commission has repeatedly held, the violation risk factors are
not a part of the Reliability Standards. In fact, in Order No. 706, we
stated that ``we will not allow NERC to reconsider the violation risk
factor designations in this instance but, rather, direct below that
NERC make specific modifications to its designations.'' \78\ However,
similar to our action in this order, Order No. 706 allowed NERC to
choose the procedural vehicle to change the violation risk factors, so
long as it meets Commission-imposed deadlines.\79\
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\78\ Mandatory Reliability Standards for Critical Infrastructure
Protection, Docket No. RM06-22-000; Order No. 706, 73 FR 7368 (Feb.
7, 2008), 122 FERC ] 61,040, at P 757, order on reh'g, Order No.
706-A, 123 FERC ] 61,174 (2008).
\79\ Id.
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2. Requirement-Specific Issues
a. Requirement R2
i. NOPR
151. The NOPR proposed to direct the ERO to raise the violation
risk factor for Requirement R2 from lower to medium. The NOPR justified
this proposal because the Requirement co-mingles the administrative
element of having an executed agreement in place with the operational
element of determining how the parties to the interface agreement will
address nuclear plant licensing requirements and SOLs in order to
provide for safe nuclear plant operation and shutdown. Thus, the
operational requirements established will include requirements for off-
site power to enable safe operation and shutdown during an electric
system or plant event. Therefore, the NOPR noted that a violation of
Requirement R2 ``could, under emergency, abnormal, or restorative
conditions anticipated by the preparations, directly affect the
electrical state or capability of the Bulk-Power System'' and found
that a medium violation risk factor is appropriate.
ii. Comments
152. Ontario IESO and Hydro One and SCE&G disagree with the
Commission that Requirement R2 has a direct impact on the electrical
state or capability of the Bulk-Power System. They argue that, in the
absence of an agreement, each party would continue to operate its own
system in accordance with all applicable Reliability Standards.\80\
Entergy and NEI argue that Requirement R2 is an administrative
requirement, and state that violations can be quickly detected and
corrected and will not directly affect the Bulk-Power System. Entergy
also points out that Requirement R2 takes place in the planning
timeframe and concludes that a lower violation risk factor is more
appropriate.
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\80\ Detroit Edison states that it agrees with Ontario IESO and
Hydro One on specific violation risk factor issues, and Ontario
Power and SCE&G also disagree with the Commission's proposals.
---------------------------------------------------------------------------
iii. Commission Determination
153. The Commission adopts the NOPR proposal. As the Commission
identified in the NOPR, Requirement R2 co-mingles the administrative
element of having an executed agreement in place with the operational
element of determining how the parties to the interface will address
nuclear plant licensing requirements and SOLs. Consistent with
violation risk factor guideline five, the Commission expects the
assigned violation risk factor to reflect the highest reliability risk
objective of the requirement.\81\ A failure to establish operational
and implementation elements of the NPIRs, the higher reliability risk
objective of the requirement, has the potential under emergency,
abnormal, or restorative conditions to directly affect the electrical
state or capability of the Bulk-Power System.
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\81\ Violation Risk Factor Order, 119 FERC ] 61,145 at P 32.
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154. Arguments that elevating a violation risk factor is not
justified because Requirement R2 is an administrative requirement that
takes place in the planning time frame, thus violations are quickly
detected and corrected are fundamentally flawed.\82\ NERC contemplates
in its definitions of the violation risk factor levels, the reliability
risk a requirement violation presents in both the operating and
planning time frames. Consistent with NERC's definition, a violation
risk factor represents the potential reliability risk a violation of a
requirement presents to the Bulk-Power System, regardless of the time
frame.
---------------------------------------------------------------------------
\82\ See NEI comments at 8, and Entergy comments at 15.
---------------------------------------------------------------------------
155. With regard to comments from Ontario IESO and Hydro One and
SCE&G, as explained previously in this Final Rule, it is not
appropriate to assign a requirement's violation risk factor based on
compliance with other Reliability Standards.
156. Accordingly, the Commission directs the ERO to revise the
violation risk factor assignment for Requirement R2 from lower to
medium no later then 90 days before the effective date of the
Reliability Standard.
b. Requirements R4.2 and R4.3
i. NOPR
157. The NOPR proposed to direct the ERO to raise the violation
risk factors for sub-Requirements R4.2 and R4.3 to high. Sub-
Requirements R4.2 and R4.3 require a transmission entity to incorporate
NPIRs into operating analyses, operate to meet the NPIRs and inform the
nuclear plant generator operator when the ability to assess performance
to meet the NPIRs is lost.
158. The NOPR states that sub-Requirement R4.2 obligates a
transmission entity to operate its electric system to meet NPIRs
established in an interface agreement. Furthermore, NPIRs are described
as forming the basis for nuclear plant generator operators and
transmission entities to ``coordinate planning, assessment, analysis,
and operation of the bulk power system to ensure safe nuclear plant
operations and shutdowns.'' Therefore, the NOPR noted that, under
emergency, abnormal, or restorative conditions, a violation of
Requirement R4.2 could directly cause or contribute to Bulk-Power
System instability, separation, or a cascading sequence of failures, or
could place the Bulk-Power System at an unacceptable risk of
instability, separation, or
[[Page 63788]]
cascading failures,\83\ and proposed a high violation risk factor for
Requirement R4.2.
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\83\ See also NERC November 19, 2007 Petition at 20 (``The
proposed reliability standard also acknowledges that the obligation
to public safety relative to nuclear plant operation establishes a
unique set of requirements that other generating facilities are not
subjected to. In order to protect the common good, the applicable
transmission entities must respect these unique requirements that
maintain and/or restore offsite power adequate to supply minimum
nuclear safety requirements.'').
---------------------------------------------------------------------------
159. The NOPR noted that Requirement R4.3 obligates a transmission
entity to inform the nuclear plant generator operator when the ability
to monitor the system and verify NPIRs is lost. The NOPR noted that a
nuclear plant generator operator that is not aware that a transmission
entity can no longer guarantee that NPIRs are met to respond to, would
suffer an impaired ability to anticipate, emergencies and changing
system conditions. Because such an event could increase the likelihood
that the plant is separated from the transmission system and cause
significant degradation in Bulk-Power System reliability, characterized
by instability, uncontrolled islanding and cascading, the NOPR proposed
to direct the ERO to raise the violation risk factor for Requirement
R4.3 from medium to high, and requested comment.
ii. Comments
160. Several commenters object to the proposal to raise the
violation risk factor of Requirement R4.2 and R4.3.\84\ NEI
characterizes Requirement R4.2 as requiring transmission entities to
operate their electrical systems to meet the NPIRs incorporated in the
interface agreements and describes Requirement R4.3 as requiring
transmission entities which lose the ability to monitor their systems
to maintain compliance with NPIRs to communicate this information to
the affected nuclear plant generator operators. NEI, ConEdison, and
Entergy state that the Commission's concerns regarding the loss of a
single generator are addressed in other NERC Reliability Standards that
minimize the risk of system instability, separation, or cascading loss
if a generator were to go offline.
---------------------------------------------------------------------------
\84\ See ConEdison, Detroit Edison, Entergy, Ontario IESO and
Hydro One, Midwest ISO, NEI, Ontario Power, and SCE&G comments.
---------------------------------------------------------------------------
161. NEI states that transmission planning and operations
Reliability Standards require the transmission system to be able to
withstand threats from the loss of a single generator. According to
NEI, entities having the responsibility to meet the Requirements of
these other Reliability Standards already incorporate the limitations
of nuclear generating plants into their studies and analyses and
address the loss of a given generator and limit the effect of the loss
on the grid. NEI states that NUC-001-1 deals only with the important
interaction and communication between the nuclear plant generator
operator and transmission entities to ensure that the NPIRs are met,
while the operation of the Bulk-Power System and requirements to
prevent instability, separation, or cascading failures are adequately
addressed by other Reliability Standards.
162. Ontario IESO and Hydro One characterize the consequences of a
violation of Requirement R4.2 or R4.3 as affecting a nuclear plant
generator operator's license requirements and may result in a shut
down, but argue that such a result, while significant to the generator,
would not cause significant degradation in Bulk-Power System. Ontario
IESO and Hydro One state that the shut down of a power plant is a
controlled process, not a contingency, and conclude that reliability
impacts such as instability, uncontrolled islanding and cascading would
not result.
163. Midwest ISO disagrees with the Commission's assessment that a
high violation risk factor is necessary for Requirement R4.2. In most
cases, if the reliability coordinator and transmission operator are in
a condition in which the bulk electric system cannot support the off-
site power requirements of a nuclear plant, the nuclear plant is not at
risk of tripping. Normally, in its licensing requirements, the plant is
required after a period of time (usually two to eight hours) to begin a
controlled shutdown of the reactor in this situation.
iii. Commission Determination
164. The Commission confirms its findings proposed in the NOPR and
directs the ERO to revise the violation risk factor for Requirements
R4.2 and R4.3 from medium to high. We disagree with the
characterization that Requirements R4.2 and R4.3 deal only with the
``important interaction and communication between the nuclear plant
[generator] operator and transition entities to ensure that the NPIRs
are met.'' \85\ As discussed in the NOPR, these requirements are
directly relevant to ensuring the continued operation of a nuclear
power plant on the Bulk-Power System. A failure of the transmission
entity to operate as needed to provide the NPIR or inform the nuclear
plant generator operator when its ability to assess the operation of
the electric system is lost, puts the Bulk-Power System at risk of
cascading outages. We note that most nuclear plant sites operate more
than one nuclear power plant. If a transmission entity loses its
ability to assess the operation of the electric system affecting its
NPIRs, it will, in most cases, impact more than one nuclear power plant
where the result would be the shutdown, controlled or otherwise, of the
applicable nuclear plant site. As a result, there could be significant
loss of firm transmission service if not cascading.
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\85\ NEI comments at 8.
---------------------------------------------------------------------------
165. The Commission is also not persuaded by the argument that
elevated violation risk factors are not justified because the shutdown
of a nuclear power plant is a controlled process and not a contingency.
NERC defines a contingency as, ``the unexpected failure or outage of a
system component, such as a generator, transmission line, circuit
breaker, switch or other electrical element.'' Although the shut down
of a nuclear power plant is described as a ``controlled'' process
because of the methodical and orderly operation of safety systems to
disconnect the plant from the Bulk-Power System, the shut down is
initiated because Bulk-Power System conditions are unsuitable for the
continued operation of the nuclear power plant on the Bulk-Power
System. If the shutdown, albeit controlled, of a nuclear power plant is
unexpected in the course of the operation of the Bulk-Power System, it
is, nonetheless, a contingency that must be accommodated in real time
operations without the loss of firm service.
166. Further, not continuously providing specific NPIRs may result
in the additional loss of one or more nuclear power plants during
single or multiple contingencies. The Commission is concerned that an
initial system event near, but unrelated to, one or more nuclear power
plants that degrades system conditions beyond the nuclear power plant's
license requirements could result in the disconnection of one or more
nuclear power plants from the Bulk-Power System. In this case, the
outages of multiple nuclear power plants would be the result of one
contingency and would be considered by the Commission to be a single
event. However, the reliability impact to the bulk electric system due
to this single event may not be addressed in operations planning and
long term planning, thus putting the Bulk-Power System at risk of
cascading outages. Thus, not achieving the NPIRs could put the Bulk-
Power System in
[[Page 63789]]
danger of instability, separation or a cascading sequence of failures.
167. For the reasons discussed previously in this Final Rule, the
Commission reiterates that it is not appropriate to assess a
requirement's violation risk factor assignment based on compliance with
other Reliability Standard requirements.
168. Therefore, consistent with the definition of a high violation
risk factor, for the reasons discussed above, the Commission directs
the ERO to revise the violation risk factor assignment for Requirements
R4.2 and R4.3 from medium to high no later then 90 days before the
effective date of the Reliability Standard.
c. Requirement R5
i. NOPR
169. The NOPR proposed to direct the ERO to raise the violation
risk factor for Requirement R5 from medium to high. The NOPR noted that
Requirement R5 obligates a nuclear plant generator operator to operate
its system consistent with the interface agreement developed under NUC-
001-1, and that the separation of a typically large nuclear power plant
from the grid may significantly affect grid operations. Because nuclear
power plant service interruptions could be initiated by incidents
occurring on the nuclear power plant system, including incidents
stemming from a failure to meet interface agreement terms, a violation
of Requirement R5 could directly affect the reliability of the system.
That possibility suggested that the violation risk factor for
Requirement R5 should be raised from medium to high.
ii. Comments
170. Several commenters object to the proposal to raise the
Requirement R5 violation risk factor from medium to high.\86\ NEI
characterizes Requirement R5 as ensuring that the nuclear plant
generator operator understands and implements the interface agreements,
and coordinates with the applicable transmission entities to ensure
nuclear plant safe operation and shutdown. According to NEI, the
nuclear industry consensus is that operation of the Bulk-Power System
to prevent instability, separation, or cascading failures is adequately
addressed by other Reliability Standards. According to NEI, the NOPR
overstates the significance of the separation of a nuclear plant from
the Bulk-Power System, because all Bulk-Power Systems are designed and
operated to handle the loss of the largest generator on the grid as an
N-1 contingency, including a large nuclear power plant, which may not
be the largest generator on the grid. Hence, the separation of a
nuclear power plant should not be assumed to result in a loss of Bulk-
Power System stability. NEI states that transmission grids must be able
to withstand the loss of a single generating unit, including nuclear
power plants and other facilities.\87\ Thus, according to NEI the
tripping of a large nuclear unit should not directly cause Bulk-Power
System instability, separation or a cascading sequence of failures or
place the Bulk-Power System at an unacceptable risk of instability,
separation, or cascading failures. Should a nuclear generating unit
separate from the grid and the resultant ``post-trip'' voltage be
insufficient to meet the nuclear offsite power requirements for the
site, it would not result in the automatic separation of the remaining
nuclear units. Any subsequent shutdown of the nuclear units should not
introduce grid or nuclear system transients because the shutdown would
be an operator controlled, orderly process to ensure compliance with
the requirements of the license.
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\86\ See Detroit Edison, Ontario IESO and Hydro One, Entergy,
Ontario Power, and SCE&G comments.
\87\ NEI cites the NERC ``Category B'' stability criteria which
it describes as the most restrictive criteria. See TPL-001-000,
Table 1, ``Transmission Planning Standards.'' NEI also cites what it
characterizes as more stringent regional criteria that require that
the common mode simultaneous outage of two generator units (nuclear
or otherwise) connected to the same switchyard shall not result in
cascading, though not addressed by the initiating events in NERC
``Category C.''
---------------------------------------------------------------------------
171. Ontario IESO and Hydro One concede that failure to meet this
requirement may significantly affect grid control and operation, but
suggest that the reliability of the power grid will not be affected in
a way that will cause instability, uncontrolled islanding and cascading
because the separation of the plant would be coordinated and
implemented in a controlled manner. Entergy states that the purpose of
NUC-001-1 is to ensure the safe operation of nuclear power plants by
requiring plant operators and transmission entities to coordinate to
meet NPIRs and that other Reliability Standards provide for operation
of the Bulk-Power System to prevent instability, separation, or
cascading failures.
iii. Commission Determination
172. The Commission adopts the NOPR proposal. Commenters argue that
elevating the violation risk factor assignment for Requirement R5 is
not justified because: (1) The Commission overstates the significance
of separation of a nuclear plant from the Bulk-Power System; (2) the
reliability concerns associated with instability, separation, or
cascading outages are already addressed in other Reliability Standards,
and (3) the shutdown of a nuclear power plant is a controlled process
and not a contingency.
173. Each of these arguments has been previously addressed in this
Final Rule. Accordingly, the Commission directs the ERO to revise the
violation risk factor assignment for Requirement R5 from medium to high
no later then 90 days before the effective date of the Reliability
Standard.
d. Requirements R7 and R8
i. NOPR
174. The NOPR proposed to direct the ERO to raise the violation
risk factors for Requirements R7 and R8 from medium to high, and sought
comment. Requirements R7 and R8 obligate a nuclear plant generator
operator and its transmission entities to inform each other of actual
or proposed changes to their facilities that affect their ability to
meet NPIRs. Because the information to be exchanged, such as ``limits''
and ``protection systems,'' affects the ability of a plant to remain
connected to the Bulk-Power System, the NOPR stated that a failure to
provide information could result in a nuclear plant disconnecting from
the Bulk-Power System, and place the Bulk-Power System at risk for
cascading outages. To account for such a risk, the NOPR proposed to
direct the ERO to raise the violation risk factors for Requirements R7
and R8 from medium to high.
ii. Comments
175. NEI states the violation risk factors for Requirements R7 and
R8 should not be changed. NEI states Requirements R7 and R8 require
nuclear plant generator operators and their transmission entities to
communicate with each other regarding any changes to their facilities
that could affect their capacity to meet their NPIR obligations. Since
violations of these requirements are not likely to lead to Bulk-Power
System instability, separation, or cascading failures, the violation
risk factors for Requirements R7 and R8 should not be changed. Entergy
also argues that Requirements R7 and R8 should have a medium violation
risk factor, since a failure of communication to be avoided under the
Requirements is not likely to lead to significant events such as Bulk-
Power System instability, separation, or cascading failures, but only
over the parties ability to monitor and oversee the Bulk-Power System
or cause other unspecified problems.
[[Page 63790]]
176. Ontario IESO and Hydro One also suggest that the violation
risk factors of Requirements R7 and R8 be assigned to medium, not
high.\88\ They agree that failure to meet these requirements may
significantly affect grid control and operation, but not the
reliability of the power grid characterized by instability,
uncontrolled islanding and cascading. Finally, ConEdison believes that
the violation risk factor for Requirement R8 should not be changed
because transmission planners and operators do not analyze generation
from nuclear power plants differently than other generators or the
requirements are largely administrative.
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\88\ See also Detroit Edison, Ontario Power, and SCE&G comments.
---------------------------------------------------------------------------
iii. Commission Determination
177. The Commission adopts the NOPR proposal. As discussed in the
NOPR and in additional detail above, if transmission entities and
nuclear plant generator operators do not provide or otherwise
communicate information concerning system changes to each other, their
planning and operating analyses may not include the true consequences
of a single contingency. As a result, unanticipated events that could
result in the disconnection of one or more nuclear power plants from
the Bulk-Power System, in addition to the consequences of the
initiating event, could place the Bulk-Power System at risk for
cascading outages.
178. Arguments that elevating the violation risk factor assignment
for Requirements R7 and R8 is not justified because the shutdown of a
nuclear power plant is a controlled process and transmission planners
and operators do not analyze nuclear power plants differently than
other generation have been previously addressed in this Final Rule.
179. Accordingly, consistent with the definition of a high
violation risk factor, and for the reasons discussed above, the
Commission directs the ERO to revise the violation risk factor
assignment for Requirements R7 and R8 from medium to high no later then
90 days before the effective date of the Reliability Standard.
e. Requirement R9
i. NOPR
180. The NOPR proposed to direct the ERO to raise the violation
risk factor for Requirement R9 from lower to medium, and sought
comment. Requirement R9 describes specific administrative, technical,
operations, maintenance, coordination, communications, and training
elements that a nuclear plant generator operator and its transmission
entities must include in their interface agreement. The NOPR stated
that Requirement R9 is similar to Requirement R2, in that it co-mingles
an administrative element of incorporating the various elements into
the interface agreement with the operational element of determining how
the parties to the interface agreement will address the administrative,
technical, operations, maintenance, coordination, communications, and
training issues in order to provide for safe nuclear power plant
operation and shutdown. The NOPR stated that a violation of Requirement
R9 could result in an inability to resolve system conditions in an
emergency because the necessary operational or emergency planning
elements may not be in place. Therefore, the NOPR noted that a
violation of Requirement R9 ``could, under emergency, abnormal, or
restorative conditions anticipated by the preparations, directly affect
the electrical state or capability of the Bulk-Power System.'' In
response, the NOPR proposed to find that a medium violation risk factor
is appropriate for Requirement R9, but stated that if the ERO wishes to
assign a lower violation risk factor to the purely administrative sub-
Requirements of Requirement R9, it could propose appropriate
differentiation in its comments.
ii. Comments
181. Commenters object to raising this violation risk factor
because Requirement R9 is a planning requirement that is administrative
in nature. Because generation from nuclear power plants is not analyzed
differently than other generation by transmission planners and
operators their operations do not justify higher risk factors.
182. NEI states the violation risk factor for Requirement R9 should
not be changed. Requirement R9 sets forth the specific administrative,
technical, operations, maintenance, coordination, communications, and
training elements that a nuclear plant generator operator and its
transmission entities must incorporate in the interface agreement. It
argues that, while the implementation of these elements is substantive,
Requirement R9 is an administrative requirement to include the
specified provisions. Violations of this requirement can be readily
identified and corrected; therefore, violations should not directly
affect the Bulk-Power System.
183. Entergy characterizes Requirement R9 as addressing the various
elements that parties must address in an interface agreement and
supporting the terms in Requirements R3 through 8. Entergy states that
Requirement R9 is administrative in nature, occurs in the planning time
frame and violations could be easily corrected without affecting the
reliability of the Bulk-Power System.
iii. Commission Determination
184. Consistent with the NOPR, the Commission directs the ERO to
revise the violation risk factor assignment for Requirement R9 from
lower to medium. The Commission disagrees with commenters that a lower
violation risk factor is appropriate because Requirement R9 is an
administrative requirement to include the specified provisions. While
the Commission recognized in the NOPR that many of the requirements of
the proposed Reliability Standard are administrative in nature, these
same requirements provide for the development of procedures to ensure
the safe and reliable operation of the grid, and responses to potential
emergency conditions.
185. Further, as identified in the NOPR, Requirement R9 co-mingles
the administrative element of incorporating the various elements into
the interface agreement with the operational elements of determining
how the parties to the interface agreement will address the
administrative, technical, operations, maintenance, coordination,
communications, and training issues for safe nuclear power plant
operation and shutdown. Consistent with violation risk factor Guideline
5, the Commission expects the assigned violation risk factor to reflect
the highest reliability risk objective of the requirement. A violation
of the highest reliability risk objectives of Requirement R9, under
emergency, abnormal, or restorative conditions has the potential to
affect the electrical state or capability of the Bulk-Power System.
186. As discussed previously in this Final Rule, arguments that
elevating the violation risk factor assigned to Requirement R9 are not
justified because the subject requirement takes place in the planning
time frame, thus violations are quickly detected and corrected, are
fundamentally flawed.
187. Therefore, consistent with the definition of a medium
violation risk factor, and for the reasons discussed above, the
Commission directs the ERO to revise the violation risk factor
assignment for Requirement R9 from lower to medium no later then 90
days before the effective date of the Reliability Standard.
[[Page 63791]]
H. Violation Severity Levels
188. For each Requirement of a Reliability Standard, NERC states
that it will also define up to four violation severity levels--lower,
moderate, high and severe--as measurements of the degree to which the
Requirement was violated. For a specific violation of a particular
Requirement, NERC or the Regional Entity will establish the initial
value range for the base penalty amount by finding the intersection of
the applicable violation risk factor and violation severity level in
the Base Penalty Amount Table in Appendix A of the Sanction
Guidelines.\89\
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\89\ See North American Electric Reliability Corp., 119 FERC ]
61,248, at P 74 (2007) (directing NERC to develop up to four
violation severity levels (lower, moderate, high, and severe) as
measurements of the degree of a violation for each requirement and
sub-requirement of a Reliability Standard).
---------------------------------------------------------------------------
1. NOPR
189. The NOPR noted that NERC's November 19, 2007 Petition proposed
violation severity levels that apply generally to all violations of the
Requirements of NUC-001-1, rather than to specific Requirements and
sub-Requirements, but that NERC had submitted proposed new violation
severity levels for each Requirement and sub-Requirement of NUC-001-1
in Docket No. RR08-4-000.\90\
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\90\ The updated NUC-001-1 violation severity levels are
provided in NERC's March 4, 2008 filing of revised Exhibit A,
containing the NERC violation severity level matrix, in Docket No.
RR08-4-000.
---------------------------------------------------------------------------
190. The NOPR stated the Commission's intention to address issues
relating to NUC-001-1 violation severity levels in the Docket No. RR08-
4-000 proceeding, but approve the proposed undifferentiated violation
severity levels on an interim basis, in case the revised violation
severity levels are not approved before the NUC-001-1 effective date.
Because the initial violation severity levels for NUC-001-1 resemble
previously proposed levels of non-compliance by grouping Requirements
in NUC-001-1 rather than distinguishing on a per-Requirement and sub-
Requirement basis, the NOPR proposed to treat the proposed,
undifferentiated violation severity levels for NUC-001-1 consistent
with the treatment adopted for levels of non-compliance, until the
Requirement and sub-Requirement-specific violation severity levels are
approved.\91\
---------------------------------------------------------------------------
\91\ See North American Electric Reliability Corp., 119 FERC ]
61,248 at P 78-80.
---------------------------------------------------------------------------
2. Comments
191. NERC concurs with the Commission's approach to violation
severity levels.
3. Commission Determination
192. The Commission takes no action on the violation severity
levels in this Final Rule. The June 19, 2008 Order on violation
severity levels directed the ERO to assess the violation severity
levels for proposed NUC-001-1 in accordance with the Commission's
guidelines set forth in that order.\92\ As such, NERC has been directed
to re-submit violation severity levels for NUC-001-1, including
appropriate revisions based on the application of the Commission's
guidelines, as part of NERC's six-month compliance filing directed in
the Violation Severity Level Order.\93\
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\92\ North American Electric Reliability Corp., 123 FERC ]
61,284, at P 14 (2008) (Violation Severity Level Order).
\93\ The Commission notes that NERC has sought rehearing of the
Violation Severity Level Order concerning the scope and timing of
the compliance filing in Docket No. RR08-4-001.
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III. Information Collection Statement
193. The Office of Management and Budget (OMB) regulations require
approval of certain information collection requirements imposed by
agency rules.\94\ Upon approval of a collection(s) of information, OMB
will assign an OMB control number and an expiration date. Respondents
subject to the filing requirements of this Final Rule will not be
penalized for failing to respond to these collections of information
unless the collections of information display a valid OMB control
number. The Paperwork Reduction Act (PRA) \95\ requires each federal
agency to seek and obtain OMB approval before undertaking a collection
of information directed to 10 or more persons, or continuing a
collection for which OMB approval and validity of the control number
are about to expire.\96\ The PRA defines the phrase ``collection of
information'' to be the ``obtaining, causing to be obtained,
soliciting, or requiring the disclosure to third parties or the public,
of facts or opinions by or for an agency, regardless of form or format,
calling for either--
\94\ 5 CFR 1320.11.
\95\ 44 U.S.C. 3501-20.
\96\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
---------------------------------------------------------------------------
(i) answers to identical questions posed to, or identical
reporting or recordkeeping requirements imposed on ten or more
persons, other than agencies, instrumentalities, or employees of the
United States; or (ii) answers to questions posed to agencies,
instrumentalities, or employees of the United States which are to be
used for general statistical purposes.'' \97\
---------------------------------------------------------------------------
\97\ 44 U.S.C. 3502(3)(A).
194. This Final Rule approves the new Reliability Standard
developed by NERC as the ERO. In addition, the Final Rule directs the
ERO to develop a modification to one Requirement through its
Reliability Standards development process. Section 215 of the FPA
authorizes the ERO to develop and enforce Reliability Standards that
provide for an adequate level of reliability of the Bulk-Power System.
Pursuant to the statute, the ERO must submit each Reliability Standard
that it proposes to be made effective to the Commission for
approval.\98\
---------------------------------------------------------------------------
\98\ See 16 U.S.C. 824o(d).
---------------------------------------------------------------------------
195. Reliability Standard NUC-001-1 does not require responsible
entities to file information with the Commission. Nor, with the
exception of a three year self-certification of compliance, does the
Reliability Standard require responsible entities to file information
with the ERO or Regional Entities. However, the Reliability Standard
does require responsible entities to develop and maintain certain
information for a specified period of time, subject to inspection by
the ERO or Regional Entities.
196. Reliability Standard NUC-001-1 requires nuclear plant
generator operators and entities that provide generation, transmission
and distribution services relating to off-site power (these entities
are defined as ``transmission entities'') to enter into interface
agreements with nuclear plant generator operators that will govern
certain communication, training, operational and planning elements for
use in addressing generation and transmission system limits and nuclear
licensing requirements. The Commission understands that most entities
subject to this Reliability Standard already have such agreements in
place. The responsible entities are also required to retain evidence
that they executed such an agreement and incorporated its terms into
systems planning and operations. Further, each nuclear plant generator
operator and transmission entity must self-certify its compliance to
the compliance monitor once every three years.
197. The Commission is submitting these reporting and recordkeeping
requirements to OMB for its review and approval under section 3507(d)
of the PRA. In the NOPR, the Commission sought comments on the
Commission's need for this information, whether the information will
have practical utility, the accuracy of provided burden
[[Page 63792]]
estimates, ways to enhance the quality, utility, and clarity of the
information to be collected, and any suggested methods for minimizing
the respondent's burden, including the use of automated information
techniques.
198. Our estimate below regarding the number of respondents is
based on the NERC compliance registry as of April 2007 and NERC's
November 19, 2007 Petition that is the subject of this proceeding. In
its Petition, NERC states that 104 nuclear power plants are subject to
the proposed Reliability Standard. These plants are run by
approximately 30 different utilities and are located on 65 different
sites. Each plant must contract with transmission entities to obtain
off-site power, and coordinate distribution and transmission services
for such power.
199. The Nuclear Reliability Standard identifies 11 categories of
functional entities that could be a transmission entity when providing
covered services, including transmission operators, transmission
owners, transmission planners, transmission service providers,
balancing authorities, reliability coordinators, planning authorities,
distribution providers, load-serving entities, generator owners and
generator operators. NERC's compliance registry indicates that there is
a significant amount of overlap among the entities that perform these
functions. Therefore, in some instances, a single entity may be
registered under several of these functions. The November 19, 2007
Petition includes NERC drafting team comments which report, ``In many
cases, agreements are not two-party [agreements]--they are often multi-
party agreements involving RTO/ISO Protocols, transmission and
generation owners and others.'' \99\ Therefore, this analysis attempts
to account for the overlap of services to be provided by entities
responsible for the various roles identified in the Reliability
Standard, as well as the fact that certain plants may need to
coordinate with multiple entities.
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\99\ NERC Nuclear Reliability Standard drafting team,
``Consideration of Comments, Draft 2--SAR on Nuclear Plant Offsite
Power Reliability'' at 2 (May 23, 2005), filed in November 19, 2007
Petition, Exh. B, Record of Development of Proposed Reliability
Standard.
---------------------------------------------------------------------------
200. Under NUC-001-1, the 104 nuclear power plants must coordinate
with off-site power suppliers and related transmission and/or
distribution service providers. NUC-001-1 drafting team reports in its
responses to SAR comments, ``Nuclear plant generators and most nuclear
offsite power supplies interconnect with the bulk electric system at
transmission system voltage levels. While backup station service for
some plants may be provided via distribution lines, these cases are the
exception, not the rule.'' \100\ Assuming conservatively, that not more
than half of the nuclear power plants call for multi-party coordination
and those that do involve all the types of parties listed by the
drafting team, the Commission estimates that 52 nuclear power plants
will execute bi-lateral interface agreements and 52 nuclear power
plants will execute multi-lateral interface agreements with
approximately four other parties. Thus, the Commission estimates that
the 104 nuclear power plants will enter into agreements with an
additional 260 parties to bilateral and multi-party agreements,
providing 364 as the total number of entities required to comply with
the information ``reporting'' or development requirements of the
Nuclear Reliability Standard.\101\
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\100\ NERC Nuclear Reliability Standard drafting team,
``Consideration of Comments on 2nd Draft of Nuclear Off-site Power
Supply Standard'' at 54 (Feb. 7, 2007), filed in November 19, 2007
Petition, Exh. B, Record of Development of Proposed Reliability
Standard.
\101\ Because it is assumed that each plant operator must ensure
that appropriate agreements are in place for each plant, this
analysis assesses the workload by measuring the work for 104 plants,
rather than for the 30 nuclear plant operators.
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201. Burden Estimate: The Public Reporting burden for the
requirements contained in the Final Rule is as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of
Data collection respondents responses Hours per respondent Total annual hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
FERC-725F:
Nuclear Plant Owners or Operators....... 104 1 Reporting: 80............................ Reporting: 8,320.
........... ........... Recordkeeping: 40........................ Recordkeeping: 4,160.
Investor-Owned Utilities................ 130 1 Reporting: 80............................ Reporting: 10,400.
........... ........... Recordkeeping: 40........................ Recordkeeping: 5,200.
Large Municipals, Cooperatives and other 130 1 Reporting: 80............................ Reporting: 10,400.
agencies.
........... ........... Recordkeeping: 40........................ Recordkeeping: 5,200.
---------------------------------------------------------------------------------------------------------------
Total............................... 364 ........... ......................................... 43,680.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Hours: (Reporting 29,120 hours + Recordkeeping 14,560 hours)
= 43,680 hours. (FTE = Full Time Equivalent or 2,080 hours)
Total Annual hours for Collection: Reporting + Recordkeeping =
43,680 hours.
Information Collection Costs: The Commission finds the average
annualized cost to be the total annual hours (Reporting) 29,120 times
$120 = $3,494,400.
Recordkeeping = @ $40/hour = $ 582,400, with labor calculated as
file/record clerk @ $17 an hour + supervisory @ $23 an hour.
Total costs = $4,076,800.
The Commission believes that this estimate may be conservative
because most if not all of the applicable entities currently have
agreements in place to provide for coordination between a nuclear plant
generator operator and its local transmission, distribution and off-
site power suppliers. Furthermore, multiple plants are located on
certain sites, and one entity may operate multiple plants, providing
for potential economies in updating, drafting and executing the
interface agreements.
Title: FERC-725F, Mandatory Reliability Standard for Nuclear Plant
Interface Coordination.
Action: Final Rule.
OMB Control No.: [To be determined.]
Respondents: Business or other for profit, and/or not for profit
institutions.
Frequency of Responses: One time to initially comply with the rule,
and then on occasion as needed to revise or modify. In addition, annual
and three-year self-certification requirements will apply.
Necessity of the Information: NUC-001-1, implements the
Congressional mandate of the Energy Policy Act of 2005 to develop
mandatory and enforceable Reliability Standards to better ensure the
reliability of the nation's Bulk-Power System. Specifically, the
Nuclear Reliability Standard will ensure that system operating limits
or SOLs used in the
[[Page 63793]]
reliability planning and operation of the Bulk-Power System are
coordinated with nuclear licensing requirements in order to ensure the
safe operation and shut down of nuclear power plants.
Internal review: The Commission has reviewed the requirements
pertaining to the Nuclear Reliability Standard for the Bulk-Power
System and determined that the requirements adopted are necessary to
meet the statutory provisions of the Energy Policy Act of 2005. These
requirements conform to the Commission's plan for efficient information
collection, communication and management within the energy industry.
The Commission has assured itself, by means of internal review, that
there is specific, objective support for the burden estimates
associated with the information requirements.
202. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426 [Attention: Michael Miller,
Office of the Executive Director, Phone: (202) 502-8415, fax: (202)
273-0873, e-mail: michael.miller@ferc.gov]. Comments on the
requirements of the Final Rule may also be sent 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], e-mail: oira_submission@omb.eop.gov.
IV. Environmental Analysis
203. 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.\102\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. The actions proposed here fall within the categorical
exclusion in the Commission's regulations for rules that are
clarifying, corrective or procedural, for information gathering,
analysis, and dissemination.\103\ Accordingly, neither an environmental
impact statement nor environmental assessment is required.
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\102\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
and Regs. ] 30,783 (1987).
\103\ 18 CFR 380.4(a)(5).
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V. Regulatory Flexibility Act Analysis
204. The Regulatory Flexibility Act of 1980 (RFA) \104\ generally
requires a description and analysis of Final Rules that will have
significant economic impact on a substantial number of small entities.
Most of the entities, i.e., planning authorities, reliability
coordinators, transmission planners and transmission operators, to
which the requirements of this rule would apply do not fall within the
definition of small entities.\105\
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\104\ 5 U.S.C. 601-12.
\105\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. See
15 U.S.C. 632 (2006). According to the SBA, a small electric utility
is defined as one that has a total electric output of less than four
million MWh in the preceding year.
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205. As indicated above, based on available information regarding
NERC's compliance registry, approximately 364 entities, including
owners and operators of 104 nuclear power plants, will be responsible
for compliance with the new Reliability Standard. It is estimated that
one-third of the responsible entities, about 130 entities, would be
municipal and cooperative organizations. In addition to generator
owners and operators and distribution service providers, the Nuclear
Reliability Standard applies to planning authorities, transmission
planners, transmission operators and reliability coordinators, which
tend to be larger entities. Thus, the Commission believes that only a
portion, approximately 30 to 40 of the municipal and cooperative
organizations to which the Reliability Standard applies, qualify as
small entities.\106\ The Commission does not consider this a
substantial number of all municipal and cooperative organizations.
Moreover, as discussed above, the Nuclear Reliability Standard will not
be a burden on the industry since most if not all of the applicable
entities currently coordinate operations and planning with nuclear
plant generator operators and the Nuclear Reliability Standard will
simply provide a common framework for agreements governing such
coordination and many of the entities already have agreements in place
to meet prior NRC requirements.
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\106\ According to the DOE's Energy Information Administration
(EIA), there were 3,284 electric utility companies in the United
States in 2005, and 3,029 of these electric utilities qualify as
small entities under the SBA definition. Among these 3,284 electric
utility companies are: (1) 883 cooperatives of which 852 are small
entity cooperatives; (2) 1,862 municipal utilities, of which 1842
are small entity municipal utilities; (3) 127 political
subdivisions, of which 114 are small entity political subdivisions;
and (4) 219 privately owned utilities, of which 104 could be
considered small entity private utilities. See Energy Information
Administration Database, Form EIA-861, Dept. of Energy (2005),
available at http://www.eia.doe.gov/cneaf/electricity/page/
eia861.html.
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206. Based on this understanding, the Commission certifies that
this Final Rule will not have a significant economic impact on a
substantial number of small entities. Accordingly, no regulatory
flexibility analysis is required.
VI. Document Availability
207. 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.
208. 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.
209. 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 (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.
Note: This Appendix will not appear in the Code of Federal
Regulations.
Comments on Notice of Proposed Rulemaking
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Abbreviation Entity
------------------------------------------------------------------------
Ameren............................. Ameren Service Co.
[[Page 63794]]
ATC\+\............................. American Transmission Company LLC.
CenterPoint Energy................. CenterPoint Energy Houston
Electric, LLC.
ConEdison.......................... Consolidated Edison of New York,
Inc.
Constellation...................... Constellation Energy Group, Inc.
Detroit Edison..................... Detroit Edison Company.
Dominion........................... Dominion Resources, Inc.
Duke............................... Duke Energy Corporation.
EEI................................ Edison Electric Institute.
Entergy............................ Entergy Services, Inc.
Exelon............................. Exelon Corporation.
ISO/RTO Council.................... ISO/RTO Council.
International Transmission......... International Transmission Co.,
Michigan Electric Transmission
Co., LLC and ITC Midwest.
Midwest ISO........................ Midwest Independent Transmission
System Operator, Inc.
National Grid\+\................... National Grid USA.
NERC............................... North American Electric Reliability
Corp.
NEI\+\............................. Nuclear Energy Institute.
Ontario IESO and Hydro One......... Independent Electricity System
Operator of Ontario and Hydro One
Networks Inc.
Ontario Power...................... Ontario Power Generation Inc.
SCE&G.............................. South Carolina Electric and Gas
Company.
Southern........................... Southern Company Services, Inc.
TVA................................ Tennessee Valley Authority.
Wisconsin Electric................. Wisconsin Electric Power Company.
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\+\ Comments filed out-of-time.
[FR Doc. E8-25139 Filed 10-24-08; 8:45 am]
BILLING CODE 6717-01-P