[Federal Register: May 28, 2009 (Volume 74, Number 101)]
[Rules and Regulations]
[Page 25413-25422]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28my09-12]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM08-16-000; Order No. 724]
Electric Reliability Organization Interpretations of Specific
Requirements of Frequency Response and Bias and Voltage and Reactive
Control Reliability Standards
Issued May 21, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
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SUMMARY: Pursuant to section 215 of the Federal Power Act, the Federal
Energy Regulatory Commission hereby approves the North American
Electric Reliability Corporation's (NERC) interpretation of one
Commission-
[[Page 25414]]
approved Reliability Standard, BAL-003-0, Frequency Response and Bias;
and remands NERC's proposed interpretation of VAR-001-1, Voltage and
Reactive Control, for reconsideration consistent with this Final Rule.
DATES: Effective Date: The Final Rule will become effective June 29,
2009.
FOR FURTHER INFORMATION CONTACT: Patrick Harwood (Technical
Information), Office of Electric Reliability, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, Telephone:
(202) 502-6125, Patrick.harwood@ferc.gov.
Richard M. Wartchow (Legal Information), Office of the General
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, Telephone: (202) 502-8744.
SUPPLEMENTARY INFORMATION: Before Commissioners: Jon Wellinghoff,
Chairman; Suedeen G. Kelly, Marc Spitzer, and Philip D. Moeller.
Final Rule
Issued May 21, 2009
1. Pursuant to section 215 of the Federal Power Act (FPA), the
Commission hereby approves the interpretation proposed by the North
American Electric Reliability Corporation (NERC) of Commission-approved
Reliability Standard BAL-003-0, Frequency Response and Bias, but
remands NERC's proposed interpretation of Reliability Standard VAR-001-
1, Voltage and Reactive Control, for additional clarification.\1\
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\1\ 16 U.S.C. 8240 (2006). The Commission is not adding any new
or modified text to its regulations.
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I. Background
A. EPAct 2005 and Mandatory Reliability Standards
2. Section 215 of the FPA requires a Commission-certified Electric
Reliability Organization (ERO) to develop mandatory and enforceable
Reliability Standards, which are subject to Commission review and
approval. Once approved, the Reliability Standards may be enforced by
the ERO, subject to Commission oversight, or by the Commission
independently.\2\
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\2\ See 16 U.S.C. 824o(e)(3).
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3. Pursuant to section 215 of the FPA, the Commission established a
process to select and certify an ERO \3\ and, subsequently, certified
NERC as the ERO.\4\ On April 4, 2006, as modified on August 28, 2006,
NERC submitted to the Commission a petition seeking approval of 107
proposed Reliability Standards. On March 16, 2007, the Commission
issued a Final Rule, Order No. 693, approving 83 of these 107
Reliability Standards and directing other action related to these
Reliability Standards.\5\ In addition, pursuant to section 215(d)(5) of
the FPA, the Commission directed NERC to develop modifications to 56 of
the 83 approved Reliability Standards.\6\
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\3\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
\4\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006),
appeal docketed sub nom. Alcoa, Inc. v. FERC, Case No. 06-1426 (DC
Cir. Dec. 29, 2006).
\5\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order
No. 693-A, 120 FERC ] 61,053 (2007).
\6\ 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides: ``The
Commission* * * may order the Electric Reliability Organization to
submit to the Commission a proposed reliability standard or a
modification to a reliability standard that addresses a specific
matter if the Commission considers such a new or modified
reliability standard appropriate to carry out this section.''
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4. NERC's Rules of Procedure provide that a person that is
``directly and materially affected'' by Bulk-Power System reliability
may request an interpretation of a Reliability Standard.\7\ In response
to a request, the ERO's standards process manager assembles a team with
relevant expertise to address the requested interpretation and forms a
ballot pool. NERC's Rules provide that, within 45 days, the team will
draft an interpretation of the Reliability Standard, with subsequent
balloting. If approved by ballot, the interpretation is appended to the
Reliability Standard and filed with the applicable regulatory authority
for approval.\8\
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\7\ NERC Rules of Procedure, Appendix 3A, Reliability Standards
Development Procedure, Version 6.1, at 26-27 (2007).
\8\ The NERC board of trustees approves Reliability Standard
interpretations once they are posted and presented for adoption. Id.
at 23-24, 26-27.
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B. NERC Filing
5. On July 28, 2008, NERC submitted a Petition for Approval of
Formal Interpretations to Reliability Standards (Petition), seeking
Commission approval of interpretations of BAL-003-0, Requirements R2
and R5; and VAR-001-1, Requirement R4.
6. For BAL-003-0, the Electric Reliability Council of Texas (ERCOT)
requested clarification that the provision in BAL-003-0, Requirement
R2, permitting use of a variable bias setting, did not conflict with
BAL-003-0, Requirement R5, which states that the frequency bias setting
for Balancing Authorities serving native load should be at least one
percent of yearly peak demand. For VAR-001-1, Dynegy, Inc. (Dynegy)
requested clarification whether there are implicit requirements that
the voltage schedule and associated tolerance band to be provided by
the transmission operator under Requirement R4 be technically based,
reasonable and practical for a generator to maintain.
7. Consistent with the NERC Rules of Procedure, a NERC-assembled
ballot body, consisting of industry stakeholders, developed the
interpretations using the NERC Reliability Standards Development
Procedure,\9\ and the NERC Board of Trustees approved the
interpretations.\10\ The interpretations do not modify the language
contained in the requirements under review. NERC requested the
Commission to approve the interpretations, effective immediately after
approval, consistent with the Commission's procedures.
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\9\ See NERC's Rules of Procedures, Appendix 3A.
\10\ NERC Petition at 3.
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C. NOPR
8. In Response, the Commission issued a Notice of Proposed
Rulemaking and proposed to approve the ERO's formal interpretation of
Requirements R2 and R5 of BAL-003-0 but remand the proposed
interpretation of VAR-001-1, and requested comment on its
proposals.\11\
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\11\ Electric Reliability Organization Interpretations of
Specific Requirements of Frequency Response and Bias and Voltage and
Reactive Control Reliability Standards, Notice of Proposed
Rulemaking, 73 FR 71971 (Nov. 26, 2008), FERC Stats. & Regs. ]
32,639 (2008) (NOPR).
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II. Discussion
A. Procedural Matters
9. NERC, Ameren Services Co. (Ameren), Edison Electric Institute
(EEI), FirstEnergy Service Co. (FirstEnergy) and The Independent
Electricity System Operator of Ontario (IESO) \12\ filed comments,
largely addressing the Commission's proposal to remand the proposed
interpretation of VAR-001-1.
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\12\ The IESO administers wholesale electricity markets and
operates the integrated power system in Ontario, Canada and is
subject to oversight by the Ontario Energy Board.
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B. BAL-003-0
1. NOPR Proposal
10. BAL-003-0, Requirement 2 states that a ``Balancing Authority
shall establish and maintain a Frequency Bias Setting that is as close
as practical to, or greater than, the Balancing Authority's Frequency
Response.'' BAL-003-0,
[[Page 25415]]
Requirement 5 states that ``Balancing Authorities that serve native
load [such as ERCOT] shall have a monthly average Frequency Bias
Setting that is at least one percent of the Balancing Authority's
estimated yearly peak demand per 0.1 Hz change.'' ERCOT requested
clarification whether there is a conflict between BAL-003-0,
Requirement R2, and BAL-003-0, Requirement R5. In response, NERC
proposed the following interpretation:
Frequency Response and Bias Requirement 2 requires a Balancing
Authority to analyze its response to frequency excursions as a first
step in determining its frequency bias setting. The Balancing
Authority may then choose a fixed bias (constant through the year)
per Requirement 2.1, or a variable bias (varies with load, specific
generators, etc.) per Requirement 2.2.
Frequency Response and Bias Requirement 5 sets a minimum
contribution for all Balancing Authorities toward stabilizing
interconnection frequency. The 1% bias setting establishes a minimum
level of automatic generation control action to help stabilize
frequency following a disturbance. By setting a floor on bias,
Requirement 5 also helps ensure a consistent measure of control
performance among all Balancing Authorities within a multi-Balancing
Authority interconnection. However, ERCOT is a single Balancing
Authority interconnection. The bias settings ERCOT uses do produce,
on average, the best level of automatic generation control action to
meet control performance metrics. The bias value in a single
Balancing Authority interconnection does not impact the measure of
control performance.
11. In the NOPR, the Commission proposed to find NERC's
interpretation of BAL-003-0, Requirements R2 and R5 to be reasonable in
providing consistency in frequency bias setting determinations, used in
area control error (ACE) calculations.\13\ The Commission viewed the
interpretation as consistent with an earlier, Order No. 693 finding
that the requirements of BAL-003-0 do not conflict with one
another.\14\ In Order No. 693, the Commission found that Requirement R2
provides the relationship between frequency response and frequency
bias, with frequency bias to be as close as practical to, or greater
than, the balancing authority's frequency response. Requirements R5 and
R5.1 require balancing authorities to establish frequency bias settings
based on one percent of peak demand or maximum generation level, based
on individual circumstances.\15\
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\13\ A frequency bias setting is a value expressed in MW per 0.1
Hz, set into a balancing authority's ACE algorithm, which allows the
balancing authority to contribute its frequency response to the
Interconnection. NERC's glossary, which provides definitions of the
relevant terms, defines ACE as ``The instantaneous difference
between a balancing authority's net actual and scheduled
interchange, taking into account the effects of frequency bias and
correction for meter error.''
\14\ NOPR, FERC Stats. & Regs. ] 32,639 at P 17; Order No. 693,
FERC Stats. & Regs. ] 31,242 at P 370 (addressing the suggestion
that Requirement R5 should be required in lieu of Requirement R2 for
certain balancing authorities and finding that Requirements R2 and
R5 do not conflict); BAL-003-0, Requirement R5.
\15\ See id. P 362, 370.
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12. The Commission proposed to approve the interpretation, since
the BAL-003-0, Requirement R5 minimum bias setting establishes a
consistent methodology for an ACE determination input, and ensures that
an adequate level of generation is set aside to provide frequency
response.\16\ The Commission declined to address the issue whether the
ERCOT methodology, reported to result in ``the best level of automatic
generation control action to meet control performance metrics,'' may be
a preferable methodology, noting that such an issue is better resolved
through a proceeding to review a proposal to permit ERCOT to depart
from the requirement. The Commission noted that while ERCOT is a
single-balancing-authority Interconnection and, therefore, does not
need to allocate automatic generation control responsibility among
multiple balancing authorities within the Interconnection, the other
justifications for Requirement R5, supporting a consistent ACE
calculation methodology and providing a minimum standard for
reliability, remain valid justifications for the minimum setting.\17\
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\16\ NOPR, FERC Stats. & Regs. ] 32,639 at P 16, 18.
\17\ Id. P 18 n.19.
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2. Comments
13. No participant filed comments opposing the BAL-003-0
interpretation.
3. Commission Determination
14. The ERO's interpretation clarifies that the BAL-003-0
Requirements R2 and R5 do not conflict with one another. In Order No.
693, the Commission made clear that a frequency bias setting based only
on the value set forth in Requirement R5 is insufficient and that a
balancing authority must also follow Requirement R2.\18\ ERCOT presents
the reverse question, whether a balancing authority that follows the
variable bias setting under Requirement R2 must also follow Requirement
R5. In response, NERC's interpretation affirms that a balancing
authority that uses the variable bias option provided under Requirement
R2 must also follow Requirement R5. In addition, no comments were filed
opposing the Commission's proposal to approve NERC's BAL-003-0
interpretation.
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\18\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 370
(emphasizing the need to follow both Requirements R2 and R5).
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15. Accordingly, we approve NERC's BAL-003-0 interpretation. The
Commission finds that the ERO's interpretation is just, reasonable, not
unduly discriminatory or preferential, and in the public interest.
C. VAR-001-1
1. NOPR Proposal
16. VAR-001-1, Requirement R4 directs each transmission operator to
provide each generator with a voltage and reactive power output
schedule, within a tolerance band. A second Reliability Standard, VAR-
002-1, Requirement R2, requires that each generator must meet the
schedule (typically via automatic control) or provide an explanation
why it cannot do so. The Requirements state:
VAR-001-1--Voltage and Reactive Control.
Requirement R4. Each Transmission Operator shall specify a
voltage or Reactive Power schedule \19\ at the interconnection
between the generator facility and the Transmission Owner's
facilities to be maintained by each generator. The Transmission
Operator shall provide the voltage or Reactive Power schedule to the
associated Generator Operator and direct the Generator Operator to
comply with the schedule in automatic voltage control mode (AVR
[automatic voltage regulation] in service and controlling voltage).
* * *
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\19\ The voltage schedule is a target voltage to be maintained
within a tolerance band during a specified period. [Footnote in
original.]
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VAR-002-1--Generator Operation for Maintaining Network Voltage
Schedules.
Requirement R2. Unless exempted by the Transmission Operator,
each Generator Operator shall maintain the generator voltage or
Reactive Power output (within applicable Facility Ratings) \20\ as
directed by the Transmission Operator.
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\20\ When a Generator is operating in manual control, reactive
power capability may change based on stability considerations and
this will lead to a change in the associate Facility Ratings.
[Footnote in original.]
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R2.1. When a generator's automatic voltage regulator is out of
service, the Generator Operator shall use an alternative method to
control the generator voltage and reactive output to meet the
voltage or Reactive Power schedule directed by the Transmission
Operator.
R2.2. When directed to modify voltage, the Generator Operator
shall comply or provide an explanation of why the schedule cannot be
met.
17. Dynegy requested clarification whether there are implicit
requirements that the voltage schedule and associated tolerance band to
be provided by the transmission operator under VAR-001-1, Requirement
R4 be technically based,
[[Page 25416]]
reasonable and practical for a generator to maintain. In response, NERC
proposed the following interpretation:
NERC Reliability Standard VAR-001-1 is only comprised of stated
requirements and associated compliance elements. The requirements
have been developed in a fair and open process, balloted and
accepted by FERC for compliance review. Any ``implicit'' requirement
would be based on subjective interpretation and viewpoint and
therefore cannot be objectively measured and enforced. Any attempt
at ``interpreting an implicit requirement'' would effectively be
adding a new requirement to the standard.
This can only be done through the [Standards Authorization
Request] process.
Since there are no requirements in VAR-001-1 to issue a
``technically based, reasonable and practical to maintain voltage or
reactive power schedule and associated tolerance band,'' there are
no measures or associated compliance elements in the standard.
The standard only requires that ``Each Transmission Operator
shall specify a voltage or Reactive Power schedule. * * *'' and that
``The Transmission Operator shall provide the voltage or Reactive
Power schedule to the associated Generator Operator and direct the
Generator Operator to comply with the schedule. * * *'' Also,
Measure 1 and the associated compliance elements follow accordingly
by stating that ``The Transmission Operator shall have evidence it
provided a voltage or Reactive Power schedule * * *''
* * * * *
Requirement 2 and Requirement 2.2 of VAR-002-1 relate somewhat
to questions 2 and 3. R2 states that ``Unless exempted by
the Transmission Operator, each Generator Operator shall maintain
the generator voltage or Reactive Power output (within applicable
Facility Ratings) as directed by the Transmission Operator.'' R2.2
goes on to state ``When directed to modify voltage, the Generator
Operator shall comply or provide an explanation of why the schedule
cannot be met.'' [footnotes omitted.]
18. NERC provided additional information in its transmittal letter
accompanying the interpretation, noting that VAR-001-1, Requirement R2
states, ``Each Transmission Operator shall acquire sufficient reactive
resources within its area to protect the voltage levels under normal
and Contingency conditions.'' NERC explained that, in order to fulfill
Requirement R2, the transmission operator must perform a valid analysis
of the system, using models that accurately represent equipment
capabilities. Therefore, while NERC supported its interpretation of
Requirement R4, including the finding that a requirement cannot
establish implicit obligations, it stated that the issue that Dynegy
raised for clarification is better resolved through an examination of
Requirement R2.\21\
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\21\ NERC Petition at 14.
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19. In response, the Commission proposed to remand NERC's
interpretation of VAR-001-1, Requirement R4, because the interpretation
suggested that there is no requirement that a voltage schedule have a
sound technical basis. The Commission noted that Order No. 693 stated
that all Reliability Standards must be designed to achieve a specified
reliability goal and must contain a technically sound means to achieve
this goal.\22\ The Commission thus disagreed with NERC's proposed
interpretation because it suggested that a transmission operator could
deliver a voltage schedule that lacked any technical basis. The
Commission, citing the NERC Rules of Procedure, section 302.5,
concluded that a voltage schedule should reflect technical analysis,
i.e., sound engineering, as well as operating judgment and
experience.\23\
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\22\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 5 (``[A]
Reliability Standard must provide for the Reliable Operation of
Bulk-Power System facilities and may impose a requirement on any
user, owner or operator of such facilities. It must be designed to
achieve a specified reliability goal and must contain a technically
sound means to achieve this goal. The Reliability Standard should be
clear and unambiguous regarding what is required and who is required
to comply. The possible consequences for violating a Reliability
Standard should be clear and understandable to those who must
comply. There should be clear criteria for whether an entity is in
compliance with a Reliability Standard. While a Reliability Standard
does not necessarily need to reflect the optimal method for
achieving its reliability goal, a Reliability Standard should
achieve its reliability goal effectively and efficiently.''); see
also Order No. 672, FERC Stats. & Regs. ] 31,204 at P 324.
\23\ NOPR, FERC Stats. & Regs. ] 32,639 at P 30 (citing Order
No. 693 at P 5).
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20. The NOPR also highlighted the Commission's review in Order No.
693 of each Reliability Standard and approval of those containing
Requirements that are sufficiently clear as to be enforceable and that
do not create due process concerns.\24\ The Commission noted that its
approval in Order No. 693 of VAR-001-1 meant that VAR-001-1 is
sufficiently clear to inform transmission operators what is required of
them.\25\ The Commission acknowledged that it has elsewhere declined to
specify in detail how a registered entity should implement a
Reliability Standard, but countered that such actions do not mean that
an entity seeking to comply with a Reliability Standard may act in a
manner that is not technically sound, i.e., in a manner that is not
grounded in sound engineering, and thus, not reasonable and
practical.\26\ The Commission objected to NERC's proposed
interpretation as implying that the voltage schedules provided under
VAR-001-1, Requirement R4 need not have any technical basis, and thus
need not be reasonable and practical.
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\24\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 274.
In reviewing specific Reliability Standards, the Commission
identified for certain Reliability Standards implicit obligations
that should be incorporated into those Reliability Standards and
directed NERC to revise the standards to explicitly incorporate the
obligations; see Mandatory Reliability Standards for Critical
Infrastructure Protection, Order No. 706, 122 FERC ] 61,040, at P 75
(2008) (directing the ERO to modify the CIP Reliability Standards to
incorporate an obligation to implement plans, policies and
procedures); Order No. 693 at P 1787 (``In the NOPR, the Commission
identified an implicit assumption in the TPL Reliability Standards
that all generators are required to ride through the same types of
voltage disturbances and remain in service after the fault is
cleared. This implicit assumption should be made explicit.'');
Facilities Design, Connections and Maintenance Reliability
Standards, Order No. 705, 121 FERC ] 61,296, at P 54 (2007)
(``although the TPL Reliability Standards implicitly require the
loss of a shunt device to be addressed, they do not do so
explicitly'').
\25\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 275.
\26\ As noted above, Reliability Standards should reflect sound
engineering principles. See id. P 5; Order No. 672, FERC Stats. &
Regs. ] 31,204 at P 324; accord NERC Rules of Procedure, section
302.5.
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21. The Commission proposed in the NOPR to remand NERC's proposed
interpretation of VAR-001-1, Requirement R4 for reconsideration
consistent with this rulemaking. In addition, the Commission rejected
an additional proposal from Dynegy, asserting that NERC needs to
develop evaluation measures to review the technical basis for voltage
schedules, as beyond the scope of the interpretation process. The
Commission proposed that such an effort would be better discussed
pursuant to a Standards Authorization Request under the NERC
Reliability Standards Development Procedures.
2. Comments
a. VAR-001-1, Requirement R4 Technical Basis
22. No participant contests the Commission's determination that all
Reliability Standards must be designed to achieve a specified
reliability goal and must contain a technically sound means to achieve
this goal.\27\ The parties, as discussed below, also largely agree or
acknowledge that voltage schedules must have a technical basis.\28\
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\27\ See, e.g., IESO comments at 5 (``The IESO agrees with the
Commission that standards should be technically sound'').
\28\ See NERC comments at 5 (each requirement contributes to
meeting a Reliability Standard objective; other Reliability
Standards require the technical basis to be established for voltage
schedules); Ameren comments at 5 (users, owners and operators must
act in a technically sound manner in compliance with VAR-001-1,
Requirement R4); EEI comments at 2 (however, EEI states that a
transmission operator cannot be audited on the ``subjective
interpretation'' that a voltage schedule be technically sound,
because there are no associated compliance measures); FirstEnergy
comments at 6 (noting that VAR-001-1 avoids overly prescriptive
language defining the correct technical basis). IESO argues that
other Reliability Standards require sound engineering principals and
technical expertise, in order to meet reliability objectives and
obligations, and that these Reliability Standards ``supplement'' the
VAR-001-1 Reliability Standard. IESO comments at 5-6.
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[[Page 25417]]
23. FirstEnergy supports the Commission's proposal to remand NERC's
interpretation for further consideration because NERC's proposed
interpretation suggests that voltage schedules could lack a technical
basis. However, FirstEnergy interprets the Commission's proposal in the
NOPR as finding that there are ``implicit'' obligations in VAR-001-1,
Requirement R4 that instead should be explicitly incorporated in the
Reliability Standards. Therefore, FirstEnergy supports a remand, but
states that the remand should incorporate a directive to consider
evaluation measures and review the technical basis for voltage
schedules pursuant to a Standards Authorization Request under the NERC
Reliability Standards development process.\29\
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\29\ FirstEnergy comments at 5. See also Ameren comments at 9
(comparing current proposal to directives in Order No. 693, FERC
Stats. & Regs. ] 31,242 at P 1880, to address clarifying changes
through the Reliability Standards development process); IESO
comments at 5 (perceived deficiencies in the Reliability Standard
should be addressed in the Reliability Standards development
process).
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24. According to FirstEnergy, Requirement R4 is correctly written
to avoid overly prescriptive language as to what constitutes the
correct technical basis, since the determination of voltage schedules
is unique to individual transmission systems.\30\
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\30\ FirstEnergy comments at 6.
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25. Despite acknowledging that the voltage schedules must have a
technical basis, some participants object to the Commission's proposal
to remand the interpretation in order that NERC may reflect that fact
in the interpretation, solely because the requirement is not explicit,
that is, not stated directly in the Reliability Standard and supported
by compliance measures.\31\ EEI supports remand for the limited purpose
to incorporate supporting material from NERC's pleadings and a
reference to the Order No. 693 discussion that prompted the
Commission's concern.\32\ However, EEI states that this material would
not reflect an auditable requirement that voltage schedules be
technically sound, due to the lack of measures and compliance
elements.\33\ According to EEI, the issue raised in Dynegy's
interpretation request was resolved in Order No. 693 when the
Commission addressed requests that the Commission direct NERC to modify
VAR-001-1 to include detailed and definitive requirements on
established limits and sufficient reactive resources and identify
acceptable voltage margins.\34\ Therefore, EEI views Dynegy's request
as an attempt to circumvent the Reliability Standard development
process.
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\31\ See NERC comments at 5, 9; Ameren comments at 6-9; IESO
comments at 1-2, 3.
\32\ EEI comments at 3-4.
\33\ Id. at 2.
\34\ Id. at 3 (citing Order No. 693, FERC Stats. & Regs. ]
31,242 at P 1868).
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26. Ameren characterizes the Commission's proposed remand as
effectively creating a new requirement outside the approved procedures,
and suggests that the appropriate procedure is to initiate a Standards
Authorization Request. Ameren cites the Commission's rejecting Dynegy's
proposed evaluation measures as supporting its position.\35\ Ameren
characterizes the Commission's proposal as resulting in an
interpretation that would implement a requirement that is not
understood to be part of the Reliability Standard, and cites the NERC
balloting as evidence that the industry does not agree with the
position that there is an implicit requirement.\36\
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\35\ Ameren comments at 10 (citing NOPR, FERC Stats. & Regs. ]
32,639 at P 32).
\36\ Id. at 7, 10.
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b. Technical Basis in Other Reliability Standard Requirements
27. Several participants claim that, while the scope of VAR-001-1,
Requirement R4 is limited, other requirements create obligations which
lead to technically sound voltage schedules or compliance with VAR-001-
1. According to NERC, each of the requirements in VAR-001-1 contributes
to meeting the stated objective of the Reliability Standard, and it is
the combination of requirements that provides a technically sound
method to achieve the purpose of VAR-001-1. NERC states that, although
Requirement R4 does not explicitly require a voltage schedule that is
technically based, reasonable and practical, ``other requirements in
VAR-001-1 do require the technical basis to be established.''\37\ NERC
concludes that ``as a whole'' VAR-001-1 is technically sound.
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\37\ NERC comments at 5-6.
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28. NERC cites Requirements R2 and R8 through R12 as requiring a
transmission operator to have a defensible technical basis to achieve
the purpose of VAR-001-1.\38\ NERC states that these requirements
direct a transmission operator to understand system dynamics to
maintain voltage sufficiency and stability under normal and contingency
conditions. According to NERC, to maintain the system within limits in
real-time and to avoid voltage collapse in the operating time horizon,
a transmission operator must study the system on a first contingency
basis and must ``position the voltage and reactive profile of the
system appropriately, including the voltage [schedules] provided to
generator operators.'' \39\ NERC continues, indicating that a
transmission operator possesses valuable insight into reactive ``weak
spots'' where additional reactive support would be beneficial to help
it achieve the performance expectations outlined in VAR-001-1.\40\
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\38\ Id. at 6-7. NERC lists Requirement R2 (discussing reactive
sufficiency), Requirement R8 (requiring a transmission operator to
operate reactive resources to maintain system voltage limits),
Requirement R9 (requiring transmission operators to address reactive
support under first contingency conditions), Requirement R10
(addressing system operating limit (SOL) and interconnection
reliability operating limit (IROL) violations), Requirement R11
(providing for transformer tap settings) and Requirement R12
(directing a transmission operator to take preemptive action to
prevent voltage collapse).
\39\ Id. at 7.
\40\ Id. at 7-8.
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29. NERC also summarizes various planning actions that a
transmission operator must take with respect to voltage support. NERC
states that, to meet the planning obligations embodied in VAR-001-1,
Requirements R2, R9.1 and R11, a transmission operator must rely on
long-range and seasonal studies provided by the transmission planner.
According to NERC, a combination of planning and operations analysis
and feedback provides the technical foundation for voltage schedules to
be maintained at buses across the transmission system, including
generator buses. NERC concludes that ``there must be a technical basis
for'' the voltage schedule provided for in Requirement R4.\41\
---------------------------------------------------------------------------
\41\ Id. at 9-10.
---------------------------------------------------------------------------
30. To remedy the perceived disconnect, NERC suggests that the
interpretation could be improved by stating that it is VAR-001-1,
Requirement R4 that lacks an explicit requirement for a technically-
based, reasonable, and practical voltage schedule, and ``not the entire
VAR-001-1 standard.''\42\
---------------------------------------------------------------------------
\42\ Id. at 9.
---------------------------------------------------------------------------
31. EEI also indicates that, even though not part of the
interpretation, the additional information in NERC's filing
demonstrates that the requirements in VAR-001 are based on sound
engineering principles, but because it is
[[Page 25418]]
not in NERC's official interpretation, a remand may be warranted.\43\
---------------------------------------------------------------------------
\43\ EEI comments at 2.
---------------------------------------------------------------------------
32. Ameren states that review of VAR-002-1a can answer Dynegy's
concerns regarding the ``reasonable and practical'' generator voltage
schedule. According to Ameren, the interpretation would not permit
unsound practices or practices that threaten system reliability, but
instead points to VAR-002-1, Requirement R2 as establishing procedures
that accommodate ``actual generator capabilities'' and ``the
transmission operator's need to maintain voltage schedules.''\44\
Ameren states that the interpretation addresses concerns whether a
voltage schedule must accommodate ``reasonable'' and ``practical''
generator capabilities by reference to VAR-002-1a, the Reliability
Standard that addresses the generators' obligations.\45\
---------------------------------------------------------------------------
\44\ Ameren comments at 6 (citing NERC Petition, Exhibit B-1 at
2; NOPR, FERC Stats. & Regs. ] 32,639 at P 31 (proposing remand and
rejecting Dynegy request for the development of compliance measures
as beyond the scope of an interpretation proceeding)).
\45\ Id. at 6 (citing NERC Petition, Transmittal Letter at 12-13
and VAR-001-1a as providing that ``each Generator Operator shall
maintain the generator voltage or Reactive Power output (within
applicable Facility Ratings[]) as directed by the Transmission
Operator'' and Requirement R2.2 as providing that ``the Generator
Operator shall comply or provide an explanation of why the schedule
cannot be met'').
---------------------------------------------------------------------------
33. Ameren states that Reliability Standards VAR-001 and VAR-002,
taken together, support a technically sound purpose of providing for
safe and reliable Reactive Power and voltage control, as required by
Order No. 693. Ameren asserts that these Reliability Standards as
written and interpreted are sufficient to protect electric
reliability.\46\
---------------------------------------------------------------------------
\46\ Id. at 7 (citing Order No. 693, FERC Stats. & Regs. ]31,242
at P 5, as explaining that ``a Reliability Standard does not
necessarily need to reflect the optimal method for achieving its
reliability goal, [but] a Reliability Standard should achieve its
reliability goal effectively and efficiently,'' and should be
``sufficient to adequately protect Bulk-Power System reliability'').
---------------------------------------------------------------------------
34. According to FirstEnergy, both transmission operators and
generator operators are responsible to confirm the technical basis for
a voltage schedule. FirstEnergy continues, explaining that the stated
purpose of VAR-001-1 provides the basis for Requirement R4, which
requires a transmission operator to provide a technically sound voltage
schedule that provides sufficient reactive support and respects bulk
electric system facility ratings. Failure to do so, FirstEnergy
submits, could adversely affect generator equipment and bulk electric
system reliability. FirstEnergy states that VAR-002-1 requires
generators to provide reactive support to meet this obligation;
FirstEnergy suggests that a generator that cannot fulfill that purpose
based on the voltage schedule received must coordinate an acceptable
voltage schedule with the transmission operator in order to meet the
explicit requirements of VAR-002-1.
35. FirstEnergy agrees with the Commission's proposal rejecting
Dynegy's request for more detailed specification of the technical
requirements of the VAR-001-1 Reliability Standard, as beyond the scope
of an interpretation proceeding. FirstEnergy claims that Dynegy's
suggestions are already being considered in Project 2008-01, pursuant
to NERC's 2009-11.\47\ Finally, FirstEnergy suggests that the addition
of reliability coordinators as applicable entities would aid in
mediating disputes between transmission operators and generator
operators.
---------------------------------------------------------------------------
\47\ FirstEnergy comments at 8.
---------------------------------------------------------------------------
36. According to IESO, numerous Reliability Standards supplement
VAR-001-1 and ensure that transmission operators develop plans and
procedures that provide for reliability.\48\ IESO states that
transmission operators would not be able to provide for system
reliability, prevent system operating limit or interconnection
reliability operating limit violations, or prevent cascading outages if
they do not employ sound engineering principles and technical expertise
during the development of plans and procedures.
---------------------------------------------------------------------------
\48\ IESO comments at 5.
---------------------------------------------------------------------------
37. IESO lists several Reliability Standards as supplementing VAR-
001-1, including TOP-002-2, Requirement R2 (requiring operations
plans); TOP-004-2, Requirement R6 (requiring transmission operators to
develop policies for transmission reliability, including controlling
voltage levels); TOP-008-1, Requirement R2 (requiring transmission
operator to limit potential for IROL or SOL violations). In addition,
IESO objects to the Commission's view that NERC's interpretation fails
to recognize that a voltage schedule issued under VAR-001-1 should
reflect technical analysis, including sound engineering and operating
judgment and experience, by noting that planners are required to
include system operating personnel in the planning process under TOP-
002-2, Requirement R2.\49\
---------------------------------------------------------------------------
\49\ Id. at 6 (citing NOPR, FERC Stats. & Regs. ] 32,639 at P
30).
---------------------------------------------------------------------------
c. Enforceability
38. EEI agrees with NERC that VAR-001-1 lacks an explicit
requirement to issue a technically based, reasonable and practical
voltage and reactive schedule and also lacks measures or associate
compliance elements in the standard. Therefore, EEI concludes that a
transmission operator cannot be audited on what EEI terms the
``subjective interpretation'' that a voltage schedule must have a sound
technical basis.\50\
---------------------------------------------------------------------------
\50\ EEI comments at 2.
---------------------------------------------------------------------------
39. According to Ameren, NERC's proposal correctly recognizes that
a Reliability Standard cannot establish obligations implicitly, but
instead must have stated obligations that can be objectively measured.
Ameren states that nothing in VAR-001-1 specifies a technical basis for
the transmission operator's voltage schedule and tolerance band or
requires a transmission operator to issue its supporting methodology,
as Dynegy proposed.\51\ IESO agrees with NERC that an implied
requirement is not a stated requirement that can be objectively
measured.
---------------------------------------------------------------------------
\51\ Ameren comments at 5-6 (citing NERC Petition, Exhibit B-1
and Dynegy Oct. 11, 2007 request for interpretation as stating:
``Requirement 4 does not impose any explicit obligations on the
Transmission Operator other than to provide the Generator Operator
with a voltage or reactive power output schedule and an associated
tolerance band.'').
---------------------------------------------------------------------------
40. Ameren states that, since there are no implicit requirements,
there are no measurements of compliance. According to Ameren, the
Reliability Standard and interpretations drafting teams explained that
any implicit requirement is subjective, and could not be objectively
measured and enforced.\52\
---------------------------------------------------------------------------
\52\ Ameren comments at 8 (citing NERC Petition at 11; NERC
proposed VAR-001-1 interpretation at 1).
---------------------------------------------------------------------------
41. Ameren cites the Order No. 672 factors for approving a
Reliability Standard as mandatory and enforceable under the FPA.\53\
According to Ameren, an implied requirement, not contained
[[Page 25419]]
in the language of the Reliability Standard itself, is ambiguous both
as to what is required and what measurements will be used to determine
compliance. Ameren concludes that such a requirement cannot be enforced
fairly, and should not be made part of a mandatory Reliability
Standard.
---------------------------------------------------------------------------
\53\ Id. at 7 (citing Order No. 672, FERC Stats. & Regs. ]
31,204 at P 324, 327:
The proposed Reliability Standard must be designed to achieve a
specified reliability goal and must contain a technically sound
means to achieve this goal. Although any person may propose a topic
for a Reliability Standard to the ERO, in the ERO's process, the
specific proposed Reliability Standard should be developed initially
by persons within the electric power industry and community with a
high level of technical expertise and be based on sound technical
and engineering criteria. It should be based on actual data and
lessons learned from past operating incidents, where appropriate.
The process for ERO approval of a proposed Reliability Standard
should be fair and open to all interested persons. * * *
There should be a clear criterion or measure of whether an
entity is in compliance with a proposed Reliability Standard. It
should contain or be accompanied by an objective measure of
compliance so that it can be enforced and so that enforcement can be
applied in a consistent and non-preferential manner.
---------------------------------------------------------------------------
42. Ameren states that disagreements may arise between transmission
operators, NERC, generator operators and auditors over reasonableness
of a technical basis or methodology or the practicality of a
schedule.\54\ Ameren criticizes the proposed remand because it contains
no instructions for how transmission operators could implement an
implicit requirement.\55\ Ameren concludes that an implicit requirement
is unacceptable and simply unworkable in the context of mandatory and
enforceable electric Reliability Standards.
---------------------------------------------------------------------------
\54\ Ameren comments at 8.
\55\ Id. at 9.
---------------------------------------------------------------------------
d. Miscellaneous
43. Some participants are concerned that this interpretation could
circumvent NERC's Standard development process or otherwise lacks due
process.\56\ Ameren agrees with the Commission's acknowledgement in the
NOPR upholding NERC's rejection of Dynegy's proposed evaluation
measures. Ameren states that NERC's interpretation should be approved
based on the results of the NERC ballot process. EEI states that the
Commission provided an appropriate response in Order No. 693 by
directing NERC to develop specific requirements for the issues
addressed in the Final Rule through the NERC Reliability Standards
development process, and questions whether Dynegy's request concerning
voltage schedules is an attempt to circumvent the Reliability Standards
development process.\57\ These participants claim that interpretations
that put new measures in place or would implement new requirements are
beyond the scope of the interpretation process.
---------------------------------------------------------------------------
\56\ Ameren comments at 10 (suggesting that remand may
circumvent the Reliability Standards development procedure by adding
new requirements to the standard violating the principles of due
process and deference); FirstEnergy comments at 5.
\57\ EEI comments at 3.
---------------------------------------------------------------------------
44. Finally, participants reason that the Commission must rely on
the judgment of the ERO in areas involving technical expertise relating
to the content of the Reliability Standard and that, if Dynegy wishes
to seek new material or measures to be added to the Reliability
Standards, it must be handled through a Standards Authorization Request
under the NERC Reliability Standards development process.\58\ Ameren
states that the technical content of the interpretation is entitled to
deference. Ameren claims that a remand of VAR-00l-l, Requirement R4
would add a new requirement to the Reliability Standard where the
technical experts have acknowledged that one does not exist, without
going through the required standards authorization process.\59\ Ameren
states that such a revision would violate due process and demonstrate a
lack of deference to the Reliability Standards development process.
---------------------------------------------------------------------------
\58\ Ameren comments at 2; EEI comments at 2; FirstEnergy
comments at 5; IESO comments at 4.
\59\ Ameren comments at 10 (citing NERC Petition at Exhibit B-3
(results of the ballot body vote) and stating ``Indeed, several
members of the ballot pool for the VAR-001-1 interpretation
indicated their belief that Dynegy's request for an interpretation
should have been filed as a Standards Authorization Request because
the proposed change is so obviously beyond the scope of the current
content of the Reliability Standard'').
---------------------------------------------------------------------------
45. On a similar note, FirstEnergy and EEI both suggest that this
interpretation request would add requirements to the VAR-001-1
Reliability Standard that are not otherwise required, and the proposed
clarification would be more appropriately considered in the ongoing
standards development proceedings. FirstEnergy states that changes to
Reliability Standards to add more detail, such as the specific
technical details sought by Dynegy, should be addressed in the ongoing
Reliability Standards development process.
46. EEI points out that Dynegy's request raises several process
issues. EEI claims that NERC's narrow interpretation, that there are no
implicit requirements with regard to the Reliability Standard's
technical validity, could suggest that the Reliability Standard itself
is useless. On the other hand, EEI claims that if NERC indicated that
there was an implicit requirement, such a requirement must be made
explicit in this and every other Reliability Standard, potentially
necessitating an overhaul of the entire collection of Reliability
Standards.\60\ EEI also warns that the Commission and NERC should be
careful not to allow a single entity to change a Reliability Standard
via interpretations and that any such ``backdoor'' device should be
avoided.
---------------------------------------------------------------------------
\60\ EEI comments at 4-5.
---------------------------------------------------------------------------
3. Commission Determination
47. The Commission remands to the ERO the proposed interpretation
of VAR-001-1, Requirement R4 and directs the ERO to revise the
interpretation consistent with the Commission's discussion below.
a. Voltage Schedules Provided Under VAR-001-1, Requirement R4 Must Have
a Sound Technical Basis
48. Order No. 693 held that all Reliability Standards must be
designed to achieve a specified reliability goal and must contain a
technically sound means to achieve the goal.\61\ No participant
disagrees with this assessment.\62\ Furthermore, no participant
challenges the Commission's objection that the Reliability Standards
should not permit delivery of a voltage schedule that lacks any
technical basis.\63\ Instead, the participants suggest various ways in
which other Reliability Standards requirements provide that technical
basis or at least do not permit transmission operators to engage in
unsound practices with respect to voltage schedules.\64\
---------------------------------------------------------------------------
\61\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 5; see
NOPR, FERC Stats. & Regs. ] 32,639 at P 30.
\62\ See NERC comments at 5; Ameren comments at 5; EEI comments
at 2; FirstEnergy comments at 3-4; IESO comments at 2-3.
\63\ NOPR, FERC Stats. & Regs. ] 32,639 at P 30.
\64\ NERC comments at 5-6; EEI comments at 2 (citing NERC
petition at 12-14); FirstEnergy comments at 5-7; IESO comments at 5.
See also Ameren comments at 6 (suggesting that procedures in VAR-
002-1 would accommodate actual generator capabilities and not permit
unsound practices under VAR-001-1, Requirement R4).
---------------------------------------------------------------------------
49. VAR-001-1, Requirement R4 requires each transmission operator
to specify a voltage schedule to be maintained by each generator and
explains that the voltage schedule is a target voltage to be maintained
within a tolerance band during a specified period. Requirement R4 is
part of the means by which a transmission operator achieves the goal of
VAR-001-1, ``to ensure that voltage levels, reactive flows, and
reactive resources are monitored, controlled, and maintained within
limits in real time to protect equipment and the reliable operation of
the Interconnection.'' Because Requirement R4 requires transmission
owners to specify target voltages at each generator's interconnection
with the system, while taking into account specific periods of use and
facility tolerance bands, the Requirement is not merely a ministerial
requirement, but, rather, presupposes the exercise of engineering
judgment. These determinations are technical in nature, and, since they
represent one of the means by which the VAR-001-1 Reliability Standard
achieves its goal, they must be technically sound, that is, based on
sound engineering. Actions
[[Page 25420]]
that do not reflect sound engineering would not be technically
sound.\65\ Therefore, the Commission adopts its NOPR proposal, and
finds that a voltage schedule should reflect sound engineering, as well
as operating judgment and experience.\66\ The Commission remands NERC's
proposed VAR-001-1, Requirement R4 interpretation, in order that NERC
may reconsider its interpretation consistent with this order.
---------------------------------------------------------------------------
\65\ NOPR, FERC Stats. & Regs. ] 32,639 at P 31.
\66\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 5 (``a
Reliability Standard must provide for the Reliable Operation of
Bulk-Power System facilities and may impose a requirement on any
user, owner or operator of such facilities. It must be designed to
achieve a specified reliability goal and must contain a technically
sound means to achieve this goal. The Reliability Standard should be
clear and unambiguous regarding what is required and who is required
to comply. The possible consequences for violating a Reliability
Standard should be clear and understandable to those who must
comply. There should be clear criteria for whether an entity is in
compliance with a Reliability Standard. While a Reliability Standard
does not necessarily need to reflect the optimal method for
achieving its reliability goal, a Reliability Standard should
achieve its reliability goal effectively and efficiently''); see
also Order No. 672, FERC Stats. & Regs. ] 31,204 at P 324; accord
NERC Rules of Procedure, section 302.5.
---------------------------------------------------------------------------
b. Whether Support for a Sound Technical Basis Is Found in Other
Reliability Standards and Requirements
50. Several participants, including NERC and Ameren, claim that, in
the broader context of the Reliability Standards, there is already an
obligation to use technically sound means to comply with VAR-001-1,
Requirement R4.\67\ The Commission recognizes and appreciates, as part
of the NERC filing, the additional information included to allay
concerns that generator operators may receive a voltage schedule that
is either unsafe or not technically feasible. However, if analysis of
other Reliability Standard requirements provides the necessary
clarification, such analysis should be made part of the formal
interpretation. Thus, in this case, if the actions performed pursuant
to other Reliability Standard requirements cited in the participants'
comments describe actions that form the basis for development of
voltage schedules, then the interpretation should reflect that fact.
---------------------------------------------------------------------------
\67\ NERC comments at 8-9 (discussing VAR-001-1, Requirements
R2, R9.1 and R11); Ameren comments at 6 (discussing VAR-002-1a,
Requirement R2). See also EEI comments at 2 (supporting NERC
conclusion); IESO comments at 6 (discussing transmission operations
Reliability Standards, TOP-002-2, et al.). However, participants
also suggest that a failure to meet that obligation would not
constitute an enforceable violation of VAR-001-1, Requirement R4.
See EEI comments at 2.
---------------------------------------------------------------------------
51. Some petitioners suggest that other Reliability Standard
requirements may mitigate any negative impact of a voltage schedule
that lacks a sound technical basis, and thus imply that Requirement R4
need not reflect a sound technical basis, or they suggest that the
clarification sought by the Commission is not necessary. The Commission
does not agree. As discussed above, voltage schedules developed
pursuant to VAR-001-1, Requirement R4 must have a sound technical
basis, and failure to properly perform the task would constitute an
independent violation of the Reliability Standard.
c. The Commission Is Not Imposing Implicit Requirements
52. The Commission disagrees with participants claiming that the
Commission's understanding of Requirement R4 would impermissibly create
a new ``implicit'' requirement, or that such requirements would
introduce an unworkable subjective analysis into Reliability Standard
enforcement. As the NOPR stated, the Commission reviewed each
Reliability Standard and, in Order No. 693, approved those containing
Requirements that are sufficiently clear as to be enforceable and that
do not create due process concerns.\68\ The Commission included VAR-
001-1 as among the Reliability Standards that are sufficiently clear to
inform transmission operators what is required of them.\69\ Order No.
693 declined to order more specificity on the technical basis in the
current version of VAR-001-1, but instead found that the development of
more detailed requirements to address such concerns are best addressed
by the ERO through the Reliability Standards development process.\70\
However, that finding does not suggest that existing requirements may
be performed without any technical basis.
---------------------------------------------------------------------------
\68\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 274.
\69\ Id. P 275.
\70\ Id. P 1869.
---------------------------------------------------------------------------
53. FirstEnergy interprets the Commission's proposal as finding
that there are ``implicit'' obligations in Requirement R4 that should
be explicitly incorporated into the Reliability Standard. To the
contrary, as noted in the NOPR, the Commission has elsewhere declined
to specify in detail how a registered entity should implement a
Reliability Standard,\71\ and so we do not direct NERC to modify VAR-
001-1, Requirement R4, at this time.\72\ The Commission affirms its
approval in Order No. 693 of VAR-001-1, Requirement R4, and its finding
that Requirement R4 is, as written, sufficiently clear to inform
entities of what is required of them.
---------------------------------------------------------------------------
\71\ NOPR, FERC Stats. & Regs. ] 32,639 at P 31; see also Order
No. 672, FERC Stats. & Regs. ] 31,204 at P 260 (stating that
implementation procedures should be included when inextricably
linked to the Reliability Standard or when leaving out
implementation features could: (1) Sacrifice necessary uniformity in
implementation of the Reliability Standard; (2) create uncertainty
for the entity that has to follow the Reliability Standard; (3) make
enforcement difficult; and (4) increase the complexity of the
Commission's oversight and review process).
\72\ Requirement R4 does not prescribe any one particular method
of achieving compliance, but instead permits transmission operators
to implement Reliability Standards through a variety of technically
sound means.
---------------------------------------------------------------------------
d. Requirement R4 Is Mandatory and Enforceable
54. Several participants claim that any requirement under VAR-001-1
to issue a technically based voltage schedule cannot be audited or
enforced because VAR-001-1 lacks measures or compliance elements
associated with such a requirement.\73\ We do not agree. In Order No.
693, the Commission approved Reliability Standards without associated
measures, stating that it disagreed with comments that a Reliability
Standard cannot reasonably be enforced, or is otherwise not just and
reasonable, solely because it does not include enforcement measures and
compliance elements. The Commission reasoned that while such compliance
elements and enforcement measures provided useful guidance,
``compliance will in all cases be measured by determining whether a
party met or failed to meet the Requirement given the specific facts
and circumstances of its use, ownership or operation of the Bulk-Power
System.'' \74\
---------------------------------------------------------------------------
\73\ Ameren comments at 8; EEI comments at 2; IESO comments at
3.
\74\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 253.
---------------------------------------------------------------------------
55. Ameren complains that a remand of the interpretation lacks
specific instructions for transmission operators to implement an
implicit Requirement. In addition, Ameren speculates that disagreements
as to the sufficiency of a particular voltage schedule may arise
between parties involved in implementation and enforcement. Again, the
Commission affirms its finding in Order No. 693 that Requirement R4 is
sufficiently clear; to be enforceable, Reliability Standards need not
``spell out in minute detail all factual scenarios that might violate a
Requirement and the precise consequences of that violation.'' \75\
---------------------------------------------------------------------------
\75\ Id. P 274-75 (``the Commission finds that none of the
Reliability Standards that we approve today contains an ambiguity
that renders it unenforceable or otherwise unjust and
unreasonable'').
---------------------------------------------------------------------------
[[Page 25421]]
e. Procedural Issues
56. Several participants such as Ameren, FirstEnergy, and EEI are
concerned that this interpretation could circumvent the Reliability
Standards development process. In this remand, the Commission is not
approving new Reliability Standards or Requirements. Such action would
be better handled via the Reliability Standards development process. In
remanding this interpretation, we are simply instructing NERC to
provide a revised interpretation reflecting appropriate consideration
of the Commission's ruling that a Reliability Standard ``must be
designed to achieve a specified reliability goal and must contain a
technically sound means to achieve this goal.'' \76\ Furthermore, the
Commission, in considering the arguments and comments, has given due
weight to the technical expertise of the ERO in deciding how to
proceed; the ERO is directed to develop revisions to the Reliability
Standard interpretation, consistent with this Final Rule, to address
the Commission's concerns.\77\
---------------------------------------------------------------------------
\76\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 324.
\77\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 165,
167 (``NERC states that the requirement that a Reliability Standard
be ``in the public interest'' provides the Commission with broad
discretion to review and approve a Reliability Standard. According
to NERC, implicit in the ``public interest'' test is that a
Reliability Standard is technically sound and ensures an adequate
level of reliability, and that the Reliability Standards provides a
comprehensive and complete set of technically sound requirements
that establish an acceptable threshold of performance necessary to
ensure reliability of the Bulk-Power System.'').
The Commission agrees with NERC that an open and transparent
process is important in implementing section 215 of the FPA and
developing proposed mandatory Reliability Standards. However, in
Order No. 672, the Commission rejected the presumption that a
proposed Reliability Standard developed through an ANSI-certified
process automatically satisfies the statutory standard of review.
Order No. 672, FERC Stats. & Regs. ] 31,204 at P 338. The Commission
reiterates that simply because a proposed Reliability Standard has
been developed through an adequate process does not mean that it is
adequate as a substantive matter in protecting reliability. We,
therefore, review each Reliability Standard to ensure that the
Reliability Standard is just, reasonable, not unduly discriminatory
or preferential, and in the public interest.
---------------------------------------------------------------------------
57. EEI warns the Commission that Dynegy's request raises several
process issues and cautions the Commission not to allow a single entity
to change a Reliability Standard via an interpretation or any other
``backdoor'' device. The Commission is mindful of EEI's concern, but we
do not believe that we have decided the issues here in a way that
allows an entity to change a standard through a ``backdoor'' effort.
III. Information Collection Statement
58. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting and recordkeeping (collections of
information) requirements imposed by an agency.\78\ The information
contained here is also subject to review under section 3507(d) of the
Paperwork Reduction Act of 1995.\79\
---------------------------------------------------------------------------
\78\ 5 CFR 1320.11.
\79\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------
59. As stated above, the Commission previously approved, in Order
No. 693, each of the Reliability Standards that are the subject of the
current rulemaking. This Final Rule approves one interpretation to a
previously approved Reliability Standard developed by NERC as the ERO,
and remands another interpretation. The proffered interpretations
relate to existing Reliability Standards and do not change these
standards; therefore, they do not add to or otherwise increase
entities' current reporting burden. Thus, the Final Rule does not
materially and adversely affect the burden estimates relating to the
currently effective version of the Reliability Standards presented in
Order No. 693.
60. The BAL-003-0 Reliability Standard that is the subject of the
approved interpretation was approved in Order No. 693, and the related
information collection requirements were reviewed and approved,
accordingly.\80\ The approved interpretation of BAL-003-0 does not
modify or otherwise affect the collection of information already in
place. With respect to BAL-003-0, the interpretation clarifies that the
minimum frequency bias setting applies to systems that employ a
variable bias methodology. Incorporating a minimum frequency bias
setting into the determination of frequency response under automatic
generation control does not change the information that a balancing
authority reports because the same logs, data, or measurements would be
maintained.
---------------------------------------------------------------------------
\80\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1901-
07.
---------------------------------------------------------------------------
61. The Commission is remanding the interpretation of VAR-001-1. As
a result, information collection requirements for that Reliability
Standard will not change at this time.
62. Thus, the interpretations of the current Reliability Standards
at issue in this rulemaking will not increase the reporting burden nor
impose any additional information collection requirements.
63. However, we will submit this Final Rule to OMB for
informational purposes.
Title: Electric Reliability Organization Interpretations of
Specific Requirements of Frequency Response and Bias and Voltage and
Reactive Control Reliability Standards.
Action: Final Rule.
OMB Control No.: 1902-0244.
Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
Frequency of Responses: On Occasion.
Necessity of the Information: This Final Rule approves an
interpretation of the specific requirements of one Commission-approved
Reliability Standard. The Final Rule finds the interpretation just,
reasonable, not unduly discriminatory or preferential, and in the
public interest. In addition, this rule remands an additional proposed
interpretation for further consideration.
Internal Review: The Commission has reviewed the proposed
Reliability Standard interpretations and made a determination that the
proposed BAL-003-1 interpretation is necessary to implement section 215
of the FPA. The interpretation conforms to the Commission's policy for
frequency response and bias within the energy industry as reflected in
BAL-003-1.
64. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE. Washington, DC 20426 [Attention:
Michael Miller, Office of the Executive Director, Phone: (202) 502-
8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov].
65. For submitting comments concerning the collection(s) of
information and the associated burden estimate(s), please send your
comments to the contact listed above and to the Office of Information
and Regulatory Affairs, Office of Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission, phone: (202) 395-4638, fax: (202) 395-7285, e-
mail: oira_submission@omb.eop.gov].
IV. Environmental Analysis
66. 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
[[Page 25422]]
environment.\81\ The Commission has categorically excluded certain
actions from this requirement as not having a significant effect on the
human environment. Included in the exclusion are rules that are
clarifying, corrective, or procedural or that do not substantially
change the effect of the regulations being amended.\82\ The actions
proposed herein fall within this categorical exclusion in the
Commission's regulations.
---------------------------------------------------------------------------
\81\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
\82\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------
V. Regulatory Flexibility Act Analysis
67. The Regulatory Flexibility Act of 1980 (RFA) \83\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a proposed rule and that minimize
any significant economic impact on a substantial number of small
entities. The Small Business Administration's Office of Size Standards
develops the numerical definition of a small business.\84\ For electric
utilities, a firm is small if, including its affiliates, it is
primarily engaged in the transmission, generation and/or distribution
of electric energy for sale and its total electric output for the
preceding twelve months did not exceed four million megawatt hours. The
RFA is not implicated by this Final Rule because the interpretations
discussed herein will not have a significant economic impact on a
substantial number of small entities.
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\83\ 5 U.S.C. 601-12.
\84\ See 13 CFR 121.201.
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68. In Order No. 693, the Commission adopted policies to minimize
the burden on small entities, including approving the ERO compliance
registry process to identify those entities responsible for complying
with mandatory and enforceable Reliability Standards. The ERO registers
only those distribution providers or load serving entities that have a
peak load of 25 MW or greater and are directly connected to the bulk
electric system or are designated as a responsible entity as part of a
required under-frequency load shedding program or a required under-
voltage load shedding program. Similarly, for generators, the ERO
registers only individual units of 20 MVA or greater that are directly
connected to the bulk electric system, generating plants with an
aggregate rating of 75 MVA or greater, any blackstart unit material to
a restoration plan, or any generator that is material to the
reliability of the Bulk-Power System. Further, the ERO will not
register an entity that meets the above criteria if it has transferred
responsibility for compliance with mandatory Reliability Standards to a
joint action agency or other organization. The Commission estimated
that the Reliability Standards approved in Order No. 693 would apply to
approximately 682 small entities (excluding entities in Alaska and
Hawaii), but also pointed out that the ERO's Compliance Registry
Criteria allow for a joint action agency, generation and transmission
(G&T) cooperative or similar organization to accept compliance
responsibility on behalf of its members. Once these organizations
register with the ERO, the number of small entities registered with the
ERO will diminish and, thus, significantly reduce the impact on small
entities.\85\
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\85\ To be included in the compliance registry, the ERO
determines whether a specific small entity has a material impact on
the Bulk-Power System. If these small entities should have such an
impact then their compliance is justifiable as necessary for Bulk-
Power System reliability.
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69. Finally, as noted above, this Final Rule addresses an
interpretation of the BAL-003-0 Reliability Standard, which was already
approved in Order No. 693, and, therefore, does not create an
additional regulatory impact on small entities.\86\
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\86\ The Commission remands the interpretation of the VAR-001-1
Reliability Standard.
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VI. Document Availability
70. 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 the Commission's Home Page (http://www.ferc.gov) and
in the Commission'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.
71. From the Commission'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.
72. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional Notification
73. These regulations are effective June 29, 2009. The Commission
has determined, with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996.
List of Subjects in 18 CFR Part 40
Electric power, Electric utilities, Reporting and recordkeeping
requirements.
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E9-12348 Filed 5-27-09; 8:45 am]
BILLING CODE 6717-01-P