[Federal Register Volume 75, Number 90 (Tuesday, May 11, 2010)]
[Rules and Regulations]
[Pages 26057-26061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11089]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules
and Regulations
[[Page 26057]]
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM08-19-002; Order No. 729-A]
Mandatory Reliability Standards for the Calculation of Available
Transfer Capability, Capacity Benefit Margins, Transmission Reliability
Margins, Total Transfer Capability, and Existing Transmission
Commitments and Mandatory Reliability Standards for the Bulk-Power
System
Issued May 5, 2010.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order on clarification.
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SUMMARY: In this order, the Commission grants several requests for
clarification of Order No. 729, which approved and directed
modification of six Modeling, Data, and Analysis Reliability Standards
submitted to the Commission for approval by the North American Electric
Reliability Corporation, the Commission-certified Electric Reliability
Organization for the United States. As discussed below, the Commission
clarifies the implementation timeline for these Reliability Standards
as well as certain directed modifications.
DATES: Effective Date: This rule will become effective June 10, 2010.
FOR FURTHER INFORMATION CONTACT: Jonathan First (Legal Information),
Office of the General Counsel, Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426, (202) 502-8529.
Cory Lankford (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6711.
Christopher Young (Technical Information), Office of Electric
Reliability, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-6403.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, and John R. Norris.
Order No. 729-A
Order on Clarification
(Issued May 5, 2010)
1. In this order, the Commission grants several requests for
clarification of Order No. 729,\1\ which approved and directed
modification of six Modeling, Data, and Analysis (MOD) Reliability
Standards submitted to the Commission for approval by the North
American Electric Reliability Corporation (NERC), the Commission-
certified Electric Reliability Organization (ERO) for the United
States.\2\ As discussed below, the Commission clarifies the
implementation timeline for these Reliability Standards as well as
certain directed modifications.
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\1\ Mandatory Reliability Standards for the Calculation of
Available Transfer Capability, Capacity Benefit Margins,
Transmission Reliability Margins, Total Transfer Capability, and
Existing Transmission Commitments and Mandatory Reliability
Standards for the Bulk-Power System, Order No. 729, 129 FERC ]
61,155 (2009).
\2\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd
sub nom. Alcoa Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
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I. Background
2. On November 24, 2009, the Commission issued a Final Rule in this
proceeding that approved the six MOD Reliability Standards submitted to
the Commission by the ERO. The approved Reliability Standards pertain
to methodologies for the consistent and transparent calculation of
available transfer capability or available flowgate capability.
Pursuant to section 215(d)(5) of the FPA \3\ and section 39.5(f) of our
regulations, the Commission directed the ERO to develop certain
modifications to the MOD Reliability Standards. The Commission also
directed NERC to retire the existing MOD Reliability Standards replaced
by the versions approved in the Final Rule once the new versions became
effective.
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\3\ 16 U.S.C. 824o(d)(5) (2006).
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3. On December 23, 2009, American Public Power Association (APPA)
and Transmission Access Policy Study Group (TAPS), Duke Energy
Carolinas, LLC (Duke), Edison Electric Institute (EEI), ISO New England
(ISO-NE), and NERC filed timely requests for clarification.
II. Discussion
A. Implementation Schedule
4. In the Final Rule, the Commission directed that the Reliability
Standards become effective according to the schedule proposed by the
ERO.\4\ Thus, the Commission stated that the MOD Reliability Standards
shall become effective on the first calendar quarter that is twelve
months beyond the date that the Reliability Standards are approved by
all applicable regulatory authorities. The Commission found that this
implementation schedule struck a reasonable balance between the need
for timely reform and the needs of transmission service providers and
transmission operators to make adjustments to their calculations of
available transfer capability, capacity benefit margin and transfer
reserve margin. In response to comments on its notice of proposed
rulemaking, the Commission clarified that, under this plan, the
Reliability Standards shall become effective on the first day of the
first quarter occurring 365 days after approval by all applicable
regulatory authorities. Approval by the Commission would be effective
60 days after the date of publication of the Final Rule in the Federal
Register.\5\
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\4\ Order No. 729, 129 FERC ] 61,155 at P 95.
\5\ Id.
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Requests for Clarification
5. Several petitioners requested clarification of the
implementation schedule. If the Commission intended approval of the MOD
Reliability Standards to be effective upon their approval of all
regulatory authorities, including the applicable Canadian provinces,
APPA and TAPS, along with ISO-NE, ask the Commission to clarify a
process to keep the Commission and industry informed on the status of
the required regulatory approval process. By contrast, EEI asks the
Commission to clarify that the MOD Reliability Standards will become
effective in the United States no earlier than the first
[[Page 26058]]
day of the first quarter occurring 365 days after the Commission
approves the MOD Reliability Standards.
6. NERC also requests clarification and provides some insight into
its proposed implementation schedule. NERC explains that the term ``all
applicable regulatory authorities,'' as it is used in the MOD
Reliability Standards, includes the Commission and the relevant
regulatory authorities in the Canadian provinces. NERC states that,
when it developed the implementation schedule, all participants
anticipated that the processes for approving the MOD Reliability
Standards in all jurisdictions would result in approvals that occurred
at roughly the same time. However, according to NERC, the processes for
approval of Reliability Standards are in various stages of development
in various jurisdictions. Accordingly, NERC requests that the
Commission clarify that the MOD Reliability Standards shall become
effective within the United States no earlier than the first day of the
first quarter occurring 365 days after the publication of Order No. 729
in the Federal Register.
Commission Determination
7. The Commission agrees that, without further clarification about
regulatory approvals in the Canadian provinces, the approved
implementation schedule is not determinative as to the effective date
of the MOD Reliability Standards within the United States. Without a
clear process for informing entities of the approval by all appropriate
regulatory authorities, the implementation schedule presents some
compliance risks. NERC has indicated that it would support
implementation of the MOD Reliability Standards within the United
States as of the first day of the first quarter occurring 365 days
after the publication of Order No. 729 in the Federal Register. The
Commission agrees that this implementation schedule is appropriate.
Accordingly, the Commission clarifies that the MOD Reliability
Standards shall become effective within the United States as of the
first day of the first quarter occurring 365 days after the publication
of Order No. 729 in the Federal Register, i.e., January 1, 2011.
8. Compliance with these MOD Reliability Standards requires an
exchange of information and data among neighboring transmission service
providers. In some instances, for example, a transmission service
provider within the United States may need to exchange information and
data with a neighboring transmission service provider located in a
jurisdiction where the Reliability Standard is not yet enforceable. In
this situation, the transmission service provider within the United
States shall share information with the transmission service provider
located in another jurisdiction pursuant to the requirements of these
MOD Reliability Standards. Nevertheless, the transmission service
providers and transmission operators within the continental United
States who must rely on information and data from utilities located in
another country to comply with these Reliability Standards shall not be
penalized solely for the failure of a utility located in another
jurisdiction to provide such information and data, until such time that
the MOD Reliability Standards become mandatory in that foreign
jurisdiction.
9. So that the Commission is informed about international approval
of these MOD Reliability Standards, we direct the ERO to file notices
with the Commission when any other applicable regulatory authority
approves any or all of the MOD Reliability Standards approved by the
Commission in Order No. 729. The ERO also must post notice of such
approval on its Web site.
B. Audit Scope
10. In the Final Rule, the Commission directed the ERO to conduct
an audit to measure compliance with the MOD Reliability Standards. In
response to comments on its notice of proposed rulemaking, the
Commission clarified that these audits are not intended to address the
competitive effects of these MOD Reliability Standards.\6\ The
Commission further stated that the audits should review each component
of available transfer or flowgate capability, including the
transmission service provider's calculation of capacity benefit margin
and transmission reliability margin, for transparency and verifiability
to ensure compliance with the MOD Reliability Standards.\7\ The
Commission explained that such an audit is consistent with Requirement
R3.1 of Reliability Standard MOD-001-1, which requires transmission
service providers to include in their available transfer capability
implementation documents information describing how the selected
methodology (or methodologies) has been implemented. Under Requirement
R3.1, transmission service providers are to provide enough detail for
the Commission and others to validate the results of the calculation
given the same information used by the transmission service provider.
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\6\ Order No. 729, 129 FERC ] 61,155 at P 106.
\7\ Id.
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Request for Clarification
11. Duke contends that, although Requirement R3.1 of MOD-001-1 may
be broad enough to permit the ERO to audit capacity benefit margin and
transfer reliability margin calculation to determine if they can be
validated, Reliability Standards MOD-004-1 and MOD-008-1 are not the
source for such authority. Accordingly, Duke asks the Commission to
clarify that the audits of MOD-004-1 and MOD-008-1 are to be limited to
compliance with the explicit requirements of those Reliability
Standards.
Commission Determination
12. Reliability Standard MOD-001-1 establishes foundational
requirements that oblige entities to select a methodology for
calculating available transfer or flowgate capability and then make the
appropriate calculations. Reliability Standards MOD-004-1 and MOD-008-1
establish the methodologies for calculating capacity benefit margin and
transmission reliability margin, respectively. The NERC Glossary of
Terms Used in Reliability Standards (NERC Glossary) defines available
transfer capability as ``Total Transfer Capability less Exiting
Transmission Commitments (including retail customer service), less a
Capacity Benefit Margin, less a Transmission Reliability Margin, plus
Postbacks, plus counterflows.'' \8\ Thus, both capacity benefit margin
and transmission reliability margin are integral components of any
available transfer or flowgate calculation.
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\8\ See NERC Glossary, available at: http://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.
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13. Under Requirement R3.1 of MOD-001-1, a transmission service
provider must include in its implementation documentation:
``[i]nformation describing how the selected methodology (or
methodologies) has been implemented, in such detail that, given the
same information used by the Transmission Service Provider, the
results of the [available transfer capability] or [available
flowgate capability] calculations can be validated.\9\
\9\ Reliability Standard MOD-001-1, Requirement R3.1.
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Because capacity benefit margin and transfer reliability margin are
integral components of any available transfer or flowgate capability
calculation, we believe that, for an entity to validate the results of
an available transfer or flowgate capability calculation, the
calculations of capacity benefit margin and transfer reliability margin
must also
[[Page 26059]]
be detailed in the implementation document with such detail that they
can be validated. Thus, the Commission clarifies that the calculations
of capacity benefit margin and transfer reliability margin, performed
under MOD-004-1 and MOD-008-1 respectively, are properly audited under
Requirement R3.1 of MOD-001-1.
C. Benchmarking
14. In the Final Rule, the Commission directed the ERO to develop
benchmarking and updating requirements for the MOD Reliability
Standards to measure modeled available transfer and flowgate capability
values against actual values.\10\ The Commission stated that such
requirements should specify the frequency for benchmarking and updating
the available transfer and flowgate capability values and should
require transmission service providers to update their models after any
incident that substantially alters system conditions, such as
generation outages.\11\
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\10\ Order No. 729, 129 FERC ] 61,155 at P 162.
\11\ Id.
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Request for Clarification
15. Duke states that, in Order No. 693, the Commission directed the
ERO to modify Reliability Standard MOD-014-0 to include a requirement
for validating models against actual system results. Duke states that
the Commission reinforced this requirement in Order No. 890-A, holding
that the models used by the transmission provider to calculate
available transfer capability, and not actual available transfer
capability values, must be benchmarked. Duke requests that the
Commission clarify that its directive in Order No. 729 to develop
benchmarking and updating requirements is the same as the directives in
Order Nos. 693 and 890-A, and is not intended to require a different
form of benchmarking.
Commission Determination
16. The Commission clarifies that the directive in Order No. 729 to
develop benchmarking and updating requirements is related to the
directives in Order Nos. 693, 890, and 890-A. In Order No. 693, the
Commission directed modification of Reliability Standard MOD-014-0 to
include a requirement that the models developed under the Reliability
Standard be validated against actual system responses and that the
maximum discrepancy between the model results and the actual system
response should be specified in the Reliability Standard.\12\
Similarly, in Order No. 890, the Commission directed public utilities,
working through NERC, to modify certain MOD Reliability Standards to
incorporate requirements for the periodic review and modification of
certain models.\13\ In Order No. 890-A, the Commission clarified this
directive by stating that the models used by the transmission provider
to calculate available transfer capability, and not actual available
transfer capability values, must be benchmarked.\14\
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\12\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ]
31,242, at P 1210 (2007), order on reh'g, Order No. 693-A, 120 FERC
] 61,053 (2007).
\13\ Preventing Undue Discrimination and Preference in
Transmission Service, Order No. 890, 72 FR 12266 (Mar. 15, 2007),
FERC Stats. & Regs. ] 31,241, at P 290 (2007), order on reh'g, Order
No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ] 31,261
(2007), order on reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008),
order on reh'g, Order No. 890-C, 126 FERC ] 61,228 (2009).
\14\ Order No. 890-A, FERC Stats. & Regs. ] 31,261 at P 99.
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17. The Commission remains concerned about the accuracy of the
models used to calculate available transfer capability. Accordingly, in
Order No. 729, the Commission directed the ERO to develop benchmarking
and updating requirements to measure the results of the available
transfer and flowgate calculations against actual values. The
Commission's directive to develop benchmarking and updating
requirements stems from the same concerns raised in Order Nos. 693,
890, and 890-A. The benchmarking and updating requirements directed in
Order No. 729 are not intended to require a different form of
benchmarking than required under those prior orders.
D. Treatment of Network Resource Designations
18. In the Final Rule, the Commission found that Reliability
Standards MOD-028-1 and MOD-029-1 failed to address the directive in
Order No. 693 to specify how transmission service providers should
determine which generators should be modeled in service when
calculating available transfer capability.\15\ Specifically, with
regard to MOD-028-1, the Commission noted that Requirement R3.1.3,
which addresses designated network resources, governs the calculation
of total transfer capability, not existing transmission commitments.
The Commission stated that the only information provided as to the
effect of designating and undesignating a network resource on existing
transmission commitments is in Requirement R8, which merely states that
``the firm capacity set aside for Network Integration Transmission
Service'' will be included. Accordingly, the Commission directed the
ERO, pursuant to section 215(d)(5) of the FPA and section 39.5(f) of
its regulations, to develop a modification to MOD-028-1 and MOD-029-1
to specify that base generation schedules used in the calculation
available transfer capability will reflect the modeling of all
designated network resources and other resources that are committed to
or have the legal obligation to run, as they are expected to run, and
to address the effect on available transfer capability of designating
and undesignating a network resource.
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\15\ Order No. 729, 129 FERC ] 61,155 at P 171 (citing Order No.
693, FERC Stats. & Regs. ] 31,242 at P 119).
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Request for Clarification
19. Duke contends that the Commission's directive requiring
additional specificity regarding the effect of designating and
undesignating a network resource on existing transmission commitments
is inappropriately focused on modifications to Requirement R8 of MOD-
028-1. Duke states that which requirements need to be amended to
include the desired additional specificity will be dependent on which
components of available transfer capability are impacted by the base
model and network resource designations and undesignations. According
to Duke, the Commission erred in stating that existing transmission
capacity includes firm capacity set aside for network integration
transmission service. According to Duke, within MOD-028-1, the
relationship between capacity set aside for network integration
transmission service and existing transmission commitment is a narrower
concept than the Commission presents in Order No. 729. Accordingly,
Duke recommends that the Commission should not expect Requirement R8 of
MOD-028-1 to be modified as a result of an effort to include the
additional specificity and requests that the Commission clarify that
the added specificity should be included in whichever Requirement(s)
are relevant and appropriate.
Commission Determination
20. In the Final Rule, the Commission did not intend to direct the
ERO to necessarily develop a modification to Requirement R8 of MOD-028-
1. The ERO may develop a modification to another appropriate
requirement of MOD-028-1 to capture the additional specificity required
regarding the effect
[[Page 26060]]
of designating and undesignating a network resource on existing
transmission commitments or, as Duke notes, any other relevant
component of available transmission capacity. Nevertheless, any
modification developed to fulfill this requirement must specify how
transmission providers should model base generation dispatch in a
consistent manner that includes all designated network resources and
other resources that are committed to or have the legal obligation to
run, as they are expected to run.\16\
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\16\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1041.
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E. Updates To Dispatch Model Following Material Changes
21. In the Final Rule, the Commission determined that, to be
useful, hourly, daily, and monthly available transfer and flowgate
capability values must be calculated and posted in advance of the
relevant time periods.\17\ The Commission found that Requirement R8 of
MOD-001-1 and Requirement R10 of MOD-030-2 require that such posting
will occur far enough in advance to meet this need. Nevertheless, in
light of concerns raised by commenters, the Commission directed the ERO
to develop modifications to MOD-001-1 and MOD-030-2 to clarify that
material changes in system conditions will trigger an update whenever
practical.\18\
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\17\ Order No. 729, 129 FERC ] 61,155 at P 179.
\18\ Id.
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Request for Clarification
22. Duke states that it agrees that material changes should trigger
an update whenever practical, but admonishes that such a requirement is
too vague to be enforceable, let alone auditable, by the ERO due to
differing interpretations of the phrases ``material changes'' and
``whenever practical.'' Accordingly, Duke requests that the Commission
provide further clarity to the ERO as to the desired modifications.
Commission Determination
23. The Commission agrees that it could be difficult in some
instances to enforce a requirement that hinges upon such phrases as
``material changes'' and ``whenever practical.'' Nevertheless, we
believe that such modifications would be useful to ensure timely
updates of available transfer or flowgate capability values. If the ERO
is unable to modify the requirements of MOD-001-1 and MOD-030-2 to
incorporate such language in a manner that sets clear criteria or
measures of whether an entity is in compliance with the relevant
Reliability Standard or cannot otherwise identify specific changes in
system conditions that require an update, the ERO must, at a minimum,
include this language in its measures of compliance associated with
those Reliability Standards.
F. Managing the Use of Capacity Benefit Margins
24. In the Final Rule, the Commission determined that ISOs, RTOs,
and other entities with a wide view of system reliability needs should
be able to provide input into determining the total amount of capacity
benefit margin required to preserve the reliability of the system.\19\
The Commission pointed out, though, that Requirements R1.3 and R7 of
MOD-004-1 already make clear that determination of need for generation
capability import requirement made by a load-serving entity or resource
planner are not final. The Commission added that the third bullet of
both Requirements R5 and R6 explicitly list reserve margin or resource
adequacy requirements established by RTOs and ISOs among the factors to
be considered in establishing capacity benefit margin values for
available transfer capability paths or flowgates used in available
transfer or flowgate capability calculations. To ensure that the
Reliability Standard clearly identifies how the transmission service
provider will manage situations where the requested use of capacity
benefit margin exceeds the capacity benefit margin available, the
Commission directed the ERO to develop a modification to MOD-004-1 to
clarify the term ``manage'' in Requirement R1.3.\20\
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\19\ Order No. 729, 129 FERC ] 61,155 at P 222.
\20\ Id.
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Request for Clarification
25. Duke states that it understands the Commission's directive to
require that the manner in which such a situation is managed should be
transparent to all users in the relevant capacity benefit margin
implementation document. Accordingly, Duke asks the Commission to
clarify that it intended to direct the ERO to modify the Reliability
Standard to require that transmission service providers explain in
their capacity benefit margin implementation document their specific
method for managing a situation where the requested use of capacity
benefit margin exceeds the capacity benefit margin available,
recognizing that each transmission service provider may have its own
method.
Commission Determination
26. In Order Nos. 890 and 693, the Commission emphasized that each
load-serving entity has the right to request that capacity benefit
margin be set aside, and to use transmission capacity set aside for
that purpose, to meet its verifiable generation reliability criteria
requirement.\21\ The Commission is concerned that Reliability Standard
MOD-004-1 could allow a transmission service provider to calculate,
allocate, and use capacity benefit margin in a way that impairs the
reliable operation of the Bulk-Power System. Under the Reliability
Standard, the transmission service provider is to ``reflect
consideration'' of studies provided by load-serving entities and
resource planners demonstrating a need for capacity benefit margin and
``manage'' situations where the requested use of capacity benefit
margin exceeds the capacity benefit margin available. Reliability
Standard MOD-004-1 places no bounds on this ``consideration'' and
``management'' and, for example, would permit a transmission service
provider to make decisions regarding the use of capacity benefit margin
based solely on economic considerations notwithstanding a demonstration
of need for capacity benefit margin by a load-serving entity or
resource planner.
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\21\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1080; see
also Order No. 890, FERC Stats. & Regs. ] 31,241 at P 259; Order No.
890-A, FERC Stats. & Regs. ] 31,261 at P 82.
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27. These concerns would be diminished if the transmission service
provider's capacity benefit margin implementation document were
sufficiently transparent to allow others to validate the method of
managing capacity benefit margin. Accordingly, the Commission upholds
its decision to direct the ERO to develop a modification that would
clarify the term ``manage'' in Requirement R1.3. The Commission
clarifies, however, that the ERO, through its Reliability Standards
development process, should determine the manner in which this
clarification is made.
III. Information Collection Statement
28. The Office of Management and Budget (OMB) regulations require
that OMB approve certain information collection requirements imposed by
an agency.\22\ The revisions to the information collection requirements
for transmission service providers and transmission operators adopted
in Order No. 729 were approved under OMB Control No. 1902-0244. This
order clarifies these requirements in order to
[[Page 26061]]
more clearly state the obligations imposed in Order No. 729, but does
not substantively alter those requirements. OMB approval of this order
is therefore unnecessary. However, the Commission will send a copy of
this order to OMB for informational purposes only.
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\22\ 5 CFR 1320.
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IV. Document Availability
29. 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.
30. 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.
31. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail at
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at
[email protected].
V. Effective Date and Congressional Notification
32. Clarifications adopted in this Final Rule will become effective
June 10, 2010.
List of Subjects in 18 CFR Part 40
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2010-11089 Filed 5-10-10; 8:45 am]
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