[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Rules and Regulations]
[Pages 65964-65975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27134]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM09-15-000; Order No. 740]
Version One Regional Reliability Standard for Resource and Demand
Balancing
Issued October 21, 2010.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
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SUMMARY: Under section 215 of the Federal Power Act, the Commission
hereby remands a revised regional Reliability Standard developed by the
Western Electricity Coordinating Council and approved by the North
American Electric Reliability Corporation, which the Commission has
certified as the Electric Reliability Organization responsible for
developing and enforcing mandatory Reliability Standards. The revised
regional Reliability Standard, designated by WECC as BAL-002-WECC-1,
would set revised Contingency Reserve requirements meant to maintain
scheduled frequency and avoid loss of firm load following transmission
or generation contingencies.
DATES: Effective Date: This rule will become effective November 26,
2010.
FOR FURTHER INFORMATION CONTACT:
Nick Henery (Technical Information), Office of Electric Reliability,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8636.
Scott Sells (Technical Information), Office of Electric Reliability,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6664.
A. Cory Lankford (Legal Information), Office of General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6711.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Nos.
I. Background.............................................. 3
A. Mandatory Reliability Standards..................... 3
B. Western Electricity Coordinating Council............ 6
C. WECC Regional Reliability Standard BAL-002-WECC-1... 9
II. Discussion............................................. 14
A. Due Weight and Effect of Remand..................... 15
B. Contingency Reserve Restoration Period.............. 22
C. Calculation of Minimum Contingency Reserve.......... 31
D. Use of Firm Load To Meet Contingency Reserve 42
Requirement...........................................
E. Demand-Side Management as a Resource................ 50
F. Miscellaneous....................................... 63
III. Information Collection Statement...................... 67
IV. Environmental Analysis................................. 68
V. Regulatory Flexibility Act.............................. 69
VI. Document Availability.................................. 70
VII. Effective Date and Congressional Notification......... 73
Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, Philip
D. Moeller, John R. Norris, and Cheryl A. LaFleur
1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the
Commission hereby remands a revised regional Reliability Standard
developed by the Western Electricity Coordinating Council (WECC) and
approved by the North American Electric Reliability Corporation (NERC),
which the Commission has certified as the Electric Reliability
Organization (ERO) responsible for developing and enforcing mandatory
Reliability Standards.\2\ The revised regional Reliability Standard,
designated by WECC as BAL-002-WECC-1,\3\ is meant to ensure that
adequate resources are available at all times to maintain scheduled
frequency, and avoid loss of firm load following transmission or
generation contingencies. As discussed below, the Commission finds that
the proposed regional Reliability Standard does not meet the statutory
criteria for approval that it be just, reasonable, not unduly
discriminatory or preferential, and in the public interest.\4\
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\1\ 16 U.S.C. 824o (2006).
\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 (D.C. Cir. 2009).
\3\ NERC designates the version number of a Reliability Standard
as the last digit of the Reliability Standard number. Therefore,
original Reliability Standards end with ``-0'' and modified version
one Reliability Standards end with ``-1.''
\4\ 16 U.S.C. 824o(d)(2).
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2. The Commission remands the proposed regional Reliability
Standard based on concerns that WECC has not provided adequate
technical support to demonstrate that the requirements of the proposed
regional Reliability Standard are sufficient to ensure the reliable
operation of the Bulk-Power System within WECC. Specifically, WECC's
data indicates that extending the reserve restoration period from 60 to
90 minutes presents an unreasonable risk that a second major
contingency could occur before reserves are restored after an initial
contingency. Without further technical justification demonstrating that
this less stringent requirement will adequately support reliability in
the Western Interconnection, the Commission is unable to determine that
the proposed regional Reliability Standard is just, reasonable, not
unduly discriminatory or preferential, and in the public interest.
Accordingly, we remand WECC regional Reliability Standard BAL-002-WECC-
1 to the ERO so that the Regional Entity may develop further
modifications consistent with this final rule.\5\
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\5\ In Order No. 672, the Commission found that it should order
only the ERO to modify a Reliability Standard because the ERO is the
only entity that may directly submit a proposed Reliability Standard
to the Commission for approval. Rules Concerning Certification of
the Electric Reliability Organization; Procedures for the
Establishment, Approval, and Enforcement of Electric Reliability
Standards, Order No. 672, 71 FR 8662 (Feb. 17, 2006), FERC Stats. &
Regs. ] 31,204, at P 423, order on reh'g, Order No. 672-A, 71 FR
19814 (Apr. 18, 2006), FERC Stats. & Regs. ] 31,212 (2006).
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[[Page 65965]]
I. Background
A. Mandatory Reliability Standards
3. Section 215 of the FPA requires a Commission-certified 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.\6\
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\6\ 16 U.S.C. 824o(e)(3).
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4. Reliability Standards that the ERO proposes to the Commission
may include Reliability Standards that are proposed to the ERO by a
Regional Entity.\7\ A Regional Entity is an entity that has been
approved by the Commission to enforce Reliability Standards under
delegated authority from the ERO.\8\ When the ERO reviews a regional
Reliability Standard that would be applicable on an interconnection-
wide basis and that has been proposed by a Regional Entity organized on
an interconnection-wide basis, the ERO must rebuttably presume that the
regional Reliability Standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest.\9\ In turn,
the Commission must give ``due weight'' to the technical expertise of
the ERO and of a Regional Entity organized on an interconnection-wide
basis.\10\
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\7\ 16 U.S.C. 824o(e)(4).
\8\ 16 U.S.C. 824o(a)(7) and (e)(4).
\9\ 18 CFR 39.5 (2010).
\10\ 16 U.S.C. 824o(d)(2).
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5. In Order No. 672, the Commission urged uniformity of Reliability
Standards, but recognized a potential need for regional
differences.\11\ Accordingly, the Commission stated that:
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\11\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290.
As a general matter, we will accept the following two types of
regional differences, provided they are otherwise just, reasonable,
not unduly discriminatory or preferential and in the public
interest, as required under the statute: (1) A regional difference
that is more stringent than the continent-wide Reliability Standard,
including a regional difference that addresses matters that the
continent-wide Reliability Standard does not; and
(2) A regional Reliability Standard that is necessitated by a
physical difference in the Bulk-Power System.\12\
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\12\ Id. P 291.
B. Western Electricity Coordinating Council
6. On April 19, 2007, the Commission accepted delegation agreements
between NERC and each of eight Regional Entities.\13\ In its order, the
Commission accepted WECC as a Regional Entity organized on an
Interconnection-wide basis. As a Regional Entity, WECC oversees
transmission system reliability in the Western Interconnection. The
WECC region encompasses nearly 1.8 million square miles, including 14
western U.S. states, the Canadian provinces of Alberta and British
Columbia, and the northern portion of Baja California in Mexico.
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\13\ North American Electric Reliability Corp., 119 FERC ]
61,060, at P 432 (2007).
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7. In June 2007, the Commission approved eight regional Reliability
Standards for WECC including the currently effective regional
Reliability Standard for operating reserves, WECC-BAL-STD-002-0.\14\
The Commission found that the current regional Reliability Standard was
more stringent than the corresponding NERC Reliability Standard, BAL-
002-0, since WECC required a more stringent minimum reserve requirement
than the continent-wide requirement.\15\ Moreover, the Commission found
that WECC's requirement to restore contingency reserves within 60
minutes was more stringent than the 90 minute restoration period as set
forth in NERC's BAL-002-0.\16\
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\14\ North American Electric Reliability Corp., 119 FERC ]
61,260, at P 53 (2007).
\15\ Id.
\16\ Id.
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8. The Commission directed WECC to develop certain minor
modifications to WECC-BAL-STD-002-0, as identified by NERC in its
filing letter for the current standard.\17\ For example, the Commission
determined that: (1) Regional definitions should conform to definitions
set forth in the NERC Glossary of Terms Used in Reliability Standards
(NERC Glossary) unless a specific deviation has been justified; and (2)
documents that are referenced in the Reliability Standard should be
attached to the Reliability Standard. The Commission also found that it
is important that regional Reliability Standards and NERC Reliability
Standards achieve a reasonable level of consistency in their structure
so that there is a common understanding of the elements. Finally, the
Commission directed WECC to address stakeholder concerns regarding
ambiguities in the terms ``load responsibility'' and ``firm
transaction.'' \18\
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\17\ Id. P 55.
\18\ Id. P 56.
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C. WECC Regional Reliability Standard BAL-002-WECC-1
9. On March 25, 2009, NERC submitted a petition (NERC Petition) to
the Commission seeking approval of BAL-002-WECC-1\19\ and requesting
the concurrent retirement of BAL-STD-002-0.\20\ In that March petition,
NERC states that the proposed regional Reliability Standard was
approved by the NERC Board of Trustees at its October 29, 2008 meeting.
NERC also requests an effective date for the regional Reliability
Standard of 90 calendar days after receipt of applicable regulatory
approval.
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\19\ See 18 CFR 39.5(a) (requiring the ERO to submit regional
Reliability Standards on behalf of a Regional Entity).
\20\ The proposed regional Reliability Standard is not attached
to the NOPR. It is, however, available on the Commission's eLibrary
document retrieval system in Docket No. RM09-15-000 and is on the
ERO's Web site, available at http://www.nerc.com.
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10. The proposed regional Reliability Standard contains three main
provisions. Requirement R1 provides that each reserve sharing group
\21\ or balancing authority must maintain a minimum contingency reserve
that is the greater of (1) an amount of reserve equal to the loss of
the most severe single contingency; or (2) an amount of reserve equal
to the sum of three percent of the load and three percent of net
generation. Requirement R2 states that each reserve sharing group or
balancing authority must maintain at least half of the contingency
reserve as spinning reserve. Requirement R3 identifies acceptable types
of reserve to satisfy Requirement R1:
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\21\ A ``reserve sharing group'' is a group whose members
consist of two or more balancing authorities that collectively
maintain, allocate, and supply operating reserves required for each
balancing authority's use in recovering from contingencies within
the group. See NERC Glossary, available at http://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.
R3.1. Spinning Reserve;
R3.2. Interruptible Load;
R3.3. Interchange Transactions designated by the source Balancing
Authority as non-spinning contingency reserve;
R3.4. Reserve held by the other entities by agreement that is
deliverable on Firm Transmission Service;
R3.5. An amount of off-line generation which can be synchronized and
generating; or
R.3.6. Load, other than Interruptible Load, once the Reliability
Coordinator has declared a capacity or energy emergency.
In addition, compliance measure M1 provides that a reserve sharing
group or balancing authority must have documentation that it maintained
100 percent of required contingency reserve levels ``except within the
first 105 minutes (15 minute Disturbance Recovery Period, plus 90
minute
[[Page 65966]]
Contingency Reserve Restoration Period) following an event requiring
the activation of Contingency Reserves.'' \22\
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\22\ Proposed WECC Reliability Standard BAL-002-WECC-1,
Compliance Measure M1.
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11. The NERC Petition explains that, because WECC developed the
modifications to the regional Reliability Standard submitted in the
instant proceeding, and the standard applies on an Interconnection-wide
basis, NERC must rebuttably presume that the WECC Reliability Standard
is just, reasonable, not unduly discriminatory or preferential, and in
the public interest.\23\ NERC states that it agrees with WECC that the
proposed WECC regional Reliability Standard establishes requirements
that are more stringent than those provided in the corresponding NERC
Reliability Standard.
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\23\ See NERC Petition at 8; and 16 U.S.C. 824o(d)(3).
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12. On March 18, 2010, the Commission issued a Notice of Proposed
Rulemaking (NOPR) proposing to remand the proposed regional Reliability
Standard to the ERO so that the Regional Entity may develop further
modifications.\24\ The Commission's proposal to remand the proposed
Regional Reliability Standard was based on a lack of technical support
for the adoption of less stringent requirements than those in the
currently effective WECC regional Reliability Standard and out of
concern that the proposed regional Reliability Standard is less
stringent than the NERC continent-wide Reliability Standard pertaining
to contingency reserves. The Commission expressed particular concern
with respect to a provision in the proposed regional Reliability
Standard that would permit a balancing authority, when an emergency is
declared, to count ``Load, other than Interruptible Load'' as
contingency reserve. The Commission understood this provision to allow
a balancing authority to shed firm load when a single contingency
occurs instead of procuring and utilizing generation or demand response
resource held in reserve for contingencies to balance the Bulk-Power
System. The Commission also proposed to direct WECC to develop certain
modifications to the regional Reliability Standard that would
explicitly allow demand-side management to be used as a resource for
contingency reserves.
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\24\ North American Electric Reliability Corp., NOPR, 75 FR
14,103 (March 24, 2010), FERC Stats. & Regs. ] 32,653 (2010).
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13. In response to the NOPR, comments were filed by 16 interested
parties.\25\ Several commenters, including WECC, opposed the proposed
remand, while others supported it. In its comments, WECC included
supplemental data to support the Commission's approval of the proposed
regional Reliability Standard. In the discussion below, we address the
issues raised by these comments and, pursuant to section 215(d)(4) of
the FPA, we adopt the NOPR proposal to remand the proposed regional
Reliability Standard.
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\25\ See Appendix A, List of Commenters.
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II. Discussion
14. Applying the principal of due weight to the technical expertise
of NERC and WECC, the Commission finds that the proposed regional
Reliability Standard BAL-002-WECC-1 does not meet the statutory
criteria for approval, that it be just, reasonable, not unduly
discriminatory or preferential, and in the public interest. In
particular, the Commission is concerned that reliability would be
reduced upon approval of the proposed regional Reliability Standard
because WECC's data indicates that extending the reserve restoration
period from 60 to 90 minutes would create an unreasonable risk that a
second major contingency could occur before reserves are restored after
an initial contingency. There must be sufficient technical
justification showing that the Western Interconnection can be operated
reliably with the reduced stringency. The Commission finds that the
NERC and the Regional Entity have failed to demonstrate that the
proposal is adequate to ensure the reliability of the Bulk-Power System
within WECC. Accordingly, under section 215(d)(4) of the FPA, the
Commission remands regional Reliability Standard BAL-002-WECC-1 to the
ERO with instruction for the Regional Entity to develop modifications,
as discussed below.
A. Due Weight and Effect of Remand
15. Several commenters point out that, under section 215(d)(2) of
the FPA, the Commission must give due weight to the technical expertise
of the ERO and WECC as the Regional Entity organized on an
Interconnection-wide basis.\26\ These parties argue that, applying the
principal of due weight, the Commission should approve the proposed
regional Reliability Standard. In addition, NERC states that it must
rebuttably presume that a standard developed by WECC is just,
reasonable, not unduly preferential, and in the public interest. NERC
states that, as a Regional Entity organized on an interconnection-wide
basis, WECC has exercised its technical expertise in regard to this
interconnection-wide Reliability Standard, supplemented by the
additional technical analyses provided in its response. Xcel agrees and
states that the Commission has not allowed any deference to WECC and
stakeholder experts that worked diligently to develop this Reliability
Standard.
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\26\ E.g., NERC, WECC, MISO, WIRAB, and Xcel.
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16. Several commenters contend that the proposed regional
Reliability Standard offers significant benefits over the current
version.\27\ Sempra states that the proposed standard would advance
three goals: It simplifies reserve accounting at balancing authorities
by clarifying which party carries reserves for power imports and
exports; it includes renewable resources; and it clarifies reserves
responsibility. If the Commission decides to remand the proposed
Reliability Standard, Sempra urges the Commission to require expedited
procedures because of the importance of replacing the current regional
Reliability Standard, which, Sempra contends, contains its own flaws
and ambiguities. WECC argues that remand of the proposed standard would
cause a greater probability of frequency-related instability,
uncontrolled separation, or cascading outages because the current WECC
standard does not take renewable resources, such as wind and solar,
into account when calculating minimum contingency reserve requirements.
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\27\ E.g., NERC, WECC, Bonneville, Idaho Power, NV Energy, SCE,
WIRAB, and Xcel.
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17. By contrast, Puget Sound states that, while FERC is required to
give due weight to the technical expertise of the ERO no deference is
due when the action of the ERO and Regional Entity are patently
unreasonable and arbitrary. Puget Sound contends that a regulatory
decision based on a review of only eight hours of data, as provided by
WECC, cannot be reasonably explained or considered to be supported by
substantial evidence. Powerex and NV Energy agree that WECC provided
insufficient data in its request for approval with respect to whether
the proposed regional Reliability Standard is just and reasonable.
Commission Determination
18. Section 215(d)(2) of the FPA provides that the Commission
``shall give due weight to the technical expertise'' of the ERO or a
Regional Entity organized on an Interconnection-wide basis ``with
respect to the content of a proposed standard or modification.'' As the
Commission explained in Order No. 672, the ERO or Interconnection-
[[Page 65967]]
wide Regional Entity ``must justify to the Commission its contention
that the proposed Reliability Standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest.''\28\ Thus,
consistent with our explanation in Order No. 672, it is necessary for
the ERO or Regional Entity to explain adequately a Reliability Standard
or modifications to a Reliability Standard.
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\28\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 345.
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19. The Commission has given due weight to the technical expertise
of the Regional Entity as it is presented both in the NERC Petition and
in WECC's comments and supporting data and we have determined that WECC
provided inadequate support for approval of the proposed regional
Reliability Standard. In its petition, NERC provides a detailed
explanation of why it believes the proposal satisfies the statutory
criteria for approval based on the guidance provided by the Commission
in Order No. 672 regarding the factors it would consider in making that
determination.\29\ However, this explanation fails to adequately
address the substantive modifications to the regional Reliability
Standard. Moreover, WECC's comments and supplemental data did not
adequately address the Commission's concerns expressed in the NOPR that
the extension of the reserve restoration period will maintain reliable
operation of the Western Interconnection. Without adequate explanation
and technical justification, we are unable to determine whether the
proposal satisfies the statutory criteria for approval and, therefore,
remand the revised Reliability Standard to the ERO with instruction for
the Regional Entity to develop modifications, as discussed below.
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\29\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 320-337.
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20. The Commission does not take lightly its authority to remand a
Reliability Standard. We understand that before a Reliability Standard
reaches the Commission it must be vetted through an intensive standard
development process. Nevertheless, despite the efforts of the different
drafting team members who contributed to the development of this
regional Reliability Standard, for the reasons discussed below, we
believe that the statutory standard for approval has not been met on
the record before us.
21. We do not believe, as WECC suggests, that this remand will
cause a greater probability of frequency-related instability,
uncontrolled separation or cascading outages. WECC does not provide any
supporting data or technical analysis to support this claim. By
remanding the proposed regional Reliability Standard, the Commission is
upholding the currently effective regional Reliability Standard. The
Commission recognizes that the Western Interconnection is experiencing
substantial growth in variable renewable generation. We believe that
the current regional Reliability Standard has proved effective for many
years and will continue to do so until WECC can modify as necessary,
through the standards development process, this regional Reliability
Standard to ensure adequate reserves to reliably accommodate this
expansion. Furthermore, we decline to set expedited procedures for the
development of a replacement regional Reliability Standard, but WECC is
free to expedite its process to the extent WECC finds appropriate.
B. Contingency Reserve Restoration Period
22. The current regional Reliability Standard sets a maximum
contingency reserve restoration period that is more stringent than the
continent-wide requirement. NERC Reliability Standard BAL-002-0
provides that a balancing authority or reserve sharing group responding
to a disturbance must fully restore its contingency reserves within 90
minutes following the disturbance recovery period, which is set at 15
minutes.\30\ The current WECC regional BAL Reliability Standard
requires reserve sharing groups and balancing authorities to maintain
100 percent of required operating reserve levels except within the
first 60 minutes following an event requiring the activation of
operating reserves.\31\ In approving WECC-BAL-STD-002-0, the Commission
found that WECC's requirement to restore contingency reserves within 60
minutes was more stringent than the 90 minute restoration period set
forth in NERC's BAL-002-0.\32\ WECC now proposes to replace the current
60 minute restoration period requirement with a new provision that
would require the restoration of contingency reserves within 90 minutes
from the end of the disturbance recovery period (15 minutes), thus
matching the continent-wide requirement.
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\30\ Reliability Standard BAL-002-0, Requirements R4 and R6.
\31\ WECC regional Reliability Standard WECC-BAL-STD-002-0,
Measure of Compliance WM1.
\32\ North American Electric Reliability Corp., 119 FERC ]
61,260 at P 53.
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NOPR Proposal
23. In the NOPR, the Commission proposed to remand the regional
Reliability Standard BAL-002-WECC-1 based on, among other things, a
lack of any technical justification or analysis of the potential
increased risk to the Western Interconnection resulting from the
increase in the contingency reserve restoration period. The Commission
noted that, without sufficient data and analysis, it is unable to
determine whether the increase in contingency reserve restoration
period is sufficient to maintain the reliable operation of the Bulk-
Power System in the Western Interconnection. The Commission also noted
that in the Western Interconnection a significant number of
transmission paths are voltage or frequency stability-limited, in
contrast to other regions of the Bulk-Power System where transmission
paths more often are thermally-limited. Disturbances that result in a
stability-limited transmission path overload, generally, must be
responded to in a shorter time frame than a disturbance that results in
a thermally-limited transmission path overload. The Commission stated
its understanding that this physical difference is one of the reasons
for the need for certain provisions of regional Reliability Standards
in the Western Interconnection.
Comments
24. WECC, supported by Bonneville, Idaho Power, SCE, and Xcel,
argues that additional studies are unnecessary because the proposed
restoration period is identical to the continent-wide restoration
period. WECC comments that the Commission should defer to WECC's
technical expertise in concluding that more stringent contingency
reserve restoration period is no longer necessary. WECC also offers
historical data that demonstrates that a second contingency involving
the loss of a resource greater than 1000 MW between 60 and 90 minutes
after a first contingency occurred six times in the last 15 years or
0.4 events on an annual basis, which, WECC argues, is insufficient to
require rejection of a proposed standard on the basis of reliability
impact. Bonneville and Xcel argue that increasing the contingency
reserve restoration period will result in more efficient system
operation without sacrificing reliability. Xcel adds that it will allow
for more efficient communication among balancing authorities because
the restoration period will be closer to the e-tagging system approval
cycle.
[[Page 65968]]
25. MISO comments that it is imperative that the Commission give
due consideration to approving modifications to Reliability Standards
so that Regional Entities can implement changes as understanding grows
and experience is gained. MISO contends that disallowance of reasonable
modifications, such as those presented here, will have the unintended
consequence of fostering a reluctance to develop other regional
standards, or encouraging a minimalist approach when standards must
necessarily be developed. WECC echoes these concerns and argues that
there is no requirement that a regional Reliability Standard can only
be modified in a manner that makes it even more stringent. Such a
requirement, WECC contends, would create a ``one-way ratchet'' that
would severely inhibit the ability to adjust Reliability Standards to
meet changing conditions, would encourage proposed standards reflecting
the ``lowest common denominator'' and would fail to provide deference
to the technical expertise of an interconnection-wide Regional Entity.
Commission Determination
26. The Commission finds that the extension of the reserve
restoration period has not been justified as an acceptable level of
risk within the Western Interconnection. WECC's own analysis shows
that, based on historical experience, replacing the 60 minute
requirement with the continent-wide 90 minute requirement could result
in a second major contingency before restoration of reserves would be
required, and that a second major contingency occurred within WECC
during this extended time frame six times in the last 15 years.\33\
WECC argues that in the Western Interconnection ``instability and/or
underfrequency load shedding normally would not occur in the absence of
a third contingency of significant magnitude within the restoration
period.'' \34\ WECC's generalization, however, is unsupported by
historical quantification or documentation in this record and, thus,
does not persuade us.\35\
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\33\ WECC's analysis shows that, over the past 15 years, the
proposed increased contingency reserve restoration period would have
resulted in 139 more events within the proposed 90 minute
contingency reserve restoration period. Limiting the analysis to
losses of generation greater than 500 MW, there were only 58 events
occurring within the proposed extended contingency reserve
restoration period. Limiting the analysis to losses of generation
greater than 1000 MW, there were only six events during the extended
contingency restoration period. WECC contends that losses of less
than 1,000 MW of generation have a minimal impact on the system
frequency response of the Western Interconnection and have minimal
impacts on the reliability of the interconnected system. WECC May
24, 2010 Comments at 13.
\34\ WECC May 24, 2010 Comments at 13 n.10.
\35\ WECC's statement is consistent with a statement made in a
2007 compliance filing that ``WECC operates its system in such a
manner that the system is at least two contingencies away from a
cascading failure.'' WECC Compliance Filing, Docket No. RR07-11-000,
at 5 (filed July 9, 2007). Nevertheless, WECC is proposing to change
its operating conditions by extending the reserve restoration
period. Thus, it must provide adequate technical justification that
the revised requirements will maintain reliable operation of the
Bulk-Power System in the Western Interconnection.
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27. While it is not inevitable that the proposed extension of the
contingency reserve restoration period would result in adverse
reliability impacts in the Western Interconnection, the data provided
shows that the Western Interconnection could be exposed to the
potential for a major disturbance every two to three years that could
result in frequency-related instability, uncontrolled separation or
cascading outages. The Commission is particularly concerned about these
potential events occurring in the Western Interconnection because, as
the Commission discussed in the NOPR, it is our understanding that a
significant number of transmission paths in the Western Interconnection
are voltage or frequency stability-limited, in contrast to other
regions of the Bulk-Power System where transmission paths more often
are thermally-limited. Disturbances that occur in a stability-limited
transmission path overload, generally, must be responded to in a
shorter time frame than a disturbance that occurs in a thermally-
limited transmission path overload.\36\ A thermal limit is determined
by how much a line can overheat without damaging equipment; lines that
are thermally-limited can have short-term emergency limits that are
higher than the normal line rating, since heating occurs over a period
of time. This is different from a stability limit, which is determined
by a system-wide voltage or frequency stability constraint, and loading
the line above this limit for any amount of time could result in
instability and cascading outages.
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\36\ NOPR, FERC Stats. & Regs. ] 32,653 at P 37.
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28. The reliance on stability-limited transmission paths becomes a
concern during the contingency reserve restoration period because
balancing authorities rely on imported power from external sources
until the entity that had the disturbance replaces the resource lost
during the disturbance.\37\ Since stability-limited lines do not have
higher emergency ratings, as thermally-limited lines can, any
disturbance that would result in increasing flows over a stability-
limited line must be addressed in a shorter time-frame than a
disturbance that only affects thermally-limited lines. There will be
some situations in which imports stress stability-limited transmission
lines. In those circumstances, extending the contingency reserve
restoration period would extend the amount of time the imported power
could stress the stability limited transmission lines, potentially
leaving the Western Interconnection in a stressed condition that could
result in adverse reliability impacts if another disturbance were to
occur. On remand, we direct WECC to develop a modification to the
reserve restoration period or provide evidence demonstrating that
extending the reserve restoration period to 90 minutes and adding a
disturbance recovery period of 15 minutes would not increase the risk
of a major disturbance in the Western Interconnection.
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\37\ See NERC, Balancing and Frequency Control, at 6-10 (Nov.
2009), available at http://www.nerc.com/docs/oc/rs/NERC_Balancing_and_Frequency_Control_Part_1_9Nov2009_(Revision2).pdf.
---------------------------------------------------------------------------
29. The fact that the proposed extension of the reserve restoration
period would match the continent-wide requirement and, thus, would
foster certain operational efficiencies through the use of the e-
tagging system does not allay our concerns that the extension could be
harmful to the reliable operation of the Western Interconnection. The
e-tagging system is an efficient tool used for day-ahead and hour-ahead
market accounting and as input for day-ahead and hour-ahead transfer
capability analysis of scheduled interchange transactions and
development of day-ahead and hour-ahead capacity and energy resource
schedules. As such, it may allow for more efficient communication among
balancing authorities during operational planning periods. However, in
2008, a WECC task force expressed concern that the ``e-Tag and
communications processes are time consuming and cumbersome when
scheduling and tagging the large amounts of energy required to recover
from system emergencies, particularly in mid-hour.''\38\ Although
adoption of the e-tagging system may result in more efficient
communication among transmission operators and balancing
[[Page 65969]]
authorities for day-ahead and hour-ahead scheduling, this fact alone is
not sufficient to justify the potential reliability impacts involved
with extending the reserve restoration period.
---------------------------------------------------------------------------
\38\ WECC Disturbance Task Force, PacifiCorp East February 14,
2008 Detailed Disturbance Report stated in Conclusion 17 (Aug. 2008)
available at http://www.wecc.biz/committees/BOD/081308/Lists/Agendas/1/PacifiCorp%20East%20Disturbance%20Board%20presentation%20Aug%2008%20Final.pdf.
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30. The Commission's action in this proceeding does not create a
``one-way ratchet'' for the development of regional Reliability
Standards. In specific circumstances, the Commission could approve
retirement of a more stringent regional requirement if the Regional
Entity demonstrates that the continent-wide Reliability Standard is
sufficient to ensure the reliability of that region. In this case,
however, WECC argued only three years earlier that the added stringency
of the current regional Reliability Standard was critical to the
reliable operation of the Western Interconnection.\39\ We find that
WECC provided insufficient technical detail and analysis for us to make
a reasoned determination that the proposed requirement will adequately
protect the reliability of the region. Regional Entities have the
discretion to develop regional Reliability Standards and implement
changes as understanding grows and experience is gained without concern
that the Commission will always hold them to their more stringent
requirements in all circumstances regardless of the provided
justification. The Commission will evaluate such proposed changes,
including those to a less stringent state, on their merit so long as
adequate reliability is maintained. In this instance, given WECC's
prior statements and its own analysis that such an extended restoration
period could lead to major system disturbances, WECC has failed to
demonstrate that its proposal will maintain adequate reliability, and
therefore has failed to demonstrate that its proposal is just,
reasonable, and in the public interest. Consequently, we remand this
proposal.
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\39\ In its letter requesting approval of the current regional
Reliability Standards WECC states:
The WECC Operating Committee thereafter undertook a
comprehensive review of all WECC criteria, policies, and guidelines
in an effort to identify all unique (i.e., those not in NERC
standards) and essential (i.e., necessary to protect WECC
reliability) criteria that it believed critical to the reliability
of the Western Interconnection. The Operating Committee concluded
that eight regional standards, proposed for adoption here, are of
the highest priority.''
NERC, Request for Approval of Regional Reliability Standards,
Docket No. RR07-11-000, at 4 (filed March 26, 2007) (NERC 2007
Petition).
---------------------------------------------------------------------------
C. Calculation of Minimum Contingency Reserve
31. NERC's Disturbance Control Standard, continent-wide Reliability
Standard BAL-002-0, requires each balancing authority or reserve
sharing group, at a minimum, to maintain at least enough contingency
reserve to cover the most severe single contingency. Similarly,
requirement WR1(a)(ii) of WECC's current WECC-BAL-STD-002-0 requires
balancing authorities to maintain a contingency reserve of spinning and
non-spinning reserves (at least half of which must be spinning),
sufficient to meet the NERC Disturbance Control Standard, BAL-002-0,
equal to the greater of: (1) the loss of generating capacity due to
forced outages of generation or transmission equipment that would
result from the most severe single contingency; or (2) the sum of five
percent of load responsibility served by hydro generation and seven
percent of the load responsibility served by thermal generation. In
approving the regional BAL-STD-002-0 Reliability Standard, the
Commission noted that the regional Reliability Standard is more
stringent than the NERC Reliability Standard, BAL-002-0, because WECC
requires a more stringent minimum reserve requirement than the
continent-wide requirement.
32. As proposed, Requirement R1 of BAL-002-WECC-1 would require
each reserve sharing group or balancing authority that is not a member
of a reserve sharing group to maintain a minimum contingency reserve.
NERC contends that the proposed minimum contingency reserve amount is
more stringent than that required by the continent-wide Reliability
Standard.\40\ NERC explains that, whereas Requirement R3.1 of BAL-002-0
requires that each balancing authority or reserve sharing group carry,
at a minimum, at least enough contingency reserve to cover the most
severe single contingency, proposed Requirement R1.1 of BAL-002-WECC-1
requires that each balancing authority or reserve sharing group
maintain, as a minimum, contingency reserves equal to the loss of the
most severe single contingency or an amount of reserve equal to the sum
of three percent of the load (generation minus station service minus
net actual interchange) and three percent of net generation (generation
minus station service).\41\
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\40\ NERC Petition at 9.
\41\ Id. at 14.
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NOPR Proposal
33. The Commission proposed to find that the eight hours of data
provided by WECC in its initial filing is insufficient to demonstrate
that the proposed minimum contingency reserve requirements are
sufficiently stringent to ensure that entities within the Western
Interconnection will meet the requirements of NERC's continent-wide
Disturbance Control Standard, BAL-002-0. The Commission noted that, in
its March 2007 petition proposing the currently effective regional
Reliability Standard, NERC stated that the eight proposed regional
Reliability Standards ``were critical to maintaining reliability within
the Western Interconnection.'' \42\ The Commission expressed concern
that the proposed regional Reliability Standard was less stringent than
the current regional Reliability Standard and that NERC had not
demonstrated that the proposed regional requirements were sufficient to
meet the requirements of NERC's continent-wide Disturbance Control
Standard, BAL-002-0.
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\42\ NERC 2007 Petition at 4.
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34. Although the proposed Reliability Standard offers some added
clarity by eliminating reference to the term ``load responsibility''
and including renewable energy resources in the calculation of
contingency reserves, the Commission proposed to find that NERC and
WECC did not provide sufficient technical justification to support the
proposed revised method for calculating contingency reserves. Thus, the
Commission proposed to remand BAL-002-WECC-1 so that WECC could develop
additional support and make modifications as appropriate for a future
proposal.
Comments
35. Several commenters argue that the proposed calculation of
minimum contingency reserve levels is more stringent than the
continent-wide NERC requirements under BAL-002-0.\43\ WECC comments
that the Commission has failed to explain how the proposed regional
Reliability Standard, which sets minimum contingency reserve level as
the greater of the most severe single contingency or a calculation of
net generation and load, could be less stringent than the continent-
wide requirement, which sets a minimum contingency reserve level as
equal to the most severe single contingency. NERC, Bonneville, Idaho
Power, NV Energy, SCE, WIRAB, and Xcel all agree that the proposed
regional requirement for calculating minimum contingency reserve levels
is more stringent than the current continent-wide requirement. NERC
adds that, in addition to including a more stringent calculation of
minimum reserve levels, the proposed regional Reliability Standard is
more stringent than the current
[[Page 65970]]
continent-wide Reliability Standard because it includes a requirement
that half of the contingency reserves must immediately and
automatically respond proportionally to frequency deviations, e.g.,
through the action of a governor or other control system. Moreover,
WECC points out that nothing in the proposed Reliability Standard
excuses any balancing authority or reserve sharing group from
satisfying the requirements of the continent-wide Reliability Standard
BAL-002-0.
---------------------------------------------------------------------------
\43\ E.g., WECC, NERC, Bonneville, Idaho Power, NV Energy, SCE,
WIRAB, and Xcel.
---------------------------------------------------------------------------
36. Several commenters argue that approval of the proposed
Reliability Standard does not require any more technical justification
to support the proposed calculation of minimum contingency reserve
levels. WECC notes that the currently approved regional Reliability
Standard was established through negotiations in the 1960s, and was
based on engineering judgment, rather than on technical studies or
simulations. Bonneville adds that the Commission did not require
extensive data support when it approved the current regional
Reliability Standard. NV Energy admits that NERC has provided
insufficient data with respect to whether the requested revision is
just and reasonable and that data may suggest that the proposed
calculation may allow responsible entities to carry less contingency
reserves than currently required under the existing regional
Reliability Standard. Nevertheless, NV Energy argues that the
Commission should approve the proposed Reliability Standard without
requiring any further data because reserve levels required under the
proposed Reliability Standard will be equal to or greater and, thus,
more stringent than reserve levels required under the continent-wide
Reliability Standard.
37. Although WECC argues that it should not be required to provide
any further technical justification, along with its NOPR comments WECC
provided additional data from a frequency responsive reserve study as
support for the proposed regional Reliability Standard. WECC states
that the summary of data demonstrates that, based on stability
simulations applied to varying load scenarios, a minimum of 2,400 MW of
response reserve is necessary to prevent underfrequency load shedding.
Based on a review of all hours during 2007-2008, WECC contends that the
proposed regional Reliability Standard would result in at least 2,927
MW of automatically responsive reserves; more than 500 MW above the
amount required for stability purposes.
38. Powerex and Puget Sound argue that the data provided by WECC in
the NERC Petition are insufficient to support the proposed Reliability
Standard and support the Commission's proposed remand. Puget Sound
contends that WECC's reliance on only eight hours of data to support
the proposed standard was unreasonable and arbitrary and, therefore,
the Commission could not reasonably approve the proposed Reliability
Standard. Powerex argues that the eight hours of data provided by WECC
in the NERC Petition is insufficient to demonstrate that the proposed
minimum contingency reserve requirements are sufficiently stringent to
ensure that entities within the Western Interconnection will meet the
requirements of the continent-wide Reliability Standard. Powerex
reiterates a concern that it expressed during the standard development
process that the proposed regional Reliability Standard assumes the
existence of a liquid ancillary service market when no such market
exists in WECC. Powerex comments that the proposed standard shifts the
operating reserve responsibility away from the source to the load and
will, thereby, result in significant increases in operating reserve
requirements of a number of jurisdictions that are primarily load-based
and will, therefore, require them to procure operating reserves.
Commission Determination
39. We will accept WECC's proposal on this issue. We believe that
WECC's proposed calculation of minimum contingency reserves is more
stringent than the national requirement and could be part of a future
proposal that the Commission could find to be just, reasonable, not
unduly discriminatory or preferential, and in the public interest. In
the NERC Petition for approval of the proposed regional Reliability
Standard, WECC provided technical studies covering eight hours from
each of the four operating seasons (summer, fall, winter, and spring,
both on and off-peak). WECC acknowledges that this data illustrates
that the methodology in the proposed regional Reliability Standard
reduces the total reserves required in the Western Interconnection for
each of the eight hours assessed when compared with the methodology in
the current regional Reliability Standard.\44\ However, WECC also
states that the proposed regional Reliability Standard does not excuse
``any non-performance with the continent-wide Disturbance Control
Standard,'' which requires each balancing authority or reserve sharing
group to activate sufficient contingency reserve to comply with the
Disturbance Control Standard.\45\ WECC's proposal would require
reserves equal to the greater of: (i) The most severe single
contingency; or (ii) the sum of three percent of the load and three
percent of net generation. Moreover, the deliverability of these
contingency reserves would continue to be assured under Requirement R7
of Reliability Standard TOP-002. Any lack of deliverability would
violate TOP-002 regardless of whether the amount of contingency
reserves is based on WECC's current requirement or its proposed
requirement.
---------------------------------------------------------------------------
\44\ See NERC Petition, Exhibit C at 1 (``The estimated impact
of these changes to the required level of reserves in the WECC is a
reduction of 650 MWs or less, a decrease of approximately 9
[percent] at most.'').
\45\ WECC May 24, 2010 Comments at 6 n.7.
---------------------------------------------------------------------------
40. Should WECC resubmit its proposed calculation of minimum
contingency reserves as part of its response to our remand on the issue
of the restoration period, NERC and/or WECC could buttress its proposal
with audits specifically focused on contingency reserves and whether
balancing authorities are meeting the adequacy and deliverability
requirements. This auditing could provide additional assurance to the
Commission that the proposed requirement is just, reasonable, and in
the public interest. This auditing also could address the concerns
raised by some entities in WECC that the original eight hours of data
provided in NERC's petition is insufficient to demonstrate that the
proposed minimum contingency reserve requirements are sufficiently
stringent to ensure that entities within the Western Interconnection
will meet the requirements of NERC's continent-wide Disturbance Control
Standard, BAL-002-0.\46\ Thus, the auditing could provide adequate
technical justification to support the proposed modification.
---------------------------------------------------------------------------
\46\ See Powerex Comments at 4; Puget Sound Comments at 2.
---------------------------------------------------------------------------
41. In response to Powerex's concerns, we believe that a
calculation of minimum contingency reserves that is based on three
percent of net generation and three percent of net load would fairly
balance the responsibilities of contingency reserve providers with the
financial obligations of those who would benefit most from those
services. Under the current regional Reliability Standard, the total
contingency reserve that a balancing authority must maintain is based
only on generating resources. By contrast, under the proposed
requirement, the total contingency reserve that a balancing
[[Page 65971]]
authority must maintain is based on a combination of the generating
resources and the demand served within a balancing authority footprint.
We agree with NERC that the equal split between load and generation
represents a reasonable balance to moderate shifts in contingency
reserve responsibility and costs among the applicable entities.\47\
---------------------------------------------------------------------------
\47\ NERC Petition at 18.
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D. Use of Firm Load To Meet Contingency Reserve Requirement
42. Requirement R3 of proposed BAL-002-WECC-1 would require that
each reserve sharing group or balancing authority use certain types of
reserves that must be fully deployable within ten minutes of
notification to meet their contingency reserve requirement. Requirement
R3.6 of Reliability Standard BAL-002-WECC-1 would allow entities to use
``Load, other than Interruptible Load, once the Reliability Coordinator
has declared a capacity or energy emergency.'' \48\
---------------------------------------------------------------------------
\48\ BAL-002-WECC-1, Requirement R3.6.
---------------------------------------------------------------------------
NOPR Proposal
43. In its NOPR, the Commission proposed to find that Requirement
R3.6 is not technically sound because it would allow balancing
authorities and reserve sharing groups within WECC to use firm load to
meet their minimum contingency reserve requirements ``once the
Reliability Coordinator has declared a capacity or energy emergency,''
thus creating the possibility that firm load could be shed due to the
loss of a single element on the system.\49\ The Commission stated that
the currently effective regional Reliability Standard does not allow
the use of firm load to meet minimum contingency reserve levels.
---------------------------------------------------------------------------
\49\ Citing Order No. 672, FERC Stats. & Regs. ] 31,204 at P 324
(identifying guidelines for what constitutes a just and reasonable
Reliability Standard).
---------------------------------------------------------------------------
Comments
44. WECC, supported by Bonneville, Idaho Power, and SCE, contends
that the proposed regional Reliability Standard treats firm load no
differently than the continent-wide Reliability Standard. WECC states
that the proposed regional Reliability Standard permits the use of
load, other than interruptible load, to meet a contingency only if
``the Reliability Coordinator has declared a capacity or energy
emergency.'' \50\ By contrast, WECC comments, the continent-wide
Reliability Standard provides that contingency reserve may be met by
Operating Reserve-Spinning and Operating Reserve-Supplemental, which
include ``load fully removable from the system within the Disturbance
Recovery Period following the contingency event'' to be used to meet
contingencies.\51\ WECC points out that the continent-wide Reliability
Standard does not refer to the declaration of an emergency. For the
same reason, Idaho Power and Xcel state that the proposed provisions
related to the use of firm load to meet contingency reserve
requirements are more stringent than the continent-wide standards. They
contend that, unlike the continent-wide Reliability Standard, the
proposed regional Reliability Standard requires the declaration of an
emergency prior to utilizing firm load to meet contingency reserve
requirements.
---------------------------------------------------------------------------
\50\ BAL-002-WECC-1, Requirement R3.6.
\51\ See NERC Glossary, available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
---------------------------------------------------------------------------
45. Idaho Power comments that if balancing authorities are unable
to count firm load towards contingency reserve requirements, balancing
authorities may have no choice but to shed firm load to remain in
compliance with the continent-wide Reliability Standard BAL-002-0.
Idaho Power explains that Requirement R6.2 of Reliability Standard EOP-
002-2.1 requires a balancing authority to deploy all available
operating reserves if it cannot meet the Disturbance Control Standard.
If the balancing authority deploys all available operating reserves,
including interruptible loads pursuant to Reliability Standard EOP-002-
2.1, but cannot declare firm load interruptible to satisfy contingency
reserve requirements, Idaho Power contends that the balancing authority
may have no choice but to shed firm load to maintain compliance with
the continent-wide Reliability Standard BAL-002. Thus, Idaho Power
argues that not all emergencies are created equal and the flexibility
to count firm load toward contingency requirements, in limited
circumstances, would promote reliability but avoid unnecessary outages.
46. WECC also states that nothing in the proposed standard directs
any entity to take action that would violate the requirements relating
to alert levels prescribed in EOP-002-2.1. Bonneville agrees and states
that the Commission's concern is misplaced because the proposed
Reliability Standard does not authorize an entity to interrupt firm
load for contingency reserves during EOP-002-2.1 energy emergency
alerts 1 and 2. If the Commission believes that the proposed
Reliability Standard should further qualify the circumstances under
which loads may be used for contingency reserves, WECC contends that
the issue should be addressed in a manner and at a time that does not
preclude approval of the proposed regional Reliability Standard. WECC
adds that it is prepared to participate in any efforts intended to
address the Commission's concerns in this regard.
47. NERC agrees with WECC that a reliability coordinator must
declare a capacity or energy emergency before firm load could be
considered to maintain contingency reserves but also agrees with the
Commission that greater specificity of the appropriate Energy Emergency
Alert (EEA) level that must be declared would be helpful. Puget Sound
argues that the proposed language could be interpreted to allow the use
of firm load in a manner that is inconsistent with EOP-002-2.1. CDWR
comments that reliability planning should not consider shedding firm
loads as a contingency reserve. CDWR contends that balancing authority
should plan for load interruption only if a customer voluntarily agrees
to that specific use of its loads, and only upon clear terms and
conditions.
Commission Determination
48. We will accept WECC's proposal on this issue. The Commission
finds that, similar to the current continent-wide Reliability Standard,
the proposed regional Reliability Standard does not allow balancing
authorities or reserve sharing groups to curtail firm load except in
compliance with NERC's Reliability Standard EOP-002-2.1.
49. The continent-wide Reliability Standard, BAL-002 does not
contemplate the use of firm load as contingency reserve. In fact, it
would be a violation of EOP-002-2.1 if balancing authorities or reserve
sharing groups outside of WECC planned to shed firm load before the
reliability coordinator issued a level 3 energy emergency alert.\52\
Similarly, although Requirement R3.6 of Reliability Standard BAL-002-
WECC-1 would allow balancing authorities and reserve sharing groups to
use ``Load, other than Interruptible Load, once the Reliability
Coordinator has declared a capacity or energy emergency,'' \53\ these
entities would not be authorized to shed firm load unless the
applicable reliability coordinator had issued a level 3 energy
emergency alert pursuant to EOP-002-2.1. Thus, balancing authorities
and reserve sharing groups within WECC are subject to the same
restrictions regarding the use of firm load as contingency reserve as
balancing authorities elsewhere
[[Page 65972]]
operating under the continent-wide Reliability Standard. On remand, we
direct WECC to develop revised language to clarify this point.
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\52\ EOP-002-2.1, Requirement R7.
\53\ BAL-002-WECC-1, Requirement R3.6.
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E. Demand-Side Management as a Resource
50. In Order No. 693, the Commission directed the ERO to submit a
modification to continent-wide Reliability Standard BAL-002-0 that
includes a Requirement that explicitly allows that demand-side
management be used as a resource for contingency reserves, and
clarifies that demand-side management should be treated on a comparable
basis so long as it meets similar technical requirements as other
resources providing this service.\54\ The Commission directed the ERO
to list the types of resources that can be used to meet contingency
reserves to provide users, owners and operators of the Bulk-Power
System a set of options to meet contingency reserves.\55\ The
Commission clarified that the purpose of this directive was to ensure
comparable treatment of demand-side management with conventional
generation or any other technology and to allow demand-side management
to be considered as a resource for contingency reserves on this basis
without requiring the use of any particular contingency reserve
option.\56\ The Commission further clarified that in order for demand-
side management to participate, it must be technically capable of
providing contingency reserve service, with the ERO determining the
technical requirements.\57\
---------------------------------------------------------------------------
\54\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ]
31,242, at P 330, order on reh'g, Order No. 693-A, 120 FERC ] 61,053
(2007).
\55\ Id. P 331, 335.
\56\ Id. P 333.
\57\ Id. P 334.
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51. In its petition, NERC states that it raised this concern with
WECC, and WECC responded that the drafting team wrote the regional
Reliability Standard ``to permit load, Demand-Side Management,
generation, or another resource technology that qualifies as Spinning
Reserve or Contingency Reserve to be used as such.'' WECC further
explained that demand-side management that is deployable within ten
minutes is a subset of interruptible load, which is an acceptable type
of reserve set forth in proposed Requirement R3.2.\58\ WECC previously
commented that, in the proposed standard, ``Loads and [demand-side
management] were not allowed as Spinning Reserve because it is not
permitted by the NERC Spinning Reserve definition.'' \59\
---------------------------------------------------------------------------
\58\ NERC Petition at 40.
\59\ NERC Petition at Exhibit C (Record of Development of
Proposed Reliability Standard) WECC's Written Response to NERC's
Written Comments, August 13, 2008 at page 4.
---------------------------------------------------------------------------
NOPR Proposal
52. In its NOPR, the Commission stated that the proposed regional
Reliability Standard does not explicitly address the use of demand-side
management as a resource for contingency reserves. Accordingly, the
Commission proposed to direct WECC to develop a modification to BAL-
002-WECC-1 that explicitly provides that demand-side management that is
technically capable of providing this service may be used as a resource
for contingency reserves. Consistent with the Commission's directive in
Order No. 693, the Commission explained that the modification should
list the types of resources, including demand-side management, which
can be used to meet contingency reserves. The Commission also stated
that the modification should ensure comparable treatment of demand-side
management with conventional generation or any other technology and
allow demand-side management to be considered as a resource for
contingency reserves on this basis without requiring the use of any
particular contingency reserve option.
53. In addition, the Commission noted a conflict related to the
definition of Spinning Reserve as it is used in the proposed regional
Reliability Standard. The Commission stated that Requirement R3.1
refers to the NERC Glossary definition of Spinning Reserve, which omits
the use of demand-side management or other technologies that could be
used as a resource because it limits acceptable Spinning Reserve
resources to generation resources. The Commission proposed to direct
WECC to develop a modification to the proposed regional Reliability
Standard replacing the term Spinning Reserve with Operating Reserve-
Spinning, which includes as part of the definition of Operating
Reserve, ``load fully removable from the system within the Disturbance
Recovery Period following the contingency event.'' Since the term
Spinning Reserve was not used in other Reliability Standards, the
Commission proposed to direct the ERO to remove the term from the NERC
Glossary upon approval of a modified Reliability Standard using
Operating Reserve-Spinning.
Comments
54. WECC, supported by NERC, Bonneville, CAISO, Idaho Power, and
SCE, contends that the proposed regional Reliability Standard is
inclusive of demand-side management as a resource to be used in the
calculation of contingency reserve because it provides for the use of
Interruptible Load for contingency reserve. WECC points out that the
NERC Glossary defines Interruptible Load as ``demand that the end-use
customer makes available to its load-serving entity via contract or
agreement for curtailment.'' \60\ Nevertheless, if the Commission
issues a remand, CAISO urges the Commission to provide NERC an
opportunity to resubmit BAL-002-WECC-1 to address any definitional
concerns within 90 days.
---------------------------------------------------------------------------
\60\ See NERC Glossary available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
---------------------------------------------------------------------------
55. Xcel comments that the Reliability Standard should not be more
explicit about the inclusion of demand-side management as a resource
because the term demand-side management encompasses many types of
technologies and services, including reduction of energy consumption by
use of high-efficiency light bulbs. If demand-side management is more
explicitly included in the proposed regional Reliability Standard, Xcel
contends that such a revision might cause entities that are working to
provide value to the end-use customers to claim that a customer could
get revenue by providing reserves.
56. By contrast, Puget Sound and CDWR comment that they agree with
the Commission that technically qualified demand-based resources--as
well as other qualified non-generation resources such as energy storage
devices--should be allowed to provide ancillary services. CDWR suggests
that, if Spinning Reserve is meant to connote two products--a
contingency reserve and a frequency regulation reserve--then
consideration should be given to better defining the services and the
associated technical criteria. Nevertheless, CDWR comments that demand-
based resources that agree to interruption for reliability purposes
should receive reduced charges for lesser quality services, an
exemption from charges associated with the same service that the
demand-based resources are providing, and compensation for service they
provide.
57. Concerning the Commission's proposal to direct the ERO to
remove the term Spinning Reserve upon approval of a modified regional
[[Page 65973]]
Reliability Standard, NERC points out that there are two definitions
for Spinning Reserve; one from NERC, the other from WECC. NERC suggests
that the Commission retain the NERC-defined term and retire the WECC
term. NERC states that the proposed standard uses the NERC-defined term
in Requirements R1, R2, and R3.
58. Several commenters oppose the removal of the term Spinning
Reserve from the NERC Glossary.\61\ Puget Sound states that retaining
the term in the NERC Glossary is helpful to the development of a
capacity/reserves market by facilitating the purchase and sale of
spinning capacity that is not contingency-based. Similarly, NV Energy
states that the term Spinning Reserve is useful because it describes a
type of reserve that must be synchronized, unloaded generating
capacity, as this is the only product that can provide the essential
service of frequency and governor response under dynamic system
conditions and disturbances. WSPP argues that the Commission's proposal
is based upon a faulty understanding of the relationship between the
terms Operating Reserve-Spinning and Spinning Reserve. WSPP and MISO
agree that Spinning Reserve is used in the definition of Operating
Reserve, which appears more than fifty times in the NERC Reliability
Standards. WSPP further explains that Spinning Reserve can be used for
the spinning component of Operating Reserve but also for other critical
system requirements. In addition, MISO argues, generally, that it is
not appropriate for the Commission to effect changes to the continent-
wide NERC standards by proposing a modification to the NERC Glossary
within the context of a proceeding addressing a regional Reliability
Standard.
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\61\ E.g., MISO, Puget Sound, WSPP, and Xcel.
---------------------------------------------------------------------------
59. With respect to the Commission's proposed revisions of the
definitions of the terms Operating Reserve--Spinning and Operating
Reserve--Supplemental, NERC agrees that greater clarity is necessary
regarding the meaning of ``load fully removable from the system.'' NERC
states, however, that these modifications must be made through NERC's
Reliability Standard Development Process and are, in fact, currently
being addressed in Project 2007-05 Balancing Authority Controls, which
is currently revising Reliability Standard BAL-002-0, as well as other
standards.\62\
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\62\ As of July 28, 2010, this project has been merged with
Project 2007-18--Reliability-based Controls and is now listed as new
Project 2010-14--Balancing Authority Reliability-based Control. The
new project page is available at http://www.nerc.com/filez/standards/Project2010-14_Balancing_Authority_RBC.html.
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Commission Determination
60. We find that the proposed regional Reliability Standard does
not provide that demand-side management that is technically capable of
providing this service may be used as a resource for contingency
reserves. The WECC definition of Spinning Reserve, like the NERC
definition of the same term, is limited to ``unloaded generation which
is synchronized and ready to serve additional demand.'' Thus, neither
the WECC nor the NERC definitions of Spinning Reserve are inclusive of
demand-side management as a resource.\63\ Nevertheless, WECC argues
that the proposed regional Reliability Standard is inclusive of demand-
side management as a resource for contingency reserves because it lists
interruptible load as an available resource for contingency reserve.
The definition of interruptible load, however, is not inclusive of all
forms of demand-side management.\64\ NERC defines demand-side
management as ``all activities or programs undertaken by Load-Serving
Entity or its customers to influence the amount or timing of
electricity they use.'' \65\ This could include interruptible load but,
as Xcel points out, demand-side management may encompass the use of
many types of technologies and services. For example, according to the
NERC Glossary, demand-side management includes controllable load,
termed Direct Control Load Management, which is defined as demand-side
management that is under the direct control of the system operator but
does not include interruptible load.\66\ Thus, by simply listing
interruptible load, the proposed regional Reliability Standard is not
sufficiently inclusive of demand-side management as a resource.\67\
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\63\ In the transmittal letter of its compliance filing to Order
No. 719, CAISO explained that demand-side management resources
cannot currently provide regulation or spinning reserve services in
its markets because of WECC's definitions of regulation and spinning
reserve, which are limited to generation resources. CAISO,
Compliance Filing, Docket No. ER09-1048-000, at 28-30 (April 28,
2009).
\64\ NERC defines Interruptible Load as ``Demand that the end-
use customer makes available to its Load-Serving Entity via contract
or agreement for curtailment.'' NERC Glossary available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
\65\ NERC Glossary available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
\66\ Id.
\67\ We also note that WECC's explanation that demand-side
management that is deployable within ten minutes is a subset of
interruptible load is not reflected in the definition of
Interruptible Load.
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61. On remand, the Commission hereby adopts its NOPR proposal and
directs the WECC to develop modifications to the proposed regional
Reliability Standard that explicitly provide that demand-side
management technically capable of providing this service may be used as
a resource for both spinning and non-spinning contingency reserves.\68\
Consistent with the Commission's directive in Order No. 693, the
modification should list the types of resources, including demand-side
management, which can be used to meet contingency reserves.\69\ The
modification also should ensure comparable treatment of demand-side
management with conventional generation or any other technology and
allow demand-side management to be considered as a resource for
contingency reserves on this basis without requiring the use of any
particular contingency reserve option. For example, consistent with our
determinations in Order No. 693, the modification could replace the
term Spinning Reserve with Operating Reserve--Spinning and Non-Spinning
Reserve with Operating Reserve--Supplemental, since these glossary
definitions are inclusive of demand-side management, including
controllable load, in contrast to the current terms used in the
proposed regional Reliability Standard.\70\
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\68\ In Order No. 693, the Commission clarified that, in order
for demand-side management to participate as a resource for
contingency reserves, it must be technically capable of providing
contingency reserve service. For example, not every end-user who
curbs electricity usage is technically capable of providing
contingency reserve service. The Commission expects that the ERO
would determine what technical requirements demand-side management
would need to meet to provide contingency reserves. Order No. 693,
FERC Stats. & Regs. ] 31,242 at P 334.
\69\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 333.
\70\ Id. P 1896.
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62. As commenters have pointed out, the term Spinning Reserve is
used in the definition of Operating Reserve and in service agreements
by and among certain WECC entities. Therefore, the Commission will not
adopt its proposal to direct the ERO to remove the term from the NERC
Glossary. However, as NERC points out WECC has maintained its own
definition of the term Spinning Reserve. We find no substantial
difference between the two terms. Both terms refer to ``unloaded
generation that is synchronized and ready to serve additional demand.''
\71\ In its order approving WECC's current regional Reliability
Standard, the Commission determined that regional definitions
[[Page 65974]]
should conform to the definitions set forth in the NERC Glossary,
unless a specific deviation has been justified.\72\ WECC has not
justified the need for a separate, regional definition of Spinning
Reserve. Accordingly, we direct WECC to remove this regional definition
from the NERC Glossary.
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\71\ NERC Glossary, available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
\72\ North American Electric Reliability Corp., 119 FERC ]
61,260 at P 54.
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F. Miscellaneous
Comments
63. In its petition, NERC contends that the industry will benefit
from the improved clarity of the proposed regional Reliability
Standard. Among its revisions, NERC presents a proposal from WECC for
an interpretation of the term ``Load Responsibility.'' \73\ In the
NOPR, the Commission stated its belief that any confusion regarding the
term ``Load Responsibility'' has been addressed by WECC and therefore
does not have a reliability impact. Xcel states that it agrees that
WECC's interpretation is an improvement and that the standard is
clearer without the term. Nevertheless, Xcel comments that more
guidance on application is needed from both WECC and FERC before the
western markets may operate efficiently.
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\73\ WECC's interpretation of ``Load Responsibility,'' which was
approved by the WECC Board of Directors September 7, 2007, places
the responsibility on the balancing authorities to determine the
amount of and assure that adequate contingency reserves are
provided. See WECC Interpretation of Load Responsibility (Sept. 7,
2007), available at http://www.wecc.biz/Standards/Interpretations/Interpretation%20of%20Load%20Responsibility.pdf. Likewise, the
current regional Reliability Standard places the responsibility on
the balancing authorities to determine the amount of contingency
reserves and assure that adequate contingency reserves are provided.
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64. If the Commission decides to remand the proposed regional
Reliability Standard, the QF Parties ask the Commission to direct WECC
to define the term ``net generation.'' The QF Parties explain that the
calculation of the amount of contingency reserves in the proposed
standard is based, in part, on the amount of net generation, which is
not defined. The QF Parties contend that, consistent with Commission
precedent, the definition of net generation should not include
generation used to serve load behind the meter.\74\
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\74\ Citing, Opinion No. 464, Docket No. ER98-997-000, at P 11
et seq., 38-40 (August 12, 2003).
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65. Regarding the applicability of the proposed regional
Reliability Standard, NV Energy expresses concern that it does not
assign any responsibility or obligations for generator owners and
generator operators. NV Energy states that a balancing authority does
not have ownership or operational control over significant shares of
generating resources within its footprint. Thus, NV Energy contends, a
balancing authority may be required to carry a disproportionate share
of the contingency reserve obligation within the Western
Interconnection. For this reason, NV Energy asks the Commission to
direct WECC to address this issue on remand.
Commission Determination
66. The proposed regional Reliability Standard offers certain
improvements over the current regional Reliability Standard as
commenters point out. Nevertheless, for the reasons discussed above, we
must remand the proposed regional Reliability Standard to the ERO. On
remand, we direct WECC to consider the concerns raised by the QF
Parties and NV Energy.
III. Information Collection Statement
67. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting and recordkeeping (collections of
information) imposed by an agency.\75\ The information contained here
is also subject to review under section 3507(d) of the Paperwork
Reduction Act of 1995.\76\ By remanding the proposed Reliability
Standard the Commission is maintaining the status quo until future
revisions to the Reliability Standard are approved by the Commission.
Thus, the Commission's action does not add to or increase entities'
reporting burden.
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\75\ 5 CFR 1320.11.
\76\ 44 U.S.C. 3507(d).
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IV. Environmental Analysis
68. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\77\ 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.\78\ The actions directed
herein fall within this categorical exclusion in the Commission's
regulations.
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\77\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
\78\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act
69. The Regulatory Flexibility Act of 1980 (RFA) \79\ 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 final 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.\80\ For electric
utilities, a firm is small if, including 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 by remanding the proposed
Reliability Standard the Commission is maintaining the status quo until
future revisions to the Reliability Standard are approved by the
Commission.
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\79\ 5 U.S.C. 601-612.
\80\ See 13 CFR 121.201.
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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 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.
71. 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.
72. 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].
VII. Effective Date and Congressional Notification
73. This final rule shall become effective November 26, 2010. The
Commission has determined, with the concurrence of the Administrator of
the
[[Page 65975]]
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.
Kimberly D. Bose,
Secretary.
Appendix A
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List of Commenters
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Commenter name Abbreviation
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Western Electricity Coordinating Council..... WECC
North American Electric Reliability Corp..... NERC
Bonneville Power Administration.............. Bonneville
California Independent System Operator Corp.. CAISO
California Dept of Water Resources, State CDWR
Water Project.
Idaho Power Co............................... Idaho Power
Midwest Independent System Operator, Inc..... MISO
Powerex Corp................................. Powerex
Puget Sound Energy, Inc...................... Puget Sound
Cogeneration Association of California and QF Parties
the Energy Producers and Users Coalition.
Sempra Generation............................ Sempra
Sierra Pacific Power Co. and Nevada Power Co. NV Energy
Southern California Edison Co................ SCE
Western Interconnection Regional Advisory WIRAB
Body.
WSPP Inc..................................... WSPP
Xcel Energy Services Inc..................... Xcel
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[FR Doc. 2010-27134 Filed 10-26-10; 8:45 am]
BILLING CODE 6717-01-P