
[Federal Register: November 26, 2008 (Volume 73, Number 229)]
[Proposed Rules]               
[Page 71977-71983]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no08-38]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-12-000]

 
Western Electricity Coordinating Council Regional Reliability 
Standard Regarding Automatic Time Error Correction

November 20, 2008.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to section 215(d)(2) of the Federal Power Act (FPA), 
the Federal Energy Regulatory Commission proposes to approve a regional 
Reliability Standard, BAL-004-WECC-01 (Automatic Time Error 
Correction), submitted to the Commission by the North American Electric 
Reliability Corporation (NERC). As a separate action, pursuant to 
section 215(d)(5) of the FPA, the Commission proposes to direct WECC to 
develop several modifications to the regional Reliability Standard. The 
proposed regional Reliability Standard would require balancing 
authorities within the Western Interconnection to maintain 
interconnection frequency within a predefined frequency profile and 
ensure that time error corrections are effectively conducted in a 
manner that does not adversely affect the reliability of the 
Interconnection.

DATES: Comments are due January 12, 2009.

ADDRESSES: You may submit comments, identified by docket number by any 
of the following methods:
     Agency Web Site: http://ferc.gov. Documents created 
electronically using word processing software should be filed in native 
applications or print-to-PDF format and not in a scanned format.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver an original and 14 copies of 
their comments to: Federal Energy Regulatory Commission, Secretary of 
the Commission, 888 First Street, NE., Washington, DC 20426.

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.
Katherine Waldbauer (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8232.
E. Nick Henery (Technical Information), Office of Electric Reliability, 
Division of Policy Analysis and Rulemaking, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
8636.

SUPPLEMENTARY INFORMATION:
    1. Pursuant to section 215(d)(2) of the Federal Power Act (FPA), 
the Federal Energy Regulatory Commission proposes to approve a regional 
Reliability Standard, BAL-004-WECC-01 (Automatic Time Error 
Correction), submitted to the Commission by the North American Electric 
Reliability Corporation (NERC). As a separate action, pursuant to 
section 215(d)(5) of the FPA, the Commission proposes to direct the 
Western Electricity Coordinating Council (WECC) to develop several 
modifications to the regional Reliability Standard. The proposed 
regional Reliability Standard would require balancing authorities 
within the WECC region to implement an automatic time error correction 
procedure for the purpose of maintaining Interconnection frequency 
within a predefined frequency profile and ensuring that time error 
corrections are effectively conducted in a manner that does not 
adversely affect reliability.\1\
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    \1\ The proposed regional Reliability Standard will be in effect 
within the Western Interconnection-wide WECC Regional Entity. In 
this proceeding, the Commission proposes to take action to make 
mandatory the regional Reliability Standard as it applies within the 
U.S. portion of the Western Interconnection.
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    2. The proposed Reliability Standard would benefit the reliable 
operation of the Bulk-Power System by creating an operating environment 
that encourages system operators to minimize the difference between the 
net actual and net scheduled interchanges, thus reducing the number of 
manual time error corrections required by the Western Interconnection 
Time Monitor, and reducing accumulated inadvertent interchange energy 
between Western Interconnection balancing authorities. The Commission 
also proposes to accept three related definitions for inclusion in the 
NERC Reliability Standards Glossary (NERC glossary). The Commission 
further proposes modifications to the violation risk factors for the 
regional Reliability Standard. Pursuant to Order No. 672,\2\ the 
Commission may accept two types of regional Reliability Standards that 
differ from continent-wide NERC Reliability Standards, 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. As discussed below, the 
Commission is proposing to find that the regional Reliability Standard 
proposed by WECC is more stringent than the applicable continent-wide 
NERC Reliability Standard.
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    \2\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204 (2006), order on reh'g, Order No. 672-A, 
FERC Stats. & Regs. ] 31,212 (2006).
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I. Background

    3. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards, which are subject to Commission review and 
approval. Once approved, the Reliability Standards may be enforced by 
the ERO, subject to Commission oversight, or by the Commission 
independently.\3\
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    \3\ See FPA 215(e)(3), 16 U.S.C. 824o(e)(3).

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[[Page 71978]]

    4. In February 2006, the Commission issued Order No. 672, 
implementing section 215 of the FPA. Pursuant to Order No. 672, the 
Commission certified one organization, NERC, as the ERO.\4\ Reliability 
Standards that the ERO proposes to the Commission may include 
Reliability Standards that are proposed to the ERO by a Regional 
Entity.\5\ When the ERO reviews a regional Reliability Standard that 
would be applicable on an Interconnnection-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.\6\
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    \4\ See North American Electric Reliability Corp., 116 FERC ] 
61,062 (ERO Certification Order), order on reh'g and compliance, 117 
FERC ] 61,126 (2006).
    \5\ 16 U.S.C. 824o(e)(4).
    \6\ 16 U.S.C. 824o(d)(3); 18 CFR 39.5(b).
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    5. In reviewing the ERO's submission, the Commission will give due 
weight to the ERO's technical expertise, except concerning the effect 
of a proposed Reliability Standard on competition.\7\ The Commission 
will also give due weight to the technical expertise of a Regional 
Entity organized on an Interconnection-wide basis with respect to a 
proposed Reliability Standard to be applicable within that 
Interconnection.\8\
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    \7\ 16 U.S.C. 824o(d)(2).
    \8\ Id.
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    6. The Commission may approve a proposed Reliability Standard if 
the Commission finds it is just, reasonable, not unduly discriminatory 
or preferential, and in the public interest.\9\ In addition, the 
Commission explained in Order No. 672 that ``uniformity of Reliability 
Standards should be the goal and the practice, the rule rather than the 
exception.'' \10\ Yet, the Commission recognized that ``the goal of 
greater uniformity does not, however, mean that regional differences 
cannot exist.'' \11\ The Commission then provided the following 
guidance:
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    \9\ Id.
    \10\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290.
    \11\ Id. P 291.

    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 by 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 
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in the Bulk-Power System.\12\

    \12\ Id.

    7. On March 16, 2007, the Commission issued Order No. 693, 
approving 83 of the 107 Reliability Standards originally proposed by 
NERC.\13\ In addition, pursuant to section 215(d)(5) of the FPA, the 
Commission directed NERC to develop modifications to 56 of the 83 
approved Reliability Standards.\14\ Relevant to the immediate 
proceeding, the Commission approved continent-wide Reliability Standard 
BAL-004-0 (Time Error Correction), but noted that WECC's regional 
approach appears to serve as a more effective means of accomplishing 
time error corrections.\15\
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    \13\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
    \14\ 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, ``The 
Commission * * * may order the Electric Reliability Organization to 
submit to the Commission a proposed reliability standard or a 
modification to a reliability standard that addresses a specific 
matter if the Commission considers such a new or modified 
reliability standard appropriate to carry out this section.''
    \15\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 377, 382. 
The Commission also directed NERC to develop a modification to BAL-
004-0 to include Levels of Non-Compliance and additional Measures 
for Requirement R3.
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    8. On April 19, 2007, the Commission approved delegation agreements 
between NERC and each of the eight Regional Entities, including 
WECC.\16\ Pursuant to such agreements, the ERO delegated responsibility 
to the Regional Entities to enforce the mandatory, Commission-approved 
Reliability Standards. In addition, the Commission approved, as part of 
each delegation agreement, a Regional Entity process for developing 
regional Reliability Standards. In the Delegation Agreement Order, the 
Commission accepted WECC as a Regional Entity organized on an 
Interconnection-wide basis and accepted WECC's Standards Development 
Manual which sets forth the process for development of WECC's 
Reliability Standards.\17\
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    \16\ See North American Electric Reliability Corp., 119 FERC ] 
61,060, order on reh'g, 120 FERC ] 61,260 (2007) (Delegation 
Agreement Order).
    \17\ Id. PP 469-470.
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    9. In a June 2007 Order, the Commission approved eight regional 
Reliability Standards that apply in the WECC region.\18\
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    \18\ North American Electric Reliability Corp., 119 FERC ] 
61,260.
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The Proposed WECC Regional Reliability Standard

A. NERC Filing

    10. On July 29, 2008, NERC submitted for Commission approval, in 
accordance with section 215(d)(1) of the FPA,\19\ regional Reliability 
Standard BAL-004-WECC-01, which would apply to balancing authorities 
within the Western Interconnection. NERC states that the primary 
purpose of the regional Reliability Standard is to reduce the number of 
time error corrections imposed on the Western Interconnection by 
requiring balancing authorities that operate synchronously to the 
Western Interconnection to automatically correct for their contribution 
to time error. According to NERC, BAL-004-WECC-01 provides the added 
benefit of a superior approach over the current NERC manual time error 
correction (BAL-004-0) for assigning costs and providing the equitable 
payback of inadvertent interchange.\20\
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    \19\ 16 U.S.C. 824o (2006).
    \20\ The NERC glossary defines ``interchange'' as the energy 
transfers that cross balancing authority boundaries, and defines 
``inadvertent interchange'' as the difference between the balancing 
authority's net actual interchange and its net scheduled 
interchange. Within a synchronous Interconnection, during real-time 
operations, a balancing authority may engage in ``inadvertent 
interchange,'' if it experiences an operational problem that 
prevents its net actual interchange of energy from matching its net 
scheduled interchange with other balancing authorities within the 
Interconnection. This discrepancy will indicate what is referred to 
as a ``time error''--i.e., because the Interconnection will operate 
at a frequency (number of cycles per second) that is different from 
the Interconnection's scheduled frequency of 60 Hz (60 cycles per 
second). Time error also serves as a means to measure of how much 
and which balancing authority within the Interconnection is at 
fault. To correct the time error using the ATEC method, it is 
necessary for the balancing authority that was at fault to adjust 
the Interconnection's frequency so that it equalizes its prior 
inadvertent energy exchange with the Interconnection.
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    11. NERC states that Automatic Time Error Correction or ``ATEC'' 
has been a regional reliability practice in WECC, effectively reducing 
manual time error corrections, reducing the number of hours of manual 
time error correction for the Western Interconnection, and reducing the 
accumulated inadvertent interchange in the Western Interconnection 
since 2003. NERC asserts that the proposed WECC regional Reliability 
Standard is more stringent or covers matters not addressed by NERC's 
continent-wide Reliability Standards, BAL-004-0 and BAL-006-1 
(Inadvertent Interchange).
    12. Proposed regional Reliability Standard BAL-004-WECC-01 contains 
four requirements, summarized as follows:

[[Page 71979]]

    13. Requirement R1. Based on the ATEC methodology, this requirement 
is necessary to ensure that all balancing authorities continuously 
participate in Automatic Time Error Correction through their automatic 
generation control systems. The sub-requirement (R1.1.) limits the 
payback amount to minimize any operating metric violations, while R1.2. 
addresses actions for cases when invalidated implementation of the ATEC 
methodology occurs and requires adjustments.
    14. Requirement R2. Requires a balancing authority that operates in 
any automatic generation control operating mode other than ATEC to 
notify all other balancing authorities of its operating mode. To avoid 
large accumulation of inadvertent interchanges, Requirement R2 limits a 
balancing authority's use of operating modes other than ATEC to a 
maximum of 24 hours per calendar quarter.
    15. Requirement R3. Requires balancing authorities to have the 
capability to switch between different automatic generation control 
operating modes in case of islanding or loss of frequency telemetry.
    16. Requirement R4. Requires each balancing authority to calculate 
and record its hourly ``Primary Inadvertent Interchange'' when hourly 
checkout is complete.
    17. NERC also proposes the following three new definitions.
    18. Automatic Time Error Correction: A frequency control automatic 
action that a Balancing Authority uses to offset its frequency 
contribution to support the Interconnection's scheduled frequency.
    19. Primary Inadvertent Interchange: The component of area (n) 
inadvertent interchange caused by the regulating deficiencies of area 
(n) itself.
    20. Secondary Inadvertent Interchange: The component of area (n) 
inadvertent interchange caused by the regulating deficiencies of area 
(i).
    21. In its filing, NERC asserts that the ATEC procedure set forth 
in the proposed regional Reliability Standard has been effective in 
mitigating three problems relating to correction of time errors in the 
Western Interconnection. First, the ATEC procedure has reduced the need 
for the WECC Time Monitor to conduct manual time error corrections from 
216 manual time error corrections in 2003 to 106 manual time error 
corrections in 2007. Second, since time error is directly related to 
inadvertent interchange, the ATEC procedure reduces both time error and 
accumulated inadvertent interchange. Third, according to NERC, the ATEC 
procedure better identifies the balancing authorities responsible for 
inadvertent interchange and provides a more equitable and more 
immediate payback of the inadvertent interchange to the balancing 
authorities that should receive it (i.e., the balancing authorities 
that did not cause the inadvertent interchange and supported the 
interconnection's scheduled frequency) than the current NERC time error 
correction process in BAL-004-0.
    22. NERC also states that the proposed regional Reliability 
Standard satisfies the factors set forth in Order No. 672 that the 
Commission considers when determining whether a proposed Reliability 
Standard is just, reasonable, not unduly discriminatory or preferential 
and in the public interest.\21\ According to NERC, BAL-004-WECC-01 is 
clear and unambiguous regarding what is required and who is required to 
comply (balancing authorities). NERC also states that the proposed 
regional Reliability Standard has clear and objective measures for 
compliance and achieves a reliability goal (namely, creating an 
operating environment that encourages system operators to minimize the 
difference between the net actual and net scheduled interchanges, and 
to better control frequency) effectively and efficiently.
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    \21\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 323-337.
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    23. NERC notes that, during the NERC posting process, one commenter 
criticized the proposed regional Reliability Standard as using 
intentionally imbalanced interchange schedules to correct time error 
without adjusting the scheduled interconnection frequency, and offered 
another approach. According to NERC, WECC considered the commenter's 
concerns and respectfully disagrees, explaining that the two approaches 
produce only a very slight variability in the calculation of the 
Control Performance Standard1 (CPS1).\22\
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    \22\ A balancing authority's Area Control Error (ACE) equation 
shows the instantaneous difference between a balancing authority's 
net actual interchange and net scheduled interchange. The Control 
Performance Standard (CPS1) is a statistical measure of the 
variability of a balancing area's ACE equation over a specified 
period. Thus, the balancing authority's CPS1 serves as an operating 
metric that demonstrates how closely the balancing authority is 
operating to the interconnection's frequency schedule.
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B. Development of the Regional Reliability Standard

    24. NERC states that on August 7, 2007, WECC submitted a request to 
NERC to approve, and submit to the Commission for approval, BAL-004-
WECC-01. NERC states that WECC developed the regional Reliability 
Standard following its Process for Developing and Approving WECC 
Standards and, therefore, NERC rebuttably presumes that the standard is 
just, reasonable, and not unduly discriminatory or preferential, and in 
the public interest. According to NERC, the proposed regional 
Reliability Standard establishes requirements that are more stringent 
than, or covers areas not covered by, current continent-wide NERC 
Reliability Standards, thereby meeting the Commission criteria for 
consideration of a regional Reliability Standard.
    25. Upon receipt of WECC's request, NERC commenced an evaluation of 
the regional Reliability Standard and initiated a 45-day public comment 
period. WECC responded to the comments presented during the NERC 
posting and requested NERC to present the regional Reliability Standard 
for board of trustees approval. During the evaluation, NERC identified 
shortcomings that WECC agreed to address by submitting a revised 
version of the regional Reliability Standard to the NERC board, which 
approved the regional Reliability Standard on March 26, 2008.

II. Discussion

    26. The Commission proposes to approve BAL-004-WECC-01, effective 
as proposed by NERC (the first quarter after approval by the 
Commission). In addition, the Commission proposes to direct 
modifications of BAL-004-WECC-01 pursuant to the Process for Developing 
and Approving WECC Standards and relevant NERC Rules of Procedure. The 
Commission also proposes to approve the three proposed new definitions, 
Automatic Time Error Correction, Primary Inadvertent Interchange and 
Secondary Inadvertent Interchange. The Commission proposes to approve 
the Violation Risk Factors, but proposes specific modifications to the 
Violation Risk Factors as well.

A. Regional Reliability Standard

    27. Pursuant to section 215(d) of the FPA, the Commission proposes 
to approve BAL-004-WECC-01 as just, reasonable, not unduly 
discriminatory or preferential and in the public interest. Further, the 
Commission proposes to find that the regional Reliability Standard is 
more stringent than the related continent-wide NERC Reliability 
Standard, BAL-004-1 (Time Error Correction).\23\ Pursuant to section 
215(d)(5) of the FPA, the Commission also proposes to direct 
modifications to

[[Page 71980]]

BAL-004-WECC-01, as discussed below.
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    \23\ See Order No. 672, FERC Stats. & Regs. ] 31,204 at P 291.
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    28. Pursuant to the continent-wide NERC Reliability Standard BAL-
004-1, when accumulated time error increases to a predetermined level, 
the Interconnection's ``time monitor'' instructs all balancing 
authorities in the Interconnection to manually change the scheduled 
Interconnection's frequency until the Interconnection's accumulated 
time error has been reduced to a set level. However, the requirements 
of BAL-004-1 do not require each balancing authority to determine what 
portion of the Interconnection's time error that it alone caused.
    29. Under the proposed WECC ATEC methodology, each balancing 
authority in the Western Interconnection is required to calculate its 
``primary inadvertent interchange'' \24\ and enter its ``primary 
inadvertent interchange'' into its ACE equation. When all balancing 
authorities input their portion of ``primary inadvertent interchange'' 
into their ACE equation,\25\ they continuously correct for their own 
``primary time error'' and, in turn, reduce the Western 
Interconnection's total time error.
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    \24\ The balancing authority causing the frequency error is said 
to have created ``primary time error'' and caused ``primary 
inadvertent interchange.'' The other balancing authorities in the 
Interconnection responding to correct system frequency are said to 
have created ``secondary time error'' and caused ``secondary 
inadvertent interchange.''
    \25\ See n.20, supra.
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    30. This differs from the methodology used in NERC's BAL-004-1, in 
that ATEC is designed to place the responsibility to correct primary 
time error on the balancing authority that causes it. Further, as 
explained by NERC, the proposed regional Reliability Standard is more 
stringent or covers matters not addressed by the related continent-wide 
NERC Reliability Standards BAL-004-0 and BAL-006-1. It appears that the 
proposed regional Reliability Standard provides for automatic 
correction of time error, using a more refined primary inadvertent 
interchange term than that included in the continent-wide NERC 
Reliability Standards for manual correction of time error.\26\ The 
Commission is proposing to find that the regional Reliability Standard 
proposed by WECC is more stringent than the continent-wide NERC 
Reliability Standard, because it provides for continuous capture of 
inadvertent interchange, and thereby (1) contributes to better 
operation of balancing authorities by operators, and (2) ensures that 
discrepancies between a balancing area's net scheduled interchange and 
its net actual interchange are adjusted more quickly and accurately. 
Based on this understanding, pursuant to section 215(d) of the FPA, the 
Commission proposes to approve BAL-004-WECC-01 as just, reasonable, not 
unduly discriminatory or preferential and in the public interest.
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    \26\ NERC filing at 10.
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    31. During the NERC posting of the WECC ATEC standard, one 
commenter asserted that BAL-004-WECC-01 does not maintain the integrity 
of the CPS1 reliability requirement because the WECC ATEC methodology 
uses intentionally imbalanced interchange schedules to correct time 
error without adjusting the scheduled interconnection frequency, and 
thus the adjustment to the scheduled frequency is not transparent. 
Contending that the failure to have balanced interchange schedules 
causes a failure to comply with necessary conditions to maintain the 
integrity of the CPS1 criteria, the commenter argues, the WECC ATEC 
methodology poses a threat to the reliability of the Interconnection.
    32. According to NERC, WECC disagrees with the commenter because 
the increase in variability of CPS1 measurement that occurs with the 
use of the ATEC methodology is still well within the threshold defined 
by NERC's Reliability Standard BAL-001-0 (Real Power Balancing Control 
Performance), and the only difference between the two methods is a 
slight variability in the calculation of CPS1.\27\ When balancing the 
slight loss of precision in CPS1 scores with the benefit of fewer 
manual time error corrections, WECC does not believe the ultimate 
impact of using the ATEC procedure is a threat to reliability.\28\ 
According to NERC and WECC, empirical data from the use of the ATEC 
procedure over the past four years confirm this view. Further, WECC 
states, implementation of the commenter's proposed alternative--
requiring each WECC balancing authority to undertake significant 
changes to Automatic Generation Control technology--could have a 
potential cost in excess of $1 million, for a marginal increase in 
precision (not accuracy) of calculation of the operating metric CPS1.
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    \27\ NERC filing at 31.
    \28\ Id.
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    33. Order No. 672 provides that a Reliability Standard must be 
designed to achieve a specified reliability goal and must contain a 
technically sound means to achieve this goal.\29\ Likewise, the 
Reliability Standard should be based on actual data and lessons learned 
from actual operations.\30\ The Commission believes that the ATEC 
procedure satisfies these considerations. NERC and WECC make clear that 
balancing authorities in the Western Interconnection have applied the 
ATEC methodology since 2003, improving time error and reducing the need 
for manual adjustments. Moreover, the ACE equation with ATEC currently 
being used in the Western Interconnection to maintain the 
interconnection frequency is identical in value to the ACE equation 
with ATEC recommended by the commenter, and differs from the 
commenter's proposed ACE equation with ATEC only in form.\31\ Thus, we 
consider the use of the ATEC procedure to be compliant with Order No. 
672's directive that the proposed Reliability Standard achieves a 
reliability goal and contains a technically sound means to achieve the 
goal, and is based on actual data and lessons learned.
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    \29\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 324.
    \30\ Id.
    \31\ As noted at footnote 22, supra, CPS1 is the operating 
metric that demonstrates how well a balancing authority is 
controlling its area (i.e., the extent to which a balancing 
authority is meeting the Interconnection's scheduled frequency and 
preventing inadvertent interchange). To comply with NERC Standard 
BAL-001, the balancing authority must operate in such a way that 
CPS1 will be calculated to be equal to or greater than 100 percent. 
The commenter's recommended ACE equation with ATEC term allows CPS1 
to be calculated with slightly greater precision than the WECC-
proposed ACE equation with ATEC. However, WECC points out and NERC 
agrees, that ``[p]resent Balancing Authority CPS1 scores in the 
Western Interconnection are generally well above the 100% minimum 
NERC requirement'' (NERC filing at 20; see also http://www.nerc.com/
filez/cps.html, showing that as of May 2007, the average CPS1 score 
of the WECC entities is 185 percent, and the lowest is 156 percent). 
Thus, any reductions in CPS1 due to the above calculation issue 
would have only a minimal effect on the measurement of overall 
interconnection reliability.
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B. Proposed Definitions

    34. As mentioned above, the Commission proposes to accept the three 
new definitions, Automatic Time Error Correction, Primary Inadvertent 
Interchange and Secondary Inadvertent Interchange.

C. Modifications Required by the Commission

    35. While the Commission is satisfied with the substance of the 
regional Reliability Standard, the Commission has identified a number 
of concerns with regard to the style and format of the Standard.\32\
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    \32\ Cf., North American Electric Reliability Corporation, 119 
FERC ] 61,260 at P 54-55.
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    36. Requirement R1.2 provides in part, `` [l]arge accumulations of 
primary inadvertent [energy] point to an invalid implementation of 
ATEC, loose control, metering or accounting errors. A

[[Page 71981]]

[balancing authority] in such a situation should identify the source of 
the error(s) and make the corrections.'' \33\ The phrases ``large 
accumulation'' and ``in such a situation'' are not defined and thus, 
while likely obvious in many circumstances, leaves to individual 
interpretation when a ``large'' amount of primary inadvertent has 
accumulated. Likewise, the phrase ``in such a situation'' is not 
sufficiently clear. The Commission proposes to direct WECC to develop 
revisions to this provision so that a balancing authority will know 
with specificity the circumstances that trigger the actions required by 
Requirement R1.2.
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    \33\ NERC filing, Exhibit A at 4.
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    37. Requirement R2 states that ``[e]ach [balancing authority] while 
synchronously connected to the Western Interconnection will be allowed 
to have ATEC out of service for a maximum of 24 hours per calendar 
quarter, for reasons including maintenance and testing'' \34\ (emphasis 
added). The Commission proposes to direct WECC to develop a 
modification that clarifies whether the ``maximum of 24 hours per 
calendar quarter'' refers to a single occurrence of up to 24 hours in 
the calendar quarter, or whether several occurrences are permitted as 
long as they add up to 24 hours or less within a calendar quarter.
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    \34\ Id.
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D. Violation Risk Factors

1. Background
    38. As part of its compliance and enforcement program, NERC must 
assign a ``lower,'' ``medium,'' or ``high'' violation risk factor to 
each Requirement of each mandatory Reliability Standard to associate a 
violation of the Requirement with its potential impact on the 
reliability of the Bulk-Power System. Violation risk factors are 
defined as follows:
    39. High Risk Requirement: (a) Is a requirement that, if violated, 
could directly cause or contribute to Bulk-Power System instability, 
separation, or a cascading sequence of failures, or could place the 
Bulk-Power System at an unacceptable risk of instability, separation, 
or cascading failures; or (b) is a requirement in a planning time frame 
that, if violated, could, under emergency, abnormal, or restorative 
conditions anticipated by the preparations, directly cause or 
contribute to Bulk-Power System instability, separation, or a cascading 
sequence of failures, or could place the Bulk-Power System at an 
unacceptable risk of instability, separation, or cascading failures, or 
could hinder restoration to a normal condition.
    40. Medium Risk Requirement: (a) Is a requirement that, if 
violated, could directly affect the electrical state or the capability 
of the Bulk-Power System, or the ability to effectively monitor and 
control the Bulk-Power System, but is unlikely to lead to Bulk-Power 
System instability, separation, or cascading failures; or (b) is a 
requirement in a planning time frame that, if violated, could, under 
emergency, abnormal, or restorative conditions anticipated by the 
preparations, directly affect the electrical state or capability of the 
Bulk-Power System, or the ability to effectively monitor, control, or 
restore the Bulk-Power System, but is unlikely, under emergency, 
abnormal, or restoration conditions anticipated by the preparations, to 
lead to Bulk-Power System instability, separation, or cascading 
failures, nor to hinder restoration to a normal condition.
    41. Lower Risk Requirement: Is administrative in nature and (a) is 
a requirement that, if violated, would not be expected to affect the 
electrical state or capability of the Bulk-Power System, or the ability 
to effectively monitor and control the Bulk-Power System; or (b) is a 
requirement in a planning time frame that, if violated, would not, 
under the emergency, abnormal, or restorative conditions anticipated by 
the preparations, be expected to affect the electrical state or 
capability of the Bulk-Power System, or the ability to effectively 
monitor, control, or restore the Bulk-Power System.\35\
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    \35\ North American Electric Reliability Corp., 119 FERC ] 
61,145, at P 9 (Violation Risk Factor Order), order on reh'g, 120 
FERC ] 61,145 (2007) (Violation Risk Factor Rehearing Order).
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    42. In the Violation Risk Factor Order, the Commission addressed 
violation risk factors filed by NERC for Version 0 and Version 1 
Reliability Standards. In that order, the Commission used five 
guidelines for evaluating the validity of each violation risk factor 
assignment: (1) Consistency with the conclusions of the Blackout 
Report, (2) consistency within a Reliability Standard, (3) consistency 
among Reliability Standards with similar Requirements, (4) consistency 
with NERC's proposed definition of the violation risk factor level, and 
(5) assignment of violation risk factor levels to those Requirements in 
certain Reliability Standards that co-mingle a higher risk reliability 
objective and a lower risk reliability objective.\36\
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    \36\ For a complete discussion of each factor, see the Violation 
Risk Factor Order at P 19-36.
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    43. The Commission notes that in NERC's July 29, 2008 petition, a 
``lower'' violation risk factor is assigned to only the main 
Requirements and no violation risk factor is assigned to any of the 
sub-Requirements. The Commission understands that NERC, and WECC, will 
apply the violation risk factor for the main Requirement to any 
violation of a sub-Requirement, unless separate violation risk factors 
are assigned to the Requirement and the sub-Requirement. The Commission 
also notes that neither NERC nor WECC provided in the petition a 
discussion explaining the justification of the proposed violation risk 
factor assignments.
2. Commission Proposal
    44. The Commission proposes to direct the ERO to modify the 
violation risk factor assigned to BAL-004-WECC-01, Requirements R1, R2, 
R3, and R4 from ``lower'' to ``medium'' as discussed below. In the 
absence of justification for the proposed violation risk factor 
assignments, the Commission generally believes that each of the subject 
Requirements provides an element necessary for a balancing authority's 
participation in time error correction within the Western 
Interconnection. As such, the Commission believes that the potential 
reliability risk that a violation of any of the subject Requirements 
presents with regard to participation in time error correction in the 
Western Interconnection is the same.
3. Requirements R1, R2, R3, and R4
    45. Proposed regional Reliability Standard BAL-004-WECC-01, 
Requirements R1, R2, R3, and R4, collectively, have the reliability 
objective to provide for a balancing authority's participation in time 
error correction within the Western Interconnection. Requirement R1 
specifies a methodology and establishes that a balancing authority must 
continuously operate utilizing time error correction methodology in its 
automatic generation control system. Requirement R2 establishes that a 
balancing authority that operates its automatic generation control 
using any other methodology other than time error correction 
methodology must notify all other balancing authorities of its 
operating mode. Requirement R3 establishes that a balancing authority 
must have the capability to switch between different automatic 
generation control modes. Requirement R4 establishes that each 
balancing authority must calculate and record its hourly primary 
inadvertent interchange to correct the time error.
    46. The continent-wide NERC Reliability Standard BAL-004-0, 
Requirement R3 shares the same reliability objective as the proposed

[[Page 71982]]

regional Reliability Standard: Namely, to provide for participation of 
all balancing authorities in time error correction. The Commission has 
previously determined that participation in an interconnection's time 
error correction is critical and can directly affect the state of the 
Bulk-Power System.\37\ The Commission explained that, ``[i]f a 
balancing authority does not participate in time error correction when 
called upon, coordinated actions with the other balancing authorities 
to correct the deviation will not reflect that balancing authority's 
contribution to the deviation and, thus, those corrective actions will 
not be fully effective, thereby adversely affecting the state of the 
Bulk-Power System.'' \38\ The Commission determined that the potential 
reliability risk that a violation of Reliability Standard BAL-004-0, 
Requirement R3 presents is consistent with the definition of a 
``medium'' violation risk factor. Accordingly, BAL-004-0, Requirement 
R3 is assigned a ``medium'' violation risk factor.
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    \37\ North American Electric Reliability Corporation, 121 FERC ] 
61,179, at P 43 (2007).
    \38\ Id.
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    47. The Commission expects consistency among violation risk factor 
assignments of Requirements that share the same reliability 
objective.\39\ As explained previously in the NOPR, BAL-004-WECC-01, 
Requirements R1, R2, R3, and R4, collectively, and Reliability Standard 
BAL-004-0, Requirement R3 have the same reliability objective--to 
ensure a balancing authority's participation in time error correction. 
BAL-004-WECC-01 seeks to accomplish this objective regionally through 
automatic correction, and BAL-004-0 seeks to do so nationally through 
manual correction. Therefore, consistent with Guideline 3, the 
Commission proposes to direct the ERO to modify the assigned violation 
risk factor for BAL-004-WECC-01, Requirements R1, R2, R3, and R4 from 
``lower'' to ``medium'' and requests comment on this proposal.
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    \39\ Violation risk factor Guideline 3.
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E. Violation Severity Levels

    48. For each Requirement of a Reliability Standard, NERC states 
that it will also define up to four violation severity levels--lower, 
moderate, high and severe--as measurements of the degree to which the 
Requirement was violated. For a specific violation of a particular 
Requirement, NERC or the Regional Entity will establish the initial 
value range for the base penalty amount by finding the intersection of 
the applicable violation risk factor and violation severity level in 
the Base Penalty Amount Table in Appendix A of NERC's Sanction 
Guidelines.\40\
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    \40\ See North American Electric Reliability Corp., 119 FERC ] 
61,248, at P 74 (2007) (directing NERC to develop up to four 
violation severity levels (lower, moderate, high, and severe) as 
measurements of the degree of a violation for each requirement and 
sub-requirement of a Reliability Standard and submit a compliance 
filing by March 1, 2008).
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    49. In its July 29, 2008 petition, NERC proposes violation severity 
levels that apply generally to all violations of the Requirements of 
BAL-004-WECC-01 and not to any one specific Requirement. Therefore, the 
Commission proposes to direct the ERO to submit new violation severity 
levels for each Requirement and sub-Requirement that has been assigned 
a violation risk factor. With regard to the assignment of violation 
risk factors, the Commission reiterates that it understands that NERC 
and WECC will apply the violation risk factor for the main Requirement 
to any violation of a sub-Requirement, unless separate violation risk 
factors are assigned to the Requirement and the sub-Requirement.
    50. In summary, proposed Regional Reliability Standard BAL004-WECC-
01 appears to be just, reasonable, not unduly discriminatory or 
preferential, and in the public interest. Accordingly, the Commission 
proposes to approve regional Reliability Standard BAL004-WECC-01 as 
mandatory and enforceable. In addition, the Commission proposes to 
direct the ERO to modify the proposed regional reliability standard and 
the proposed violation risk factors and violation severity levels, as 
described above. The Commission invites comments on these proposals.

III. Information Collection Statement

    51. The Office of Management and Budget (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\41\ Upon approval of a collection(s) of information, OMB 
will assign an OMB control number and an expiration date. Respondents 
subject to the filing requirements of an agency rule will not be 
penalized for failing to respond to these collections of information 
unless the collections of information display a valid OMB control 
number. The Paperwork Reduction Act (PRA) \42\ requires each federal 
agency to seek and obtain OMB approval before undertaking a collection 
of information directed to ten or more persons, or continuing a 
collection for which OMB approval and validity of the control number 
are about to expire.\43\
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    \41\ 5 CFR 1320.8.
    \42\ 44 U.S.C. 3501-3520.
    \43\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
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    52. This order approves and requires modifications of one regional 
Reliability Standard that was submitted by NERC as the ERO. Section 215 
of the FPA authorizes the ERO to submit Reliability Standards to 
provide for the reliable operation of the Bulk-Power System. Pursuant 
to the statute, the ERO must submit each Reliability Standard that it 
proposes to be made effective to the Commission for approval.\44\
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    \44\ See 16 U.S.C. 824(d).
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    53. The proposed regional Reliability Standard, which applies to 
approximately 35 balancing authorities in the U.S. portion of the 
Western Interconnection, does not require balancing authorities to file 
information with the Commission. It does require balancing authorities 
to develop and maintain certain information for a specified period of 
time, subject to inspection by WECC. However, the Commission does not 
believe that approval of the WECC regional Reliability Standard will 
result in an increase in reporting burdens as compared to current 
practices in WECC. As NERC indicates, since 2003, WECC has used the 
automatic time error correction practice set forth in BAL-004-WECC-01. 
Thus, the Commission finds that the requirement to develop and maintain 
information in the regional Reliability Standard mirrors customary and 
usual business practice and, therefore, imposes minimal burden on 
balancing authorities and eliminates any possible confusion between 
current industry practice and the standard, and that the proposed 
modifications to the current Reliability Standard effected by this 
proposed rule will not increase the reporting burden nor impose any 
additional information collection requirements.
    54. The Commission does not foresee any impact on the reporting 
burden for small businesses. However, we will submit this proposed rule 
to OMB for informational purposes.
    55. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Michael Miller, 
Office of the Executive Director, Phone: (202) 502-8415, fax: (202) 
273-0873, e-mail: michael.miller@ferc.gov]. Comments on the 
requirements of this order may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington,

[[Page 71983]]

DC 20503 [Attention: Desk Officer for the Federal Energy Regulatory 
Commission], e-mail: oira_submission@omb.eop.gov.

IV. Environmental Analysis

    56. 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.\45\ 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.\46\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \45\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act of 1969, 52 FR 47,897 (Dec. 17, 1987), FERC 
Stats. & Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \46\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act Certification

    57. The Regulatory Flexibility Act of 1980 (RFA) \47\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on a substantial number of small 
entities. The Small Business Administration's Office of Size Standards 
develops the numerical definition of a small business. (See 13 CFR 
121.201.) For electric utilities, a firm is small if, including its 
affiliates, it is primarily engaged in the transmission, generation 
and/or distribution of electric energy for sale and its total electric 
output for the preceding twelve months did not exceed four million 
megawatt hours.
---------------------------------------------------------------------------

    \47\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

    58. In drafting a rule an agency is required to: (1) Assess the 
effect that its regulation will have on small entities; (2) analyze 
effective alternatives that may minimize a regulation's impact; and (3) 
make the analyses available for public comment.\48\ In its NOPR, the 
agency must either include an initial regulatory flexibility analysis 
(initial RFA) \49\ or certify that the proposed rule will not have a 
``significant impact on a substantial number of small entities.'' \50\
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    \48\ 5 U.S.C. 601-604.
    \49\ 5 U.S.C. 603(a).
    \50\ 5 U.S.C. 605(b).
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    59. As noted above, the Commission has determined that the regional 
Reliability Standard will not impose any new burden on balancing 
authorities within the Western Interconnection, as the practice has 
been used in the region since 2003. Further, the regional reliability 
standard would apply to about 35 balancing areas in the Western 
Interconnection. The Commission estimates that of these balancing 
areas, approximately two to four qualify as small entities, because the 
total electric output of each of these entities for the preceding 
twelve months did not exceed four million megawatt hours. Thus, few 
small entities are impacted by the proposed rule. Therefore, the 
Commission certifies, for informational purposes only, that the 
regional Reliability Standard will not have a significant impact on a 
substantial number of small entities.

VI. Comment Procedures

    60. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due January 12, 2009. Comments must refer to 
Docket No. RM08-12-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments.
    61. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://
www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    62. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street, NE., Washington, DC 20426.
    63. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VII. Document Availability

    64. 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.
    65. 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.
    66. User assistance is available for eLibrary and the FERC's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By direction of the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. E8-28088 Filed 11-25-08; 8:45 am]

BILLING CODE 6717-01-P
