
[Federal Register: March 24, 2010 (Volume 75, Number 56)]
[Proposed Rules]               
[Page 14097-14103]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr10-15]                         

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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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[[Page 14097]]



DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM09-18-000; 130 FERC ] 61,204]

 
Revision to Electric Reliability Organization Definition of Bulk 
Electric System

March 18, 2010.
AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission proposes to direct the Electric Reliability 
Organization (ERO) to revise its definition of the term ``bulk electric 
system'' to include all electric transmission facilities with a rating 
of 100 kV or above. The Commission proposes that a Regional Entity must 
seek ERO and Commission approval before exempting any facility rated at 
100 kV or above from compliance with mandatory Reliability Standards. 
The Commission believes that a 100 kV threshold for identifying bulk 
electric system facilities will protect the reliability of the bulk 
electric system. The proposal would also provide consistency across the 
nation's reliability regions regarding the identification of bulk 
electric system facilities.

DATES: Comments are due May 10, 2010.

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, Office of the 
Secretary, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:
Kumar Agarwal (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. (202) 502-8923.
Robert Snow (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. (202) 502-6516.
Jonathan First (Legal Information), Office of General Counsel, 888 
First Street, NE., Washington, DC 20426. (202) 502-8529.

SUPPLEMENTARY INFORMATION:

Notice of Proposed Rulemaking

    1. The Commission proposes to direct the Electric Reliability 
Organization (ERO) to revise its definition of the term ``bulk electric 
system'' to include all electric transmission facilities with a rating 
of 100 kV or above. The Commission proposes that a Regional Entity must 
seek ERO and Commission approval before exempting any facility rated at 
100 kV or above from compliance with mandatory Reliability Standards. 
The Commission believes that a 100 kV threshold for identifying bulk 
electric system facilities will protect the reliability of the bulk 
electric system. The proposal would also provide consistency across the 
nation's reliability regions regarding the identification of bulk 
electric system facilities.\1\
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    \1\ The Commission is not proposing any new or modified text to 
its regulations.
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I. Background

A. Section 215 of the Federal Power Act

    2. On August 8, 2005, the Energy Policy Act of 2005 (EPAct) was 
enacted into law. Title XII of EPAct added a new section 215 to the 
Federal Power Act (FPA),\2\ which requires a Commission-certified ERO 
to develop mandatory and enforceable Reliability Standards, 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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    \2\ Public Law 109-58, Title XII, Subtitle A, 119 Stat. 594, 941 
(2005) (codified at 16 U.S.C. 824o).
    \3\ See 16 U.S.C. 824o(e)(3).
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    3. In February 2006, the Commission issued Order No. 672,\4\ 
implementing section 215 of the FPA. Pursuant to Order No. 672, the 
Commission certified one organization, the North American Electric 
Reliability Corporation (NERC), as the ERO.\5\
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    \4\ 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).
    \5\ See North American Electric Reliability Corp., 116 FERC ] 
61,062 (ERO Certification Order), order on reh'g and compliance, 117 
FERC ] 61,126 (2006).
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B. Order No. 693

    4. On March 16, 2007, in Order No. 693,\6\ pursuant to section 
215(d) of the FPA,\7\ the Commission approved 83 Reliability Standards 
proposed by the NERC, the Commission-certified ERO.\8\ In addition, 
Order No. 693 addressed the applicability of mandatory Reliability 
Standards to the Bulk-Power System.
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    \6\ See 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) (directing improvements to 
56 of the 83 approved Reliability Standards and leaving 24 
Reliability Standards as pending until further information is 
provided).
    \7\ 16 U.S.C. 824o(d) (2006).
    \8\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006), 
aff'd sub nom. Alcoa Inc. v. FERC, No. 06-1426 (DC Cir.) (certifying 
NERC as the ERO responsible for the development and enforcement of 
mandatory Reliability Standards).
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    5. In Order No. 693, the Commission explained that section 215(a) 
of the FPA defines Bulk-Power System as:

    (A) Facilities and control systems necessary for operating an 
interconnected electric energy transmission network (or any portion 
thereof) and
    (B) Electric energy from generating facilities needed to 
maintain transmission system reliability. The term does not include 
facilities used in the local distribution of electric energy.[\9\]

    \9\ 16 U.S.C. 824o(a).
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    The Commission observed that NERC defines ``bulk electric system'' 
as follows:

    As defined by the Regional Reliability Organization, the 
electrical generation resources, transmission lines, 
interconnections with neighboring systems, and associated equipment, 
generally operated at voltages of 100 kV or higher. Radial 
transmission facilities serving only load with

[[Page 14098]]

one transmission source are generally not included in this 
definition.[\10\]
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    \10\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 51.

    Additionally, the Commission recognized that this definition 
provides discretion to define ``bulk electric system'' without any 
stated limitation and without ERO oversight. Nevertheless, it accepted 
the definition.
    6. The Commission stated in Order No. 693 that, ``at least for an 
initial period, the Commission will rely on the NERC definition of bulk 
electric system and NERC's registration process to provide as much 
certainty as possible regarding the applicability to and the 
responsibility of specific entities to comply with the Reliability 
Standards * * *.'' \11\ Further, the Commission explained that some 
regional definitions of bulk electric system exclude facilities below 
230 kV and transmission lines that serve Washington, DC and New York 
City:
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    \11\ Id. P 75; see also Order No. 693-A, 120 FERC ] 61,053 at P 
19 (``the Commission will continue to rely on NERC's definition of 
bulk electric system, with the appropriate regional differences, and 
the registration process until the Commission determines in future 
proceedings the extent of the Bulk-Power System'').

    Although we are accepting the NERC definition of bulk electric 
system and NERC's registration process for now, the Commission 
remains concerned about the need to address the potential for gaps 
in coverage of facilities. For example, some current regional 
definitions of bulk electric system exclude facilities below 230 kV 
and transmission lines that serve major load centers such as 
Washington, DC and New York City. The Commission intends to address 
this matter in a future proceeding.[\12\]
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    \12\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 77 
(footnotes omitted).

    The Commission directed NERC to submit an informational filing that 
includes regional definitions of bulk electric system and any regional 
documents that identify critical facilities to which the Reliability 
Standards apply (i.e., facilities below 100 kV).

C. NERC's June 14, 2007 Filing

    7. In a June 14, 2007 filing, NERC submitted the regional 
definitions of bulk electric system.\13\ NERC represented that ``[e]ach 
Regional Entity utilizes the definition of bulk electric system in the 
NERC Glossary of Terms Used in Reliability Standards (NERC Glossary); 
however, as permitted by that definition * * * several Regional 
Entities define specific characteristics or criteria that the Regional 
Entity uses to identify the bulk electric system facilities for its 
members. In addition, the Reliability Standards apply to load shedding 
and special protection relay facilities below 100 kV, which are 
monitored by Regional Entities, in compliance with NERC's Reliability 
Standards.'' \14\
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    \13\ NERC Informational Filing, Docket No. RM06-16-000 (June 14, 
2007) (June 2007 Filing).
    \14\ Id. at 7.
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    8. In the June 2007 Filing, NERC indicated that four Regional 
Entities, Texas Regional Entity, Florida Reliability Coordinating 
Council (FRCC), Midwest Reliability Organization, and SERC Reliability 
Corporation, use the NERC definition of bulk electric system without 
modification. In a supplemental filing, NERC informed the Commission 
that Western Electricity Coordinating Council (WECC) uses the NERC 
definition alone in its implementation of Regional Entity 
activities.\15\
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    \15\ NERC Supplemental Informational Compliance Filing, Docket 
No. RM06-16-000 (March 6, 2009).
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    9. Three other Regional Entities, ReliabilityFirst Corporation 
(ReliabilityFirst), Southwest Power Pool (SPP Regional Entity) and 
Northeast Power Coordinating Council, Inc. (NPCC) stated that they use 
the NERC definition supplemented with additional criteria. For example, 
SPP Regional Entity indicated that it uses the criteria specified in 
the NERC Statement of Registry Criteria (with one exception). 
ReliabilityFirst supplemented the NERC definition with specific 
voltage-based inclusions and exclusions. For example, ReliabilityFirst 
includes ``lines operated at voltage of 100 kV or higher.'' \16\ 
ReliabilityFirst excludes certain radial facilities, balance of 
generating plant control and operation functions, and ``all other 
facilities operated at voltages below 100 kV.''
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    \16\ June 2007 Filing at 10.
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    10. NERC's June 2007 Filing indicated that NPCC also asserts that 
it uses the NERC definition of bulk electric system supplemented by 
additional criteria. Unlike the supplemental criteria of other Regional 
Entities, however, NPCC utilizes a significantly different approach to 
identifying bulk electric system elements. According to NERC, NPCC 
identifies elements of the bulk electric system using an impact-based 
methodology, not a voltage-based methodology. Further, as part of its 
approach to defining the bulk electric system, NPCC includes its own 
definition of ``bulk power system'' as follows:

    The interconnected electrical systems within northeastern North 
America comprised of system elements on which faults or disturbances 
can have a significant adverse impact outside of the local area.

    According to NERC, NPCC analyzes all system elements within its 
footprint regardless of size (voltage) to determine impact based on 
this definition. NERC's filing included NPCC's ``Classification of Bulk 
Power System Elements,'' which provides further information on the 
above definition and how it is applied.\17\ Each balancing authority 
conducts studies in accordance with NPCC Document A-10 to develop a 
list of Bulk-Power System assets, which must be approved by NPCC's Task 
Force on System Studies.
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    \17\ NERC June 2007 Filing, Attachment 1 (NPCC Document A-10, 
Classification of Bulk Power System Elements (April 28, 2007)).
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D. NPCC Identification of Bulk Electric System Facilities

    11. In a December 2008 order, the Commission directed NERC and NPCC 
to submit to the Commission a comprehensive list of bulk electric 
system facilities located within the United States portion of the NPCC 
region.\18\ The Commission explained that there appeared to be 
conflicting lists of bulk electric system elements developed by one of 
the balancing authorities in the United States portion of the NPCC 
region. Further, it was not clear which, if any, of the lists developed 
using NPCC's document A-10 were submitted to NPCC or approved by NPCC's 
Task Force on System Studies. The December 2008 Order also stated that 
``[t]he Commission believes that to best achieve reliability, the 
applicable NPCC list should be consistent with both the NPCC impact-
based methodology and with the interpretations of bulk electric system 
elements in other regional entities.'' \19\
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    \18\ North American Electric Reliability Corp., 125 FERC ] 
61,295 (2008) (December 2008 Order).
    \19\ Id. P 13.
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    12. In response, NERC and NPCC submitted a compliance filing on 
February 20, 2009, as supplemented on April 21, 2009. The compliance 
filing indicated that the ``NPCC Approved BES List'' of June 2007 is 
the only listing of bulk electric system facilities approved by NPCC 
and is the current list of facilities within the U.S. portion of NPCC 
to which the NERC Reliability Standards apply.\20\ The filing indicated 
that a majority of the 115 kV and 138 kV transmission facilities in the 
NYISO Balancing Authority Area of the NPCC

[[Page 14099]]

region are excluded from the bulk electric system and, hence, 
compliance with mandatory Reliability Standards. In addition, NPCC 
excludes approximately seven higher voltage (e.g., 230 kV, 345 kV and 
500 kV) transmission facilities, some connecting to nuclear power 
plants.
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    \20\ NERC and NPCC Compliance Filing at 5 (February 20, 2009), 
Docket No. RC09-3-000. The February 20 Compliance Filing also 
indicated that the NPCC approved list of bulk electric system 
elements was not developed pursuant to NPCC's Document A-10, 
Classification of Bulk Power System Elements, identified in NERC's 
June 2007 Filing. Rather, the approved NPCC list was developed 
pursuant to an earlier version of the NPCC impact-based methodology.
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    13. NERC and NPCC also provided information on generation 
facilities in the U.S. portion of NPCC that are subject to compliance 
with mandatory Reliability Standards. According to the filing, 92 
percent of the total gross megavolt-ampere (MVA) in the NYISO Balancing 
Authority Area, and 97 percent of the total gross MVA in the NE-ISO 
Balancing Authority Area, are subject to compliance with mandatory 
Reliability Standards. That information also indicates that numerous 
transmission lines at 100 kV and above that interconnect with the 
registered generation facilities are excluded from NPCC's list of bulk 
electric system facilities.
    14. In September 2009, NERC and NPCC submitted a compliance filing 
in which NPCC evaluated the impact and usefulness of a 100 kV ``bright-
line'' bulk electric system definition as well as another optional 
method which utilizes Transmission Distribution Factor calculations to 
determine reliability impacts. The NPCC definition would exclude radial 
portions of the transmission system.\21\ However, NPCC states that it 
continues to believe that its current impact-based approach provides an 
adequate level of reliability and, therefore, intends to continue to 
apply the impact-based approach in classifying its bulk-electric system 
elements.\22\
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    \21\ NERC and NPCC Compliance Filing and Assessment of Bulk 
Electric System Report (September 21, 2009), Docket No. RC09-3-000. 
NPCC would define ``radial portions of the transmission system to 
include (1) an area serving load that is connected to the rest of 
the network at a single transmission substation at a single 
transmission voltage by one or more transmission circuits; (2) tap 
lines and associated facilities which are required to serve local 
load only; (3) transmission lines that are operated open for normal 
operation; or (4) additionally as an option, those portions of the 
NPCC transmission system operated at 100 kV or higher not explicitly 
designated as a BES path for generation which have a one percent or 
less participation in area, regional or inter regional power 
transfers. Id. at 11.
    \22\ Id. at 7-8. See also id. at 14 (``[i]f directed by the 
Commission to adopt the developed [bulk electric system] definition 
for U.S. registered entities within the NPCC footprint, NPCC would 
need additional time to carefully consider and develop a more 
extensive and detailed implementation plan'').
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II. Discussion

    15. As discussed in further detail below, based on our experience 
in implementing FPA section 215 over the past four years and events 
that have either caused or contributed to significant bulk electric 
system disturbances and cascading outages, the Commission has 
reevaluated the definition of ``bulk electric system'' contained in 
Commission-approved NERC Glossary and has determined that the 
definition needs to be modified in order to protect the reliability of 
the Nation's Bulk-Power System.\23\ Accordingly, the Commission 
proposes to direct the ERO to revise, within 90 days of the effective 
date of a final rule in this proceeding, the ERO's definition of the 
term ``bulk electric system'' to include all electric transmission 
facilities with a rating of 100 kV or above.\24\
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    \23\ As with Reliability Standards, the Commission reviews and 
approves revisions to the NERC glossary pursuant to FPA section 
215(d)(2). Further, the Commission may direct a modification to 
address a specific matter identified by the Commission pursuant to 
section 215(d)(5). See Order No. 693, FERC Stats. & Regs. ] 31,242 
at P 1893-98.
    \24\ While the Commission indicated in Order No. 693, FERC 
Stats. & Regs. ] 31,242 at P 77, that the Commission may reconsider 
the scope of the statutory term Bulk Power System in a future 
proceeding, in this proceeding we are addressing only the ERO's 
definition of the term bulk electric system.
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    16. This proposal would eliminate the discretion provided in the 
current definition for a Regional Entity to define ``bulk electric 
system'' within a region. Importantly, however, we emphasize that we 
are not proposing to eliminate all regional variations and we do not 
anticipate that the proposed change would affect most entities. The 
goal of the proposal is to eliminate significant inconsistencies across 
regions and provide a backstop review to ensure that any regional 
variations do not compromise reliability and that facilities that could 
significantly impact reliability are subject to mandatory rules. Simply 
put, if the Commission does not take this step, we are concerned that 
we would not be fulfilling the intent of Congress in enacting section 
215 to protect reliability of the Nation's Bulk-Power System, including 
reliability in major cities. The proposed change in definition and our 
rationale and technical support for a new definition, are discussed in 
more detail below.
    17. The current ERO definition provides a ``general'' 100 kV 
threshold for identifying ``bulk electric system'' facilities:

    As defined by the Regional Reliability Organization, the 
electrical generation resources, transmission lines, 
interconnections with neighboring systems, and associated equipment, 
generally operated at voltages of 100 kV or higher. Radial 
transmission facilities serving only load with one transmission 
source are generally not included in this definition.\25\
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    \25\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 51.

    The definition, however, as noted above, also provides discretion 
for a Regional Entity \26\ to define ``bulk electric system'' without 
any stated limitation or ERO oversight. Although the Commission 
accepted this definition in our early implementation of FPA section 
215, in Order No. 672,\27\ we also expressed certain reservations about 
the definition and in particular a preference for uniformity of 
Reliability Standards. More recently, we have repeated our preference 
for a uniformity of definitions used by the ERO and the Regional 
Entities.\28\ Similarly, the Commission believes that there should be 
uniformity in the definition of bulk electric system and the 
identification of facilities that are subject to mandatory Reliability 
Standards. Without such uniformity, and assurance of a strong 
justification for not complying with a uniform definition, the risk is 
that the reliability of the electric system could be compromised.
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    \26\ In Order No. 693, the Commission recognized the Regional 
Entities as the appropriate statutory regional body, and directed 
the ERO to substitute ``Regional Entity'' for ``Regional Reliability 
Organization'' in mandatory Reliability Standards. Id. at P 157, 
321.
    \27\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290 
(``[t]he Commission believes that uniformity of Reliability 
Standards should be the goal and practice, the rule rather than the 
exception'').
    \28\ Western Electricity Coordinating Council Regional 
Reliability Standard Regarding Automatic Time Error Correction, 
Order No. 723, 127 FERC ] 61,176, at P 39 (2009) (``the Commission 
believes NERC, as a rule, should develop definitions that apply 
uniformly across the different regions. As a general goal, NERC 
should work to minimize the use of regional definitions and 
terminology * * *.'').
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    18. The Commission recognizes that there may be limited 
circumstances when a variation from the proposed uniform 100 kV 
threshold is appropriate. The Commission proposes that a Regional 
Entity must seek ERO approval before it exempts any transmission 
facility rated at 100 kV or above from compliance with mandatory 
Reliability Standards. Pursuant to this proposal, the ERO must submit 
to the Commission for review on a facility-by-facility basis any ERO-
approved exception to the proposed threshold that all transmission 
facilities at 100 kV or above, except for radial transmission 
facilities serving only load, are subject to compliance with mandatory 
Reliability Standards. Any such submission must also include adequate 
supporting information explaining why

[[Page 14100]]

it is appropriate to exempt a specific transmission facility that would 
otherwise satisfy the proposed 100 kV threshold. Only after Commission 
approval would the proposed exclusion take effect. Such review would 
allow flexibility where warranted while providing appropriate oversight 
to assure that there is a legitimate need for an exemption. The 
Commission seeks comment whether a corresponding revision to the ERO's 
Rules of Procedure to accommodate the proposed process is warranted.
    19. Further, the Commission does not propose to change the ERO's 
statement that ``[r]adial transmission facilities serving only load 
with one transmission source are generally not included in this 
definition.'' Likewise, as is currently the case, Regional Entities may 
identify ``critical'' facilities, rated at less than the 100 kV, that 
are subject to mandatory Reliability Standards, without seeking 
approval from the ERO and the Commission.\29\
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    \29\ See NERC June 2007 Filing at 14.
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    20. The Commission believes that the proposed 100 kV threshold for 
identifying bulk electric system facilities is consistent with current 
reliability criteria. Most notably, NERC has applied a definition of 
bulk electric system that includes a 100 kV ``general'' threshold for 
decades.\30\ As discussed above, seven of eight Regional Entities have 
adopted NERC's definition, including the 100 kV threshold, either 
verbatim or with limited additional criteria.\31\ Significantly, 
ReliabilityFirst Regional Entity, which resulted from a merger of three 
historical reliability regions, successfully replaced three ``legacy'' 
definitions with a 100 kV threshold for defining bulk electric system 
facilities.\32\ Moreover, the NERC Statement of Compliance Registry 
Criteria, which the ERO and Regional Entities use to determine which 
entities should be registered to comply with mandatory Reliability 
Standards, also utilizes a 100 kV threshold.\33\ In fact, the Registry 
Criteria provide that a load serving entity should be subject to 
registration if its peak load exceeds 25 MW ``and is directly connected 
to the bulk power (>100 kV) system * * *.'' \34\ Likewise, the Registry 
Criteria provide that a transmission owner or transmission operator 
should be registered if it owns or operates ``an integrated 
transmission element associated with the bulk power system 100 kV and 
above * * *.'' \35\
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    \30\ See, e.g., NERC Board of Trustees, Minutes of the Meeting 
at 2-3 (April 3-4, 1995) (noting adoption of definitions, including 
a definition of bulk electric system: ``[t]he bulk electric system 
is a term commonly applied to that portion of an electric utility 
system, which encompasses the electrical generation resources, 
transmission lines, interconnections with neighboring systems, and 
associated equipment, generally operated at voltages of 100 kV or 
higher'').
    \31\ We note that WECC has established a ``BES definition Task 
Force,'' which is currently re-evaluating WECC's 100 kV threshold. 
This Task Force has previously considered options that include 
retaining WECC's current 100 kV threshold, adopting a 200 kV 
threshold, or adopting a ``classification by voltage'' definition. 
More recently, in December 2009, WECC's Task Force posted a proposal 
to retain the 100 kV threshold, and also allow for the exclusion of 
facilities with a rating above 100 kV based on a ``material impact'' 
assessment. Information regarding the Task Force's activities is 
available on the WECC Web site at: http://www.wecc.biz/Standards/
Development/BES/default.aspx.
    \32\ See NERC June 2007 Filing at 11. One of the merged 
reliability councils in the ReliabilityFirst footprint had 
historically excluded transmission facilities with a rating below 
230 kV from the definition of bulk electric system. Id. In an 
October 1, 2007 letter, ReliabilityFirst informed NERC of its 
transition plan to allow sufficient time for entities with 
facilities at voltages less than 230 kV to become compliant with 
mandatory Reliability Standards. Subsequently, ReliabilityFirst 
informed NERC that, as of December 2008, it completed the 
transition, and all entities within ReliabilityFirst ``now subscribe 
to the stated bulk electric system definition and are required to 
comply with the NERC Reliability Standards in accordance with the 
new definition.'' NERC Supplemental Compliance Filing at 3 (March 6, 
2009), Docket No. RM06-16-000.
    \33\ NERC Statement of Registry Criteria, Revision 5.0 (October 
16, 2008) (Registry Criteria).
    \34\ Id. at 7.
    \35\ Id. at 9.
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    21. In addition, the Commission believes that there is adequate 
technical justification for the proposed 100 kV threshold for 
identifying bulk electric system facilities for reliability-related 
purposes. Events on facilities rated at 115 kV and 138 kV have either 
caused or contributed to significant bulk electric system disturbances 
and cascading outages. For example, a February 26, 2008 event in the 
FRCC region, which resulted in widespread outages, originated from a 
fault at a facility connected to the 138 kV transmission system. This 
event resulted in the loss of 24 transmission lines and loss of 4,300 
MW of generation, associated with thirteen generating units, and 
disruption of electric service to more than three million customers for 
several hours on average.
    22. Other recent events also evidence the impact of 115 and 138 kV 
facilities on bulk electric system reliability. On June 13, 2008, the 
electrical failure of a 138 kV motor operated switch on a 138 kV-13 kV 
transformer located in the ReliabilityFirst region resulted in the 
tripping of two transformers, one due to the electrical failure and the 
second due to inappropriate operation of an adjacent protection system. 
This event resulted in the tripping of three 138 kV-13kV transformers, 
three 138 kV transmission lines, and an estimated loss of approximately 
150 MW of firm load in a critical high population density area. A June 
27, 2007 event on 138 kV transmission lines in the NPCC region resulted 
in sequential tripping of the four 138 kV cable-circuits. The event 
resulted in the interruption of service to about 137,000 customers as 
well as the loss of five generators and six 138 kV transmission lines.
    23. Transmission lines with a rating of 100-200 kV represent a 
significant portion of the total circuit miles of transmission within 
the bulk electric system.\36\ As illustrated by the disturbances 
described above, the 100-200 kV facilities are important to reliable 
operations. Moreover, events that occur on the 100-200 kV facilities 
can result in consequences, sometimes severe, to the reliability of the 
higher kV system.
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    \36\ In the Eastern Interconnection, there is a total of 182,288 
transmission line circuit miles rated above 100 kV, of which 
approximately 103,983 transmission line circuit miles are rated 
between 100 kV and 200 kV, or 57 percent of the total. In the 
Western Interconnection, approximately 27,318 (or 41 percent) of a 
total 66,815 transmission line circuit miles consist of facilities 
rated between 100 kV and 200 kV. (Based on information from publicly 
available sources, including FERC Form 1. The figures exclude 
transmission lines owned by Federal and local governmental 
entities.)
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    24. In addition, there are other compelling technical reasons for 
proposing a 100 kV threshold. Certain transmission lines in the U.S. 
portion of NPCC region are not identified as bulk electric system 
although these transmission lines extend into the footprint of another 
Regional Entity where they are considered bulk electric system 
facilities. For example, NPCC does not identify two 115 kV transmission 
lines--Falconer to Warren, and North Waverly to East Sayre--as part of 
the bulk electric system in its region even though the sections of 
these lines that connect to PJM's balancing authority area are 
considered bulk electric system within the Reliability First 
Corporation footprint.
    25. Moreover, reliability coordinators within NPCC have declared 
transmission load relief (TLR) events, pursuant to Reliability Standard 
IRO-006-4, on certain transmission lines to protect reliability of the 
bulk electric system.\37\ Yet, NPCC does not classify the transmission 
lines subject to the TLR events as bulk electric system

[[Page 14101]]

facilities. For example, the New York Independent System Operator has 
declared TLR events on a flowgate named ``Central East ties,'' multiple 
times, in some cases for more than twenty four hours, in a ninety-day 
period during 2009. The Central East ties consist of ten transmission 
elements, three of which operate at 115 kV, all of which were impacted 
during the TLR event.\38\ Yet, the three 115 kV transmission elements 
are not bulk electric system facilities pursuant to NPCC's current 
regional definition of that term. This suggests that entities within 
NPCC operate their systems as if certain facilities are important to 
protect the reliability of the bulk electric system, even though NPCC 
does not identify the same transmission facilities as bulk electric 
system elements.
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    \37\ Pursuant to Reliability Standard IRO-006-4, the TLR 
procedure is used by reliability coordinators to prevent or manage 
potential or actual violations of ``system operating limits'' and 
``interconnection reliability operating limits'' to maintain 
reliability of the bulk electric system.
    \38\ See North American Reliability Council, Transmission 
Loading Relief Log (June 2009), https://www.crc.nerc.net/.
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    26. Thus, the Commission believes that its proposal to direct the 
ERO to consistently maintain a 100 kV threshold for identifying bulk 
electric system facilities for reliability purposes, with exceptions 
allowed only with ERO and Commission oversight, is justified based on 
(1) the need to eliminate inappropriate inconsistencies among regions, 
(2) the historical and current application of a 100 kV threshold to 
identify the bulk electric system for reliability purposes, and (3) the 
technical justification for a 100 kV threshold provided above, 
including events on facilities rated at 115 kV and 138 kV that have 
caused or contributed to significant bulk electric system disturbances 
and cascading outages.
    27. As discussed above, information provided by the ERO indicates 
that seven of eight Regional Entities currently have regional 
definitions of ``bulk electric system'' that are consistent with the 
ERO definition, either verbatim or with limited additional criteria. 
Thus, the Commission does not believe that the proposal would have an 
immediate effect on entities in any Regional Entity other than NPCC. 
Based on NERC's and NPCC's responses to the Commission's December 2008 
Order, it appears that a significant number of transmission lines in 
the U.S. portion of the NPCC region rated at 115 kV and 138 kV are 
currently excluded from NPCC's definition of bulk electric system. The 
Commission recognizes that, similar to the transition that occurred in 
the ReliabilityFirst region, entities within the U.S. portion of NPCC 
would likely require a reasonable period of time to ensure that they 
can comply with mandatory Reliability Standards for previously-exempt 
facilities. Therefore, the Commission proposes to allow a Regional 
Entity impacted by the Commission's final rule in this matter to submit 
a transition plan that allows a reasonable period of time for affected 
entities within that region to achieve compliance with respect to 
facilities that are subject to mandatory Reliability Standards for the 
first time.\39\
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    \39\ We note that for certain specific matters (such as 
operating reserves and protection), NPCC has more stringent criteria 
than NERC Reliability Standards, which NPCC refers to collectively 
as ``NPCC Criteria.'' NPCC designates each Criteria with a 
``Document A'' prefix, such as ``NPCC Document A-6.'' These NPCC 
Criteria require the approval of two thirds of the NPCC membership, 
but are not submitted to the ERO or Commission for approval. The 
Commission's proposal here would not affect the applicability of 
NPCC Criteria that are not submitted to the ERO and Commission for 
approval. NPCC would not be required to apply NPCC Criteria based on 
a 100 kV threshold and, rather, could continue to determine the 
applicability of such criteria to facilities in the region based on 
NPCC's impact-based methodology.
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    28. In summary, the Commission proposes to direct the ERO to submit 
to the Commission, within 90 days of the effective date of a final 
rule, a revised ERO definition of bulk electric system that provides a 
100 kV threshold for facilities that are included in the bulk electric 
system and eliminates the currently-allowed discretion of a Regional 
Entity to define bulk electric system within its system without ERO or 
Commission oversight.\40\ The Commission proposes that a Regional 
Entity must seek ERO and Commission approval before it exempts a 
transmission facility rated at 100 kV or above from compliance with 
mandatory Reliability Standards. A Regional Entity may develop a 
transition plan that allows a reasonable period of time for affected 
entities within that region to achieve compliance with respect to 
facilities that are subject to mandatory Reliability Standards for the 
first time.
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    \40\ As discussed above, the Commission does not propose to 
change the provision of the ERO's definition that ``[r]adial 
transmission facilities serving only load with one transmission 
source are generally not included in this definition.'' Likewise, 
Regional Entities may identify ``critical'' facilities, rated at 
less than the 100 kV, that are subject to mandatory Reliability 
Standards, without application to the ERO and the Commission.
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III. Information Collection Statement

    29. 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 this 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\ The PRA defines the phrase ``collection of information'' to 
be the ``obtaining, causing to be obtained, soliciting, or requiring 
the disclosure to third parties or the public, of facts or opinions by 
or for an agency, regardless of form or format, calling for either--(i) 
answers to identical questions posed to, or identical reporting or 
recordkeeping requirements imposed on ten or more persons, other than 
agencies, instrumentalities, or employees of the United States; or (ii) 
answers to questions posed to agencies, instrumentalities, or employees 
of the United States which are to be used for general statistical 
purposes.'' \44\
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    \41\ 5 CFR 1320.11.
    \42\ 44 U.S.C. 3501-20.
    \43\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
    \44\ 44 U.S.C. 3502(3)(A).
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    30. This NOPR proposes to direct the ERO to revise its definition 
of the term bulk electric system to provide a 100 kV threshold for 
identifying bulk electric system facilities and requiring ERO and 
Commission approval of a Regional Entity definition of bulk electric 
system that varies from the ERO's definition of the term. In Order No. 
693, the Commission approved the ERO's definition of the term bulk 
electric system. The Commission also approved 83 Reliability Standards 
submitted by the ERO. The Commission's proposed action in this NOPR 
does not specify any information collection requirements. However, the 
proposal would likely result in certain responsible entities having to 
comply with mandatory Reliability Standards with respect to certain 
facilities in the 100 kV to 200 kV range for the first time. While the 
previously-approved Reliability Standards do not require reporting to 
the Commission, they do require responsible entities to develop and 
maintain certain information for a specified period of time, subject to 
inspection by the ERO or Regional Entities. Thus, the proposed revision 
to the ERO's definition of bulk electric system in this proceeding 
would likely increase the public reporting burden estimate provided in 
Order No. 693.\45\
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    \45\ See Order No. 693, FERC Stats. and Regs. ] 31,242 at P 
1904.

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[[Page 14102]]

    31. Public Reporting Burden: As discussed above, the Commission 
believes that only one Regional Entity, NPCC, would be immediately 
affected by the Commission's proposal. In particular, the Commission 
believes that transmission owners, transmission operators and 
transmission service providers in the U.S. portion of the NPCC region 
would be affected by the Commission's proposal. Based on registration 
information available on NPCC's Web site, it appears that approximately 
33 transmission owners, transmission operators and transmission service 
providers in the U.S. portion of the NPCC region would potentially be 
affected by the Commission's proposal.\46\ These entities are currently 
responsible for complying with applicable mandatory Reliability 
Standards approved by the Commission in Order No. 693 and subsequent 
orders. A final rule in this proceeding would result in the extension 
of compliance under these Reliability Standards to additional 
facilities within the U.S. portion of the NPCC region.
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    \46\ ``NPPC Registered Entities as of January 13, 2010,'' 
available on the NPCC Web site: http://www.npcc.org/.
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    32. Based on currently available information, the Commission 
estimates that the increased Public Reporting Burden as follows:

----------------------------------------------------------------------------------------------------------------
                                      Number of       Number of
         Data collection             respondents      responses    Hours per respondent     Total annual hours
----------------------------------------------------------------------------------------------------------------
FERC-725-A
    Transmission Owners,                       33               1  Reporting: 0........  Reporting: 0.
     Transmission Operators and                                    Recordkeeping: 500..  Recordkeeping: 16,500.
     Transmission Service
     Providers in the U.S.
     portion of the NPCC Region.
                                  ------------------------------------------------------------------------------
        Total....................              33               1  500.................  16,500
----------------------------------------------------------------------------------------------------------------

     Total Annual Hours for Collection: (Reporting + 
Recordkeeping) = 16,500 hours.
    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost to be the total annual hours.
    Recordkeeping = 16,500 @ $40/hour = $660,000.
    Labor (file/record clerk @ $17 an hour + supervisory @ $23 an 
hour).
     Total costs = $ 660,000.
     Title: FERC-725-A Revision of Definition of Bulk Electric 
System.
     Action: Proposed Collection of Information.
     OMB Control No.: 1902-0244.
     Respondents: Business or other for profit, and/or not for 
profit institutions.
     Frequency of Responses: On Occasion.
     Necessity of the Information: The proposed revision to the 
ERO's definition of the term bulk electric system, if adopted, would 
implement the Congressional mandate of the Energy Policy Act of 2005 to 
develop mandatory and enforceable Reliability Standards to better 
ensure the reliability of the nation's Bulk-Power System. Specifically, 
the proposal would ensure that certain facilities needed for the 
reliable operation of the nation's bulk electric system are subject to 
mandatory and enforceable Reliability Standards.
     Internal Review: The Commission has reviewed the proposed 
directive that the ERO revise its current definition of bulk electric 
system and determined that the proposal is necessary to meet the 
statutory provisions of the Energy Policy Act of 2005. The Commission 
has assured itself, by means of internal review, that there is 
specific, objective support for the burden estimates associated with 
the information requirements.
    33. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Michael Miller, 
Office of the Executive Director, Phone: (202) 502-8415, fax: (202) 
273-0873, e-mail: michael.miller@ferc.gov]. Comments on the 
requirements of the proposed rule may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy 
Regulatory Commission], e-mail: oira_submission@omb.eop.gov.

IV. Environmental Analysis

    34. 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.\47\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. The actions proposed here fall within the categorical 
exclusion in the Commission's regulations for rules that are 
clarifying, corrective or procedural, for information gathering, 
analysis, and dissemination.\48\ Accordingly, neither an environmental 
impact statement nor environmental assessment is required.
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    \47\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regs. Preambles 1986-1990 30,783 (1987).
    \48\ 18 CFR 380.4(a)(5).
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V. Regulatory Flexibility Act Certification

    35. The Regulatory Flexibility Act of 1980 (RFA) \49\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
As discussed above, the Commission believes that the immediate effect 
of the proposed directive that the ERO revise its current definition of 
bulk electric system to establish a 100 kV threshold would likely be 
limited to certain transmission owners, transmission operators and 
transmission service providers in the U.S. portion of the NPCC region. 
Most transmission owners, transmission operators and transmission 
service providers do not fall within the definition of small 
entities.\50\ The Commission estimates that approximately four of the 
33 transmission owners, transmission operators and transmission 
services providers may fall within the definition of small entities.
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    \49\ 5 U.S.C. 601-612.
    \50\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act (SBA), which defines a 
``small business concern'' as a business that is independently owned 
and operated and that is not dominant in its field of operation. See 
15 U.S.C. 632 (2006). According to the SBA, a small electric utility 
is defined as one that has a total electric output of less than four 
million MWh in the preceding year.
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    36. Based on this understanding, the Commission certifies that this 
rule will not have a significant economic impact on a substantial 
number of small

[[Page 14103]]

entities. Accordingly, no regulatory flexibility analysis is required.

VI. Comment Procedures

    37. 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 May 10, 2010. Comments must refer to 
Docket No. RM09-18-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments.
    38. 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.
    39. 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.
    40. 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

    41. 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.
    42. 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.
    43. 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 
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; Reporting and recordkeeping requirements.

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2010-6479 Filed 3-23-10; 8:45 am]
BILLING CODE 6717-01-P

