
[Federal Register Volume 75, Number 245 (Wednesday, December 22, 2010)]
[Proposed Rules]
[Pages 80391-80396]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32074]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-8-000]


Electric Reliability Organization Interpretations of 
Interconnection Reliability Operations and Coordination and 
Transmission Operations Reliability Standards

Issued December 16, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: Under section 215 of the Federal Power Act (FPA), the Federal 
Energy Regulatory Commission (Commission) proposes to approve the North 
American Electric Reliability Corporation's (NERC) proposed 
interpretation of certain specific requirements of the Commission-
approved Reliability Standards, TOP-005-1, Operational Reliability 
Information, and IRO-005-1, Reliability Coordination--Current-Day 
Operations. Specifically, the interpretation addresses whether a 
Special Protection System (or SPS) that is operating with only one 
communication channel in service is ``degraded'' under these standards. 
The Commission proposes to approve the interpretation, discussed below, 
as being consistent with and not expanding or changing the existing 
Reliability Standards. However, to address Commission concerns that the 
interpretation fails to specify that a Special Protection System that 
has lost a communication channel be reported, the Commission also 
proposes to direct NERC pursuant to section 215 (d)(5) of the FPA to 
develop modifications to the TOP-005-1 and IRO-005-1 Reliability 
Standards, as discussed below, through its Reliability Standards 
development process. The Commission seeks comments on its proposal.

DATES: Comments are due February 7, 2011.

ADDRESSES: You may submit comments, identified by docket number and in 
accordance with the requirements posted on the Commission's Web site, 
http://www.ferc.gov. Comments may be submitted by any of the following 
methods:
     Agency Web Site: Documents created electronically using 
word processing software should be filed in native applications or 
print-to-PDF format, and not in a scanned format, at

[[Page 80392]]

http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver an original copy of their 
comments to: Federal Energy Regulatory Commission, Secretary of the 
Commission, 888 First Street, NE., Washington, DC 20426. These 
requirements can be found on the Commission's Web site; see, e.g., the 
``Quick Reference Guide for Paper Submissions,'' available at http://www.ferc.gov/docs-filing/efiling.asp or via phone from FERC Online 
Support at 202-502-6652 or toll-free at 1-866-208-3676.

FOR FURTHER INFORMATION CONTACT:

Danny Johnson (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8892, 
danny.johnson@ferc.gov;
Richard M. Wartchow (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8744.

SUPPLEMENTARY INFORMATION: 1. Under section 215 of the Federal Power 
Act (FPA), the Federal Energy Regulatory Commission (Commission) 
proposes to approve the North American Electric Reliability 
Corporation's (NERC) proposed interpretation of certain specific 
requirements of the Commission-approved Reliability Standards, TOP-005-
1, Operational Reliability Information, and IRO-005-1, Reliability 
Coordination--Current-Day Operations.\1\ Specifically, the 
interpretation addresses whether a Special Protection System (or SPS) 
that is operating with only one communication channel in service is 
``degraded'' under these standards. The Commission proposes to approve 
the interpretation, discussed below, as being consistent with and not 
expanding or changing the existing Reliability Standards. However, to 
address Commission concerns that the interpretation fails to specify 
that a Special Protection System that has lost a communication channel 
be reported, the Commission also proposes to direct NERC pursuant to 
section 215(d)(5) of the FPA to develop modifications to the TOP-005-1 
and IRO-005-1 Reliability Standards, as discussed below, through its 
Reliability Standards development process. The Commission seeks 
comments on its proposal.
---------------------------------------------------------------------------

    \1\ The Commission is not proposing any new or modified text to 
its regulations. As provided in 18 CFR Part 40, proposed Reliability 
Standards will not become effective until approved by the 
Commission, and the ERO must post on its Web site each effective 
Reliability Standard. The proposed interpretations would assist 
entities in complying with the Reliability Standards.
---------------------------------------------------------------------------

I. Background

A. FPA Section 215 and Mandatory Reliability Standards

    2. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards, which are subject to Commission review and 
approval. Once approved, the Reliability Standards may be enforced by 
the ERO, subject to Commission oversight, or by the Commission 
independently.\2\
---------------------------------------------------------------------------

    \2\ See 16 U.S.C. 824o(e)(3).
---------------------------------------------------------------------------

    3. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO \3\ and, subsequently, certified 
NERC as the ERO.\4\ On April 4, 2006, as modified on August 28, 2006, 
NERC submitted to the Commission a petition seeking approval of 107 
proposed Reliability Standards. On March 16, 2007, the Commission 
issued a Final Rule, Order No. 693, approving 83 of these 107 
Reliability Standards and directing other action related to these 
Reliability Standards.\5\ In addition, pursuant to section 215(d)(5) of 
the FPA, the Commission directed NERC to develop modifications to 56 of 
the 83 approved Reliability Standards.\6\
---------------------------------------------------------------------------

    \3\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \4\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
    \5\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
    \6\ 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, ``The 
Commission * * * may order the Electric Reliability Organization to 
submit to the Commission a proposed reliability standard or a 
modification to a reliability standard that addresses a specific 
matter if the Commission considers such a new or modified 
reliability standard appropriate to carry out this section.''
---------------------------------------------------------------------------

    4. In Order No. 693, the Commission approved the previous versions 
of the IRO-005-1 \7\ and TOP-005-1 Reliability Standards, directing 
NERC to develop modifications to the standards. For IRO-005-1, the 
Commission directed NERC to develop modifications to the standard in 
order to include Measures and Levels of Non-Compliance specific to 
interconnection reliability operating limit (IROL) violations during 
normal and contingency conditions.\8\ For TOP-005-1, the Commission 
directed NERC to develop a modification to include the operational 
status of Special Protection Systems and power system stabilizers in 
the types of information that transmission operators are expected to 
share, unless otherwise agreed.\9\ NERC reports that its interpretation 
was originally developed based on a review of version IRO-005-1 of the 
Reliability Coordination--Current-Day Operations Reliability Standard. 
According to NERC, the intervening changes resulting in the current 
versions are not material to the substance of the interpretation.\10\ 
Therefore, although our discussion of the interpretation will refer for 
convenience to the IRO-005-1 and TOP-005-1 versions of the Reliability 
Standards, the discussion in this NOPR is intended to apply equally to 
subsequent versions of the standards.
---------------------------------------------------------------------------

    \7\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 945.
    \8\ Id. P 951.
    \9\ Id. P 1648 (directing revisions to TOP-005-1, Attachment 1). 
The Commission proposed to accept a new version of the Operational 
Reliability Information Reliability Standard, TOP-005-2, in 
Mandatory Reliability Standards for Interconnection Reliability 
Operating Limits, NOPR, Docket No. RM10-15-000, 75 FR 71613 (Nov. 
24, 2010), 133 FERC ] 61,151, at P 65 (2010) (requesting comment 
whether the list of minimum electric system reliability data in TOP-
005-1, Attachment 1 is beneficial for reliability coordinators to 
meet the requirements of IRO-008-1 and IRO-009-1).
    \10\ The Order No. 693 directive to add the operational status 
of Special Protection Systems and power system stabilizers to the 
types of information to be provided under TOP-005-1 remains 
outstanding.
---------------------------------------------------------------------------

    5. Also in Order No. 693, the Commission declined to approve 
standards addressing Special Protection System design, operation, and 
coordination, finding them to be ``fill in the blank'' standards.\11\ 
Such fill-in-the-blank standards would require the regional reliability 
organizations to develop criteria for use by users, owners or operators 
within each region. In Order No. 693, the Commission required NERC to 
submit supplemental information for the fill-in-the-blank standards, 
including standards for Special Protection System design, and found 
that absent such information the Commission was not in a position to

[[Page 80393]]

approve or remand those Reliability Standards.
---------------------------------------------------------------------------

    \11\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, at P 1520, 1528, et 
seq. (2007) (declining to approve or remand certain Special 
Protection Systems-related Reliability Standards, including PRC-012-
0, Special Protection System Review Procedure; PRC-013-0, Special 
Protection System Database; PRC-014-0, Special Protection System 
Assessment). The Commission used the term fill-in-the-blank 
standards to refer to proposed standards that required the regional 
reliability organizations to develop at a later date criteria for 
use by users, owners or operators within each region.
---------------------------------------------------------------------------

    6. The NERC glossary provides definitions of terms used in the 
Reliability Standards and defines a ``Special Protection System'' (or 
SPS) as:

    An automatic protection scheme designed to detect abnormal or 
predetermined system conditions and take corrective actions other 
than and/or in addition to the isolation of faulted component to 
maintain system reliability. Such action may include changes in 
demand, generation (MW and MVAR), or system configuration to 
maintain system stability, acceptable voltage or power flows.\12\
---------------------------------------------------------------------------

    \12\ In the Western Interconnection, a Special Protection System 
is called a ``Remedial Action Scheme.''

    7. Special Protection Systems generally are used to address system 
reliability vulnerabilities in lieu of installing more costly 
additional Bulk-Power System facilities. For instance, a Special 
Protection System may be used to control generator output to limit line 
loading after a contingency, or a Special Protection System may rely on 
pre-determined operational protocols to reconfigure the system in 
response to identified system conditions to prevent system instability 
or cascading outages, and protect other facilities in response to 
transmission outages.
    8. Since Order No. 693 was issued, NERC has produced a white paper 
providing background for its Protection System Reliability Standards 
development effort.\13\ After this standards development effort was 
initiated, the NERC Regional Reliability Standards Working Group 
identified the Special Protection System standard as one that required 
regional standard development.\14\ The Commission understands that the 
regional standard development efforts are currently ongoing.
---------------------------------------------------------------------------

    \13\ NERC System Protection and Control Subcommittee (SPCS), 
November 18, 2008 white paper on Protection System Reliability, 
Redundancy of Protection System Elements available at http://www.nerc.com/filez/spctf.html (posted Jan. 14, 2009).
    \14\ NERC Regional Reliability Standards Working Group, Notes on 
October 29, 2009 meeting, available at http://www.nerc.com/filez/rrswg.html.
---------------------------------------------------------------------------

    9. NERC's Rules of Procedure provide that a person that is 
``directly and materially affected'' by Bulk-Power System reliability 
may request an interpretation of a Reliability Standard.\15\ The ERO's 
``standards process manager'' will assemble a team with relevant 
expertise to address the requested interpretation and also form a 
ballot pool. NERC's Rules provide that, within 45 days, the team will 
draft an interpretation of the Reliability Standard, with subsequent 
balloting. If approved by ballot, the interpretation is appended to the 
Reliability Standard and filed with the applicable regulatory authority 
for regulatory approval.
---------------------------------------------------------------------------

    \15\ NERC Rules of Procedure, Appendix 3A, Reliability Standards 
Development Procedure, Version 6.1, at 26-27 (2007).
---------------------------------------------------------------------------

B. Reliability Standards and Interpretation Request

1. Reliability Standard IRO-005-1
    10. Reliability Standard IRO-005-1 applies to transmission 
operators, balancing authorities, reliability coordinators and 
purchasing selling entities. The IRO-005-1 Purpose statement provides: 
``The Reliability Coordinator must be continuously aware of conditions 
within its Reliability Coordinator Area and include this information in 
its reliability assessments. The Reliability Coordinator must monitor 
Bulk Electric System parameters that may have significant impacts upon 
the Reliability Coordinator Area and neighboring Reliability 
Coordinator Areas.'' Requirement R12 of Reliability Standard IRO-005-1 
requires the transmission operator to immediately notify the 
reliability coordinator of the status of certain Special Protections 
Systems, whenever those Special Protection Systems are armed, including 
any degradation or potential failure to operate as expected. 
Requirement R12 provides:

    Whenever a Special Protection System that may have an inter-
Balancing Authority, or inter-Transmission Operator impact (e.g., 
could potentially affect transmission flows resulting in a SOL or 
IROL violation) is armed, the Reliability Coordinator shall be aware 
of the impact of the operation of that Special Protection System on 
inter-area flows. The Transmission Operator shall immediately inform 
the Reliability Coordinator of the status of the Special Protection 
System including any degradation or potential failure to operate as 
expected.
2. Reliability Standard TOP-005-1
    11. Reliability Standard TOP-005-1 applies to transmission 
operators, balancing authorities, reliability coordinators and 
purchasing selling entities, and has the stated purpose of ensuring 
that reliability entities have the operating data needed to monitor 
system conditions within their areas.\16\
---------------------------------------------------------------------------

    \16\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1642.
---------------------------------------------------------------------------

    12. Requirement R3 of Reliability Standard TOP-005-1 requires each 
balancing authority and transmission operator to provide its 
neighboring balancing authorities and transmission operators with 
operating data to allow them to perform operational reliability 
assessments and to coordinate reliable operations. Included in the 
types of data to be reported are ``New or degraded special protection 
systems.'' TOP-005-1, Requirement R3 provides:

    Upon request, each Balancing Authority and Transmission Operator 
shall provide to other Balancing Authorities and Transmission 
Operators with immediate responsibility for operational reliability, 
the operating data that are necessary to allow these Balancing 
Authorities and Transmission Operators to perform operational 
reliability assessments and to coordinate reliable operations. 
Balancing Authorities and Transmission Operators shall provide the 
types of data as listed in Attachment 1-TOP-005-0 ``Electric System 
Reliability Data,'' unless otherwise agreed to by the Balancing 
Authorities and Transmission Operators with immediate responsibility 
for operational reliability.
3. Manitoba Hydro Interpretation Request
    13. Manitoba Hydro requested clarification from NERC of the meaning 
of the term ``degraded/degradation'' as used in NERC Reliability 
Standards TOP-005-1 and IRO-005-1.\17\ Specifically, Manitoba Hydro 
asked whether a Special Protection System that is operating with only 
one communication channel in service would be considered ``degraded'' 
for the purposes of these standards. Manitoba Hydro stated:
---------------------------------------------------------------------------

    \17\ The NERC Petition provides a copy of Manitoba Hydro's 
November 28, 2008 request for interpretation as Exhibit A.

    Unlike other facilities, Special Protection Systems are required 
by NERC standards to be designed with redundant communication 
channels, so that if one communication channel fails the SPS is able 
to remain in operation. Requirement R1.3 of NERC Standard PRC-012-0 
requires a Regional Reliability Organization with Transmission 
Owners that use SPSs to have a documented review procedure to ensure 
that SPSs comply with reliability standards and criteria, including: 
``Requirements to demonstrate that the SPS shall be designed so that 
a single SPS component failure, when the SPS was intended to 
operate, does not prevent the interconnected transmission system 
from meeting the performance requirements in TPL-001-0, TPL-002-0 
and TPL-003-0.'' Accordingly, SPSs are designed to continue to 
perform their function with only one communication channel in 
---------------------------------------------------------------------------
service.

    14. According to Manitoba Hydro, a Special Protection System should 
not be considered ``degraded'' if it is operating with one 
communication channel out of service. Manitoba Hydro supported its 
position as consistent with the Institute of Electrical and Electronics 
Engineers, Inc. (IEEE) definition of degraded as ``the inability of an 
item to perform its

[[Page 80394]]

required function.'' \18\ Manitoba Hydro cites NERC Reliability 
Standard PRC-012-0, Requirement R1.3 and asserts that Special 
Protection Systems are designed to continue to perform their function 
with only one communication channel in service.\19\ Manitoba Hydro 
cites the NERC glossary as defining the function of a Special 
Protection System ``to detect abnormal or predetermined system 
conditions, and take corrective actions other than and/or in addition 
to the isolation of faulted components to maintain system 
reliability.'' Manitoba Hydro concludes that a Special Protection 
System with one communication channel out of service can still fully 
perform its function and, therefore, that a Special Protection System 
with one communication channel out of service is not degraded.
---------------------------------------------------------------------------

    \18\ Manitoba Hydro's request for interpretation at 4-5 (citing 
full IEEE definitions of degraded: ``A failure that is gradual, or 
partial or both; for example, the equipment degrades to a level 
that, in effect, is a termination of the ability to perform its 
required function,'' and failure (Reliability): ``The termination of 
the ability of an item to perform its required function.'' IEEE 100, 
The Authoritative Dictionary of IEEE Standards Terms (7th ed.) 
(2000)).
    \19\ According to Manitoba Hydro, PRC-012-0, Requirement R1.3 
requires a Special Protection System to be designed so that, when 
the Special Protection System is intended to operate, a single 
component failure does not prevent the interconnected transmission 
system from meeting the performance requirements in TPL-001-0, TPL-
002-0 and TPL-003-0. In Order No. 693, the Commission did not 
approve PRC-012-0, finding that was a fill-in-the-blank standard and 
lacked regional review procedures for Special Protection Systems.
---------------------------------------------------------------------------

C. NERC Petition

    15. NERC submitted its Petition for Approval of Interpretations to 
Reliability Standard TOP-005-1--Operational Reliability Information and 
Reliability Standard IRO-005-1--Reliability Coordination--Current Day 
Operations (Petition) on November 24, 2009, seeking Commission approval 
of the interpretations referenced in the title of its pleading.
    16. Consistent with the NERC Rules of Procedure, NERC assembled a 
team to respond to the requests for interpretation and presented the 
proposed interpretations to industry ballot, using a process similar to 
the process it uses for the development of Reliability Standards.\20\ 
According to NERC, the interpretations were developed and approved by 
industry stakeholders using the NERC Reliability Standards Development 
Procedure and approved by the NERC Board of Trustees (Board).
---------------------------------------------------------------------------

    \20\ NERC Reliability Standards Development Procedure at 26-27.
---------------------------------------------------------------------------

    17. In response to Manitoba Hydro's interpretation request, NERC 
provided the following:

    TOP-005-1 does not provide, nor does it require, a definition 
for the term ``degraded.''
    The IRO-005-1 ([Requirement] R12) standard implies that degraded 
is a condition that will result in a failure of an SPS to operate as 
designed. If the loss of a communication channel will result in the 
failure of an SPS to operate as designed, then the Transmission 
Operator would be mandated to report that information. On the other 
hand, if the loss of a communication channel will not result in the 
failure of the SPS to operate as designed, then such a condition can 
be, but is not mandated to be, reported.

    18. Also, in a background description of the interpretation, NERC 
affirms that transmission operators are required to provide information 
such as that listed in the examples upon request, ``whether or not [a 
facility] is or is not in some undefined `degraded' state.'' \21\
---------------------------------------------------------------------------

    \21\ NERC Petition, Exhibit B at 5 (proposing text of 
interpretation as Appendix 1 to IRO-005-1 and TOP-005-1).
---------------------------------------------------------------------------

    19. In addition, the background section accompanying the 
interpretation emphasizes that the information to be provided under 
IRO-005-1 relates to events that may have a significant impact on the 
system, especially where operating limits are or may be exceeded. 
Specifically it states:

    IRO-005-1 mandates that each Reliability Coordinator monitor 
predefined base conditions (Requirement R1), collect additional data 
when operating limits are or may be exceeded (Requirement R3), and 
identify actual or potential threats (Requirement R5). The basis for 
that request is left to each Reliability Coordinator. The Purpose 
statement of IRO-005-1 focuses on the Reliability Coordinator's 
obligation to be aware of conditions that may have a ``significant'' 
impact upon its area and to communicate that information to others 
(Requirements R7 and R9). Please note: it is from this communication 
that Transmission Operators and Balancing Authorities would either 
obtain or would know to ask for [Special Protection System] 
information from another Transmission Operator.\22\
---------------------------------------------------------------------------

    \22\ Id. Exhibit B at 6.

---------------------------------------------------------------------------
    20. In addition, the NERC Petition states:

    The NERC Board of Trustees, in approving these interpretations, 
did so using a standard of strict construction that does not expand 
the reach of the standard or correct a perceived gap or deficiency 
in the standard. However, the NERC Board of Trustees recommended 
that any gaps or deficiencies in a Reliability Standard that are 
evident through the interpretation process be addressed promptly by 
the standard drafting team.\23\
---------------------------------------------------------------------------

    \23\ NERC Petition at 5.

    21. NERC reports that it will examine any gaps or deficiencies in 
Reliability Standards TOP-005-1 and IRO-005-2 when it develops the next 
version of these standards through the Reliability Standards 
development process.
    22. According to NERC, the interpretations do not modify the 
language contained in the requirements under review. NERC states that 
the interpretations do not represent new or modified Reliability 
Standard requirements and will provide instruction and guidance of the 
intent and application of the requirements. NERC requests that the 
Commission approve the interpretations and make them effective 
immediately after approval, consistent with the Commission's 
procedures.

II. Proposed Determination

    23. We propose to approve NERC's interpretation of Reliability 
Standards IRO-005-1, Requirement R12, and TOP-005-1, Requirement R3. We 
believe that the ERO has presented a reasonable interpretation that is 
not inconsistent with the language of the Reliability Standards. 
However, we are concerned that the interpretation highlights a 
potential gap in reliability. While not required by the Reliability 
Standards as interpreted by the ERO, we are concerned that a Special 
Protection System that has lost a communication channel could 
compromise system reliability, for the reasons explained below. 
Accordingly, pursuant to section 215 (d)(5) of the FPA, we propose to 
direct that the ERO develop modifications to the Reliability Standards 
to address our concern. Specifically, we propose to direct the ERO to 
develop modifications to IRO-005-1, Requirement R12, and TOP-005-1, 
Requirement R3.

A. Discussion

    24. The Commission proposes to approve the interpretation. We agree 
with the ERO that the failure of a Special Protection System to operate 
as designed is, for the purpose of Reliable Operation, degraded and 
reportable under Reliability Standards IRO-005-1, Requirement R12 and 
TOP-005-1, Requirement R3. The Commission is concerned, however, that 
this interpretation may create a reliability gap concerning the 
reporting requirements for a Special Protection System that is able to 
operate as designed but still poses a reliability risk to Bulk-Power 
System with the loss of a single communication channel with redundant 
design.
    25. In its November 18, 2008 white paper, ``Protection System 
Reliability,

[[Page 80395]]

Redundancy of Protection System Elements,'' the NERC System Protection 
and Control Subcommittee (SPCS) explained that ``[r]edundancy means 
that two or more functionally equivalent Protection Systems are used to 
protect each electric system element.'' \24\ The SPCS also explained in 
its white paper that ``[a] fundamental concept of redundancy is that 
Protection Systems need to be designed such that electric system faults 
will be cleared, even if a component of the Protection System fails.'' 
\25\ In accordance with the analysis provided in the SPCS white paper, 
redundancy of Protection System components is neither unnecessary nor 
superfluous. Rather, redundancy is necessary to ensure that no single 
point of failure of a Protection System component results in the 
inability of the Bulk-Power System to meet the system performance 
requirements established in the TPL Reliability Standards.\26\ In other 
words, redundant communication channels are a means to provide for the 
reliable operation of the Special Protection System. Should a 
communication channel fail at the time the Special Protection System is 
required to operate, the designed redundancy of the Special Protection 
System ensures that the Bulk-Power System can meet its reliability 
performance requirements.
---------------------------------------------------------------------------

    \24\ NERC SPCS white paper at 9, available at http://www.nerc.com/filez/spctf.html (dated Jan. 14, 2009).
    \25\ Id.; see also Table 4-3 in the white paper noting possible 
responses to communication channel failure including adding a 
redundant channel or performing testing to ensure that delayed fault 
clearing does not violate the planning standards.
    \26\ We note proposed NERC Reliability Standard PRC-012-0, 
Requirement R1.3 establishes a performance requirement for Special 
Protection Systems. Proposed Requirement R1.3 states: ``Requirements 
to demonstrate that the SPS shall be designed so that single SPS 
component failure, when the SPS was intended to operate, does not 
prevent the interconnected transmission system from meeting the 
performance requirements defined in Reliability Standards TPL-001-0, 
TPL-002-0, and TPL-003-0.'' Proposed reliability standard PRC-012-0 
has not yet been approved as mandatory and enforceable by the 
Commission.
---------------------------------------------------------------------------

    26. Our concern is that, given NERC's proposed interpretation, a 
loss of a communication channel, a necessary and inherent performance 
requirement of a Special Protection System, may not be considered a 
reportable event under the current reporting requirements. Because 
Special Protection Systems are by their nature used to address system 
reliability vulnerabilities to prevent system instability, cascading 
outages, and protect other facilities in response to contingencies, a 
failure of the remaining communication component of a Special 
Protection System creates a reliability risk to the Bulk-Power System. 
This means that where one communication channel has failed, the Special 
Protection System may not be able to meet the performance criteria of 
the Reliability Standards and in particular the performance criteria 
specified in the Transmission Planning (TPL) standards. In such a 
situation, the Special Protection System, though capable of operating 
as designed following the loss of one communication channel, may not be 
able to withstand a second component failure. It is our view that such 
a Special Protection System would be operating at some state less than 
the normal secure state and should need to be reported to the 
appropriate reliability entities in order for these reliability 
entities to accurately assess operational reliability.

B. Commission Proposal

    27. For the reasons stated above, the Commission proposes to direct 
the ERO to develop modification to Reliability Standards IRO-005-2 and 
TOP-005-1.1 through its standards development process. The ERO's 
revision would address the potential reliability gap discussed above to 
ensure that a component failure, wherein a Special Protection System 
may not be able to perform as designed to ensure required Bulk-Power 
System performance, is reported to the appropriate reliability 
entities. Accordingly, pursuant to section 215 (d)(5) of the FPA, we 
propose to direct NERC to develop modifications to the Reliability 
Standards to address our concern. Specifically, we propose to direct 
NERC to develop modifications to Reliability Standards IRO-005-2 and 
TOP-005-1.1 to address the potential reliability gap discussed above to 
ensure that a component failure, wherein a Special Protection System 
may not be able to perform as designed to ensure required Bulk-Power 
System performance, is reported to the appropriate reliability 
entities. We seek comment on this proposal. In particular, we seek 
comment from reliability coordinators and transmission operators 
whether this information would be useful in the operation and 
coordination of the transmission system.

III. Information Collection Statement

    28. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping (collections of 
information) imposed by an agency.\27\ The information contained here 
is also subject to review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\28\
---------------------------------------------------------------------------

    \27\ 5 CFR 1320.11.
    \28\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    29. As stated above, the Commission previously approved, in Order 
No. 693, materially similar versions of each of the Reliability 
Standards that are the subject of the current rulemaking. This NOPR 
proposes to approve the interpretation of these previously approved 
Reliability Standards, which was developed by NERC as the ERO. In doing 
so, the Commission proposes certain issues to be addressed and 
clarifications to be made. The proposed interpretations, as clarified, 
relate to existing Reliability Standards and the Commission does not 
expect them to add to or otherwise increase entities' current reporting 
burden.\29\
---------------------------------------------------------------------------

    \29\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1901-
1907.
---------------------------------------------------------------------------

    30. For the purposes of reviewing this interpretation, the 
Commission seeks information concerning whether the interim 
interpretation as approved will cause respondents to alter reporting 
frequencies and potentially impose an additional burden.
    31. We will submit this proposed rule to OMB for informational 
purposes.
    Title: Electric Reliability Organization Interpretations of 
Interconnection Reliability Operations and Coordination and 
Transmission Operations Reliability Standards.
    Action: Proposed Collection.
    OMB Control No.: 1902-0244.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: On Occasion.
    Necessity of the Information: This proposed rule would approve an 
interpretation of the specific requirements of two Commission-approved 
Reliability Standards. The proposed rule would find the interpretation 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest.
    32. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, Phone: (202) 502-8663, 
fax: (202) 273-0873, e-mail: data.clearance@ferc.gov].
    33. For submitting comments concerning the collection(s) of 
information and the associated burden estimate(s), please send your 
comments to the contact listed above and to the Office of Information 
and Regulatory Affairs, Office of Management and

[[Page 80396]]

Budget, Washington, DC 20503 [Attention: Desk Officer for the Federal 
Energy Regulatory Commission, phone (202) 395-7345, fax: (202) 395-
7285, 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.\30\ 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.\31\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
---------------------------------------------------------------------------

    \30\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \31\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    35. The Regulatory Flexibility Act of 1980 (RFA) \32\ 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 (SBA) Office of Size 
Standards develops the numerical definition of a small business.\33\ 
The SBA has established a size standard for electric utilities, stating 
that 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.\34\ The RFA is not 
implicated by this proposed rule because the interpretations discussed 
herein will not have a significant economic impact on a substantial 
number of small entities.
---------------------------------------------------------------------------

    \32\ 5 U.S.C. 601-612.
    \33\ 13 CFR 121.101.
    \34\ 13 CFR 121.201, Sector 22, Utilities, & n. 1.
---------------------------------------------------------------------------

    36. In Order No. 693, the Commission adopted policies to minimize 
the burden on small entities, including approving the ERO compliance 
registry process to identify those entities responsible for complying 
with mandatory and enforceable Reliability Standards. The ERO registers 
only those distribution providers or load serving entities that have a 
peak load of 25 MW or greater and are directly connected to the bulk 
electric system or are designated as a responsible entity as part of a 
required under-frequency load shedding program or a required under-
voltage load shedding program. Similarly, for generators, the ERO 
registers only individual units of 20 MVA or greater that are directly 
connected to the bulk electric system, generating plants with an 
aggregate rating of 75 MVA or greater, any blackstart unit material to 
a restoration plan, or any generator that is material to the 
reliability of the Bulk-Power System. Further, the ERO will not 
register an entity that meets the above criteria if it has transferred 
responsibility for compliance with mandatory Reliability Standards to a 
joint action agency or other organization. The Commission estimated 
that the Reliability Standards approved in Order No. 693 would apply to 
approximately 682 small entities (excluding entities in Alaska and 
Hawaii), but also pointed out that the ERO's Compliance Registry 
Criteria allow for a joint action agency, generation and transmission 
(G&T) cooperative or similar organization to accept compliance 
responsibility on behalf of its members. Once these organizations 
register with the ERO, the number of small entities registered with the 
ERO will diminish and, thus, significantly reduce the impact on small 
entities.\35\
---------------------------------------------------------------------------

    \35\ To be included in the compliance registry, the ERO 
determines whether a specific small entity has a material impact on 
the Bulk-Power System. If these small entities should have such an 
impact then their compliance is justifiable as necessary for Bulk-
Power System reliability.
---------------------------------------------------------------------------

    37. Finally, as noted above, this proposed rule addresses an 
interpretation of the IRO-005-1 and TOP-005-1 Reliability Standards, 
which were already approved in Order No. 693, and, therefore, is not 
expected to create an additional regulatory impact on small entities.

VI. Comment Procedures

    38. 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 February 7, 2011. Comments must refer to 
Docket No. RM10-8-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments.
    39. 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.
    40. Commenters unable to file comments electronically must mail or 
hand deliver an original copy of their comments to: Federal Energy 
Regulatory Commission, Secretary of the Commission, 888 First Street, 
NE., Washington, DC 20426.
    41. 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

    42. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, 
Washington, DC 20426.
    43. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    44. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

    By direction of the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2010-32074 Filed 12-21-10; 8:45 am]
BILLING CODE 6717-01-P


