
[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Rules and Regulations]
[Pages 16240-16250]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6778]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-15-000; Order No. 748]


Mandatory Reliability Standards for Interconnection Reliability 
Operating Limits

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: Under section 215 of the Federal Power Act, the Federal Energy 
Regulatory Commission (Commission) approves three new Interconnection 
Reliability Operations and Coordination Reliability Standards and seven 
revised Reliability Standards related to Emergency Preparedness and 
Operations, Interconnection Reliability Operations and Coordination, 
and Transmission Operations. These Reliability Standards were submitted 
to the Commission for approval by the North American Electric 
Reliability Corporation (NERC), which the Commission has certified as 
the Electric Reliability Organization responsible for developing and 
enforcing mandatory Reliability Standards. The Reliability Standards 
were designed to prevent instability, uncontrolled separation, or 
cascading outages that adversely impact the reliability of the 
interconnection by ensuring that the reliability coordinator has the 
data necessary to assess its reliability coordinator area during the 
operations horizon and that it takes prompt action to prevent or 
mitigate instances of exceeding Interconnection Reliability.
    Operating Limits. The Commission also approves the addition of two 
new terms to the NERC Glossary of Terms.
    In addition, the Commission approves NERC's proposed revisions to 
Reliability Standards EOP-001-1, IRO-002-2, IRO-004-2, IRO-005-3, TOP-
003-1, TOP-005-2, and TOP-006-2, which remove requirements for the 
reliability coordinator to monitor and analyze system operating limits 
other than interconnection reliability operating limits.

DATES: Effective Date: This Rule will become effective May 23, 2011.

FOR FURTHER INFORMATION CONTACT: Darrell Piatt (Technical Information), 
Office of Electric Reliability, Division of Reliability Standards, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-6687.
    A. Cory Lankford (Legal Information), Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-6711.
    William Edwards (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-6669.

SUPPLEMENTARY INFORMATION:

Table of Contents


 
                                                               Paragraph
                                                                 Nos.
 
I. Background...............................................           3
    A. Mandatory Reliability Standards......................           3
    B. Order No. 693 Directives.............................           4
    C. NERC Petition........................................           7
        1. IRO-008-1........................................          11
        2. IRO-009-1........................................          15
        3. IRO-010-1a.......................................          16
    D. Notice of Proposed Rulemaking........................          18
II. Discussion..............................................          21
    A. Division of Responsibilities for SOLs and IROLs......          22

[[Page 16241]]

 
        1. Continued Analysis of SOLs by Reliability                  26
         Coordinators.......................................
        2. Documented Methodology to Identify System                  33
         Operating Limit Information........................
        3. Current Practices for the Prevention and                   34
         Mitigation of SOLs and IROLs and the Monitoring
         Capability of the Reliability Coordinator..........
        4. Reliability Coordinator's Procedures for                   37
         Selecting the SOLs for Evaluation by the
         Interchange Distribution Calculator................
        5. Current Functional Model.........................          38
    B. Operational Analyses and Real-time Assessments.......          45
    C. Reliability Coordinator Actions to Operate Within              52
     IROLs..................................................
    D. IRO-010-1a...........................................          56
    E. Violation Severity Levels and Violation Risk Factors.          64
III. Information Collection Statement.......................          73
IV. Environmental Analysis..................................          78
V. Regulatory Flexibility Act...............................          79
VI. Document Availability...................................          80
VII. Effective Date and Congressional Notification..........          83
 


Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.

Final Rule

Issued March 17, 2011.
    1. Under section 215 of the Federal Power Act (FPA),\1\ the Federal 
Energy Regulatory Commission (Commission) approves three new 
Interconnection Reliability Operations and Coordination (IRO) 
Reliability Standards and seven revised Reliability Standards related 
to Emergency Preparedness and Operations (EOP), IRO, and Transmission 
Operations (TOP). The proposed Reliability Standards were submitted to 
the Commission for approval by the North American Electric Reliability 
Corporation (NERC), which the Commission has certified as the Electric 
Reliability Organization (ERO) responsible for developing and enforcing 
mandatory Reliability Standards.\2\ These Reliability Standards were 
designed to prevent instability, uncontrolled separation, or cascading 
outages that adversely impact the reliability of the interconnection by 
ensuring that the reliability coordinator has the data necessary to 
assess its reliability coordinator area during the operations horizon 
and that it takes prompt action to prevent or mitigate instances of 
exceeding Interconnection Reliability Operating Limits (IROL).\3\ The 
Commission also approves the addition of two new terms to the NERC 
Glossary of Terms (NERC Glossary). In addition, the Commission approves 
NERC's proposed revisions to Reliability Standards EOP-001-1, IRO-002-
2, IRO-004-2, IRO-005-3, TOP-003-1, TOP-005-2, and TOP-006-2, which 
remove requirements for the reliability coordinator to monitor and 
analyze system operating limits (SOL) \4\ other than IROLs.
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    \1\ 16 U.S.C. 824o (2006).
    \2\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
    \3\ NERC defines IROLs as the value (such as MW, MVar, Amperes, 
Frequency or Volts) derived from, or a subset of the SOLs, which if 
exceeded, could expose a widespread area of the bulk electric system 
to instability, uncontrolled separation, or cascading outages. See 
NERC Glossary, available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
    \4\ NERC defines SOLs as the value (such as MW, MVar, Amperes, 
Frequency or Volts) that satisfies the most limiting of the 
prescribed operating criteria for a specific system configuration to 
ensure operation within acceptable reliability criteria. Id.
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    2. In addition, the Commission asks the ERO to evaluate certain 
issues through ongoing standards development and working group projects 
and to develop appropriate revisions as necessary. These issues regard 
the scope of the reliability coordinator's responsibility under these 
and other IRO Reliability Standards. In particular, the Commission 
identifies, based on the comments received, certain issues regarding 
the delineation of the responsibility of the reliability coordinator to 
analyze, monitor and communicate to other operating entities the class 
of SOLs identified as ``grid-impactive'' SOLs by NERC.

I. Background

A. Mandatory Reliability Standards

    3. Section 215 of the FPA requires a Commission-certified ERO to 
develop mandatory and enforceable Reliability Standards, which are 
subject to Commission review and approval. Once approved, the 
Reliability Standards are enforced by the ERO, subject to Commission 
oversight, or by the Commission independently.

B. Order No. 693 Directives

    4. On March 16, 2007, the Commission issued Order No. 693, 
approving 83 of the 107 initial Reliability Standards filed by NERC, 
including the currently-effective IRO Reliability Standards.\5\ Under 
section 215(d)(5) of the FPA, the Commission directed NERC to develop 
modifications to the IRO Reliability Standards to address certain 
issues identified by the Commission.
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    \5\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ] 
31,242, order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
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    5. With respect to IRO-001-1, the Commission directed the ERO to 
develop modifications to eliminate the regional reliability 
organization as an applicable entity.\6\ The Commission also directed 
the ERO to modify IRO-002-1 to require a minimum set of capabilities 
that must be made available to the reliability coordinator to ensure 
that a reliability coordinator has the capabilities it needs to perform 
its functions.\7\ With respect to IRO-003-2, the Commission directed 
the ERO to develop a modification to create criteria to define the term 
``critical facilities'' in a reliability coordinator's area and its 
adjacent systems.\8\ The Commission also directed the ERO to modify 
IRO-004-1 to require the next-day analysis to identify control actions 
that can be implemented and effective within 30 minutes after a 
contingency. In addition, the Commission directed the ERO to consider 
adding Measures and Levels of Non-Compliance to Reliability Standards 
IRO-004-1 and IRO-005-1 that are commensurate with the magnitude, 
duration, frequency and causes of the violations and whether these 
occur during normal or contingency conditions.\9\
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    \6\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 896.
    \7\ Id. P 908.
    \8\ Id. P 914.
    \9\ Id. P 935. NERC has subsequently replaced Levels of Non-
Compliance with Violation Severity Levels. See Order on Violation 
Severity Levels Proposed by the Electric Reliability Organization, 
123 FERC ] 61,284 (Violation Severity Level Order), order on reh'g, 
125 FERC ] 61,212 (2008).

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[[Page 16242]]

    6. The Commission also directed the ERO to conduct a survey on IROL 
practices and actual operating experiences by requiring reliability 
coordinators to report any violations of IROLs, their causes, the date 
and time, the durations and magnitudes in which actual operations 
exceed IROLs to the ERO on a monthly basis for one year beginning two 
months after the effective date of Order No. 693.\10\ On October 31, 
2008, NERC filed the results of its year-long survey with the 
Commission.\11\ On February 8, 2009, NERC supplemented those results in 
a second filing.\12\
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    \10\ Id. P 951.
    \11\ NERC, Compliance Filing, Docket No. RM06-16-006 (filed Oct. 
31, 2008).
    \12\ NERC, Compliance Filing, Docket No. RM06-16-006 (filed Feb. 
8, 2009).
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C. NERC Petition

    7. On December 31, 2009, NERC submitted a petition to the 
Commission (NERC Petition) \13\ seeking approval of proposed 
Reliability Standards IRO-008-1, IRO-009-1, and IRO-010-1a. Under these 
Reliability Standards, reliability coordinators must analyze and 
monitor IROLs within their Wide-Area \14\ to prevent instability, 
uncontrolled separation, or cascading outages that adversely impact the 
reliability of the interconnection. These Reliability Standards do not 
require the reliability coordinator to analyze and monitor SOLs other 
than IROLs or to take preventive action to avoid or mitigate SOL 
violations within their reliability coordinator area. In developing the 
proposed IRO Reliability Standards, NERC determined that it was 
necessary to retire or modify certain requirements from several 
existing Reliability Standards. Therefore, NERC proposed revisions to 
Reliability Standards EOP-001-1,\15\ IRO-002-2, IRO-004-2, IRO-005-3, 
TOP-003-1, TOP-005-2, and TOP-006-2, which remove requirements for the 
reliability coordinator to monitor and analyze SOLs other than IROLs. 
NERC also requests approval of new definitions ``Operational Planning 
Analysis'' and ``Real-time Assessment.''
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    \13\ North American Electric Reliability Corp., Dec. 31, 2009 
Petition for Approval of Proposed New and Revised Reliability 
Standards for Operating Within Interconnection Operating Limits.
    \14\ The term ``Wide-Area'' is defined in the NERC Glossary, 
approved by the Commission. As defined, Wide-Area includes not only 
the reliability coordinators' area, but also critical flow and 
status information from adjacent reliability coordinator areas as 
determined by detailed system studies to allow the calculation of 
IROLs. See NERC Glossary available at http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
    \15\ Concurrent with its Petition in this Docket, NERC filed a 
petition in Docket No. RM10-16-000 seeking approval of certain 
Emergency Preparedness and Operations Reliability Standards. NERC, 
Petition for Approval of Three Emergency Preparedness and Operations 
Reliability Standards, Docket No. RM10-16-000 (filed Dec. 31, 2009). 
As part of its Petition in RM10-16-000, NERC proposed to retire 
Requirement R3.4 of EOP-001-0. Each petition proposes unique changes 
to EOP-001-0 reflecting the distinct issues addressed by the 
respective Reliability Standards drafting teams. In this Final Rule, 
the Commission is addressing Version 2 of EOP-001 contained in 
Exhibit B of the NERC Petition which reflects both the IRO and the 
EOP proposed changes.
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    8. These IRO Reliability Standards together with the proposed 
revisions to existing Reliability Standards divide responsibility for 
SOLs and IROLs between reliability coordinators and transmission 
operators according to the Functional Model.\16\ In its Petition, NERC 
explains that having two entities with the same primary responsibility 
is not supported by the Functional Model.\17\ However, NERC notes that 
these IRO Reliability Standards should not imply that the reliability 
coordinator will not look at its future operations with respect to 
specific SOLs.\18\ NERC states that the reliability coordinator must 
look at its future operations with respect to specific SOLs to ensure 
that their transmission operators are taking actions at appropriate 
times, but the primary responsibility for SOLs rests with the 
transmission operators.
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    \16\ NERC, Reliability Functional Model, version 5, at 30 (Dec. 
2009), available at http://www.nerc.com/files/Functional_Model_V5_Final_2009Dec1.pdf (NERC Functional Model).
    \17\ In its comments, NERC cites specific tasks outlined in the 
Functional Model for the respective duties of the reliability 
coordinator and transmission operator with respect to SOLs and 
IROLs. NERC Comments at 14.
    \18\ NERC Petition at 77.
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    9. NERC explains that, under the new IRO Reliability Standards, the 
reliability coordinator retains overall visibility of all operations 
within its Wide-Area view, including some SOLs, although the 
transmission operator is primarily responsible for actions related to 
SOLs.\19\ NERC states that the IRO Reliability Standards were developed 
in support of the authority and assignment of tasks in the Functional 
Model.\20\ NERC explains that under the Functional Model, while 
reliability coordinators will assign their transmission operators tasks 
associated with IROLs, the reliability coordinator has ultimate 
responsibility for these tasks, and the reliability coordinator is 
sanctioned if these tasks are not performed as required by the 
Reliability Standards.\21\
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    \19\ Id. at 78.
    \20\ Id. at 7-9.
    \21\ Id. at 8.
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    10. NERC further explains that, in a similar fashion, the 
Functional Model assigns responsibility for SOLs that are not IROLs to 
the transmission operator. But, NERC states, this too is a shared 
responsibility.\22\ NERC states that, where the Transmission Operator 
has primary responsibility for developing the SOLs within its 
transmission operator area, the transmission operator may request the 
assistance of its reliability coordinator in developing these SOLs. In 
addition, NERC points out that reliability coordinators are responsible 
for ensuring that transmission operators develop SOLs for its 
reliability coordinator area in accordance with a methodology developed 
by the reliability coordinator.\23\ NERC states that the transmission 
operator must share its SOLs with its reliability coordinator, and the 
reliability coordinator must share any SOLs it develops with its 
transmission operator. NERC also states that the reliability 
coordinator monitors the status of some, but not all, SOLs.
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    \22\ Id. at 9.
    \23\ NERC Reliability Standard FAC-011-1, Requirement R3.
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1. IRO-008-1
    11. Reliability Standard IRO-008-1 has the stated purpose of 
preventing instability, uncontrolled separation, or cascading outages 
that adversely impact the reliability of the interconnection by 
ensuring that the bulk electric system is assessed during the 
operations horizon. The proposed Reliability Standard applies to 
reliability coordinators. IRO-008-1 requires the reliability 
coordinator to use analyses and assessments as methods of achieving the 
stated goal. The Reliability Standard requires analysis of the 
reliability coordinator's Wide-Area ahead of time and during real-time. 
It also requires communication with the entities that need to take 
specific operational actions based on the analyses and assessments.
    12. Reliability Standard IRO-008-1 contains three requirements. 
Requirement R1 requires each reliability coordinator to perform an 
Operational Planning Analysis to assess whether the planned operations 
for the next day within its Wide-Area will exceed any of its IROLs 
during anticipated normal and contingency event conditions. Requirement 
R2 requires the reliability coordinator to perform a Real-Time 
Assessment at least once every 30 minutes to determine if its Wide Area 
is exceeding any IROLs or is expected to exceed any IROLs. Requirement 
R3 requires a reliability coordinator to share the results of an 
Operational

[[Page 16243]]

Planning Analysis or Real-Time Assessment that indicates the need for 
specific operational actions to prevent or mitigate an instance of 
exceeding an IROL with those entities that are expected to take those 
actions.
    13. NERC also requests approval of two new terms that appear in 
IRO-008-1: ``Operational Planning Analysis'' and ``Real-time 
Assessment.'' Operational Planning Analysis is defined as:

    An analysis of the expected system conditions for the next day's 
operation. (That analysis may be performed either a day ahead or as 
much as 12 months ahead.) Expected system conditions include things 
such as load forecast(s), generation output levels, and known system 
constraints (transmission facility outages, generator outages, 
equipment limitations, etc.).

NERC states that the definition was designed to provide greater 
specificity regarding the day-ahead study.
    14. The proposed term ``Real-time Assessment'' is defined as ``[a]n 
examination of existing and expected system conditions, conducted by 
collecting and reviewing immediately available data.'' NERC states that 
the purpose of the new term is to assure that the reliability 
coordinator is required to conduct a real-time assessment, including 
situations in which the reliability coordinator is operating without 
its primary analysis facilities and has implemented the work-around 
requirements of IRO-002-2, Requirement R8.
2. IRO-009-1
    15. As proposed, Reliability Standard, IRO-009-1 is designed to 
prevent instability, uncontrolled separation, or cascading outages that 
adversely impact the reliability of the interconnection by ``ensuring 
prompt action to prevent or mitigate instances of exceeding [IROLs].'' 
Proposed Reliability Standard IRO-009-1 applies only to reliability 
coordinators.
3. IRO-010-1a
    16. NERC proposes the addition of a new Reliability Standard, IRO-
010-1a \24\ to the current suite of IRO Reliability Standards. IRO-010-
1a is designed to prevent instability, uncontrolled separation, or 
cascading outages that adversely impact the reliability of the 
interconnection by mandating that the reliability coordinator have the 
data it needs to monitor and assess the operation of its reliability 
coordinator area.
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    \24\ Because the interpretation for IRO-010-1 was completed 
before the filing of IRO-010-1, NERC requests Commission approval of 
IRO-010-1a, which includes the standard as interpreted.
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    17. The requirements in the Reliability Standard specify a formal 
request process for the reliability coordinator to explicitly identify 
the data and information it needs for reliability; and require the 
entities with the data to provide it as requested. The Reliability 
Standard applies to the reliability coordinator and to the other 
functional entities that must supply data to the reliability 
coordinator.\25\ This includes entities that have been identified as 
owners, users, or operators of the Bulk-Power System.
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    \25\ The requirements in the standard are specifically 
applicable to the following functional entities: (1) Reliability 
coordinator[s]; (2) balancing authority; (3) generator owner; (4) 
generator operator; (5) interchange authority; (6) load-serving 
entity; (7) transmission operator; and (8) transmission owner.
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D. Notice of Proposed Rulemaking

    18. On November 18, 2010, the Commission issued a Notice of 
Proposed Rulemaking (NOPR) proposing to approve Reliability Standards 
IRO-008-1, IRO-009-1, and IRO-010-1a; revised Reliability Standards 
EOP-001-1, IRO-002-2, IRO-004-2, IRO-005-3, TOP-003-1, TOP-005-2, and 
TOP-006-2; and the two new NERC Glossary terms.
    19. In the NOPR, the Commission agreed with NERC that it is 
appropriate to develop requirements for Reliability Standards that 
offer a clear division of responsibilities among reliability 
coordinators and transmission operators. In addition, the Commission 
sought ERO and public comment to ensure that the proposed Reliability 
Standards will not create a reliability gap by the inappropriate 
division of responsibilities for analyzing, monitoring and resolving 
SOLs and IROLs between transmission operators and reliability 
coordinators respectively.
    20. In response to the NOPR, NERC and a number of parties filed 
comments. PJM Interconnection L.L.C., ISO New England, New York 
Independent System Operator, Inc., California Independent System 
Operation Corporation and Southwest Power Pool submitted joint comments 
(Joint Commenters). The Edison Electric Institute (EEI), Midwest 
Independent Transmission System Operator, Inc. (Midwest ISO), and 
Western Electricity Coordinating Council (WECC) also submitted timely 
comments. American Electric Power Service Corp. (AEP) filed comments 
one day out-of-time.

II. Discussion

    21. The Commission hereby adopts its NOPR proposals and approves 
new Reliability Standards IRO-008-1, IRO-009-1, and IRO-010-1a; revised 
Reliability Standards EOP-001-1, IRO-002-2, IRO-004-2, IRO-005-3, TOP-
003-1, TOP-005-2, and TOP-006-2; and the two new NERC Glossary terms: 
``Operational Planning Analysis'' and ``Real-time Assessment.'' In 
approving these Reliability Standards, the Commission concludes that 
they are just, reasonable, not unduly discriminatory or preferential, 
and in the public interest. These Reliability Standards serve an 
important reliability purpose in seeking to prevent instability, 
uncontrolled separation, or cascading outages that adversely impact the 
reliability of the interconnection by ensuring that the reliability 
coordinator has the data necessary to assess its reliability 
coordinator area during the operations horizon and that it takes prompt 
action to prevent or mitigate instances of exceeding IROLs. Moreover, 
they clearly identify the entities to which they apply and contain 
clear and enforceable requirements. Commenters addressed many of the 
Commission concerns discussed in the NOPR and in some areas the ERO has 
indicated that it is continuing to study some issues related to the 
Commission concerns. The Commission encourages the ERO, applying its 
technical expertise, to continue such reviews and make any necessary 
changes to applicable Reliability Standards.

A. Division of Responsibilities for SOLs and IROLs

    22. In the NOPR, the Commission sought comment on a number of 
issues related to NERC's division of responsibilities for SOLs and 
IROLs between reliability coordinators and transmission operators. NERC 
acknowledges in its Petition that the transmission operator must 
develop and share its SOLs with its reliability coordinator, and the 
reliability coordinator must share any SOLs it develops with its 
transmission operator.\26\ NERC also states that it is currently 
working on a project to identify a subset of SOLs, other than IROLs, 
that the transmission operator and reliability coordinator must 
continuously analyze and monitor.\27\ Therefore, in the NOPR, the 
Commission sought comment on whether there is a need for reliability 
coordinators to continue to analyze, in addition to continuing to 
monitor and coordinate data on, SOLs other than

[[Page 16244]]

IROLs.\28\ The Commission also sought comment on whether the 
reliability coordinator should have a documented methodology for 
identifying the SOL information it needs to fulfill its 
responsibilities for day-ahead analysis, monitoring and real-time 
assessments, and operational control within the reliability 
coordinator's area.
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    \26\ NERC Petition at 77.
    \27\ NERC identifies this as ``Project 2007-03: Real-time 
Operations,'' available at http://www.nerc.com/filez/standards/Real-time_Operations_Project_2007-03.html.
    \28\ Under NERC FAC-011-2, reliability coordinators must have a 
documented methodology for use in developing SOLs within its 
reliability coordinator area.
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    23. The Commission requested information from NERC, reliability 
coordinators, and other interested entities on the current practices of 
reliability coordinators and transmission operators with respect to 
coordinating operational responsibilities for monitoring, day ahead and 
real-time assessments. The Commission also asked for comments on Bulk-
Power System operations related to SOLs and IROLs, on the practical 
division of responsibilities for preventing and mitigating SOL and IROL 
violations, and the monitoring capabilities of the reliability 
coordinator with respect to IROLs as well as other SOLs. Additionally, 
the Commission asked whether a reliability coordinator can provide an 
accurate assessment of the Bulk-Power System to its transmission 
operators on a Wide-Area basis, without evaluating: (1) The operating 
environment of SOLs that will impact the transmission operators within 
the reliability coordinator's areas; (2) SOLs that have the potential 
to become IROLs; and, (3) the existing IROLs within the reliability 
coordinator area. The Commission further sought comment as to whether a 
transmission operator can provide reliable operating assessments or 
make reliable operating instructions on an SOL that is on the border 
between two different transmission operator's areas. The Commission 
also requested comment on whether the reliability coordinator should 
have responsibility to monitor certain SOLs other than IROLs, and 
whether such a responsibility would place an unreasonable burden on 
reliability coordinators.
    24. The Commission noted that IRO-006-4.1 requires the reliability 
coordinator to model SOLs and IROLs in the Interchange Distribution 
Calculator (IDC) to perform the Transmission Loading Relief procedures. 
We sought comment on how reliability coordinators in the Eastern 
Interconnection select the SOLs for evaluation in the IDC and the 
extent of any burden this has caused the reliability coordinator.
    25. Finally, the Commission also sought comments from NERC and the 
public as to how the current Functional Model represents the 
delineation of assessment and operating responsibilities between the 
reliability coordinator and transmission operator with respect to SOLs 
and IROLs.
Comments
1. Continued Analysis of SOLs by Reliability Coordinators
    26. NERC states in its comments, that the proposed IRO Reliability 
Standards appropriately distinguish which entity has primary 
responsibility for SOLs. Further, Bulk-Power System reliability 
practices assign responsibilities for analyzing and resolving 
conditions to the entities closest to it, so that the entity with the 
closest eye to the condition can quickly assess and resolve it. NERC 
asserts that it is appropriate for transmission operators to maintain 
primary responsibility for SOLs, and for reliability coordinators to 
maintain primary responsibility for IROLs. NERC also explains that, 
while SOLs are typically associated with the prevention of facility 
damage or the accelerated degradation of equipment life, only a subset 
of SOLs are used to analyze and monitor local area reliability and, 
therefore, the proposed IRO standards are silent on the reliability 
coordinator's responsibility with respect to SOLs.
    27. NERC notes in its Petition, that the proposed Reliability 
Standards ``should not imply that the Reliability Coordinator will not 
look at its future operations with respect to specific SOLs.'' \29\ 
NERC also states that ``[t]he Reliability Coordinator retains the 
overall visibility of all operations within its Wide-Area view, 
including some SOLs, although the transmission operator is primarily 
responsible for actions related to SOLs.'' \30\ NERC also notes that 
the reliability coordinator can monitor the transmission operator's 
actions to resolve SOLs and provides, as an example, that the 
reliability coordinator can study real-time operating trends to help 
determine whether an asset is trending toward a ``grid-impactive SOL.'' 
\31\
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    \29\ NERC Petition at 9.
    \30\ NERC Petition at 10.
    \31\ NERC Comments at 7. NERC does not offer a definition of the 
term ``grid-impactive SOL,'' but we understand it to mean an SOL 
that the reliability coordinator monitor so that it does not develop 
into an IROL.
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    28. In its comments, NERC provides the results of a survey 
conducted in response to the NOPR in which each of the nine reliability 
coordinators in the Eastern Interconnection responded that, for SOLs 
that it monitors, the SOLs were developed in a coordinated fashion with 
the transmission operators in its area. The survey responses did not 
suggest that any transmission operator withheld important SOL 
information from reliability coordinators, nor did any reliability 
coordinator indicate that transmission operators were not willing to 
work with the reliability coordinators in monitoring SOLs for Bulk-
Power System reliability. NERC contends that this survey demonstrates 
that current operating practices are effective to ensure that 
reliability coordinators are able to obtain sufficient information from 
transmission operators in order to analyze and monitor certain SOLs 
other than IROLs.
    29. NERC also notes that, since the completion of the proposed IRO 
standards, the industry has been working to improve the clarity of 
Reliability Standard requirements regarding the transmission operator's 
primary responsibility for SOLs through the Real-time Operations 
Standard Drafting Team (Project 2007-03). For example, NERC explains 
that the Standard Drafting Team has proposed to add a requirement to 
TOP-001-2 that would require each transmission operator to inform its 
reliability coordinator of all SOLs which, while not IROLs, have been 
identified by the transmission operator as supporting its local area 
reliability based on its assessment of its Operational Planning 
Analysis. NERC states that, by using tools that properly model Wide-
Area conditions, the reliability coordinators are able to identify and 
help resolve lower-level issues that may not explicitly be included in 
the reliability coordinator modeling capabilities. EEI supports NERC's 
comments to the NOPR and believes that the Commission should encourage 
the NERC reliability coordinators working group to engage these issues 
with NERC stakeholders, especially the NERC Planning and Operating 
Committees.
    30. The Joint Commenters support the proposed primary division of 
responsibilities for SOLs and IROLs between reliability coordinators 
and transmission operators. They contend, though, that the proposed 
division should not be interpreted as implying that a reliability 
coordinator should not monitor any SOLs. The Joint Commenters further 
contend that it was not intended that the proposed Reliability 
Standards would remove all responsibility for SOLs from the reliability 
coordinator, but to establish a clear distinction of responsibilities 
and authority. The Joint Commenters state that they would not support a 
formal

[[Page 16245]]

requirement that would assign primary responsibility for analyzing and 
resolving SOLs to a reliability coordinator since the primary 
responsibility is correctly assigned to the transmission operator that 
is most familiar with their respective operating limits and local Bulk-
Power System characteristics.
    31. Midwest ISO states that it is necessary for reliability 
coordinators to analyze, monitor, and coordinate some SOLs other than 
IROLs and that the Reliability Standards should reflect this best 
practice. Midwest ISO believes the Commission should encourage the 
efforts currently underway at NERC towards the development of 
Reliability Standards addressing the role of reliability coordinators 
with regard to analyzing SOLs, other than IROLs, that are important to 
the reliable operation of the Bulk-Power System.
    32. AEP states that it generally supports the proposed Reliability 
Standards but that it agrees with concerns raised by the Commission 
that if reliability coordinators are not monitoring other SOLs, there 
is a potential gap in monitoring for SOLs that have the potential to 
become IROLs. AEP argues that performing an annual IROL identification 
would be insufficient because it could miss some opportunities to 
identify these potentially new IROLs when they could be material. AEP 
asserts that, at a minimum, reliability coordinators should be required 
to be involved in SOLs that could border two different transmission 
operators' areas to ensure the activities are appropriately 
coordinated. AEP states that reliability coordinators and transmission 
operators should develop this subset of SOLs through joint analysis, or 
agreement. AEP requests that the Commission direct NERC to develop a 
modification to proposed Reliability Standards EOP-001-1, IRO-002-2, 
IRO-004-2, IRO-005-3, TOP-003-1, TOP-005-2, and TOP-006-2, to require 
reliability coordinators to work together with transmission operators 
in developing and monitoring SOLs that border multiple transmission 
operators' areas.
2. Documented Methodology To Identify System Operating Limit 
Information
    33. NERC asserts that, because proposed Reliability Standard IRO-
008-1 requires reliability coordinators to use tools to model 
transmission and generation assets based on ratings provided by asset 
owners, it is unnecessary to impose an additional requirement that the 
reliability coordinator have a documented methodology for identifying 
the SOL information it needs because the systems and controls in place 
already provide the information needed by the reliability coordinators. 
The Joint Commenters also believe that such a methodology is 
unnecessary because, in its defined role, a reliability coordinator 
already will have access to, and be provided with, the appropriate set 
of SOLs from the transmission operator.
3. Current Practices for the Prevention and Mitigation of SOLs and 
IROLs and the Monitoring Capability of the Reliability Coordinator
    34. NERC states that current practices give the reliability 
coordinators the ability to provide assessments of the Bulk-Power 
System to their transmission operators on a Wide-Area basis. NERC 
believes it is unnecessary to require reliability coordinators to have 
additional responsibility to monitor SOLs other than IROLs. NERC also 
notes that there are checks in place that allow the reliability 
coordinator to monitor SOLs that could turn into IROLs. As an example, 
NERC points out that IRO-010-1a requires reliability coordinators to 
conduct Operational Planning Analyses and Real-Time Assessments to 
identify any IROLs that may be exceeded.
    35. NERC states that the electric power industry is predicated on 
interdependencies. NERC describes the interdependency of transmission 
operators and reliability coordinators as enabling the reliability 
coordinator both to control IROLs and flows, and to be aware of local 
issues, giving the reliability coordinator the ability to monitor SOLs 
that may become IROLs within the reliability coordinators areas. NERC 
further explains that it is working on Project 2007-03--Real-Time 
Operations to develop proposed revisions to the TOP standards that 
require a transmission operator to perform Operational Planning 
Analyses for its transmission operator area. NERC states that Project 
2007-03 is considering revisions to the Reliability Standards that 
would require observation of SOL limits in adjoining areas.
    36. The Joint Commenters state that the proposed IRO Reliability 
Standards hold reliability coordinators to the proper assessment of 
information required to provide accurate assessments on a Wide-Area 
basis. The Joint Commenters also caution that ``accurate assessments'' 
do not equate to precise results and the Commission should refrain from 
mandating that reliability coordinators provide accurate assessments.
4. Reliability Coordinator's Procedures for Selecting the SOLs for 
Evaluation by the Interchange Distribution Calculator
    37. NERC states that reliability coordinators in the Eastern 
Interconnection select which SOLs to evaluate in the interchange 
distribution calculator based on information received from the 
transmission operators indicating that the transmission operator has a 
facility that is approaching or exceeding its SOL and/or IROL. NERC 
states that the interchange distribution calculator is a congestion 
management tool that helps the reliability coordinators deal with 
transmission constraints. In the survey conducted by NERC of 
reliability coordinators, one reliability coordinator responded that it 
publishes most of its information for use by any entity that may wish 
to use the information in its reliability assessments. Another 
reliability coordinator responded that it does not enter SOLs in its 
area into the interchange distribution calculator, but flowgates are 
entered into the interchange distribution calculator that may have SOLs 
or IROLs associated with them. Entering the flowgates allows an entity 
to determine if external schedules are impacting the flowgate.
5. Current Functional Model
    38. NERC argues that Version 5 of the NERC Functional Model makes a 
clear distinction between the duties of the reliability coordinator and 
transmission operator with respect to SOLs and IROLs in certain task 
descriptions.\32\ Similarly, the Joint Commenters state that the latest 
NERC Functional Model divides reliability components and allocates them 
to ``unique'' baskets of tasks which include a fundamental reliability 
task to do Wide-Area analysis and another task for local analysis.
---------------------------------------------------------------------------

    \32\ See NERC Functional Model at 31, 37.
---------------------------------------------------------------------------

Commission Determination
    39. As we stated in the NOPR, we believe that it is appropriate for 
Reliability Standards requirements to offer a clear division of 
responsibilities among reliability coordinators and transmission 
operators. The preponderance of comments to the NOPR supports 
Commission approval of the Reliability Standards as proposed by NERC, 
including the proposed division of responsibilities. For the reasons 
described below, we approve the division of responsibility for SOLs and 
IROLs among transmission operators and reliability coordinators as 
expressed in the proposed Reliability Standards.
    40. NERC and others suggest that these Reliability Standards are 
not

[[Page 16246]]

intended to remove all responsibility for the analysis and monitoring 
SOLs from the reliability coordinator. We agree. These Reliability 
Standards generally establish a clear distinction of primary 
responsibility for SOLs and IROLs between the transmission operator and 
reliability coordinator respectively. As NERC notes, however, the 
reliability coordinator will continue to have the ability and the 
responsibility to analyze and monitor SOLs that could turn into IROLs. 
For example, Requirements R5 and R6 of Reliability Standard IRO-002-2 
require the reliability coordinator to monitor the important elements 
that could be critical to SOLs and IROLs within the reliability 
coordinator's area and surrounding reliability coordinator areas. In 
addition, the proposed IRO Reliability Standards require the 
reliability coordinator to conduct Operational Planning Analyses and 
Real-time Assessments of its reliability coordinator area. As NERC 
explained, the Operational Planning Analyses look at the expected 
system conditions and potential reliability impacts, with a focus on 
any impacts that affect the Wide-Area. Although a transmission operator 
lacks the tools to predict the impact on the surrounding transmission 
operator areas due to any changes in flow between inter-area 
facilities, a reliability coordinator addresses these facilities in its 
Wide-Area modeling capabilities.
    41. As the Commission noted in its NOPR, Reliability Standard IRO-
002-2 continues to require each reliability coordinator to monitor SOLs 
other than IROLs both within its reliability coordinator area and in 
surrounding reliability coordinator areas. Specifically, under 
Requirement R4 of IRO-002-2, each reliability coordinator must have 
detailed real-time monitoring capability of its reliability coordinator 
area and sufficient monitoring capability of its surrounding 
reliability coordinator areas to ensure that potential or actual SOL or 
IROL violations are identified and analyzed. In addition, under 
Requirement R5, each reliability coordinator must monitor bulk electric 
system elements such as generators, transmission lines, buses, 
transformers and breakers that could result in SOL or IROL violations 
within its reliability coordinator area. Further, as the Commission 
noted in the NOPR, the reliability coordinator must resolve potential 
or actual violations of SOL ratings by implementing a local or area-
wide transmission loading relief procedure under Reliability Standard 
IRO-006-4.1.
    42. Nevertheless, as noted by NERC and other commenters, there 
exists a subset of ``grid-impactive'' SOLs other than IROLs that the 
Commission believes may warrant closer analysis by the reliability 
coordinator, in addition to the analysis being conducted by the 
transmission operator, that focuses on whether these particular ``grid-
impactive'' SOLs could become IROLs. The Commission believes that there 
can be considerable benefit derived from some overlap in the 
responsibility for analyzing and monitoring these ``grid-impactive'' 
SOLs since, by definition, every IROL emanated from an SOL. While the 
proposed Reliability Standards continue to commit the reliability 
coordinator to the analysis and monitoring of SOLs that may become 
IROLs, a subset of SOLs, such as these ``grid-impactive'' SOLs, may 
deserve a more defined analysis and monitoring role on the part of the 
reliability coordinator.
    43. We acknowledge NERC's and industry's continuing efforts to 
improve the clarity of standard requirements regarding SOLs through the 
Real-time Operations Standard Drafting Team (Project 2007-03). We 
believe that the issues concerning the analysis and monitoring of 
``grid-impactive'' SOLs that we note here can be raised and considered 
in this or other ongoing projects. NERC comments that it is working on 
Project 2007-03 to develop revisions to the TOP Reliability Standards 
that require transmission operators to perform operational planning 
analyses for their local areas. NERC also comments that this project is 
also considering revisions that would require that SOL limits in 
adjoining areas be observed. In addition, there are other open 
projects, such as Project 2006-06--Reliability Coordination, which is 
analyzing appropriate reliability coordinator functions and 
responsibilities. In consideration of these ongoing efforts, we will 
not direct specific modifications to these Reliability Standards and, 
rather, accept NERC's commitment to exercise its technical expertise to 
study these issues and develop appropriate revisions to applicable 
Standards as may be necessary.
    44. Because the study and monitoring of SOLs and IROLs is an issue 
at the very core of Bulk-Power System reliability, the Commission 
agrees with EEI that the NERC Reliability Coordinators Working Group 
should engage the issues raised in this proceeding with NERC 
stakeholders, including the NERC Planning and Operating committees, to 
determine whether a need exists to further refine the delineation of 
responsibilities between the reliability coordinator and transmission 
operator for analyzing a class of ``grid-impactive'' SOLs. Depending on 
the results of that review, we further encourage NERC, working through 
its standard development process, to develop appropriate modifications 
to these and any other related Reliability Standards as necessary.

B. Operational Analyses and Real-time Assessments

    45. In the NOPR, the Commission sought comment on the prudence of 
using an Operational Planning Analysis up to twelve months old. The 
Commission asked whether this timeframe is reasonable or whether the 
timeframe should be shorter to ensure that the analysis is not 
outdated. In addition, the Commission sought comment on whether the 
definition should include measurable criteria to determine whether it 
is appropriate to use an existing analysis.
    46. Further, the Commission requested comments on the meaning of 
``immediately available data'' within the proposed definition of the 
NERC Glossary definition of Real-Time Assessment. The Commission 
proposed to direct NERC to modify the definition of ``Real-time 
Assessment'' to specify that the type of data to be relied upon by a 
reliability coordinator in conducting a Real-time Assessment must be 
based on adequate analysis capabilities such as state estimation, pre- 
and post-contingency analysis capabilities (thermal, stability, and 
voltage), and wide-area overview displays referenced in Requirement R6 
of IRO-002-2.
Comments
    47. In response to the Commission's questions regarding the use of 
an existing Operational Planning Analysis, NERC states that it is 
unlikely that a reliability coordinator would deliberately rely on an 
Operational Planning Analysis that does not reflect its expected system 
conditions. NERC asserts that a reliability coordinator will rely on a 
twelve-month old operational planning analysis only if system 
conditions have not changed over that time period. NERC states that the 
proposed definition of Operational Planning Analysis was developed, 
based on stakeholder comments, to apply not only to studies conducted 
for the day ahead, but also for future use in possibly developing 
requirements for seasonal studies. Thus, NERC explains, the definition 
includes the option of performing an Operational Planning Analysis up 
to twelve months ahead. NERC further explains that the

[[Page 16247]]

definition includes key elements that provide measurable criteria in 
assessing an entity's Operational Planning Analysis.
    48. In response to the Commission's questions regarding the 
proposed definition of Real-time Assessment, NERC and the Joint 
Commenters state that the industry is currently working towards 
consensus on the set of data and capabilities the reliability 
coordinators need to perform their tasks via the Real-time Reliability 
Monitoring and Analysis Capabilities Standards Development Team 
(Project 2009-02). Accordingly, NERC asks the Commission to refrain 
from directing modifications pending completion of the project.
Commission Determination
    49. The Commission approves the definitions of ``Operational 
Planning Analysis'' and ``Real-time Assessment'' without modification.
    50. The Commission agrees with NERC that the reliability 
coordinator should rely on a twelve-month old Operational Planning 
Analysis study only if system conditions have not changed from those 
originally studied. Consistent with the views of NERC, we expect that 
reliability coordinators will rely on Operational Planning Analysis 
that reflect expected system conditions. Accordingly, we accept the 
definition as proposed.
    51. Similarly, we find it is unnecessary to direct NERC to modify 
the definition of ``Real-time Assessment'' to specify that the type of 
data to be relied upon by a reliability coordinator in conducting a 
Real-time Assessment as proposed in the NOPR. Instead, the Commission 
will allow industry to complete Project 2009-02, which is working 
towards consensus on the set of data and capabilities the reliability 
coordinators need to perform their tasks. We expect NERC to use its 
technical expertise to develop any modifications to the definition of 
Real-time Assessment as may be necessary as a result of this ongoing 
project.

C. Reliability Coordinator Actions To Operate Within IROLs

    52. In the NOPR, the Commission sought comment on whether 
reliability coordinators should have action plans developed and 
implemented with respect to other SOLs apart from IROLs and if so, 
which SOLs.
Comments
    53. NERC states that transmission operators already are responsible 
for developing action plans for preventing and/or mitigating conditions 
that cause facility ratings to be exceeded. NERC therefore contends 
that it would add confusion to the process to require both the 
reliability coordinator and transmission operator to develop action 
plans for every SOL.
    54. Similarly, WECC does not believe that reliability coordinators 
should be required to have action plans developed and implemented for 
SOLs apart from IROLs. WECC argues that requiring the reliability 
coordinator to second guess rather than defer to the more granular view 
and detailed view of the transmission operators or balancing 
authorities undermines and substantially changes the roles of each 
function without any foreseeable benefit to overall reliability.
Commission Determination
    55. The Commission agrees with NERC that requiring both the 
reliability coordinator and transmission operator to develop action 
plans for every SOL may add confusion to the process. As a result, the 
Commission approves IRO-009-1, without modification. However, the 
Reliability Coordinator Working Group should further study this issue 
and determine if there is a need for reliability coordinators to have 
action plans developed and implemented with respect to certain grid-
impactive SOLs.

D. IRO-010-1a

    56. In the NOPR, the Commission expressed concern that Reliability 
Standard IRO-010-1a does not require reliability coordinators to 
specify a list of minimum data needed for reliable operation of the 
Bulk-Power System. The Commission, therefore, sought comment on whether 
a minimum list of data is necessary for the effective sharing of data 
between neighboring reliability coordinators and, if so, what data 
should be included. The Commission also sought comment on how 
compatibility of data between neighboring reliability coordinators can 
be assured without a list of minimum data in this proposed Reliability 
Standard.
    57. In its discussion of Reliability Standard TOP-003-1, the 
Commission noted that Requirement R3 of proposed Reliability Standard 
IRO-010-1a requires entities to provide data and information to the 
reliability coordinator in accordance with the reliability 
coordinator's specifications. The Commission expressed concern that 
this requirement does not specify outage coordination data and, 
therefore, the reliability coordinator may not receive adequate outage 
coordination data to support the Operational Planning Analysis. 
Accordingly, the Commission sought comment on whether IRO-010-1a should 
specify necessary outage coordination data.
Comments
    58. NERC, the Joint Commenters and Midwest ISO contend that 
requiring a minimum list of data is not necessary for the effective 
sharing of data between neighboring reliability coordinators. NERC 
argues that requiring a list of minimum data not only could impair an 
entity's ability to provide the data to the reliability coordinator 
quickly, but could prevent a reliability coordinator from obtaining 
needed data quickly. NERC also notes that, during the development of 
the proposed Reliability Standard, the reliability coordinators that 
were polled indicated they already were receiving the data they needed 
without any issues and that the data and information they received 
varied from one reliability coordinator to another. The Joint 
Commenters argue that it is unnecessary to develop such a requirement 
because two interconnected parties can agree upon the appropriate type 
and level of data it needs from the other, taking into consideration 
their respective tools and capabilities. Midwest ISO argues that many 
reliability coordinators already have developed coordination agreements 
with their neighbors that identify the information necessary for 
effective data sharing. Midwest ISO contends that a generic list of 
minimum data could be inadequate to meet regional needs and could 
create conflicts with existing coordination agreements. Midwest ISO 
further contends that a minimum list could curb creativity and 
innovation as capabilities develop new uses for data.
    59. NERC and the Joint Commenters also urge the Commission to 
refrain from requiring NERC to modify IRO-010-1a to specify the 
necessary outage coordination data for all reliability coordinators. 
They contend that such an approach would not account for the 
significantly varying facilities located within the reliability 
coordinators' area and allow for the flexibility to specify the data 
needed for its respective area.
    60. Reiterating comments it raised during the standard development 
process, WECC opposes the requirement in R1.2 that the parties reach 
mutual agreement with respect to the format of the data and information 
that the reliability coordinator receives. WECC argues that, due to the 
large number of entities that must provide data to the reliability 
coordinator, the requirement for mutually agreeable formats may cause 
the reliability coordinator to receive data in a multitude of diverse 
formats. WECC also believes that

[[Page 16248]]

requiring mutually agreeable data formats could delay the submission of 
data by a submitting entity until agreement can be reached via 
negotiation or dispute resolution. WECC argues that more than one party 
is involved in the formulation of an agreeable format yet only a 
reliability coordinator will be found non-compliant when the 
reliability coordinator and transmission operators or balancing 
authorities within the reliability coordinator area fail to reach an 
agreement over an acceptable format.
Commission Determination
    61. The Commission agrees with commenters that it is unnecessary to 
direct NERC to develop a specific list of minimum data for the 
effective sharing of data between neighboring reliability coordinators 
under Reliability Standard IRO-010-1a. NERC and other entities confirm 
that reliability coordinators currently obtain necessary data without 
such a specific list. In addition, as commenters point out, a minimum 
list may conflict with coordination agreements currently in place which 
identify the information necessary for effective data sharing. With 
regard to the concern expressed in the NOPR regarding outage 
coordination data, we accept that reliability coordinators currently 
obtain necessary data. If, in the future, reliability coordinators are 
not able to obtain the necessary outage coordination data, we would ask 
NERC to consider whether a Reliability Standard should be developed for 
the reliability coordinators to obtain such data.
    62. In response to WECC's concerns about the submission of data in 
mutually agreeable formats under Requirement R1.2, we do not believe 
any modification is necessary. As NERC states in its Petition, by 
specifying that the format must be mutually agreeable, the standard 
supports efficiency by precluding the submission of data that is in a 
format that cannot be used. We agree. NERC states that current data 
exchange formats are acceptable. Therefore, entities can continue to 
utilize existing agreements regarding data exchange. While disputes may 
arise in the future, the Reliability Standard does not dictate a 
specific dispute resolution process in the interpretation leaving 
reliability coordinators and other entities options for informal 
resolution of a dispute on the format of data and flexibility in 
choosing a dispute resolution process to reach an agreement.
    63. Accordingly, the Commission approves IRO-010-1a as submitted.

E. Violation Severity Levels and Violation Risk Factors

    64. In the event of a violation of a Reliability Standard, NERC 
establishes the initial value range for the corresponding base penalty 
amount. To do so, NERC assigns a violation risk factor for each 
requirement of a Reliability Standard that relates to the expected or 
potential impact of a violation of the requirement on the reliability 
of the Bulk-Power System. In addition, NERC defines up to four 
violation severity levels--Lower, Moderate, High, and Severe--as 
measurements for the degree to which the requirement was violated in a 
specific circumstance.
    65. In Order No. 705, the Commission approved 63 of NERC's 72 
proposed violation risk factors for the version one FAC Reliability 
Standards and directed NERC to file violation severity level 
assignments before the version one FAC Reliability Standards become 
effective.\33\ Subsequently, NERC developed violation severity levels 
for each requirement of the Commission-approved FAC Reliability 
Standards, as measurements for the degree to which the requirement was 
violated in a specific circumstance.
---------------------------------------------------------------------------

    \33\ Facilities Design, Connections and Maintenance Reliability 
Standards, Order No. 705, 121 FERC ] 61,296, at P 137 (2007).
---------------------------------------------------------------------------

    66. On June 19, 2008, the Commission issued its Violation Severity 
Level Order approving the violation severity level assignments filed by 
NERC for the 83 Reliability Standards approved in Order No. 693.\34\ In 
that order, the Commission offered four guidelines for evaluating the 
validity of violation severity levels, and ordered a number of reports 
and further compliance filing to bring the remainder of NERC's 
violation severity levels into conformance with the Commission's 
guidelines. The four guidelines are: (1) Violation severity level 
assignments should not have the unintended consequence of lowering the 
current level of compliance; (2) violation severity level assignments 
should ensure uniformity and consistency among all approved Reliability 
Standards in the determination of penalties; \35\ (3) violation 
severity level assignments should be consistent with the corresponding 
requirement; and (4) violation severity level assignments should be 
based on a single violation, not a cumulative number of violations.\36\ 
The Commission found that these guidelines will provide a consistent 
and objective means for assessing, inter alia, the consistency, 
fairness and potential consequences of violation severity level 
assignments. The Commission noted that these guidelines were not 
intended to replace NERC's own guidance classifications, but rather, to 
provide an additional level of analysis to determine the validity of 
violation severity level assignments.
---------------------------------------------------------------------------

    \34\ Violation Severity Level Order, 123 FERC ] 61,284.
    \35\ Guideline 2 contains two sub-parts: (a) the single 
violation severity level assignment category for binary requirements 
should be consistent and (b) violation severity levels assignments 
should not contain ambiguous language.
    \36\ Violation Severity Level Order, 123 FERC ] 61,284 at P 17.
---------------------------------------------------------------------------

    67. On August 10, 2009, NERC submitted an informational filing 
setting forth a summary of revised guidelines that NERC intends to use 
in determining the assignment of violation risk factors and violation 
severity levels for Reliability Standards. NERC states that these 
revised guidelines were consistent with Commission's guidelines. On May 
5, 2010, NERC submitted the subject informational filing as a 
supplement to its pending March 5, 2010 Violation Severity Level Order 
compliance filing.\37\
---------------------------------------------------------------------------

    \37\ North American Reliability Corporation, Filing of the North 
American Electric Reliability Corporation regarding the Assignment 
of Violation Risk Factors and Violation Severity Levels, Docket No. 
RR08-4-005 (filed May 5, 2010).
---------------------------------------------------------------------------

NERC Proposal
    68. NERC proposes a complete set of violation severity levels and 
violation risk factors for proposed new Reliability Standards IRO-008-
1, IRO-009-1, and IRO-010-1a. In addition, NERC proposes to apply the 
existing set of violation severity levels and violation risk factors 
assigned to the proposed modified requirements.
    69. NERC states that it developed the violation severity levels for 
the new IRO Reliability Standards before the Commission issued its June 
19, 2008 Order on violation severity levels.\38\ NERC also notes that 
the proposed violation severity levels were developed before NERC 
proposed a new methodology for assigning violation severity levels and 
violation risk factors.\39\ As a result, NERC states that some of the 
proposed violation severity levels do not comport with the Commission's 
guidelines on violation severity levels and some do not comport with 
the NERC's revised guidelines. NERC identified differences and 
committed to propose revisions to the violation severity levels.
---------------------------------------------------------------------------

    \38\ Id.
    \39\ NERC, Informational Filing Regarding the Assignment of 
Violation Risk Factors and Violation Severity Levels, Docket Nos. 
RM08-11-000, RR07-9-000, and RR07-10-000 (filed Aug. 10, 2009).

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

[[Page 16249]]

    70. Separately from NERC's Petition here, on March 5, 2010, NERC 
submitted the first of two VSL compliance filings (Filing 1) to the 
Commission's VSL Orders,\40\ which contained the VSL assignments for 
the original set of 83 Reliability Standards approved by the Commission 
and NUC-001-2. In addition, NERC requested an extension for filing the 
remaining VSLs until the 3rd quarter of 2010. On July 6, 2010, the 
Commission issued a Notice of Extension of Time up to and including 
December 1, 2010, for Filing 2.\41\ On December 1, 2010, NERC submitted 
a compliance filing to the Commission in Docket No. RR08-04-006 (Filing 
2). In Filing 2, NERC submitted VSLs both for Reliability Standards 
that are pending at the Commission and Reliability Standards previously 
approved by the Commission. Filing 2 includes VSLs to supersede those 
in NERC's Petition in Docket No. RM10-15-000 for EOP-001-1, IRO-002-2, 
IRO-004-2, IRO-005-3, IRO-008-1, IRO-009-1, IRO-010-1, IRO-010-1a, TOP-
003-1, TOP-005-2, and TOP-006-2.\42\
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    \40\ North American Electric Reliability Corp., 123 FERC ] 
61,284 (2008), order on reh'g, 125 FERC ] 61,212 (2008) (VSL 
Orders).
    \41\ North American Electric Reliability Corporation, Docket No. 
RR08-4-005 (Jul. 6, 2010) (granting an extension of time for 
submitting this VSL compliance filing up to and including December 
1, 2010).
    \42\ See NERC, Compliance Filing, Docket No. RR08-4-006, at 2 
n.6 (filed Dec. 1, 2010).
---------------------------------------------------------------------------

NOPR Proposal
    71. In the NOPR, the Commission proposed to accept the proposed 
violation risk factors and violation severity levels presented in 
NERC's petition. In addition, the Commission proposed to accept NERC's 
commitment to review the proposed violation risk factors and violation 
severity levels to ensure compliance with the Commission's guidelines. 
Accordingly, we proposed to direct NERC to submit a compliance filing 
within six months of the effective date of the final rule in this 
proceeding that would provide the results of NERC's review including 
any modifications necessary to comply with the Commission's guidelines 
on violation risk factors and violation severity levels.
Commission Determination
    72. Because a determination has not yet been made regarding NERC's 
``roll-up'' approach pending before the Commission in Docket Nos. RR08-
4-005 and RR08-4-006, the Commission will defer discussion on the 
proposed violation risk factors and violation severity levels assigned 
to IRO-008-1, IRO-009-1, and IRO-010-1a, until after the Commission 
issues a final order acting on NERC's petition in these proceedings.

III. Information Collection Statement

    73. The information collection requirements in this Final Rule are 
identified under the Commission data collection FERC-725A, ``Mandatory 
Reliability Standards for the Bulk-Power System.'' The information 
collection requirements are being submitted to the Office of Management 
and Budget (OMB) for review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\43\ OMB's regulations require OMB to approve 
certain information collection requirements imposed by agency rule.\44\
---------------------------------------------------------------------------

    \43\ 44 U.S.C. 3507(d).
    \44\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    74. The Commission approves new Reliability Standards IRO-008-1, 
IRO-009-1, and IRO-010-1a; revised Reliability Standards EOP-001-1, 
IRO-002-2, IRO-004-2, IRO-005-3, TOP-003-1, TOP-005-2, and TOP-006-2; 
and the two new NERC Glossary terms: ``Operational Planning Analysis'' 
and ``Real-time Assessment.'' The three new Reliability Standards (IRO-
008-1, IRO-009-1 and IRO-010-1a, governing reliability coordinator 
analyses, operational actions and data collection) replace parts of the 
currently-effective Reliability Standards EOP-001-0, IRO-002-1, IRO-
004-1, IRO-005-2, TOP-003-0, TOP-005-1 and TOP-006-1 approved by the 
Commission in Order No. 693.
    75. Thus, this final rule does not impose entirely new burdens on 
the affected entities. With the exception of the addition of 
Interchange Authority as an applicable entity in IRO-010-1a, the 
currently-effective standards EOP-001-0, IRO-002-1, IRO-004-1, IRO-005-
2, TOP-003-0, TOP-005-1 and TOP-006-1 require actions by the same 
applicable group of entities. IRO-010-1a clarifies that balancing 
authorities, generator owners, generator operators, interchange 
authorities, load-serving entities, reliability coordinators, 
transmission operators, and transmission owners shall provide data and 
information, as specified, to the reliability coordinator(s) with which 
it has a reliability relationship.\45\ The requirements of IRO-008-1 
and IRO-009-1 provide clarification from existing requirements, 
dictating the analysis and operational roles of the reliability 
coordinator.
---------------------------------------------------------------------------

    \45\ Proposed Reliability Standard IRO-010-1a, Requirement R3.
---------------------------------------------------------------------------

    76. Public Reporting Burden: Our estimate below regarding the 
number of respondents is based on the NERC compliance registry as of 
September 28, 2010. According to the NERC compliance registry, there 
are 134 balancing authorities, 824 generator owners, 773 generator 
operators, 61 interchange authorities, 541 load-serving entities, 26 
reliability coordinators, 178 transmission operators, and 332 
transmission owners that would be involved in providing information. 
However, under NERC's compliance registration program, entities may be 
registered for multiple functions, and as such there is some 
duplication of functions regarding the number of registered entities 
that would be required to provide information. Given these parameters, 
the Commission estimates that the Public Reporting burden for the 
requirements contained in the final rule is as follows:

----------------------------------------------------------------------------------------------------------------
                                                                Number of
        FERC-725A data collection             Number of          annual           Hours per       Total annual
                                             respondents        responses        respondent           hours
                                                       (A)               (B)               (C)       (A x B x C)
----------------------------------------------------------------------------------------------------------------
Reliability Coordinators distribution of                26                *1                 8               208
 data specification to entities.........
Balancing Authorities, Generator Owners,             1,501                *1                 8            12,008
 Generator Operators, Interchange
 Authorities, Load-serving Entities,
 Reliability Coordinators, Transmission
 Operators, and Transmission Owners
 reporting data to their Reliability
 Coordinator............................
                                         -----------------------------------------------------------------------
    Total...............................  ................  ................  ................            12,216
----------------------------------------------------------------------------------------------------------------
*As needed.


[[Page 16250]]

     Total Information Collection Costs: The Commission 
estimated that it would require 12,216 total annual hours for the 
information collection (reporting and recordkeeping) and that the 
average annualized costs would be $1,465,920 (12,216 hours @ $120/
hour).
    Title: FERC-725A, Mandatory Reliability Standards for the Bulk-
Power System.
    Action: Proposed Revision to FERC-725A.
    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 Final Rule approves three 
Reliability Standards that pertain to interconnection reliability 
operating limits and seven modified Reliability Standards that pertain 
to emergency preparedness and operations, interconnection reliability 
operations and coordination, and transmission operations. This Final 
Rule also approves the addition of two new terms to the NERC Glossary 
of Terms. The Reliability Standards that pertain to interconnection 
reliability operating limits will require reliability coordinators and 
transmission operators to coordinate data on system operating limits 
and interconnection reliability operating limits. This Final Rule finds 
the Reliability Standards and related definitions just, reasonable, not 
unduly discriminatory or preferential, and in the public interest.
    77. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, Attn: 
Ellen Brown, Office of the Executive Director, 888 First Street, NE. 
Washington, DC 20426, E-mail: DataClearance@ferc.gov, Tel: (202) 502-
8663, Fax: (202) 273-0873. Comments on the requirements of this final 
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]. 
For security reasons, comments should be sent by e-mail to OMB at 
oira_submission@omb.eop.gov. Please reference OMB Control Number 1902-
0244, RIN 1902-AE17, and the docket number of this final rule in your 
submission.

IV. Environmental Analysis

    78. 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.\46\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. The actions directed 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.\47\ Accordingly, neither an environmental 
impact statement nor environmental assessment is required.
---------------------------------------------------------------------------

    \46\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \47\ 18 CFR 380.4(a)(5) (2010).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    79. The Regulatory Flexibility Act of 1980 (RFA) \48\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The requirements of this rule would apply primarily to reliability 
coordinators, which do not fall within the definition of small 
entities.\49\ Moreover, the proposed Reliability Standards reflect a 
continuation of existing requirements for reliability coordinators and 
other entities to monitor, analyze, prevent, and mitigate the 
occurrence of operating limit violations on the Bulk-Power System. The 
one exception is the proposed new requirements in Reliability Standard 
IRO-010-1a for interchange authorities, which also do not fall within 
the definition of small entities. Based on the foregoing, the 
Commission certifies that this proposed rule will not have a 
significant impact on a substantial number of small entities. 
Accordingly, no regulatory flexibility analysis is required.
---------------------------------------------------------------------------

    \48\ 5 U.S.C. 601-612.
    \49\ 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. 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.
---------------------------------------------------------------------------

VI. Document Availability

    80. 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.
    81. 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.
    82. 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.

VII. Effective Date and Congressional Notification

    83. These regulations are effective May 23, 2011. The Commission 
has determined, with the concurrence of the Administrator of the Office 
of Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2011-6778 Filed 3-22-11; 8:45 am]
BILLING CODE 6717-01-P


