
[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Rules and Regulations]
[Pages 58101-58103]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24088]



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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-29-000; Order No. 753]


Electric Reliability Organization Interpretation of Transmission 
Operations Reliability Standard

September 15, 2011.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: Under section 215 of the Federal Power Act (FPA), the Federal 
Energy Regulatory Commission approves the North American Electric 
Reliability Corporation's proposed interpretation of Reliability 
Standard, TOP-001-1, Requirement R8, which pertains to the restoration 
of real and reactive power during a system emergency.

DATES: Effective Date: This rule will become effective November 21, 
2011.

FOR FURTHER INFORMATION CONTACT: 
Robert T. Stroh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8473.
Eugene Blick (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8066.
David O'Connor (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-6695.

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

Final Rule

    1. Under section 215 of the Federal Power Act (FPA),\1\ the Federal 
Energy Regulatory Commission approves the North American Electric 
Reliability Corporation's (NERC) proposed interpretation of Requirement 
R8 in Commission-approved NERC Reliability Standard TOP-001-1--
Reliability Responsibilities and Authorities.
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    \1\ 16 U.S.C. 824o (2006).
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I. Background

    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. Approved Reliability Standards are enforced by the ERO, 
subject to Commission oversight, or by the Commission independently.
    3. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO \2\ and, subsequently, certified 
NERC as the ERO.\3\ On March 16, 2007, the Commission issued Order No. 
693, approving 83 of the 107 Reliability Standards filed by NERC, 
including Reliability Standard TOP-001-1.\4\
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    \2\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \3\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
    \4\ 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).
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    4. 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.\5\ 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.
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    \5\ NERC Rules of Procedure, Appendix 3A, Reliability Standards 
Development Procedure, Version 6.1, at 27-29 (2010).
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A. Reliability Standard TOP-001-1

    5. Reliability Standard TOP-001-1 (Reliability Responsibilities and 
Authorities) centers on the responsibilities of balancing authorities 
and transmission operators during a system emergency. Specifically, the 
stated purpose of Reliability Standard TOP-001-1 is to ensure 
reliability entities have clear decision-making authority and 
capabilities to take appropriate actions or direct the actions of 
others to return the transmission system to normal conditions during an 
emergency. Requirement R8 of the standard provides:

    During a system emergency, the Balancing Authority and 
Transmission Operator shall immediately take action to restore the 
Real and Reactive Power Balance. If the Balancing Authority or 
Transmission Operator is unable to restore Real and Reactive Power 
Balance it shall request emergency assistance from the Reliability 
Coordinator. If corrective action or emergency assistance is not 
adequate to mitigate the Real and Reactive Power Balance, then the 
Reliability Coordinator, Balancing Authority, and Transmission 
Operator shall implement firm load shedding.\6\
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    \6\ Reliability Standard TOP-001-1, Requirement R8.
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B. NERC Proposed Interpretation

    6. On July 16, 2010, NERC submitted its petition for approval for 
an interpretation of Requirement R8 in Commission-approved Reliability 
Standard TOP-001-1. The Petition explains that NERC received a request 
from Florida Municipal Power Pool (FMPP) seeking an interpretation of 
Reliability Standard TOP-001-1, Requirement R8. Specifically, FMPP 
requested clarification on several aspects of Requirement R8. FMPP 
asked the following:

    Balancing real power is not a function of a [Transmission 
Operator] and balancing reactive power is not a function of a 
[Balancing Authority]. For Requirement R8 is the Balancing Authority 
responsibility to immediately take corrective action to restore Real 
Power Balance and is the [Transmission Operator] responsibility to 
immediately take corrective action to restore Reactive Power 
Balance? \7\
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    \7\ NERC Petition at 5.

    7. Consistent with the NERC Rules of Procedure, NERC stated that it 
assembled a team to respond to the request for interpretation and 
presented the proposed interpretation to industry ballot, using a 
process similar to the process it uses for the development of 
Reliability Standards.\8\
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    \8\ NERC Reliability Standards Development Procedure at 27-29.
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    8. In response to FMPP's interpretation request, NERC provided the 
following:

    The answer to both questions is yes. According to the NERC 
Glossary of Terms Used in Reliability Standards, the Transmission 
Operator is responsible for the reliability of its ``local'' 
transmission system, and operates or directs the operations of the 
transmission facilities. Similarly, the Balancing Authority is 
responsible for maintaining load-interchange-generation balance, 
i.e., real power balance. In the context of this requirement, the 
Transmission Operator is the functional entity that balances 
reactive power. Reactive power balancing can be accomplished by 
issuing instructions to the Balancing Authority or Generator 
Operators to alter reactive power injection. Based on NERC 
Reliability Standard BAL-005-1b Requirement R6, the Transmission 
Operator has no requirement to

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compute an Area Control Error (ACE) signal or to balance real power. 
Based on NERC Reliability Standard VAR-001-1 Requirement R8, the 
Balancing Authority is not required to resolve reactive power 
balance issues. According to TOP-001-1[bsol] Requirement R3, the 
Balancing Authority is only required to comply with Transmission 
Operator or Reliability Coordinator instructions to change 
injections of reactive power.\9\
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    \9\ Id. at 5-6.

    NERC stated that the interpretation was developed and approved by 
industry stakeholders and approved by the NERC Board of Trustees 
(Board).
    9. The NERC petition explained that the interpretation is 
consistent with the stated purpose of the Reliability Standard, which 
is to ensure reliability entities have clear decision-making authority 
and capabilities to take appropriate actions or direct the actions of 
others to return the transmission system to normal conditions during an 
emergency. NERC added that the interpretation clarifies the 
responsibilities of balancing authorities and transmission operators 
during a system emergency by referencing the NERC Glossary of Terms 
Used in Reliability Standards as well as other relevant Reliability 
Standards.\10\
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    \10\ Id. at 6.
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    10. On February 14, 2011, NERC made a supplemental filing in 
response to a Commission staff data request.\11\ With regard to whether 
Requirement R8 obligates a joint response in a system emergency, NERC 
explained that Requirement R8 does not use the word ``joint'' or 
otherwise infer joint responsibility during system emergencies. Rather, 
NERC responded that the balancing authority and transmission operator 
have separate responsibilities to restore real and reactive power 
balance during system emergencies. NERC also stated that the use of 
``and'' between the two entities should not construe communication or 
coordination. NERC added that the Blackout Report \12\ correctly 
identifies communication and coordination issues as reliability issues 
and that communication and coordination are addressed in the 
Communications (COM) Reliability Standards.\13\
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    \11\ Response of the North American Electric Reliability 
Corporation to Request for Additional Information Regarding 
Interpretation to Reliability Standard TOP-001-1, Requirement R8 
(NERC Response).
    \12\ Final Report on the August 14, 2003 Blackout in the United 
States and Canada (Blackout Report).
    \13\ NERC Response at 4-7.
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II. Notice of Proposed Rulemaking

    11. On April 21, 2011, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) proposing to approve NERC's interpretation of 
Reliability Standard TOP-001-1, Requirement R8.\14\ In the NOPR, the 
Commission stated that it believed that the ERO has presented a 
reasonable interpretation consistent with the language of the 
Reliability Standard. In addition, the NOPR noted that a balancing 
authority and transmission operator each have coordination and 
communication functions that are necessary for maintaining real and 
reactive power balance.
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    \14\ Electric Reliability Organization Interpretation of 
Transmission Operations Reliability Standard, Notice of Proposed 
Rulemaking, 76 FR 23222 (Apr. 26, 2011), FERC Stats. & Regs. ] 
32,674 (2011) (NOPR).
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    12. In response to the NOPR, NERC filed comments supporting the 
Commission's proposed approval of the interpretation. No comments were 
filed opposing the Commission's proposal to approve NERC's 
interpretation.

III. Commission Determination

    13. The Commission adopts the NOPR proposal and approves the 
interpretation of TOP-001-1, Requirement R8. The Commission finds that 
NERC's interpretation is just, reasonable, not unduly discriminatory or 
preferential, and in the public interest.
    14. The interpretation supports the stated purpose of the 
Reliability Standard, i.e., ensuring that reliability entities have 
clear decision-making authority and capabilities to take appropriate 
actions or direct the actions of others to return the transmission 
system to normal conditions during an emergency.\15\ The interpretation 
also clarifies the responsibilities of a balancing authority and 
transmission operator during a system emergency. Further, the language 
is consistent with the language of the requirement. Accordingly, the 
Commission approves the ERO's interpretation of TOP-001-1, Requirement 
R8.
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    \15\ Id. at 6.
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    15. We agree, as discussed in the interpretation, that the 
balancing authority is responsible for restoring real power balance 
during a system emergency and the transmission operator is responsible 
for restoring reactive power balance during a system emergency. 
However, during a system emergency, communication and coordination 
between the transmission operator and balancing authority can be 
essential to restore real and reactive power balance. For example, 
during an emergency, the balancing authority may rely on the real power 
output of a generator to fulfill its responsibility, while the 
transmission operator may expect the same generator unit to reduce real 
power to generate greater reactive power output.\16\
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    \16\ The Blackout Report described such a scenario, explaining 
that a generator unit tripped because the unit's protection system 
detected the VAR output, i.e., reactive power, exceeded the unit's 
capability. Blackout Report at 27. The Blackout Report also 
explained that no generator units were asked to reduce their real 
power output to produce more reactive power. Id. at 47.
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    16. NERC acknowledges the need for such communication and 
coordination.\17\ NERC maintains that this coordination and 
communication is required through two currently-effective Communication 
Reliability Standards: (1) COM-001-1.1--Telecommunications and (2) COM-
002-2--Communication and Coordination.\18\
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    \17\ NERC Response at 6-7.
    \18\ NERC Response at 6-7. NERC also identifies several ongoing 
Reliability Standards projects that are intended to strengthen the 
requirements pertaining to communication and coordination between 
entities.
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    17. We agree with NERC that the currently effective COM Reliability 
Standards provide for such communication and coordination. For example, 
Reliability Standard COM-002-2, Requirement R1 provides that 
transmission operators, balancing authorities and generator operators 
must have communication links with one another and must be staffed to 
address a real-time emergency. Reliability Standard EOP-001-0, 
Requirements R3, R4.3, and R7 also contain provisions relevant to the 
need for communication and coordination in emergencies.\19\ These 
provisions require balancing authorities and transmission operators to 
develop plans to mitigate operating emergencies including coordination 
among adjacent transmission operators and balancing authorities.
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    \19\ See NOPR, FERC Stats. & Regs. ] 32,674 at P 14. On July 13, 
2011, the Commission approved EOP-001-2 Reliability Standard, 
replacing EOP-001-0 effective July 1, 2013. Mandatory Reliability 
Standards for Interconnection Reliability Operating Limits; System 
Restoration Reliability Standards, 136 FERC ] 61,030 (2011). The 
applicable Requirements in EOP-001-2 relevant to the need for 
communication and coordination in emergencies are Requirements R2, 
R3.3, and R6.
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    18. Accordingly, for the reasons discussed above, we approve NERC's 
proposed interpretation of TOP-001-1, Requirement R8.

IV. Information Collection Statement

    19. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping requirements 
(collections of information) imposed by an agency.\20\ The information 
contained here is also

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subject to review under section 3507(d) of the Paperwork Reduction Act 
of 1995.\21\
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    \20\ 5 CFR 1320.11.
    \21\ 44 U.S.C. 3507(d).
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    20. As stated above, the Commission approved, in Order No. 693, 
Reliability Standard TOP-001-1 that is the subject of the current 
rulemaking. This Final Rule approves the interpretation of the 
previously approved Reliability Standard, which was developed by NERC 
as the ERO. The interpretation, as clarified, relates to an existing 
Reliability Standard, and the Commission does not expect it to affect 
entities' current reporting burden.\22\ Accordingly, we will submit 
this Final Rule to OMB for informational purposes only.
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    \22\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1901-
1907.
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    21. 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, e-mail: 
DataClearance@ferc.gov, Phone: (202) 502-8663, fax: (202) 273-0873].

V. Environmental Analysis

    22. 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.\23\ 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.\24\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \23\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
& Regs. Preambles 1986-1990 ] 30,783 (1987).
    \24\ 18 CFR 380.4(a)(2)(ii).
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VI. Regulatory Flexibility Act

    23. The Regulatory Flexibility Act of 1980 (RFA) \25\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a final rule and that minimize any 
significant economic impact on a substantial number of small entities. 
The Small Business Administration's (SBA) Office of Size Standards 
develops the numerical definition of a small business.\26\ 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.\27\ The RFA is not implicated 
by this Final Rule because the interpretations discussed herein will 
not have a significant economic impact on a substantial number of small 
entities.
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    \25\ 5 U.S.C. 601-612.
    \26\ 13 CFR 121.101.
    \27\ 13 CFR 121.201, Section 22, Utilities, & n.1.
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    24. The Commission approved Reliability Standard TOP-001-1 in 2007 
in Order No. 693. The Final Rule in the immediate docket addresses an 
interpretation of Requirement R8 of previously-approved TOP-001-1. The 
interpretation clarifies current compliance obligations of balancing 
authorities and transmission operators and therefore, does not create 
an additional regulatory impact on small entities.

VII. Document Availability

    25. 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.
    26. 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.
    27. User assistance is available for eLibrary and the FERC's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or 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.

VIII. Effective Date and Congressional Notification

    28. These regulations are effective November 21, 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.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-24088 Filed 9-19-11; 8:45 am]
BILLING CODE 6717-01-P


