
[Federal Register Volume 78, Number 234 (Thursday, December 5, 2013)]
[Proposed Rules]
[Pages 73112-73128]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28629]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket Nos. RM13-12-000, RM13-14-000 and RM13-15-000]


Monitoring System Conditions--Transmission Operations Reliability 
Standards; Interconnection Reliability Operations and Coordination 
Reliability Standards

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the 
Commission proposes to remand revisions to the Transmission Operations 
and Interconnection Reliability Operations and Coordination Reliability 
Standards, developed 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. In addition, the Commission proposes 
to approve NERC's proposed revisions to Reliability Standard TOP-006-3.

DATES: Comments are due February 3, 2014.

[[Page 73113]]


ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
Michael Gandolfo (Technical Information), Office of Electric 
Reliability, Federal Energy Regulatory Commission, 888 First Street 
NE., Washington, DC 20426, Telephone: (202) 502-6817, 
Michael.Gandolfo@ferc.gov.
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, Robert.Stroh@ferc.gov.

SUPPLEMENTARY INFORMATION: 

145 FERC ] 61,158

Notice of Proposed Rulemaking

(Issued November 21, 2013)

    1. Pursuant to section 215(d) of the Federal Power Act (FPA),\1\ 
the Commission proposes to remand revisions to the Transmission 
Operations (TOP) and Interconnection Reliability Operations and 
Coordination (IRO) Reliability Standards, developed 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. In addition, the Commission proposes to approve NERC's 
proposed revision to Reliability Standard TOP-006-3 concerning the 
monitoring role and notification obligation of reliability 
coordinators, balancing authorities and transmission operators. The 
Commission seeks comments on its proposals.
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    \1\ 16 U.S.C. 824o(d) (2012).
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    2. NERC filed changes to the TOP Reliability Standards (Docket No. 
RM13-14-000) concurrently with its proposal to modify the IRO 
Reliability Standards (Docket No. RM13-15-000). NERC requests that the 
Commission process the two proposals together. In addition, NERC 
separately filed revisions to Reliability Standard TOP-006-3 (Docket 
No. RM13-12-000) that NERC proposes to become effective prior to the 
effective date of the revisions to the TOP Reliability Standards in 
Docket No. RM13-14-000. Because the proposed TOP and IRO Reliability 
Standards are interrelated, and because the proposed revisions to 
Reliability Standard TOP-006-3 involve similar issues raised in the TOP 
and IRO proposals concerning monitoring of the interconnected 
transmission network and notification of and by registered entities, 
the Commission addresses the three proposals together in this Notice of 
Proposed Rulemaking (NOPR).
    3. NERC explains that the set of TOP Reliability Standards 
``address the important reliability goal of ensuring that the 
transmission system is operating within operating limits.'' \2\ The TOP 
Standards generally address real-time operations and planning for next-
day operations, and apply primarily to the responsibilities of 
transmission operators. The set of IRO Standards apply to the 
responsibility and authority of reliability coordinators, the entities 
with the highest level of authority that are responsible for reliable 
operation of the bulk electric system, and have the wide-area view of 
the bulk electric system. The IRO Standards, which complement the TOP 
Standards, have the goal of ensuring that the bulk electric system is 
planned and operated in a coordinated manner to perform reliably under 
normal and abnormal conditions.\3\ Thus, together, the TOP and IRO 
Reliability Standards address matters that are fundamental to grid 
reliability as they pertain to the coordinated efforts to operate the 
bulk electric system in a reliable manner during real-time operations.
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    \2\ NERC TOP Petition at 3.
    \3\ See NERC IRO Petition at 6.
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    4. Based on our review of the NERC petitions, it appears that the 
proposed TOP and IRO Reliability Standards contain some improvements 
over the current standards. Specifically, the revised standards include 
organizational and administrative improvements that reduce redundancy 
and clarify the delineation between applicable entities with regard to 
certain tasks. The Commission appreciates efforts to clarify standards 
and reduce redundancies.\4\ However, we are concerned that the changes 
in the proposed standards create reliability gaps in the standards that 
are critical to reliable operation of the Bulk-Power System. While NERC 
indicates that the revised TOP Reliability Standards eliminate gaps and 
ambiguities in the currently-effective TOP requirements, we are 
concerned that NERC has removed critical reliability aspects that are 
included in the currently-effective standards without adequately 
addressing these aspects in the proposed standards. One area of concern 
is that, unlike the currently-effective TOP Reliability Standards, 
there is no requirement in the proposed standards for transmission 
operators to plan and operate within all System Operating Limits 
(SOLs).\5\ The provisions in the proposed TOP Reliability Standards 
that require transmission operators to operate only within a subset of 
SOLs offset the potential improvements. The Commission believes that 
NERC's proposal for the treatment of SOLs adversely impacts multiple 
requirements in the proposed TOP Reliability Standards. Moreover, as 
discussed herein, the Commission identifies other concerns that may 
need to be addressed in order not to create further reliability gaps. 
Section 215(d)(4) requires that the Commission remand to the ERO for 
further consideration a Reliability Standard ``that the Commission 
disapproves in whole or in part.'' \6\ Thus, notwithstanding the 
improvements mentioned above, the concern regarding the treatment of 
SOLs, and potentially other concerns discussed below, leads us to 
propose to remand the proposed TOP standards. In addition, given the 
interrelationship between the TOP and IRO Reliability Standards and 
that NERC requests that both sets of standards be addressed 
together,\7\ we believe a remand of the proposed IRO standards in 
addition to those of the TOP will enable NERC to more comprehensively 
consider modifications to the standards that would address the 
reliability concerns identified in this NOPR. This approach, in turn, 
should allow NERC more

[[Page 73114]]

flexibility in developing appropriate modifications that address our 
concerns since changes to the TOP standards might require, in some 
instances, commensurate changes to the IRO standards.
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    \4\ Electric Reliability Organization Proposal to Retire 
Requirements in Reliability Standards, Order No. 788, 145 FERC ] 
61,147 (2013).
    \5\ NERC defines a SOL as ``[t]he value (such as MW, MVar, 
Amperes, Frequency or Volts) that satisfies the most limiting of the 
prescribed operating criteria for a specified system configuration 
to ensure operation within acceptable reliability criteria. System 
Operating Limits [pre- and post-Contingency] are based upon certain 
operating criteria. . . .''
    \6\ 16 U.S.C. 824o(d)(4) (2012) (emphasis added).
    \7\ NERC TOP Petition at 2 (stating that ``simultaneous approval 
of both petitions by the Commission will help ensure a smooth 
transition and implementation of the proposed Reliability Standards 
for both the industry and the ERO.'').
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    5. In addition to the concerns regarding the treatment of SOLs, the 
Commission has identified a reliability gap in the IRO Reliability 
Standards and accordingly proposes to direct that NERC develop 
modifications in these standards to ensure that reliability 
coordinators continue to develop and implement comprehensive generation 
and transmission outage coordination processes.
    6. Further, we discuss below additional issues regarding the 
proposed TOP and IRO Reliability Standards that require clarification 
or further explanation and technical justification. Depending on the 
explanations provided by NERC and other interested entities in their 
comments to this NOPR, additional Commission action may be appropriate, 
including directives that NERC must address in response to a final rule 
in this proceeding.

I. Background

    7. 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. On March 16, 2007, the 
Commission issued Order No. 693, approving 83 of the 107 initial 
Reliability Standards filed by NERC, including the existing TOP and IRO 
Reliability Standards.\8\ In addition, in Order No. 748, the Commission 
approved revisions to the IRO Reliability Standards; however, none of 
the standards approved in Order No. 748 are at issue in this NOPR.\9\


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    \8\ 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).
    \9\ Mandatory Reliability Standards for Interconnection 
Reliability Operating Limits, Order No. 748, 134 FERC ] 61,213 
(2011).
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A. NERC's TOP Petition (Docket No. RM13-14-000)

    On April 16, 2013, in Docket No. RM13-14-000, NERC submitted for 
Commission approval three revised TOP Reliability Standards: TOP-001-2 
(Transmission Operations), TOP-002-3 (Operations Planning), TOP-003-2 
(Operational Reliability Data), and one Protection Systems (PRC) 
Reliability Standard, PRC-001-2 (System Protection Coordination) to 
replace the eight currently-effective TOP standards.
    NERC also seeks approval of the implementation plan for the 
proposed TOP Reliability Standards and approval of the retirement of 
eight TOP and one PER Reliability Standards,\10\ and to retire 
Requirements R2, R5, and R6 of Reliability Standard PRC-001-1.
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    \10\ TOP-001-1a--(Reliability Responsibilities and Authorities); 
TOP-002-2.1b (Normal Operations Planning); TOP-003-1 (Planned Outage 
Coordination); TOP-004-2 (Transmission Operations); TOP-005-2a 
(Operational Reliability Information); TOP-006-2 (Monitoring System 
Conditions); TOP-007-0 (Reporting System Operating Limit and 
Interconnection Reliability Operating Limit Violations); TOP-008-1 
(Response to Transmission Limit Violations); and on Personnel 
Performance, Training, and Qualifications (PER) Reliability 
Standard, PER-001-0.2 (Operating Personnel Responsibility and 
Authority).
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    9. NERC states that the proposed TOP Reliability Standards 
represent significant revision and improvement to the current set of 
enforceable Reliability Standards by upgrading the overall quality of 
the standards, eliminating gaps in the requirements, ambiguity, 
redundancies, and addressing Order No. 693 directives. NERC adds that 
the proposed TOP Reliability Standards are also more efficient than the 
currently-effective standards because they incorporate the necessary 
requirements from today's standards into three cohesive, comprehensive 
Reliability Standards ``that are focused on achieving a specific 
result.'' \11\ NERC states that the proposed TOP Reliability Standards, 
along with the proposed IRO Reliability Standards, will help to ensure 
better coordination for transmission operators and reliability 
coordinators to ``plan and operate the interconnected Bulk Electric 
System in a synchronized manner to perform reliably under normal and 
abnormal conditions.'' \12\
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    \11\ NERC TOP Petition at 4, 11, 42. NERC explains that the 
corresponding changes in proposed Reliability Standard PRC-001-2 are 
administrative in nature and are limited to removal of three 
requirements in currently-effective Reliability Standard PRC-001-1 
that are now addressed in proposed Reliability Standard TOP-003-2.
    \12\ NERC TOP Petition at 9.
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    10. NERC states that the proposed TOP Reliability Standards are a 
significant improvement from the currently-effective TOP Reliability 
Standards in three ways. First, NERC explains that the proposed TOP 
Reliability Standards ``rais[e] the bar on system performance by 
mandating that all IROLs be resolved within the IROL Tv, 
which is a significant increase in performance over the existing 
Reliability Standards.'' \13\ NERC indicates that the proposed TOP 
Reliability Standards adopt an approach ``for operating within a subset 
of SOLs that more closely aligns with the original NERC Operating 
Guidelines.'' \14\ Second, NERC states that it improved the proposed 
Reliability Standards by designating requirements to apply solely to 
transmission operators and removing several of the requirements 
applicable to reliability coordinators. NERC explains that it added 
requirements applicable to reliability coordinators to the proposed IRO 
Reliability Standards. Third, NERC states it consolidated ``the 
necessary requirements from the eight existing TOP Reliability 
Standards into three cohesive, comprehensive Reliability Standards.'' 
\15\ The specific revisions to the TOP Reliability Standards are as 
follows:
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    \13\ NERC TOP Petition at 11. The Interconnection Reliability 
Operating Limit (IROL) Tv is defined in the NERC Glossary 
of Terms as: ``The maximum time that an Interconnection Reliability 
Operating Limit can be violated before the risk to the 
interconnection or other Reliability Coordinator Area(s) becomes 
greater than acceptable. Each Interconnection Reliability Operating 
Limit's Tv shall be less than or equal to 30 minutes.''
    \14\ NERC TOP Petition at 11. NERC states that ``[p]rior to 
becoming the ERO, NERC guidelines for power system operation and 
accreditation were referred to as the NERC Operating Guidelines, for 
which compliance was strongly encouraged yet ultimately voluntary.'' 
Id. at n.23.
    \15\ NERC TOP Petition at 11.
    \16\ The proposed TOP and IRO Reliability Standards are not 
attached to the NOPR. The complete text of the Reliability Standards 
is available on the Commission's eLibrary document retrieval system 
in Docket Nos. RM13-14 and RM13-15 and is posted on the ERO's Web 
site, available at: http://www.nerc.com.
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TOP-001-2 (Transmission Operations) \16\
    11. In the TOP petition, NERC explains that the requirements of 
proposed Reliability Standard TOP-001-2 address the following matters: 
(1) Transmission operator ``Reliability Directives'' (proposed 
Requirements R1 and R2); (2) emergencies and emergency assistance 
(proposed Requirements R3-R6); and (3) IROLs and SOLs (proposed 
Requirements R7-R11). Proposed Requirements R1 and R2 state:

    R1. Each Balancing Authority, Generator Operator, Distribution 
Provider, and Load-Serving Entity shall comply with each Reliability 
Directive issued and identified as such by its Transmission 
Operator(s), unless such action would violate safety, equipment, 
regulatory, or statutory requirements.
    R2. Each Balancing Authority, Generator Operator, Distribution 
Provider, and Load-Serving Entity shall inform its Transmission 
Operator of its inability to perform an identified Reliability 
Directive issued by that Transmission Operator.


[[Page 73115]]


NERC states that proposed Requirement R1 recognizes the reliability 
need to give transmission operators the ability to issue Reliability 
Directives to various entities, subject to limited exceptions in cases 
where such actions would violate safety, equipment, regulatory, or 
statutory requirements. NERC explains that Requirement R2 requires 
entities receiving the directive from the transmission operator to 
inform the transmission operator in situations where an identified 
Reliability Directive cannot be performed. NERC explains that these 
requirements give transmission operators the authority to issue 
Reliability Directives when needed, but also provide them the 
flexibility to take different action in those situations where an 
entity notifies its transmission operator of its inability to comply 
with a Reliability Directive.\17\
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    \17\ NERC TOP Petition at 12-13.
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    12. With regard to emergencies and emergency assistance, NERC 
proposes Requirements R3 through R6:

    R3. Each Transmission Operator shall inform its Reliability 
Coordinator and Transmission Operator(s) that are known or expected 
to be affected by each actual and anticipated Emergency based on its 
assessment of its Operational Planning Analysis.
    R4. Each Transmission Operator shall render emergency assistance 
to other Transmission Operators, as requested and available, 
provided that the requesting entity has implemented its comparable 
emergency procedures, unless such actions would violate safety, 
equipment, regulatory, or statutory requirements.
    R5. Each Transmission Operator shall inform its Reliability 
Coordinator and other Transmission Operators of its operations known 
or expected to result in an Adverse Reliability Impact on those 
respective Transmission Operator Areas unless conditions do not 
permit such communications. Examples of such operations are relay or 
equipment failures, and changes in generation, Transmission, or 
Load.
    R6. Each Balancing Authority and Transmission Operator shall 
notify its Reliability Coordinator and negatively impacted 
interconnected NERC registered entities of planned outages of 
telemetering equipment, control equipment and associated 
communication channels between the affected entities.

NERC states that proposed Requirements R3, R5, and R6 apply to the 
coordination aspects of interconnected operation. NERC explains that 
proposed Requirement R3 requires a transmission operator to inform its 
reliability coordinators and other transmission operators of actual and 
anticipated emergencies based on its assessment of its ``Operational 
Planning Analysis.'' \18\ NERC states that, in situations ``where 
emergency assistance is needed, proposed Requirement R4 requires that 
Transmission Operators render emergency assistance to other 
Transmission Operators when it is requested and available'' and that 
proposed Requirement R5 ``requires Transmission Operators to inform 
entities (Reliability Coordinators and other Transmission Operators) of 
operations that may adversely impact them.'' \19\ According to NERC, 
this proposed requirement addresses the Order No. 693 directive to 
consider the need for the transmission operator to notify the 
reliability coordinator or the balancing authority when facilities are 
removed from service.\20\ NERC states that proposed Requirement R6 
requires balancing authorities and transmission operators to notify the 
reliability coordinator and negatively impacted interconnected NERC 
registered entities of planned outages of telemetering equipment.
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    \18\ NERC defines an Operational Planning Analysis as ``[a]n 
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 Glossary of Terms at 47.
    \19\ NERC TOP Petition at 14.
    \20\ NERC TOP Petition at 14 (citing Order No. 693, FERC Stats. 
& Regs. ] 31,242 at P 1588).
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    13. With respect to treatment of SOLs and IROLs, NERC explains that 
the standard drafting team examined the requirements for SOLs and IROLs 
in the currently-effective TOP Reliability Standards to ensure whether 
they adequately addressed the handling of these limits. In particular, 
the standard drafting team was concerned that the transition from the 
NERC Operating Guidelines to the Version 0 standards had resulted in an 
incorrect emphasis on non-IROL SOLs as opposed to IROLs. The standard 
drafting team noted a discrepancy among the three currently-effective 
SOL/IROL-related requirements.\21\ According to NERC, in Reliability 
Standards TOP-002-2a, Requirement R10 and TOP-004-2, Requirement R1, 
applicable entities are expected to plan and operate to meet all SOLs 
and IROLs, while in TOP-007-0, R1, entities are only instructed to take 
action for IROLs. According to NERC, the standard drafting team 
concluded that the Version 0 standards did not accurately reflect what 
the operating policies stated. Nevertheless, the standard drafting team 
determined that non-IROL SOLs are still important. NERC explains that 
reliability risk to the system exists when the system is operating in 
conditions such that an IROL limit is exceeded for a time exceeding 
Tv. Consequently, NERC revised the requirements related to 
operating within limits by tying IROL actions to Tv. NERC 
proposes Requirements R7 through R11 to address the transmission 
operator's responsibilities over IROLs \22\ or SOLs \23\ that the 
transmission operator identifies as necessary to support reliability 
internal to its transmission operator area:
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    \21\ TOP-002-2a, Requirement R10: Each Balancing Authority and 
Transmission Operator shall plan to meet all System Operating Limits 
(SOLs) and Interconnection Reliability Operating Limits (IROLs). 
TOP-004-2, Requirement R1: Each Transmission Operator shall operate 
within the Interconnection Reliability Operating Limits (IROLs) and 
System Operating Limits (SOLs). TOP-007-0, Requirement R2: Following 
a Contingency or other event that results in an IROL violation, the 
Transmission Operator shall return its transmission system to within 
IROL as soon as possible, but not longer than 30 minutes.
    \22\ NERC defines an IROL as ``[t]he value (such as MW, MVar, 
Amperes, Frequency or Volts) derived from, or a subset of the System 
Operating Limits, which if exceeded, could expose a widespread area 
of the Bulk Electric System to instability, uncontrolled 
separation(s) or cascading outages.''
    \23\ NERC defines a SOL as ``[t]he value (such as MW, MVar, 
Amperes, Frequency or Volts) that satisfies the most limiting of the 
prescribed operating criteria for a specified system configuration 
to ensure operation within acceptable reliability criteria. System 
Operating Limits [pre- and post-Contingency] are based upon certain 
operating criteria. . . .''

    R7. Each Transmission Operator shall not operate outside any 
identified Interconnection Reliability Operating Limit (IROL) for a 
continuous duration exceeding its associated IROL Tv.
    R8. Each Transmission Operator shall inform its Reliability 
Coordinator of each SOL which, while not an IROL, has been 
identified by the Transmission Operator as supporting reliability 
internal to its Transmission Operator Area based on its assessment 
of its Operational Planning Analysis.
    R9. Each Transmission Operator shall not operate outside any 
System Operating Limit (SOL) identified in Requirement R8 for a 
continuous duration that would cause a violation of the Facility 
Rating or Stability criteria upon which it is based.
    R10. Each Transmission Operator shall inform its Reliability 
Coordinator of its actions to return the system to within limits 
when an IROL, or an SOL identified in Requirement R8, has been 
exceeded.
    R11. Each Transmission Operator shall act or direct others to 
act, to mitigate both the magnitude and duration of exceeding an 
IROL within the IROL's Tv, or of an SOL identified in 
Requirement R8.

NERC explains that the responsibility for monitoring and handling IROLs 
is primarily given to the reliability

[[Page 73116]]

coordinator, but the transmission operator has the primary 
responsibility to designate any SOLs that require special attention. 
NERC indicates that the delineation in the proposed TOP Reliability 
Standards with respect to operating within an identified IROL and in 
designating important SOLs is an important distinction in the proposed 
TOP Reliability Standards that is necessary for reliability.
    14. NERC adds that the proposed TOP Reliability Standards include a 
requirement that provides for ``the identification of a sub-set of non-
IROL SOLs that are identified as important for local areas.'' \24\ NERC 
indicates that the proposed requirements mandate exceedances of these 
non-IROL SOLs to be monitored and reported to the reliability 
coordinator, giving transmission operators ``the ability to ensure that 
any non-IROL SOLs that are of concern to the transmission operator will 
be monitored to ensure local consequences are managed.'' \25\
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    \24\ NERC TOP Petition at 19.
    \25\ Id. at 19-20.
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    15. NERC states that the ``difference between non-IROL SOLs and 
IROLs is expressed in the difference between the consequences to the 
System (or impact to reliability) should unplanned perturbations of the 
System occur when the limit is being exceeded. For an IROL, the 
consequences are described as Cascading, uncontrolled separation, or 
instability.'' \26\ NERC explains that the consequences of non-IROL 
SOLs are typically thought of in terms of equipment damage or total 
loss of an element and are restricted to a limited or local area. NERC 
states that the revised TOP requirements move the standards to where 
the NERC Operating Guidelines intended them to be and ensure that the 
reliability of the interconnected system will be maintained and even 
enhanced because system operators ``will not be distracted from true 
reliability issues by local system issues.'' \27\ NERC states that the 
impact of exceeding a non-IROL SOL will not result in an Adverse 
Reliability Impact.\28\
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    \26\ Id. at 19.
    \27\ NERC TOP Petition at 18.
    \28\ NERC TOP Petition at 18-19.
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    16. According to NERC, transmission operators may also identify and 
communicate to their reliability coordinator any of the non-IROL SOLs 
that are believed or anticipated to have potential to develop into 
IROLs and, thus, to ensure that they too are monitored and managed. 
NERC also explains that, while non-IROL SOLs are similar to IROLs in 
that non-IROL SOLs must respect the ratings of equipment associated 
with the facilities to which the non-IROL SOL applies, there is no 
specific requirement established for a time exceedance similar to the 
Tv of an IROL. According to NERC, because Tv may 
be less than 30 minutes, Tv ``mandates a tighter time frame 
for action than the 30-minute time that is mandated in the currently-
effective standards, thereby improving reliability of the bulk power 
system.'' \29\
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    \29\ NERC TOP Petition at 18.
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Proposed TOP-002-3 (Operations Planning)
    17. NERC states that proposed Reliability Standard TOP-002-3 
Requirements R1 through R3 require transmission operators to perform 
Operational Planning Analyses to ensure operations within IROLs and 
SOLs. The requirements for proposed Reliability Standard TOP-002-3 are 
as follows:

    R1. Each Transmission Operator shall have an Operational 
Planning Analysis that represents projected System conditions that 
will allow it to assess whether the planned operations for the next 
day within its Transmission Operator Area will exceed any of its 
Facility Ratings or Stability Limits during anticipated normal and 
Contingency event conditions.
    R2. Each Transmission Operator shall develop a plan to operate 
within each Interconnection Reliability Operating Limit (IROL) and 
each System Operating Limit (SOL) which, while not an IROL, has been 
identified by the Transmission Operator as supporting reliability 
internal to its Transmission Operator Area, identified as a result 
of the Operational Planning Analysis performed in Requirement R1.
    R3. Each Transmission Operator shall notify all NERC registered 
entities identified in the plan(s) cited in Requirement R2 as to 
their role in those plan(s).

NERC explains that Requirement R1 requires transmission operators to 
have an Operational Planning Analysis that will allow it to assess 
whether the planned operations for the next-day will exceed any of its 
facility ratings or stability limits during anticipated normal and 
contingency event conditions. NERC also explains that Requirement R2 
requires transmission operators to develop a plan that will help ensure 
they do not operate in excess of limits identified in the Operational 
Planning Analysis. NERC indicates that Requirement R3 requires that 
entities be notified if they are identified in the transmission 
operator's plans and that the notification should inform entities of 
their role in the plans.
    18. According to NERC, requiring transmission operators to perform 
Operational Planning Analyses that incorporate normal and contingency 
situations for next-day operations while assuring appropriate limits 
are not violated assures that the transmission operators ``will have a 
plan to follow during Real-time operations that accurately reflects the 
anticipated conditions of the day's operations, including the ability 
to deliver generation to Load.'' \30\ NERC adds that Requirement R3 is 
similar to the coordination requirements established in proposed 
Reliability Standard TOP-001-2 by ensuring that all entities know their 
role in next-day operations.
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    \30\ NERC TOP Petition at 22.
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Proposed TOP-003-2 (Operational Reliability Data)
    19. NERC states that proposed Reliability Standard TOP-003-2, 
Requirements R1 through R5 were adapted for transmission operators and 
balancing authorities based on similar, Commission-approved 
requirements for reliability coordinators.\31\ The proposed 
requirements include:
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    \31\ NERC TOP Petition at 23 (citing Reliability Standard IRO-
010-1a.)

    R1. Each Transmission Operator shall create a documented 
specification for the data necessary for it to perform its 
Operational Planning Analyses and Real-time monitoring. The 
specification shall include:
    1.1. A list of data and information needed by the Transmission 
Operator to support its Operational Planning Analyses and Real-time 
monitoring.
    1.2. A mutually-agreeable format.
    1.3. A periodicity for providing data.
    1.4. The deadline by which the respondent is to provide the 
indicated data.
    R2. Each Balancing Authority shall create a documented 
specification for the data necessary for it to perform its analysis 
functions and Real-time monitoring . . .
    R5. Each Transmission Operator, Balancing Authority, Generator 
Owner, Generator Operator, Interchange Authority, Load-Serving 
Entity, Transmission Owner, and Distribution Provider receiving a 
data specification . . . shall satisfy the obligations of the 
documented specifications for data.

NERC states that the proposed requirements emphasize the need for 
transmission operators and balancing authorities to obtain all of the 
data they need for reliability purposes and mandate that entities that 
have this data timely provide it to the transmission operator and 
balancing authority. According to NERC, lack of adequate data for real-
time operations and modeling have contributed to system incidents in 
the past, and the data specification concept will eliminate this 
problem by allowing transmission operators and balancing authorities to

[[Page 73117]]

require entities to send them any required data.
NERC's Response to Order No. 693 Directives and Analysis of Southwest 
Outage Report
    20. NERC indicates that its staff analyzed the recommendations from 
the report on the Arizona-Southern California Outages on September 8, 
2011, Causes and Recommendations (``2011 Southwest Outage Blackout 
Report'') that apply to transmission operators and compared the 
recommendations to both the currently-effective TOP Reliability 
Standards and the proposed Reliability Standards.\32\ The TOP Petition 
provides that, ``[b]ased on this analysis, NERC staff believes that if 
entities complied with the proposed TOP Reliability Standards, the 
likelihood of such an event occurring would be significantly 
diminished.'' \33\ NERC includes as Exhibit H a detailed report on this 
analysis, including the relevant 2011 Southwest Outage Blackout Report 
recommendations with an explanation of how the relevant recommendations 
would be addressed in the proposed TOP Reliability Standards.
---------------------------------------------------------------------------

    \32\ NERC TOP Petition at 6 and Exh. H.
    \33\ NERC TOP Petition at 6.
---------------------------------------------------------------------------

    21. The NERC TOP Petition includes a summary of nine Order No. 693 
directives related to the proposed TOP Reliability Standards and NERC's 
responses to those directives in Exhibit I. NERC also explains that, 
rather than addressing two directives from Order No. 693 relating to 
minimum analysis and monitoring capabilities in the proposed TOP 
Reliability Standards and proposed IRO Reliability Standards, the 
standard drafting team chose to have them addressed by the Project 
2009-02 Standard Drafting Team.\34\ According to NERC, it ``is 
developing a set of Reliability Standards in Project 2009-02, which is 
expected to be completed in 2014,'' that will establish requirements 
for the functionality, performance, and maintenance of real-time 
monitoring and analysis capabilities for reliability coordinators, 
transmission operators, generator operators, and balancing authorities 
for use by their system operators in support of reliable system 
operations.\35\
---------------------------------------------------------------------------

    \34\ One directive is applicable to Reliability Standard IRO-002 
and is described in PP 905 and 906 of Order No. 693, and the second 
directive is applicable to Reliability Standard TOP-006 and is 
described in P 1660.
    \35\ NERC IRO Petition at 27.
---------------------------------------------------------------------------

TOP Implementation Plan
    22. NERC states that some of the proposed revisions to the TOP 
Reliability Standards are dependent on corresponding changes to 
proposed IRO Reliability Standards (IRO-001-3 and IRO-005-4) and to one 
Verification and Data Reporting of Generator Real and Reactive Power 
Capability Reliability Standard--MOD-025-2. NERC states that the 
proposed TOP Reliability Standards cannot be implemented until all 
three of the above standards have been implemented.
    23. In its implementation plan, NERC also states that there ``are 
no new definitions in the proposed set of standards'' but the standard 
drafting teams for the TOP and IRO projects have coordinated on a 
common definition of ``Reliability Directive'' and agreed that the IRO 
standard drafting team ``would write the definition and post it for 
vetting by the industry.'' The definition is as follows:

    Reliability Directive--A communication initiated by a 
Reliability Coordinator, Transmission Operator, or Balancing 
Authority where action by the recipient is necessary to address an 
Emergency or Adverse Reliability Impacts.

Further, the IRO-014-2 implementation plan indicates that a revised 
definition for ``Adverse Reliability Impact'' was approved by the NERC 
Board of Trustees on August 4, 2011; however, the petition does not 
discuss the merits of this change.\36\ In addition, NERC does not 
discuss the impact of this revised definition on the overall body of 
Reliability Standards.
---------------------------------------------------------------------------

    \36\ Adverse Reliability Impact (ARI)--Previous Definition--The 
impact of an event that results in frequency-related instability; 
unplanned tripping of load or generation; or uncontrolled separation 
or cascading outages that affects a widespread area of the 
Interconnection. ARI--Revised Definition--The impact of an event 
that results in the Bulk Electric System instability or Cascading.
---------------------------------------------------------------------------

    24. NERC requests that all requirements except proposed Reliability 
Standard TOP-003-2, Requirements R1 and R2 become effective the first 
day of the first calendar quarter twelve months following applicable 
regulatory approval.\37\ NERC also requests that Requirements R1 and R2 
of proposed Reliability Standard TOP-003-2 become effective the first 
day of the first calendar quarter ten months following applicable 
regulatory approval. NERC explains that the twelve month period is to 
allow for entities to update processes and train operators on the 
revised requirements, and the two month differential for proposed 
Reliability Standard TOP-003-2, Requirements R1 and R2 is to provide 
time for recipients of a data specification to respond to the request 
for data.\38\
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    \37\ NERC also requests that the existing TOP Reliability 
Standards be retired at midnight of the day immediately prior to the 
first day of the first calendar quarter twelve months following 
applicable regulatory approval.
    \38\ NERC TOP Petition, Exh. C at 2.
---------------------------------------------------------------------------

B. NERC's IRO Petition (Docket No. RM13-15-000)

    25. Also on April 16, 2013, NERC submitted for Commission approval 
four revised IRO Reliability Standards: IRO-001-3 (Responsibilities and 
Authorities), IRO-002-3 (Analysis Tools), IRO-005-4 (Current Day 
Operations), and IRO-014-2 (Coordination Among Reliability 
Coordinators).\39\ NERC also requests approval of the implementation 
plan for the proposed IRO Reliability Standards, and approval of the 
retirement of six currently-effective Reliability Standards, effective 
at midnight immediately prior to the first day of the first calendar 
quarter that is twelve months following the effective date of a final 
rule in this proceeding.\40\ NERC indicates that its petition also 
addresses two Order No. 693 directives associated with Reliability 
Standard IRO-005-1, but that it does not address a directive associated 
with Reliability Standard IRO-002-1 because this directive falls under 
the scope of Real-Time Tools Best Practices Task Force.
---------------------------------------------------------------------------

    \39\ NERC states that the NERC Board of Trustees approved a 
proposed Reliability Standard IRO-001-2 Reliability Standard on 
August 4, 2011, that was subsequently revised before it was filed at 
the Commission. The revision is designated as Reliability Standard 
IRO-001-3, was approved by the Board on August 16, 2012, and is 
included in this petition for approval. NERC IRO Petition at 4 n.5.
    \40\ NERC proposes to retire Reliability Standards IRO-001-1.1 
(Responsibilities and Authorities); IRO-002-2 (Facilities); IRO-005-
3a (Current Day Operations); IRO-014-1 (Procedures, Processes, or 
Plans to Support Coordination Between Reliability Coordinators); 
IRO-015-1 (Notifications and Information Exchange Between 
Reliability Coordinators); IRO-016-1 (Coordination of Real-time 
Activities Between Reliability Coordinators).
---------------------------------------------------------------------------

    26. NERC identifies two ``overall reliability benefits'' of the 
proposed IRO Reliability Standards: (1) Delineating a ``clean division 
of responsibilities'' between the reliability coordinator and 
transmission operator, giving the reliability coordinator authority to 
direct transmission operators to take actions to prevent or mitigate 
Interconnection Reliability Operating Limits (IROLs); and (2) ``raising 
the bar'' on IROL/SOL monitoring to focus on only those important to 
reliability. NERC also identifies four ``improvements'' reflected in 
the proposed IRO Reliability Standards, as follows:
     Interconnected bulk electric systems will be planned and 
operated in a coordinated manner to perform

[[Page 73118]]

reliably under normal and abnormal conditions.
     Personnel responsible for planning and operating 
interconnected bulk electric systems will be trained, qualified, and 
have the responsibility and authority to implement actions.
     The security of the interconnected bulk electric systems 
will be assessed, monitored and maintained on a wide-area basis.
     Plans for emergency operation and system restoration * * * 
will be developed, coordinated, maintained and implemented.\41\
---------------------------------------------------------------------------

    \41\ NERC IRO Petition at 11.
---------------------------------------------------------------------------

IRO-001-3 (Responsibilities and Authorities)
    27. NERC proposes to replace the nine currently-effective 
requirements of Reliability Standard IRO-001-1 with the following three 
requirements in proposed IRO-001-3:

    R1. Each Reliability Coordinator shall have the authority to act 
or direct others to act (which could include issuing Reliability 
Directives) to prevent identified events or mitigate the magnitude 
or duration of actual events that result in an Emergency or Adverse 
Reliability Impact.
    R2. Each Transmission Operator, Balancing Authority, Generator 
Operator, and Distribution Provider shall comply with its 
Reliability Coordinator's direction unless compliance with the 
direction cannot be physically implemented or unless such actions 
would violate safety, equipment, regulatory, or statutory 
requirements.
    R3. Each Transmission Operator, Balancing Authority, Generator 
Operator, and Distribution Provider shall inform its Reliability 
Coordinator upon recognition of its inability to perform as directed 
in accordance with Requirement R2.

    NERC states that these requirements ensure that reliability 
coordinators ``have the responsibility and authority to act or direct 
others to act (which could include issuing Reliability Directives) to 
prevent identified events or mitigate the magnitude or duration of 
actual events that result in an Emergency or Adverse Reliability 
Impact.'' \42\ According to NERC, these proposed requirements ``ensure 
that the responsibility and authority to act or direct others to act 
(which could include issuing Reliability Directives) to prevent 
identified events or mitigate the magnitude or duration of actual 
events that result in an Emergency or Adverse Reliability Impact is 
assigned to the Reliability Coordinator.'' \43\
---------------------------------------------------------------------------

    \42\ NERC IRO Petition at 12.
    \43\ NERC IRO Petition at 12-13.
---------------------------------------------------------------------------

    28. NERC states that the changes to the proposed Reliability 
Standard IRO-001-3 are a result of the proposed retirement of the 
currently-effective Reliability Standard IRO-001-1.1, Requirement R7, 
which is now covered in proposed Reliability Standard IRO-014-2.\44\ 
According to NERC, Reliability Standard IRO-014-2 will continue to 
ensure that both coordination agreements are in place to require that 
IROLs and SOLs are managed, and that system conditions that could cause 
Adverse Reliability Impacts are mitigated.
---------------------------------------------------------------------------

    \44\ Currently-effective Requirement R7 states: The Reliability 
Coordinator shall have clear, comprehensive coordination agreements 
with adjacent Reliability Coordinators to ensure that System 
Operating Limit or Interconnection Reliability Operating Limit 
violation mitigation requiring actions in adjacent Reliability 
Coordinator Areas are coordinated.
---------------------------------------------------------------------------

IRO-002-3 (Analysis Tools)
    29. NERC proposes two new requirements pertaining to analytical 
tools and to retire Requirements R1 through R7 of currently-effective 
Reliability Standard IRO-002-2. The two proposed requirements provide:

    R1. Each Reliability Coordinator shall provide its System 
Operators with the authority to approve, deny or cancel planned 
outages of its own analysis tools.
    R2. Each Reliability Coordinator shall have procedures in place 
to mitigate the effects of analysis tool outages.

    30. NERC states that the currently-effective requirements contain 
redundancies, which the proposed revision are intended to eliminate. 
NERC states that it revised Requirement R8 and incorporated it into 
proposed Requirements R1 and R2 of Reliability Standard IRO-002-3. NERC 
also indicates that it is developing a set of Reliability Standards in 
Project 2009-02, that will establish requirements for the 
functionality, performance, and maintenance of real-time monitoring and 
analysis capabilities which affects Reliability Standard IRO-002.
IRO-005-4 (Current Day Operations)
    31. NERC proposes the following two new requirements for proposed 
Reliability Standard IRO-005-4:

    R1. When the results of an Operational Planning Analysis or 
Real-time Assessment indicate an anticipated or actual condition 
with Adverse Reliability Impacts within its Reliability Coordinator 
Area, each Reliability Coordinator shall notify all impacted 
Transmission Operators and Balancing Authorities in its Reliability 
Coordinator Area.
    R2. Each Reliability Coordinator that identifies an anticipated 
or actual condition with Adverse Reliability Impacts within its 
Reliability Coordinator Area shall notify all impacted Transmission 
Operators and Balancing Authorities in its Reliability Coordinator 
Area when the problem has been mitigated.

    32. NERC states that proposed Reliability Standard IRO-005-4 is a 
result of eliminating redundancies between existing and proposed 
standards. NERC also states that the requirements are to ``ensure that 
entities are notified when an expected or actual event with Adverse 
Reliability Impacts is identified.'' \45\
---------------------------------------------------------------------------

    \45\ NERC IRO Petition at 28.
---------------------------------------------------------------------------

IRO-014-2 (Coordination Among Reliability Coordinators)
    33. NERC proposes the eight requirements of Reliability Standard 
IRO-014-2 to replace the currently-effective Reliability Standards IRO-
014-1, IRO-015-1 and IRO-016-1. NERC states that proposed Reliability 
Standard IRO-014-2 ensures that each reliability coordinator's 
operations are coordinated to avoid an Adverse Reliability Impact on 
other reliability coordinator areas and to preserve the reliability 
benefits of interconnected operations. Proposed Reliability Standard 
IRO-014-2 provides in part:

    IRO-014-2 R1. Each Reliability Coordinator shall have Operating 
Procedures, Operating Processes, or Operating Plans for activities 
that require notification, exchange of information or coordination 
of actions that may impact other Reliability Coordinator Areas to 
support Interconnection reliability. These Operating Procedures, 
Processes, or Plans shall collectively address the following:
    1.1. Communications and notifications, including the mutually 
agreed to conditions under which one Reliability Coordinator 
notifies other Reliability Coordinators; the process to follow in 
making those notifications; and the data and information to be 
exchanged with other Reliability Coordinators.
    1.2. Energy and capacity shortages.
    1.3. Planned or unplanned outage information.
    1.4. Control of voltage, including the coordination of reactive 
resources.
    1.5. Coordination of information exchange to support reliability 
assessments.
    1.6. Authority to act to prevent and mitigate system conditions 
which could cause Adverse Reliability Impacts to other Reliability 
Coordinator Areas.
    1.7. Weekly conference calls.
    R5. Each Reliability Coordinator, upon identification of an 
Adverse Reliability Impact, shall notify all other Reliability 
Coordinators.
    R6. During each instance where Reliability Coordinators disagree 
on the existence of an Adverse Reliability Impact each impacted 
Reliability Coordinator shall operate as though the problem exists.
    R7. During those instances where Reliability Coordinators 
disagree on the existence of an Adverse Reliability Impact,

[[Page 73119]]

the Reliability Coordinator that identified the Adverse Reliability 
Impact shall develop an action plan to resolve the Adverse 
Reliability Impact.

    34. NERC states that Requirement R1 is the same as the currently-
effective requirement except for the addition of Part 1.7, which 
requires reliability coordinators to have weekly conference calls. 
Additionally, while Requirement R1 of Reliability Standard IRO-014-1 
addresses ``Operating Procedures, Operating Processes, or Operating 
Plans for activities that require notification, exchange of information 
or coordination of actions that may impact other Reliability 
Coordinator Areas to support Interconnection reliability,'' NERC states 
that proposed Requirement R1 defines specific information that is to be 
included in the procedures, processes, and plans.
IRO Implementation Plan
    35. NERC proposes as the effective date for Reliability Standard 
IRO-001-3, the first day of the second calendar quarter beyond the date 
that the standard is approved by the Commission. NERC states that this 
time will allow applicable entities adequate time to develop the 
documentation and other evidence necessary to exhibit compliance with 
the requirements. NERC proposes as the effective date for Reliability 
Standards IRO-002-3 and IRO-005-4 the first day of the first calendar 
quarter following the effective date of a final rule because the 
revisions are ``to an existing mandatory and enforceable standard, 
applicable entities are already complying with the existing standard.'' 
\46\
---------------------------------------------------------------------------

    \46\ NERC IRO Petition, Exh. A at 8.
---------------------------------------------------------------------------

    36. For proposed Reliability Standard IRO-014-2, NERC proposes the 
first day of the first calendar quarter that is twelve months following 
the effective date of a final rule as the effective date. NERC states 
that, while the revisions to this Reliability Standard are to an 
existing mandatory and enforceable standard, ``applicable entities 
should only have to make minor revisions to their Operating Plans, 
Operating Processes or Operating Procedures to show compliance.'' \47\
---------------------------------------------------------------------------

    \47\ NERC IRO Petition, Exh. A at 8-9.
---------------------------------------------------------------------------

    NERC also proposes retirement of the six IRO Reliability Standards, 
effective at midnight immediately prior to the first day of the first 
calendar quarter that is twelve months following the effective date of 
a final rule.

C. Proposed Revisions to Reliability Standard TOP-006-3 (Docket No. 
RM13-12)

    38. On April 4, 2013, NERC proposed revisions to Reliability 
Standard TOP-006-3 to divide the reporting responsibilities of 
balancing authorities and transmission operators into separate 
requirements. According to NERC, the proposed revisions clarify that 
transmission operators are responsible for monitoring and reporting 
available transmission resources, while balancing authorities are 
responsible for monitoring and reporting available generation 
resources. NERC states that this division is consistent with the roles 
and responsibilities of registered entities as set forth in NERC 
Reliability Functional Model.
    39. NERC states that, as currently written, Requirement R1.2 could 
be interpreted as duplicating efforts to monitor and report the 
availability of generation and transmission resources. NERC explains 
that it specifically requires both transmission operators and balancing 
authorities to inform reliability coordinators and other affected 
transmission operators and balancing authorities of all transmission 
and generation resources available for use. To address these concerns, 
NERC revised Requirement R1.2 to limit a transmission operator's 
monitoring and notification obligations to transmission resources 
available for use. NERC created Requirement R1.3 to limit a balancing 
authority's monitoring and notification obligations to generation 
resources available for use. NERC explains that proposed Requirement 
R1.3 only requires balancing authorities to inform reliability 
coordinators of all generation resources available for use, and they 
are not required to report the availability of generation resources to 
transmission operators because transmission operators already receive 
this information from generator operators pursuant to currently 
effective Requirement R1.1. According to NERC, by defining the 
reporting channels from transmission operators and balancing 
authorities to reliability coordinators, reliability coordinators will 
receive necessary information in advance, as part of their operating 
tools, processes and procedures, to prevent and mitigate emergency 
operating situations in real and next day operations.
    40. In addition, NERC proposes to modify currently-effective 
Requirement R3. According to NERC, while the currently-effective 
Requirement R3 requires reliability coordinators, transmission 
operators and balancing authorities to provide appropriate technical 
information concerning protective relays to their operating personnel, 
NERC states that it does not impose explicit geographical boundaries on 
the scope of this obligation. NERC indicates that revised Requirement 
R3 specifies that the relevant protective relays are those within these 
entities' respective reliability coordinator area, transmission 
operator area or balancing authority area.
    41. NERC has proposed medium Violation Risk Factors (VRFs) for 
proposed TOP-006-3, Requirements R1.2, R1.3 and R3 because these three 
Requirements all ensure that critical reliability parameters are 
monitored in real-time. NERC also states that the proposed Violation 
Security Levels (VSLs) for Requirement R1.3 meet NERC's VSL guidelines. 
NERC requests that the revisions become effective on the first day of 
the first calendar quarter after applicable regulatory approval.

II. Discussion

    42. Pursuant to section 215(d) of the FPA, we propose to remand 
NERC's proposed revisions to the TOP and IRO Reliability Standards 
(Docket Nos. RM13-14-000 and RM13-15-000). While we believe that NERC's 
approach of condensing the requirements and removing redundancies 
generally has merit, we are concerned that, unlike the currently-
effective TOP Reliability Standards, there is no requirement in the 
proposed standards for transmission operators to plan and operate 
within all SOLs. Without a requirement to analyze and operate within 
all SOLs in the proposed standards and by limiting non-IROL SOLs to 
only those identified by the transmission operator internal to its 
area, system reliability is reduced and negative consequences can occur 
outside of the transmission operator's internal area. As described 
below, this was a problem during the Southwest Outage when the loss of 
a 500 kV line in Arizona Public Service's area overloaded equipment, 
which ultimately resulted in a cascade outage leaving approximately 2.7 
million customers without power.\48\ The provisions in the proposed TOP 
Reliability Standards that require transmission operators to operate 
only within a subset of SOLs offsets the potential benefits the 
proposed Reliability Standards may otherwise provide.
---------------------------------------------------------------------------

    \48\ 2011 Southwest Outage Blackout Report at 1.
---------------------------------------------------------------------------

    43. The Commission believes that NERC's proposal for the treatment 
of SOLs affects at least proposed Reliability Standard TOP-002-3, 
Requirements R1 and R2 as well as

[[Page 73120]]

proposed Reliability Standard TOP-001-2, Requirements R8 through R11. 
Section 215(d)(4) requires that the Commission remand to the ERO for 
further consideration a Reliability Standard ``that the Commission 
disapproves in whole or in part.'' \49\ Thus, notwithstanding the 
organizational and administrative improvements contained in other 
provisions of proposed TOP Reliability Standards, our concern regarding 
the treatment of SOLs provides us no option other than to propose to 
remand the entire Reliability Standards TOP-001-2 and TOP-002-3.
---------------------------------------------------------------------------

    \49\ 16 U.S.C. 824o(d)(4) (2012) (emphasis added).
---------------------------------------------------------------------------

    44. In addition to addressing the SOL issue in the TOP Reliability 
Standards, we also propose to direct that NERC, on remand, develop 
modifications to the IRO Reliability Standards to ensure that 
reliability coordinators continue to develop and implement 
comprehensive generation and transmission outage coordination 
processes.
    45. Given that the SOL and outage coordination process issues 
pertain to numerous requirements across the proposed standards, the 
interrelationship among the TOP standards and between the TOP and IRO 
Reliability Standards, and that NERC requests that both sets of 
standards be addressed together, we propose to remand the entire set of 
TOP and IRO Reliability Standards.\50\ This approach will give industry 
and NERC flexibility to develop modifications to the standards that 
address the concerns identified in this NOPR.
---------------------------------------------------------------------------

    \50\ NERC TOP Petition at 1-2.
---------------------------------------------------------------------------

    46. Further, the Commission discusses below certain provisions of 
NERC's proposal that require clarification or further technical 
explanation. Depending on the explanations provided by NERC and other 
interested entities in comments to this NOPR, additional Commission 
action may be appropriate, including the identification of additional 
issues that NERC must address on remand.
    47. Finally, pursuant to section 215(d) of the FPA, we also propose 
to approve NERC's proposed revisions to Reliability Standard TOP-006-3. 
We find that proposed TOP-006-3 is sufficiently separate from the 
standards we propose to remand above. Below, we discuss: (A) The 
proposed TOP Standards; (B) the proposed IRO Standards; and (C) the 
proposed revisions to Reliability Standard TOP-006-3.

TOP Reliability Standards

Issue To Be Addressed
a. Plan and Operate Within All SOLs
NERC Petition
    48. Currently-effective Reliability Standard TOP-002-2a, 
Requirement R10 requires the transmission operator to plan to meet all 
SOLs and IROLs. Similarly, currently-effective Reliability Standard 
TOP-004-2, Requirement R1 requires transmission operators to operate 
within all IROLs and SOLs.
    49. Proposed Reliability Standard TOP-002-3, Requirement R2 
provides that each transmission operator still plan to operate within 
all IROLs but within only a sub-set of SOLs. It states that each 
transmission operator ``shall develop a plan to operate within each 
[IROL] and each [SOL] which, while not an IROL, has been identified by 
the Transmission Operator as supporting reliability internal to its 
Transmission Operator area'' as a result of its Operational Planning 
Analysis performed in Reliability Standard TOP-002-3, Requirement R1.
    50. NERC states that it is appropriate to limit Requirement R2 to a 
sub-set of ``non-IROL SOLs'' that are important to local areas and that 
the identified subset of non-IROL SOLs will be subject to the 
requirements of the proposed Reliability Standards. NERC states that 
non-IROL SOLs are typically thought of in terms of ``equipment damage 
or [element] loss of life'' and are restricted to a limited or local 
area.\51\ According to NERC, the standard drafting team concluded that 
it is not necessary to monitor all non-IROL SOLs because the ``true 
reliability requirement is to operate within IROLs and that non-IROL 
SOLs are a local operating issue.'' \52\ NERC explains that the 
``difference between non-IROL SOLs and IROLs is expressed in the 
difference between the consequences to the System (or impact to 
reliability) should unplanned perturbations of the system occur when 
the limit is being exceeded.'' \53\ According to NERC, the consequences 
of exceeding an IROL are described as cascading, uncontrolled 
separation, or instability.\54\ NERC states that the impact of 
exceeding a non-IROL SOL will not result in an Adverse Reliability 
Impact.\55\
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    \51\ NERC states that the revised TOP requirements move the 
standards to where the NERC Operating Guidelines intended them to be 
and ensure that the reliability of the interconnected system will be 
maintained and even enhanced because system operators will not be 
distracted from true reliability issues by local system issues. NERC 
TOP Petition at 18.
    \52\ NERC TOP Petition, Exh. D, Consideration of Comments 
(Consideration of Comments on Second Draft of Standards for Real-
Time Operations) at 23.
    \53\ NERC TOP Petition at 19.
    \54\ Id.
    \55\ NERC TOP Petition at 19.
---------------------------------------------------------------------------

Commission Proposal
    51. The Commission is concerned with NERC's proposal because, 
unlike the currently-effective TOP Reliability Standards, the proposed 
standards do not require the transmission operator to plan and operate 
within SOLs, only non-IROL SOLs that are identified by the transmission 
operator as supporting reliability internal to its area and identified 
as a result of an Operational Planning Analysis.\56\ For example, non-
IROL SOLs that appear to be excluded from the proposed standard are 
non-IROL SOLs that are in a transmission operator's area that impact 
another transmission operator's area or more than one transmission 
operator's area.
---------------------------------------------------------------------------

    \56\ NERC's Functional Model states one of the tasks of 
transmission operations is to ``[d]evelop system limitations such as 
System Operating Limits. . .and operate within those limits.'' 
NERC's ``Reliability Functional Model Function Definitions and 
Functional Entities Version 5'' at 37 available at www.nerc.com.
---------------------------------------------------------------------------

    52. During deteriorating system conditions, an SOL can rapidly 
degrade into an IROL. Limiting the requirement for transmission 
operators to analyze and operate within SOLs only to non-IROL SOLs 
identified by the transmission operator for its internal area can 
reduce system reliability because operators have less situational 
awareness of the system and conditions. Even if we accept the argument 
that our rules for operating bulk electric facilities should not be 
concerned with ``equipment damage or [element] loss of life,'' NERC has 
not explained adequately why the only ``true reliability requirement is 
to operate within IROLs and that non-IROL SOLs are a local operating 
issue.'' Major cascading events including the Northeast Blackout of 
2003 and the 2011 Southwest Outage were initiated by a non-IROL SOL 
exceedance, followed by a series of non-IROL SOLs exceedances until the 
system cascaded.\57\ Thus, while non-IROL SOLs are essentially defined 
as not posing a risk of cascading outages, instability or uncontrolled 
separation if they are exceeded, experience indicates that operators do 
not always foresee the consequences of exceeding such SOLs and thus 
cannot be sure of preventing harm to reliability. The Commission 
believes that when any facility ratings or stability limits are 
exceeded or expected to be exceeded (i.e. causing a SOL or an expected 
SOL on jurisdictional facilities), these

[[Page 73121]]

conditions should be mitigated to avoid the possibility of further 
deteriorating system conditions and a cascade event.
---------------------------------------------------------------------------

    \57\ See 2003 Northeast Blackout Report at 74 and the 2011 
Southwest Outage Blackout Report at 1.
---------------------------------------------------------------------------

    53. We recognize that, if IROLs and non-IROL SOLs are determined 
accurately, the reliability consequences of an exceedance should 
usually be greater for the former than the latter. If NERC or 
commenters believe this probability warrants general exclusion of the 
latter from the TOP Reliability Standards (subject to an entity's 
specific inclusions), they should explain this view in more detail and 
present any information that may help us weigh its merit.
    54. Moreover, we believe that proposed Reliability Standard TOP-
002-3, Requirement R1 is flawed because the transmission operator 
should have an operational plan to operate within all Bulk-Power System 
IROLs and SOLs for all cases when facility ratings or stability limits 
are exceeded during anticipated normal and contingency event 
conditions. The operational plan is needed to ensure the transmission 
operator operates in, or can return its system to, a reliable operating 
state. For example, the 2011 Southwest Outage Blackout Report raised a 
similar concern, stating that transmission operators should ``ensure 
that post-contingency mitigation plans reflect the time necessary to 
take mitigating actions, including control actions, to return the 
system to secure N-1 state as soon as possible but no longer than 30 
minutes following a single contingency.'' \58\ We believe that the 
transmission operator should have operational or mitigation plans for 
all Bulk-Power System IROLs and SOLs that can be implemented within 30 
minutes or less to return the system to a secure state. Absent such 
plans, system conditions can linger in an unsecure or emergency state 
exposing the system to cascading outages upon the next contingency. 
Thus, we are concerned that Requirement R1 is insufficient for the 
fundamental operation of the interconnected transmission network as 
proposed by NERC.
---------------------------------------------------------------------------

    \58\ Southwest Outage Blackout Report (Recommendation 13 at 90). 
In addition, in Order No. 693 the Commission stated that operational 
plans for all IROLs should include the ``[i]dentification and 
communication of control actions [to system operators] that can be 
implemented within 30 minutes'' following a contingency to return 
the system to a reliable operating state. . . .'' Order No. 693, 
FERC Stats. & Regs. ] 31,242 at P 1601.
---------------------------------------------------------------------------

    55. Similarly, proposed Reliability Standard TOP-001-2, 
Requirements R8 through R11 address transmission operator notification, 
operation and action with respect to IROLs and some SOLs based on the 
transmission operator's next-day Operational Planning Analysis. Because 
proposed Reliability Standard TOP-001-2, Requirement R8 requires a 
transmission operator's notification of only those SOLs identified in a 
next-day Operational Planning Analysis, the Commission believes it is 
possible for additional SOLs to develop or occur in the same-day or 
real-time operational time horizon. This could impose an operational 
risk to the interconnected transmission network. For example, if real-
time system load levels are unexpectedly higher than forecasted load 
conditions used in the Operational Planning Analysis, this condition 
could result in real-time SOLs not identified in the Operational 
Planning Analysis because facility ratings and stability limits are now 
exceeded under high load levels whereas under the forecasted load 
levels (lower load levels), facility ratings and stability limits were 
not expected to be exceeded. Another example is if an unplanned outage 
of a transmission element or generator unit occurred after the 
completion of the next-day Operational Planning Analysis, this 
condition may result in real-time SOLs not identified in the 
Operational Planning Analysis because facility ratings and stability 
limits are now possibly exceeded due to the change in the system 
topology (i.e. transmission element outage) or generation dispatch 
(i.e. generator unit outage) that redirected the power flow on some 
portions of the interconnected transmission network.\59\ Thus, there 
are various reasons why a SOL could occur in real-time operations due 
to the dynamic nature of the real-time interconnected transmission 
network and not be identified in the next-day Operational Planning 
Analysis. To assure that transmission operators are equipped to react 
to such situations, we believe that the Requirement R8 operational 
responsibilities and actions should pertain to all IROLs and all SOLs 
for all operating time horizons.
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    \59\ This condition was identified in the 2011 Southwest Outage 
Blackout Report, which found that Imperial Irrigation District did 
not perform a separate, updated next-day study and contingency 
analysis for September 8, 2011 and instead, referenced a previous 
study which was not valid because it did not match the load and 
generation dispatch for the day. 2011 Southwest Outage Blackout 
Report, Recommendation No. 1 at 66.
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    56. Accordingly, pursuant to section 215(d)(4) of the FPA, we 
propose to remand proposed Reliability Standards TOP-001-2 and TOP-002-
3. Specifically, we propose to direct that NERC develop modifications 
to Reliability Standard TOP-002-3, Requirements R1 and R2 that address 
our concerns discussed above to ensure that transmission operators 
develop mitigation plans for all IROLs and SOLs expected to be 
exceeded. Similarly, for proposed Reliability Standard TOP-001-2, 
Requirement R8, we propose to direct that NERC develop modifications to 
require that transmission operator actions apply to all SOLs identified 
in all operational time horizons (operations planning, same-day 
operations and real-time operations). Further, for proposed Reliability 
Standard TOP-001-2, Requirements R9 through R11, we propose to direct 
that NERC develop modifications to require that transmission operator 
specified actions apply to all SOLs related responsibilities in the 
real-time operations time horizon. Our concerns discussed above apply 
to specific provisions of proposed TOP-001-2 and TOP-002-3. However, as 
explained above, we propose to remand proposed Reliability Standards 
TOP-001-2 and TOP-002-3. Moreover, as explained above, because the TOP 
standards are so interrelated, we also propose to remand Reliability 
Standard TOP-003-2 to give NERC and industry flexibility to address our 
concerns.
TOP Reliability Standards--Issues Requiring Clarification
a. System Models, Monitoring and Tools
NERC Petition
    57. NERC proposes to retire TOP and IRO Reliability Standards that 
require reliability coordinators and transmission operators to maintain 
and use certain models and analysis capabilities and monitoring. NERC 
proposes to delete requirements for transmission operators to (1) 
``maintain accurate computer models utilized for analyzing and planning 
system operations''; (2) ``use monitoring equipment to bring to the 
attention of operating personnel important deviations''; (3) ``use 
sufficient metering . . . to ensure accurate and timely monitoring''; 
and (4) ``have sufficient information and analysis tools to determine 
the cause(s) of SOL violations. . . .'' \60\ NERC explains that these 
transmission operator requirements are unnecessary because transmission 
operators meet these requirements as part of NERC's certification 
process or are in other

[[Page 73122]]

currently-effective or proposed standards.\61\
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    \60\ See Reliability Standards TOP-002-2.1b, Requirement R19, 
TOP-006-2, Requirement R5, TOP-006-2, Requirement R6, and TOP-008-1, 
R4, respectively.
    \61\ NERC TOP Petition, Exhibit J at 22, 34, 35, and 38.
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    Similarly, NERC proposes to retire Reliability Standard IRO-002-2 
Requirements R4, R5, R6, and R7, which address real-time monitoring and 
analysis capabilities and functions required to enable the reliability 
coordinator to perform its responsibilities. According to NERC, these 
requirements are unnecessary because they are inherent in the 
reliability coordinator's duty to maintain area control error or 
operate within IROLs/SOLs and can be verified in the certification 
process.\62\ NERC also states that the Commission directives in Order 
No. 693 applicable to a minimum set of analytical tools and applicable 
to reliability coordinators and transmission operators will be 
addressed in Project 2009-02--Real-time Monitoring and Analysis 
Capabilities--that has a projected completion date of 2014. Further, 
NERC proposes to retire other requirements of currently-effective 
Reliability Standard TOP-006-2 which address real-time monitoring 
responsibilities of the transmission operator.
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    \62\ Section 500 of NERC's Rules of Procedure provide for an 
organization certification program that is intended to ensure that 
the an applicant to be a reliability coordinator, balancing 
authority or transmission operator ``has the tools, processes, 
training, and procedures to demonstrate their ability to meet the 
Requirements/sub-Requirements of all of the Reliability Standards 
applicable to the function(s) for which it is applying thereby 
demonstrating the ability to become certified and then 
operational.'' NERC Rules of Procedure at 44.
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Commission Proposal
    59. In Order No. 693, the Commission directed NERC to develop 
requirements for a minimum set of analytical tools (analysis and 
monitoring capabilities) to ensure that a reliability coordinator has 
the tools it needs to perform its functions.\63\ In its TOP Petition, 
NERC discusses the importance of analytical tools and real-time 
monitoring noting that, ``[a]ccording to the August 2003 Blackout 
Report, a principal cause of the August 14, 2003 blackout was a lack of 
situational awareness, which was in turn the result of inadequate 
reliability tools.'' \64\ We agree with NERC's statement and believe 
this is an area of reliability that requires vigilance. Moreover, our 
view is reinforced by the 2011 Southwest Outage Blackout Report, which 
found that ``[a]ffected TOP's real-time tools are not adequate or, in 
one case, operational to provide the situational awareness necessary to 
identify contingencies and reliably operate their systems'' and 
consequently recommended that ``TOPs should take measures to ensure 
that their real-time tools are adequate, operational, and run 
frequently enough to provide their operators the situational awareness 
necessary to identify and plan for contingencies and reliably operate 
their systems.'' \65\
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    \63\ Order No. 693, FERC Stats. & Regs. ] 31,242, at PP 905, 
906, 1660.
    \64\ NERC TOP Petition at 10. NERC also states that ``the 
failure of control computers and alarm systems, incomplete tool 
sets, and the failure to supply network analysis tools with correct 
System data on August 14, contributed directly to this lack of 
situational awareness. Also, the need for improved visualization 
capabilities over a wide geographic area has been a recurrent theme 
in blackout investigations.''
    \65\ 2011 Southwest Outage Blackout Report at 88 and Finding 12. 
In addition, the 2011 Southwest Outage Blackout Report, Finding 27 
(at 111) states that ``[a] TOP did not have tools in place to 
determine the phase angle difference between two terminals of its 
500 kV line after it tripped.''
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    Monitoring and analysis capabilities are essential in establishing 
and maintaining situational awareness. While NERC indicates that these 
functions are assured through the certification process,\66\ we are not 
convinced that NERC's certification process is a suitable substitute 
for a mandatory Reliability Standard. Monitoring and assessment 
capabilities must adapt to assess changing topography and system 
conditions so that operators can continually maintain an adequate level 
of situational awareness. In contrast, certification is a one-time 
process that may not adequately assure continual operational 
responsibility would occur if these requirements were in a Reliability 
Standard.
---------------------------------------------------------------------------

    \66\ NERC TOP Petition, Exh. J at 33.
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    In addition, as discussed above, NERC indicates that Standards 
Project 2009-02, Real-time Monitoring and Analysis Capabilities, will 
address the Commission directives in Order No. 693 that address a 
minimum set of analytical tools. According to NERC, this project has a 
projected completion date of 2014. NERC's retiring of current IRO and 
TOP requirements that address monitoring and analysis capabilities 
warrants expedition in the completion of Project 2009-02. The 
retirement of the current IRO and TOP requirements that address 
monitoring and analysis capabilities should not occur until the 
completion and implementation of Project 2009-02.\67\ Thus, in its NOPR 
comments NERC should propose a schedule that it will follow to ensure 
it completes and implements Project 2009-02 prior to any retirement of 
the standard such that there would be no gap.
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    \67\ NERC's ``Standards Independent Experts Review Project'' 
(Industry Experts Report) identifies one aspect of Project 2009-02 
as a ``high priority'' gap. Industry Experts Report at Appendix F. 
The Industry Experts Report (App. F) identifies a high priority gap 
for Project 2009-02 to define the requirements for EMS RTCA models 
or performance expectations of the models; the Report also says 
proposed TOP-002 should incorporate current requirement for tools to 
determine cause of SOL violations.
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b. Compliance With Reliability Directives
NERC Petition
    62. Currently-effective Reliability Standard TOP-001-1, 
Requirements R3 and R4 require applicable entities to comply with 
transmission operators' and reliability coordinators' ``reliability 
directives,'' which currently is an undefined term. NERC proposes 
Reliability Standard TOP-001-2, Requirement R1 which requires 
applicable entities to comply with transmission operators' 
``Reliability Directives,'' which NERC proposes to define as ``[a] 
communication initiated by a Reliability Coordinator, Transmission 
Operator, or Balancing Authority where action by the recipient is 
necessary to address an Emergency or Adverse Reliability Impacts.'' 
\68\
---------------------------------------------------------------------------

    \68\ NERC's proposed definition of Reliability Directive does 
not appear in the TOP Petition. Rather, NERC proposes the definition 
in the IRO Petition, Exhibit C at 1 (IRO Implementation Plan).
---------------------------------------------------------------------------

    In its implementation plan, NERC states that it is not proposing 
any new definitions but that the TOP standard drafting team coordinated 
with the IRO drafting team to develop a definition of ``Reliability 
Directive.'' This definition is included in the IRO implementation 
plan.
Commission Proposal
    64. The currently-effective TOP Reliability Standards use 
``reliability directive,'' which, as an undefined term, does not appear 
to be limited to a specific set of circumstances. Also IRO Reliability 
Standards use the term ``reliability directive'' in the same manner as 
an undefined term.\69\ In contrast, application of the proposed 
definition of ``Reliability Directive'' appears to require compliance 
with transmission operator directives only in emergencies, not normal 
or pre-emergency times. We believe that directives from a reliability 
coordinator or transmission operator should be mandatory at all times, 
and not just during emergencies (unless contrary to safety, equipment, 
regulatory or statutory requirements). For example, mandatory 
compliance with directives in non-emergency situations is important 
when a decision is made to

[[Page 73123]]

alter or maintain the state of an element on the interconnected 
transmission network. NERC staff has noted in the context of how to 
communicate such directives that operating practices for such 
directives should be consistent, no matter what type of operating 
condition (normal, alert, emergency) exists.\70\ Moreover, the 
transition from normal to emergency operation can be sudden and 
indistinguishable until recognized, often after the damage is done.\71\
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    \69\ See Reliability Standard IRO-002-2, Requirement R8.
    \70\ See COM-003-1, Operations Communications Protocols White 
Paper, May 2012 at 12, available at nerc.com.
    \71\ See NERC staff's letter to ``Project 2009-22 Interpretation 
of COM-002-2 R2 for IRC Drafting Team'' dated November 18, 2011, at 
1, available at nerc.com.
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    65. NERC's TOP and IRO petitions do not explain the proposed, 
defined term ``Reliability Directive,'' or why compliance with a 
transmission operator's directives should be required only during 
emergencies (if this is the intent). Accordingly, we seek from NERC and 
other interested entities clarification and technical explanation 
regarding the scope and intent of the defined term, as well as the 
anticipated reliability benefits and/or drawbacks of the proposed term.
    66. In addition, while NERC has included the proposed definition in 
its implementation plan, NERC has not explained or justified its 
request for approval of the revised definition. The Commission has held 
that definitions are standards.\72\ Therefore, we cannot approve the 
definition without a technical justification.
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    \72\ As with Reliability Standards, the Commission reviews and 
approves revisions to the NERC glossary pursuant to FPA section 
215(d)(2). Further, the Commission may direct a modification to 
address a specific matter identified by the Commission pursuant to 
section 215(d)(5). See also Order No. 693, FERC Stats. & Regs. ] 
31,242 at PP 1893-98.
---------------------------------------------------------------------------

c. Consideration of External Networks and sub-100 kV Facilities and 
Contingencies in Operational Planning Analysis
NERC Petition
    67. In proposed Reliability Standard TOP-002-3, Requirement R1, 
NERC proposes to require transmission operators to prepare an 
Operational Planning Analysis, i.e., next day study, which represents 
``projected System conditions'' to determine if their planned 
operations will exceed facility ratings and stability limits for normal 
and contingency conditions. NERC does not indicate whether this 
includes external networks or sub-100 kV facilities.
Commission Proposal
    68. It is unclear whether NERC's proposal would require 
transmission operators to include updated external networks to reflect 
operating conditions external to their systems and (internal and 
external) sub-100 kV facilities in their operational planning analyses. 
In Order No. 693, the Commission directed a modification to planned 
outage coordination to require consideration of facilities below 100 kV 
that, in the opinion of the registered entity (such as a transmission 
operator) ``will have a direct impact on the reliability of the Bulk-
Power System. . . .'' \73\ The 2011 Southwest Outage Blackout Report 
includes similar recommendations that transmission operators should 
ensure their next-day studies include updated external networks and 
internal and external facilities (including those below 100 kV) that 
can impact Bulk-Power System reliability.\74\ Although proposed 
Reliability Standard TOP-002-3, Requirement R1 requires the 
transmission operator to consider ``projected System conditions,'' it 
is unclear whether ``projected System conditions'' include the relevant 
updated external networks and (internal and external) sub-100 kV 
facilities.
---------------------------------------------------------------------------

    \73\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1624.
    \74\ 2011 Southwest Outage Blackout Report, Recommendations Nos. 
2 and 3.
---------------------------------------------------------------------------

    69. The Commission seeks clarification and technical explanation 
from NERC whether the term ``projected System conditions'' in proposed 
Reliability Standard TOP-002-3 Requirement R1 includes updated external 
networks to reflect operating conditions external to their systems and 
sub-100 kV facilities (internal and external) in their operational 
planning analyses. If not, the Commission seeks comment on the 
associated reliability risks and, whether it is appropriate to include 
updated external networks to reflect operating conditions and external 
and sub-100 kV facilities (internal and external) in the operational 
planning analyses.
d. Operating To Respect the Most Severe Single Contingency in Real-Time 
Operations and Unknown Operating States
NERC Petition
    70. NERC proposes to delete Reliability Standard TOP-004-2, 
Requirement R2, which provides that each transmission operator ``shall 
operate so that instability, uncontrolled separation, or cascading 
outages will not occur as a result of the most severe single 
contingency.'' NERC's Petition does not provide an explanation for the 
deletion. However, the NERC ``mapping document,'' which is included as 
an exhibit to the TOP Petition indicates that NERC intends that 
Requirement R2 be replaced by proposed Reliability Standards TOP-001-2, 
Requirements R7 and R9.\75\ Proposed Requirement R7 requires each 
transmission operator to not operate outside any identified IROL ``for 
a continuous duration exceeding its associated IROL Tv.'' 
Proposed Requirement R9 states each transmission operator shall not 
operate outside any SOL identified in Requirement R8 ``for a continuous 
duration that could cause a violation of the Facility Rating or 
Stability criteria upon which it is based.'' Further, NERC proposes to 
replace Reliability Standard TOP-008-1, Requirement R4 with multiple 
proposed requirements from proposed Reliability Standards TOP-001-2, 
TOP-002-3, and TOP-003-2. Reliability Standard TOP-008-1, Requirement 
R4 requires that the transmission operator have information and 
analysis tools to determine the causes of SOL violations, such as a 
most severe single contingency event, and conduct this analysis in all 
operating timeframes.
---------------------------------------------------------------------------

    \75\ NERC TOP Petition, Exhibit J at 25.
---------------------------------------------------------------------------

    71. With regard to unknown operating states, currently-effective 
Reliability Standard TOP-004-2, Requirement R4 states that, if a 
transmission operator ``enters an unknown operating state (i.e. any 
state for which valid operating limits have not been determined), it 
will be considered to be in an emergency and shall restore operations 
to respect proven reliable power system limits within 30 minutes.'' 
\76\ Order No. 693 directed NERC to modify Requirement R4 to restore 
the system ``to respect proven reliable power system limits as soon as 
possible and in no longer than 30 minutes.'' \77\
---------------------------------------------------------------------------

    \76\ Reliability Standard TOP-004-2, Requirement R4.
    \77\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1636.
---------------------------------------------------------------------------

    72. In the TOP Petition, NERC proposes to replace Requirement R4 
with proposed Reliability Standard TOP-001-2, Requirements R7 through 
R11. Requirements R7 through 11 address the transmission operator's 
responsibilities over IROLs or SOLs that have been identified by the 
transmission operator as necessary to support reliability internal to 
its transmission operator area. NERC explains that the proposed 
requirements ``do not include an explicit reference to `unknown state' 
since system limits can and should be determined and conditions can be

[[Page 73124]]

monitored to know when they have been exceeded.'' \78\ NERC also states 
that unknown operating states ``cannot exist because valid operating 
limits have been determined for all facilities in a TOP's footprint.'' 
\79\ In addition, NERC states that the proposed requirements ``prohibit 
operations outside of IROLs, or SOLs identified in TOP-001-2. . . .'' 
\80\ Further, NERC explains that proposed Reliability Standard EOP-001-
2, which applies to emergency operations planning, covers the general 
intent of being prepared to react to ``Emergencies.'' \81\
---------------------------------------------------------------------------

    \78\ NERC TOP Petition, Exhibit H at 5.
    \79\ NERC TOP Petition, Exhibit I at 4.
    \80\ NERC TOP Petition, Exhibit H at 5.
    \81\ NERC TOP Petition, Exhibit I (Resolution of Order No. 693 
directives) at 4.
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Commission Proposal
    73. NERC has proposed to retire three key rules here, i.e., the 
requirements to be ready for the single largest contingency, to move 
quickly from an ``unknown operating state'' to within proven limits, 
and to determine the cause of SOL violations in all time-frames, 
including real-time. We believe these three rules represent the bedrock 
core of real-time operating rules and practices, and it is therefore 
incumbent upon NERC to provide a more thorough and comprehensive 
explanation of how the proposed replacement standards compare in 
meeting the same objectives as the current standards. We request 
comment on these concerns, as elaborated below.\82\
---------------------------------------------------------------------------

    \82\ The 2011 Southwest Outage Blackout Report indicated that 
the September 8, 2011 cascade event ``showed that the system was not 
being operated in a secure N-1 state'' and that ``[NERC's] mandatory 
Reliability Standards . . . require that the BES be operated so that 
it generally remains in a reliable condition, without instability, 
uncontrolled separation or cascading, even with the occurrence of 
any single contingency.'' 2011 Southwest Outage Blackout Report at 
5.
---------------------------------------------------------------------------

    74. In particular, NERC should address whether its proposal would 
allow a different approach to real-time operational assessments and 
operation to the most severe single contingencies and, if so, NERC 
should explain and technically support the nature and associated 
reliability effects of any different approaches.\83\ How are the 
proposed requirements to not exceed IROLs or certain SOLs for more than 
the specified times are the functional or implicit equivalent of the 
current rules? For example, do the proposed rules allow reliance on 
post-contingency mitigation at times when the current rules would 
require pre-contingency mitigation? If so, is the difference 
significant for reliability purposes? Do both the current and proposed 
rules prohibit an entity from operating for more than 30 minutes in a 
state where loss of a particular line would cause the loss of enough 
resources or load to risk cascading outages or instability? Or, if the 
entity is not yet operating beyond the pre-determined ratings of the 
particular line, would the proposed rules allow doing so while the 
current rules do not? Should all transmission operators be required to 
run a real-time contingency analysis (RTCA) frequently, since the lack 
of such analysis can impair situational awareness substantially? Or is 
the value of such information outweighed for smaller entities with such 
limited facilities and operations that they generally can maintain 
similar reliability based on operator experience and judgment without 
any extra staffing and procedures needed to ensure that the RTCA's 
informational inputs and modeling are valid and useful?
---------------------------------------------------------------------------

    \83\ Currently-effective Reliability Standard IRO-008-1, 
Requirement R2 requires that ``[e]ach Reliability Coordinator shall 
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.''
---------------------------------------------------------------------------

    75. With regard to mitigation of unknown operating states, while 
NERC asserts that ``unknown states'' cannot exist, a transmission 
provider could have valid operating limits for all facilities but lack 
situational awareness when valid limits are exceeded. In addition, a 
transmission operator could operate in an unanalyzed or unstudied state 
(as a result of loss of EMS facilities that meter and report voltage, 
MW flow and other key system indicators). For example, the 2011 
Southwest Outage Blackout Report found that Western Area Power 
Administration-Lower Colorado was operating in an ``unknown state'' 
when it lost its real-time contingency analysis capabilities and, at 
the same time, did not notify its reliability coordinator to assist 
with situational awareness.\84\ In light of this concern, the 
Commission seeks comment and technical explanation from NERC and other 
interested entities on the proposed retirement. As above, our main 
question is whether the proposed rules are comparable to the current 
rules for reliability purposes and, if not, whether the difference is 
reasonable.
---------------------------------------------------------------------------

    \84\ 2011 Southwest Outage Blackout Report, Recommendation 15, 
at 95 states that ``[a]n entity should never be operating in an 
unknown state, as WALC [Western Area Power Administration-Lower 
Colorado] was when it lacked functional RTCA [real-time contingency 
analysis] and State Estimator, and did not ask any other entity to 
assist it with situational awareness.'' Cf. NERC Compliance Filing, 
Docket No. RM06-16-000 (Oct. 31, 2008) at 7 (``the Reliability 
Coordinators in the West operate only to study conditions and note 
that they do not operate in IROL conditions, only SOLs, unless there 
are one or more unanticipated outages. In these cases, when an IROL 
condition is experienced, the Reliability Coordinators must restore 
the system to a known operating state within 20 minutes for 
stability concerns and 30 minutes for thermal concerns.'').
---------------------------------------------------------------------------

e. System Protection Coordination
NERC Petition
    76. NERC proposes to replace currently-effective Requirements R2, 
R5 and R6 in Reliability Standard PRC-001-1, with proposed Reliability 
Standard TOP-003-2, Requirement R5.\85\ Currently-effective Reliability 
Standard PRC-001-1, Requirement R2 requires generator operators and 
transmission operators to notify affected entities of relay or 
equipment failures and if the failure reduces system reliability, take 
corrective action as soon as possible. Requirement R5 requires 
generator operators and transmission operators to coordinate changes in 
generation, transmission, load or operating conditions with appropriate 
advance notice that could require changes in the protection systems of 
others. Requirement R6 obligates transmission operators and balancing 
authorities to monitor the status of each special protection system in 
their area and to notify affected transmission operators and balancing 
authorities of a change in status.
---------------------------------------------------------------------------

    \85\ NERC TOP Petition, Exhibit J at 40 and 41. According to 
NERC (petition at 4), the ``corresponding changes in proposed PRC-
001-2 are administrative in nature and are limited to removal of 
three requirements in currently-effective PRC-001-1 that are now 
addressed in proposed TOP-003-2, included herein for approval.''
---------------------------------------------------------------------------

    77. Proposed Reliability Standard TOP-003-2, Requirement R5 states 
that entities ``receiving a data specification in Requirement R3 or R4 
shall satisfy the obligations of the documented specifications for 
data.'' In the standard development process, the standard drafting team 
explained that a ``data specification'' is required to contain all of 
the information that a transmission operator and balancing authority 
needs to fulfill its obligations.\86\ In addition, the standard 
drafting team stated that the transmission operator and balancing 
authority ``are the best ones to determine the contents of the data 
specification and that any attempt to provide a minimal list or other 
guidance

[[Page 73125]]

would be short-sighted and possibly misleading.'' \87\ The standard 
drafting team indicated that ``an auditor can only question what is 
contained in the requirements and in this case that would include only 
the existence of the data specification and not its contents. Any 
omissions of data will be caught up in failures to adhere to other 
standards.'' \88\
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    \86\ E.g., NERC TOP Petition, Exh. D, Consideration of Comments 
(Consideration of Comments on the 7th Draft) at 72. Southwest Power 
Pool Regional Entity stated that it ``does not believe TOP-003-2 
addresses the requirements in PRC-001.'' Exh. D at 73. Texas 
Reliability Entity states that ``Requirements R2, R5 and R6 of PRC-
001-1, which are proposed to be deleted, are not actually replaced 
by any new or revised requirements in other standards, resulting in 
reliability gaps.'' Exh. D at 89.
    \87\ NERC TOP Petition, Consideration of Comments (Consideration 
of Comments on the 7th Draft) at 79. Southwest Power Pool Standards 
Review Group states that ``[t]o be sure that all the bases are 
covered, we would suggest that the SDT provide a guideline which 
incorporates the types of data and information they envisioned when 
drafting these requirements.'' Id.
    \88\ NERC TOP Petition, Consideration of Comments (Consideration 
of Comments on the 7th Draft) at 88. Southwest Power Pool Standards 
Review Group states that ``incorporating protective relay 
information in the data specifications of R1 and R2 raises the 
potential for auditors to question the contents of an entity's 
specification.'' Id. at 79.
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Commission Proposal
    78. The Commission seeks comment and technical explanation from 
NERC and other interested entities on how current Reliability Standard 
PRC-001-1 Requirement R2's requirement for corrective action (i.e., 
return a system to a stable state) is addressed in its proposal.\89\ 
Further, the Commission proposes that NERC issue guidance on data 
needed for protection system coordination that addresses the applicable 
Order No. 693 directives and the proposed retirement of the Reliability 
Standard PRC-001-1 requirements.\90\
---------------------------------------------------------------------------

    \89\ In Order No. 693, the Commission required changes to 
Requirement R2 of Reliability Standard PRC-001-1 to clarify 
``corrective action'' (i.e., return a system to a stable state), 
specify time limit for notification, and require corrective action 
as soon as possible but no longer than 30 minutes. Order No. 693, 
FERC Stats. & Regs. ] 31,242 at PP 1441, 1445 and 1449.
    \90\ In Order No. 693, the Commission directed NERC to develop a 
modification to Reliability Standard TOP-006-1 to clarify ``the 
meaning of `appropriate technical information' concerning protective 
relays'' so that ``operators can make better informed decisions. An 
example of such information would be the allowable reclosing angle 
set in the existing relays and the maximum angle at specific points 
in the Bulk-Power System that would be acceptable to allow closing 
of lines during system restoration.'' Order No. 693, FERC Stats. & 
Regs. ] 31,242, at P 1663 and P 1665.
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f. Notification of Emergencies
NERC Petition
    79. Currently-effective TOP Reliability Standard TOP-001-1a 
requires each transmission operator to inform its reliability 
coordinator and other potentially affected transmission operators ``of 
real time or anticipated emergency conditions, and take actions to 
avoid, when possible, or mitigate the emergency.'' \91\ In its 
petition, NERC proposes to retire Reliability Standard TOP-001-1a and 
proposes as replacements Requirements R3-R6 of Reliability Standard 
TOP-001-2. In particular, Requirement R3 provides ``[e]ach Transmission 
Operator shall inform its Reliability Coordinator and Transmission 
Operator(s) that are known or expected to be affected by each actual 
and anticipated Emergency based on its assessment of its Operational 
Planning Analysis.'' \92\ In addition, Requirement R3 has a time 
horizon of ``Operations Planning,'' which NERC describes as the 
``operating and resource plans from day-ahead up to and including 
seasonal'' and does not include same-day operations or real-time 
operations.\93\
---------------------------------------------------------------------------

    \91\ Reliability Standard TOP-001-1a, Requirement R5.
    \92\ The NERC Glossary defines Operational Planning Analysis as 
``[a]n 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.''
    \93\ See NERC Time Horizons at 1, available at http://www.nerc.com/pa/Stand/Resources/Documents/TimeHorizons.pdf at 1.
---------------------------------------------------------------------------

Commission Proposal
    80. NERC's proposed revisions warrant clarification. Read one way, 
proposed Requirement R3 is less comprehensive than the currently-
effective requirements pertaining to notification of emergencies. Yet, 
it also contains provisions that, read another way, could require TOPs 
to notify others of all emergencies, not just day-ahead.\94\ Indeed, 
during the standard development process, similar concerns were 
expressed.\95\
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    \94\ An ``anticipated'' emergency should apply to all 
operational time horizons: Operations planning, same-day, and real-
time. Further, an ``actual'' emergency could only occur during the 
real-time operational time horizon.
    \95\ NERC TOP Petition, Exh. D, Consideration of Comments 
(Consideration of Comments on the 7th Draft) at 21: ``R3 seems to be 
missing some words . . . it is not clear if this requirement is 
supposed to be about planning (``expected to be affected by 
anticipated Emergencies'') or real-time operations (``known to be 
affected by actual Emergencies'') or both. If the latter is 
intended, the Time Horizon should include Real-Time Operations and 
Same Day Operations. . . .'' The standard drafting team responded 
that ``it is clear as to what needs to be communicated.'' Id. at 23.
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    81. Similarly, it is not clear whether proposed Reliability 
Standard TOP-001-2, Requirement R5 would address same-day and real-time 
operating emergencies not covered by TOP-001-2, Requirement R3. 
Proposed TOP-001-2, Requirement R5, states that ``[e]ach [TOP] shall 
inform its [RC] and other [TOPs] of its operations known or expected to 
result in an Adverse Reliability Impact on those respective 
Transmission Operator Areas. . . .'' The definition of Adverse 
Reliability Impact in NERC's TOP filing is ``[t]he impact of an event 
that results in frequency related instability; unplanned tripping of 
load or generation; or uncontrolled separation or cascading outages 
that affects a widespread area of the Interconnection.'' \96\ In 
contrast, NERC defines Emergency as ``[a]ny abnormal system condition 
that requires automatic or immediate manual action to prevent or limit 
the failure of transmission facilities or generation supply that could 
adversely affect the reliability of the Bulk Electric System.'' An 
Adverse Reliability Impact is an event that results in instability, or 
cascade conditions, while an Emergency includes conditions that could 
be a precursor to an Adverse Reliability Impact. Thus, the notification 
provisions of Requirement R5 do not cure the possible ambiguity in 
proposed Requirement R3.
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    \96\ NERC TOP Petition at 19. In the IRO Petition, NERC cites a 
different definition of Adverse Reliability Impact: ``[t]he impact 
of an event that results in Bulk Electric System instability or 
cascading.'' NERC IRO Petition at 3, n20.
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    82. While NERC states that the obligation to notify for real-time 
emergency conditions was replaced by proposed Requirement R3, NERC does 
not indicate in its petition that the real-time or same-day obligation 
was purposely deleted or offer an explanation for the deletion.\97\ We 
believe that, consistent with the currently-effective TOP Reliability 
Standards, the notification requirement of proposed Reliability 
Standard TOP-001-2 should apply to all emergencies, including real-time 
and same day emergencies. The Commission seeks comment from NERC and 
other interested entities regarding (1) the proper understanding of the 
scope of the notification provisions in the proposed requirements and 
(2) if the notification does not include all operational time horizons, 
technical justification for why transmission operators should not be 
required to notify reliability coordinators and other affected 
transmission operators of all emergencies in all operating time 
horizons.
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    \97\ NERC TOP Petition, Exhibit C at 3.
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    83. In addition, as noted above, NERC uses two different 
definitions of Adverse Reliability Impact in the TOP and IRO Petitions. 
NERC has not explained the intent or effect of the two definitions, and 
the term is used in several provisions of the proposed TOP and IRO 
Reliability Standards. The

[[Page 73126]]

Commission seeks clarification and a technical explanation from NERC 
and other interested entities regarding the two definitions, including 
if it is proposing a revised definition, which definition it is 
proposing. In addition, if the definition NERC is proposing no longer 
includes the phrase ``uncontrolled separation'' NERC should explain the 
removal of the statutory phrase ``uncontrolled separation.''
g. Primary Decision-Making Authority for Mitigation of IROLs/SOLs
    84. NERC's proposal contains a potential overlap in authority 
between the transmission operator and reliability coordinator with 
regard to the provisions pertaining to mitigation of IROLs and SOLs as 
set forth in the proposed TOP and IRO Standards.
    85. NERC states in its TOP Petition that ``[t]he responsibility for 
monitoring and handling IROLs is primarily given to the Reliability 
Coordinator, but the Transmission Operator has the primary 
responsibility to designate any SOLs that require special attention.'' 
\98\ Likewise, NERC also states that an improvement resulting from the 
changes to the IRO Reliability Standards is that they delineate a clean 
division of responsibilities between the reliability coordinator and 
transmission operators to ``help to ensure that the Reliability 
Coordinator is responsible for identifying and controlling operations 
associated with IROLs and the Transmission Operator is responsible for 
identifying and controlling operations associated with SOLs.'' \99\ 
Proposed Reliability Standard IRO-001-3, Requirement R1, provides that 
each reliability coordinator ``shall have the authority to act or 
direct others to act (which could include issuing Reliability 
Directives) to prevent identified events or mitigate the magnitude or 
duration of actual events that result in an Emergency or Adverse 
Reliability Impact.'' Further, currently-effective Reliability Standard 
IRO-009-1, Requirement R4 states that ``[w]hen actual system conditions 
show that there is an instance of exceeding an IROL in its Reliability 
Coordinator Area, the Reliability Coordinator shall, without delay, act 
or direct others to act to mitigate the magnitude and duration of the 
instance of exceeding that IROL within the IROL's Tv.'' 
\100\
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    \98\ NERC TOP Petition at 15.
    \99\ NERC IRO Petition at 5-7.
    \100\ Reliability Standard IRO-009-1, Requirement R4.
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    86. However, proposed Reliability Standard TOP-001-2, Requirement 
R11 provides similar authority for the transmission operator with 
respect to IROLs. NERC proposes that each transmission operator ``shall 
act or direct others to act, to mitigate both the magnitude and 
duration of exceeding an IROL within the IROL's Tv, or of an 
SOL identified in Requirement R8.'' \101\
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    \101\ NERC's TOP Petition (at 15) states that ``the delineation 
in the proposed TOP Reliability Standards with respect to operating 
within an identified IROL . . . is an important distinction in the 
proposed TOP Reliability Standards that is necessary for 
reliability.''
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    87. NERC's proposal with respect to mitigating IROLs appears to 
give both the transmission operator and reliability coordinator 
authority to act.\102\ Therefore, we seek clarification and technical 
explanation whether the reliability coordinator or the transmission 
operator has primary responsibility for IROLs.
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    \102\ NERC in its 2009 filing to revise and add new IRO 
standards (RM10-15-000 petition at 8) states that under its 
``Functional Model, the reliability coordinator is the functional 
entity with the highest level of responsibility and authority for 
the real-time reliability of the bulk power system.''
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B. IRO Reliability Standards

    88. As discussed above, because of the interrelationship of the TOP 
and IRO Reliability Standards, the Commission proposes to remand 
proposed IRO Reliability Standards: IRO-001-3, IRO-002-3; IRO-005-4; 
and IRO-014-2. In addition, as discussed below, as part of the remand, 
the Commission proposes to direct that NERC develop modifications with 
regard to planned outage coordination. We also seek comment from NERC 
and other interested entities regarding several proposed provisions of 
the IRO Reliability Standards. Depending on the responses in the NOPR 
comments, the Commissions may issue further directives in the final 
rule in this proceeding.
1. Issues To Be Addressed
a. Planned Outage Coordination
NERC Petition
    89. In its IRO petition, NERC proposes to retire Reliability 
Standard IRO-005-3.1a, Requirement R6, which requires reliability 
coordinators to ``coordinate pending generation and transmission 
maintenance outages with Transmission Operators, Balancing Authorities 
and Generator Operators as needed in both the real-time and next-day 
reliability analysis timeframes.'' \103\ NERC states that the 
``coordination aspects of this part of Requirement R6 are addressed in 
the requirements of currently-effective IRO-008-1,\104\ Requirement R3, 
and IRO-010-1a, Requirement R3,'' which provide:
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    \103\ NERC IRO Petition at 33-34.
    \104\ NERC IRO Petition at 34.

    IRO-008-1, R3. When a Reliability Coordinator determines that 
the results of an Operational Planning Analysis or Real-Time 
Assessment indicates the need for specific operational actions to 
prevent or mitigate an instance of exceeding an IROL, the 
Reliability Coordinator shall share its results with those entities 
that are expected to take those actions.
    IRO-010-1a, R3. Each Balancing Authority, Generator Owner, 
Generator Operator, Interchange Authority, Load-serving Entity, 
Reliability Coordinator, Transmission Operator, and Transmission 
Owner shall provide data and information, as specified, to the 
Reliability Coordinator(s) with which it has a reliability 
relationship.
Commission Proposal
    90. The Commission is concerned with NERC's proposal because 
Reliability Standards IRO-008-1, Requirement R3 and IRO-010-1a do not 
require coordination of outages. Outage coordination is a critical 
reliability function that should be performed by the reliability 
coordinator. Outage coordination is an integral part of the operational 
planning process with generation outages being scheduled from three to 
five years in advance and transmission maintenance and construction 
outages being scheduled one to three years in advance. Outages that 
have been planned well in advance still must go through a month-ahead, 
week-ahead, and sometimes even a day-ahead approval process depending 
on system topography and system conditions that may change as the 
scheduled maintenance outage approaches. For instance, forced outages 
often disrupt planned outage schedules. Therefore, the Commission 
believes it is essential that, as the functional entity with the wide-
area view, the reliability coordinator coordinates this critical area 
of operational planning.\105\
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    \105\ The Independent Experts Report identifies outage 
coordination as one of the key areas where risk to the Bulk-Power 
System is not adequately mitigated. Industry Experts Report at 15. 
The Independent Experts Report proposes (Appendix H) to fill this 
gap ``by giving the Reliability Coordinator the authority and 
responsibility to develop and implement a generation and 
transmission outage coordination process across Transmission 
Operators and Balancing Authorities in their footprint'' and 
``between its adjacent Reliability Coordinators.'' Industry Experts 
Report at 31. This outage coordination process ``shall cover the 
time period from the current operating hour out through at least 36 
months.'' In addition, The 2011 Southwest Outage Blackout Report (at 
67) found a problem with Imperial Irrigation District's lack of 
awareness of another entity's planned generation outage.
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    91. Because outage coordination is critical to operations planning 
and the reliability coordinator has the needed wide-area view for 
operations planning, on remand, the Commission proposes to

[[Page 73127]]

direct NERC to develop modifications to the IRO Reliability Standards 
that would require the reliability coordinator to have the authority 
and responsibility to develop and implement a generation and 
transmission outage coordination and planning process across 
transmission operators and balancing authorities in its footprint and 
between its adjacent reliability coordinators for the operations 
planning timeframe.\106\
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    \106\ This proposed directive is consistent with the Order No. 
693 directive for NERC to modify Reliability Standard TOP-003-1, 
Planned Outage Coordination, to require communication of scheduled 
outages to affected entities well in advance. Order No. 693, FERC 
Stats. & Regs. ] 31,242 at P 1620 through P 1624. In addition, the 
Commission has a similar concern with proposed Reliability Standard 
TOP-003-2 because it is not clear whether it addresses planned 
outage coordination.
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2. IRO Reliability Standards--Issues Requiring Clarification
a. Use of a Secure Data Network
NERC Petition
    92. Currently-effective Reliability Standard IRO-002-2, Requirement 
R2, requires that the data exchange between the reliability 
coordinator, transmission operator, and balancing authority be 
accomplished ``via a secure network.'' According to NERC, the 
requirement to provide information via a ``secure network'' is now 
addressed in NERC Rules of Procedure, Section 1002 (Reliability Support 
Services).\107\ NERC also indicates that Requirement R2 is now 
addressed in proposed Reliability Standard IRO-014-2, Requirements R1, 
R2, and R3.
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    \107\ NERC IRO Petition at 16, quoting section 1002 of the NERC 
Rules of Procedure which states in part that ``NERC may assist in 
the development of tools and other support services for the benefit 
of Reliability Coordinators and other system operators to enhance 
reliability, operations and planning. NERC states that it will work 
with the industry to identify new tools, collaboratively develop 
requirements, support development, provide an incubation period, and 
at the end of that period, transition the tool or service to another 
group or owner for long term operation of the tool or provision of 
the service.''
---------------------------------------------------------------------------

Commission Proposal
    93. Although NERC cites Section 1002 of the Rules of Procedure and 
proposed Reliability Standard IRO-014-2 as providing for the use of a 
secured data network, NERC does not explain how secured networks are 
covered in those sections. While Section 1002 of the NERC Rules and 
Reliability Standard IRO-014-2, Requirements R1, R2, and R3 address 
notification and exchange of information and data and coordination of 
actions, no language in these provisions appears to require the data 
exchange or notifications to be conducted in a secure mode.
    94. A secure network is essential to prevent unauthorized access to 
or modification of information that is critical for interconnected 
transmission network reliability functions performed by reliability 
coordinators. Therefore, we seek comment and technical explanation from 
NERC and other interested parties regarding how the identified section 
in the Rules of Procedure and Reliability Standard IRO-014-2, 
Requirements R1, R2, and R3 ensure that the data exchange and 
notifications will be conducted using a secure mode in a secure 
environment.
b. Reliability Coordinator Monitoring of SOLs and IROLs
NERC Petition
    95. NERC proposes to retire Reliability Standard IRO-002-2, 
Requirements R4 through R7, which require reliability coordinators to 
monitor IROLs and SOLs. Requirement R5 requires reliability 
coordinators to monitor bulk electric system elements that could result 
in SOL or IROL violations. NERC argues that it is appropriate to retire 
these requirements because: (1) An SOL is unlikely to have an impact on 
the wide-area reliability of the Bulk-Power System as it will generally 
not have an impact outside the affected transmission operator's area 
and (2) Requirement R4 is redundant with the requirements contained in 
existing Reliability Standards IRO-010-1a, and EOP-008-1.\108\ NERC 
also asserts that these requirements are redundant with proposed 
Reliability Standard TOP-001-2, Requirements R8 through R11.
---------------------------------------------------------------------------

    \108\ NERC IRO Petition at 19-24.
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Commission Proposal
    96. Although NERC's petition focuses on the appropriate entity to 
identify SOLs, it does not adequately explain the proposed retirement 
of the currently-effective Reliability Standard IRO-002-2 that 
establishes the obligation for reliability coordinators to monitor 
SOLs. With regard to NERC's explanation that Reliability Standard IRO-
002-2 Requirement R4 is redundant with the requirements contained in 
IRO-010-1a and EOP-008-1, neither of these Reliability Standards 
requires the reliability coordinator to monitor SOLs.
    97. The reliability coordinator's monitoring function is important 
to ensure that the reliability coordinator can identify, assess and 
take appropriate action so that elements of the system do not operate 
outside established limits causing cascading outages or blackouts. 
Thus, monitoring is not simply a support function but a major 
reliability activity necessary to maintain situational awareness and 
ensure reliable operation of the interconnected transmission network. 
As we explain above, the reliability coordinator's obligation to 
monitor SOLs is important to reliability because an SOL can evolve into 
an IROL during deteriorating system conditions, and for potential 
system conditions such as this, the reliability coordinator's 
monitoring of SOLs provides a necessary backup function to the 
transmission operator.
    98. Notwithstanding these concerns, currently-effective Reliability 
Standard IRO-003-2, Requirements R1 and R2 address the concern over 
monitoring of SOLs and IROLs, which provide:

    R1. Each Reliability Coordinator shall monitor all Bulk Electric 
System facilities, which may include sub-transmission information, 
within its Reliability Coordinator Area and adjacent Reliability 
Coordinator Areas, as necessary to ensure that, at any time, 
regardless of prior planned or unplanned events, the Reliability 
Coordinator is able to determine any potential System Operating 
Limit and Interconnection Reliability Operating Limit violations 
within its Reliability Coordinator Area.
    R2. Each Reliability Coordinator shall know the current status 
of all critical facilities whose failure, degradation or 
disconnection could result in an SOL or IROL violation. Reliability 
Coordinators shall also know the status of any facilities that may 
be required to assist area restoration objectives.

Thus, the Commission seeks comment on whether the currently-effective 
Reliability Standard IRO-003-2 Requirements R1 and R2 require 
reliability coordinators to monitor all SOLs and IROLs.

C. Proposed Revisions to Reliability Standard TOP-006-3

    99. Pursuant to section 215(d)(5) of the FPA, we propose to approve 
NERC's proposed revisions to Reliability Standard TOP-006-3 as just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest. We believe that the proposed revisions reasonably 
clarify that transmission operators are responsible for monitoring and 
reporting available transmission resources and that balancing 
authorities are responsible for monitoring and reporting available 
generation resources is reasonable. Further, NERC's proposed revision 
to TOP-006-3 is consistent with the Commission's approval of NERC's 
approach to ensure that reliability entities have clear decision-making 
authority and capabilities to take appropriate actions with a clear 
division of responsibility with respect to

[[Page 73128]]

balancing authority and transmission operator responsibilities during a 
system emergency.\109\
---------------------------------------------------------------------------

    \109\ Electric Reliability Organization Interpretation of 
Transmission Operations Reliability Standard, 136 FERC ] 61,176 
(2011).
---------------------------------------------------------------------------

III. Information Collection Statement

    100. The Commission's information collection requirements are 
typically subject to review by the Office of Management and Budget 
(OMB) under section 3507(d) of the Paperwork Reduction Act of 
1995.\110\ However, by remanding the TOP and IRO Reliability Standards, 
any information collection requirements are unchanged. With regard to 
proposed Reliability Standard TOP-006-3, the Commission estimates that 
the information collection burden will not change as compared to the 
currently-effective standard. The reporting requirements for 
transmission operators and balancing authorities remain unchanged 
because the new requirements clarify the existing standard that the 
transmission operators report transmission information, while the 
balancing authorities report generation information.
---------------------------------------------------------------------------

    \110\ 44 U.S.C. 3507(d) (2012).
---------------------------------------------------------------------------

IV. Environmental Analysis

    101. 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.\111\ 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.\112\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \111\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 ] 30,783 (1987).
    \112\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act Certification

    102. The Regulatory Flexibility Act of 1980 (RFA) \113\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on a substantial number of small 
entities. The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of a small business.\114\ 
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.\115\ The RFA is not 
implicated by this NOPR because the Commission is proposing to remand 
the TOP and IRO Reliability Standards and not proposing any 
modifications to the existing burden or reporting requirements. With no 
changes to the TOP and IRO Reliability Standards as approved, the 
Commission certifies that this NOPR will not have a significant 
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \113\ 5 U.S.C. 601-612.
    \114\ 13 CFR 121.201.
    \115\ Id. n.22.
---------------------------------------------------------------------------

    103. In addition, for proposed Reliability Standard TOP-006-3, the 
Commission estimates that there will be no material change in burden 
for all small entities because the effect of the changes merely clarify 
that transmission operators are responsible for reporting transmission 
information while balancing authorities are responsible for reporting 
generation information.

VI. Comment Procedures

    104. The Commission invites interested persons to submit comments 
on the matters and issues proposed in this notice to be adopted, 
including any related matters or alternative proposals that commenters 
may wish to discuss. Comments are due February 3, 2014. Comments must 
refer to Docket No. RM13-15-000, and must include the commenter's name, 
the organization they represent, if applicable, and their address in 
their comments.
    105. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    106. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    107. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VII. Document Availability

    108. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington, DC 20426.
    109. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    110. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2013-28629 Filed 12-4-13; 8:45 am]
BILLING CODE 6717-01-P


