
[Federal Register Volume 81, Number 188 (Wednesday, September 28, 2016)]
[Proposed Rules]
[Pages 66555-66562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23442]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM16-13-000]


Balancing Authority Control, Inadvertent Interchange, and 
Facility Interconnection Reliability Standards

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission proposes to approve Reliability Standards BAL-
005-1 (Balancing Authority Control)

[[Page 66556]]

and FAC-001-3 (Facility Interconnection Requirements) submitted by the 
North American Electric Reliability Corporation.

DATES: Comments are due November 28, 2016.

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:
    Syed Ahmad (Technical Information), Office of Electric Reliability, 
Division of Reliability Standards, Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426, Telephone: 
(202) 502-8718, Syed.Ahmad@ferc.gov.
    Julie Greenisen (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, Telephone: (202) 502-6362, Julie.Greenisen@ferc.gov.

SUPPLEMENTARY INFORMATION:
    1. Under section 215 of the Federal Power Act (FPA),\1\ the 
Commission proposes to approve Reliability Standards BAL-005-1 
(Balancing Authority Control) and FAC-001-3 (Facility Interconnection 
Requirements), submitted by the North American Electric Reliability 
Corporation (NERC), and to retire Reliability Standards BAL-005-0.2b 
(Automatic Generation Control), FAC-001-2 (Facility Interconnection 
Requirements), and BAL-006-2 (Inadvertent Interchange). The Commission 
also proposes to approve the associated implementation plans, violation 
risk factors, and violation severity levels for Reliability Standards 
BAL-005-1 and FAC-001-3. Finally, the Commission proposes to approve 
three revised definitions for the glossary of terms used in NERC 
Reliability Standards (NERC Glossary).
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    \1\ 16 U.S.C. 824(o).
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    2. Proposed Reliability Standards BAL-005-1 and FAC-001-3 will 
enhance the reliability of the Bulk-Power System, as compared to 
currently-effective Reliability Standards BAL-005-0.2b and FAC-001-2, 
by clarifying and consolidating existing requirements related to 
frequency control. The proposed Reliability Standards support more 
accurate and comprehensive calculation of Reporting Area Control Error 
(ACE) by requiring timely reporting of an inability to calculate 
Reporting ACE and by requiring balancing authorities to maintain 
minimum levels of annual availability of 99.5% for each balancing 
authority's system for calculating Reporting ACE.\2\
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    \2\ NERC states that Reporting ACE ``represents a Balancing 
Authority Area's [] Area Control Error [] measured in megawatts [] 
as the difference between the [Balancing Authority Area's] Actual 
and Scheduled Net Interchange, plus its Frequency Bias Setting 
obligation and meter error corrections. Reporting ACE helps 
Responsible Entities provide reliable frequency control by 
indicating the current state of the entity's contribution to 
Reliability.'' NERC Petition at 3.
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    3. As discussed below, we have questions regarding the proposed 
retirement of Requirement R15 of Reliability Standard BAL-005-0.2b, 
which requires responsible entities to maintain and periodically test 
backup power supplies at primary control centers and other critical 
locations. Depending on the explanation received in comments, the 
Commission may issue a directive in the final rule to restore the 
substance of Requirement R15 in the Reliability Standards. Separately, 
we propose to approve NERC's request to retire Reliability Standard 
BAL-006-2 upon the latter of the effective date of proposed Reliability 
Standard BAL-005-1 and the NERC Operating Committee's approval of an 
Inadvertent Interchange Guideline document.

I. Background

A. Mandatory Reliability Standards and Order No. 693 Directive

    4. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards that are subject to Commission review and 
approval. Specifically, the Commission may approve, by rule or order, a 
proposed Reliability Standard or modification to a Reliability Standard 
if it determines that the Standard is just, reasonable, not unduly 
discriminatory or preferential and in the public interest.\3\ Once 
approved, the Reliability Standards may be enforced by NERC, subject to 
Commission oversight, or by the Commission independently.\4\
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    \3\ 16 U.S.C. 824o(d)(2).
    \4\ Id. 824o(e).
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    5. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO,\5\ and subsequently certified 
NERC as the ERO.\6\ On March 16, 2007, the Commission issued Order No. 
693, approving 83 of the 107 Reliability Standards filed by NERC, 
including Reliability Standards BAL-005-0 (Automatic Generation 
Control), FAC-001-0 (Facility Interconnection Requirements), and BAL-
006-1 (Inadvertent Interchange).\7\ However, in approving Reliability 
Standards BAL-005-0 and BAL-006-1, the Commission directed NERC to 
develop modifications to those Reliability Standards through the 
standards development process.
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    \5\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \6\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006), 
aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
    \7\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 420, 439, and 680, 
order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
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    6. With respect to Reliability Standard BAL-005-0, the Commission 
directed NERC to develop a modification that:

    (1) Develops a process to calculate the minimum regulating 
reserve a balancing authority must have at any given time taking 
into account expected load and generation variation and transactions 
being ramped into or out of the balancing authority; (2) changes the 
title of the Reliability Standard to be neutral as to the source of 
regulating reserves and to allow the inclusion of technically 
qualified DSM and direct control load management; (3) clarifies 
Requirement R5 of this Reliability Standard to specify the required 
type of transmission or backup plans when receiving regulation from 
outside the balancing authority when using non-firm service; and (4) 
includes Levels of Non-Compliance and a Measure that provides for a 
verification process over the minimum required automatic generation 
control or regulating reserves a balancing authority must 
maintain.\8\
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    \8\ Id. P 420.

Since then, the Commission has approved one interpretation of 
Reliability Standard BAL-005-0 and accepted two errata filings.\9\ The 
currently-effective version of the Reliability Standard is BAL-005-
0.2b.
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    \9\ See Modification of Interchange and Transmission Loading 
Relief Reliability Standards; and Electric Reliability Organization 
Interpretation of Specific Requirements of Four Reliability 
Standards, Order No. 713, 124 FERC ] 61,071 (2008); North American 
Electric Reliability Corp., Docket No. RD09-2-000 (May 13, 2009) 
(delegated letter order); North American Electric Reliability Corp., 
Docket No. RD12-4-000 (Sept. 13, 2012) (delegated letter order).

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[[Page 66557]]

    7. With respect to Reliability Standard BAL-006-1, the Commission 
directed NERC to develop a modification ``that adds Measures concerning 
the accumulation of large inadvertent imbalances and Levels of Non-
Compliance.'' \10\ The Commission explained the need for such a 
modification as follows:
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    \10\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 428.

    While we agree that inadvertent imbalances do not normally 
affect the real-time operations of the Bulk-Power System and pose no 
immediate threat to reliability, we are concerned that large 
imbalances represent dependence by some balancing authorities on 
their neighbors and are an indication of less than desirable 
balancing of generation with load. The Commission also notes that 
the stated purpose of this Reliability Standard is to define a 
process for monitoring balancing authorities to ensure that, over 
the long term, balancing authorities do not excessively depend on 
other balancing authorities in the Interconnection for meeting their 
demand or interchange obligations.\11\
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    \11\ Id.

Since then, the Commission has approved one revision to Reliability 
Standard BAL-006-1 to remove the regional waiver of certain 
requirements for the Midwest ISO, following the Midwest ISO's 
transition to a single balancing authority model.\12\ The currently-
effective version of the Reliability Standard is BAL-006-2.
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    \12\ See North American Electric Reliability Corp., 134 FERC ] 
61,007 (2011).
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B. NERC Petition

    8. On April 20, 2016, NERC filed a petition seeking approval of 
proposed Reliability Standards BAL-005-1 (Balancing Authority Control) 
and FAC-001-3 (Facility Interconnection Requirements), nine new or 
revised definitions associated with the proposed Reliability Standards, 
and retirement of currently-effective Reliability Standards BAL-005-
0.2b (Automatic Generation Control), FAC-001-2 (Facility 
Interconnection Requirements), and BAL-006-2 (Inadvertent Interchange).
    9. NERC requests that the two revised Reliability Standards and the 
revised definitions of Automatic Generation Control, Pseudo-Tie, and 
Balancing Authority become effective on the first day of the first 
calendar quarter twelve months from the effective date of the 
applicable governmental authority's approval of NERC's petition. NERC 
also requests that the retirement of Reliability Standard BAL-006-2 
become effective upon the latter of the effective date of proposed 
Reliability Standard BAL-005-1 and the NERC Operating Committee's 
approval of the Inadvertent Interchange Guideline document. For the six 
remaining definitions (Reporting ACE and its component definitions--
Actual Frequency, Actual Net Interchange, Scheduled Net Interchange, 
Interchange Meter Error, and Automatic Time Error Correction), NERC 
requests an effective date of July 1, 2016, to coincide with the 
effective date for BAL-001-2.
    10. NERC subsequently withdrew its request for approval of the six 
Reporting ACE-related definitions from the instant docket, and filed 
for expedited approval of the six definitions in a separate docket. The 
six definitions were approved by delegated letter order on June 23, 
2016, and are no longer at issue in the instant proceeding.\13\
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    \13\ North American Electric Reliability Corp., Docket No. RD16-
7-000 (June 23, 2016) (delegated letter order).
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    11. NERC explains in its petition that proposed Reliability 
Standards BAL-005-1 and FAC-001-3 and the proposed retirement of 
Reliability Standard BAL-006-2 came about as part of the second phase 
of NERC's project to ``clarify, consolidate, streamline, and enhance 
the Reliability Standards addressing frequency control.'' \14\ NERC 
indicates in its petition that the standard drafting team developed the 
proposed revisions after reviewing applicable Commission directives, 
``Paragraph 81'' criteria, and the recommendations of the periodic 
review team that examined Reliability Standards BAL-005-0.2b and BAL-
006-2.\15\
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    \14\ NERC Petition at 2 (referencing Project 2010-14.2.1 Phase 2 
of Balancing Authority Reliability-based Controls).
    \15\ Id. at 3 (citing North American Elec. Reliability Corp., 
138 FERC ] 61,193 at P 81, order on reh'g and clarification, 139 
FERC ] 61,168 (2012); Petition of the North American Electric 
Reliability Corporation for Approval of Retirement of Requirements 
in Reliability Standards, Docket No. RM13-8-000, at Exhibit A 
(``Paragraph 81 Criteria'') (filed Feb. 28, 2013); Electric 
Reliability Organization Proposed to Retire Requirements in 
Reliability Standards, Order No. 788, 145 FERC ] 61,147 (2013)).
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    12. NERC describes the revisions to Reliability Standard BAL-005-
0.2b as clarifying and refining the current requirements ``for 
accurate, consistent, and complete'' Reporting ACE, which is a key 
frequency control and reliability indicator.\16\ These revisions 
include relocating some of the current requirements of Reliability 
Standard BAL-005-0.2b, which relate to confirming that facilities are 
within a balancing authority's metered boundary, into the proposed 
Facility Interconnection Requirements Reliability Standard, FAC-001-3. 
In addition, NERC proposes to relocate Requirement R3 of currently-
effective Reliability Standard BAL-006-2 into proposed Reliability 
Standard BAL-005-1, explaining that the requirement relates to ensuring 
that balancing authorities use consistent data sources to calculate 
Reporting ACE, and therefore more properly belongs in Reliability 
Standard BAL-005.
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    \16\ Id.
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    13. NERC explains that the proposed Reliability Standards 
``represent substantial improvements over existing Reliability 
Standards by helping to support more accurate and comprehensive 
calculation of Reporting ACE and satisfying all remaining Commission 
directives for Reliability Standards BAL-005 and BAL-006.'' \17\ 
Further, NERC maintains that proposed Reliability Standard BAL-005-1 is 
an improvement over the currently-effective version, BAL-005-0.2b, 
because it ``consolidates unnecessary or repetitive Requirements and 
moves certain metrics for calculating Reporting ACE to the revised, 
proposed definition of Reporting ACE.'' \18\ Among other things, NERC 
proposes to move requirements applicable to generator operators and 
transmission operators in currently-effective Reliability Standard BAL-
005-0.2b, into a more appropriate standard, explaining that ``[a]s the 
purpose of FAC-001-3 is more commensurate with interconnection 
responsibilities, interconnection procedures contained in currently 
effective BAL-005-0.2b should be included in proposed Reliability 
Standard FAC-001-3.'' \19\
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    \17\ Id. at 12.
    \18\ Id. at 13.
    \19\ Id. at 23.
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    14. In addition, NERC asserts that proposed Reliability Standard 
BAL-005-1 improves on the currently-effective version of the 
Reliability Standard because proposed Requirement R2 clarifies the 
performance expectations for notification to reliability coordinators 
when a balancing authority is unable to calculate Reporting ACE for 30 
minutes or more,\20\ and Requirement R5 ``introduces a new obligation . 
. . to assure the availability of a BA's system used to calculate 
Reporting ACE,'' requiring a minimum availability of 99.5% in each 
calendar year.\21\
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    \20\ Id. at 16.
    \21\ Id. at 19.
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    15. NERC states that the proposed package of revisions reflected in 
its petition address the outstanding directives related to Reliability 
Standards BAL-005 and BAL-006 from Order No. 693. Specifically, NERC 
states that the title of Reliability Standard

[[Page 66558]]

BAL-005-1 has been modified from Automatic Generation Control to 
Balancing Authority Control ``to reflect the connection to Reporting 
ACE and resource-neutral requirements.'' \22\ In addition, NERC 
indicates that it has revised the definition of Automatic Generation 
Control to ensure a resource-neutral process for controlling demand and 
resources.\23\
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    \22\ Id. at 13 (referencing Order No. 693, FERC Stats. & Regs. ] 
31,242 at P 404, and noting that the Commission's directive related 
to resource-neutrality for regulating reserves is now moot, as 
Requirement R2 of Reliability Standard BAL-005-0.2b, which required 
entities to maintain regulating reserves, has been retired).
    \23\ Id. at n.39.
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    16. NERC states that the requirements of proposed Reliability 
Standard BAL-005-1 all have a ``medium'' violation risk factor, thereby 
addressing the Commission's directive to revise the violation risk 
factor for Reliability Standard BAL-005-0, Requirement R17 to 
``medium.'' \24\ Similarly, NERC asserts that it has met the directive 
to consider Xcel and FirstEnergy's comments about the scope of 
Requirement R17, which set minimum accuracy requirements for time error 
and frequency devices, by retiring part of the currently-effective 
requirement and moving the minimum accuracy requirements into 
Requirement R3 of Reliability Standard BAL-005-1. NERC maintains that 
this has ``streamlined obligations to use specific frequency metering 
equipment that is necessary for operation of [automatic generation 
control (AGC)] and accurate calculation of Reporting ACE, as this 
ensures that costs associated with implementation are commensurate with 
reliability benefit.'' \25\
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    \24\ Id. at 17; see also North American Elec. Reliability Corp., 
121 FERC P 61,179 at P 58 (2007).
    \25\ Id. at 18.
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    17. NERC proposes to move Requirement R3 from currently-effective 
Reliability BAL-006-2 into proposed Reliability Standard BAL-005-1, but 
proposes to retire the rest of the requirements of Reliability Standard 
BAL-006-2 (Requirements R1, R2, R4, and R5). NERC states that the 
standard drafting team determined that, aside from Requirement R3, each 
of the requirements in Reliability Standard BAL-006-2 are ``energy 
accounting standards'' and/or are ``administrative'' in nature, and 
should accordingly be retired.\26\
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    \26\ Id. at 25-26.
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    18. While NERC acknowledges that the Commission previously directed 
it to develop measures concerning the accumulation of large inadvertent 
imbalances, based on the Commission's concern that large imbalances may 
indicate an underlying problem, NERC explains that the requirements of 
Reliability Standard BAL-001-2, which require balancing authorities to 
maintain clock-minute ACE within the Balancing Authority ACE Limit, as 
well as the requirements of Reliability Standard BAL-003-1 and proposed 
Reliability Standard BAL-002-2, which require entities to restore 
Reporting ACE within predefined bounds, prevent any excessive 
dependency on other entities. As NERC explains in its petition:

    Because entities are supporting frequency through this 
coordinated suite of reliability standards, entities will not 
excessively depend on other entities in the Interconnection such 
that the purely economic issue that was addressed by BAL-006-2 
becomes a reliability issue for a NERC Reliability Standard.\27\
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    \27\ Id. at 27.

    19. In order to address ``any remaining or potential concerns with 
retirement of BAL-006-2,'' NERC proposes that the retirement become 
effective only upon the Operating Committee's approval of an 
Inadvertent Interchange Guideline document.\28\ NERC states that the 
Inadvertent Interchange Guideline document was based on a white paper 
developed by the standard drafting team for Reliability Standards BAL-
005 and BAL-006, and maintains that it provides an in-depth 
justification for why a NERC Reliability Standard is not necessary for 
inadvertent interchange.
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    \28\ The Inadvertent Interchange Guideline document is expected 
to be presented to the NERC Operating Committee in mid-September 
2016, and will be posted for a 45-day comment period.
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    20. With respect to the three proposed definitions that remain at 
issue in this proceeding, NERC explains that (1) ``Automatic Generation 
Control'' has been revised to set forth a resource-neutral process for 
controlling demand and resources; (2) ``Pseudo-Tie'' has been updated 
to reflect the use of the term ``Reporting ACE''; and (3) ``Balancing 
Authority'' has been revised to more accurately describe a balancing 
authority's resource demand function.

C. NERC Supplemental Filing

    21. On June 14, 2016, NERC submitted supplemental information in 
support of its April 20, 2016 petition (Supplemental Filing), to 
provide additional explanation and support for the retirement of 
Requirement R15 in currently-effective Reliability Standard BAL-005-
0.2b.\29\ In its Supplemental Filing, NERC maintains that Requirement 
R15 should be retired because the objectives of that requirement (i.e., 
to ensure the continued operation of AGC and certain data recording 
equipment during the loss of normal power supply) are being addressed 
through other Reliability Standards and requirements. Specifically, 
NERC maintains that Reliability Standard EOP-008-1 requires a balancing 
authority to have a backup control center facility and an operating 
plan that allows it to meet its functional obligations with regard to 
the reliable operation of the bulk electric system in the event that 
its primary control center functionality is lost.\30\
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    \29\ As NERC notes in its Supplemental Filing, NERC stated in 
its initial petition that ``Requirements R2, R7 and R15 . . . are 
redundant, ineffective, and should be retired based on Commission-
approved Paragraph 81 Criteria.'' NERC Supplemental Filing at 1 
(quoting April 20 Petition at 15).
    \30\ NERC Supplemental Filing at 2.
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    22. In addition, NERC maintains that the proposed performance 
requirements of Requirement R3 of Reliability BAL-005-1, which would 
require balancing authorities to ``use frequency metering equipment for 
the calculation of Reporting ACE that is available a minimum of 99.95% 
of each calendar year,'' will help to ensure that balancing authorities 
can continuously operate the equipment necessary for the calculation of 
Reporting ACE, effectively eliminating the need for Requirement 
R15.\31\
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    \31\ Id. at 4.
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II. Discussion

    23. Pursuant to FPA section 215(d)(2), we propose to approve 
Reliability Standards BAL-005-1 and FAC-001-3 as just, reasonable, not 
unduly discriminatory or preferential, and in the public interest. 
Proposed Reliability Standard BAL-005-1 and FAC-001-3 will enhance 
reliability as compared to currently-effective Reliability Standards 
BAL-005-0.2b and FAC-001-2, because the proposed Reliability Standards 
clarify and consolidate existing requirements related to frequency 
control. In addition, proposed Reliability Standard BAL-005-1 supports 
more accurate and comprehensive calculation of Reporting ACE by 
requiring timely reporting of an inability to calculate Reporting ACE 
(Requirement R2) and by requiring minimum levels of availability and 
accuracy for each balancing authority's system for calculating 
Reporting ACE (Requirement R5).
    24. We also propose to approve the violation risk factors and 
violation severity levels associated with Reliability Standards BAL-
005-1 and FAC-001-3; the proposed revisions to the definitions of 
Automatic Generation Control, Pseudo-Tie, and Balancing Authority; the 
proposed retirement of

[[Page 66559]]

Reliability Standards BAL-005-0.2b, FAC-001-2, and BAL-006-2 in 
accordance with NERC's implementation plan; and NERC's implementation 
plans for proposed Reliability Standards BAL-005-1 and FAC-001-3.
    25. As discussed below, the Commission seeks comment from NERC and 
other interested entities regarding the retirement of Requirement R15 
of Reliability Standard BAL-005-0.2b, which requires responsible 
entities to maintain and periodically test backup power supplies at 
primary control centers and other critical locations. Depending on the 
explanation received in the comments, the Commission may issue a 
directive in the final rule requiring NERC to restore this requirement 
through the standards development process.

A. Retirement of Reliability Standard BAL-005-0.2b, Requirement R15

    26. Proposed Reliability Standard BAL-005-1 would eliminate 
currently-effective Requirement R15 from the standard, which states as 
follows:

    The Balancing Authority shall provide adequate and reliable 
backup power supplies and shall periodically test these supplies at 
the Balancing Authority's control center and other critical 
locations to ensure continuous operation of AGC and vital data 
recording equipment during loss of the normal power supply.

    27. NERC contends that Requirement R15 should be retired because it 
is ``redundant'' and ``ineffective,'' and points to a number of other 
Reliability Standards and requirements that, NERC maintains, achieve 
the same objective as Requirement R15. Specifically, NERC explains that 
requirements in Reliability Standard EOP-008-1 (Loss of Control Center 
Functionality) and the performance requirements of Requirement R3 in 
proposed Reliability Standard BAL-005-1 address the same objectives as 
existing Requirement R15 (i.e., to ensure the continued operations of 
AGC and certain data recording equipment during the loss of normal 
power supply).\32\
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    \32\ Id. at 2-4.
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    28. NERC contends that Reliability Standard EOP-008-1 requires a 
balancing authority to have a backup control center facility and an 
operating plan that allows it to meet its functional obligations with 
regard to the reliable operation of the bulk electric system in the 
event that its primary control center functionality is lost. NERC 
asserts that these requirements effectively address the same 
reliability objective as Reliability Standard BAL-005-0.2b Requirement 
R15 because a balancing authority's ``functional obligations regarding 
reliable operations'' \33\ include the continuous operation of AGC and 
the data recording equipment necessary to balance generation and load. 
Further, NERC contends that Requirement R7 of Reliability Standard EOP-
008-1 requires balancing authorities to test their operating plans 
annually to demonstrate the viability of their backup functionality.
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    \33\ Id. at 3.
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    29. NERC maintains that the proposed performance requirements in 
Requirement R3 of Reliability Standard BAL-005-1, which require 
balancing authorities to ``use frequency metering equipment for the 
calculation of Reporting ACE that is available a minimum of 99.95% of 
each calendar year,'' will help ensure that balancing authorities can 
continuously operate the equipment necessary for the calculation of 
Reporting ACE. NERC notes that if a balancing authority ``fails[s] to 
have adequate and reliable backup power supplies at its control center 
to ensure continuous operation of its AGC and vital data recording 
equipment, the Balancing Authority risks violation of the performance 
obligation in proposed Reliability Standard BAL-005-1, Requirement R3 
if its normal power supply is lost.'' \34\
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    \34\ Id. at 4-5.
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Commission Request for Comments
    30. We recognize that the approach taken in revised Reliability 
Standard BAL-005-1, combined with the requirements of Reliability 
Standard EOP-008-1, represents a more performance-based approach to 
maintaining functionality for reliable operation of the interconnected 
bulk electric system, including ensuring the continued operation of AGC 
and certain data recording equipment during the loss of normal power 
supply, compared to the more specific approach of Requirement R15 in 
Reliability Standard BAL-005-0.2b. Moreover, balancing authorities 
currently appear to be the only type of functional entity explicitly 
required to have and to test adequate and reliable backup supply at 
critical locations. For example, there is no provision parallel to 
Requirement R15 that reliability coordinators or transmission operators 
provide ``adequate and reliable backup power supplies'' at their 
primary control centers and ``other critical locations.''
    31. Nonetheless, after considering NERC's Petition and Supplemental 
Filing addressing the matter, we continue to have questions as to 
whether the objectives of Requirement R15 are met, as NERC contends, by 
other requirements in Reliability Standard EOP-008-1 and proposed 
Reliability Standard BAL-005-1. In particular, Requirement R15 of 
currently-effective Reliability Standard BAL-005-0.2b helps to ensure 
continued operability of balancing authorities' primary control 
centers, despite the loss of normal power supply, without evacuation to 
or activation of backup control centers. Thus, this provision appears 
to provide additional robustness in the primary control center and 
mitigates the risk of problems occurring in the transition to a 
secondary control center. We also note that NERC's Independent Expert 
Review Project (IERP) report did not include Requirement R15 among the 
requirements recommended for retirement when it reviewed Reliability 
Standard BAL-005-0.2b in 2013.\35\ While the IERP report explicitly 
recommended retiring other provisions of Reliability Standard BAL-005-
0.2b, it recommended retaining Requirement R15 as part of the Future 
Enforceable Set of requirements.\36\
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    \35\ Standards Independent Experts Review Project at 26, http://www.nerc.com/pa/Stand/Resources/Documents/Standards_Independent_Experts_Review_Project_Report.pdf.
    \36\ Id. at 1.
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    32. Accordingly, we are not persuaded based on the current record 
that it is appropriate to eliminate balancing authorities' existing 
obligation to have and periodically test backup power supply at a 
primary control center. We, therefore, seek additional justification 
for the retirement of Requirement R15 of Reliability Standard BAL-005-
0.2b. Specifically, the Commission seeks comment on the benefits and 
potential burden of retaining Requirement R15. We also seek an 
explanation as to why, historically, there is no parallel to 
Requirement R15 for reliability coordinators and transmission 
operators, and whether any reason exists to distinguish between 
balancing authorities and other entities, such as reliability 
coordinators and transmission operators, that may operate a control 
center or critical facility with respect to the need for backup power 
supply and testing at such locations.
    33. The Commission further seeks comment on the following 
questions:

    1. If Requirement R15 of Reliability Standard BAL-005-0.2b is 
retired, can balancing authorities comply with Reliability Standard 
EOP-008-1 by having a primary control center and ``backup 
functionality'' without a backup power supply at the primary control 
center or without a backup

[[Page 66560]]

power supply at the location providing backup functionality? Are 
reliability coordinators and transmission operators compliant with 
Reliability Standard EOP-008-1 by having a primary control center 
and ``backup functionality'' without a backup power supply at the 
primary control center or without a backup power supply at the 
location providing backup functionality?
    2. Explain the benefits and potential burdens for the reliable 
operation of the bulk electric system in having a backup power 
supply at the primary control center. Is it more appropriate to have 
backup power supply sited at a location providing backup 
functionality? Does the potential impact to reliability change if 
the entity is a reliability coordinator or transmission operator?
    3. Describe current practices with respect to the availability 
of backup power supplies at primary control centers and other 
critical locations. In particular, do any reliability coordinators, 
transmission operators, or balancing authorities currently have a 
primary control center without a backup power supply?
    4. What does the reference in Reliability Standard BAL-005-0.2b 
Requirement R15 to ``other critical locations'' include? Does it 
include facilities beyond primary control centers and locations 
providing backup functionality?
    5. Does the use of frequency metering equipment to calculate 
Reporting ACE that is available a minimum of 99.95% of each calendar 
year, as proposed in Reliability Standard BAL-005-1, Requirement R3, 
ensure ``continuous operation of AGC and vital data recording 
equipment during loss of the normal power supply,'' per Reliability 
Standard BAL-005-0.2b, Requirement R15? What other functions would 
be included as part of the metering equipment and data collection of 
Reliability Standard BAL-005-1, Requirement R3? What functions 
currently part of Reliability Standard BAL-005-0.2b, Requirement R15 
would be omitted?
    6. Do the requirements in Reliability Standard EOP-008-1 for 
backup functionality ensure the ``continuous operation of AGC and 
vital data recording equipment,'' and the ability to collect data to 
calculate Reporting ACE, in the case of the unavailability of such 
equipment for a period within the bounds of proposed Reliability 
Standard BAL-005-1, Requirement R3?

III. Information Collection Statement

    34. The Paperwork Reduction Act (PRA) \37\ requires each federal 
agency to seek and obtain Office of Management and Budget (OMB) 
approval before undertaking a collection of information directed to ten 
or more persons, or contained in a rule of general applicability. The 
OMB regulations require that OMB approve certain reporting and 
recordkeeping (collections of information) imposed by an agency.\38\ 
Upon approval of a collection(s) of information, OMB will assign an OMB 
control number and expiration date. Respondents subject to the filing 
requirements of this rule will not be penalized for failing to respond 
to these collections of information unless the collections of 
information display a valid OMB control number.
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    \37\ 44 U.S.C. 3501-3520.
    \38\ 5 CFR 1320.11.
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    35. The Commission is submitting these reporting and recordkeeping 
requirements to OMB for its review and approval under section 3507(d) 
of the PRA. Comments are solicited on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of the provided burden estimate, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods for minimizing the respondent's burden, including the 
use of automated information techniques.
    36. This Notice of Proposed Rulemaking (NOPR) proposes to approve 
revisions to Reliability Standards BAL-005, associated with FERC-725R 
and FAC-001, associated with FERC-725D. These proposed revisions 
streamline and clarify the current requirements related to the 
calculation of Reporting ACE--a key frequency control and reliability 
indicator factor--including consolidating the seventeen requirements of 
currently-effective BAL-005-0.2b, associated with FERC-725R, into seven 
requirements in BAL-005-1, relocation of certain requirements related 
to interconnection requirements for transmission owners and generation 
owners into FAC-001-3, relocation of Requirement R3 in currently-
effective BAL-006-2 into proposed BAL-005-1, and relocation of certain 
metrics and calculations required for calculating Reporting ACE into 
the NERC definition of Reporting ACE and its component definitions.
    37. NERC's proposed revisions to Reliability Standards BAL-005 and 
FAC-001will not result in an increase in the record-keeping and 
reporting requirements imposed on balancing authorities, other than the 
one-time cost of administering the change to the revised standard. All 
other recordkeeping and reporting obligations imposed on balancing 
authorities under the revised requirements essentially track those that 
already exist under currently-effective Reliability Standards BAL-005-
0.2b and FAC-001-2. The proposed revisions to FAC-001-3 will result in 
a limited increase in the record-keeping and reporting requirements 
imposed on those transmission owners and generator owners that are not 
also transmission operators and generator operators (about 198 entities 
in the United States), as shown in the chart below.\39\ Many of the 
revisions to the Reliability Standards reflected in this NOPR were 
developed to help clarify and streamline existing requirements related 
to calculation of Reporting ACE, and are expected to simplify these 
entities' overall burden with respect to recordkeeping, reporting, and 
compliance. Moreover, the NOPR proposes to allow the retirement of the 
bulk of the requirements in Reliability Standard BAL-006-2, further 
reducing the overall record-keeping and reporting requirements for 
balancing authorities. Accordingly, the Commission estimates that the 
overall change in the record-keeping and reporting requirements as a 
result of this rulemaking will be de minimis on a per-entity basis.
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    \39\ Proposed Reliability Standard FAC-001-3 replaces and 
strengthens currently effective Reliability Standard FAC-001-2 by 
moving currently effective Requirement R1 of Reliability Standard 
BAL-005-0.2b to proposed Reliability Standard FAC-001-3, requiring 
that transmission owner and generator owner interconnection 
requirements include procedures for confirming that new or 
materially modified facilities connecting to the bulk electric 
system are within a balancing authority's metered boundaries. NERC 
explains that these interconnection requirements should be relocated 
to Reliability Standard FAC-001-3, as FAC-001-3 establishes facility 
interconnection requirements.
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    38. Public Reporting Burden: The changes reflected in proposed 
Reliability Standard BAL-005-1 are not expected to result in an 
increase in the annual record-keeping and reporting requirements on 
applicable entities (balancing authorities). However, balancing 
authorities will have to perform a one-time review of the new standard 
to ensure that their compliance practices (including record-keeping) 
are consistent with the revised requirements. The relocation of 
Requirement R1 of Reliability Standard BAL-005-0.2b into Reliability 
Standard FAC-003-1 will result in an increase in the number of entities 
subject to the requirement, as the requirement will be applicable to 
transmission owners and generator owners rather than transmission 
operators and generator operators. This limited increase in annual 
record-keeping and reporting burden, along with the one-time burden of 
administering the change from BAL-005-0.2b to BAL-005-1, is however 
expected to be offset to some extent by the decrease in record-keeping 
and reporting burden associated with the retirement of Reliability 
Standard BAL-006-2 (in considering the overall record-keeping and 
reporting requirements associated with the revised Reliability 
Standards).

[[Page 66561]]



----------------------------------------------------------------------------------------------------------------
                                                                                      Average     Annual  burden
 Data collection  FERC 725D &      Number of        Number of      Total number    burden hours   hours  & total
725R  (modifications in  RM16- respondents \40\   responses  per   of responses     & cost per     annual  cost
           13-000)                                  respondent                     response \41\       \42\
                               (1).............  (2)............     (1) x (2) =             (4)     (3) x (4) =
                                                                             (3)                             (5)
----------------------------------------------------------------------------------------------------------------
BAL-005-1 (FERC-725R)........  BA 105..........  1 (one-time)...             105               1             105
                                                                                          $95.35         $10,325
FAC-001-3 R3 (FERC-725D).....  GO/TO 198 \43\..  1 (annual).....             198               1  ..............
                                                                                     \44\ $63.25      $12,523.50
Retirement of current          BA 105..........  -1 (annual)....            -105              -1             105
 standard BAL-006-02                                                                     -$31.15      -$3,270.75
 currently in (FERC-725R).
                                                                 -----------------------------------------------
    Total....................  ................  ...............  ..............  ..............      $19,577.75
----------------------------------------------------------------------------------------------------------------

    Title: FERC-725D, Mandatory Reliability Standards: FAC Reliability 
Standards; FERC-725R, Mandatory Reliability Standards: BAL Reliability 
Standards
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    \40\ The estimated number of respondents is based on the NERC 
compliance registry as of August 12, 2016. According to the NERC 
compliance registry, there are 70 U.S. balancing authorities (BA) in 
the Eastern Interconnection, 34 balancing authorities in the Western 
Interconnection and one balancing authority in the Electric 
Reliability Council of Texas (ERCOT).
    \41\ The burden hours and cost are based on the hourly cost for 
an engineer for BAL-005-1, the average of the hourly cost for an 
engineer and clerical staff for FAC-001-3, and the hourly cost for 
clerical staff for changes associated with the retirement of BAL-
006-2.
    \42\ For purposes of determining the overall annual cost of the 
record-keeping and reporting changes reflected in this NOPR, the 
one-time cost associated with administering the change to BAL-005-1 
is being treated as an annual cost.
    \43\ Per the NERC compliance registry, there are 56 generator 
owners (GO) that are not also generator operators and 142 
transmission owners (TO) that are not also transmission operators, 
for a total of 198 new entities in the United States subject to FAC-
001-3 Requirement R3.
    \44\ The project cost per response for record-keeping and 
reporting associated with the revisions in FAC-001-3 reflect an 
average of the hourly cost for an engineer and for clerical staff.
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    Action: Proposed Revisions.
    OMB Control No: 1902-0247 (FERC-725D); 1902-0268 (FERC-725R).
    Respondents: Business or other for-profit and not-for-profit 
institutions.
    Frequency of Responses: On-going.
    Necessity of the Information: The Commission has reviewed the 
requirements of Reliability Standards BAL-005-1 and FAC-001-3 and has 
made a determination that the requirements of these Reliability 
Standards are necessary to implement section 215 of the FPA.
    Internal Review: The Commission reviewed the proposed Reliability 
Standards and made a determination that its action is necessary to 
implement section 215 of the FPA. The Commission has assured itself, by 
means of its internal review, that there is specific, objective support 
for the burden estimates associated with the information requirements.
    39. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, email: 
DataClearance@ferc.gov, phone: (202) 502-8663, fax: (202) 273-0873].
    40. For submitting comments concerning the collection(s) of 
information and the associated burden estimate(s), please send your 
comments to the Commission and to the Office of Management and Budget, 
Office of Information and Regulatory Affairs, Washington, DC 20503 
[Attention: Desk Officer for the Federal Energy Regulatory Commission, 
phone: (202) 395-4638, fax: (202) 395-7285]. For security reasons, 
comments to OMB should be submitted by email to: 
oira_submission@omb.eop.gov. Comments submitted to OMB should include 
FERC-725R and Docket Number RM16-13-000.

IV. Environmental Analysis

    41. 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.\45\ 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.\46\ The actions proposed here 
fall within this categorical exclusion in the Commission's regulations.
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    \45\ Regulations Implementing National Environmental Policy Act 
of 1969, Order No. 486, FERC Stats. & Regs., ] 30,783 (1987).
    \46\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act Certification

    42. The Regulatory Flexibility Act of 1980 (RFA) \47\ generally 
requires a description and analysis of proposed rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA does not mandate any particular outcome in a rulemaking. It 
only requires consideration of alternatives that are less burdensome to 
small entities and an agency explanation of why alternatives were 
rejected. The Small Business Administration (SBA) revised its size 
standard effective January 22, 2014 for electric utilities from a 
standard based on megawatt hours to a standard based on the number of 
employees, including affiliates. Under SBA's size standards, some 
balancing authorities, generation owners, and transmission owners will 
fall under the following category and associated size threshold: 
Electric bulk power transmission and control, at 500 employees.\48\
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    \47\ 5 U.S.C. 601-612.
    \48\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121 
(Electric Bulk Power Transmission and Control).
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    43. As noted above, the Commission estimates a very limited, one-
time increase in record-keeping and reporting burden on balancing 
authorities due to the changes in the revised Reliability Standards, 
with no other increase in the cost of compliance. Approximately 24 of 
the 105 balancing authorities are expected to meet the SBA's definition 
for a small entity. In addition, approximately 198 entities will be 
subject to new record-keeping and reporting requirements under revised 
Reliability Standard FAC-001-3, with no other increase in the cost of 
compliance. Approximately 177 of these entities are expected to meet 
the SBA's definition of a small entity.
    44. Even assuming that the one-time cost of compliance for 
administering the change from Reliability Standard BAL-005-0.2b to BAL-
005-1 is an annual

[[Page 66562]]

cost, and assuming that all of the affected entities qualify as small 
entities, the total annual cost to the industry as a whole is minimal 
($19,577.75), and the average cost per affected entity is $63.23.
    45. According to SBA guidance, the determination of significance of 
impact ``should be seen as relative to the size of the business, the 
size of the competitor's business, and the impact the regulation has on 
larger competitors.'' \49\ The Commission does not consider the 
estimated burden to be a significant economic impact. As a result, the 
Commission certifies that the reforms proposed in this NOPR would not 
have a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \49\ U.S. Small Business Administration, A Guide for Government 
Agencies: How to comply with the Regulatory Flexibility Act, at 18 
(May 2012), https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
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VI. Comment Procedures

    46. 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 November 28, 2016. Comments must refer to 
Docket No. RM16-13-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments.
    47. 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.
    48. 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.
    49. 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

    50. 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.
    51. 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.
    52. 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.

    Issued: September 22, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-23442 Filed 9-27-16; 8:45 am]
 BILLING CODE 6717-01-P


