[Federal Register Volume 75, Number 227 (Friday, November 26, 2010)]
[Rules and Regulations]
[Pages 72910-72933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29570]



[[Page 72909]]

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Part III





Department of Energy





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Federal Energy Regulatory Commission



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18 CFR Part 40



Revision to Electric Reliability Organization Definition of Bulk 
Electric System; Final Rule

Federal Register / Vol. 75 , No. 227 / Friday, November 26, 2010 / 
Rules and Regulations

[[Page 72910]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM09-18-000; Order No. 743]


Revision to Electric Reliability Organization Definition of Bulk 
Electric System

Issued November 18, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: In this Final Rule, pursuant to section 215 of the Federal 
Power Act (FPA),\1\ the Federal Energy Regulatory Commission 
(Commission) adopts, with modifications, the proposal outlined in its 
March 18, 2010 Notice of Proposed Rulemaking to require the Electric 
Reliability Organization (ERO) to revise its definition of the term 
``bulk electric system.'' \2\ The Commission directs the ERO, through 
the ERO's Reliability Standards Development Process, to revise the 
definition to address the Commission's technical concerns, as discussed 
fully below, and ensure that the definition encompasses all facilities 
necessary for operating an interconnected electric transmission 
network. The Commission believes that the best way to accomplish these 
goals is to eliminate the regional discretion in the current 
definition, maintain a bright-line threshold that includes all 
facilities operated at or above 100 kV except defined radial 
facilities, and establish an exemption process and criteria for 
excluding facilities that are not necessary for operating the 
interconnected transmission network. However, this Final Rule allows 
the ERO, in accordance with Order No. 693, to develop an alternative 
proposal for addressing the Commission's concerns with the present 
definition with the understanding that any such alternative must be as 
effective as, or more effective than, the Commission's proposed 
approach in addressing the identified technical and other concerns, and 
may not result in a reduction in reliability.
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    \1\ 16 U.S.C. 824o.
    \2\ Revision to Electric Reliability Organization Definition of 
Bulk Electric System, Notice of Proposed Rulemaking, 75 FR 14097 
(Mar. 24, 2010), FERC Stats. & Regs. ] 32,654 (2010).

DATES: Effective Date: This Final Rule will become effective January 
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25, 2011.

FOR FURTHER INFORMATION CONTACT:

Robert V. Snow (Technical Information), Office of Electric Reliability, 
Division of Reliability Standards, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, Telephone: 
(202) 502-6716.
Patrick A. Boughan (Technical Information), Office of Electric 
Reliability, Division of Reliability and Engineering Services, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426, Telephone: (202) 502-8071.
Jonathan E. First (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8529.
Mindi Sauter (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-6830.

SUPPLEMENTARY INFORMATION:

Table of Contents

 
                                                               Paragraph
                                                                  No.
 
I. Background...............................................           3
  A. Section 215 of the FPA.................................           3
  B. Order No. 693..........................................           5
  C. NERC's June 14, 2007 Filing............................           8
  D. NPCC's Identification of Bulk Electric System                    11
   Facilities...............................................
  E. Notice of Proposed Rulemaking..........................          13
II. Discussion..............................................          16
  A. Overview...............................................          16
    1. Definition of Bulk Electric System...................          17
      (a) Commission Authority..............................          17
        (1) Comments........................................          18
          (i) NERC Standards Development Process and                  19
           Deference to NERC and the Regional Entities......
          (ii) Bulk-Power System............................          24
          (iii) Distribution Facilities.....................          26
        (2) Commission Determination........................          29
          (i) Overview......................................          29
          (ii) NERC Standards Development Process and                 34
           Deference to NERC and the Regional Entities......
          (iii) Bulk-Power System...........................          36
          (iv) Distribution Facilities......................          37
      (b) Scope of the Definitional Change of ``Bulk                  42
       Electric System''....................................
        (1) NOPR Proposal...................................          42
        (2) Comments........................................          43
        (3) Commission Determination........................          52
      (c) Technical and Historical Justification for                  56
       Modification.........................................
        (1) NOPR Proposal...................................          56
        (2) Comments........................................          58
        (3) Commission Determination........................          72
          (i) Impact-Based Methodology and Regional                   76
           Variation........................................
          (ii) FRCC Event...................................          87
          (iii) ReliabilityFirst Event......................          88
          (iv) Astoria West Event...........................          89
          (v) Relevance of TLR..............................          90
          (vi) International Concerns.......................          91
        (4) Summary.........................................          96
      (d) Usage and Definition of ``Bulk-Power System''.....          97
        (1) Comments........................................          97
        (2) Commission Determination........................         100

[[Page 72911]]

 
    2. Exemption Process....................................         101
      (a) Comments..........................................         102
      (b) Commission Determination..........................         111
    3. Transition Process...................................         122
      (a) Comments..........................................         123
      (b) Commission Determination..........................         131
    4. Cost Recovery........................................         133
      (a) Comments..........................................         133
      (b) Commission Determination..........................         134
    5. Issues Regarding the Western Interconnection.........         135
      (a) Comments..........................................         135
      (b) Commission Determination..........................         139
    6. Impact on Generation Owners and Operators............         142
      (a) Comments..........................................         142
      (b) Commission Determination..........................         144
    7. Clarifying Terms.....................................         146
      (a) Comments..........................................         146
      (b) Commission Determination..........................         149
III. Information Collection Statement.......................         151
IV. Environmental Analysis..................................         158
V. Regulatory Flexibility Act Analysis......................         161
  A. NOPR Proposal..........................................         166
  B. Comments...............................................         167
  C. Commission Determination...............................         169
VI. Document Availability...................................         170
VII. Effective Date and Congressional Notification..........         173
 

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

    1. In this Final Rule, pursuant to section 215 of the FPA,\3\ the 
Commission adopts, with modifications described below, the proposal set 
forth in its March 18, 2010 Notice of Proposed Rulemaking (NOPR) 
requiring the Electric Reliability Organization (ERO) to revise its 
definition of the term ``bulk electric system.'' \4\ The Commission 
directs the ERO, through the ERO's Reliability Standards Development 
Process, to revise the definition to address the Commission's technical 
concerns, as discussed fully below, and ensure that the definition 
encompasses all facilities necessary for operating an interconnected 
electric transmission network. The Commission believes that the best 
way to accomplish these goals is to eliminate the regional discretion 
in the current definition, maintain a bright-line threshold that 
includes all facilities operated at or above 100 kV except defined 
radial facilities, and establish an exemption process and criteria for 
excluding facilities that are not necessary for operating the 
interconnected transmission network. However, this Final Rule allows 
the ERO, in accordance with Order No. 693, to develop an alternative 
proposal for addressing the Commission's concerns with the present 
definition with the understanding that any such alternative must be as 
effective as, or more effective than,\5\ the Commission's proposed 
approach in addressing the identified technical and other concerns, and 
may not result in a reduction in reliability.\6\
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    \3\ 16 U.S.C. 824o.
    \4\ Revision to Electric Reliability Organization Definition of 
Bulk Electric System, Notice of Proposed Rulemaking, 75 FR 14097 
(Mar. 24, 2010), FERC Stats. & Regs. ] 32,654 (2010).
    \5\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, at P 31 (2007), order 
on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
    \6\ See, e.g., Version One Regional Reliability Standard for 
Resource and Demand Balancing, 133 FERC ] 61,063, at P 14 (2010) 
(Noting the Commission's concern that approving a proposed 
Reliability Standard may result in reduced reliability). In 
addition, as a general matter, any proposed regional difference must 
be: (1) More stringent than the continent-wide definition, including 
a regional difference that addresses matters that the continent-wide 
Reliability Standard does not, or (2) necessitated by a physical 
difference in the Bulk-Power System. See 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, at P 291 (2006), order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
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    2. In Order No. 693, the Commission noted its concern that the 
current ``bulk electric system'' definition has the potential for gaps 
in coverage of facilities, and indicated that it would revisit the 
issue. This Final Rule is the next step towards addressing the 
Commission's concerns. The approved changes will help ensure 
reliability and consistency in the bulk electric system classification 
throughout the interconnected United States. The Commission takes this 
action as a continuation of Order No. 693's efforts to ensure that the 
mandatory Reliability Standards fulfill the intent of Congress in 
enacting section 215 of the FPA to protect reliability of the nation's 
Bulk-Power System. The aim of the Final Rule is to eliminate 
inconsistencies across regions, eliminate the ambiguity created by the 
current discretion in NERC's definition of bulk electric system, 
provide a backstop review to ensure that any variations do not 
compromise reliability, and ensure that facilities that could 
significantly affect reliability are subject to mandatory rules. The 
Commission is not adding any new or modified text to its regulations.

I. Background

A. Section 215 of the FPA

    3. On August 8, 2005, the Energy Policy Act of 2005 (EPAct 2005) 
was enacted into law. Title XII of EPAct 2005 added a new section 215 
to the FPA,\7\ which requires a Commission-certified ERO to develop 
mandatory and enforceable Reliability Standards, subject to Commission 
review and approval. Once approved, the Reliability Standards may be 
enforced by the ERO, subject to Commission oversight, or by the 
Commission independently.\8\
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    \7\ Public Law 109-58, Title XII, Subtitle A, 119 Stat. 594, 941 
(2005) (codified at 16 U.S.C. 824o).
    \8\ See 16 U.S.C. 824o(e)(3).

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    4. In February 2006, the Commission issued Order No. 672 \9\ in 
which the Commission certified one organization, the North American 
Electric Reliability Corporation (NERC), as the ERO.\10\
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    \9\ Order No. 672, FERC Stats. & Regs. ] 31,204, order on reh'g, 
Order No. 672-A, FERC Stats. & Regs. ] 31,212.
    \10\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006) 
(certifying NERC as the ERO responsible for the development and 
enforcement of mandatory Reliability Standards), aff'd sub nom. 
Alcoa Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
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B. Order No. 693

    5. On March 16, 2007, in Order No. 693, pursuant to section 215(d) 
of the FPA,\11\ the Commission approved 83 of 107 proposed Reliability 
Standards, six of the eight proposed regional differences, and the 
Glossary of Terms Used in Reliability Standards developed by NERC, the 
Commission-certified ERO. In addition, Order No. 693 addressed the 
applicability of mandatory Reliability Standards to the statutorily 
defined Bulk-Power System.
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    \11\  See Order No. 693, FERC Stats. & Regs. ] 31,242 (directing 
improvements to 56 of the 83 approved Reliability Standards and 
leaving 24 Reliability Standards as pending until further 
information is provided), order on reh'g, Order No. 693-A, 120 FERC 
] 61,053 (2007).
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    6. In Order No. 693, the Commission explained that section 215(a) 
of the FPA broadly defines the Bulk-Power System as:

    Facilities and control systems necessary for operating an 
interconnected electric energy transmission network (or any portion 
thereof) [and] electric energy from generating facilities needed to 
maintain transmission system reliability.\12\
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    \12\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 76.

    The Commission also approved NERC's definition of ``bulk electric 
system,'' which is an integral part of the NERC Reliability Standards 
and is included in the NERC Glossary of Terms Used in Reliability 
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Standards (NERC Glossary):

    As defined by the Regional Reliability Organization, the 
electrical generation resources, transmission lines, 
interconnections with neighboring systems, and associated equipment, 
generally operated at voltages of 100 kV or higher. Radial 
transmission facilities serving only load with one transmission 
source are generally not included in this definition.\13\
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    \13\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 75 n.47 
(quoting NERC's definition of ``bulk electric system'').

    7. The Commission approved NERC's definition of ``bulk electric 
system'' with reservations. The Commission stated in Order No. 693 
that, ``at least for an initial period, the Commission will rely on the 
NERC definition of `bulk electric system' and NERC's registration 
process to provide as much certainty as possible regarding the 
applicability to and the responsibility of specific entities to comply 
with the Reliability Standards.'' \14\ In approving the use of NERC's 
definition of ``bulk electric system,'' the Commission stated that 
``[it] remains concerned about the need to address the potential for 
gaps in coverage of facilities.'' \15\
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    \14\ Id. P 75; see also Order No. 693-A, 120 FERC ] 61,053 at P 
19 (``the Commission will continue to rely on NERC's definition of 
bulk electric system, with the appropriate regional differences, and 
the registration process until the Commission determines in future 
proceedings the extent of the Bulk-Power System'').
    \15\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 77 
(footnotes omitted). For example, the Commission noted that some 
regional definitions of bulk electric system exclude facilities 
below 230 kV and transmission lines that serve Washington, DC and 
New York City and the Commission stated its intent to address this 
matter in a future proceeding. Id.
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C. NERC's June 14, 2007 Filing

    8. In a June 14, 2007 filing, NERC submitted the regional 
definitions of ``bulk electric system.'' \16\ NERC represented that 
``[e]ach Regional Entity utilizes the definition of bulk electric 
system in the [NERC Glossary of Terms Used in Reliability Standards]; 
however, as permitted by that definition * * * several Regional 
Entities define specific characteristics or criteria that the Regional 
Entity uses to identify the bulk electric system facilities for its 
members.[\17\] In addition, the Reliability Standards apply to load 
shedding and special protection relay facilities below 100 kV, which 
are monitored by Regional Entities, in compliance with NERC's 
Reliability Standards.'' \18\
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    \16\ NERC Informational Filing in Response to Paragraph 77 of 
Order No. 693, Docket No. RM06-16-000 (Jun. 14, 2007) (June 2007 
Filing).
    \17\ Id. at 7. NERC also noted that the Texas Regional Entity, 
Florida Reliability Coordinating Council (FRCC), Midwest Reliability 
Organization, and SERC Reliability Corporation use the NERC 
definition of bulk electric system without modification. In a 
supplemental filing, NERC informed the Commission that Western 
Electricity Coordinating Council (WECC) uses the NERC definition 
alone in its implementation of Regional Entity activities. See NERC 
Supplemental Informational Compliance Filing, Docket No. RM06-16-000 
(Mar. 6, 2009). Three other Regional Entities, ReliabilityFirst 
Corporation (ReliabilityFirst), Southwest Power Pool (SPP Regional 
Entity), and Northeast Power Coordinating Council, Inc. (NPCC), 
stated that they use the NERC definition supplemented with 
additional criteria. For example, SPP Regional Entity indicated that 
it uses the criteria specified in the NERC Statement of Registry 
Criteria (with one exception). ReliabilityFirst supplemented the 
NERC definition with specific voltage-based inclusions and 
exclusions. For example, ReliabilityFirst includes ``lines operated 
at voltage of 100 kV or higher.'' June 2007 Filing at 10. 
ReliabilityFirst excludes certain radial facilities, balance of 
generating plant control and operation functions, and ``all other 
facilities operated at voltages below 100 kV.''
    \18\ June 2007 Filing at 7.
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    9. As noted in the NOPR, NERC's June 2007 Filing indicated that 
NPCC uses the NERC definition of ``bulk electric system'' supplemented 
by additional criteria. Unlike the supplemental criteria of other 
Regional Entities, however, NPCC utilizes a significantly different 
approach to identifying bulk electric system elements. According to 
NERC, NPCC identifies elements of the bulk electric system using an 
impact-based methodology, as opposed to a voltage-based methodology. 
Further, as part of its approach to defining the ``bulk electric 
system,'' NPCC includes its own definition of ``bulk power system.'' 
\19\
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    \19\ ``The interconnected electrical systems within northeastern 
North America comprised of system elements on which faults or 
disturbances can have a significant adverse impact outside of the 
local area.'' Id., Attachment 1 (NPCC Document A-10, Classification 
of Bulk Power System Elements (Apr. 28, 2007)).
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    10. According to NERC, NPCC analyzes all system elements within its 
footprint regardless of size (voltage) to determine their impact based 
on its ``bulk electric system'' definition. NPCC also utilizes a 
guidance document, which provides further information on the NPCC 
definition of ``bulk power system'' and how it is applied.\20\
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    \20\ Id.
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D. NPCC's Identification of Bulk Electric System Facilities

    11. In a December 2008 Order, the Commission directed NERC and NPCC 
to submit to the Commission a comprehensive list of bulk electric 
system facilities located within the United States portion of the NPCC 
region.\21\ The Commission explained that there appeared to be 
conflicting lists of bulk electric system elements developed by one of 
the balancing authorities in the United States portion of the NPCC 
region and it was not clear which, if any, of the lists were submitted 
to NPCC or approved by NPCC's Task Force on System Studies. In a 
compliance filing, NERC and NPCC indicated that the ``NPCC Approved 
Bulk Electric System List'' of June 2007 was the only listing of bulk 
electric system facilities approved by NPCC and is the current list of 
facilities within the U.S. portion of NPCC to which the NERC 
Reliability Standards apply.\22\

[[Page 72913]]

The filing indicated that a majority of the 115 kV and 138 kV 
transmission facilities in the NYISO Balancing Authority Area of the 
NPCC region are excluded from the NPCC list of bulk electric system 
facilities, including those associated with nuclear power plants, and 
thus are excluded from compliance with mandatory Reliability 
Standards.\23\ The information provided by NPCC also indicated that 
numerous transmission lines at 100 kV or above that interconnect with 
registered generation facilities are excluded from NPCC's list of bulk 
electric system facilities.
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    \21\ North American Electric Reliability Corp., 125 FERC ] 
61,295 (2008) (December 2008 Order).
    \22\ NERC and NPCC Compliance Filing at 5, Docket No. RC09-3-000 
(Feb. 20, 2009). The February 20 Compliance Filing also indicated 
that the NPCC approved list of bulk electric system elements was not 
developed pursuant to NPCC's Document A-10, Classification of Bulk 
Power System Elements, identified in the June 2007 Filing. Rather, 
the approved NPCC list was developed pursuant to an earlier version 
of the NPCC impact-based methodology.
    \23\ In addition, NPCC excludes approximately seven higher 
voltage (e.g., 230 kV, 345 kV and 500 kV) transmission facilities, 
some connecting to nuclear power plants.
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    12. In September 2009, NERC and NPCC submitted a compliance filing 
in which NPCC evaluated the impact and usefulness of a 100 kV ``bright-
line'' ``bulk electric system'' definition as well as another optional 
method, which utilizes Transmission Distribution Factor calculations to 
determine reliability impacts. The NPCC definition would exclude radial 
network portions of the transmission system, as opposed to radial 
lines.\24\ However, NPCC stated that it continues to believe that its 
current impact-based approach provides an adequate level of reliability 
and, therefore, intends to continue to apply the impact-based approach 
in classifying its bulk electric system elements.\25\
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    \24\ NERC and NPCC Compliance Filing and Assessment of Bulk 
Electric System Report, Docket No. RC09-3-000 (Sep. 21, 2009). NPCC 
would define ``radial portions of the transmission system to include 
(1) an area serving load that is connected to the rest of the 
network at a single transmission substation at a single transmission 
voltage by one or more transmission circuits; (2) tap lines and 
associated facilities which are required to serve local load only; 
(3) transmission lines that are operated open for normal operation; 
or (4) additionally as an option, those portions of the NPCC 
transmission system operated at 100 kV or higher not explicitly 
designated as a bulk electric system path for generation which have 
a one percent or less participation in area, regional or inter 
regional power transfers. Id. at 11.
    \25\ Id. at 7-8; see also id. at 14 (``If directed by the 
Commission to adopt the developed [bulk electric system] definition 
for U.S. Registered Entities within the NPCC footprint, NPCC would 
need additional time to carefully consider and develop a more 
extensive and detailed implementation plan.'').
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E. Notice of Proposed Rulemaking

    13. On March 18, 2010, the Commission issued a NOPR proposing to 
direct NERC to revise the definition of ``bulk electric system'' in the 
NERC Glossary. The current ``bulk electric system'' definition provides 
Regional Entities discretion to define ``bulk electric system,'' 
including the ability to exclude facilities 100 kV or above, without 
ERO or Commission oversight. The Commission's proposed revised 
definition would continue to include all facilities rated above 100 kV 
and eliminate regional variations, providing a consistent 
identification of bulk electric system facilities across the nation's 
reliability regions. The proposal called for Commission and NERC 
approval for exempting facilities that would otherwise qualify as part 
of the bulk electric system on a facility-by-facility basis.
    14. The NOPR identified inconsistencies between regions that 
resulted from the existing definition, such as NPCC not including two 
115 kV transmission lines as part of the bulk electric system in its 
region even though the sections of these same lines that connect to 
PJM's balancing authority area are considered bulk electric system 
elements within the ReliabilityFirst footprint. As an additional 
example, seven higher voltage (e.g., 230 kV, 345 kV, and 500 kV) 
transmission facilities (some connecting to nuclear power plants) 
excluded from the list of bulk electric system facilities in NPCC would 
be included in other regions. Further, the NOPR provided several 
examples of disturbances that either began on or were propagated by 
100-200 kV facilities including a February 26, 2008 event in FRCC 
originating at a 138 kV facility that resulted in the loss of 24 
transmission lines and 4,300 MW of generation.
    15. The Commission issued the NOPR on March 18, 2010, and required 
that comments be filed within 45 days after publication in the Federal 
Register.\26\ More than eighty comments and reply comments to the NOPR 
proposal were submitted to the Commission.\27\ Upon consideration of 
the comments, the Commission modifies certain proposals from the NOPR 
in this Final Rule, as described below.
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    \26\ See 75 FR 14097 (Mar. 24, 2010).
    \27\ A list of commenters appears in Appendix A.
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II. Discussion

A. Overview

    16. After consideration of the comments submitted, the Commission 
adopts the NOPR's proposal with some modifications. The Commission 
directs the ERO to revise the definition of ``bulk electric system'' 
through the NERC Standards Development Process to address the 
Commission's concerns discussed herein. The Commission believes the 
best way to address these concerns is to eliminate the Regional 
Entities' discretion to define ``bulk electric system'' without ERO or 
Commission review, maintain a bright-line threshold that includes all 
facilities operated at or above 100 kV except defined radial 
facilities, and adopt an exemption process and criteria for excluding 
facilities that are not necessary to operate an interconnected electric 
transmission network. However, NERC may propose a different solution 
that is as effective as, or superior to, the Commission's proposed 
approach in addressing the Commission's technical and other concerns so 
as to ensure that all necessary facilities are included within the 
scope of the definition.
1. Definition of Bulk Electric System
(a) Commission Authority
    17. In the NOPR, the Commission proposed, pursuant to section 
215(d)(5) of the FPA and Sec.  39.5(f) of our regulations, to require 
NERC to submit a revised NERC definition of ``bulk electric system'' 
that provides a 100 kV threshold for facilities that are included in 
the bulk electric system and eliminates the currently-allowed 
discretion of a Regional Entity to define ``bulk electric system'' 
within its system without NERC or Commission oversight.
(1) Comments
    18. Several commenters argue that the Commission's proposal exceeds 
its statutory authority.\28\ Other commenters contend that the 
Commission's proposal is inconsistent with the statutory regime 
envisioned in section 215 of the FPA, requiring the Commission to defer 
to the ERO on technical issues and for the ERO to have primary 
responsibility for developing specific Reliability Standards.
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    \28\ See, e.g., APPA/NRECA, NYPSC, NYSRC, EEI, Joint Western 
Commenters, NERC, Snohomish, Tacoma Power, and PGE. Note that 
although the parties we have identified as the ``Joint Western 
Commenters'' submitted separate comments, the comments were 
virtually identical. Consequently, we cite their comments as a 
single group.
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(i) NERC Standards Development Process and Deference to NERC and the 
Regional Entities
    19. NERC supports the Commission's objectives of ensuring a common 
understanding and consistent application of ``bulk electric system'' 
across the regions, while allowing variations to the definition based 
on reliability. However, NERC objects to the Commission making 
unilateral decisions with respect to the definition, as it did in the 
NOPR, rather than allowing this issue to be addressed through the NERC 
Reliability Standards

[[Page 72914]]

Development Process.\29\ NERC states that the NERC Glossary of Terms is 
part-and-parcel of the Reliability Standards and therefore falls under 
the same section 215 process. NERC argues that the Commission may order 
the ERO, pursuant to section 215(d)(5) of the FPA, to submit a proposed 
Reliability Standard or modification to a Reliability Standard to the 
Commission. Following this submission, NERC continues, the Commission 
may then approve the proposal or remand it to the NERC Reliability 
Standards Development Process for further consideration.
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    \29\ NERC at 8-11.
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    20. NERC states that by directing this change, the Commission is 
bypassing the NERC Reliability Standards Development Process, and the 
Commission will not have the opportunity to consider NERC's guidance in 
developing an equally effective and perhaps superior alternative. NERC 
states that the approach in the Commission's NOPR would accomplish 
indirectly that which it is prohibited from doing directly, in 
contravention of well-established judicial precedent. NERC notes that 
the Commission refrained from taking similar unilateral action in Order 
No. 693. NERC requests the Commission clarify in the Final Rule that 
any modification to the definition of bulk electric system be 
accomplished through the NERC Reliability Standards Development 
Process.
    21. Similarly, EEI, Duke Energy, APPA/NRECA, and other commenters 
assert that the Commission should defer to the NERC Reliability 
Standards Development Process, and allege that the proposal 
unreasonably departs from the Commission's precedent in Order No. 693.
    22. Snohomish also asserts that the proposed rule fails to defer to 
the technical expertise of the regional reliability organizations and 
inappropriately interferes in the local work of Snohomish's Board 
regarding decisions on levels of service.
    23. TAPS states that Congress did not intend for the Commission to 
undertake a facility-by-facility review of all facilities above 100 kV, 
and that the proposed rule is contrary to section 215's apportionment 
of primary responsibility for reliability administration to the 
ERO.\30\ Additionally, TAPS states that the Commission's proposed 
facility-by facility review would not satisfy section 215's goal of 
effective and efficient reliability administration.
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    \30\ TAPS at 4; see also Snohomish at 22-28.
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(ii) Bulk-Power System
    24. NYSRC argues that section 215 does not provide a ``bright-
line'' test for Bulk-Power System facilities and states that the 
statutory intent of section 215 limits the Commission's jurisdiction to 
facilities that are necessary for the reliable operation of the Bulk-
Power System.\31\ Several commenters state that the Commission's 
proposal exceeds its statutory authority as described in the definition 
of ``Bulk-Power System'' because the proposed definition of bulk 
electric system would likely encompass facilities not necessary for 
operating the interconnected network,\32\ and that the statutory 
definitions of ``Reliability Standard'' and ``Reliable Operation'' 
refer to protecting the system from instability, uncontrolled 
separation, or cascading failures, not local-area outages.\33\ The 
commenters contend that a functional test, such as NPCC's current 
material impact assessment would be more appropriate since it is 
tailored to include facilities that are necessary for operation of an 
interconnected electric energy transmission network.
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    \31\ NYSRC at 7-8.
    \32\ See, e.g., NYPSC, NYSRC, Duke Energy, Indicated New York 
Transmission Owners, Snohomish and Joint Western Commenters.
    \33\ NYSRC at 7.
---------------------------------------------------------------------------

    25. GTC/GSOC add that the proposed change would make the definition 
of ``bulk electric system'' broader than the statutory definition of 
``Bulk-Power System,'' and therefore would exceed the Commission's 
authority.
(iii) Distribution Facilities
    26. Several other parties assert that the proposed rule will 
inappropriately include distribution facilities as part of the bulk 
electric system, and argue that the Commission's proposal is contrary 
to Congress's definition of ``Bulk-Power System'' and the Commission's 
own precedent regarding transmission versus local distribution.\34\ 
Several parties state that FPA section 215 specifically excludes 
distribution facilities and that they therefore should be excluded from 
the definition of ``bulk electric system.'' Constellation/CENG argues 
that the Commission's proposal to exclude from the definition of ``bulk 
electric system'' ``[r]adial transmission facilities serving only load 
with one transmission source'' is too limiting. Constellation/CENG 
believes that this approach will include local distribution facilities 
in a manner contrary to section 215 of the FPA.
---------------------------------------------------------------------------

    \34\ See, e.g., Constellation/CENG, Dow, Duke Energy, GTC/GSOC, 
Hydro-Qu[eacute]bec, Indicated New York Transmission Owners, Joint 
Western Commenters, NARUC, NV Energy, NYSRC, PGE, Public Power 
Council, Snohomish Tacoma Power, TIEC.
---------------------------------------------------------------------------

    27. The NYPSC contends that the Commission's proposal exceeds its 
jurisdiction by encompassing local distribution facilities that are not 
necessary for operating the interconnected transmission network. It 
states that 138 kV facilities in New York City operate above 100 kV but 
do not serve a bulk system function due to the high concentration of 
load served by these lines. It asserts that transmission facilities 
such as these that move power between Bulk-Power System and 
distribution facilities do not affect the reliable operation of the 
bulk system. The New York Transmission Owners contend that the Long 
Island Power Authority's (LIPA) system east of the Northport system is 
composed of 138 kV lines with limited connections to other areas that 
is not affected by other regional flows, but instead mirrors a radial 
system feeding local load.
    28. Snohomish, Consumers Energy, PGE, Tacoma Power and other 
commenters argue that the Commission's proposal, unless clarified to 
exclude distribution facilities, is contrary to statute because section 
215 directs that distribution facilities should be excluded on a 
functional basis regardless of voltage.\35\ Snohomish argues that the 
Commission's proposal departs from its previous determinations in Order 
No. 693 regarding the difference between transmission and distribution 
systems.\36\ Further, it states that section 215 emphasizes how 
facilities are used rather than their voltage level, and asserts that 
the NOPR's definition runs counter to the statutory definition.
---------------------------------------------------------------------------

    \35\ See, e.g., Snohomish at 20-22; PGE at 3-6; Tacoma Power at 
2-3.
    \36\ Snohomish at 20-21 (citing Order No. 693, FERC Stats. and 
Regs. ] 31,242 at P 23 n.20).
---------------------------------------------------------------------------

(2) Commission Determination
(i) Overview
    29. We disagree that the Commission exceeded its statutory 
authority by directing the ERO to revise the definition of bulk 
electric system in its Glossary of Terms. We agree with NERC that the 
NERC Glossary is part of the Reliability Standards and therefore falls 
under the same section 215 process. Pursuant to section 215(d)(5), the 
Commission may order the ERO to submit a proposed Reliability Standard 
or a modification to a Reliability Standard that addresses a specific 
matter. Here, by directing a revision to the definition of bulk 
electric system, the Commission orders a modification to a definition 
of a term contained in a

[[Page 72915]]

number of Commission-approved Reliability Standards.\37\ Because this 
term is contained within Commission-approved Reliability Standards, the 
Commission has the authority to direct the ERO to develop a 
modification of the definition of a defined term contained in the 
Reliability Standards under the process delineated in section 215 of 
the FPA.
---------------------------------------------------------------------------

    \37\ See, e.g., CIP-002-2, COM-001-1.1, EOP-004-1, EOP-005-1, 
FAC-008-1, FAC-009-1, FAC-010-2, FAC-011-2, FAC-013-1, FAC-014-2, 
IRO-001-1.1, IRO-002-1, IRO-003-2, IRO-004-1, IRO-005-2, IRO-006-
4.1, NUC-001-2, PER-001-0.1, PER-002-0, PER-003-0, PRC-004-1, PRC-
005-1, PRC-021-1, PRC-022-1, PRC-023-1, TOP-001-1, TOP-002-2, TOP-
008-1, TPL-002-0, TPL-003-0, TPL-004-0.
---------------------------------------------------------------------------

    30. For the reasons discussed more fully below, the Commission 
finds that the current definition of bulk electric system is 
insufficient to ensure that all facilities necessary for operating an 
interconnected electric energy transmission network are included under 
the ``bulk electric system'' rubric. Therefore, pursuant to section 
215(d)(5) of the FPA,\38\ the Commission directs the ERO to modify, 
through the Standards Development Process, the definition of ``bulk 
electric system'' to address the Commission's technical and policy 
concerns described more fully herein. The Commission believes the best 
way to address these concerns is to eliminate the regional discretion 
in the ERO's current definition, maintain the bright-line threshold 
that includes all facilities operated at or above 100 kV except defined 
radial facilities, and establish an exemption process and criteria for 
excluding facilities the ERO determines are not necessary for operating 
the interconnected transmission network. It is important to note that 
the Commission is not proposing to change the threshold value already 
contained in the definition, but rather seeks to eliminate the 
ambiguity created by the current characterization of that threshold as 
a general guideline.\39\
---------------------------------------------------------------------------

    \38\ 16 U.S.C. 824o(d)(5).
    \39\ We note that all regions except NPCC currently utilize 100 
kV as a general threshold.
---------------------------------------------------------------------------

    31. In accordance with Order No. 693, the ERO may develop an 
alternative proposal for addressing the Commission's concerns with the 
present definition with the understanding that any such alternative 
must be as effective as, or more effective than, the Commission's 
proposed approach in addressing the identified technical and other 
concerns,\40\ and may not result in a reduction in reliability.\41\ If 
the ERO decides to propose an alternative approach, it must explain in 
detail, and with a technical record sufficient enough for the 
Commission to make an informed decision, how its alternative addresses 
each of the Commission's concerns in a manner that is as effective as, 
or more effective than, the Commission's identified solution.\42\ 
Additionally, the ERO would need to address the factors the Commission 
will consider in determining whether a proposed Reliability Standard is 
just and reasonable, as outlined in Order No. 672. In particular, Order 
No. 672 states that proposed Reliability Standards ``should be clear 
and unambiguous regarding what is required and who is required to 
comply.'' \43\ Another factor indicates that a ``proposed Reliability 
Standard should be designed to apply throughout the interconnected 
North American Bulk-Power System, to the maximum extent this is 
achievable with a single Reliability Standard.'' \44\ As Order No. 672 
further requires, any proposed regional difference must be: (1) More 
stringent than the continent-wide definition, including a regional 
difference that addresses matters that the continent-wide definition 
does not; or (2) necessitated by a physical difference in the Bulk-
Power System.\45\
---------------------------------------------------------------------------

    \40\ Order No. 693, FERC Stats. & Regs. 31,242 at P 31.
    \41\  See, e.g., Version One Regional Reliability Standard for 
Resource and Demand Balancing, 133 FERC ] 61,063, at P 14 (2010); 
North American Electric Reliability Corporation Reliability 
Standards Development and NERC and Regional Entity Enforcement, 132 
FERC ] 61,217, at P 112 (2010).
    \42\ Order No. 693 FERC Stats. & Regs. 31,242 at P 31.
    \43\ See Order No. 672, FERC Stats. & Regs. 31,204 at P 325.
    \44\ See id. P 331.
    \45\ Id. P 291.
---------------------------------------------------------------------------

    32. The Commission further finds that revising the definition to 
address the identified concerns is a significant step toward improving 
the reliability of the Bulk-Power System in North America because it 
protects the reliability of the bulk electric system and provides 
clarity and consistency across the nation's reliability regions in 
identifying bulk electric system facilities.
    33. The Commission directs the ERO to submit these modifications no 
later than one year from the effective date of this Final Rule. We will 
address each proposal and the specific comments received on each 
proposal in the remainder of this Final Rule.
(ii) NERC Standards Development Process and Deference to NERC and the 
Regional Entities
    34. With regard to the concerns raised by some commenters about the 
prescriptive nature of the Commission's proposed modifications, we 
agree that, consistent with Order No. 693, a direction for modification 
should not be so overly prescriptive as to preclude the consideration 
of viable alternatives that may produce an equally effective or 
efficient solution. However, some guidance is necessary, as the 
Commission explained in Order No. 693:

    [I]n identifying a specific matter to be addressed in a 
modification * * * it is important that the Commission provide 
sufficient guidance so that the ERO has an understanding of the 
Commission's concerns and an appropriate, but not necessarily 
exclusive, outcome to address those concerns. Without such direction 
and guidance, a Commission proposal to modify a Reliability Standard 
might be so vague that the ERO would not know how to adequately 
respond.\46\
---------------------------------------------------------------------------

    \46\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 185.

    35. Thus, due to the importance of the bulk electric system 
definition to our overall ability to carry out the mandates of section 
215, and the problems we have identified with the current definition, 
we provide specific details regarding the Commission's expectations. We 
intend by doing so to provide useful direction to assist in the 
Reliability Standards Development Process, not to impede it. As we 
explained in Order No. 693, we find that this is consistent with 
statutory language that authorizes the Commission to direct the ERO to 
submit a modification ``that addresses a specific matter'' if the 
Commission considers it appropriate to carry out section 215 of the 
FPA.\47\ Although some commenters' contend that we should ``defer to 
regional expertise,'' we note that the statute specifies that we should 
``give due weight'' to the ERO's technical expertise.\48\ The 
Commission's action here does not conflict with that statutory 
requirement. In this Final Rule, we have considered commenters' 
concerns and, although we have identified a proposed approach, the 
Commission provides flexibility by directing the ERO to address the 
underlying issue through the Reliability Standards Development 
Process.\49\ Consequently, consistent with Order No. 693, we clarify 
that where the Final

[[Page 72916]]

Rule identifies a concern and offers a specific approach to address 
that concern, we will consider an equivalent alternative approach 
provided that the ERO demonstrates that the alternative will adequately 
address the Commission's underlying concern or goal as efficiently and 
effectively as the Commission's proposal.\50\
---------------------------------------------------------------------------

    \47\ Id. P 186 (citing 16 U.S.C. 824o(d)(5)).
    \48\ 16 U.S.C. 824o(d)(2); see also Order No. 672, FERC Stats. & 
Regs. ] 31,204 at P 345 (``We do not agree that giving due weight 
means a rebuttable presumption that the Reliability Standard meets 
the statutory requirement of being just, reasonable, not unduly 
discriminatory or preferential, and in the public interest.'').
    \49\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 186.
    \50\ Id.
---------------------------------------------------------------------------

(iii) Bulk-Power System
    36. With regard to the alleged conflict between ``bulk electric 
system'' and ``Bulk-Power System,'' the Commission noted in Order No. 
693 that Congress chose to create a new term, ``Bulk-Power System,'' 
with a definition that is distinct from the term of art (``bulk 
electric system'') used by industry, and thus there is an intentional 
distinction between the Bulk-Power System and the bulk electric 
system.\51\ The Commission further noted that the statutory term 
``Bulk-Power System'' has not been definitively defined but does not 
establish a voltage threshold limit of applicability or configuration 
as does the NERC definition of ``bulk electric system,'' and therefore 
may reach more facilities than NERC's definition of ``bulk electric 
system.'' \52\
---------------------------------------------------------------------------

    \51\ Id. P 76.
    \52\ See id. P 76; Order No. 693-A, 120 FERC ] 61,053 at P 17-
18.
---------------------------------------------------------------------------

(iv) Distribution Facilities
    37. The Commission has stated that the statutory term ``Bulk-Power 
System'' defines the jurisdiction of the Commission.\53\ The Commission 
noted that it has not defined the extent of the facilities covered by 
the Bulk-Power System, but that Congress specifically exempted 
``facilities used in the local distribution of electric energy'' from 
the definition. FPA section 215 defines the term ``Bulk-Power System'' 
as encompassing the ``facilities and control systems necessary for 
operating an interconnected electric energy transmission network (or 
any portion thereof).'' \54\ In ascertaining the extent of the 
facilities included in the ``Bulk-Power System'' definition, the 
Commission's prior discussion regarding the inclusion of generation 
facilities as part of the Bulk-Power System is instructive. In the 
discussion, the Commission stated that, ``if electric energy from a 
generating facility is needed to maintain a reliable transmission 
system, that facility is part of the Bulk-Power System with respect to 
the energy it generates that is needed to maintain reliability.'' \55\ 
Similarly, several 115 and 138 kV facilities that some entities term as 
``distribution'' may be needed to reliably operate the interconnected 
transmission system. Determining where the line between 
``transmission'' and ``local distribution'' lies, which includes an 
inquiry into which lower voltage ``transmission'' facilities are 
necessary to operate the interconnected transmission system, should be 
part of the exemption process the ERO develops.
---------------------------------------------------------------------------

    \53\ Order No. 693-A, 120 FERC ] 61,053 at P 19.
    \54\ 16 U.S.C. 824o(a)(1).
    \55\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 71.
---------------------------------------------------------------------------

    38. The Commission disagrees with comments that appear to assert 
that the Commission's jurisdiction extends only to facilities that 
could, if improperly operated, singularly cause cascading outages, 
uncontrolled separation or instability. By this narrow metric, the 
facilities that caused the 2003 Blackout would not be viewed as 
critical since not one of the individual facilities caused the outage. 
In defining jurisdictional facilities, section 215(a)(1) focuses on 
whether facilities are necessary to operate the interconnected 
transmission system, not solely on the consequences of unreliable 
operation of those facilities. Lower voltage facilities needed to 
reliably operate the grid tend to operate in parallel with other high 
voltage and extra high voltage facilities, interconnect significant 
amounts of generation sources and may operate as part of a defined flow 
gate. These parallel facilities operated at 100-200 kV will experience 
similar loading as higher voltage facilities at any given time. 
Additionally, the lower voltage facilities will be relied upon during 
contingency scenarios.
    39. For example, we are not persuaded by the NYPSC's argument that 
the 138 kV system in New York, and specifically the 138 kV system 
including those facilities in the Astoria area, are all distribution 
facilities. We do not believe that most of these facilities are local 
distribution because: the facilities are not primarily radial in 
character, as they are connected to the 345 kV network in the Astoria 
area at over six different points; the 138 kV system is networked 
amongst itself; power flows both in and out of the system into both 
NYISO and PJM facilities depending on time of day and loading; and the 
system is not constrained to a comparatively restricted geographical 
area due to multiple interconnections. The 138 kV system in the Astoria 
area includes six major substations that are interconnected at 345 kV 
to both NYISO and PJM facilities that are integral parts of the Eastern 
Interconnection. There are ten 138 kV phase angle regulators connecting 
the 345 kV stations to the 138 kV network, which are necessary to 
control the appropriate distribution of power flows between the 345 kV 
and 138 kV systems to accommodate power transfers from upstate New York 
and PJM into southeastern New York. In addition, there are 
approximately 9,000 MW of capacity resources directly connected to the 
138 kV network in the New York City area at different points, 2,000 MW 
of which is connected in the Astoria area. Similarly over 10,000 MW of 
customer firm demand in the area is supplied from the 138 kV to lower 
voltage levels via step-down transformers. None of these 
characteristics is consistent with any reasonable definition of local 
distribution.\56\ To the extent that any individual line would be 
considered to be local distribution, that line would not be considered 
part of the bulk electric system.
---------------------------------------------------------------------------

    \56\ This example illustrates one of the deficiencies of the 
NPCC impact-based approach for identifying bulk electric system 
facilities, discussed more fully below.
---------------------------------------------------------------------------

    40. Nor are we persuaded by the Indicated New York Transmission 
Owners' statement that LIPA's service territory--which includes a 
majority of Long Island, identified as Zone K by NYISO and, as reported 
in the NYISO ``Load & Capacity Data,'' had a 2010 summer peak load of 
5,300 MW--``mirrors a radial system feeding local load.'' As with the 
138 kV network in New York City discussed above, the LIPA system 
contains significant capacity resources (5,700 MW), is interconnected 
with other portions of NYISO, ISO-NE, and PJM, and its operations 
affect and depend on operations in other portions of New York, as well 
as New Jersey and Connecticut.\57\
---------------------------------------------------------------------------

    \57\ See http://www.nyiso.com/public/webdocs/services/planning/reliability_assessments/AppxE.pdf and http://www.nyiso.com/public/webdocs/services/planning/planning_data_reference_documents/2010_GoldBook_Public_Final_033110.pdf.
---------------------------------------------------------------------------

    41. Some commenters allege that the proposal is an unexpected 
departure from the Commission's previous actions regarding the bulk 
electric system in Order No. 693. To the contrary, the Commission was 
very clear about its reservations in accepting the NERC bulk electric 
system definition in Order No. 693 and expressly accepted the 
definition for an ``initial period'' \58\ subject to subsequent 
review.\59\ The

[[Page 72917]]

Commission's action here will ensure that all facilities necessary to 
maintain a reliable transmission system are included as part of the 
bulk electric system and thus will be subject to ERO and Commission 
oversight.\60\
---------------------------------------------------------------------------

    \58\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 75.
    \59\ In accepting NERC's definition of ``bulk electric system,'' 
the Commission explained: ``Although we are accepting the NERC 
definition of bulk electric system and NERC's registration process 
for now, the Commission remains concerned about the need to address 
the potential for gaps in coverage of facilities. For example, some 
current regional definitions of bulk electric system exclude 
facilities below 230 kV and transmission lines that serve major load 
centers such as Washington, DC and New York City. The Commission 
intends to address this matter in a future proceeding.''
    Id. P 77 (footnotes omitted).
    \60\ While the Commission seeks to ensure that the definition of 
``bulk electric system'' includes all facilities 100 kV or above 
that are necessary for reliable operation, our action here is not 
intended to determine the extent of the facilities included in the 
Bulk-Power System. As stated in Order No. 693-A, the Commission 
believes that the Bulk-Power System reaches farther than those 
facilities that are included in NERC's definition of the bulk 
electric system, but we have not definitively defined the extent of 
the facilities covered by the Bulk-Power System, and we are not 
doing so here. See Order No. 693-A at P 17-18.
---------------------------------------------------------------------------

(b) Scope of the Definitional Change of ``Bulk Electric System''
(1) NOPR Proposal
    42. In the NOPR, the Commission proposed to direct the ERO to 
revise its definition of the term ``bulk electric system'' to include 
all electric transmission facilities with a rating of 100 kV or 
above.\61\ The Commission's proposal further states that a Regional 
Entity must seek ERO and Commission approval before exempting any 
facility rated at 100 kV or above from compliance with mandatory 
Reliability Standards.
---------------------------------------------------------------------------

    \61\ NOPR, FERC Stats. & Regs. ] 32,654 at P 1.
---------------------------------------------------------------------------

(2) Comments
    43. NERC argues that the proposed definitional change would have a 
much broader impact than acknowledged by the Commission. Among other 
things, NERC states that the proposed change to ``rated at'' from the 
current ``operated at'' will dramatically expand the scope of 
facilities and entities affected by the change. NERC states that the 
proposal will unnecessarily include some facilities that entities built 
at higher voltage levels (i.e., 138 kV) to accommodate future load 
growth while presently operating the facilities at lower voltages 
(i.e., 69 kV).
    44. Several commenters seek clarification that the definition of 
``bulk electric system'' is not intended to supersede voltage 
thresholds specified in specific Reliability Standards.\62\ For 
example, Reliability Standard FAC-003 generally applies to transmission 
lines 200 kV and above.
---------------------------------------------------------------------------

    \62\ See, e.g., EEI, Dominion Power, National Grid, and Southern 
Company.
---------------------------------------------------------------------------

    45. Joint Western Commenters and Bay Area Municipal argue that the 
definition of ``bulk electric system'' that the Commission ultimately 
accepts should clarify that if an element is determined to be part of 
the bulk electric system, such an element is not necessarily a 
transmission asset.
    46. Joint Western Commenters state that an entity should be able to 
de-register as a Distribution Provider and Load-Serving Entity if it 
does not own any bulk electric system elements.\63\ They state that an 
entity with no elements in the bulk electric system cannot be 
considered an owner or operator of the bulk electric system, and 
because operation of that entity's distribution assets has no material 
impact on the bulk electric system, it should be exempt from regulation 
as transmission and the need to register and participate in the 
regulatory framework for transmission facilities. These commenters also 
state that requiring an entity with no bulk electric system elements to 
comply with the mandatory Reliability Standards would be an unnecessary 
burden on the entity, and a diversion of resources by the Regional 
Entity, NERC, and the Commission.\64\
---------------------------------------------------------------------------

    \63\ Joint Western Commenters at section IV.B.
    \64\ Id.
---------------------------------------------------------------------------

    47. Although EEI supports the Commission's proposal not to change 
the ERO treatment of radials under the ERO definition of bulk electric 
system, several commenters raise concerns about the scope of the 
exemption going forward.
    48. Several commenters believe that the statement in the NOPR that 
radial lines would not be part of the bulk electric system is not 
enough to remove ambiguity.\65\ APPA/NRECA notes that the NOPR leaves a 
question open as to whether radial lines would be automatically exempt 
under the bulk electric system definition or whether entities would 
have to go through the multi-tiered exemption process.\66\ Other 
commenters point out that certain Regional Entities currently provide a 
clearer and more valid approach to determining whether facilities 
should be classified as exempt radial facilities. They state for 
example that the WECC process includes additional detail regarding 
demarcation points and system characteristics that are important in 
defining ``radial.'' Commenters also state that the WECC transmission 
system includes radial lines, where a backup feed is possible, but is 
normally open, and a utility should not be penalized for having a 
secondary feed via a normally open line by requiring it to 
automatically become part of the bulk electric system. The bright line 
100 kV threshold would encourage small utilities to choose not to 
provide backup service options, reducing overall customer service.
---------------------------------------------------------------------------

    \65\ See, e.g., id. at section III.C.
    \66\ APPA/NRECA at 19-23.
---------------------------------------------------------------------------

    49. Arguing that NERC's current definition of radial transmission 
facilities, defined as ``facilities serving only load with one 
transmission source,'' is too narrow, National Grid supports adoption 
of a broader definition that includes tap lines and associated 
facilities used to serve local load only, and transmission lines that 
are operated in an open position for normal operations.\67\
---------------------------------------------------------------------------

    \67\ National Grid at 10.
---------------------------------------------------------------------------

    50. ELCON states that the Final Rule should specify that radial 
lines do not have to go through the exemption process.
    51. FRCC states the Commission should afford the Regional Entities 
sufficient time to complete their efforts to define the scope of the 
bulk electric system, since they are in the process of establishing 
criteria for the exclusion of facilities as ``radial transmission 
facilities.''
(3) Commission Determination
    52. We grant the clarification sought by commenters that the 100 kV 
threshold will not modify thresholds established in individual 
Reliability Standards such as FAC-003.
    53. In response to comments, although the NOPR used the term 
``rated at,'' the Commission did not intend to require NERC to utilize 
that term rather than the term ``operated at'' which is reflected in 
the current definition of bulk electric system. While the Commission 
does not have firm data on the number of facilities that operate at a 
voltage significantly lower than the rated voltage, we find that the 
term ``rated at'' could generate confusion.\68\
---------------------------------------------------------------------------

    \68\ Operating voltage usually encompasses a small range of 
voltages around the expected or normal operating value while rated 
voltage depends on the design of the facilities.
---------------------------------------------------------------------------

    54. We believe that the issues of whether a distribution provider 
or load-serving entity may de-register if it is shown not to own any 
bulk electric system elements, and whether the inclusion of a facility 
as part of the bulk electric system is or is not determinative of that 
facility's status as a transmission asset, are addressed by the NERC 
Registry Criteria and beyond the scope of this proceeding.

[[Page 72918]]

    55. As we stated in the NOPR, we do not seek to modify the second 
part of the definition through this Final Rule, which states that 
``[r]adial transmission facilities serving only load with one 
transmission source are generally not included in this definition.'' 
While commenters would like to expand the scope of the term ``radial'' 
to exclude certain transmission facilities such as tap lines and 
secondary feeds via a normally open line, we are not persuaded that 
such categorical exemption is warranted. For example, when the normally 
``open'' line is ``closed,'' it becomes part of the transmission 
network and therefore should be subject to mandatory Reliability 
Standards. Commenters also argued that the bright line 100 kV threshold 
would encourage small utilities to choose not to provide backup service 
options, reducing overall customer service. We acknowledge these 
concerns, and direct the ERO to consider these comments regarding 
radial facilities in crafting an exemption methodology.
(c) Technical and Historical Justification for Modification
(1) NOPR Proposal
    56. In the NOPR, the Commission stated its concern that if it does 
not clarify the ``bulk electric system'' definition to apply a stricter 
100 kV threshold, it would not be fulfilling Congress's intent in 
enacting section 215. The NOPR stated that the Commission believes 
there is an adequate technical and reliability-related justification, 
discussed further below, for the proposed 100 kV operating threshold 
for identifying bulk electric system facilities. Additionally, the NOPR 
noted that NERC already applies a general 100 kV threshold.\69\ 
Further, at present all regions, with the exception of NPCC, also apply 
a 100 kV threshold.
---------------------------------------------------------------------------

    \69\ NOPR, FERC Stats. & Regs. ] 32,654 at P 13-14.
---------------------------------------------------------------------------

    57. The NOPR identified inconsistencies between regions, such as 
two transmission lines that are classified as bulk electric system in 
ReliabilityFirst but not in NPCC.\70\ The NOPR also offered examples of 
disturbances that either began on or were propagated by 100-200 kV 
facilities, including a February 26, 2008 event in FRCC originating at 
a 138 kV facility that resulted in the loss of 24 transmission lines 
and 4,300 MW of generation, and a June 27, 2007 event on 138 kV 
transmission lines in the NPCC region that included sequential tripping 
of four 138 kV cable-circuits without a contingency. The June 27, 2007 
NPCC event (the ``Astoria West event'') resulted in the interruption of 
service to about 137,000 customers as well as the loss of five 
generators and six 138 kV transmission lines. Further, the NOPR pointed 
to Transmission Loading Relief (TLR) issuances on non-bulk electric 
system elements in New York and the historical basis for a 100 kV 
threshold as justification.
---------------------------------------------------------------------------

    \70\ See NERC/NPCC, compliance filing, Docket No. RC09-3 (filed 
Feb. 20, 2009).
---------------------------------------------------------------------------

(2) Comments
    58. Several commenters including ISO-NE, BGE, Northeast Utilities, 
ReliabilityFirst, Manitoba Hydro, and Dominion Power support the 
proposed change, arguing that the increased consistency and 
applicability of NERC Reliability Standards will ensure reliability. 
Moreover, a number of other commenters who ultimately suggest that 
other processes are more appropriate for undertaking a modification to 
the definition of ``bulk electric system'' agree with the overriding 
goal to develop a more consistent definition of ``bulk electric 
system.'' For example, NERC notes that it ``supports the Commission's 
objectives of ensuring a common understanding and consistent 
application of the definition of `bulk electric system' across the 
regions,'' with variations justified on the basis of reliability.\71\ 
Likewise, ReliabilityFirst supports the creation of a bright-line rule 
for determining which facilities are subject to Reliability Standards 
(with appropriate process for refinement or exemption), and both SCE 
and WECC generally support a rebuttable presumption that transmission 
facilities above 100 kV should be initially classified as ``bulk 
electric system'' facilities, as long as appropriate mechanisms for 
exclusion are in place.\72\
---------------------------------------------------------------------------

    \71\ NERC at 2.
    \72\ ReliabilityFirst at 2; SCE at 2; WECC at 3.
---------------------------------------------------------------------------

    59. Several other commenters contend that the proposal does not 
explain how the proposed changes to bulk electric system classification 
would have prevented the discussed events or improved reliability.\73\ 
They argue that the NOPR did not describe whether these events took 
place on facilities classified as ``bulk electric system'' or non-
``bulk electric system.'' Similarly, commenters contend that the NOPR 
does not show the connection between regional inconsistencies and 
reliability concerns.\74\ Commenters also assert the proposal will be 
expensive and lengthy to implement without improving reliability.
---------------------------------------------------------------------------

    \73\ See, e.g., FRCC, NARUC, NYSRC, Redding, GTC/GSOC.
    \74\ See, e.g., NARUC, NYPSC, FRCC, Dow, GTC/GSOC, Hydro-
Qu[eacute]bec, Ontario Power, NV Energy, Snohomish, Southern.
---------------------------------------------------------------------------

    60. Additionally, several commenters state that a material impact 
assessment should be used instead of a ``bright-line'' test, thus 
deferring to the Regional Entities' technical expertise.\75\ Commenters 
also contend that the Commission has not shown how the current NPCC 
method is flawed or how it has harmed reliability. They conclude that a 
material impact assessment is preferable to a ``bright-line'' test 
because they believe it will focus limited resources towards critical 
facilities that have the largest impact.
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    \75\ See, e.g., NARUC, NYSRC.
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    61. APPA/NRECA, NARUC, CMUA, CPUC, and TANC state that the specific 
examples cited by the Commission of outages on lower voltage lines in 
one region do not support making sweeping changes to the definition of 
bulk electric system as proposed in the NOPR. APPA/NRECA notes that the 
Commission's stated concerns about facilities inappropriately excluded 
from the bulk electric system definition are limited to the NPCC 
region, while the Commission's proposed solution is directed at and 
would affect all regions.\76\ APPA/NRECA asserts that the Commission's 
limited examples of outages on lines excluded from the bulk electric 
system definition in NPCC cannot support imposing the Reliability 
Standards on all lower-voltage facilities, regardless of the function 
and impact of such facilities.\77\ Finally, APPA/NRECA notes that the 
Commission's attempt to justify the proposal based on the total amount 
of 100 kV facilities in service is inapposite, as it has no bearing on 
whether or not those facilities function as part of the bulk electric 
system.\78\ Similarly, CMUA asserts that it is inappropriate to draw 
conclusions regarding the effect of disturbances on lower-voltage 
facilities based on a limited number of cases in one region, without 
consideration of the nature of the facilities and particular features 
of that region.\79\ NARUC also contends that a key part of the 
historical approach to the ``bulk electric system'' definition was the 
Regional Entities' ability to define the bulk electric system for its 
own region. Further, NARUC states that the NOPR does not identify any 
excluded lines critical to reliability. Additionally,

[[Page 72919]]

NARUC believes NPCC's estimated $280 million cost to comply with the 
new ruling will outweigh the expected minimal to negligible benefit.
---------------------------------------------------------------------------

    \76\ APPA/NRECA at 15-16.
    \77\ Id. at 30-31.
    \78\ Id. at 32.
    \79\ CMUA at 5.
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    62. The Joint Canadian Parties assert that the impact-based 
methodology ensures that all facilities critical to wide-area 
reliability, independent of voltage level, are covered by the bulk 
electric system definition. Similarly, they argue that the NERC 
Reliability Standards should apply only to facilities that, if lost, 
would have the potential for a wide-area reliability impact.
    63. The Indicated New York Transmission Owners and NYSRC state that 
the NOPR does not sufficiently account for the time and cost required 
to implement the proposed rule change. Further, they contend that the 
TLR events cited in the NOPR were issued in order to mitigate an 
unanticipated clockwise flow around Lake Erie, and that classification 
of lower voltage facilities as part of the ``bulk electric system'' 
would not have affected the need for the TLR. The NYPSC and Duke Energy 
contend that the 115 kV facility in the Central East ties flowgate 
constitutes a minor element of the flowgate that would not result in a 
cascading event on the bulk system.
    64. NYSRC also contends that the February 26, 2008 and the June 13, 
2008 events cited in the NOPR occurred in regions that already use a 
100 kV threshold and therefore do not show that the 100 kV threshold is 
more effective at protecting reliability than the impact-based 
approach. Additionally, NYSRC believes that the current methodology 
appropriately defers to regional expertise.
    65. NYPSC also states that the June 27, 2007 event ``was caused by 
lighting [sic] strikes on the telecommunications system over which 
several relay signals were carried,'' and that the utility involved has 
since ensured separate paths are provided for telecommunications beyond 
the fence of the electric utility's facilities.\80\ Additionally, the 
NPCC Working Group concluded that the event was confined to the Astoria 
West load pocket and that no other portions of the Consolidated Edison 
(ConEd) system were affected. Separately, the NYPSC states that the 
Commission has not provided evidence as to how the regional 
inconsistencies identified in the NOPR jeopardize reliability.
---------------------------------------------------------------------------

    \80\ NYSPC at 10.
---------------------------------------------------------------------------

    66. Alcoa states that it supports NPCC's current material impact 
assessment because it believes most of the facilities not included in 
the bulk electric system are accurately excluded. Alcoa further 
contends that the Commission has not shown how inclusion of lines like 
these will improve reliability and that the reliability benefit is only 
presumed. Dow likewise argues that it does not believe that the 
applicability of NERC Reliability Standards is a sufficient basis to 
assume that reliability will improve and argues that the NOPR does not 
provide any additional evidence.
    67. Constellation/CNEG supports continued use of Regional 
Reliability Organizations' technical discretion as opposed to the 
Commission's proposal. Constellation/CNEG states that current proposals 
from WECC utilizing a Short Circuit Megavolt Ampere methodology, or a 
three-phase fault with delayed clearing analysis, demonstrate the 
proper regional discretion and technical expertise. Similarly, Tacoma 
Power requests that the WECC Bulk Electric System Definition Task Force 
(BESDTF) be allowed to complete its work, and states that the 
Commission has not provided sufficient technical support for requiring 
a bright-line voltage-based standard.\81\ The Joint Western Commenters 
state that the Final Rule should be consistent with the WECC BESDTF's 
efforts that will utilize an impact based approach. Further, if the 
Commission has issues with the NPCC method, Constellation/CNEG state 
that the Commission should address its concerns with NPCC specifically 
rather than through an across the board proposal. The Joint Western 
Commenters similarly state that the Western entities should not be 
penalized for NPCC's actions, which actions are the apparent impetus 
for issuance of the NOPR.
---------------------------------------------------------------------------

    \81\ Tacoma Power at 6.
---------------------------------------------------------------------------

    68. Hydro-Qu[eacute]bec and Ontario Power state that application of 
the NERC Reliability Standards should be limited to facilities with a 
material impact on reliability, based on regional variances and 
expertise. The proposed change would divert needed resources from more 
important facilities.
    69. NESCOE requests the Commission study the impact of the proposal 
more before implementing the rule.
    70. Bay Area Municipal agrees that 115 kV and 138 kV facilities 
have either caused or contributed to significant bulk system 
disturbances and cascading outages. Utah Municipal also concedes that 
some facilities rated at 100 kV and above may have been improperly 
excluded from classification in the bulk electric system, at least in 
the NPCC. However, Utah Municipal also states that unless the 
facilities described were not included in the bulk electric system of 
the applicable Regional Entities, the cited events do not show a flaw 
in the existing definition.\82\ Utah Municipal also disputes the NOPR's 
claim of a historical precedent supporting the 100 kV threshold since 
the previous threshold was presumptive rather than a ``bright-line.'' 
Utah Municipal recommends that the Commission allow WECC's BESDTF to 
complete its work on a hybrid definition that utilizes a presumptive 
100 kV threshold and a material impact assessment. Utah Municipal 
suggests that this model be used as a template for other Regional 
Entities' bulk electric system definitions.
---------------------------------------------------------------------------

    \82\ Utah Municipal at 8.
---------------------------------------------------------------------------

    71. The WPSC and Consumers Energy state that without substantial 
refinement, the proposal will cause public utilities to experience 
significant but unnecessary compliance costs. Additionally, the WPSC 
anticipates that utilities would elect to build facilities below the 
100 kV threshold to avoid ``bright-line'' oversight, which will in turn 
result in a lower voltage, less technically capable system and will 
therefore adversely affect reliability.\83\
---------------------------------------------------------------------------

    \83\ WPSC at 2-3.
---------------------------------------------------------------------------

(3) Commission Determination
    72. The Commission finds sufficient justification for the action in 
this Final Rule. The current definition has failed to ensure that all 
facilities necessary for operation of the interconnected transmission 
network are covered by the Reliability Standards. As discussed above, 
the current definition allows broad regional discretion without ERO or 
Commission oversight, which has resulted in reliability issues such as 
the exclusion of transmission serving bulk electric generators 
(including nuclear plants), inconsistency in classification at the 
seams that compromises the effectiveness of the Reliability Standards, 
routine TLR events on non-bulk electric system facilities, and the 
exclusion of elements necessary to operate the interconnected 
transmission network. Given the inconsistency of the application among 
regions and the reliability issues created as a result of the current 
definition, we conclude that it is necessary to direct the ERO to 
revise the definition of ``bulk electric system'' to ensure that all 
facilities necessary to operate the interconnected transmission network 
are included and to address the concerns noted herein. We believe that 
the Commission's proposed approach of adopting a bright-line, 100 kV 
threshold, along with a NERC-developed, Commission-approved exemption 
process, as well as

[[Page 72920]]

eliminating regional variations unless approved by the Commission as 
provided in Order No. 672,\84\ is an appropriate action to ensure bulk 
electric system reliability.
---------------------------------------------------------------------------

    \84\ See Order No. 672, FERC Stats. & Regs. ] 31,204 at P 291.
---------------------------------------------------------------------------

    73. As discussed in this Final Rule, many facilities operated at 
100 kV and above have a significant effect on the overall functioning 
of the grid. The majority of 100 kV and above facilities in the United 
States operate in parallel with other high voltage and extra high 
voltage facilities, interconnect significant amounts of generation 
sources and operate as part of a defined flow gate, which illustrates 
their parallel nature and therefore their necessity to the reliable 
operation of the interconnected transmission system. Parallel 
facilities operated at 100-200 kV will experience similar loading as 
higher voltage parallel facilities at any given time and the lower 
voltage facilities will be relied upon during contingency scenarios. 
Further, as illustrated by the Commission's examples and as Bay Area 
Municipal states, 115 kV and 138 kV facilities have either caused or 
contributed to significant bulk system disturbances and cascading 
outages. Additionally, the current definition's broad regional 
discretion has allowed classification inconsistencies to develop within 
and along the borders of Regional Entities, as discussed in further 
detail herein.\85\ The proposed 100kV threshold is intended to ensure 
facilities necessary for reliable operation are captured by the 
definition and to avoid entities exempting their facilities by any 
means other than through a Commission-approved exemption process.
---------------------------------------------------------------------------

    \85\ See NERC Petition, Docket No. RM08-013-000, at 18 (filed 
July 30, 2008). There NERC indicated that the PRC-023 standard 
drafting team selected a voltage threshold for the Reliability 
Standard's applicability because the bulk electric system definition 
has too many variances to be effective for defining a Reliability 
Standard's applicability: ``This conclusion [to use a voltage-
specific-threshold] was reached by considering the potential 
variances in the facilities included as the bulk power system in 
different Regional Entities, together with an observation that the 
effects of the proposed reliability standard are not constrained to 
Regional boundaries. For example, if one Region has a purely 
performance-based criteria and an adjoining Region has a voltage-
based criteria, these criteria may not permit consideration of the 
effects of protective relay operation in one Region upon the 
behavior of facilities in the adjoining Region.''
---------------------------------------------------------------------------

    74. While the Commission believes the solution described above is 
the best way to address the identified problems with the current 
definition, the ERO has the discretion to develop an alternate solution 
that is as effective as, or superior to, the Commission's proposed 
approach in addressing the identified technical and other concerns, and 
may not result in a reduction in reliability. If the ERO chooses to 
propose a different solution, it must demonstrate that its proposal is 
equally effective or more effective at ensuring that all facilities 
necessary to operate the interconnected transmission network are 
captured by the definition and that the proposal will not produce the 
inconsistencies and inaccuracies that result from the current 
definition, as described in this Final Rule. The ERO must support any 
alternate proposal with a technical analysis that demonstrates and 
explains, with a technical record sufficient for the Commission to make 
an informed decision, how its proposal provides the same level of 
reliability as the Commission's proposal, and reflects the reality of 
how entities use and rely on their 100 kV and above facilities.
    75. Finally, we believe use of the term ``operated at'' rather than 
``rated at'' together with the exemption methodology that NERC will 
develop as discussed in this Final Rule addresses the WPSC's concern 
that utilities may elect to build facilities below 100 kV to avoid 
oversight.
(i) Impact-Based Methodology and Regional Variation
    76. Several commenters argue that the Commission did not adequately 
justify the proposed changes to the ``bulk electric system'' definition 
and that the technical examples provided similarly do not justify the 
proposed changes. In their opinion, an impact-based methodology is 
superior to the proposed approach. The Commission does not support 
using the material impact tests proffered by commenters as a basis for 
determining a facility's importance. Section 215 states that the 
Reliability Standards apply to facilities that are necessary for 
operating an interconnected electric energy transmission network (or 
any portion thereof). The material impact tests that either are under 
development or implemented appear to exclude facilities without regard 
to whether they are necessary to operate the system, and instead seek 
to determine the impact of the loss of an element. The Commission is 
not aware of any consistent and comprehensive material impact test that 
the industry has implemented to date. The scale and magnitude of 
generation and load loss during the Astoria West event described herein 
further demonstrates the shortcomings of NPCC's material impact 
assessment in determining bulk electric system elements necessary to 
ensure reliable operation. We disagree with assertions that the Astoria 
West event was an invalid example, as the commenters did not provide 
sufficient evidence supporting their assertions.
    77. We disagree with commenters who assert that NPCC's current 
material impact assessment, referred to as NPCC Document A-10, ensures 
that the proper facilities are included in the bulk electric system. 
Although the NPCC Document A-10 provides a test methodology to identify 
elements of the bulk electric system, the tests prescribed are 
subjective. In the test, a specific bus is subjected to a three-phase 
fault and the impacts on other buses are determined.\86\ NPCC Document 
A-10 states that ``a transient stability test may be done first to 
identify buses at which faults may cause a significant adverse impact 
outside of the `local area.' '' \87\ The term ``local area'' is broadly 
defined and is open to interpretation.\88\ Thus, under NPCC Document A-
10, if an entity chooses a large geographical area for its ``local 
area,'' the impact resulting from a fault at a specific bus could be 
considered a ``significant adverse impact,'' but since the impact falls 
within the large ``local area,'' the bus may not be declared part of 
the bulk electric system. For example, if one entity defines the 
``local area'' as the boundary of the balancing authority, while 
another entity defines the local area as adjacent buses, the outcome of 
the two tests could vary significantly. In particular, this likely 
could result in an exclusion of a large number of facilities from the 
purview of the bulk electric system for the first entity that applies a 
broader view of ``local area.''
---------------------------------------------------------------------------

    \86\ NPCC Document A-10 defines the term bus as ``a junction 
with sensing or protection equipment within a substation or 
switching station at which the terminals of two or more elements are 
connected, regardless of whether circuit breakers are provided.'' 
See NPCC Document A-10 at page 2.
    \87\ See NPCC Document A-10 at 4.
    \88\ See NPCC Glossary of Terms, NPCC Document A-7 at 13-14 
(``Local area--An electrically confined or radial portion of the 
system. The geographic size and number of system elements contained 
will vary based on system characteristics. A local area may be 
relatively large geographically with relatively few buses in a 
sparse system, or be relatively small geographically with a 
relatively large number of buses in a densely networked system.'').
---------------------------------------------------------------------------

    78. NPCC Document A-10 does not assess whether the facilities 
within the ``local area'' are necessary for reliable operation of the 
interconnected transmission network and also does not discuss system 
performance or any ``significant adverse impact'' on the facilities 
within the ``local area.'' Therefore, facilities within a local area 
could operate in an unstable manner or violate emergency operating 
limits, and as long as these adverse effects are

[[Page 72921]]

contained within the defined ``local area,'' NPCC's Document A-10 
assessment would deem those facilities outside the scope of the bulk 
electric system. For these reasons, we believe NPCC's Document A-10 
assessment has resulted in an inconsistent process that excludes 
facilities from the bulk electric system.
    79. NARUC and other commenters contend that the Commission has not 
demonstrated any reliability issues created by NPCC's current 
methodology.\89\ To the contrary, the NOPR noted that seven high and 
extra-high voltage lines in NPCC are not included in the bulk electric 
system under the current definition, including some serving nuclear 
power plants, and pointed to several events that occurred in other 
regions on facilities that may not have been included in the bulk 
electric system if they were under NPCC's current methodology. 
Additionally, thousands of megawatts of capacity resources are 
connected to these excluded transmission facilities.
---------------------------------------------------------------------------

    \89\ See, e.g., APPA, NRECA, CMUA, CPUC, and TANC.
---------------------------------------------------------------------------

    80. Further, there is even inconsistency within NPCC in that a 345 
kV tie-line between ISO-NE and NYISO is classified as part of the 
``bulk electric system'' in one ISO but not the other. Regional 
classification inconsistencies can also lead to issues under TOP-002, 
Requirement R7.\90\ If one Regional Entity or balancing authority 
within a region complies with TOP-002, Requirement R7 by ensuring 
system deliverability during a single contingency along its portion of 
an intra-regional tie-line while the other Regional Entity or the other 
balancing authority within the same region on the other end of the tie-
line does not, during a contingency, deliverability is not ensured, 
which could lead to loss of load and undermine reliability.
---------------------------------------------------------------------------

    \90\ TOP-002, Requirement R7 provides that ``each Balancing 
Authority shall plan to meet capacity and energy reserve 
requirements, including the deliverability/capability for any single 
Contingency.''
---------------------------------------------------------------------------

    81. Moreover, one of the main justifications for the Final Rule is 
to reduce inconsistencies across regions in order to increase the 
effectiveness of the NERC Reliability Standards. Some commenters 
challenge the supposition that regional inconsistency is a drawback of 
the current definition. Commenters state that regional variation allows 
regional entities to use their technical expertise to adopt a tailored 
regional bulk electric system definition. NARUC and Utah Municipal 
contend that a key part of the historical approach was the discretion 
of the Regional Entities.
    82. In response, as the Commission stated in Order No. 672, uniform 
Reliability Standards, and uniform implementation, should be the goal 
and the practice, the rule rather than the exception, absent a showing 
that a regional variation is superior or necessary due to regional 
differences.\91\ Consistency is important as it sets a common bar for 
transmission planning, operation, and maintenance necessary to achieve 
reliable operation. As noted, we have found several reliability issues 
with allowing Regional Entities broad discretion without ERO or 
Commission oversight. The Commission's proposed approach to addressing 
these concerns will enable affected entities to pursue exemptions for 
facilities they believe should not be included in the bulk electric 
system, and also will allow Regional Entities to add facilities below 
100 kV they believe should be included.
---------------------------------------------------------------------------

    \91\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290.
---------------------------------------------------------------------------

    83. Additionally, Requirement R4 of PRC-001-1 (System Protection 
Coordination) requires that ``[e]ach Transmission Operator shall 
coordinate protection systems on major transmission lines and 
interconnections with neighboring Generator Operators, Transmission 
Operators and Balancing Authorities.'' If the protection systems on one 
end of the tie line that are not classified as bulk electric system are 
not coordinated with protection systems on the other end or with those 
protection systems on the major transmission lines connected to the 
same end, the protection system will not operate as desired and 
cascading outages are likely to occur. This could lead to a significant 
system event. Deficiencies and lack of coordination in protection 
systems have been and remain a major cause of power outages since the 
Reliability Standards became effective in June 2007.\92\ These are but 
a few examples of how uniform application of the Reliability Standards 
to lines operated at 100 kV or above results in improved reliability. 
These examples demonstrate that NPCC's current methodology does not 
necessarily accurately assess situations that warrant exclusion of 
facilities from the bulk electric system definition.
---------------------------------------------------------------------------

    \92\ See, e.g., Mandatory Reliability Standards for the Bulk 
Power System, Notice of Proposed Rulemaking, FERC Stats. & Regs., 
Proposed Regulations 2004-2007 ] 32,608, at P 280 (2006); U.S.-
Canada Power System Outage Task Force, Final Report on the August 
14, 2003 Blackout in the United States and Canada: Causes and 
Recommendations 107 (2004) (Blackout Report), available at http://www.ferc.gov/industries/electric/indus-act/reliability.asp.
---------------------------------------------------------------------------

    84. Separately, the NPCC impact-based test has excluded elements 
that interconnect generators, including multiple nuclear facilities. 
Nuclear facilities generally are significantly larger than other power 
plants, serve as base load, and often are critical to meeting capacity 
demand. They require external interconnections to provide power to 
auxiliary equipment within the plant under normal and emergency 
conditions, which includes issues related to black starts and system 
restoration. Additionally, many non-nuclear generators representing 
over 10,000 MW of capacity resources that are subject to reliability 
rules and which provide needed capacity are interconnected to the 
network through facilities that are not classified as bulk electric 
system facilities under NPCC's rules, which may undermine the 
reliability of the capacity provided. The facilities that these 
generators connect to tend to be 100 kV and above facilities that are 
operated in parallel with extra high voltage facilities and have 
numerous interconnections to the extra high voltage network while also 
serving some distribution facilities.
    85. Given the questionable and inconsistent exclusions of 
facilities from the bulk electric system by the material impact 
assessment and the variable results of the Transmission Distribution 
Factor test proposed in NPCC's compliance filing in Docket No. RC09-3, 
there are no grounds on which to reasonably assume that the results of 
the material impact assessment are accurate, consistent, and 
comprehensive.\93\

[[Page 72922]]

Additionally, we have noted how the results of multiple material impact 
tests can vary depending on how the test is implemented. In contrast, 
the proposed ``bright-line'' test would continue the 100 kV threshold 
currently in use throughout much of the industry without allowing 
entities to vary this definition outside a Commission-approved 
exemption process. Further, since most regions currently use the 100 kV 
general threshold, most regions should have little difficulty 
maintaining a 100 kV bright-line threshold. If NERC proposes an 
alternate methodology, it must ensure that the method is consistent, 
repeatable, and verifiable, which the material impact tests we have 
discussed are not.
---------------------------------------------------------------------------

    \93\ See WECC BESDTF Proposal V5 Appendix B, at B-11-B-12, 
available at http://www.wecc.biz/Standards/Development/BES/Shared%20Documents/WECC-058%20BES%20Comments%20Posting%205/P5%20Appendix%20B%20FINAL%20CLEAN.doc: ``The BESDTF considered the 
Northeast Power Coordinating Council's Transfer Distribution Factor 
(TDF) approach to determining which networked Elements and 
facilities are used to distribute electricity locally and do not 
provide meaningful flow-through capability for the BES. In general, 
the TDF approach increases generation on one side of a transmission 
interface, decreases generation on the other side of the 
transmission interface, and measures the resulting change in flow 
across the interface. NPCC proposed that an Element with a TDF of 
less than 1% would not be part of the BES.
    WECC staff expressed concern that the results of the TDF studies 
subjectively depended on which generating units had their output 
increased and which generating units had their output decreased. The 
results would also depend on the location, and what kind, of slack 
bus [a designated generator bus without a real power injection 
setting used in power system modeling for the purpose of producing 
or absorbing real power such as change in real losses, loss of 
generation or interchange] used in the power flow simulation. As a 
result, the BESDTF did not propose to adopt the TDF method to 
determine which networked facilities could be classified as Local 
Distribution Networks and excluded from the BES.''
---------------------------------------------------------------------------

    86. With respect to the comments about the relevance of the FRCC, 
ReliabilityFirst and Astoria West events, and statements that they do 
not provide an adequate basis for our action here, the Commission 
emphasizes that for the Reliability Standards to have their intended 
outcome of protecting the system from instability, uncontrolled 
separation, or cascading failures, the bulk electric system definition 
must include the facilities necessary for reliable operation of the 
system and the registered entities must comply with the requirements of 
the Reliability Standards applicable to those facilities. If the 
definition excludes facilities that are necessary for reliable 
operation, the result is that more system events may occur, the impact 
of such events may be broader, and NERC and the Commission may have 
little or no authority to require the entities to mitigate the issues 
going forward. The FRCC, ReliabilityFirst and Astoria West examples 
demonstrate that, had all the relevant requirements in the Reliability 
Standards been adhered to, such as those in the PRC, IRO and TOP 
categories, the impacts of the events could have been minimized, if not 
avoided all together. The examples also illustrate that, because FRCC 
and ReliabilityFirst classify the facilities at issue as part of the 
bulk electric system, NERC and the Commission could require mitigation 
or take other action to ensure that the entities comply with the 
Reliability Standards in the future, thus enhancing system reliability. 
On the other hand, NERC and the Commission were unable to require 
mitigation with respect to the NPCC event because NPCC's definition 
excluded the facilities involved from the bulk electric system. We will 
address our specific concerns with each event in turn, below.
FRCC Event
    87. The FRCC event originated from a single fault on a 138 kV 
facility, which is included in the ``bulk electric system'' according 
to FRCC's definition. This single 138 kV fault led to the loss of 22 
transmission lines, 4,300 MW of generation, and 3,650 MW of customer 
service or load distributed over the lower two thirds of Florida. It is 
clear from the facts that this was a wide-scale cascading outage, which 
deserves the Commission's attention. Subsequent to this event, Florida 
Power & Light implemented mitigation plans that would preclude similar 
problems. The Commission notes that if this same event had occurred in 
NPCC, the Commission or NERC would not have had the chance to require 
mitigation of the issue because these facilities would not be 
considered part of the bulk electric system.
(iii) ReliabilityFirst Event
    88. Similarly, the June 13, 2008 event in ReliabilityFirst 
demonstrates how problems on 100-200 kV facilities can cascade into 
significant outages. As noted in NOPR, ``the inappropriate operation of 
the relay on a 138 kV facility contributed to the loss of three 138 kV-
13 kV transformers, three 138 kV transmission lines, and estimated loss 
of approximately 150 MW of firm load in a critical high population 
density area,'' \94\ that includes the White House, for over four 
hours.\95\ Because ReliabilityFirst classifies these facilities as part 
of the bulk electric system, the circumstances are covered by the 
Reliability Standards. Thus, ReliabilityFirst, NERC and the Commission 
are able to require mitigation, which can be informed by the mandatory 
Reliability Standards. Facilities similar to those involved in this 
example would not, in NPCC, be included under the bulk electric system 
definition. Thus those facilities would not have to be operated 
pursuant to the Reliability Standards and, if a problem occurred, 
neither the Commission nor NERC could require a mitigation plan to be 
developed and completed.
---------------------------------------------------------------------------

    \94\ NOPR, FERC Stats. & Regs. ] 32,654 at 22.
    \95\ See, e.g., WTOP story ``Friday the 13th'' Blackout hits DC 
(June 13, 2008), available at http://www.wtop.com/?sid=1421434&nid=25; CBS News story ``Power Outage Knocks Out D.C.'' 
(June 13, 2008) (`` `The White house had been running on generator 
power,' said deputy press secretary Tony Fratto.'') available at 
http://www.cbsnews.com/stories/2008/06/13/national/main4178695.shtml.
---------------------------------------------------------------------------

(iv) Astoria West Event
    89. On the other hand, the ConEd Astoria West facilities are not 
part of the bulk electric system according to NPCC's impact-based 
criteria. Nonetheless, as reported by the news media, the event 
resulted in widespread loss of load affecting around 385,000 people in 
parts of Manhattan and the Bronx.\96\ The NYPSC identified the cause of 
the outage as a lightning strike not to any ConEd transmission 
facilities, but a communications facility. The Commission understands 
that this communication disruption to a protection system by itself did 
not cause any faults on the 138 kV facilities. However, as explained 
earlier, this non-fault (N-0) event resulted in the interruption of 
service to about 137,000 customers, affecting portions of two boroughs 
in New York City, as well as the loss of five generators and six 138 kV 
transmission lines. Unlike the FRCC event, ConEd was not required to 
mitigate, under section 215, the root cause of the Astoria event 
because the facilities are not included under the bulk electric system 
definition. We note that these facilities are not included in the 
definition despite the fact that the 138 kV network is heavily 
interconnected to the extra-high voltage network through ten 138 kV 
phase angle regulators in 345 kV stations. Additionally, approximately 
2,000 MW of capacity resources and a similarly large quantity of 
customer firm demand in the Astoria area is directly connected to the 
138 kV network or supplied from the 138 kV to lower voltage levels via 
step-down transformers. While the NYPSC stated that ConEd did mitigate 
the communication issue at the cited location, it is not clear if ConEd 
addressed similar vulnerabilities at other locations or if other 
underlying root cause items were identified or addressed.\97\
---------------------------------------------------------------------------

    \96\ See, e.g., New York Times article, ``Brief Power Failure Is 
Long Enough to Unsettle'' (June 28, 2007), available at http://query.nytimes.com/gst/fullpage.html?res=9A02E0DB163EF93BA15755C0A9619C8B63&sec=&spon=&&scp=1&sq=Brief%20Power%20Failure%20Is%20Long%20Enough%20to%20Unsettle&st=cse; ABC News story ``Power Back on in NYC after Outages'' (June 27, 
2007), available at http://abclocal.go.com/wabc/story?section=weather&id=5428326.
    \97\ NYPSC at 10-11. The NYPSC's comments do not specify whether 
ConEd took any action besides the telecommunications fixes.
---------------------------------------------------------------------------

(v) Relevance of TLR
    90. Reliability Standard IRO-006-4.1--Reliability Coordination--
Transmission Loading Relief has the purpose of providing 
``Interconnection-wide transmission loading relief

[[Page 72923]]

procedures that can be used to prevent or manage potential or actual 
[System Operating Limit] and [Interconnection Reliability Operating 
Limit] violations to maintain reliability of the Bulk Electric 
System.'' The only time that transmission loading relief (TLR) 
procedures can be used is when a Reliability Coordinator is 
experiencing a potential or actual System Operating Limit (SOL) \98\ or 
Interconnection Reliability Operating Limit (IROL) \99\ on the bulk 
electric system within its Reliability Coordinator area.\100\ The 
Commission understands that TLR procedures used to curtail firm and 
non-firm transactions \101\ have been activated in NPCC on flowgates 
that contain facilities that are not part of the bulk electric system 
under NPCC's definition, but were needed to prevent or manage potential 
or actual SOL or IROL violations on the NPCC-defined bulk electric 
system. Since a flowgate generally defines facilities that operate in 
parallel and collectively respond to a transmission loading relief 
event as if it were a single transmission facility, it is logical that 
these 115 and 138 kV parallel facilities are included in these 
flowgates. Therefore, we disagree with ICNU's and NYSRC's claims that 
these facilities can be dismissed as unimportant. If a flowgate 
contains facilities that are needed to prevent or manage SOL or IROL 
violations, they should be included in the bulk electric system. Since 
the material impact test did not show this, this is another indication 
that the test does not adequately identify bulk electric system 
elements.
---------------------------------------------------------------------------

    \98\ The NERC Glossary defines System Operating Limit as: ``The 
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.''
    \99\ The NERC Glossary defines Interconnection Reliability 
Operating Limit as ``A System Operating Limit that, if violated, 
could lead to instability, uncontrolled separation, or Cascading 
Outages that adversely impact the reliability of the Bulk Electric 
System.''
    \100\ See IRO-006-4.1, Requirement R1.
    \101\ Flowgate 7004 in NPCC, which contains non-bulk electric 
system facilities, had 31 TLR events totaling 484 hours in 2009 and 
44 TLR events totaling 798 hours to date in 2010. Additionally, 
three other NPCC flowgates that contain non-bulk electric system 
facilities had TLR events called in 2009 and 2010. Specifically, 
flowgates 7001, 7002, and 7010 were collectively subject to 11 TLR 
events totaling 91 hours during that period. See NERC Transmission 
Loading Relief Procedure Logs (October 28, 2010) available at http://www.nerc.com/filez/Logs/tlrlogs.html.
---------------------------------------------------------------------------

(vi) International Concerns
    91. Ontario Power contends that the Commission must explicitly 
state that the proposed change applies only to those jurisdictions 
within the United States. Ontario Power argues that although the 
Commission indicates that the proposal seeks to increase consistency 
across reliability regions by imposing a bright line definition, 
Ontario Power believes that implementation of the Order as currently 
proposed will not achieve this goal. Specifically, Ontario Power argues 
that the proposed modification ``will simply move the point of 
demarcation from one methodology to the other (i.e., 100 kV threshold 
versus a performance-based approach) from Regional Entity borders to 
National borders.'' \102\ Ontario Power reiterates that it is not aware 
of any significant reliability issues attributable to the use of NPCC's 
performance-based methodology. Accordingly, Ontario Power does not 
believe that Canadian jurisdictions maintaining the performance-based 
approach would suffer reduced reliability as compared to those who are 
required to adopt the 100 kV threshold.
---------------------------------------------------------------------------

    \102\ Ontario Power at 4.
---------------------------------------------------------------------------

    92. Hydro-Qu[eacute]bec contends that the NOPR's proposal does not 
take into account the characteristics of the Qu[eacute]bec 
Interconnection, particularly that it is asynchronous with the other 
systems that make up the Eastern Interconnection and thus is not freely 
influenced by power flows in other balancing areas. According to Hydro-
Qu[eacute]bec, application of the NERC Reliability Standards should be 
limited to facilities with a material impact on reliability, and this 
decision is best left to the Regional Entities.
    93. The Joint Canadian Parties argue that the NOPR's proposal would 
result in the Reliability Standards being applied to the majority of 
facilities 100 kV and above, a significant number of which only impact 
the local area in the event of a contingency, and often under the 
purview of different regulatory authorities. Additionally, they state 
that the proposed ``one-size fits all'' approach does not give due 
consideration to either regional variations or the technical expertise 
of the regions. According to the Joint Canadian Parties, the impact-
based methodology ensures that all facilities critical to wide-area 
reliability are included in the bulk electric system definition.
    94. The Commission acknowledges that it does not have jurisdiction 
to enforce a modified definition with respect to non-U.S. entities. 
However, as Ontario Power correctly notes, the problems discussed above 
with respect to transmission lines classified as ``bulk electric 
system'' in one region but not classified as such in a connected region 
also can occur when lines cross the international border. Thus, we 
will, and we encourage NERC to, work with the Canadian authorities to 
ensure consistent treatment of transmission lines that cross the 
border.
    95. In response to Ontario Power's statement that it is not aware 
of any significant reliability issues attributable to use of NPCC's 
material impact test, and the Joint Canadian Parties' argument that the 
NOPR proposal would result in Reliability Standards being applied to 
facilities that only impact the local area, we have discussed elsewhere 
in this order our concerns with the NPCC methodology including the 
reliability concerns arising from that test's inconsistent results and 
our concerns with the subjective nature of the term ``local area'' as 
defined in NPCC Document A-10. We also note that the Final Rule directs 
the ERO to consider adopting an exemption process that would help 
alleviate the Joint Canadian Parties' concerns about a ``one-size fits 
all'' approach. Finally, because this Final Rule directs the ERO to 
develop a revised bulk electric system definition through the Standards 
Development process, the Canadian commenters will be able to raise and 
address a number of their substantive concerns in that forum.
(4) Summary
    96. In general, the Final Rule identifies the reliability concerns 
created by the current definition and a method to ensure that certain 
facilities needed for the reliable operation of the nation's bulk 
electric system are subject to mandatory and enforceable Reliability 
Standards, and that exemption methodologies would be developed by NERC 
and subject to Commission review. From the Commission's review, the 
material impact assessments implemented by NPCC are subjective in 
nature, and results from such tests are inconsistent in application, as 
shown through the exclusion of facilities that clearly are needed for 
reliable operation. Further, we find that the vast majority of 100 kV 
and above facilities are part of parallel networks with high voltage 
and extra high voltage facilities and are necessary for reliable 
operation. As a result, and consistent with our previous statements in 
Order No. 672,\103\ we find it is best for the ERO to establish a 
uniform definition that eliminates subjectivity and regional variation 
in order to ensure reliable operation of the bulk electric system. We 
further find that the existing

[[Page 72924]]

NPCC impact test is not a consistent, repeatable, and comprehensive 
alternative to the bright-line, 100 kV definition we prefer. By 
directing the ERO to revise the definition of ``bulk electric system,'' 
through the approach proposed by the Commission, or through an equally 
effective alternative proposed approach, the Commission is fulfilling 
its responsibility to ensure reliable operation of the grid.\104\ Any 
alternative proposal from the ERO must be as effective as, or more 
effective than the 100 kV threshold at ensuring facilities necessary 
for reliable operation are captured in the definition while also 
addressing the issues outlined in this Final Rule.
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    \103\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290.
    \104\ As noted previously, any alternative proposal must be as 
effective as, or superior to, the Commission's proposed approach in 
addressing the identified technical and other concerns, and may not 
result in a reduction in reliability.
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(d) Usage and Definition of ``Bulk-Power System''
(1) Comments
    97. Anaheim states that the Commission's observation that the term 
``Bulk-Power System'' is somehow broader than the term ``bulk electric 
system,'' coupled with its refusal to define, explain, or otherwise 
implement the statutory term, creates substantial uncertainty within 
the industry concerning the scope of the Reliability Standards going 
forward.
    98. ReliabilityFirst states the use of the terms ``bulk electric 
system'' and ``Bulk-Power System'' at times has created confusion 
within the industry and in compliance enforcement matters. Therefore, 
ReliabilityFirst believes that NERC should formally document the use of 
both terms and, going forward, use a single term and definition for all 
compliance and enforcement of the Reliability Standards.\105\
---------------------------------------------------------------------------

    \105\ ReliabilityFirst at 10.
---------------------------------------------------------------------------

    99. SCE states that the industry has been seeking final resolution 
of the statutory term ``Bulk-Power System'' and requests that the 
Commission act now and through this Final Rule to resolve the statutory 
term ``Bulk-Power System.'' It requests that the Commission's Final 
Rule recognize that the definition of ``bulk electric system'' 
developed under this Final Rule is identical to the statutory term 
``Bulk-Power System'' and no further definitional change will take 
place.
(2) Commission Determination
    100. In the NOPR, the Commission addressed the definition of ``bulk 
electric system'' and not the definition of the statutory term ``Bulk-
Power System.'' Although the statutory term Bulk-Power System defines 
our jurisdiction, the Commission believes more clarity and certainty is 
achieved in this context by focusing on whether facilities are part of 
the bulk electric system. Ensuring that the bulk electric system 
definition encompasses all facilities necessary to reliably operate an 
interconnected electric transmission system will not cause the 
application of the Reliability Standards to extend beyond the 
jurisdiction prescribed in section 215. The Commission, the ERO, and 
the Regional Entities will continue to enforce Reliability Standards 
for facilities that are included in the bulk electric system.
2. Exemption Process
    101. The NOPR proposed that a Regional Entity must seek ERO and 
Commission approval before exempting any transmission facility rated at 
100 kV or above from compliance with mandatory Reliability 
Standards.\106\ Pursuant to the NOPR proposal, a Regional Entity would 
submit proposed facility exclusions to the ERO and then, in turn, the 
ERO would submit to the Commission for review on a facility-by-facility 
basis any ERO-approved exception to the proposed threshold of all 
transmission facilities at 100 kV or above, except for radial 
transmission facilities serving only load with one transmission source. 
Any such submission would also include adequate supporting information 
explaining why it is appropriate to exempt a specific transmission 
facility that would otherwise satisfy the proposed 100 kV threshold. 
Only after Commission approval would the proposed exclusion take 
effect.
---------------------------------------------------------------------------

    \106\ NOPR, FERC Stats. & Regs. ] 32,654 at P 18.
---------------------------------------------------------------------------

(a) Comments
    102. Most commenters disagree with the exemption process outlined 
in the NOPR, and several requested that the Commission abandon the 
NOPR's proposal or adopt a more streamlined process. NERC and other 
commenters characterize the Commission's proposal as costly, time 
consuming, and potentially unworkable.\107\ Some parties suggested 
alternatives, such as the Commission reviewing and approving a Regional 
Entity's exemption methodology rather than reviewing each individual's 
exemption application. Other commenters argue that the Commission 
should approve a methodology that allows the Regional Entities or ERO 
to perform a facility-by-facility review rather than the 
Commission.\108\ Several commenters requested that the Commission adopt 
a blanket exemption for distribution facilities, as defined by the 
Regional Entities, or clarification that the Commission did not intend 
to include distribution facilities within the scope of the definition 
of bulk electric system.\109\ Commenters also request that the 
Commission suspend enforcement of Reliability Standards to newly-
classified bulk electric system facilities while the Regional Entities 
evaluate exemption requests.
---------------------------------------------------------------------------

    \107\ See, e.g., Alcoa, BPA, CMUA, Palo Alto, Redding, 
Constellation/CENG, ICNU, APPA/NRECA, National Grid, NERC, NESCOE, 
NCPA, NV Energy, Public Power Council, SWTDUG, NYSRC, SCE, State 
Utility Commissions and Consumer Counsel, TANC, TAPS, Utah 
Municipal, Wells, WPSC.
    \108\ See, e.g., EEI, BPA, Utility Services, Inc., NPCC, WECC, 
TAPS, Santa Clara, NUSCO, Indicated New York Transmission Owners, 
SWTDUG.
    \109\ See, e.g., GTC/GSOC, Redding, Dow, NV Energy, PGE, TIEC.
---------------------------------------------------------------------------

    103. APPA/NRECA argues that the NOPR's approach represents an 
extreme departure from current practice with respect to allowing 
appropriate exemptions from the Reliability Standards requirements. 
APPA/NRECA notes that entities seeking an exemption for even radial 
line facilities may require NERC and Commission approval before that 
exemption would take effect, and that these entities would not only 
have the burden of obtaining the necessary approvals for the exemption 
but also would have to comply with the Reliability Standards while 
those approvals are pending.\110\ APPA/NRECA contends that the proposal 
could impose significant burdens on many smaller utilities, some of 
which have never been subject to Reliability Standards, without 
affording them any procedural protections and without imposing on 
Regional Entities the appropriate and parallel burden of demonstrating 
that expanded authority over low-voltage (less than 100 kV) facilities 
is necessary to preserve reliability.\111\
---------------------------------------------------------------------------

    \110\ APPA/NRECA at 19-23.
    \111\ Id. at 25-27.
---------------------------------------------------------------------------

    104. Alcoa points out that the proposal would increase the costs 
associated with their facilities in the NPCC region either through 
additional compliance measures associated with mandatory Reliability 
Standards or by obtaining approvals for an exemption from such 
requirements. EEI believes that NERC should determine whether to grant 
or deny a specific request for an exemption and that Commission 
approval should not be required in every case. Instead, an appeal to 
the

[[Page 72925]]

Commission should be available as an option.
    105. GTC/GSOC proposes that the definition for a blanket exemption 
of localized and load-serving lines include: An area serving load that 
is connected to the rest of that network at a single transmission 
substation at a single transmission voltage by one or more transmission 
circuits; tap lines and associated facilities that are required to 
serve local load only; and transmission lines that are operated open 
for normal operation.
    106. On the other hand, Manitoba Hydro supports the Commission's 
proposal to require a Regional Entity to obtain NERC and Commission 
approval prior to exempting any facility rated at 100 kV or above, 
except for radial transmission facilities serving only load. Manitoba 
Hydro also believes regulatory review provides a wider opportunity for 
stakeholder review.
    107. Several commenters argue that the Commission should direct 
modifications to section 500 of the NERC Rules of Procedure, which 
governs NERC's business practices, including its operation and review 
processes.\112\ For example, NPCC proposes minimal revision to the NERC 
Rules of Procedure, Section 500 to include a process for evaluating 
bulk electric system exclusions recommended to NERC by the Regional 
Entities. NERC states that changes likely will be necessary in the NERC 
Rules of Procedure and the NERC Statement of Compliance Registry 
Criteria.
---------------------------------------------------------------------------

    \112\ See, e.g., NERC, NPCC, and Utility Services.
---------------------------------------------------------------------------

    108. TIEC states that many industrial sites are interconnected to 
the grid through lines rated at or above 100 kV, or otherwise contain 
lines rated at 100 kV or above within a private use network. TIEC notes 
that although these lines are operated at a high voltage due to the 
size of the industrial loads, they are used to provide electric service 
to end-use industrial customers and do not serve a ``transmission'' 
function for the interconnected grid within the meaning of the 
Commission rules and NERC Reliability Standards. Instead, these 
facilities deliver electricity from the grid or a cogeneration facility 
to the consuming loads within a plant site. TIEC states that the 
Commission should clarify that customer-owned facilities that are used 
to distribute electricity to consuming facilities on the customer's 
premises, which do not therefore serve a ``transmission'' function for 
the interconnected grid, are not part of the bulk electric system. 
Alcoa contends that its industrial facilities are connected to the grid 
using 115 kV lines for efficiency purposes, but that they have no 
practical impact on the grid, and therefore would be improperly 
included in the bulk electric system by the proposal.
    109. ExxonMobil suggests modifying the definition of the bulk 
electric system to include ``those facilities rated at 100 kV or above 
intended for the transmission of power within an interconnected grid,'' 
i.e., ExxonMobil suggests that the Commission draw a distinction 
between facilities that could under limited circumstances transmit 
power but were not intended or designed to be a transmission path. 
ExxonMobil notes that in order to meet the reliability target 
requirements to safely and economically operate manufacturing and 
production facilities, many industrial facilities are fed by two or 
more utility transmission lines that originate at different utility 
substations. Due to the magnitude of an industrial site's load, these 
transmission lines are typically designed to operate at levels in 
excess of 100 kV at the request of the utility company. These 
transmission lines typically terminate into an interconnection 
facility, owned by the industrial facility, that networks the 
transmission lines together within the industrial facility's private 
use network in order to serve the load of the facility's private use 
network. ExxonMobil states that its proposed approach is consistent 
with the Commission's stated goal of requiring the Regional Entities to 
register transmission lines that are operated at the 100 kV level and 
above; while at the same time clearly excluding end user facilities 
rated 100 kV or above.
    110. ERCOT suggests that the Commission should consider imposing a 
parallel process for including facilities that are below 100 kV in the 
bulk electric system. ERCOT notes that presently, facilities below 100 
kV generally are not considered part of the bulk electric system, but 
the Regional Entities can explicitly include facilities below 100 kV if 
they are deemed ``critical facilities.'' ERCOT states that ``Regional 
Entities should not have unbounded unilateral discretion to make such 
designations given the potential impact to affected parties.'' \113\ 
Thus, consistent with the Commission's proposal to subject all 100 kV 
and above exemptions to due process, ERCOT asks the Commission to 
consider imposing a similar process for the inclusion of facilities 
below 100 kV.
---------------------------------------------------------------------------

    \113\ ERCOT at 2.
---------------------------------------------------------------------------

(b) Commission Determination
    111. As mentioned above, the NOPR proposed an exemption process 
pursuant to which a Regional Entity would seek ERO and Commission 
approval before exempting a transmission facility rated at 100 kV or 
above from compliance with the Reliability Standards. In response to 
the NOPR proposal, we received numerous comments that the proposed 
exemption process would be costly, time-consuming and potentially 
unworkable. Other commenters expressed concern that the proposal was 
unduly burdensome, particularly on smaller entities. We continue to 
believe that an exemption process is appropriate and is complementary 
to our directive, discussed earlier, that the ERO develop a revised 
definition of the term bulk electric system that addresses the concerns 
resulting from the current discretion of Regional Entities to develop 
alternative regional definitions of the term. However, we are persuaded 
by the commenters' concerns and the Final Rule does not adopt the 
exemption model proposed in the NOPR.
    112. Rather than devising a revised exemption process in the Final 
Rule, we direct the ERO to develop a proposed exemption process. We 
believe that it is appropriate that NERC develop the process in its 
function as the ERO. Further, allowing the ERO to develop an 
appropriate exemption process should provide interested stakeholders an 
opportunity to participate in the development of the process, as 
requested by some commenters. This stakeholder participation should 
result in a process with practical application that is less burdensome 
than the NOPR proposal.
    113. The ERO must submit the proposed exemption process within one 
year of the effective date of this Final Rule. After notice and 
opportunity for comment, the Commission will act on the ERO's proposal.
    114. We will not dictate the substance or content of the exemption 
process in this Final Rule. Rather, we identify below several matters 
or concerns that should be addressed in an acceptable exemption 
process.
    115. NERC should develop an exemption process that includes clear, 
objective, transparent, and uniformly applicable criteria for exemption 
of facilities that are not necessary for operating the grid. The ERO 
also should determine any related changes to its Rules of Procedures 
that may be required to implement the exemption process, and file the 
proposed

[[Page 72926]]

exemption process and rule changes with the Commission.
    116. As indicated above, since we are not adopting the exemption 
model proposed in the NOPR, we no longer contemplate a process that 
requires Commission review of each request for exemption. However, in 
order to avoid an inconsistent application of the exemption process, 
NERC should oversee the facility-by-facility exemption process to 
ensure an objective and uniform application of the exemption criteria 
that it develops. NERC may consider delegating responsibilities for the 
exemption process to Regional Entities, so long as the process is clear 
and capable of being applied consistently, objectively and uniformly 
across all regions. However, consistent with our statements in Order 
No. 672 regarding the need for a strong ERO, NERC should maintain 
oversight of any Regional Entity activity.\114\ We believe ERO 
oversight is also vital in ensuring consistent application of any 
nation-wide exemption criteria that the ERO develops.
---------------------------------------------------------------------------

    \114\ Order No. 672, FERC Stats. & Regs ] 31,204 at P 140, 654.
---------------------------------------------------------------------------

    117. While the Commission will not require that we review each 
exemption on a facility-by-facility basis, we would maintain the 
authority to conduct audits to determine the appropriateness of a 
particular exemption. We contemplate that a Commission staff audit 
would review the application of the exemption criteria developed by 
NERC in NERC's or a Regional Entity's determination to approve an 
exemption for a particular facility. However, to facilitate such 
audits, the ERO should maintain a list of exempted facilities that can 
be made available to the Commission upon request. NERC can decide how 
best to maintain the list, including determining whether or not to post 
it on the NERC Web site.
    118. Additionally, the ERO should consider developing criteria for 
revoking an exemption if a particular transmission facility no longer 
qualifies for such an exemption. This may be appropriate, for example, 
when a transmission system in the vicinity undergoes a significant 
change.
    119. A number of comments raised concerns that the Commission's 
directive that the ERO revise the definition of bulk electric system 
would result in the erroneous inclusion of distribution facilities 
within the definition. As we explained above, these arguments are 
unconvincing because the majority of facilities operated at or above 
100 kV are parallel paths that are necessary for the reliable operation 
of the transmission system. In addition, the exemption process provides 
a means of ensuring that relatively high voltage distribution 
facilities are excluded from compliance with mandatory Reliability 
Standards. In this light, we believe that it would be beneficial for 
the ERO, in maintaining a list of exempted facilities, to consider 
including a means to track and review facilities that are classified as 
local distribution to ensure accuracy and consistent application of the 
definition. Similarly, the ERO could track exemptions for radial 
facilities.
    120. In response to comments seeking a blanket exemption for 
industrial facilities, the Commission is not inclined to grant 
categorical exemptions of any kind. However, NERC should consider the 
parties' concerns regarding exemption categories in developing an 
exemption process and criteria. Entities can submit specific facilities 
for exemption through the NERC-developed exemption process. As 
previously discussed, radial facilities, as well as facilities used in 
the local distribution of electric energy as provided in section 215, 
will continue to be excluded.
    121. We agree with ERCOT's suggestion that the ERO should develop a 
parallel process for including as part of the bulk electric system 
``critical'' facilities, operated at less than 100 kV, that the 
Regional Entities determine are necessary for operating the 
interconnected transmission network. Currently, Regional Entities have 
the ability to include ``critical'' facilities operated below 100 
kV.\115\ We believe that it would be worthwhile for NERC to consider 
formalizing the criteria for inclusion of critical facilities operated 
below 100 kV in developing the exemption process. Additionally, we note 
that Order No. 716 creates a process to include critical facilities 
under NUC-001-1.\116\ Similarly, we note that Order No. 733 creates an 
additional ``add in'' approach to sub-100 kV facilities that Regional 
Entities and planning coordinators have identified as critical to the 
reliability of the bulk electric system.\117\
---------------------------------------------------------------------------

    \115\ See, e.g., Order No. 693, FERC Stats. & Regs. ] 31,242 at 
P 77.
    \116\ Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination, Order No. 716, 125 FERC ] 61,065, at P 51-53 (2008), 
order on reh'g, Order No. 716-A, 126 FERC ] 61,122 (2009).
    \117\ Transmission Relay Loadability Reliability Standard, Order 
No. 733, 130 FERC ] 61,221, at P 20-25, 47, 60, 62 (2010).
---------------------------------------------------------------------------

3. Transition Process
    122. In the NOPR, the Commission proposed to allow a Regional 
Entity affected by the Commission's Final Rule to submit a transition 
plan that allows a reasonable period of time for affected entities 
within that region to achieve compliance with respect to facilities 
that are subject to Commission-approved Reliability Standards for the 
first time.\118\
---------------------------------------------------------------------------

    \118\ NOPR, FERC Stats. & Regs. ] 32,654 at P 27.
---------------------------------------------------------------------------

(a) Comments
    123. Certain commenters argue that the NOPR fails to clearly detail 
a transition process for bringing additional facilities into compliance 
with Commission-approved Reliability Standards.\119\ APPA/NRECA believe 
that if the definition of bulk electric system is ultimately modified, 
NERC should be responsible for developing a clear and achievable 
transition plan to bring new facilities (and entities) into 
compliance.\120\ APPA/NRECA further note that the NOPR is somewhat 
inconsistent in its discussion of a transition plan and required 
compliance, recognizing at one point that a transition plan for newly-
affected facilities would be appropriate while elsewhere stating that 
facilities falling within the broad definition of bulk electric system 
would only be exempt after Commission approval.\121\
---------------------------------------------------------------------------

    \119\ See, e.g., APPA/NRECA and Bay Area Municipal.
    \120\ APPA/NRECA at 4.
    \121\ Id. at 35.
---------------------------------------------------------------------------

    124. National Grid requests that the Commission allow entities 
affected by the new rule the opportunity to develop a reasonable 
transition plan for bringing existing facilities into compliance with 
newly-applicable Commission-approved Reliability Standards, through a 
collaborative process involving NERC, Regional Entities, state 
commissions and other affected parties.\122\ National Grid notes that 
the process for bringing all of its and its subsidiaries' newly-
affected facilities into compliance could take several years and would 
require significant increases in operations and maintenance costs as 
well as capital expenditures.\123\ National Grid suggests a transition 
period of 24-36 months would be necessary to study and to begin to 
implement compliance programs.\124\
---------------------------------------------------------------------------

    \122\ National Grid at 5.
    \123\ Id. at 3, 8 (estimating compliance costs for transmission 
planning standards alone to be $75 million to $125 million).
    \124\ Id. at 5-6.
---------------------------------------------------------------------------

    125. Several commenters state that the Final Rule should include a 
sufficient transition period, and many propose specific minimum 
transition time periods.\125\ For example, FRCC

[[Page 72927]]

recommends a transition period of 24 months for Registered Entities to 
phase in compliance of additional facilities with Commission-approved 
Reliability Standards.\126\
---------------------------------------------------------------------------

    \125\  See, e.g., APPA/NRECA, EEI, FRCC, NERC, NPCC, National 
Grid, NYISO, Northeast Utilities, Indicated New York Transmission 
Owners, and Utah Municipal.
    \126\ FRCC at 9.
---------------------------------------------------------------------------

    126. NPCC recommends that the effective date of any new bulk 
electric system definition be 24 months following the Commission's 
Final Rule and that within 90 days of the Final Rule, all Registered 
Entities be required to submit implementation plans to bring all newly 
identified bulk electric system facilities into compliance and submit 
any needed changes in registration by the effective date of the bulk 
electric system definition.\127\
---------------------------------------------------------------------------

    \127\ NPCC at 5.
---------------------------------------------------------------------------

    127. Likewise, NYISO recommends that the effective date of any new 
definition should be no sooner than 24 months following the effective 
date of a Commission order requiring compliance with that 
definition.\128\ NYISO further argues that during the transition 
period, no parties should be required to self-report or be deemed non-
compliant by NPCC.\129\
---------------------------------------------------------------------------

    \128\ NYISO at 8-9.
    \129\ Id.
---------------------------------------------------------------------------

    128. Several commenters request that the Commission provide for 
temporary waivers from enforcement of Commission-approved Reliability 
Standards while entities wait for initial exemption requests to be 
processed.\130\ For example, Utility Services argues that the 
Commission must grant a temporary waiver for audit, certification, or 
other compliance requirements to any requesting Registered Entity while 
its application is pending at the regional, NERC, or Commission levels, 
as this process has already been deemed acceptable by the Commission in 
the technical feasibility exemptions for cyber security.\131\ 
Similarly, ELCON argues that the Commission should clarify that a 
facility will not be subject to the obligations of registered status 
until the notification and any review process, followed by the 
transition period, is completed.\132\
---------------------------------------------------------------------------

    \130\ See, e.g., Utility Services, Dow, and ELCON.
    \131\ Utility Services at 5.
    \132\ ELCON at 5.
---------------------------------------------------------------------------

    129. Dow argues that the Commission must afford companies an 
opportunity to secure facility-specific exemptions before the 
Commission-approved Reliability Standards become applicable to those 
facilities.\133\
---------------------------------------------------------------------------

    \133\ Dow at 7.
---------------------------------------------------------------------------

    130. NYISO further argues that during the transition period no 
parties should be required to self-report or be deemed non-compliant by 
a Regional Entity.
(b) Commission Determination
    131. As discussed above, we are directing the ERO to revise the 
definition through the Standards Development Process. We direct NERC to 
work with the Regional Entities affected by this Final Rule to submit 
for Commission approval transition plans that allow a reasonable period 
of time for the affected entities within each region to achieve 
compliance with respect to facilities that are subject to Commission-
approved Reliability Standards for the first time based on a revised 
bulk electric system definition. The Commission expects that NPCC is 
the only region that will be significantly affected. Based on 
ReliabilityFirst's experience in adopting a ``bright-line'' definition 
for bulk electric system facilities, we expect transition periods not 
to exceed 18 months from the time the Commission approves a revised 
definition and exemption process, unless the Commission approves a 
longer transition period based on specific justification. The 
Commission directs NERC to file the proposed transition plans within 
one year of the effective date of this Final Rule.
    132. While the Commission is sensitive to commenters' concerns 
regarding non-compliance during the transition period, the Commission 
will not provide a trial period, as we declined to do in Order No. 
693,\134\ with respect to those facilities that are subject to 
Commission-approved Reliability Standards for the first time. We expect 
that the transition periods will be long enough for exemption requests 
to be processed and to allow entities to bring newly-included 
facilities into compliance prior to the mandatory enforcement date. 
Additionally, the ERO and Regional Entities may exercise their 
enforcement discretion during the transition period.
---------------------------------------------------------------------------

    \134\ Order No. 693, FERC Stats. and Regs. ] 31,242 at P 221-
222.
---------------------------------------------------------------------------

4. Cost Recovery
(a) Comments
    133. The Indicated New York Transmission Owners requested that the 
Commission provide a new process to ensure recovery for costs incurred 
by NPCC members to comply with implementation of the new definition of 
bulk electric system.\135\ While not seeking a specific cost recovery 
mechanism, other commenters noted their concern that the transition 
period established by the Commission must be sufficient to allow 
affected companies to recover any one-time or annual compliance costs 
incurred.\136\ NYISO states that implementing the 100 kV ``bulk 
electric system'' definition in the New York Control Area will cause it 
to incur increased capital costs and staff additions for which cost 
recovery will be required.\137\
---------------------------------------------------------------------------

    \135\ Indicated New York Transmission Owners at 11.
    \136\ See, e.g., Northeast Utilities at 6.
    \137\ NYISO at 11.
---------------------------------------------------------------------------

(b) Commission Determination
    134. We note that the Commission has adopted an explicit rule, as 
required under Section 219(b)(4) of EPAct 2005, allowing the recovery 
of ``all prudently incurred costs necessary to comply with mandatory 
reliability standards issued pursuant to section 215,'' \138\ and that 
the proposed modifications to the definition of bulk electric system do 
not raise any new issues with respect to cost recovery of reliability 
compliance costs. Finally, the transition plan that we direct herein 
will facilitate an opportunity for transmission owners and any other 
affected entities to recover any one-time or annual costs of compliance 
that result from any changes to the definition of ``bulk electric 
system'' as ultimately adopted by NERC.
---------------------------------------------------------------------------

    \138\ 16 U.S.C. 824s(b)(4)(A); see also 18 CFR 35.35(f)(2010).
---------------------------------------------------------------------------

5. Issues Regarding the Western Interconnection
(a) Comments
    135. Several entities from the Western Interconnection state that 
the proposal should not apply to the Western Interconnection because 
the West is built and operated differently.\139\ The parties argue that 
100-200 kV facilities in the West are often used for distribution of 
power and have a limited or no impact on reliability over the wider 
area.\140\ Multiple entities supported utilizing a technical test to 
differentiate which facilities should be included, such as the material 
impact assessment methodology currently being developed by the WECC 
BESDTF.\141\ Several commenters also argue that the proposal would be 
expensive to implement while providing minimal reliability benefits.
---------------------------------------------------------------------------

    \139\ See, e.g., WECC, State Utility Commissions and Consumer 
Counsel, WPSC, Joint Western Commenters, Snohomish.
    \140\ Id.
    \141\ See, e.g., Bay Area Municipal, Joint Western Commenters, 
Redding, NV Energy, Snohomish, Tacoma Power, Utah Municipal.
---------------------------------------------------------------------------

    136. State Utility Commissions and Consumer Counsel state that 
facilities ranging from 100-199 kV in the West are typically used for 
radial distribution or local area distribution networks, and not 
necessarily for bulk power

[[Page 72928]]

transmission.\142\ They believe that a 200 kV bulk electric system 
threshold reflects the usage and history of the Western 
Interconnection.\143\ They further argue that nearly all new 
transmission in the West is being built at 500 and 230 kV and that the 
average line capacity of 100-199 kV lines makes up a very small 
percentage of the overall network capacity in the West.\144\
---------------------------------------------------------------------------

    \142\ State Utility Commissions and Consumer Counsel at 2.
    \143\ Id.
    \144\ Id.
---------------------------------------------------------------------------

    137. The WPSC notes that certain utilities within its service area 
have elected to build distribution facilities above 100 kV, and such 
utilities could become subject to substantial compliance costs without 
measurable benefits under the proposed bright-line rule.\145\ Moreover, 
if the 100 kV threshold is adopted, certain commenters are concerned 
that utilities will elect to build facilities below 100 kV in order to 
avoid complying with the Commission-approved Reliability 
Standards.\146\
---------------------------------------------------------------------------

    \145\ WPSC at 2-3.
    \146\ Id. at 2-3, 5; Utah Municipal at 6-7.
---------------------------------------------------------------------------

    138. Likewise, Utah Municipal argues that any proposal to classify 
facilities in excess of 100 kV as part of the bulk electric system may 
be appropriate for the Eastern Interconnection, but that such an 
approach is inappropriate and extremely burdensome for entities in the 
Western Interconnection.\147\ Utah Municipal further notes that the 
NOPR does not address the ``demonstrable differences between the 
Western and Eastern Interconnections,'' i.e., that the spread out 
nature of the West makes use of lines over 100 kV appropriate for use 
as distribution lines.\148\ Rather than adopting an across the board 
change in each region's approach to determining ``bulk electric 
system'' facilities, Utah Municipal recommends letting the WECC BESDTF 
finish work on its hybrid threshold and material impact assessment 
classification, and requests that the Commission defer to the technical 
experts at Regional Entities such as WECC regarding any bulk electric 
system definition change.\149\
---------------------------------------------------------------------------

    \147\ Utah Municipal at 5-7.
    \148\ Id. at 8.
    \149\ Id. at 13.
---------------------------------------------------------------------------

(b) Commission Determination
    139. The Commission does not agree with the commenters' arguments 
that 100-199 kV facilities in the Western Interconnection should be 
treated differently than facilities in the Eastern Interconnection as a 
threshold matter. The bulk electric system definition should include 
all facilities that are necessary for operating an interconnected 
electric transmission network. While commenters have implied that not 
all 100-199 kV facilities are needed for reliable operation, the 
Commission notes that 100 kV and some lower voltage facilities are 
included in some of the WECC Rated Paths. Clearly, these facilities are 
operationally significant and needed for reliable operation as 
identified by certain WECC documents.\150\ Any entity wishing to seek 
exemption of non-radial facilities from compliance with Commission-
approved Reliability Standards may utilize the exemption process NERC 
will develop. While the Western Interconnection has a higher percentage 
of transmission facilities above 200 kV compared to the Eastern 
Interconnection,\151\ it is how the lines below 200 kV are 
interconnected with higher voltage facilities that determines their 
significance.
---------------------------------------------------------------------------

    \150\ See WECC Rated Path Catalog.
    \151\ In the Western Interconnection, 59 percent of the total 
circuit miles of transmission lines above 100 kV also are above 200 
kV, compared to 43 percent in the Eastern Interconnection. See NOPR, 
FERC Stats. & Regs. ] 32,654 at n. 36.
---------------------------------------------------------------------------

    140. Therefore, commenters have not provided adequate explanation 
in this proceeding, supported by data and analysis, as to why there is 
a physical difference upon which to treat the Western Interconnection 
differently. In fact, the present WECC definition uses 100 kV as the 
threshold for classifying bulk electric system facilities.\152\ The 
Commission understands that the audits performed by WECC and self-
reporting by entities includes all facilities 100 kV and above.\153\
---------------------------------------------------------------------------

    \152\ See http://www.wecc.biz/Standards/Development/BES/default.aspx.
    \153\ June 2007 Filing at 13-14.
---------------------------------------------------------------------------

    141. Further, the suggestion that the modifications should not 
apply to the West contradicts guidance regarding Reliability Standards 
from Order No. 672. Order No. 672 details several factors the 
Commission will consider in determining whether a proposed Reliability 
Standard is just and reasonable. One of the factors indicates that a 
``proposed Reliability Standard should be designed to apply throughout 
the interconnected North American Bulk-Power System, to the maximum 
extent this is achievable with a single Reliability Standard.'' \154\ 
Moreover, and particularly compelling with respect to the definition of 
bulk electric system, Order No. 672 indicates that proposed Reliability 
Standards ``should be clear and unambiguous regarding what is required 
and who is required to comply.'' \155\ Eliminating broad regional 
discretion without ERO or Commission oversight and maintaining a 100 kV 
bright-line definition, coupled with an exemption process, removes any 
ambiguity regarding who is required to comply and accomplishes the goal 
of reducing inconsistencies across regions. Commenters have not 
provided compelling evidence that the proposed definition should not 
apply to the United States portion of the Western Interconnection as a 
threshold matter. As Order No. 672 detailed, however, the regions may 
propose: (1) A regional difference that is more stringent than the 
continent-wide definition, including a regional difference that 
addresses matters that the continent-wide definition does not; or (2) a 
regional definition that is necessitated by a physical difference in 
the Bulk-Power System. Should a region decide to propose a regional 
difference, in addition to the criteria above, such a proposal must 
address the Commission's concerns with the present definition with the 
understanding that any such alternative must be as effective as, or 
more effective than, the Commission's proposed approach in addressing 
the identified technical and other concerns, and may not result in a 
reduction in reliability.\156\
---------------------------------------------------------------------------

    \154\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 331.
    \155\ Id. at P 325.
    \156\ See, e.g., Version One Regional Reliability Standard for 
Resource and Demand Balancing, 133 FERC ] 61,063, at P 14 (2010); 
North American Electric Reliability Corporation Reliability 
Standards Development and NERC and Regional Entity Enforcement, 132 
FERC ] 61,217 at P 112 (2010).
---------------------------------------------------------------------------

6. Impact on Generation Owners and Operators
(a) Comments
    142. NERC and several other commenters raise the concern that the 
revised definition could bring a large number of generator owners and 
generator operators within the ambit of the Reliability Standards for 
the first time, and could result in an extremely large number of 
exemption requests despite the fact that the relevant facilities can 
have limited or no impact on the Bulk-Power System.\157\ NERC and other 
commenters generally request that the Ad Hoc Group for Generator 
Requirements at the Transmission Interface (the ``GOTO task force'') 
\158\

[[Page 72929]]

findings and process be taken into account as part of any final 
Commission rule, and/or that any new ``bulk electric system'' 
definition otherwise adopted be developed in concert with the GOTO task 
force findings.\159\
---------------------------------------------------------------------------

    \157\ NERC at 12-14; see also Palo Alto at 6-7, NCPA at 6-10.
    \158\ NERC has undertaken an initiative to address the special 
circumstances associated with generators and to determine which 
Reliability Standards might be inappropriate for such limited 
facilities. The GOTO task force was formed in February 2009, and 
included a broad array of participants across regions and industry 
segments, with representatives from operating and planning 
perspectives. The GOTO task force developed a Final Report, issued 
in November 2009, and has submitted a Standards Authorization 
Request to NERC to implement its proposed recommendations. See Final 
Report from the Ad Hoc Group for Generator Requirements at the 
Transmission Interface and related materials, available at http://www.nerc.com/filez/standards/Project2010-07_GOTO_Project.html.
    \159\ NERC at 14; Palo Alto at 7, NCPA at 9-10.
---------------------------------------------------------------------------

    143. A few other parties request additional clarification with 
respect to the proposed rule's applicability to generation facilities. 
The U.S. Department of the Interior suggests that the Commission 
clarify its policy regarding the exclusion of radial lines from the 
bulk electric system definition, such that transmission facilities 
linking small generators are also treated as excluded radial 
lines.\160\ WECC notes that the Commission's proposed bright-line 
standard is somewhat unclear, in that parts of the NOPR suggest that 
the 100 kV standard would apply only to transmission facilities, while 
the current ``bulk electric system'' definition used by NERC applies to 
transmission, generation, and interconnection facilities.
---------------------------------------------------------------------------

    \160\ U.S. Department of Interior at 1-2 (suggesting that small 
generators be defined as set out in the NERC Statement of Compliance 
Registry Criteria, Section III(c)).
---------------------------------------------------------------------------

(b) Commission Determination
    144. We expect that our decision to direct NERC to develop a 
uniform modified definition of ``bulk-electric system'' will eliminate 
regional discretion and ambiguity. The change will not significantly 
increase the scope of the present definition, which applies to 
transmission, generation and interconnection facilities. The proposed 
exemption process will provide sufficient means for entities that do 
not believe particular facilities are necessary for operating the 
interconnected transmission system to apply for an exemption.
    145. As noted above, NERC has undertaken an initiative to address 
the special circumstances associated with such generators.\161\ 
Although the NERC Board of Trustees has not approved any action arising 
from the GOTO task force at this time, the task force members may 
submit their comments and report to NERC for its consideration as NERC 
develops an exemption process.
---------------------------------------------------------------------------

    \161\ The GOTO task force was formed in February 2009, and 
included a broad array of participants across regions and industry 
segments, with representatives from operating and planning 
perspectives. The GOTO task force developed a Final Report, issued 
in November 2009, and has submitted a Standards Authorization 
Request to NERC to implement its proposed recommendations. NERC and 
other commenters generally request that the GOTO task force findings 
and process be taken into account as part of any final Commission 
rule, and/or that any new ``bulk electric system'' definition 
otherwise adopted be developed in concert with the GOTO task force 
findings.
---------------------------------------------------------------------------

7. Clarifying Terms
(a) Comments
    146. Several commenters seek clarification on the definitions and 
implications of specific terms and concepts such as ``integrated 
transmission element'' and ``material impact.'' \162\
---------------------------------------------------------------------------

    \162\ See, e.g., North Carolina Independent Cooperatives, 
SWTDUG.
---------------------------------------------------------------------------

    147. For example, the North Carolina Independent Cooperatives 
request that the Commission clarify the terms ``integrated transmission 
element'' and ``material impact.'' They state that unless these terms 
are clarified there is a real danger that very small facilities will be 
unnecessarily included in the bulk electric system and their owners 
subjected to unreasonable compliance costs. The North Carolina 
Independent Cooperatives propose that the Commission adopt additional 
factors to determine the types of facilities that fall within or 
outside of the scope of these terms.
    148. ReliabilityFirst requests clarification on whether 
transformers with a high side winding above 100 kV and a low side 
winding below 100 kV are included in the bulk electric system 
definition. It argues that, to eliminate uncertainty, ``any and all'' 
facilities that operate at 100 kV or above should be considered bulk 
electric system facilities, even if, for example, one transformer 
winding operates below 100 kV.\163\
---------------------------------------------------------------------------

    \163\ ReliabilityFirst at 6.
---------------------------------------------------------------------------

(b) Commission Determination
    149. With regard to ReliabilityFirst's comments, we agree with its 
developed delineation point with regard to ``step-down'' transformers, 
but note that these kinds of refinements can and should be addressed as 
part of NERC's exemption process.
    150. We disagree with commenters that definitions of ``integrated 
transmission elements'' and ``material impact'' are needed to implement 
this Final Rule. These terms are not defined by the present bulk 
electric system definition, and defining these terms is not necessary 
to revise the definition as directed herein. Whether specific 
facilities have a material impact is not dispositive with respect to 
whether they are needed for reliable operation. These questions are 
more appropriately addressed through development of an exemption 
process at NERC.

III. Information Collection Statement

    151. The information collection requirements in this Final Rule are 
identified under the Commission data collection, FERC-725-A ``Revision 
of Definition of Bulk Electric System.'' Under section 3507(d) of the 
Paperwork Reduction Act of 1995,\164\ the proposed reporting 
requirements in the subject rulemaking will be submitted to OMB for 
review. Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426 (Attention: Michael Miller, 
Office of the Executive Director, 202-502-8415) or from the Office of 
Management and Budget (Attention: Desk Officer for the Federal Energy 
Regulatory Commission, fax: 202-395-7285, e-mail: <a href="/cdn-cgi/l/email-protection#a3cccad1c2fcd0d6c1cecad0d0cacccde3cccec18dc6ccd38dc4ccd5"><span class="__cf_email__" data-cfemail="bad5d3c8dbe5c9cfd8d7d3c9c9d3d5d4fad5d7d894dfd5ca94ddd5cc">[email protected]</span></a>).
---------------------------------------------------------------------------

    \164\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    152. The ``public protection'' provisions of the Paperwork 
Reduction Act of 1995 require each agency to display a currently valid 
control number and inform respondents that a response is not required 
unless the information collection displays a valid OMB control number 
on each information collection or provides a justification as to why 
the information collection number cannot be displayed. In the case of 
information collections published in regulations, the control number is 
to be published in the Federal Register.
    153. Public Reporting Burden: In the NOPR, the Commission based its 
estimate of the Public Reporting Burden on its belief that only one 
Regional Entity, NPCC, would be immediately affected by the 
Commission's proposal. In particular the Commission stated that the 
transmission owners, transmission operators and transmission service 
providers in the U.S. portion of the NPCC region would be affected by 
the Commission's proposal. Based on registration information available 
on NPCC's Web site, it appeared that approximately 33 transmission 
owners, transmission operators and transmission service providers in 
the U.S. portion of the NPCC region would potentially be affected by 
the Commission's proposal.\165\ These entities are currently 
responsible for complying with applicable mandatory Reliability

[[Page 72930]]

Standards approved by the Commission in Order No. 693 and subsequent 
orders. Given these parameters, the Commission estimated the Public 
Reporting Burden as follows:
---------------------------------------------------------------------------

    \165\ ``NPPC Registered Entities as of January 13, 2010,'' 
available on the NPCC Web site: http://www.npcc.org/.

----------------------------------------------------------------------------------------------------------------
          Data collection
-----------------------------------   Numbers of      Numbers of    Hours per  respondent    Total annual hours
            FERC-725-A                respondents      responses
----------------------------------------------------------------------------------------------------------------
Transmission Owners, Transmission               33               1  Reporting: 0.........  Reporting: 0.
 Operators and Transmission
 Service Providers in the U.S.
 portion of the NPCC Region.
                                                                   ---------------------------------------------
                                                                    Recordkeeping: 500...  Recordkeeping:
                                                                                            16,500.
    Total.........................  ..............  ..............  .....................  16,500.
----------------------------------------------------------------------------------------------------------------

    154. Based on the available information, the Commission estimated 
that 33 entities would be affected by the proposal. The Commission also 
estimated that it would require 16,500 total annual hours for 
collection (reporting and recordkeeping) and that the average 
annualized cost of compliance would be $660,000 ($40/hour for 16,500 
hours; the Commission based the $40/hour estimate on $17/hour for a 
file/record clerk and $23/hour for a supervisor).
    155. Commenters argue that the Commission has severely 
underestimated the potential impact of the change in the definition of 
bulk electric system and the exemption process as proposed in the NOPR. 
APPA/NRECA asserts that the NOPR is deficient in its assessment of the 
public reporting burden.\166\ APPA/NRECA argues that the burden of 
compliance and/or of obtaining exempt status is significant and reaches 
far beyond entities in NPCC. Moreover, APPA/NRECA notes that the 
Commission has used underlying assumptions about the kind and cost of 
work needed to comply with the change in rules that significantly 
underestimate the costs associated with compliance. Finally, APPA/NRECA 
argues that the NOPR is deficient in failing to make any assessment of 
the increased burden related to the change in the Commission's approach 
to allowing lower-voltage (less than 100 kV) facilities to be included 
as part of the bulk electric system by a Regional Entity.
---------------------------------------------------------------------------

    \166\ APPA/NRECA at 37-40.
---------------------------------------------------------------------------

    156. Snohomish argues that the NOPR does not reflect the existing 
practice outside NPCC and that the Commission is simply wrong in 
asserting that the NOPR proposal would not substantially increase 
regulatory compliance burdens. Snohomish asserts that the Commission's 
stated basis for compliance with the Paperwork Reduction Act and 
associated regulations is incorrect.
    157. Given the Commission's decision to direct NERC to develop a 
revised bulk electric system definition, rather than implement the 
NOPR's proposal, and by granting certain clarifications, some of the 
comments are no longer relevant and the remainder are best responded to 
in a future order addressing the revised definition developed by NERC. 
By directing NERC to develop a revised definition, the Commission is 
maintaining the status quo (i.e., the current bulk electric system 
definition) until the Commission approves a revised definition. Thus, 
the Commission's action does not add to or increase entities' reporting 
burden.

IV. Environmental Analysis

    158. 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.\167\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. The actions proposed here fall within the categorical 
exclusion in the Commission's regulations for rules that are 
clarifying, corrective or procedural, for information gathering, 
analysis, and dissemination.\168\ Accordingly, neither an environmental 
impact statement nor environmental assessment is required.
---------------------------------------------------------------------------

    \167\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regs. Preambles 1986-1990 30,783 (1987).
    \168\ 18 CFR 380.4(a)(5).
---------------------------------------------------------------------------

    159. Greenburgh Environmental Forum LORAX Working Group 
(Greenburgh) states that the Commission must address the environmental 
impact of the NOPR on the human environment.\169\
---------------------------------------------------------------------------

    \169\ Greenburgh at 2.
---------------------------------------------------------------------------

    160. We disagree with Greenburgh. Any revised bulk electric system 
definition the ERO develops will not modify thresholds established in 
individual Reliability Standards such as FAC-003 with respect to 
vegetation management. The Final Rule requires the ERO to clarify which 
facilities will be included within the definition of ``bulk electric 
system'' and the actions proposed here fall within the categorical 
exclusion in the Commission's regulations for rules that are 
clarifying, corrective or procedural, for information gathering, 
analysis, and dissemination.

V. Regulatory Flexibility Act Analysis

    161. The Regulatory Flexibility Act of 1980 (RFA) generally 
requires a description and analysis of any final rule that will have 
significant economic impact on a substantial number of small entities. 
The RFA does not mandate any particular outcome in a rulemaking, but 
rather requires consideration of alternatives that are less burdensome 
to small entities and an agency explanation of why alternatives were 
rejected.
    162. In drafting a rule, an agency is required to: (1) Assess the 
effect that its regulation will have on small entities; (2) analyze 
effective alternatives that may minimize a regulation's impact; and (3) 
make the analyses available for public comment. In its NOPR, the agency 
must either include an Initial Regulatory Flexibility Act Analysis 
(Initial Analysis) or certify that the proposed rule will not have a 
``significant impact on a substantial number of small entities.''
    163. If, in preparing the NOPR, an agency determines that the 
proposal could have a significant impact on a substantial number of 
small entities, the agency shall ensure that small entities will have 
an opportunity to participate in the rulemaking procedure.
    164. In its Final Rule, the agency must also either prepare a Final 
Regulatory Flexibility Act Analysis (Final Analysis) or make the 
requisite certification. Based on the comments the agency receives on 
the NOPR, it can alter its

[[Page 72931]]

original position as expressed in the NOPR but it is not required to 
make any substantive changes to the proposed regulation.
    165. The statute provides for judicial review of an agency's final 
RFA certification or Final Analysis. An agency must file a Final 
Analysis demonstrating a ``reasonable, good-faith effort'' to carry out 
the RFA mandate. However, the RFA is a procedural, not a substantive, 
mandate. An agency is only required to demonstrate a reasonable, good 
faith effort to review the impact the proposed rule would place on 
small entities, any alternatives that would address the agency's and 
small entities' concerns and their impact, provide small entities the 
opportunity to comment on the proposals, and review and address 
comments. An agency is not required to adopt the least burdensome rule. 
Further, the RFA does not require an agency to assess the impact of a 
rule on all small entities that may be affected by the rule, only on 
those entities that the agency directly regulates and that are subject 
to the requirements of the rule.

A. NOPR Proposal

    166. In the NOPR, the Commission stated that the immediate effect 
of the proposed directive that the ERO revise its current definition of 
bulk electric system to establish a 100 kV threshold would likely be 
limited to certain transmission owners, transmission operators and 
transmission service providers in the U.S. portion of the NPCC region. 
Most transmission owners, transmission operators and transmission 
service providers do not fall within the definition of small entities. 
The Commission estimated that approximately four of the 33 transmission 
owners, transmission operators and transmission services providers may 
fall within the definition of small entities. The Commission determined 
that this rule will not have a significant economic impact on a 
substantial number of small entities. Accordingly, no regulatory 
flexibility analysis is required.

B. Comments

    167. APPA/NRECA state that the Commission's RFA statement is 
flawed, in that the likely impacts of the proposed rule will reach far 
beyond entities in NPCC. APPA/NRECA argues that it is a substantial 
possibility that a substantial number of entities outside of NPCC will 
be affected by the proposal. As such, it asks for a delay in 
implementing the proposal in order to avoid impacting a broader group 
of smaller entities.\170\
---------------------------------------------------------------------------

    \170\ APPA/NRECA at 41-42.
---------------------------------------------------------------------------

    168. TAPS generally supports the APPA/NRECA comments on the 
Commission's RFA analysis. TAPS argues that the NOPR's RFA 
Certification, which states that only a few (presumably already-
registered) transmission owners, transmission operators, and 
transmission service providers in the NPCC footprint would be affected 
by this rulemaking, is fatally flawed.\171\
---------------------------------------------------------------------------

    \171\ TAPS at 12.
---------------------------------------------------------------------------

C. Commission Determination

    169. The Commission disagrees with commenters that challenge the 
Commission's conclusion that the rule will not have a significant 
economic impact on a substantial number of small entities. Commenters 
have not made specific assertions regarding how the Commission's 
analysis is erroneous or in what ways the Final Rule will have a 
significant economic impact on a substantial number of small entities. 
As the Commission stated in its NOPR, most transmission owners, 
transmission operators and transmission service providers do not fall 
within the definition of small entities. Further, the Commission has 
suggested that the ERO create an appropriate exemption process and this 
will further ensure that the Final Rule minimally affects small 
entities. In addition, the ability of Regional Entities to identify 
``critical'' facilities, operated at less than 100 kV, and require 
these facilities to comply with mandatory Reliability Facilities is not 
new. Our direction here that the ERO formalize the process for 
including such facilities will provide additional protections to small 
entities. Based on this analysis, we certify that this Final Rule will 
not have a significant economic impact on a substantial number of small 
entities. Accordingly, no further RFA analysis is required.

VI. Document Availability

    170. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, 
Washington, DC 20426.
    171. 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.
    172. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or e-mail at 
<a href="/cdn-cgi/l/email-protection#3a5c5f485955545653545f494f4a4a55484e7a5c5f4859145d554c"><span class="__cf_email__" data-cfemail="8debe8ffeee2e3e1e4e3e8fef8fdfde2fff9cdebe8ffeea3eae2fb">[email protected]</span></a>, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
<a href="/cdn-cgi/l/email-protection#225257404e4b410c5047444750474c4147504d4d4f62444750410c454d54"><span class="__cf_email__" data-cfemail="fb8b8e99979298d5899e9d9e899e95989e89949496bb9d9e8998d59c948d">[email protected]</span></a>.

VII. Effective Date and Congressional Notification

    173. These regulations are effective January 25, 2011. The 
Commission has determined, with the concurrence of the Administrator of 
the Office of Information and Regulatory Affairs of OMB, that this rule 
is not a ``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

                               Appendix A
------------------------------------------------------------------------
                 Commenter                           Abbreviation
------------------------------------------------------------------------
Alcoa Inc. and Alcoa Power Generating Inc..  Alcoa
American Public Power Association and the    APPA/NRECA
 National Rural Electric Cooperative
 Association.

[[Page 72932]]

 
Baltimore Gas and Electric Company.........  BGE
Bay Area Municipal Transmission Group......  Bay Area Municipal
Bonneville Power Administration............  BPA
California Municipal Utilities Association.  CMUA
California Public Utilities Commission.....  CPUC
Central Hudson Gas & Electric Corporation,   Indicated New York
 Consolidated Edison Company of New York,     Transmission Owners
 Inc., Long Island Power Authority, New
 York Power Authority, New York State
 Electric & Gas Corporation, Orange and
 Rockland Utilities, Inc. and Rochester Gas
 and Electric Corporation.
City of Anaheim, California................  Anaheim
City of Palo Alto, California..............  Palo Alto
City of Redding, California................  Redding
City of Santa Clara, California d/b/a        Santa Clara
 Silicon Valley Power.
Constellation Energy Commodities Group,      Constellation/CENG
 Inc., Constellation Energy Control and
 Dispatch, LLC, Constellation Energy
 Nuclear Group, LLC, Constellation
 NewEnergy, Inc. and Constellation Power
 Source Generation, Inc.
Consumers Energy Company...................  Consumers Energy
Dow Chemical Company.......................  Dow
Duke Energy Corporation....................  Duke Energy
Edison Electric Institute..................  EEI
Electric Reliability Council of Texas, Inc.  ERCOT
Electricity Consumers Resource Council.....  ELCON
ExxonMobil Research and Engineering........  ExxonMobil
Florida Reliability Coordinating Council...  FRCC
Georgia Transmission Corporation and         GTC/GSOC
 Georgia System Operations Corporation.
Greenburgh Environmental Forum LORAX         Greenburgh
 Working Group.
Hydro-Qu[eacute]bec Trans[Eacute]nergie....  Hydro-Qu[eacute]bec
Independent Electricity System Operator,     Joint Canadian Parties
 Hydro One Networks Inc., Ontario Power
 Generation Inc., Five Nations Energy Inc.,
 Brookfield Renewable Power Inc., New
 Brunswick System Operator, and Nova Scotia
 Power Inc.
Industrial Customers of Northwest Utilities  ICNU
ISO New England Inc........................  ISO-NE
Large Public Power Council                   ...........................
Manitoba Hydro                               ...........................
National Association of Regulatory Utility   NARUC
 Commissioners.
National Grid USA..........................  National Grid
Nevada Power Company and Sierra Pacific      NV Energy
 Power Company, d/b/a NV Energy.
New England States Committee on Electricity  NESCOE
New York Independent System Operator, Inc..  NYISO
New York State Public Service Commission...  NYPSC
New York State Reliability Council, L.L.C..  NYSRC
North American Electric Reliability          NERC
 Corporation.
North Carolina Independent Cooperatives      ...........................
Northeast Power Coordinating Council, Inc..  NPCC
Northeast Utilities Service Company........  Northeast Utilities
Northern California Power Agency...........  NCPA
Ontario Power Generation Inc...............  Ontario Power
Joint Western Commenters...................  Joint Western Commenters
    Benton Rural Electric Association        ...........................
    Big Bend Electric Cooperative            ...........................
    Blachley-Lane Electric Cooperative       ...........................
    Central Electric Cooperative             ...........................
    Central Lincoln People's Utility         ...........................
     District
    City of Ellensburg, Washington           ...........................
    City of Richland, Washington             ...........................
    Clearwater Power Company                 ...........................
    Consumers Power                          ...........................
    Coos-Curry Electric Cooperative          ...........................
    Douglas Electric Cooperative             ...........................
    Eugene Water & Electric Board            ...........................
    Fall River Rural Electric Cooperative    ...........................
    Fergus Electric Cooperative, Inc.        ...........................
    Idaho Falls Power                        ...........................
    Inland Power and Light Company           ...........................
    Lane Electric Cooperative                ...........................
    Lincoln Electric Cooperative             ...........................
    Lost River Electric Cooperative          ...........................
    Northern Lights                          ...........................
    Northwest Public Power Association       ...........................
    Northwest Requirements Utilities         ...........................
    Okanogan Electric Cooperative            ...........................
    Pacific Northwest Generating             ...........................
     Cooperative
    Public Utility District No. 1 of         ...........................
     Douglas County, Washington

[[Page 72933]]

 
    Public Utility District No. 1 of         ...........................
     Klickitat County, Washington
    Raft River Rural Electric Cooperative    ...........................
    Salmon River Electric Cooperative        ...........................
    Tillamook PUD                            ...........................
    Umatilla Electric Cooperative            ...........................
    Wells Rural Electric Company             ...........................
    West Oregon Electric Cooperative         ...........................
    Western Montana Electric Generating and  ...........................
     Transmission Cooperative, Inc
Portland General Electric Company..........  PGE
Public Power Council                         ...........................
Public Utility District No. 1 of Snohomish   Snohomish
 County, Washington.
ReliabilityFirst Corporation...............  ReliabilityFirst
Southern California Edison Company.........  SCE
Southern Company Services, Inc.............  Southern Company
Southwest Transmission Dependent Utility     SWTDUG
 Group.
State Utility Commissions and Consumer       ...........................
 Counsel
    Idaho Public Utilities Commission        ...........................
    Montana Public Service Commission        ...........................
    Montana Consumer Counsel                 ...........................
    Oregon Public Utility Commission         ...........................
    Utah Public Service Commission           ...........................
    Washington Utilities and Transportation  ...........................
     Commission
Tacoma Power...............................  ...........................
Texas Industrial Energy Consumers..........  TIEC
Transmission Access Policy Study Group.....  TAPS
Transmission Agency of Northern California.  TANC
U.S. Department of the Interior              ...........................
Utah Associated Municipal Power Systems....  Utah Municipal
Utility Services, Inc......................  Utility Services
Virginia Electric and Power Company, d/b/a   Dominion Power
 Dominion Virginia Power.
Western Electricity Coordinating Council...  WECC
Wyoming Public Service Commission..........  WPSC
------------------------------------------------------------------------

[FR Doc. 2010-29570 Filed 11-24-10; 8:45 am]
BILLING CODE 6717-01-P


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