133 FERC ¶ 61,150 

UNITED STATES OF AMERICA 

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. 

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 

 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). 
Docket No. RM09-18-000 ii 

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. 

EFFECTIVE DATE: This Final Rule will become effective [insert date that is 60 days 

from the date that this Final Rule is published in the FEDERAL REGISTER]. 
Docket No. RM09-18-000 iii 

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 Number 

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 Facilities ..............................................11.

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 Deference to NERC 

and the Regional Entities.............................................................................19.

(ii) Bulk-Power System ..............................................................................24.

(iii) Distribution Facilities ..........................................................................26.

(2) Commission Determination ......................................................................29.

(i) Overview................................................................................................29.

(ii) NERC Standards Development Process and Deference to NERC 

and the Regional Entities.............................................................................34.

(iii) Bulk-Power System.............................................................................36.

(iv) Distribution Facilities ..........................................................................37.

(b) Scope of the Definitional Change of “Bulk Electric System”.......................42.

(1) NOPR Proposal .........................................................................................42.

(2) Comments..................................................................................................43.

(3) Commission Determination ......................................................................52.

(c) Technical and Historical Justification for Modification................................56.

(1) NOPR Proposal .........................................................................................56.

(2) Comments..................................................................................................58.

(3) Commission Determination .....................................................................72.

(i) Impact-Based Methodology and Regional Variation ............................76.

(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.
Docket No. RM09-18-000 - 2 - 

(1) Comments..................................................................................................97.

(2) Commission Determination ......................................................................100.

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.
133 FERC ¶ 61,150 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 John R. Norris, and Cheryl A. LaFleur. 

Revision to Electric Reliability Organization Definition 

of Bulk Electric System 

Docket No. RM09-18-000 

ORDER NO. 743 

FINAL RULE 

(Issued November 18, 2010) 

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 

 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). 
Docket No. RM09-18-000 - 2 - 

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

 

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 

 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).
Docket No. RM09-18-000 - 3 - 

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

 

 7

 Pub. L. No. 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). 
Docket No. RM09-18-000 - 4 - 

4. In February 2006, the Commission issued Order No. 6729

 in which the 

Commission certified one organization, the North American Electric Reliability 

Corporation (NERC), as the ERO.10 

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. 

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 

 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). 

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). 
Docket No. RM09-18-000 - 5 - 

portion thereof) [and] electric energy from generating 

facilities needed to maintain transmission system reliability.12 

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 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 

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 

 12 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 76. 

13 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 75 n.47 (quoting NERC’s 

definition of “bulk electric system”). 

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”). 
Docket No. RM09-18-000 - 6 - 

that “[it] remains concerned about the need to address the potential for gaps in coverage 

of facilities.”15 

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 

 

(continued...) 

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.

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 
Docket No. RM09-18-000 - 7 - 

shedding and special protection relay facilities below 100 kV, which are monitored by 

Regional Entities, in compliance with NERC’s Reliability Standards.”18 

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

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

 

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. 

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)). 

20 Id.
Docket No. RM09-18-000 - 8 - 

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 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 

 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. 
Docket No. RM09-18-000 - 9 - 

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. 

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

 

(continued...) 

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. 

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 
Docket No. RM09-18-000 - 10 - 

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-byfacility 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 

 

footprint, NPCC would need additional time to carefully consider and develop a more 

extensive and detailed implementation plan.”). 
Docket No. RM09-18-000 - 11 - 

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. 

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 

 26 See 75 FR 14097 (Mar. 24, 2010). 

27 A list of commenters appears in Appendix A. 
Docket No. RM09-18-000 - 12 - 

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 § 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 

 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.
Docket No. RM09-18-000 - 13 - 

Commission to defer to the ERO on technical issues and for the ERO to have primary 

responsibility for developing specific Reliability Standards. 

(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 Development Process.29 NERC states that the NERC Glossary of Terms is 

part-and-parcel of the Reliability Standards and therefore fall 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. 

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 

 29 NERC at 8-11. 
Docket No. RM09-18-000 - 14 - 

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. 

 30 TAPS at 4; see also Snohomish at 22-28. 
Docket No. RM09-18-000 - 15 - 

(ii) Bulk-Power System

24. NYSRC argues that section 215 does not provide a “bright-line” test for BulkPower 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. 

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. 

 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. 
Docket No. RM09-18-000 - 16 - 

(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. 

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 

 34 See, e.g., Constellation/CENG, Dow, Duke Energy, GTC/GSOC, HydroQuébec, Indicated New York Transmission Owners, Joint Western Commenters, 

NARUC, NV Energy, NYSRC, PGE, Public Power Council, Snohomish Tacoma Power, 

TIEC. 
Docket No. RM09-18-000 - 17 - 

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. 

(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 

 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). 
Docket No. RM09-18-000 - 18 - 

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 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. 

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 

 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. 

38 16 U.S.C. 824o(d)(5). 
Docket No. RM09-18-000 - 19 - 

excluding facilities the ERO determines are not necessary for operating the 

interconnected transmission network. It is important to note that 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 

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 

 39 We note that all regions except NPCC currently utilize 100 kV as a general 

threshold. 

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. 
Docket No. RM09-18-000 - 20 - 

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 

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. 

 43 See Order No. 672, FERC Stats. & Regs. 31,204 at P 325. 

44 See id. P 331. 

45 Id. P 291. 
Docket No. RM09-18-000 - 21 - 

(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 

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” 

 46 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 185. 
Docket No. RM09-18-000 - 22 - 

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 

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 

(iii) Bulk-Power System

36. With regard to the alleged conflict between “bulk electric system” and “BulkPower 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 

 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.
Docket No. RM09-18-000 - 23 - 

(“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 

(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 

 51 Id. P 76. 

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

53 Order No. 693-A, 120 FERC ¶ 61,053 at P 19. 

54 16 U.S.C. 824o(a)(1). 
Docket No. RM09-18-000 - 24 - 

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. 

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 

 55 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 71. 
Docket No. RM09-18-000 - 25 - 

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 
Docket No. RM09-18-000 - 26 - 

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. 

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 

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 

 56 This example illustrates one of the deficiencies of the NPCC impact-based 

approach for identifying bulk electric system facilities, discussed more fully below. 

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_docu

ments/2010_GoldBook_Public_Final_033110.pdf. 
Docket No. RM09-18-000 - 27 - 

definition for an “initial period”58 subject to subsequent review.59 The 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 

(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 

 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. 

61 NOPR, FERC Stats. & Regs. ¶ 32,654 at P 1. 
Docket No. RM09-18-000 - 28 - 

Entity must seek ERO and Commission approval before exempting any facility rated at 

100 kV or above from compliance with mandatory Reliability Standards. 

(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. 

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 

 62 See, e.g., EEI, Dominion Power, National Grid, and Southern Company. 
Docket No. RM09-18-000 - 29 - 

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 

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 

 63 Joint Western Commenters at section IV.B. 

64 Id. 

65 See, e.g., id. at section III.C. 

66 APPA/NRECA at 19-23. 
Docket No. RM09-18-000 - 30 - 

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. 

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 

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 

 67 National Grid at 10. 
Docket No. RM09-18-000 - 31 - 

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 

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. 

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 

 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. 
Docket No. RM09-18-000 - 32 - 

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 
Docket No. RM09-18-000 - 33 - 

general 100 kV threshold.69 Further, at present all regions, with the exception of NPCC, 

also apply a 100 kV threshold. 

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. 

(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 

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

70 See NERC/NPCC, compliance filing, Docket No. RC09-3 (filed Feb. 20, 2009). 
Docket No. RM09-18-000 - 34 - 

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 

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 

 71 NERC at 2. 

72 ReliabilityFirst at 2; SCE at 2; WECC at 3. 

73 See, e.g., FRCC, NARUC, NYSRC, Redding, GTC/GSOC. 
Docket No. RM09-18-000 - 35 - 

connection between regional inconsistencies and reliability concerns.74 Commenters also 

assert the proposal will be expensive and lengthy to implement without improving 

reliability. 

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. 

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 

 74 See, e.g., NARUC, NYPSC, FRCC, Dow, GTC/GSOC, Hydro-Québec, Ontario 

Power, NV Energy, Snohomish, Southern. 

75 See, e.g., NARUC, NYSRC. 

76 APPA/NRECA at 15-16. 
Docket No. RM09-18-000 - 36 - 

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, 

NARUC believes NPCC’s estimated $280 million cost to comply with the new ruling 

will outweigh the expected minimal to negligible benefit. 

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 widearea reliability impact. 

 77 Id. at 30-31. 

78 Id. at 32. 

79 CMUA at 5. 
Docket No. RM09-18-000 - 37 - 

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 

 80 NYSPC at 10. 
Docket No. RM09-18-000 - 38 - 

affected. Separately, the NYPSC states that the Commission has not provided evidence 

as to how the regional inconsistencies identified in the NOPR jeopardize reliability. 

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 WE

BESDTF’s efforts that will utilize an impact based approach. Further, if the Commission 

CC 

 81 Tacoma Power at 6. 
Docket No. RM09-18-000 - 39 - 

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. 

68. Hydro-Québec 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 

 82 Utah Municipal at 8. 
Docket No. RM09-18-000 - 40 - 

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. 

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

(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 

 83 WPSC at 2-3. 
Docket No. RM09-18-000 - 41 - 

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 brightline, 100 kV threshold, along with a NERC-developed, Commission-approved exemption 

process, as well as 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. 

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 

 84 See Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 291. 
Docket No. RM09-18-000 - 42 - 

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. 

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 

 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 Standards’ 

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 voltagebased 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.” 
Docket No. RM09-18-000 - 43 - 

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 100kV 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 
Docket No. RM09-18-000 - 44 - 

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 

 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. 
Docket No. RM09-18-000 - 45 - 

open to interpretation.88 Thus, under NPCC Document A-10, if an entity chooses a l

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.” 

arge 

 

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 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 

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.”). 
Docket No. RM09-18-000 - 46 - 

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. 

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-

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

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.” 
Docket No. RM09-18-000 - 47 - 

line does not, during a contingency, deliverability is not ensured, which could lead to loss 

of load and undermine reliability. 

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, 

 91 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 290. 
Docket No. RM09-18-000 - 48 - 

and also will allow Regional Entities to add facilities below 100 kV they believe should 

be included. 

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. 
Docket No. RM09-18-000 - 49 - 

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 nonnuclear 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 Additionally, 

 

(continued...) 

93 See WECC BESDTF Proposal V5 Appendix B, at B-11-B-12, available at

http://www.wecc.biz/Standards/Development/BES/Shared%20Documents/WECC0058%20BES%20Comments%20Posting%205/P5%20Appendix%20B%20FINAL%20C

LEAN.doc: “The BESDTF considered the Northeast Power Coordinating Council’s 
Docket No. RM09-18-000 - 50 - 

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. 

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, 

 

Transfer Distribution Factor (TDF) approach to determining which networked Elements 

and facilities are used to distribute electricity locally and do not provide meaningful flowthrough 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.” 
Docket No. RM09-18-000 - 51 - 

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. 

(ii) 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 
Docket No. RM09-18-000 - 52 - 

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 

 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. 
Docket No. RM09-18-000 - 53 - 

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. 

(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 

 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=9A02E0DB163EF93BA15755C0A9619C

8B63&sec=&spon=&&scp=1&sq=Brief%20Power%20Failure%20Is%20Long%20Eno

ugh%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. 
Docket No. RM09-18-000 - 54 - 

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 

(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 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 

 97 NYPSC at 10-11. The NYPSC’s comments do not specify whether ConEd took 

any action besides the telecommunications fixes. 

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.” 
Docket No. RM09-18-000 - 55 - 

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 nonfirm transactions101 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. 

 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. 
Docket No. RM09-18-000 - 56 - 

(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 performancebased approach would suffer reduced reliability as compared to those who are required to 

adopt the 100 kV threshold. 

92. Hydro-Québec contends that the NOPR’s proposal does not take into account the 

characteristics of the Québec 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-Québec, application of the 

 102 Ontario Power at 4. 
Docket No. RM09-18-000 - 57 - 

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 
Docket No. RM09-18-000 - 58 - 

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 

 103 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 290. 
Docket No. RM09-18-000 - 59 - 

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 NPCC 

impact test is not a consistent, repeatable, and comprehensive alternative to the brightline, 100kV 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. 

(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. 

 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. 
Docket No. RM09-18-000 - 60 - 

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

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 

 105 ReliabilityFirst at 10. 
Docket No. RM09-18-000 - 61 - 

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. 

(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 

 106 NOPR, FERC Stats. & Regs. ¶ 32,654 at P 18. 
Docket No. RM09-18-000 - 62 - 

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. 

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 

 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. 
Docket No. RM09-18-000 - 63 - 

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 lowvoltage (less than 100 kV) facilities is necessary to preserve reliability.111 

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 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. 

 110 APPA/NRECA at 19-23. 

111 Id. at 25-27. 
Docket No. RM09-18-000 - 64 - 

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. 

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 

 112 See, e.g., NERC, NPCC, and Utility Services. 
Docket No. RM09-18-000 - 65 - 

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 
Docket No. RM09-18-000 - 66 - 

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. 

(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 

 113 ERCOT at 2. 
Docket No. RM09-18-000 - 67 - 

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 
Docket No. RM09-18-000 - 68 - 

its Rules of Procedures that may be required to implement the exemption process, and 

file the proposed 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. 

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 

 114 Order No. 672, FERC Stats. & Regs ¶ 31, 204 at P 140, 654. 
Docket No. RM09-18-000 - 69 - 

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 website. 

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 
Docket No. RM09-18-000 - 70 - 

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

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 

 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). 
Docket No. RM09-18-000 - 71 - 

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

(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 newlyaffected 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

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 

 118 NOPR, FERC Stats. & Regs. ¶ 32,654 at P 27. 

119 See, e.g., APPA/NRECA and Bay Area Municipal. 

120 APPA/NRECA at 4. 

121 Id. at 35. 
Docket No. RM09-18-000 - 72 - 

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

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 recommends a transition period of 24 months for Registered Entities to phase in 

compliance of additional facilities with Commission-approved Reliability Standards.126 

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 

 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 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. 
Docket No. RM09-18-000 - 73 - 

needed changes in registration by the effective date of the bulk electric system 

definition.127 

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. 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 

 127 NPCC at 5. 

128 NYISO at 8-9. 

129 Id.

130 See, e.g., Utility Services, Dow, and ELCON. 

131 Utility Services at 5. 
Docket No. RM09-18-000 - 74 - 

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

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

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 

 132 ELCON at 5. 

133 Dow at 7. 
Docket No. RM09-18-000 - 75 - 

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 noncompliance 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 th

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. 

e 

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 

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

135 Indicated New York Transmission Owners at 11. 

136 See, e.g., Northeast Utilities at 6. 
Docket No. RM09-18-000 - 76 - 

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 whi

cost recovery will be required

ch 

.

137

(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. 

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 

 137 NYISO at 11. 

(b)(4)(A); see also 18 CFR § 35.35(f)(2010). 138 16 U.S.C. 824s
Docket No. RM09-18-000 - 77 - 

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 

that a 200 kV 

s 

 

benefits. 

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 transmission.142 They believe 

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 line

makes up a very small percentage of the overall network capacity in the West.144 

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. 

142 State Utility Commissions and Consumer Counsel at 2. 

143 Id.

144 Id. 
Docket No. RM09-18-000 - 78 - 

137. The WPSC notes that certain utilities within its service area have elected to buil

distribution facilities above 100 kV, and such utilities could become subject to substan

compliance costs without measurable benefits under the proposed bright-line rule.

d 

tial 

in commenters are concerned that 

ome for 

0 

ld 

nt classification, and requests that the Commission defer to 

 

145 

Moreover, if the 100 kV threshold is adopted, certa

utilities will elect to build facilities below 100 kV in order to avoid complying with the 

Commission-approved Reliability Standards.146 

138. Likewise, Utah Municipal argues that any proposal to classify facilities in excess 

of 100kV as part of the bulk electric system may be appropriate for the Eastern 

Interconnection, but that such an approach is inappropriate and extremely burdens

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 10

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 thresho

and material impact assessme

cipal at 6-7. 

nicipal at 5-7. 

145 WPSC at 2-3. 

146 Id. at 2-3, 5; Utah Muni

147 Utah Mu

148 Id. at 8. 
Docket No. RM09-18-000 - 79 - 

the technical experts at Regional Entities such as WECC regarding any bulk electric 

system definition change.149 

(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 facili

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. 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 perc

of transmission facilities above 

ties in the 

entage 

200 kV compared to the Eastern Interconnection,151 it is 

150

how the lines below 200 kV are interconnected with higher voltage facilities that 

determines their significance. 

 149 Id. at 13. 

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. 
Docket No. RM09-18-000 - 80 - 

140. Therefore, commenters have not provided adequate explanation in this 

supported by data and analysis, as to why there is a physical difference upon which t

treat the Western Interconnection differently. In fact, 

proceeding, 

o 

the present WECC definition uses 

72 

sed 

e 

the 

 

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 

141. Further, the suggestion that the modifications should not apply to the West 

contradicts guidance regarding Reliability Standards from Order No. 672. Order No. 6

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 “propo

Reliability Standard should be designed to apply throughout the interconnected North

American Bulk-Power System, to the maximum extent this is achievable with a singl

Reliability Standard.”154 Moreover, and particularly compelling with respect to 

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 100kV bright-line definition, coupled with an 

152 See http://www.wecc.biz/Standards/Development/BES/default.aspx. 

153 June 2007 Filing at 13-14. 

154 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 331. 

155 Id. at P 325. 
Docket No. RM09-18-000 - 81 - 

exemption process, removes any ambiguity regarding who is required to comply and 

accomplishes the goal of reducing inconsistencies across regions. Commenters hav

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 address

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 re

to propose a regional difference, in addition to the criteria above, such a proposal m

address the Commission’s concerns with the present definitio

e not 

es 

gion decide 

ust 

n with the understanding 

th han, the 

Commiss addressing the identified technical and other 

at any such alternative must be as effective as, or more effective t

ion’s proposed approach in 

concerns, and may not result in a reduction in reliability.156 

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 

 156 See, e.g., Version One Regional Reliability Standard for Resource and Dem

Balancing, 133 FERC ¶ 61,063, at P 14 (2010); North American Electric Reliabil

Corporation Reliability Standards Development and

and 

ity 

 NERC and Regional Entity 

Enforcement, 132 FERC ¶ 61,217 at P 112 (2010). 
Docket No. RM09-18-000 - 82 - 

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 Int

(the “GOTO task force”)

erface 

 part of any 

 that the 100 

 

158 findings and process be taken into account as

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 

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

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. 

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)). 
Docket No. RM09-18-000 - 83 - 

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. 

(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

change will not significantly increase the scope of the present definition, which 

transmission, g

. The 

applies to 

eneration and interconnection facilities. The proposed exemption process 

e 

h 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. 

 

will provide sufficient means for entities that do not believe particular facilities ar

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 suc

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. 
Docket No. RM09-18-000 - 84 - 

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

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

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

163 ReliabilityFirst at 6. 
Docket No. RM09-18-000 - 85 - 

(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, 

 164 44 U.S.C. 3507(d). 
Docket No. RM09-18-000 - 86 - 

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: 

oira_submission@omb.eop.gov). 

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 website, 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 

 165 “NPPC Registered Entities as of January 13, 2010,” available on the NPCC 

website: http://www.npcc.org/. 
Docket No. RM09-18-000 - 87 - 

applicable mandatory Reliability Standards approved by the Commission in Order No. 

693 and subsequent orders. Given these parameters, the Commission estimated the 

Public Reporting Burden as follows: 

Data Collection No. of 

Respondents 

No. of 

Responses 

Hours Per 

Respondent 

Total Annual 

Hours 

FERC-725-A

Reporting: 

0 

Reporting: 

0 

Transmission 

Owners, 

Transmission 

Operators and 

Transmission 

Service 

Providers in the 

U.S. portion of 

the NPCC 

Region: 

33 1 

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 
Docket No. RM09-18-000 - 88 - 

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. 

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 

 166 APPA/NRECA at 37-40. 
Docket No. RM09-18-000 - 89 - 

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. 

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 

160. We disagree with Greenburgh. Any revised bulk electric system definition the 

ERO develops will not modify thresholds established in individual Reliability Standards 

 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). 

169 Greenburgh at 2. 
Docket No. RM09-18-000 - 90 - 

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 
Docket No. RM09-18-000 - 91 - 

the agency receives on the NOPR, it can alter its 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, goodfaith 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 
Docket No. RM09-18-000 - 92 - 

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

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

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 

 170 APPA/NRECA at 41-42. 

171 TAPS at 12. 
Docket No. RM09-18-000 - 93 - 

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 5:00 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 
Docket No. RM09-18-000 - 94 - 

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 website during 

normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-

208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public Reference Room at 

(202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

VII. Effective Date and Congressional Notification

173. These regulations are effective [insert date that is 60 days from the date this Final 

Rule is published in the FEDERAL REGISTER]. 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. 

( S E A L ) 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 
Docket No. RM09-18-000 - 95 - 

Appendix A 

Commenter Abbreviation 

Alcoa Inc. and Alcoa Power Generating Inc. Alcoa 

American Public Power Association and the National 

Rural Electric Cooperative Association 

APPA/NRECA 

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, 

Consolidated Edison Company of New York, 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 

Indicated New York 

Transmission Owners 

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 Silicon Valley 

Power 

Santa Clara 

Constellation Energy Commodities Group, Inc., 

Constellation Energy Control and Dispatch, LLC, 

Constellation Energy Nuclear Group, LLC, 

Constellation NewEnergy, Inc. and Constellation Power 

Source Generation, Inc. 

Constellation/CENG 

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 
Docket No. RM09-18-000 - 96 - 

Commenter Abbreviation 

Florida Reliability Coordinating Council FRCC 

Georgia Transmission Corporation and Georgia System 

Operations Corporation 

GTC/GSOC 

Greenburgh Environmental Forum LORAX Working 

Group 

Greenburgh 

Hydro-Québec TransÉnergie Hydro-Québec 

Independent Electricity System Operator, 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. 

Joint Canadian Parties 

Industrial Customers of Northwest Utilities ICNU 

ISO New England Inc. ISO-NE 

Large Public Power Council 

Manitoba Hydro 

National Association of Regulatory Utility 

Commissioners 

NARUC 

National Grid USA National Grid 

Nevada Power Company and Sierra Pacific Power 

Company, d/b/a NV Energy 

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 Corporation NERC 

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 
Docket No. RM09-18-000 - 97 - 

Commenter Abbreviation 

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 

Public Utility District No. 1 of Klickitat County, 

Washington 
Docket No. RM09-18-000 - 98 - 

Commenter Abbreviation 

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 County, 

Washington 

Snohomish 

ReliabilityFirst Corporation ReliabilityFirst 

Southern California Edison Company SCE 

Southern Company Services, Inc. Southern Company 

Southwest Transmission Dependent Utility Group SWTDUG 

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 
Docket No. RM09-18-000 - 99 - 

Commenter Abbreviation 

Utility Services, Inc. Utility Services 

Virginia Electric and Power Company, d/b/a Dominion 

Virginia Power 

Dominion Power 

Western Electricity Coordinating Council WECC 

Wyoming Public Service Commission WPSC