135 FERC ¶ 61,042 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 40 

[Docket No. RM10-29-000] 

Electric Reliability Organization Interpretation of Transmission Operations Reliability 

Standard 

(Issued April 21, 2011) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: Under section 215 of the Federal Power Act (FPA), the Federal Energy 

Regulatory Commission (Commission) proposes to approve the North American Electric 

Reliability Corporation’s (NERC’s) proposed interpretation of Reliability Standard, TOP001-1, Requirement R8. 

DATES: Comments are due [Insert_Date ] that is 60 days after publication in the

FEDERAL REGISTER. 

ADDRESSES: You may submit comments, identified by docket number and in 

accordance with the requirements posted on the Commission’s web site, 

http://www.ferc.gov. Comments may be submitted by any of the following methods: 

 Electronic Submission: Documents created electronically using word processing 

software should be filed in native applications or print-to-PDF format, and not in a 

scanned format, at http://www.ferc.gov/docs-filing/efiling.asp. 

 Mail/Hand Delivery: Commenters unable to file comments electronically must mail 
Docket No. RM10-29-000 - 2 - 

or hand deliver an original copy of their comments to: Federal Energy Regulatory 

Commission, Secretary of the Commission, 888 First Street, NE, Washington, DC 

20426. These requirements can be found on the Commission’s website, see, e.g., the 

“Quick Reference Guide for Paper Submissions,” available at

http://www.ferc.gov/docs-filing/efiling.asp, or via phone from FERC Online Support 

at 202-502-6652 or toll-free at 1-866-208-3676. 

FOR FURTHER INFORMATION CONTACT: 

Robert T. Stroh (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

Telephone: (202) 502-8473 

Eugene Blick (Technical Information) 

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

Telephone: (202) 502-8066 

David O’Connor (Technical Information) 

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

Telephone: (202) 502-6695 

SUPPLEMENTARY INFORMATION:
135 FERC ¶ 61,042 

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. 

Electric Reliability Organization Interpretation of Docket No. RM10-29-000 

 Transmission Operations Reliability Standard 

NOTICE OF PROPOSED RULEMAKING 

(Issued April 21, 2011) 

1. Under section 215 of the Federal Power Act (FPA),1

 the Federal Energy 

Regulatory Commission (Commission) proposes to approve the North American Electric 

Reliability Corporation’s (NERC’s) proposed interpretation of Requirement R8 in 

Commission-approved NERC Reliability Standard TOP-001-1 — Reliability 

Responsibilities and Authorities. 2

 The Commission proposes to approve the 

interpretation as discussed below. 

I. Background

2. Section 215 of the FPA requires a Commission-certified Electric Reliability 

Organization (ERO) to develop mandatory and enforceable Reliability Standards, which 

are subject to Commission review and approval. If approved, the Reliability Standards 

 1

 16 U.S.C. § 824o (2006). 

2

 The Commission is not proposing any new or modified text to its regulations. As 

provided in 18 C.F.R. Part 40, proposed interpretation of a Reliability Standard will not 

become effective until approved by the Commission, and the ERO must post on its 

website each effective Reliability Standard. 
Docket No. RM10-29-000 - 2 - 

are enforced by the ERO, subject to Commission oversight, or by the Commission 

independently. 

3. Pursuant to section 215 of the FPA, the Commission established a process to select 

and certify an ERO3

 and, subsequently, certified NERC as the ERO.4 On March 16, 

2007, the Commission issued Order No. 693, approving 83 of the 107 Reliability 

Standards filed by NERC, including Reliability Standard TOP-001-1.5

4. NERC’s Rules of Procedure provide that a person that is “directly and materially 

affected” by Bulk-Power System reliability may request an interpretation of a Reliability 

Standard.6

 The ERO’s “standards process manager” will assemble a team with relevant 

expertise to address the requested interpretation and also form a ballot pool. NERC’s 

Rules provide that, within 45 days, the team will draft an interpretation of the Reliability 

Standard, with subsequent balloting. If approved by ballot, the interpretation is appended 

 3 Rules Concerning Certification of the Electric Reliability Organization; and 

Procedures for the Establishment, Approval and Enforcement of Electric Reliability 

Standards, Order No. 672, FERC Stats. & Regs. ¶ 31,204, order on reh’g, Order 

No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006). 

4 North American Electric Reliability Corp., 116 FERC ¶ 61,062, order on reh’g 

& compliance, 117 FERC ¶ 61,126 (2006), aff’d sub nom., Alcoa, Inc. v. FERC, 564 F.3d 

1342 (D.C. Cir. 2009). 

5 Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, 

FERC Stats. & Regs. ¶ 31,242, order on reh’g, Order No. 693-A, 120 FERC ¶ 61,053 

(2007). 

6

 NERC Rules of Procedure, Appendix 3A, Reliability Standards Development 

Procedure, Version 6.1, at 27-29 (2010). 
Docket No. RM10-29-000 - 3 - 

to the Reliability Standard and filed with the applicable regulatory authority for 

regulatory approval. 

A. Reliability Standard TOP-001-1

5. Reliability Standard TOP-001-1 (Reliability Responsibilities and Authorities) 

centers on the responsibilities of balancing authorities and transmission operators during 

a system emergency. Specifically, the stated purpose of Reliability Standard TOP-001-1 

is to ensure reliability entities have clear decision-making authority and capabilities to 

take appropriate actions or direct the actions of others to return the transmission system to 

normal conditions during an emergency. Requirement R8 of the standard provides: 

During a system emergency, the Balancing Authority and 

Transmission Operator shall immediately take action to restore the 

Real and Reactive Power Balance. If the Balancing Authority or 

Transmission Operator is unable to restore Real and Reactive Power 

Balance it shall request emergency assistance from the Reliability 

Coordinator. If corrective action or emergency assistance is not 

adequate to mitigate the Real and Reactive Power Balance, then the 

Reliability Coordinator, Balancing Authority, and Transmission 

Operator shall implement firm load shedding.7

B. NERC Proposed Interpretation

6. NERC submitted its petition for approval for an interpretation of Requirement R8 

in Commission-approved Reliability Standard TOP-001-1 on July 16, 2010. Consistent 

with the NERC Rules of Procedure, NERC states that it assembled a team to respond to 

the request for interpretation and presented the proposed interpretation to industry ballot, 

using a process similar to the process it uses for the development of Reliability 

 7

 Reliability Standard TOP-001-1, Requirement R8. 
Docket No. RM10-29-000 - 4 - 

Standards.8

 According to NERC, the interpretation was developed and approved by 

industry stakeholders using the NERC Reliability Standards Development Procedure and 

approved by the NERC Board of Trustees (Board). In the NERC Petition, NERC 

explains that it received a request from Florida Municipal Power Pool (FMPP) seeking an 

interpretation of Reliability Standard TOP-001-1, Requirement R8. Specifically, FMPP 

requested clarification on several aspects of Requirement R8. FMPP asked the 

following: 

Balancing real power is not a function of a [Transmission Operator] 

and balancing reactive power is not a function of a [Balancing 

Authority]. For Requirement R8 is the Balancing Authority 

responsibility to immediately take corrective action to restore Real 

Power Balance and is the [Transmission Operator] responsibility to 

immediately take corrective action to restore Reactive Power 

Balance?9

7. In response to FMPP’s interpretation request, NERC provided the following : 

The answer to both questions is yes. According to the NERC 

Glossary of Terms Used in Reliability Standards, the Transmission 

Operator is responsible for the reliability of its “local” transmission 

system, and operates or directs the operations of the transmission 

facilities. Similarly, the Balancing Authority is responsible for 

maintaining load-interchange-generation balance, i.e., real power 

balance. In the context of this requirement, the Transmission 

Operator is the functional entity that balances reactive power. 

Reactive power balancing can be accomplished by issuing 

instructions to the Balancing Authority or Generator Operators to 

alter reactive power injection. Based on NERC Reliability Standard 

BAL-005-1b Requirement R6, the Transmission Operator has no 

requirement to compute an Area Control Error (ACE) signal or to 

 8

 NERC Reliability Standards Development Procedure at 27-29. 

9

 NERC Petition at 5. 
Docket No. RM10-29-000 - 5 - 

balance real power. Based on NERC Reliability Standard VAR-001-

1 Requirement R8, the Balancing Authority is not required to resolve 

reactive power balance issues. According to TOP-001- Requirement 

R3, the Balancing Authority is only required to comply with 

Transmission Operator or Reliability Coordinator instructions to 

change injections of reactive power.10

8. NERC contends that the interpretation is consistent with the stated purpose of the 

Reliability Standard, which is to ensure reliability entities have clear decision-making 

authority and capabilities to take appropriate actions or direct the actions of others to 

return the transmission system to normal conditions during an emergency. NERC adds 

that the interpretation clarifies the responsibilities of balancing authorities and 

transmission operators during a system emergency by referencing the NERC Glossary of 

Terms Used in Reliability Standards as well as other relevant Reliability Standards.11 

9. On February 14, 2011, NERC made a supplemental filing in response to a 

Commission staff data request.12 With regard to whether Requirement R8 obligates a 

joint response in a system emergency, NERC explained that Requirement R8 does not 

use the word “joint” or otherwise infer joint responsibility during system emergencies. 

Rather, NERC responded that the balancing authority and transmission operator have 

separate responsibilities to restore real and reactive power balance during system 

 10 Id. at 5-6 

11 Id. at 6. 

12 Response of the North American Electric Reliability Corporation to Request for 

Additional Information Regarding Interpretation to Reliability Standard TOP-001-1, 

Requirement R8 (NERC Response). 
Docket No. RM10-29-000 - 6 - 

emergencies. NERC also stated that the use of “and” between the two entities should not 

construe communication or coordination. NERC added that the Blackout Report13

correctly identifies communication and coordination issues as reliability issues and that 

communication and coordination are addressed in the Communications (COM) 

Reliability Standards.14

II. Proposed Determination 

10. We propose to approve NERC’s interpretation of Reliability Standard TOP-001-1, 

Requirement R8. We believe that the ERO has presented a reasonable interpretation 

consistent with the language of the Reliability Standard. In addition, as discussed below, 

we note that a balancing authority and transmission operator each have coordination and 

communication functions that are necessary for maintaining real and reactive power 

balance. 

Discussion

11. We propose to approve NERC’s interpretation of TOP-001-1, Requirement R8. 

As explained by NERC, the interpretation supports the stated purpose of the Reliability 

Standard, i.e., ensuring that reliability entities have clear decision-making authority and 

capabilities to take appropriate actions or direct the actions of others to return the 

transmission system to normal conditions during an emergency.15 The interpretation also 

 13 Final Report on the August 14, 2003 Blackout in the United States and Canada

(Blackout Report). 

14 NERC Response at 4-7. 

15 Id. at 6. 
Docket No. RM10-29-000 - 7 - 

clarifies the responsibilities of a balancing authority and transmission operator during a 

system emergency. Further, the language is consistent with the language of the 

requirement. Accordingly, the Commission proposes to approve the ERO’s interpretation 

of TOP-001-1, Requirement R8. 

12. We agree, as discussed in the interpretation, that the balancing authority is 

responsible for restoring real power balance during a system emergency and the 

transmission operator is responsible for restoring reactive power balance during a system 

emergency. However, during a system emergency, communication and coordination 

between the transmission operator and balancing authority can be essential to restore real 

and reactive power balance. For example, during an emergency, the balancing authority 

may rely on the real power output of a generator to fulfill its responsibility, while the 

transmission operator may expect the same generator unit to reduce real power to 

generate greater reactive power output.16 

13. NERC acknowledges the need for such communication and coordination. NERC 

maintains that this coordination and communication is required through two currently- 

 16 The Blackout Report described such a scenario, explaining that a generator unit 

tripped because the unit’s protection system detected the Var output, i.e., reactive power, 

exceeded the unit’s capability. Blackout Report at 27. The Blackout Report also 

explained that no generator units were asked to reduce their real power output to produce 

more reactive power. Id. at 47. 
Docket No. RM10-29-000 - 8 - 

effective Communication (COM) Reliability Standards: (1) COM-001-1.1 – 

Telecommunications and (2) COM-002-2 – Communication and Coordination.17 

14. We agree with NERC that the currently effective COM Reliability Standards 

provide for such communication and coordination. For example, Reliability Standard 

COM-002-2, Requirement R1 provides that transmission operators, balancing authorities 

and generator operators must have communication links with one another and must be 

staffed to address a real-time emergency. Reliability Standard EOP-001-0, Requirements 

R3, R4.3 and R7 also contain provisions relevant to such communication and 

coordination in emergencies. These provisions require balancing authorities and 

transmission operators to develop plans to mitigate operating emergencies including 

coordination among adjacent transmission operators and balancing authorities. 

15. Accordingly, for the reasons discussed above, we propose to approve NERC’s 

proposed interpretation of TOP-001-1, Requirement R8. 

III. Information Collection Statement

16. The Office of Management and Budget (OMB) regulations require that OMB 

approve certain reporting and recordkeeping requirements (collections of information) 

 17 NERC Response at 6-7. NERC also identifies several ongoing Reliability 

Standards projects that are intended to strengthen the requirements around 

communication and coordination between functional entities. 
Docket No. RM10-29-000 - 9 - 

imposed by an agency.18 The information contained here is also subject to review under 

section 3507(d) of the Paperwork Reduction Act of 1995.19 

17. As stated above, the Commission approved, in Order No. 693, Reliability Standard 

TOP-001-1 that is the subject of the current rulemaking. This proposed rulemaking 

proposes to approve the interpretation of the previously approved Reliability Standard, 

which was developed by NERC as the ERO. The proposed interpretation, as clarified, 

relates to an existing Reliability Standard, and the Commission does not expect it to 

affect entities’ current reporting burden.20 Accordingly, we will submit this proposed 

rule to OMB for informational purposes only. 

18. For the purposes of reviewing this interpretation, the Commission seeks 

information concerning whether the interpretation will affect respondents’ burden or cost. 

Title: Mandatory Reliability Standards for the Bulk-Power System 

Action: FERC-725A. 

OMB Control No.: 1902-0244 

Respondents: Businesses or other for-profit institutions; not-for-profit institutions. 

Frequency of Responses: On Occasion. 

19. Necessity of the Information: This proposed rule would approve the proposed 

interpretation of Reliability Standard, TOP-001-1, Requirement R8. The proposed rule 

 18 5 C.F.R § 1320.11. 

19 44 U.S.C. § 3507(d). 

20 See Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1901-1907. 
Docket No. RM10-29-000 - 10 - 

would find the interpretation just, reasonable, not unduly discriminatory or preferential, 

and in the public interest. The TOP-001-1 Reliability Standard helps ensure the reliable 

operation of the North American Bulk-Power System by ensuring “reliability entities 

have clear decision-making authority and capabilities to take appropriate actions or direct 

the actions of others to return the transmission system to normal conditions during an 

emergency.”21

20. Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director, email: DataClearance@ferc.gov, Phone: (202) 502-8663, fax: (202) 273-0873]. 

For submitting comments concerning the collection of information and the associated 

burden estimate, please submit your comments to FERC and to the Office of Information 

and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission, phone: (202) 

395-7345, fax: (202) 395-7285]. Due to security concerns, comments should be sent 

electronically to the following e-mail address at OMB: oira submission@omb.eop.gov. 

 Please refer to OMB Control No. 1902-0244, and the docket number of this proposed 

rule in your submission. 

 21 The purpose of Standard TOP-001-1, according to the NERC website at 

http://www.nerc.com/files/TOP-001-1.pdf. 
Docket No. RM10-29-000 - 11 - 

IV. Environmental Analysis

21. 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.22 The Commission has categorically excluded certain 

actions from this requirement as not having a significant effect on the human 

environment. Included in the exclusion are rules that are clarifying, corrective, or 

procedural or that do not substantially change the effect of the regulations being 

amended.23 The actions proposed herein fall within this categorical exclusion in the 

Commission’s regulations. 

V. Regulatory Flexibility Act

22. The Regulatory Flexibility Act of 1980 (RFA)24 generally requires a descriptio

and analysis of final rules that will have significant economic impact on a substantial 

number of small entities. The RFA mandates consideration of regulatory alternatives 

accomplish the stated objectives of a proposed rule and that minimize any signifi

economic impact on a substantial number of small entities. The Small Business 

Administration’s (SBA) Office of Size Standards develops the numerical definition of a

n 

that 

cant 

 22 Order No. 486, Regulations Implementing the National Environmental Policy 

Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 

(1987)

)(ii). 

. 

23 18 C.F.R.§ 380.4(a)(2

24 5 U.S.C. § 601-612. 
Docket No. RM10-29-000 - 12 - 

small business.25 The SBA has established a size standard for electric utilities, stating 

that a firm is small if, including its affiliates, it is primarily engaged in the transmission,

generation and/or distribution of electric energy for sale and its total electric output for 

the preceding twelve months did not exceed four million megawatt hours.

in will not 

n 

on 

t create an additional regulatory impact on small entities. 

26 The RFA is 

not implicated by this proposed rule because the interpretations discussed here

have a significant economic impact on a substantial number of small entities. 

23. The Commission approved Reliability Standard TOP-001-1 in 2007 in Order 

No. 693. The proposed rulemaking in the immediate docket addresses an interpretatio

of Requirement R8 of previously-approved TOP-001-1. The proposed interpretati

clarifies current compliance obligations of balancing authorities and transmission 

operators and therefore, does no

VI. Comment Procedures

24. The Commission invites interested persons to submit comments on the matters an

issues proposed in this notice to be adopted, including any related matters or alterna

proposals that commenters may wish to discuss. Comments are due 60 days from 

publication in the Federal Register. Comments must refer to Docket No. RM10-29-000

and must include the commenter's nam

d 

tive 

, 

e, the organization they represent, if applicable, 

and their address in their comments. 

 25 13 C.F.R. § 121.101. 

26 13 C.F.R. § 121.201, Section 22, Utilities, & n.1. 
Docket No. RM10-29-000 - 13 - 

25. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission's web site at http://www.ferc.gov. The Commission accepts

most standard word processing formats. Documents created electronically using word 

nd not 

n, 

ill be placed in the Commission's public files and may be viewed, 

 as described in the Document Availability section 

processing software should be filed in native applications or print-to-PDF format a

in a scanned format. Commenters filing electronically do not need to make a paper 

filing. 

26. Commenters that are not able to file comments electronically must send an 

original and 14 copies of their comments to: Federal Energy Regulatory Commissio

Secretary of the Commission, 888 First Street NE, Washington, DC 20426. 

27. All comments w

printed, or downloaded remotely

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters. 

VII. Document Availability

28. In addition to publishing the full text of this document in the Federal Register, t

Commission provides all interested persons an opportunity to view and/or prin

contents of this document

he 

t the 

 via the Internet through FERC's Home Page 

ess 

t of this document is available on eLibrary in PDF and Microsoft 

(http://www.ferc.gov) and in FERC's Public Reference Room during normal busin

hours (8:30 a.m. to 5:00 p.m. eastern time) at 888 First Street, NE, Room 2A, 

Washington DC 20426. 

29. From FERC's Home Page on the Internet, this information is available on 

eLibrary. The full tex
Docket No. RM10-29-000 - 14 - 

bsite during normal 

 Support at 202-502-6652 (toll free at 1-866-208-3676) 

r email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-

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

ublic.referenceroom@ferc.gov. 

By the Commission. 

( S E A L ) 

Kimberly D. Bose, 

Secretary. 

Word format for viewing, printing, and/or downloading. To access this document in 

eLibrary, type the docket number excluding the last three digits of this document in the 

docket number field. 

30. User assistance is available for eLibrary and the FERC’s we

business hours from FERC Online

o

8

p