120 FERC ¶ 61,053 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 40 

[Docket No. RM06-16-001; Order No. 693-A] 

Mandatory Reliability Standards for the Bulk-Power System 

(Issued July 19, 2007) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Order on Rehearing 

SUMMARY: The Commission denies rehearing and otherwise reaffirms its 

determinations in Order No. 693. 72 FR 16,416 (April 4, 2007). We further clarify 

certain portions of the Preamble to that order. Order No. 693 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 the North American 

Electric Reliability Corporation, which the Commission has certified as the Electric 

Reliability Organization (ERO) responsible for developing and enforcing mandatory 

Reliability Standards. Order No. 693 also required the ERO to submit significant 

improvements to 56 of the 83 Reliability Standards that are being approved as mandatory 

and enforceable. Finally, Order No. 693 provided that the remaining 24 Reliability 

Standards will remain pending at the Commission until further information is provided. 

Order No. 693 adds a new part to the Commission’s regulations, which states that this 

part applies to all users, owners and operators of the Bulk-Power System within the 

United States (other than Alaska or Hawaii) and requires that each Reliability Standard 
Docket No. RM06-16-001 - 2 - 

identify the subset of users, owners and operators to which that particular Reliability 

Standard applies. The new regulations also require that each Reliability Standard that is 

approved by the Commission will be maintained on the ERO’s Internet website for public 

inspection. 

EFFECTIVE DATE: The final rule became effective on June 18, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Jonathan First (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8529 

Christy Walsh (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6523 

Robert Snow (Technical Information) 

Office of Energy Markets and Reliability 

Division of Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6716 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Mandatory Reliability Standards for the Bulk-Power 

System 

Docket No. RM06-16-001 

ORDER NO. 693-A 

ORDER ON REHEARING 

(Issued July 19, 2007) 

I. Introduction .................................................................................................................... 1.

A. Summary of Order No. 693...................................................................................... 3.

B. Procedural Matters.................................................................................................... 4.

II. Discussion..................................................................................................................... 7.

A. Applicability Issues.................................................................................................. 7.

1. Bulk-Power System v. Bulk Electric System ....................................................... 7.

2. NERC Registry ................................................................................................... 20.

3. Use of the NERC Functional Model................................................................... 48.

B. Mandatory Reliability Standards............................................................................ 57.

1. Prioritizing Modifications to Reliability Standards............................................ 57.

2. Trial Period ......................................................................................................... 61.

C. Common Issues Pertaining to Reliability Standards.............................................. 65.

1. Blackout Report Recommendation on Liability Limitations ............................. 65.

2. Fill-in-the-Blank Standards ................................................................................ 70.

D. Discussion of Individual Reliability Standards...................................................... 82.

1. EOP-001-0 .......................................................................................................... 82.

2. EOP-002-2 .......................................................................................................... 86.

3. EOP-008-0 .......................................................................................................... 90.

4. FAC-003-1.......................................................................................................... 95.

5. IRO-001-1......................................................................................................... 100.

6. IRO-005-1 and IRO-005-2 ............................................................................... 120.

7. MOD-013-1 ...................................................................................................... 123.

8. PRC-007-0, PRC-008-0, and PRC-009-0......................................................... 132.

9. TOP-008-1 ........................................................................................................ 153.

III. Information Collection Statement ........................................................................... 156.

IV. Document Availability ............................................................................................ 157.
Docket No. RM06-16-001 - 2 - 

I. Introduction 

1. On March 16, 2007, the Commission issued a Final Rule (Order No. 693)1

approving, pursuant to section 215 of the Federal Power Act (FPA),2

 83 of 107 proposed 

Reliability Standards, six of the eight proposed regional differences, and the Glossary of 

Terms Used in Reliability Standards (glossary) developed by the North American 

Electric Reliability Corporation (NERC), which the Commission has certified as the 

Electric Reliability Organization (ERO) responsible for developing and enforcing 

mandatory Reliability Standards. However, the Commission stated that, although it 

believed it is in the public interest to make these Reliability Standards mandatory and 

enforceable, it also found that much work remains to be done. Specifically, it stated that 

many of these Reliability Standards require significant improvement to address, among 

other things, the recommendations of the Blackout Report.3

 Therefore, pursuant to 

section 215(d)(5), we required the ERO to submit significant improvements to 56 of the 

83 Reliability Standards that are being approved as mandatory and enforceable. The 

 1

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

72 FR 16,416 (Apr. 4, 2007), FERC Stats. & Regs. ¶ 31,242 (2007). 

2

 16 U.S.C. § 824o (2000). 

3

 U.S.-Canada Power System Outage Task Force, Final Report on the August 14 

Blackout in the United States and Canada: Causes and Recommendations (April 2004) 

(Blackout Report). The Blackout Report is available on the Internet at 

http://www.ferc.gov/cust-protect/moi/blackout.asp
Docket No. RM06-16-001 - 3 - 

Commission stated that the remaining 24 Reliability Standards will remain pending at the 

Commission until further information is provided. 

2. Order No. 693 added a new part to the Commission’s regulations, which states 

that this part applies to all users, owners and operators of the Bulk-Power System within 

the United States (other than Alaska or Hawaii) and requires that each Reliability 

Standard identify the subset of users, owners and operators to which that particular 

Reliability Standard applies. The new regulations also require that each Reliability 

Standard that is approved by the Commission will be maintained on the ERO’s Internet 

website for public inspection. 

A. Summary of Order No. 693

3. In Order No. 693, the Commission stated that there were four possible courses of 

action that it would take with regard to each proposed Reliability Standard: (1) approve; 

(2) approve as mandatory and enforceable; and direct modification pursuant to section 

215(d)(5); (3) request additional information; or (4) remand. As mentioned above, the 

Commission approved 83 Reliability Standards and directed NERC to develop 

modifications to 56 of the approved Reliability Standards. In approving the Reliability 

Standards, Order No. 693 stated that, for an initial period, the Commission would rely on 

the NERC definition of bulk electric system, rather than the statutory Bulk-Power 

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 
Docket No. RM06-16-001 - 4 - 

Reliability Standards in the start-up phase of a mandatory Reliability Standard regime.4

 

Further, while the Commission did not institute a formal “trial period,” it directed the 

ERO and Regional Entities to “focus their resources” on the “most serious violations” 

during an initial period through December 31, 2007.5

B. Procedural Matters

4. The following entities have filed timely requests for rehearing or for clarification 

of Order No. 693: American Public Power Association (APPA); Avista Corporation, 

Portland General Electric Company, and Puget Sound Energy, Inc. (collectively, Avista); 

City of Santa Clara, California (Santa Clara); Cogeneration Association of California and 

the Energy Producers and Users Coalition (California Cogeneration); ISO-New England, 

Inc. (ISO-New England); Midwest Independent Transmission System Operator, Inc. 

(Midwest ISO); National Association of Regulatory Utility Commissioners (NARUC); 

National Rural Electric Cooperative Association (NRECA); Pacific Northwest Security 

Coordinator (PNSC); Transmission Agency of Northern California (TANC); and Xcel 

Energy Services, Inc. (Xcel). 

5. PNSC’s rehearing request is deficient because it fails to include a Statement of 

Issues section separate from its arguments, as required by Rule 713 of the Commission's 

 4

 Order No. 693 at P 75. 

5

 Id. at P 221-22. 
Docket No. RM06-16-001 - 5 - 

Rules of Practice and Procedure.6

 Rule 713(c)(2) requires that a rehearing request must 

include a separate section entitled "Statement of Issues" listing each issue presented to the 

Commission in a separately enumerated paragraph that includes representative 

Commission and court precedent on which the participant is relying.7

 Under Rule 713, 

any issue not so listed will be deemed waived. Accordingly, we will dismiss PNSC’s 

rehearing request.8

 

6. In any event, PNSC’s arguments on rehearing are beyond the scope of this 

proceeding. PNSC asks the Commission to clarify that PNSC is in compliance with IRO001 because it has written agreements delineating the responsibilities and authority of the 

 6

 18 C.F.R. § 385.713(c)(2) (2006). See Revision of Rules of Practice and 

Procedure Regarding Issue Identification, Order No. 663, 70 Fed. Reg. 55,723 

(September 23, 2005), FERC Stats. and Regs. ¶ 31,193 (2005). See also, Order 663-A, 

effective March 23, 2006, which amends Order No. 663 to limit its applicability to 

rehearing requests. Revision of Rules of Practice and Procedure Regarding Issue 

Identification, Order No. 663-A, 71 Fed. Reg. 14,640 (March 23, 2006), FERC Stats. and 

Regs. ¶ 31,211 (2006) (codified at 18 C.F.R. § 385.713(c)(2) (2006)). 

7

 As explained in Order No. 663, supra, the purpose of this requirement is to 

benefit all participants in a proceeding by ensuring that the filer, the Commission, and all 

other participants understand the issues raised by the filer, and to enable the Commission 

to respond to these issues. Having a clearly articulated Statement of Issues ensures that 

issues are properly raised before the Commission and avoids the waste of time and 

resources involved in litigating appeals regarding whether the courts of appeals lack 

jurisdiction because the issues on appeal were not clearly identified before the 

Commission. See Order No. 663 at P 3-4. 

8

 See, e.g., Duke Power Co., LLC, 116 FERC ¶ 61,171 (2006); and South Carolina 

Electric & Gas Co., 116 FERC ¶ 61,218 (2006). 
Docket No. RM06-16-001 - 6 - 

operating personnel who staff its reliability center. Whether any one entity is in 

compliance with a Reliability Standard is not an issue in the rulemaking. 

II. Discussion

A. Applicability Issues

1. Bulk-Power System v. Bulk Electric System

7. Section 215 of the FPA defines the term “Bulk-Power System” as follows: 

(A) facilities and control systems necessary for operating an interconnected 

electric energy transmission network (or any portion thereof) and (B) 

electric energy from generating facilities needed to maintain transmission 

system reliability. The term does not include facilities used in the local 

distribution of electric energy. 

8. The NERC glossary, in contrast, states that Reliability Standards apply to the 

“bulk electric system,” which is defined by its regions in terms of a voltage threshold and 

configuration, as follows: 

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. 

9. In Order No. 693, the Commission stated that, for an initial period, it would 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 in the start-up phase of a 
Docket No. RM06-16-001 - 7 - 

mandatory Reliability Standard regime.9

 However, the Commission stated that it was 

concerned about the need to address the potential for gaps in coverage of facilities. The 

Commission intends to address this matter in future proceedings. As a first step in 

enabling the Commission to understand the reach of the Reliability Standards, we 

directed the ERO to provide the Commission with an informational filing that includes a 

complete set of regional definitions of bulk electric system and any regional documents 

that identify critical facilities to which the Reliability Standards apply (i.e., facilities 

below a 100 kV threshold that have been identified by the regions as critical to system 

reliability). 

10. However, the Commission disagreed with commenters who suggested that there is 

no intentional distinction between Bulk-Power System and bulk electric system. This 

distinction was evidenced by the fact that “Congress did not borrow the term of art – bulk 

electric system – but instead chose to create a new term, Bulk-Power System, with a 

definition that is distinct from the term of art used by industry.”10 Thus, the Commission 

“confirmed” that the Bulk-Power System reaches farther than those facilities that are 

included in NERC’s definition of the bulk electric system, although choosing to rely on 

the NERC definition for determining the immediate applicability of the approved 

 9

 Order No. 693 at P 75. 

10 Id. at P 76. 
Docket No. RM06-16-001 - 8 - 

Reliability Standards. The Commission indicated that it remained concerned about 

potential gaps in coverage of facilities and that any change in applicability would be 

addressed in future Commission proceedings. 

a. Requests for Rehearing

11. NRECA asks that the Commission clarify that it has not definitively decided that 

the term Bulk-Power System as defined in section 215 of the FPA encompasses more 

than NERC’s definition of bulk electric system. Rather, NRECA understands that the 

Commission deferred on determining whether its jurisdiction expands beyond the bounds 

of the bulk electric system. NRECA is concerned that Order No. 693 may suggest that 

the Bulk-Power System is broader than the bulk electric system out of a misapprehension 

that NERC’s definition imposes a rigorous 100 kV “cutoff” when, according to NRECA, 

it actually provides for more flexibility. Alternatively, if the Commission has definitively 

interpreted the term Bulk-Power System to encompass more than the bulk electric 

system, NRECA seeks rehearing. 

12. In support of its request for rehearing, NRECA raises three arguments that the 

Commission erred in determining that the statutory definition of Bulk-Power System is 

broader than NERC’s definition of bulk electric system. First, it contends that such a 

determination violates a rule of law that the parts of a statute should be construed in 
Docket No. RM06-16-001 - 9 - 

accordance with the statute’s overall legislative purpose.11 NRECA explains that section 

215 was intended to replace the prior voluntary reliability standards with a mandatory 

scheme but, to the best of NRECA’s knowledge, no participant in the drafting of the 

legislation expressed the view that Congress intended to expand NERC’s scope.12 

NRECA states that, if the issue had been presented, it would have prompted a legislative 

record. The absence of such record confirms that an intent to expand NERC’s scope was 

never expressed. 

13. Second, NRECA contends that an expansive definition of Bulk-Power System is 

contrary to the text of section 215, which narrows the Commission’s reach. Specifically, 

NRECA contends that the statutory definition of Bulk-Power System makes clear that the 

term does not encompass all transmission facilities but, rather, only those facilities and 

control systems “necessary for operating an interconnected electric energy transmission 

network.” It also points to the statutory definitions of Reliability Standard and Reliable 

Operation that refer to protecting the system from instability, uncontrolled separation or 

cascading failures. NRECA infers from this that there is no reason to conclude that 

Congress included in the definition of Bulk-Power System any facilities other than those 

 11 NRECA at 7-11, citing United States v. Public Utilities Commission of 

California, 345 U.S. 295, 315 (1953). 

12 NRECA at 7-8. 
Docket No. RM06-16-001 - 10 - 

that could materially contribute to instability, uncontrolled separation or cascading 

outages. 

14. Third, NRECA posits that, if Congress borrows a term of art that has an 

established meaning, the established meaning is to apply.13 NRECA claims that the 

terms Bulk-Power System and bulk electric system have been used interchangeably for 

decades and cites examples from both industry documents and Commission orders. 

According to NRECA, Congress did not adopt NERC’s exact definition of bulk electric 

system because it was insufficiently specific for legislation. NRECA asserts that 

“Congress used more and different words than NERC in order to provide clarity, but the 

definition of Bulk-Power System incorporated the exact same facilities as NERC and the 

regions had always included in their working definition of bulk electric system. . . .”14

15. NARUC seeks clarification that the Commission will “continue relying on 

NERC’s definition of Bulk-Power System” and NERC’s registration process beyond the 

initial period during which mandatory Reliability Standards are in effect.15 It states that 

section 215 of the FPA was enacted based on an industry consensus that it would apply to 

 13 Id. at 11-16, citing Morissette v. United States, 342 U.S. 246, 263 (1952). 

14 NRECA at 16. 

15 NARUC at 3. NARUC refers repeatedly to “NERC’s definition of Bulk-Power 

System.” It is not clear from NARUC’s pleading whether this is simply a typographical 

error or it seeks to make a point that NERC’s definition of bulk electric system is 

equivalent to the statutory term Bulk-Power System. 
Docket No. RM06-16-001 - 11 - 

facilities and entities covered by the historical definition of Bulk-Power System. 

According to NARUC, the term applies to higher-voltage, network facilities that integrate 

regional transmission networks to ensure the reliability of interconnected system 

operations. NARUC states that NERC’s definition of Bulk-Power System is consistent 

with section 215 and that a broader interpretation is inconsistent with Congressional 

intent because such a definition could sweep in facilities such as load centers and local 

transmission facilities that do not have a material impact on system reliability. 

16. NARUC also seeks clarification that, if the Commission determines that NERC’s 

current definition requires revision, NERC should revise the definition using its 

American National Standards Institute (ANSI)-accredited process. Further, NARUC 

expresses concern that the Commission has directed the ERO to submit a complete set of 

regional definitions of bulk electric system and, thus, asks the Commission to clarify that 

it will continue to defer to the ERO’s and Regional Entities’ determinations concerning 

which facilities and entities materially affect the reliability of the interconnected 

transmission network and should be included in the compliance registry. 

b. Commission Determination

17. The Commission will grant NRECA’s request for clarification, and thus dismisses 

its request for rehearing. We agree with NRECA that NERC’s definition of bulk electric 
Docket No. RM06-16-001 - 12 - 

system does not impose a 100 kV cutoff and provides some flexibility in its application.16 

Although Order No. 693 stated that 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, the Commission has not definitively defined the extent of the facilities 

covered by the Bulk-Power System. As we stated in Order No. 693, the Commission 

intends to address concerns regarding the scope of the term Bulk-Power System in future 

proceedings. NRECA and others will not be legally precluded from presenting 

arguments in such a proceeding that the terms Bulk-Power System and bulk electric 

system encompass the same facilities. 

18. The Commission notes NRECA’s assertion that the Commission’s determination 

that the Bulk-Power System reaches farther than the bulk electric system is contrary to 

the text of section 215 of the FPA. Because the Commission has not definitively defined 

the extent of the facilities covered by the Bulk-Power System, the Commission believes 

that this determination is best made in the context of a Commission proceeding 

determining the extent of the Bulk-Power System. We make no finding on the matter at 

this time. The Commission defers judgment on this matter to a later proceeding so that 

the Commission can develop a record on which to base its final determination. 

 16 See Mandatory Reliability Standards for the Bulk Power System, Notice of 

Proposed Rulemaking, 71 FR 64,770 (Nov. 3, 2006), FERC Stats. & Regs., ¶ 32,608 at 

P 63 (2006). 
Docket No. RM06-16-001 - 13 - 

19. In response to NARUC, the Commission will continue to rely on NERC’s 

definition of bulk electric system, with the appropriate regional differences, and NERC’s 

registration process until the Commission determines in future proceedings the extent of 

the Bulk-Power System. The requirement that the ERO file a complete set of regional 

differences was to enable the Commission to understand the current reach of the 

Reliability Standards. However, we do not agree with NARUC that NERC should be 

allowed to define Bulk-Power System using its American National Standards Institute 

(ANSI)-accredited process. The statutory term Bulk-Power System defines the 

jurisdiction of the Commission. Although the Commission has chosen to defer, for the 

time being, to the ERO as to which entities must comply with Reliability Standards, the 

fundamental matter of determining the extent of Commission’s jurisdiction cannot and 

will not be delegated to the ERO. 

2. NERC Registry

20. Order No. 693 accepted the ERO’s compliance registry process as an appropriate 

approach to identify the set of entities that are responsible for compliance with a 

particular Reliability Standard.17 Further, Order No. 693 explained that NERC has 

developed a Statement of Compliance Registry Criteria that describes how NERC will 

identify organizations that may be candidates for registration and assign them to the 

 17 Order No. 693 at P 92-101. 
Docket No. RM06-16-001 - 14 - 

compliance registry. NERC’s compliance registry process identifies and registers entities 

based on categories of functions within the Bulk-Power System and related Commissionapproved Reliability Standards. For example, NERC plans to register individual 

generator units of 20 MVA or greater that are directly connected to the bulk electric 

system, generating plants with an aggregate rating of 75 MVA or greater, any blackstart 

unit material to a restoration plan, or any generator “regardless of size, that is material to 

the reliability of the Bulk-Power System.” The Commission accepted the Statement of 

Compliance Registry Criteria, stating that “[w]e believe that NERC has set reasonable 

criteria for registration. . . .”18

21. Further, Order No. 693 noted that the Commission’s regulations then exempted 

most qualifying facilities (QFs) from specific provisions of the FPA including section 

215.19 The Commission, however, expressed concerned whether it is appropriate to grant 

QFs a complete exemption from compliance with Reliability Standards that apply to 

other generator owners and operators, and noted that the Commission was concurrently 

issuing a notice of proposed rulemaking proposing to amend the Commission’s 

regulation that exempts most QFs from section 215 of the FPA. The Commission has 

 18 Id. at P 95. 

19 18 CFR 292.601(c)(2006). 
Docket No. RM06-16-001 - 15 - 

since issued a final rule eliminating the exemption of QFs from the requirements of 

section 215 of the FPA.20

a. Requests for Rehearing

22. California Cogeneration argues that the Commission improperly relied on the 

ERO’s compliance registry process. It contends that the Commission, rather than 

determining who the “users” of the Bulk-Power System are, has improperly delegated 

this task to the ERO and Regional Entities. California Cogeneration notes that the NERC 

registry criteria were submitted for information purposes only. Further, it contends that 

these criteria are being applied inconsistently among the Regional Entities, noting in 

particular that Western Electricity Coordinating Council (WECC) has developed 

supplemental criteria that may result in the registration of entities not captured by the 

ERO criteria.21 It also points to discrepancies in ERCOT’s registration process. 

23. California Cogeneration also argues that Reliability Standards that are not clear in 

how they are applied or are applied inconsistently are not just and reasonable. It contends 

that the examples of regional variation in the registration process demonstrate a lack of 

required clarity and consistency. 

 20 Applicability of Federal Power Act Section 215 to Qualifying Small Power 

Production and Cogeneration Facilities, Order No. 696, FERC Statutes and Regulations 

¶ 31,248 (2007). 

21 California Cogeneration at 5, Referencing WECC Supplemental Registration 

Criteria and Dispute Resolution Process, available at http://www.wecc.biz. 
Docket No. RM06-16-001 - 16 - 

24. NRECA asks the Commission to clarify that, in expanding the applicability of 

certain Reliability Standards,22 it has not departed from the compliance registry concept 

or sought to dictate actions by the ERO. Alternatively, the Commission should grant 

rehearing. According to NRECA, it appears possible, even likely, that the Commission 

was not specifying that additional entities register, but was merely specifying that the 

ERO should consider whether entities otherwise required to register (because they meet 

or exceed specified thresholds, or because they had been to shown to have a material 

impact on grid reliability) should also be subject to these particular Reliability 

Standards.23 If that is the Commission's intended meaning, NRECA requests that the 

Commission specify the requested clarification and resolve the matter (subject to 

subsequent consideration by the ERO). However, if the Commission intends to impose a 

broader obligation, i.e., to encompass additional entities in the Reliability Standards, then 

NRECA seeks rehearing. 

 22 NRECA at 20-23. Specifically, NRECA cites the Commission’s requirement 

that (1) COM-001-1, or some replacement Reliability Standard addressing black start 

capability, and COM-002-2 apply to all distribution providers, (2) TOP-003-0 apply to all 

load-serving entities, even those below specified thresholds, based on the opinion of the 

transmission operator, balancing authority, or reliability coordinator, and (3) VAR-001-1 

apply to all load-serving entities. See Order No. 693 at P 487, 492, 512, 540, 1624, 1626, 

1848, 1858 and 1990. 

23 NRECA at 20, citing see, e.g., Order No. 693 at P 512 ("APPA's concern that 

2,000 public power systems would have to be added to the compliance registry is 

misplaced, since, as we explain in our Applicability discussed above, we are approving 

NERC's registry process, including the registry criteria"). 
Docket No. RM06-16-001 - 17 - 

25. Further, NRECA argues that the Commission should not, as it recognized in Order 

No. 672-A, prescribe either the text or the substance of a Reliability Standard, including 

which entities are subject to the Reliability Standards, because that responsibility is 

reserved to the ERO, subject to the Commission's review. NRECA maintains that the 

Commission lacks the authority to dictate what a Reliability Standard requires or who it 

encompasses, as the Commission has recognized previously in Order No. 672-A. 

NRECA notes that Order No. 693 states that the Commission "agrees that a direction for 

modification should not be so overly prescriptive as to preclude the consideration of 

viable alternatives in the ERO’s Reliability Standards development process.... Thus, in 

some instances, while we provide specific details regarding the Commission’s 

expectations, we intend by doing so to provide useful guidance to assist in the Reliability 

Standards development process, not to impede it."24

26. Beyond that, NRECA asserts that the Reliability Standards should not apply at all 

to entities whose scope of activities is too limited to have a material impact on grid 

reliability. In other words, the specific Reliability Standards should not apply to a 

distribution provider or a load-serving entity just because it is a distribution provider or a 

load-serving entity; instead, the Reliability Standards at issue, as well as the Reliability 

Standards generally, should not apply unless an entity has a material impact on grid 

 24 Order No. 693 at P 185-86. 
Docket No. RM06-16-001 - 18 - 

reliability. According to NRECA, this concept is central to NERC's compliance registry, 

and the Commission has not articulated a sound basis for departing from it, 

notwithstanding the Commission’s lack of authority to do so. 

27. With respect to COM-001-1 or some replacement standard addressing black start 

capability, and COM-002-2, for example, NRECA asserts that some entities are 

functionally irrelevant for black start activities. It argues that having to coordinate black 

start operations with a large number of small entities, most, if not all, of which are served 

through interconnections with larger and bigger entities in the hierarchy of the Functional 

Model, would hinder, rather than facilitate, black start operations. NRECA maintains 

that the Commission should defer to the ERO's technical expertise. 

28. NRECA raises similar concerns with respect to TOP-003-1. According to 

NRECA, read literally, the Commission appears to recommend delegating the 

determination of whether entities that fall below the threshold of NERC’s definition of 

bulk electric system should be subject to the standard to "the opinion of the transmission 

operator, balancing authority, or reliability coordinator." If so, NRECA asserts that this 

approach would appear to override both the compliance registry and the ERO, and the 

Commission would effectively delegate authority that it does not have to entities that 

could well face incentives to favor their own interests over those of load-serving entities 

that could be made subject to the Reliability Standards. The Commission cannot delegate 

authority it does not have in the first place, and the determination should be that of the 
Docket No. RM06-16-001 - 19 - 

ERO and the Regional Entity. While NRECA agrees that the ERO and the Regional 

Entities may and should take the views of the transmission operators, balancing 

authorities, and reliability coordinators into account, it argues that this is considerably 

different than simply abdicating the matter to them. 

29. NRECA has similar concerns with the treatment of VAR-001-1 with respect to the 

Commission's "direct[ing] the ERO to address the reactive power requirements of loadserving entities on a comparable basis with purchasing-selling entities." While NRECA 

agrees that this may be an appropriate matter for the ERO to consider, it argues that the 

Commission should not be dictating a particular action, nor should the Commission be 

overriding the compliance registry approach that it elsewhere endorses in its Final Rule. 

30. Accordingly, NRECA requests the Commission to clarify that it has not 

overridden the compliance registry with respect to COM-001-1, COM-002-2, and TOP003-0, nor dictated specific changes to those Reliability Standards. Alternatively, 

NRECA seeks rehearing. Absent the requested clarification, NRECA asserts that the 

Commission has sought to prescribe the substance of a Reliability Standard in excess of 

its statutory authority under section 215, contrary to its own recognition of the limitations 

on its authority in Order No. 672-A, and contrary to Order No. 693 itself. NRECA 

maintains that the proposed changes could undermine rather than enhance reliability for 

the reasons stated, and thus involve matters where the Commission should and is required 

to defer to the ERO's technical expertise. 
Docket No. RM06-16-001 - 20 - 

31. Xcel notes that, pursuant to NERC’s registry criteria, NERC will generally register 

individual generator units of 20 MVA or greater that are directly connected to the bulk 

electric system. According to Xcel, under NERC’s criteria, generators that are connected 

to distribution facilities are generally exempt from registration as they are not connected 

to the Bulk-Power System. Xcel seeks rehearing of the Commission’s decision to accept 

this aspect of the ERO’s registration process, contending that generating facilities that are 

connected at a distribution voltage but deliver energy to the transmission system can 

affect transmission system reliability and, thus, should be subject to mandatory 

Reliability Standards. Further, Xcel contends that the exclusion of facilities connected at 

a distribution level creates inappropriate incentives for entities to interconnect generating 

facilities at the distribution level rather than the transmission level. 

32. TANC requests clarification of the Commission’s statement that: 

we believe our concerns can be addressed by having the ERO, through its 

compliance registry process, ensure that each user, owner and operator of 

the Bulk-Power System is registered for each Requirement in the 

Reliability Standards that relate to transmission owners to assure there are 

no gaps in coverage of the type discussed here.[25] 

33. According to TANC, this statement seems to require all entities subject to the 

Reliability Standards to register for each requirement applicable to transmission owners, 

which it states is inconsistent with the Commission’s goal of preventing overlap and 

 25 Id. at P 145. 
Docket No. RM06-16-001 - 21 - 

negates the transmission owner classification in the NERC Functional Model. Therefore, 

TANC asks the Commission to clarify that only those entities that meet the description of 

transmission owner provided in NERC’s compliance registry and the NERC Functional 

Model descriptions are required to register as responsible entities for the Requirements 

applicable to transmission owners. 

34. TANC asks that the Commission specify that, where an existing contract between 

two parties provides that one is the transmission owner, but the other has agreed to 

perform the TOP functions, the latter entity be listed in the compliance registry as the 

responsible entity for the TOP Reliability Standards. Further, TANC maintains that the 

transmission owner should not be the default entity ultimately responsible for compliance 

with the TOP Reliability Standards. According to TANC, only the entity accepting 

responsibility to perform the tasks delegated to it in the agreement should be accountable 

for the responsibilities assigned to it in the agreement. TANC asserts that, where entities 

have assigned responsibilities by contract, there is no reason to register those 

responsibilities to another entity. 

35. California Cogeneration claims that Order No. 693 failed to adequately address the 

unique characteristics of QFs. It states that reliance on the registry process, which is 

based on the 14 functions identified in the NERC functional model, does not adequately 

distinguish among different types of generators, including size and location, and their 

impact on reliability. California Cogeneration states that the Commission, as a remedy to 
Docket No. RM06-16-001 - 22 - 

these infirmities, should direct NERC to immediately initiate a stakeholder process to 

revise the Reliability Standards to identify in greater detail the entities that are 

responsible for compliance and revise requirements to recognize the operational 

constraints of different generators. It states that this process should be completed before 

Reliability Standards become enforceable. Further, California Cogeneration states that 

the stakeholder process should also develop criteria for determining whether an entity has 

a “material impact” on reliability. 

36. Finally, California Cogeneration states that the Commission was not responsive to 

issues raised by California Cogeneration in its rulemaking comments regarding individual 

Reliability Standards that apply to generator owners and operators and needed revisions if 

they are to be applied to cogenerators. It states that some of these Reliability Standards 

seem to require information regarding gross generation or load behind the customer’s 

point of interconnection, contrary to an earlier Commission order.26 While the 

Commission directed the ERO to consider these concerns during its three-year Work Plan 

to review each Reliability Standard, California Cogeneration contends this approach does 

not suffice because cogenerators must comply with the Reliability Standards in the 

interim. 

 26 California Cogeneration at 12, citing California Independent System Operator, 

Corp., 96 FERC ¶ 63,015 (2001) (Initial Decision); Opinion No. 464, 104 FERC ¶ 61,196 

(2003) (affirming Initial Decision). 
Docket No. RM06-16-001 - 23 - 

b. Commission Determination

37. The Commission denies California Cogeneration’s request for rehearing 

concerning the definition of users of the Bulk-Power System. The Commission has not 

improperly delegated this definition to the ERO and Regional Entities. While NERC 

proposed the registry criteria, the Commission reviewed the criteria and approved them 

as appropriate under section 215 of the FPA. Further, the Commission has provided a 

method by which any entity that disagrees with NERC’s determination to place it in the 

compliance registry may submit a challenge in writing to NERC and, if still not satisfied, 

may lodge an appeal with the Commission.27 Therefore, the Commission has the 

ultimate ability to determine whether an entity should be on the NERC registry. 

38. With regard to the fact that certain Regional Entities have created supplemental 

criteria to determine which entities should be on the registry, we agree with California 

Cogeneration that this is not appropriate.28 Order No. 693 accepted NERC’s compliance 

 27 See Order No. 693 at P 101; ERO Certification Order at P 679. 

28 We note that the example cited by California Cogeneration appears to assert that 

the NERC registry criteria incorporates a bright line test as to which entities should be 

registered: 

The application of the different sets of criteria to a 30 MW generator 

interconnected at 69 kv illustrates the inconsistency in treatment. Under 

NERC’s criteria, the generator is interconnected at less than 100 kv, and it 

is not therefore a user of the bulk electric system. The generator would be 

eliminated from registration by the first step of NERC’s process. WECC’s 

Supplemental Criteria, however, state that a generator greater than 20 MW 

must be registered regardless of the voltage at which it is interconnected. 

(continued) 
Docket No. RM06-16-001 - 24 - 

registration process “to provide as much certainty as possible regarding the applicability 

and responsibility of specific entities under the approved standards.”29 NERC’s 

Statement of Compliance Registry does not reference supplemental compliance registries 

created by Regional Entities. While both the Commission and the ERO have made it 

clear that an entity that falls below the minimum registry criteria may be included on the 

compliance registry on a facility-by-facility basis, nonetheless NERC’s compliance 

registry places the burden on the Regional Entity to reasonably demonstrate that the 

organization is a user, owner or operator of the Bulk-Power System.30 This language 

contemplates a case-by-case registration of entities outside the NERC criteria, provided 

that a reasonable demonstration of the need to register the entity31 is made by the 

Regional Entity. 32

 

California Cogeneration at 5. We disagree with this interpretation. NERC’s 

compliance registry would also allow the ERO and Regional Entities to register “[a]ny 

generator, regardless of size, that is a blackstart unit material to and designated as part of 

a transmission operator entity’s restoration plan, or; ... [a]ny generator, regardless of 

size, that is material to the reliability of the bulk power system.” NERC Statement of 

Compliance Registry at 7. 

29 Order No. 693 at P 33. 

30 NERC Statement of Compliance Registry at 10, n.1.

31 The entity registered would also have to be a user, owner or operator of NERC’s 

definition of bulk electric system. 

32 The Commission notes that no Regional Entity has filed a supplemental registry 

with the Commission. The Commission makes its determination to reject regional 

registry criteria without prejudice to a Regional Entity creating supplemental registry 

(continued) 
Docket No. RM06-16-001 - 25 - 

39. In response to NRECA, in directing the ERO to expand the applicability of certain 

Reliability Standards, the Commission did not intend to expand the applicability beyond 

those entities that are on the compliance registry. Rather, we indicated where the 

Commission believed there was a reliability concern in not applying certain Reliability 

Standards to a category of registered entities. For example, in COM-001-0, where the 

Commission directed the ERO to add distribution providers that are essential to the 

implementation of a black start plan to the Applicability section, this would include only 

those distribution providers that are on the compliance registry. 

40. The Commission agrees with NRECA to the extent that we do not wish that a 

direction for modification be so overly prescriptive as to preclude the consideration of 

viable alternatives in the ERO’s Reliability Standards development process. However, as 

stated in Order No. 693, in identifying a specific matter to be addressed in a modification 

to a Reliability Standard, 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, the ERO might not know how to respond adequately to a Commission 

proposal to modify a Reliability Standard.33 Thus, in some instances, while we provided 

 

criteria, provided that the Regional Entity affords due process to those entities that would 

be subject to them, and requests ERO and Commission approval of such criteria. 

33 Order No. 693 at P 185. 
Docket No. RM06-16-001 - 26 - 

specific details regarding the Commission’s expectations, we intended by doing so to 

provide useful guidance to assist in the Reliability Standards development process, not to 

impede it. 

41. With respect to the specific Reliability Standards cited by NRECA, the 

Commission first notes that NRECA does not appear to request rehearing on the 

substance of the directed modifications, but argues that the Commission was too 

prescriptive procedurally. In many instances, the Commission provided guidance to the 

ERO and stated that it could develop an alternative to our direction, so long as the 

alternative is as effective and efficient as the Commission’s proposal. However, with 

respect to the Reliability Standards cited by NRECA, the Commission has identified 

specific concerns about the gap in applicability in the Reliability Standard. For example, 

as to COM-001-1 and COM-002-2, the Commission was concerned about having a 

reliability gap during normal and emergency operations. Section 215(d)(5) of the FPA 

states: 

The Commission, upon its own motion or upon complaint, may order the 

Electric Reliability Organization to submit to the Commission a proposed 

reliability standard or a modification to a reliability standard that addresses 

a specific matter if the Commission considers such a new or modified 

reliability standard appropriate to carry out this section. 

In the instances cited by NRECA, the Commission has identified a deficiency in the 

applicability of the Reliability Standard. To correct this deficiency, the ERO must add 

the specific entity to the Applicability section of the Reliability Standard. 
Docket No. RM06-16-001 - 27 - 

42. TOP-003-0 contains Requirements that can have a significant impact on both the 

reliability of the Bulk-Power System and on competition with regard to available transfer 

capability (ATC). The Commission’s approval of TOP-003-0 does not override either 

the compliance registry or the ERO. The planning authority or transmission planner 

should inform its Regional Entity if it is not receiving cooperation in getting the 

information it requires. We note that section 39.2(d) of our regulations requires each 

user, owner or operator of the Bulk-Power System to provide the Commission, the ERO 

and the applicable Regional Entity such information as is necessary to implement section 

215 of the FPA. If a problem arises in obtaining information necessary to calculate ATC, 

the Commission may revisit this matter in the future. For example, if entities are unable 

to obtain the required information under TOP-003-0, the Commission might require the 

ERO, through the Reliability Standards development process, to develop a provision to 

ensure that all jurisdictional entities that must provide information pursuant to TOP-003-

0 because of a particular reliability need are added to the registry, even if only to meet the 

requirements of TOP-003-0. 

43. The Commission denies Xcel’s request for rehearing. As noted by Xcel, NERC’s 

registry criteria state that the ERO and Regional Entities will “generally” register 

generators greater than 20 MVA and will “generally” exempt generators that are 

connected to distribution facilities. The use of the term “generally” allows the ERO and 

Regional Entities flexibility to register a generator meeting those descriptions if the ERO 
Docket No. RM06-16-001 - 28 - 

or a Regional Entity determines that the facility is needed for Bulk-Power System 

reliability. Further, Order No. 693 specifically provided for such an outcome.34 

Therefore, those generating facilities that Xcel is concerned about, which are connected 

at a distribution voltage but deliver energy to the transmission system, may be required to 

comply with Reliability Standards depending on a possible case-by-case determination by 

the ERO or a Regional Entity. Xcel does not provide any support for its claim that this 

general exclusion of facilities connected at a distribution level creates inappropriate 

incentives for entities to interconnect generating facilities at the distribution level rather 

than the transmission level. 

44. In response to TANC’s concern that Order No. 693 appears to require all entities 

subject to the Reliability Standards to register for each requirement applicable to 

transmission owners, we disagree. This statement was made only to ensure that there are 

no gaps or unnecessary redundancies with regard to the entity or entities responsible for 

compliance. The Commission did not intend to imply that each user, owner and operator 

of the Bulk-Power System must comply with those Reliability Standards which apply to 

transmission owners. Rather, the Commission intended for the ERO to ensure that there 

 34 Id. at P 101. “Finally, the Commission agrees that, despite the existence of a 

voltage or demand threshold for a particular Reliability Standard, the ERO or Regional 

Entity should be permitted to include an otherwise exempt facility on a facility-by-facility 

basis if it determines that the facility is needed for Bulk-Power System reliability.” 
Docket No. RM06-16-001 - 29 - 

is clarity in the registering of entities and that the registration process results in no gaps or 

unnecessary redundancies. 

45. Further, the Commission clarifies that it did not intend to change existing 

contracts, agreements or other understandings as to who is responsible for a particular 

function under a Reliability Standard.35 The Commission believes that allowing an 

organization to accept compliance responsibility on behalf of its members should cover 

TAPS’ concerns regarding a situation in which two entities have a contract regarding 

which will perform functions under the Reliability Standards.36 NERC has filed 

procedures for allowing such agreements in Docket No. RM06-16-003. The Commission 

will rule on the particulars of those procedures in that proceeding. 

46. The Commission denies California Cogeneration’s request for rehearing with 

respect to exemption of QFs from compliance with mandatory Reliability Standards. As 

stated in Order No. 696, for reliability purposes, there is no meaningful distinction 

between QF and non-QF generators that would warrant generic exemption of QFs from 

mandatory Reliability Standards.37 Therefore, we disagree with California Cogeneration 

that Order No. 693 failed to adequately address the unique characteristics of QFs. 

 35 See id. at P 107. 

36 See id. at P 107-09.

37 Order No. 696 at P 28. 
Docket No. RM06-16-001 - 30 - 

47. Whether a generation facility should be subject to Reliability Standards should 

depend on whether electric energy from the generation facility is needed to maintain the 

reliability of the Bulk-Power System. The registration criteria adopted by NERC and 

approved by the Commission, as well as the compliance registry process adopted by 

NERC and approved by the Commission, are designed to ensure that only those facilities 

needed to maintain the reliability of the Bulk-Power System are subject to the Reliability 

Standards. The ultimate decision with respect to individual generation units or plants is, 

and must be, made on a case-by-case basis. Thus, whether a particular QF or type of QF 

should be exempt from Reliability Standards is an issue that is more appropriately raised 

in the context of NERC’s establishment of registry criteria for owners and operators of 

generators, and in the context of NERC’s compliance registry process. The reliability of 

the Bulk-Power System will be better protected by addressing this issue in the NERC 

compliance registry process, which will ensure that no generator that is needed to 

maintain the reliability of the Bulk-Power System will be exempt from Reliability 

Standards, while excusing those generators that are not needed to maintain reliability. 

Therefore, the Commission rejects California Cogeneration’s request that it direct NERC 

to immediately initiate a stakeholder process to revise the Reliability Standards to 

identify in greater detail the entities that are responsible for compliance and revise 

requirements to recognize the operational constraints of QF generators. 
Docket No. RM06-16-001 - 31 - 

3. Use of the NERC Functional Model

48. Order No. 693 explained that NERC has developed a “Functional Model” that 

defines the set of functions that must be performed to ensure the reliability of the BulkPower System. The Functional Model identifies 14 functions and the name of a 

corresponding entity responsible for fulfilling each function. While the Commission had 

proposed to require that NERC file future revisions to the Functional Model, Order No. 

693 determined that such filing was not necessary.38 The Commission made this 

determination based on the characterization offered by numerous commenters that the 

Functional Model is an evolving guidance document that is not intended to convey firm 

rights and responsibilities. Further, the Commission agreed with commenters that the 

applicability section of a particular Reliability Standard should be the ultimate 

determinant of applicability of each Reliability Standard. While some commenters asked 

that all revisions to the Functional Model be developed through NERC’s ANSIaccredited process, the Commission left to the discretion of the ERO the appropriate 

means of allowing stakeholder input when revising the Functional Model. 

a. Requests for Rehearing

49. TANC requests rehearing of the Commission’s determination that future 

modifications of the Functional Model do not need to be submitted to the Commission for 

 38 Order No. 693 at P 127-29. 
Docket No. RM06-16-001 - 32 - 

approval. TANC contends that the Functional Model is more than just a guidance 

document and, rather, is fundamental to determining the applicability of each Reliability 

Standard. It asserts that the ERO’s compliance registry process that is used to identify 

users, owners and operators of the Bulk-Power System that must comply with Reliability 

Standards relies on the Functional Model. Thus, according to TANC, a change in the 

Functional Model affects the applicability and enforcement of each Reliability Standard. 

50. Further, TANC contends that the Reliability Standards are not “complete,” a 

quality objective identified by NERC in the development of Reliability Standards, 

because the Reliability Standards are dependent on an external document. TANC is 

concerned that revising the Functional Model could result in additional entities having to 

comply with Reliability Standards without affording these entities adequate notice of 

what is expected of them. It notes that terms used in the Functional Model are also 

defined in the NERC glossary, which was approved by the Commission. Thus, TANC 

requests that the Commission require the ERO to submit revisions to the Functional 

Model for Commission approval, either as revisions to the Functional Model or revised 

terms in the NERC glossary, after development through the ERO’s full Reliability 

Standards development process. 

51. Midwest ISO contends that the Commission erred in failing to require NERC to 

define the distinct roles of the “planning coordinator” and “planning authority.” 

According to Midwest ISO, while NERC used the term planning authority when it 
Docket No. RM06-16-001 - 33 - 

developed the “Version 0” Reliability Standards, it was recognized that there was “[no] 

common understanding of who or what the Planning Authority was.”39 Further, Midwest 

ISO explains that many Reliability Standards describe roles for both the planning 

authority and transmission planner. Midwest ISO states that, while the latest revision to 

the Functional Model substitutes the term “planning coordinator” for “planning 

authority,” this has not resolved the problem because the responsibilities of the planning 

coordinator “are both more limited and wide-area in nature” and may not be simply 

substituted for those of planning authority. Midwest ISO notes that certain Regional 

Entities are registering entities based on the planning authority function as previously 

defined, and Midwest ISO asks rhetorically whether the ERO can hold a company 

accountable to a set of Reliability Standards applicable to an entity that it no longer 

recognizes as valid. 

52. Midwest ISO maintains that the Commission did not adequately address Midwest 

ISO’s concerns when it stated in Order No. 693 that the ERO can address such concerns 

as it updates and revises the Functional Model. According to Midwest ISO, the 

Reliability Standards state that regions should work closely with the planning 

coordinators on a common understanding of roles and responsibilities, but such a process 

will be lengthy and perhaps futile without Commission guidance. Further, Midwest ISO 

 39 Midwest ISO at 4. 
Docket No. RM06-16-001 - 34 - 

states that, while NERC will address this issue in the long term, the Commission’s failure 

to provide interim clarification or direct NERC to specify the role of the planning 

coordinator is an error. 

b. Commission Determination

53. The Commission denies TANC’s request for rehearing. The Commission 

disagrees with TANC that the Commission-approved Reliability Standards are 

incomplete. As stated in Order No. 693, the applicability section of a particular 

Reliability Standard should be the ultimate determinant of applicability of each 

Reliability Standard.40 Further, the Commission notes that we required the ERO to 

update the Glossary of Terms Used in Reliability Standards through the Reliability 

Standards development process whenever a new or revised Reliability Standard includes 

a new defined term.41

54. The Commission disagrees with TANC that the Functional Model is used to 

identify users, owners and operators of the Bulk-Power System that must comply with 

Reliability Standards. The compliance registry criteria are used to determine which 

entities must be listed on the compliance registry, and therefore must comply with 

Reliability Standards. Changes in the Functional Model cannot require additional entities 

to comply with Reliability Standards. Consistent with our explanation in Order No. 693, 

 40 Order No. 693 at P 127. 

41 Id. at P 1893. 
Docket No. RM06-16-001 - 35 - 

if an entity is registered as a result of a change that emanated from a revision of the 

Functional Model, the entity would have an opportunity to seek review by the ERO and 

the Commission. Accordingly, we deny the request for rehearing and will not require 

NERC to file revisions to the Functional Model. 

55. Further, we reject Midwest ISO’s contention that the Commission erred in failing 

to provide guidance in directing NERC to define the distinct roles of the planning 

authority and planning coordinator. First, as recognized by Midwest ISO, NERC will 

address this issue as part of its long range plan. This is consistent with the Commission’s 

statement in Order No. 693 that “given that the Functional Model is an evolving guidance 

document, the ERO can address such concerns as it updates and revises the Functional 

Model.”42 Midwest ISO has provided insufficient support for its contention that 

addressing this matter may be lengthy and futile without Commission intervention. 

Moreover, consistent with Order No. 693, any ambiguity regarding roles and the 

responsibility of a particular entity for compliance with a particular Reliability Standard 

is a matter that should be addressed in the registration of a particular entity. 

56. Finally, we disagree with Midwest ISO’s suggestion that it is inappropriate to 

register entities as planning authorities given that the applicability provisions of the 

Commission-approved Reliability Standards refer to the planning authority and not the 

 42 Id. at P 129. 
Docket No. RM06-16-001 - 36 - 

planning coordinator. Consistent with our discussion above, revisions to the Functional 

Model do not convey rights and responsibilities but, rather, the modification to the 

applicability provision of a Reliability Standard or NERC glossary ultimately determines 

an entity’s obligations. 

B. Mandatory Reliability Standards

1. Prioritizing Modifications to Reliability Standards

57. In Order No. 693, the Commission directed the ERO to submit a revised Work 

Plan to: (1) reflect modification directives contained in Order No. 693; (2) include the 

timeline for completion of ATC-related Reliability Standards as ordered in Order No. 

890; and (3) account for the views of its stakeholders, including those raised in this 

proceeding. The Commission required that the ERO set specific delivery dates, 

explaining that “[a] Work Plan with specific target dates will provide a valuable tool and 

incentive to timely address the modifications directed in this Final Rule.”43 Further, 

Order No. 693 stated that: 

the ERO should make every effort to meet such delivery dates. However, 

we understand that there may be certain cases in which the ERO is not able 

to meet [the] Commission’s deadline. In those instances, the ERO must 

inform the Commission of its inability to meet the specified delivery date 

and explain why it will not meet the deadline and when it expects to 

complete its work.[44] 

 43 Id. at P 207. 

44 Id. 
Docket No. RM06-16-001 - 37 - 

a. Requests for Rehearing

58. NRECA asks for clarification, or alternatively rehearing, that Order No. 693 does 

not allow the imposition and enforcement of deadlines that preclude the ERO from 

satisfying the due process requirements set forth in section 215 of the FPA or applying its 

own expertise. NRECA states that a deadline “may be reasonable or unreasonable, and 

its reasonableness needs to be determined within context” taking into account the 

complexity of the matter and other considerations.45 NRECA contends that the 

imposition and enforcement of an unreasonable deadline conflicts with section 215 as 

well as Order No. 672. Thus, NRECA seeks clarification that the Commission’s 

assertion of authority to establish deadlines for ERO action represents no more than the 

authority to “exhort” the ERO to move expeditiously, consistent with its statutory due 

process obligations. “However, if the Commission is purporting in the Final Rule to 

reserve the power to specify an unreasonable deadline, that undermines due process and 

ignores the ERO’s technical expertise in contravention of the requirements of section 

215, then NRECA seeks rehearing of the Commission’s determination.”46

b. Commission Determination

59. The Commission agrees that it should not impose deadlines that preclude the ERO 

from satisfying the due process requirements set forth in section 215 of the FPA, and has 

 45 NRECA at 17. 

46 Id. at 18. 
Docket No. RM06-16-001 - 38 - 

provided in several previous orders that, in complying with a deadline, NERC must also 

meet the requirements of the FPA and the Commission’s regulations. In our January 

2007 Compliance Order, we made it clear that a revision to NERC’s expedited Reliability 

Standards development process must “make it clear that the Commission can order 

expedited standard development in a specific time frame and that NERC must adhere to 

that time frame and still allow for due process.”47 On rehearing, we further clarified that 

“any ERO process that provides ‘reasonable notice and opportunity for comment, due 

process, openness, and balance of interests’ as required by section 215(c)(2)(D) of the 

FPA, and that also can meet a Commission-imposed deadline pursuant to section 39.5(g) 

of the Commission’s regulations, will comply with this directive.”48 

60. Finally, in Order No. 693, the Commission stated that the ERO should make every 

effort to meet Commission-ordered delivery dates. However, we acknowledged that 

“there may be certain cases in which the ERO is not able to meet [the] Commission’s 

deadline. In those instances, the ERO must inform the Commission of its inability to 

meet the specified delivery date and explain why it will not meet the deadline and when it 

expects to complete its work.”49

 47 North American Electric Reliability Corp., 118 FERC ¶ 61,030 at P 27 (2007) 

(January 2007 Compliance Order) (emphasis added). 

48 North American Electric Reliability Corp., 119 FERC ¶ 61,046 at P 13 (2007). 

49 Order No. 693 at P 207. 
Docket No. RM06-16-001 - 39 - 

2. Trial Period

61. In Order No. 693, while the Commission did not institute a formal “trial period,” it 

directed the ERO and Regional Entities to “focus their resources” on the “most serious 

violations” during an initial period through December 31, 2007.50 Order No. 693 stated 

that this use of enforcement discretion should apply to all users, owners and operators of 

the Bulk-Power System. The Commission explained that the goal should be to ensure 

that, at the outset, the ERO and Regional Entities can assess a monetary penalty in a 

situation where, for example, an entity’s non-compliance places Bulk-Power System 

reliability at risk. This approach would allow the ERO, Regional Entities and other 

entities time to ensure that the compliance monitoring and enforcement processes work as 

intended and that all entities have time to implement new processes. 

a. Requests for Rehearing

62. Xcel states that, while it supports the Commission’s decision that the ERO and 

Regional Entities should have the enforcement discretion to calculate but not collect 

penalties during an initial period, it asks that the Commission provide greater clarity and 

guidance regarding the circumstances when penalties should be collected and when they 

should not. It asks that the Commission be as specific as possible in defining the 

circumstances under which the ERO and Regional Entities should exercise their 

 50 Id. at P 221-22. 
Docket No. RM06-16-001 - 40 - 

enforcement discretion. It suggests that the Commission clarify that to assess a penalty a 

violation must be, at a minimum, (i) an intentional violation of a well-understood 

Reliability Standard and (ii) a violation that causes substantial harm. 

b. Commission Determination

63. The Commission denies Xcel’s request for clarification. First, the Commission 

believes that Xcel’s requested clarification would not always capture the most serious 

violations. Moreover, the Commission in Order No. 693 intentionally declined to 

develop a threshold that would place limits on the ERO’s and Regional Entities’ exercise 

of enforcement discretion; and we decline to do so here as well. Although we clearly 

allowed for “the ERO or a Regional Entity to take an enforcement action against an entity 

whose violation causes a significant disturbance,” we also provided that the ERO and 

Regional Entities can assess a monetary penalty in a situation where, for example, an 

entity’s non-compliance places Bulk-Power System reliability at risk. 51 We did not 

require that there be actual harm to the Bulk-Power System for the ERO to assess a 

penalty during the transition period. 

64. The Commission believes that it is better to allow the ERO and Regional Entities 

to use their expertise in determining which violations constitute the most serious. 

Likewise, the ERO and Regional Entities are in the best position to know how to best use 

 51 Id.
Docket No. RM06-16-001 - 41 - 

their finite enforcement resources. This will require case-by-case analysis of the 

circumstances surrounding a situation. Therefore, we will not stipulate a single set of 

circumstances under which the ERO and Regional Entities should use their enforcement 

discretion for the initial transition period. 

C. Common Issues Pertaining to Reliability Standards

1. Blackout Report Recommendation on Liability Limitations

65. In Order No. 693, consistent with Order No. 890, the Commission did not adopt 

new liability protections.52 The Commission stated that it did not believe any further 

action is needed to implement Blackout Report Recommendation No. 8 because the Task 

Force found that no further action is needed.53 Further, the Blackout Report indicated 

that some states already have appropriate protection against liability suits.54 Finally, the 

Commission stated that, in Order No. 888, as affirmed by Order No. 890, the 

Commission declined to adopt a uniform federal liability standard and decided that, while 

 52 Id. at P 237; Preventing Undue Discrimination and Preference in Transmission 

Service, Order No. 890, 72 FR 12,266 (March 15, 2007), FERC Stats. & Regs. ¶ 31,241 

(2007) at P 1671-77. 

53 US-Canada Power System Outage Task Force, Final Report on Implementation 

of Task Force Recommendations at 22 (Oct. 3, 2006), available at 

http://www.oe.energy.gov/news/blackout.htm (“Action Required to Fully Implement 

Recommendation 8: No further action under this recommendation is needed.”). 

54 Id. (“In the United States, some state regulators have informally expressed the 

view that there is appropriate protection against liability suits for parties who shed load 

according to approved guidelines”). 
Docket No. RM06-16-001 - 42 - 

it was appropriate to protect the transmission provider through force majeure and 

indemnification provisions from damages or liability when service is provided by the 

transmission provider without negligence, it would leave the determination of liability in 

other instances to other proceedings.55 

a. Requests for Rehearing

66. Avista seeks rehearing on the Commission’s determination not to provide further 

liability limitations and questions whether it is fair, just and reasonable to deny 

transmission operators that are not regional transmission organizations (RTOs) or 

independent system operators (ISOs) the protections afforded to RTOs and ISOs and at 

the same time impose mandatory Reliability Standards with significant fines and 

penalties as an enforcement mechanism.56 Avista argues that the Commission has limited 

the scope of liability in the pro forma open access transmission tariff (OATT) to instances 

of gross negligence or intentional misconduct and also limited damages by excluding 

consequential, indirect or punitive damages for RTOs and ISOs. According to Avista, 

not providing these same limitations to other transmission operators is, on its face, 

 55 Order No. 888-B, 81 FERC ¶ 61,248 at 62,081 (1997), order on reh’g, Order 

No. 888-C, 82 FERC ¶ 61,046 (1998), aff’d in relevant part sub nom. Transmission 

Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New 

York v. FERC, 535 U.S. 1 (2002). 

56 Avista and PSE also requested rehearing of this issue in Docket Nos. RM05-25-

001 and RM05-17-001. 
Docket No. RM06-16-001 - 43 - 

arbitrary, and may have unintended adverse consequences to the ratepayers of any 

transmission operator whose operating employee's decisions initiate a large cascading 

outage, if available insurance is not adequate to cover the risk. Avista argues that 

enforcement of mandatory Reliability Standards should not depend both on risk of 

massive liability exposure and upon multi-million dollar civil fines and penalties. 

b. Commission Determination

67. The Commission denies rehearing. The Commission has already ruled that the 

liability standard the Commission has approved for RTOs and ISOs is not appropriate for 

other transmission providers.57 Further, we also found without merit assertions that 

increased liability protections in the pro forma OATT should be viewed as a necessary 

element of the implementation of the Commission’s reliability authority.58 In the 

Reliability Policy Statement,

59 the Commission stated that it would consider, on a caseby-case basis, proposals by public utilities to amend their OATTs to include limitations 

on liability. The Commission further noted that, while this issue has not been resolved on 

a standardized basis, the Commission has entertained RTO transmission providers’ 

 57 Order No. 890 at P 1675. We note that this discussion concerns civil liability 

only, not liability for penalties imposed by the ERO, Regional Entities or the 

Commission. 

58 Id. at P 1677. 

59 Policy Statement on Matters Related to Bulk Power System Reliability, 

107 FERC ¶ 61,052 (2004) (Reliability Policy Statement). 
Docket No. RM06-16-001 - 44 - 

specific proposals to amend their OATTs to include provisions addressing limitations on 

liability.60 

68. In subsequent orders, the Commission found that the gross negligence and 

intentional wrongdoing indemnification and liability standard is appropriate for RTOs 

and ISOs. However, the Commission has declined to extend this protection to all 

transmission providers. In Southwest Power Pool, Inc., the Commission explicitly stated 

“that our acceptance here of the gross negligence and intentional wrongdoing indemnity 

standard is limited to SPP, in its role as an RTO, and its TOs; we do not intend to extend 

such protection to all transmission providers.”61 In Southern Company Services, Inc., the 

Commission stated that: 

Having considered Southern Companies’ proposed limitation on liability 

and indemnification provisions pursuant to our Reliability Policy Statement 

cited above, we find that Southern Companies have not shown that they are 

similarly situated to the RTOs/ISOs they cite in support. While Southern 

Companies claim that they ‘may not be protected by any State-regulated 

limitations on liability,’ Southern Companies offer no evidence to support 

this concern. The Commission has provided such liability protection to 

 60 Reliability Policy Statement at P 40 (citations omitted). 

61 112 FERC ¶ 61,100 at P 39 (2005). 
Docket No. RM06-16-001 - 45 - 

RTOs/ISOs because they were created by and solely regulated by the 

Commission, and otherwise would be without limitations on liability. 

Southern Companies have proffered no evidence of any change in 

circumstances vis-à-vis their liability exposure post-Order No. 888.62 

69. Further, we disagree with Avista that there is a risk of massive liability exposure. 

It offers no new arguments that demonstrate that non-RTO and non-ISO transmission 

providers are unable to rely on state laws, i.e., the state laws provide inadequate 

protection. Avista has not persuaded us to change our policy regarding liability 

protections applicable to non-RTO and non-ISO transmission providers. Therefore, we 

deny rehearing. 

2. Fill-in-the-Blank Standards

70. In Order No. 693, the Commission required supplemental information for any 

Reliability Standard that currently requires a regional reliability organization to fill in 

missing criteria or procedures.63 The Commission explained that, where important 

information has not yet been provided, it would not approve or remand such Reliability 

Standards until the ERO submits further information. Until such information is provided, 

compliance with the so-called fill-in-the-blank standards should continue on a voluntary 

 62 113 FERC ¶ 61,239 at P 7 (2005). 

63 Order No. 693 at P 297-302. 
Docket No. RM06-16-001 - 46 - 

basis, and the Commission considers compliance with such Reliability Standards to be a 

matter of good utility practice. Further, the Commission stated: 

In our Reliability Policy Statement, we explained that compliance with 

NERC Reliability Standards (or more stringent regional standards) is 

expected as a matter of good utility practice as that term is used in the pro

forma OATT. The Commission continues to expect compliance with such 

Reliability Standards as a matter of good utility practice. That being said, 

the Commission agrees that retaining a dual mechanism to enforce 

Reliability Standards both as good utility practice and under section 215 of 

the FPA is inappropriate; the OATT only applies to entities subject to our 

jurisdiction as public utilities under the FPA, while section 215 defines 

more broadly our jurisdiction with respect to mandatory Reliability 

Standards. We therefore do not intend to enforce, as an OATT violation, 

compliance with any Reliability Standard that has not been approved by the 

Commission under section 215.64

a. Requests for Rehearing

71. While APPA believes that Order No. 693 correctly deferred consideration of the 

“fill-in-the-blank” standards, it requests rehearing of the Commission’s approval of other 

Reliability Standards that incorporate the “fill-in-the-blank” standards. APPA argues that 

the Commission cannot, lawfully, approve Reliability Standards for immediate 

enforcement that incorporate those same unreviewed and unapproved regional Reliability 

Standards. 

72. According to APPA, approving a Reliability Standard that references an 

unapproved fill-in-the-blank standard requires compliance with regional Reliability 

 64 Id. at P 302 (footnote omitted). 
Docket No. RM06-16-001 - 47 - 

Standards that the Commission has not reviewed or approved. APPA asserts that the 

Commission cannot determine if a Reliability Standard that references a pending 

Reliability Standard is “just, reasonable, not unduly discriminatory or preferential, and in 

the public interest” for the same reasons that the Commission articulated in determining 

that it lacked important information needed to evaluate “fill-in-the-blank” standards. 

73. APPA also argues that the approved Reliability Standards that reference a fill-inthe-blank standard do not promote uniformity and consistency as required by Order No. 

672. APPA asserts that the Commission cannot determine if such Reliability Standards 

are justified, because the regional standard is more stringent than continent-wide 

Reliability Standards or is necessitated by a physical difference in the Bulk-Power 

System, without reviewing the regional standard in question to determine whether one of 

those two findings is appropriate. APPA also maintains that the Commission cannot 

conclude that the processes by which the regional practices involved in the referenced 

fill-in-the-blank standards were developed meet statutory requirements. APPA raises 

concerns about due process and fundamental fairness, asserting that small entities have 

often not been included in past regional processes, and may not have received prior 

notice of the standards with which they must now comply. 

74. APPA also argues the Commission is incorrect that “many of these Reliability 

Standards either refer to the process of collecting data or reference Requirements that 

entities are generally aware of because they have already been following these Reliability 
Docket No. RM06-16-001 - 48 - 

Standards on a voluntary basis.” According to APPA, Reliability Standards may sweep 

in many small entities that have not been members of regional reliability organizations 

and have not necessarily complied with standards on a voluntary basis. 

75. APPA argues that the Commission’s approval of Reliability Standards that make 

enforceable unreviewed “fill-in-the-blank” standards could trigger registration of a large 

number of small entities. According to APPA, unless it can be assumed that no change in 

the scope or content of the fill-in-the-blank standards will result from the ongoing process 

NERC and the Regional Entities are undertaking to fill in the blanks, mandatory 

enforcement of the “before” version is likely to sweep in different entities and subject 

them to different standards than will the “after” version. Further, APPA asserts that, by 

posing the potential to sweep a large number of small entities onto the compliance 

registry before the applicable regional standard is approved, the Commission’s decision 

calls into question its adherence in Order No. 693 to the Regulatory Flexibility Act 

requirements because, absent review of the undisclosed incorporated “fill-in-the-blank” 

standards, the Commission cannot estimate the number of small systems these Reliability 

Standards will affect. Further, APPA maintains that the Commission cannot make the 

requisite determination that a small entity’s compliance with an unapproved “fill-in-theblank” standard has a material impact on reliability, and the Commission cannot find 

such compliance necessary for Bulk-Power System reliability. 
Docket No. RM06-16-001 - 49 - 

76. Finally, APPA maintains that, even though the Commission stated that the fact 

that a Reliability Standard references a fill-in-the-blank standard “may be considered in 

an enforcement action,”65 the Commission should not have approved such Reliability 

Standards. According to APPA, the ability of an entity to raise this issue in an 

enforcement action occurs too late to avoid the harm to many small entities in being 

required to register and comply with what it calls unapproved regional underfrequency 

load shedding (UFLS) programs that have not been developed through Commissionapproved processes meeting the statutory standard, and which may well differ from the 

final standard that the Commission approves to fill in the blanks. Nor, according to 

APPA, does the ability to raise issues relating to fill-in-the-blank standards in an 

enforcement action avoid the potential for significant distraction of NERC and Regional 

Entities from more crucial reliability-related duties to instead deal with compliance by 

numerous small entities that have no material impact on the grid with regional standards 

that are in a state of flux. APPA also asserts that this statement cannot overcome the 

fundamental legal deficiency with approving a Reliability Standard that references a fillin-the-blank standard—that the Commission lacks authority to approve regional 

reliability standards that require compliance with regional UFLS standards it has neither 

reviewed nor approved. 

 65 Id. at P 300. 
Docket No. RM06-16-001 - 50 - 

77. Xcel contends that the statement that the Commission does not intend to enforce, 

as an OATT violation, compliance with any Reliability Standard that has not been 

approved by the Commission under section 215 is confusing. By stating that the 

Commission does not intend to enforce as an OATT violation compliance with a 

Reliability Standard that has not been approved by the Commission under section 215, 

Xcel is concerned that the Commission may intend to enforce as an OATT violation noncompliance with a Reliability Standard that has been approved by the Commission under 

section 215. Xcel seeks clarification or rehearing on this issue. 

b. Commission Determination

78. The Commission denies APPA’s request for rehearing and provides further 

clarification. The Commission continues to believe that the fact that a Reliability 

Standard simply references a Reliability Standard that was not approved or remanded in 

Order No. 693 does not alone justify not approving the former Reliability Standard. 

Rather, such a reference may be considered in an enforcement action, if relevant, but is 

not a reason to delay approval of the Reliability Standard. Further, we clarify that, in an 

enforcement proceeding, such a reference can be considered regarding whether a 

particular Requirement or part of a Requirement in an otherwise approved Reliability 

Standard is enforceable.66 The Commission did not err in approving Reliability 

 66 See discussion of PRC-007, PRC-008, and PRC-009, infra. 
Docket No. RM06-16-001 - 51 - 

Standards that reference a pending Reliability Standard because they contain the 

appropriate level of specificity necessary to provide notice to users, owners and operators 

of the Bulk-Power System as to what is required. We will discuss the issue raised by 

APPA in regard to the Protection and Control Systems (PRC) group of Reliability 

Standards in our discussion of individual Reliability Standards below. 

79. In approving a Reliability Standard that references a fill-in-the-blank standard, the 

Commission is not requiring compliance with the unapproved Reliability Standard. 

Therefore, it is immaterial how the regional differences discussed in the unapproved 

Reliability Standard were created. Rather, as addressed more fully in our discussion on 

the PRC group of Reliability Standards below, the Commission, ERO and Regional 

Entities will only enforce the data requirements and any requirement that can be 

independently enforced in those Reliability Standards, and will not enforce compliance 

with regional criteria created by a regional reliability organization pursuant to an 

unapproved fill-in-the-blank standard.67

80. APPA’s contention that approving a Reliability Standard that references a fill-inthe-blank standard could trigger additional small entity registration is speculative. At this 

time, registration is governed by NERC’s definition of bulk electric system and its 

 67 This is similar to our action in Order No. 693, where we approved certain 

Reliability Standards, but acknowledged that a particular requirement may be 

unenforceable. See Order No. 693 at P 147, 157-58. 
Docket No. RM06-16-001 - 52 - 

compliance registry criteria. Nothing in a Reliability Standard can cause an entity to be 

registered if it would otherwise not be required to do so. 

81. In response to Xcel, the Commission clarifies that it does not intend to enforce as a 

violation of good utility practice non-compliance with a Reliability Standard that has 

been approved by the Commission under section 215. However, where the OATT 

contains a specific requirement that may be related to a Reliability Standard, for example, 

an independent obligation under the OATT to calculate transmission capacity, the 

Commission does not limit its ability to take enforcement action separately against a 

violation of a Reliability Standard and a violation of a specific OATT provision. Such 

determinations will be based on the facts of a specific circumstance. 

D. Discussion of Individual Reliability Standards

1. EOP-001-0

82. Reliability Standard EOP-001-0 requires each transmission operator and balancing 

authority to develop, maintain and implement a set of plans to mitigate operating 

emergencies. These plans must be coordinated with other transmission operators and 

balancing authorities and the reliability coordinator. 

83. Order No. 693 approved Reliability Standard EOP-001-0. In addition, the 

Commission directed the ERO to develop a modification to EOP-001-0 that, among other 

things, includes the reliability coordinator as an applicable entity. In pertinent part, the 

Commission found the reliability coordinator to be a necessary entity under EOP-001-0 
Docket No. RM06-16-001 - 53 - 

and directed the ERO to modify the Reliability Standard to include the reliability 

coordinator as an applicable entity.68 Recognizing the importance NERC attributes to the 

reliability coordinator in connection with matters covered by EOP-001-0, the 

Commission was persuaded that specific responsibilities for the reliability coordinator in 

the development and coordination of emergency plans must be included as part of this 

Reliability Standard. The Commission reasoned that while balancing authorities and 

transmission operators are capable of developing, maintaining and implementing plans to 

mitigate operating emergencies for their specific areas of responsibility, unlike reliability 

coordinators, they do not have a wide-area view. 

a. Requests for Rehearing

84. Midwest ISO disagrees with the Commission’s mandate to the ERO to make EOP001-0 applicable to the reliability coordinator. It notes that the Commission correctly did 

not provide guidance on the reliability coordinators’ role in the emergency planning 

process and appears to have left this issue up to the industry experts. Midwest ISO 

argues that the industry had already addressed any potential role of the reliability 

coordinator in emergency planning by declining to make the reliability coordinator an 

applicable entity in EOP-001-0. 

 68 Id. at P 566. 
Docket No. RM06-16-001 - 54 - 

b. Commission Determination

85. The Commission affirms its determination to mandate that the ERO make EOP001-0 applicable to the reliability coordinator function because it is the highest level of 

authority responsible for reliable operation of the Bulk-Power System and has a widearea view. Midwest ISO has not substantively disputed that Requirements for mitigation 

of emergencies will benefit from including a role for the entity with a wide-area view. 

The ERO may consider other equivalent alternatives and consider industry concerns in its 

modification of EOP-001-0. 

2. EOP-002-2

86. EOP-002-2 applies to balancing authorities and reliability coordinators and is 

intended to ensure that they are prepared for capacity and energy emergencies. This 

Reliability Standard requires that balancing authorities have the authority to bring all 

necessary generation on line, communicate about energy and capacity emergencies with 

the reliability coordinator and coordinate with other balancing authorities. EOP-002-2 

includes an attachment that describes an emergency procedure to be initiated by a 

reliability coordinator that declares one of four energy emergency alert levels to provide 

assistance to the load-serving entity. 

87. Order No. 693 approved Reliability Standard EOP-002-2. In addition, the 

Commission directed the ERO to develop a modification to EOP-002-2 that, among other 

things, would modify the Reliability Standard to ensure that the Transmission Loading 
Docket No. RM06-16-001 - 55 - 

Relief (TLR) procedure is not used to mitigate actual Interconnection Reliability 

Operating Limit (IROL) violations. The Commission found that the TLR procedure may 

be appropriate and effective for use in managing potential IROL violations, but that the 

TLR procedure is an inappropriate and ineffective tool for mitigating actual IROL 

violations or for use in emergency situations as called for in EOP-002-2. Accordingly, 

the Commission directed the ERO to modify the Reliability Standard to ensure that the 

TLR procedure is not used to mitigate actual IROL violations.69

a. Requests for Rehearing

88. Midwest ISO requests that the Commission clarify which of the following 

conditions constitutes a “potential IROL” violation for purposes of EOP-002-2: (1) the 

operating limit has been exceeded, but 30 minutes has not elapsed and the operator may 

yet return the system to normal; or (2) the operating limit has not been exceeded, but 

appears that it may be if action is not taken quickly. Midwest ISO believes that the 

second circumstance is the one the Commission identified as being appropriate for TLR 

mitigation, but reasons that the terminology can be interpreted differently by different 

operators applying historically different operating practices. 

 69 Order No. 693 at P 583. 
Docket No. RM06-16-001 - 56 - 

b. Commission Determination

89. The Commission clarifies that a potential IROL violation refers to the second 

circumstance provided by Midwest ISO, in which “the operating limit has not been 

exceeded, but appears that it may be if action is not taken quickly.” In such a situation, 

use of TLR procedures may be appropriate depending on the circumstances. Moreover, 

actions undertaken under the TLR procedure are not fast and predictable enough for use 

in situations in which an operating security limit is being violated. 

3. EOP-008-0

90. EOP-008-0 addresses plans for loss of control center functionality. It requires 

each reliability coordinator, transmission operator and balancing authority to have a plan 

to continue reliable operations and to maintain situational awareness in the event its 

control center is no longer operable. 

91. Order No. 693 approved Reliability Standard EOP-008-0. In addition, the 

Commission directed the ERO to develop a modification to EOP-008-0 that, among other 

things, includes a Requirement that provides for backup capabilities that, at a minimum, 

requires transmission operators and balancing authorities that have operational control 

over significant portions of generation and load to have minimum backup capabilities, 
Docket No. RM06-16-001 - 57 - 

but may do so through contracting for these services instead of through dedicated backup 

control centers.70 

a. Requests for Rehearing

92. Midwest ISO supports the outcome of Order No. 693 with regard to Commission 

mandates in EOP-008-0. However, it notes that ambiguities and potential 

misunderstandings could result from imprecise adjectives in the Reliability Standards. 

Specifically, for purposes of EOP-008-0, Midwest ISO advocates that the Commission 

should define an amount of load or generation that constitutes a “significant” portion of 

generation and load that would require entities to have minimum backup capabilities 

through backup control centers. Alternatively, Midwest ISO proposes that NERC could 

be directed to create a “safe-harbor” limit below which a system would not be considered 

significant unless found to be so by the Regional Entity or the ERO. 

b. Commission Determination

93. The Commission reiterates its direction in Order No. 693 that the goal of this 

Reliability Standard is to provide the continuation of Reliable Operation and the 

maintenance of situational awareness in the event that the primary control center is no 

longer operational.71 To that end, every registered reliability coordinator, balancing 

authority, transmission operator, and centrally dispatched generator operator should have 

 70 Id. at P 672. 

71 See Order No. 693 at P 659. 
Docket No. RM06-16-001 - 58 - 

a plan and means of achieving the outcome of the plan upon the loss of their respective 

control centers. The Commission has identified three requirements as a minimum for the 

plans – independence from the primary control center, capability to operate for a 

prolonged period corresponding to the time it would take to replace the primary control 

center, and the provision of a minimum set of tools and facilities to replicate the critical 

reliability functions of the primary control center. The Reliability Standard should 

provide specific Requirements, based on the size or impact to Reliable Operation, to 

achieve the Commission’s requirements. 

94. The Commission declines to define a “safe harbor” limit requested by Midwest 

ISO. We directed the ERO, through the Reliability Standards development process, to 

identify what Requirements are necessary on which size entities to achieve the 

Commission’s directives and the goal of this Reliability Standard. Since there are many 

equally efficient ways of achieving the Commission’s direction, we will not identify any 

specific method or safe harbor. 

4. FAC-003-1

95. FAC-003-1 addresses vegetation management on transmission rights-of-way. As 

proposed, FAC-003-1 would apply to transmission lines operated at 200 kV or higher 

voltage (and lower-voltage transmission lines which have been deemed critical to 

reliability by a regional reliability organization). It would require each transmission 

owner to have a documented vegetation management program in place, including records 
Docket No. RM06-16-001 - 59 - 

of its implementation. Each program must be developed for the geographical area and 

specific design configurations of the transmission owner’s system. 

96. Order No. 693 approved Reliability Standard FAC-003-1. In addition, while we 

did not direct the ERO to submit a modification to the general limitation on applicability 

to facilities above 200 kV, we required the ERO to address Commission concerns 

regarding the applicability threshold through the ERO’s Reliability Standards 

development process.72 The Commission was concerned that the bright-line applicability 

threshold of 200 kV in this Reliability Standard would exclude a significant number of 

transmission lines that could impact Bulk-Power System reliability. We stated that, in 

proposing to require the ERO to modify the Reliability Standard to apply to Bulk-Power 

System transmission lines that have an impact on reliability as determined by the ERO, 

we did not intend to make this Reliability Standard applicable to fewer facilities than it is 

currently, but to extend the applicability to lower-voltage facilities that have an impact on 

reliability. 

a. Requests for Rehearing

97. NRECA asks that the Commission clarify that Order No. 693 did not mandate that 

FAC-003-1 apply to lines below 200 kV. NRECA believes that a fair reading of Order 

No. 693 is that the Commission only directed the ERO to give additional consideration to 

 72 Id. at P 735. 
Docket No. RM06-16-001 - 60 - 

having FAC-003-1 apply to lines below 200 kV and did not purport to require such a 

modification.73 However, NRECA claims that other portions of Order No. 693 appear to 

go further, such as where the Commission states that it is requiring the Reliability 

Standard “to include a greater number of entities....”74 In view of the potential 

ambiguity, NRECA requests that the Commission clarify that it is not dictating a 

particular outcome to the ERO's deliberations, as such a directive would be contrary to 

section 215 of the FPA, Order Nos. 672 and 672-A, and other portions of Order No. 693. 

Alternatively, NRECA requests rehearing. 

b. Commission Determination

98. We will grant NRECA’s request for clarification. First, in Order No. 693, we 

specifically stated that “[w]e will not direct NERC to submit a modification to the general 

limitation on applicability [in FAC-003-1] as proposed in the NOPR.”75 Further, as a 

general matter, we stated that a direction for modification should not preclude the 

 73 NRECA at 23, citing Order No. 693 at P 706 (“We will not direct NERC to 

submit a modification to the general limitation on applicability as proposed in the NOPR. 

However, we will require the ERO to address the proposed modification through its 

Reliability Standards development process”). 

74 NRECA at 23, citing Order No. 693 at P 711. 

75 Order No. 693 at P 706. 
Docket No. RM06-16-001 - 61 - 

consideration of viable alternatives in the ERO’s Reliability Standards development 

process.76 

99. In Order No. 693, the Commission stated that it was concerned that the bright-line 

applicability threshold of 200 kV would exclude a significant number of transmission 

lines that could impact Bulk-Power System reliability. We noted that, at that time no 

regional reliability organization had used its discretion to designate lower voltage lines 

under the proposed Reliability Standard, even though there are lower voltage lines 

involving IROL.77 The Commission was concerned that this approach would not require 

all transmission lines that could impact Bulk-Power System reliability to be included 

under this Reliability Standard. While the Commission did not mandate that FAC-003-1 

apply to lines below 200 kV, the Commission did require the ERO to address the 

Commission’s concerns through its Reliability Standards development process. 

5. IRO-001-1

100. IRO-001-1 requires that a reliability coordinator have reliability plans, 

coordination agreements and the authority to act and direct reliability entities to maintain 

reliable system operations under normal, contingency and emergency conditions. 

Requirement R3 provides that a reliability coordinator “shall have clear decision-making 

 76 Id. at P 185-86. 

77 The Commission notes that the Regional Entities have since filed their 

definitions of bulk electric system and that at least one Regional Entity, WECC, has 

designated lower voltage facilities that must comply with the Reliability Standards. 
Docket No. RM06-16-001 - 62 - 

authority to act and direct actions to be taken” by applicable entities to “preserve the 

integrity and reliability of the bulk electric system and these actions shall be taken 

without delay but no longer than 30 minutes.” 

101. Order No. 693 approved Reliability Standard IRO-001-1. In Order No. 693, the 

Commission declined to adopt a change suggested by Santa Clara that would only require 

the commencement of corrective control action within a 30-minute limit. We found that 

the requirement to take action without delay and within the 30-minute limit is important 

to minimize the amount of time the system operates in an insecure mode and is 

vulnerable to cascading outages.78

a. Requests for Rehearing

102. Santa Clara seeks rehearing of the Commission’s determination not to order the 

ERO to modify Reliability Standard IRO-001-1. Santa Clara is concerned that the 30-

minute time period during which entities must take remedial action under this Reliability 

Standard could be too short with respect to physical actions that must be taken where the 

facilities which are subject to these actions cannot be readily accessed within the 30 

minute time period.79

 78 Id. at P 898. 

79 In its comments to the NOPR, Santa Clara requested that this requirement of 

IRO-001-1 be revised to read: “Actions shall be commenced without delay, but in any 

event, shall commence within 30 minutes.” Santa Clara Comments, December 28, 2006 

at 30. 
Docket No. RM06-16-001 - 63 - 

103. First, Santa Clara maintains that the reliability coordinator could direct that load 

be dropped within Silicon Valley Power’s (SVP) service territory.80 According to Santa 

Clara, those directives could only be implemented through a physical activity, such as 

opening breakers within certain substations, and cannot be accomplished at all times 

using an electronic signal from SVP’s control center. Therefore, Santa Clara claims that, 

while SVP personnel would respond to the reliability coordinator’s directive 

immediately, the required action might not be able to be accomplished within 30 minutes. 

104. As another example, Santa Clara states that SVP has a program through which 

certain SVP retail customers can commit to reduce base load by 10 percent where an 

emergency exists in its control area. However, Santa Clara maintains that reducing load 

by shutting down power to specific buildings can take longer than 30 minutes. Santa 

Clara states that it is not seeking to have the language in IRO-001-1 modified as it 

requested in comments to the NOPR. Rather, it seeks to have the Commission grant 

rehearing to direct NERC to modify IRO-001-1 and allow Santa Clara to work with 

NERC to develop clarifications and refinements to IRO-001-1 to remedy its concerns. 

105. Avista seeks clarification of the intent of Order No. 693 as to whether the 

authority of a reliability coordinator to issue directives to reliability entities arises out of 

(i) reliability coordinator contracts or (ii) Commission-approved Reliability Standards 

 80 SVP is the utility division of Santa Clara. 
Docket No. RM06-16-001 - 64 - 

without reliance on reliability coordinator contracts. According to Avista, if the authority 

of a reliability coordinator is non-contractual and arises out of Commission-approved 

Reliability Standards, the Commission must make sure that such authority is 

accompanied by equitable treatment of reliability entities. For example, Avista states that 

the Commission should require equitable compensation for re-dispatch of generation 

required by the reliability coordinator and emphasizes the need for fair and impartial 

procedures and methodologies are adopted to ensure that such equitable treatment is 

provided. 

106. Avista states the Commission’s statement in Order No. 693 that it “clarifies that it 

did not intend to change existing contracts, impose new organizational structures or 

otherwise affect existing agreements that set forth the responsibilities of various 

entities"81 applies to existing agreements that affect reliability coordinator functions. 

According to Avista, provisions of IRO-001-1 seem to imply that, as to the source and 

scope of authority for a reliability coordinator to issue directives, existing contracts may 

have been superseded, or rendered moot or unnecessary, by Order No. 693. In particular, 

 81 Order No. 693 at P 141. 
Docket No. RM06-16-001 - 65 - 

Avista contends that Requirement R8 of IRO-001-1 seems to suggest that contracts are 

unnecessary to authorize reliability coordinators to issue directives.82

107. Avista asserts that, if transmission operators or balancing authorities or other 

reliability entities are subject to a non-contractual duty imposed by the Commission 

under Order No. 693 to comply with the directives of a reliability coordinator, the 

Commission should clearly indicate such a requirement. It notes that, in another 

proceeding, Western Electricity Coordinating Council (WECC) seems to suggest that it 

believes that when the reliability coordination Reliability Standards become mandatory, 

the existing contracts regarding reliability or security coordination no longer will be 

relevant and will not be necessary to authorize reliability coordinators to issue mandatory 

directives to reliability entities.83 

 82 Requirement R8 states: “R8. Transmission Operators, Balancing Authorities, 

Generator Operators, Transmission Service Providers, Load-Serving Entities, and 

Purchasing-Selling Entities shall comply with Reliability Coordinator directives unless 

such actions would violate safety, equipment, or regulatory or statutory requirements. 

Under these circumstances, the Transmission Operator, Balancing Authority, Generator 

Operator, Transmission Service Provider, Load-Serving Entity, or Purchasing-Selling 

Entity shall immediately inform the Reliability Coordinator of the inability to perform the 

directive so that the Reliability Coordinator may implement alternate remedial actions.” 

83 Supplemental Comments of the Western Electricity Coordinating Council 

(WECC) filed March 12, 2007, in Docket No. RR06-3-001 at 13 (“Currently the BAs 

[balancing authorities] and TOPs [transmission operators] have a contractual obligation 

to comply with such directives, except in narrow, enumerated circumstances. Once the 

reliability standards are mandatory, BAs and TOPs must obey such directives or be 

subject to major penalties or other sanctions.”)(footnote omitted). 
Docket No. RM06-16-001 - 66 - 

108. On the other hand, Avista maintains that additional provisions of IRO-001-1 

suggest that reliability coordinators must have contracts or other written evidence in place 

that delineate and evidence their authority over reliability entities. For example, Avista 

cites measure M2 of IRO-001-1, which states that each reliability coordinator shall have 

and provide upon request evidence that could include, but is not limited to, job 

descriptions, signed agreements, an authority letter signed by an officer of the company, 

or other equivalent evidence that will be used to confirm that the reliability coordinator 

has the authority to act as described in Requirement 3. According to Avista, this 

provision suggests that the source of authority to issue directives lies in a contractual 

relationship between the reliability coordinator and each reliability entity covered by the 

requirements of Requirement R3.84 In Avista’s view, the language in the Purpose section 

indicates that the purpose of IRO-001-1 is to establish authority of reliability coordinators 

over reliability entities through contracts, in addition to establishing internal authority 

through delegations of authority and plans presumably through Requirement R2. 

109. Avista asserts that the security coordinator in the Pacific Northwest, PNSC, does 

not have contractual relationships with reliability entities other than control area 

 84 Requirement R3 states, "The Reliability Coordinator shall have clear decisionmaking authority to act and to direct actions to be taken by Transmission Operators, 

Balancing Authorities, Generation Operators, Transmission Service Providers, Load 

Serving Entities and Purchasing-Selling Entities within its Reliability Coordinator Area 

to preserve the integrity and reliability of the Bulk Electric System." 
Docket No. RM06-16-001 - 67 - 

operators. Avista contends that, if the authority of a reliability coordinator to issue 

directives to reliability entities arises out of reliability coordinator contracts, the 

reliability coordinator will need to enter into contractual relationships with each of the 

reliability entities within its area—which would expand the scope of and parties to the 

current PNSC contracts. Further, Avista states that existing contracts may not contain 

provisions regarding the authority of reliability coordinators to issue directives to 

reliability entities that fully track the Reliability Standards.85

110. Therefore, Avista requests rehearing and asks that the Commission require that 

(1) reliability coordinators develop and file contracts or tariffs that govern their reliability 

coordination authority and activities, and (2) such contracts or tariffs ensure equitable 

treatment of reliability entities by reliability coordinators and provide adequate 

procedures and methodologies to help ensure such equitable treatment. Avista also seeks 

rehearing for the purpose of expanding the time to transition from the current, voluntary 

contractual arrangements to the arrangements contemplated by Order No. 693. 

111. Specifically, Avista asserts that the Commission should require reliability 

coordinators to file such contracts or tariffs under section 205 of the FPA. In this regard, 

Avista states that the Commission should, as a first step, require reliability coordinators 

to submit for filing their existing contracts, such as the contracts between PNSC and the 

 85 For example, Avista contends that Requirements R8 and R3 of IRO-001-1, 

when read together contain very broad language. 
Docket No. RM06-16-001 - 68 - 

control area operators. According to Avista, filing of these contracts or tariffs under 

section 205 should ensure the equitable treatment of reliability entities, provide a 

mechanism for redress in the event of inequitable treatment, and provide a basis for the 

Commission's determination that the Reliability Standards approved by Order No. 693 

are just and reasonable. 

b. Commission Determination

112. In response to Avista, the Commission clarifies that a reliability coordinator’s 

authority to issue directives arises out of the Commission’s approval of Reliability 

Standards that mandate compliance with such directives. Avista is correct that contracts 

are unnecessary to authorize reliability coordinators to issue directives. Under the 

voluntary reliability scheme in place prior to section 215 of the FPA, a contractual basis 

was needed to assure that entities would comply with a reliability coordinator’s directive. 

Pursuant to the current, mandatory reliability scheme established by statute, contracts are 

no longer needed. We view the concerns raised by Avista as part of the transition from a 

voluntary to mandatory scheme. Although, as noted by Avisa, IRO-001-1 retains 

references to contracts, we view these as vestiges of an earlier program that no longer 

control given the current, mandatory mechanism. 

113. Avista’s assertion that, if transmission operators, balancing authorities or other 

reliability entities are subject to a non-contractual duty imposed by the Commission 

under Order No. 693 to comply with the directives of a reliability coordinator, the 
Docket No. RM06-16-001 - 69 - 

Commission should have clearly indicated such a requirement, is not justified. First, the 

Commission believes that this duty was clearly laid out in the Reliability Standards 

themselves. However, the duty to comply with Reliability Standards is imposed by 

section 215 of the FPA, not by contract. The Reliability Standards approved by the 

Commission include requirements that certain users, owners and operators of the BulkPower System follow directions given by the reliability coordinators.86 The duty to 

follow such directions lies in the duty to comply with Reliability Standards as laid out in 

section 215 of the FPA and the Commission’s regulations. 

114. The Commission notes that Avista uses the Commission’s statement that it 

“clarifies that it did not intend to change existing contracts, impose new organizational 

structures or otherwise affect existing agreements that set forth the responsibilities of 

various entities”87 for the proposition that the Commission did not intend to change or 

otherwise affect existing agreements about reliability coordinator functions. We disagree 

with Avista on this point. The Commission made this statement regarding the 

responsibility for functions in the Functional Model, especially regarding ISOs, RTOs or 

 86 For example, Requirement R9 of IRO-001-1 states that transmission operators, 

balancing authorities, generator operators, transmission service providers, load-serving 

entities, and purchasing-selling entities shall comply with Reliability Coordinator 

directives unless such actions would violate safety, equipment, or regulatory or statutory 

requirements. 

87 Order No. 693 at P 141. 
Docket No. RM06-16-001 - 70 - 

any organizations that pool resources. In that statement, we clarified that we were not 

changing any contract to which an ISO, RTO or pooled resource organization is a party 

as to who must comply with specific requirements of the Reliability Standards. 

115. In response to Avista’s arguments regarding Measure M2 of IRO-001-1, the 

Commission does not believe that this measure imposes a requirement that reliability 

coordinators must have contracts in place. Measure M-2 of IRO-001-1 requires each 

reliability coordinator to have and provide upon request evidence that it has the authority 

to have clear decision-making authority to act and to direct actions to be taken by certain 

users, owners and operators within its area to preserve the integrity and reliability of the 

bulk electric system. Neither the Reliability Standard nor the Commission prescribed the 

form of such evidence. 

116. Avista’s concerns regarding whether existing contracts, including those regarding 

the contracts with PNSC, and whether contracts, generally, have been superseded or 

rendered moot or unnecessary by Order No. 693 are beyond the scope of this proceeding. 

This proceeding established mandatory Reliability Standards, including those pertaining 

to directions by reliability coordinators. Reliability coordinator contracts are not before 

the Commission in this proceeding. Therefore, the Commission cannot rule here on any 

issue regarding such contracts. 

117. The Commission denies Avista’s request that the Commission require reliability 

coordinators to develop and file contracts or tariffs that govern their reliability 
Docket No. RM06-16-001 - 71 - 

coordination authority and activities. The Commission understands that reliability must 

be a primary goal. Each user, owner and operator of the Bulk-Power System must be in 

compliance with the Reliability Standards so that everyone can have the benefits of using 

the system. As stated above, the Reliability Standards do not prescribe the form through 

which each reliability coordinator must provide evidence of its clear decision-making 

authority to act and to direct actions to be taken by certain entities. To that end, it is 

unnecessary to require each reliability coordinator to file a contract or tariff. 

118. We deny Santa Clara’s request for rehearing. In Order No. 693, the Commission 

noted that various commenters provided specific suggestions to improve or otherwise 

modify a Reliability Standard that address issues not raised in the NOPR. In such 

circumstances, the Commission directed the ERO to consider such comments as it 

modifies the Reliability Standards during the three-year review cycle contemplated by 

NERC’s Work Plan through the ERO Reliability Standards development process. The 

Commission, however, did not direct any outcome other than that the comments receive 

consideration.88

119. However, the Commission denied Santa Clara’s specific request to modify 

Requirement R3 of IRO-001-1, explaining that, when system integrity or reliability is 

jeopardized, e.g., when IROLs or SOLs are exceeded, the relevant reliability entities must 

 88 See id. at P 188. 
Docket No. RM06-16-001 - 72 - 

take corrective control actions to return the system to a secure and reliable state as soon 

as possible but not longer than 30 minutes.89 The Commission believes that this reaction 

time has been vetted through the industry and that the 30-minute time limit for action is 

important to minimize the amount of time the system operates in an insecure mode and is 

vulnerable to cascading outages. 

6. IRO-005-1 and IRO-005-2

120. IRO-005-1 ensures energy balance and transmission reliability for the current day 

by identifying tasks that reliability coordinators must perform throughout the day. Order 

No. 693 approved Reliability Standard IRO-005-1. 

a. Requests for Rehearing

121. TANC requests clarification as to whether the Commission intended to approve 

IRO-005-1 or IRO-005-2 in Order No. 693. Although the Commission states that it 

approves IRO-005-1,90 TANC notes that NERC submitted a later version, IRO-005-2, in 

its November filing. Therefore, TANC seeks clarification that the Commission intended 

to approve IRO-005-1, rather than the more recently filed IRO-005-2. 

 89 Id. at P 898. 

90 See id. at P 945, 951. 
Docket No. RM06-16-001 - 73 - 

b. Commission Determination

122. The Commission grants TANC’s request for clarification. As stated in Order No. 

693, the Commission approved version one of IRO-005.91 

7. MOD-013-1

123. MOD-013-1 requires the regional reliability organizations within an 

Interconnection to develop comprehensive dynamics data requirements and reporting 

procedures needed to model and analyze the dynamic behavior and response of each 

Interconnection. More specifically, the regional reliability organization, in coordination 

with its transmission owners, transmission planners, generator owners and resource 

planners within an Interconnection, is required to: (1) participate in development of 

documentation for their Interconnection data requirements and reporting procedures; 

(2) participate in the review of those data requirements and reporting procedures at least 

every five years; and (3) make the data requirements and reporting procedures available 

to NERC and other specified entities upon request. 

124. Because MOD-013-1 is a fill-in-the-blank standard, the Commission stated that it 

will not approve or remand MOD-013-1 until the ERO submits additional information. 

However, the Commission directed the ERO to develop a modification to MOD-013-1 to 

(1) permit entities to estimate dynamics data if they are unable to obtain unit specific data 

 91 The Commission notes that many provisions of IRO-005-2 only become 

effective when BAL-002 is retired. If and when NERC proposes to retire BAL-002, we 

will make a determination on IRO-005-2. 
Docket No. RM06-16-001 - 74 - 

for any reason; (2) require verification of the dynamic models with actual disturbance 

data and (3) expand the applicability section to include the planning authority, 

transmission operator and transmission planner. 

a. Requests for Rehearing 

125. TANC requests that the Commission clarify that it erred in directing the ERO to 

apply MOD-013-1 to transmission operators and transmission planners. Although the 

Commission left Reliability Standard MOD-013-1 pending, TANC asserts that the 

Commission stated that it would adopt the NOPR proposal to expand the applicability 

section to include planning authorities, but in a later summary paragraph directed the 

ERO to apply the standard to transmission operators and transmission planners, in 

addition to planning authorities.92 TANC states that the inclusion of transmission 

operators and transmission planners was neither mentioned in the NOPR nor discussed in 

Order No. 693. In the alternative, TANC requests rehearing. 

126. ISO-New England requests rehearing of the Commission’s determination to 

(1) permit entities to estimate dynamics data if they are unable to obtain unit specific data 

for any reason; (2) require verification of the dynamic models with actual disturbance 

data; and (3) expand the applicability section to include the planning authority, 

transmission operator and transmission planner. ISO-New England states that the 

 92 Compare Order No. 693 at P 1199; 1200. 
Docket No. RM06-16-001 - 75 - 

Commission’s direction to the ERO to modify MOD-013-1 appears internally 

inconsistent with other positions the Commission took in Order No. 693. First, ISO-New 

England notes that the Commission required the ERO to modify MOD-013-1 because it 

would allow the use of estimated data but, at the same time, required “verification of the 

dynamic models with actual disturbance data.” 

127. Second, ISO-New England observes that the Commission stated in Order No. 693 

that “[f]ailure to provide the data needed for dynamics system modeling and simulation 

would halt regional reliability assessment processes and impede planners from accurately 

predicting future system conditions, which would be detrimental to system reliability.”93 

Further, ISO-New England points to the Commission’s statement in Order No. 693 that it 

believes “to achieve the goal of this Reliability Standard of having the ability to 

accurately model and analyze the dynamic behavior and response of each 

Interconnection, it is necessary to have accurate data.”94 In sum, ISO-New England 

argues that just as the Commission has recognized the importance of accurate data with 

respect to the administration of other NERC Reliability Standards, the Commission 

should equally recognize the importance with regard to MOD-013-1. 

 93 Id. at P 1177. 

94 Id. at P 1188. 
Docket No. RM06-16-001 - 76 - 

128. Further, ISO-New England argues that the Blackout Report suggests that actual 

data should be required.95 Specifically, ISO-New England points to the Blackout 

Report’s recommendation to improve the quality of system modeling data and data 

exchange practices. ISO-New England notes that the Blackout Report indicates that 

“after-the-fact models developed to simulate August 14 conditions and events found that 

the dynamic modeling assumptions for generator and load power factors in regional 

planning and operating models were frequently inaccurate.”96 Further, ISO-New England 

states that the Task Force commented that, during the investigation process, it too found 

that data was frequently not available.97 Consequently, ISO-New England maintains that 

the Task Force recommended the collection of validated data.98

129. Finally, ISO-New England states that Order No. 693 leaves too much unclear in 

terms of its direction that entities should be permitted to estimate dynamics data if unit 

specific data is unavailable “for any reason.” According to ISO-New England, this 

exemption appears “overbroad” and could serve as the basis for an asset owner’s 

rejection of any reasonable request for the unit specific data. ISO-New England requests 

that, if the Commission retains its direction to permit entities to estimate dynamics data, 

 95 ISO-New England at 4, citing Blackout Report at 160-61. 

96 Blackout Report at 160. 

97 Id. at 161. 

98 ISO-New England at 4, citing Blackout Report at 160-61. 
Docket No. RM06-16-001 - 77 - 

that it narrow the scope of the exemption that asset owners may employ in providing unit 

specific data. 

b. Commission Determination

130. The Commission denies TANC’s request for rehearing. TANC correctly identifies 

that the Commission did not approve or remand MOD-013-1, but provided direction to 

the ERO concerning the addition of entities not already identified in the Reliability 

Standard. Although we acknowledge that Order No. 693 did not include a discussion of 

the addition of transmission operators and transmission planners in the applicability 

section of this Reliability Standard, in directing the ERO to apply MOD-013-1 to 

transmission operators and transmission planners, we recognized that transmission 

operators and transmission planners would be required to perform coordination functions 

under Requirement R1 of MOD-013-1. Therefore, the Commission directed the ERO to 

specifically include transmission operators and transmission planners in the applicability 

section of MOD-013-1 so as to be clear what the Commission considers to be the 

minimum applicability of this Reliability Standard and to make the Reliability Standard 

internally consistent. 

131. In response to ISO-New England’s concerns, the Commission notes that the data 

referenced in Requirement R1.1 include “items such as inertia constant, damping 

coefficient, saturation parameters, and direct and quadrature axis reactances and time 

constants, excitation systems, voltage regulators, turbine-governor systems, power system 
Docket No. RM06-16-001 - 78 - 

stabilizers, and other associated generation equipment.” Much of these data will be 

estimated from similar classes of facilities prior to the facilities going into service. The 

Commission clarifies that its determination to permit entities to estimate dynamics data if 

they are unable to obtain unit specific data for any reason is limited to the initial analysis 

of dynamics data. While we continue to believe that “[a]chieving the most accurate 

possible picture of the dynamic behavior of the Interconnection requires the use of actual 

data,”99 we acknowledge that, in certain circumstances, actual data may not be initially 

available and only obtained through “verification of the dynamic models with actual 

disturbance data.” In addition, in Order No. 693, we determined that “the Reliability 

Standard should include Requirements that such estimates be based on sound engineering 

principles and be subject to technical review and approval of any estimates at the regional 

level.”100 This procedure would allow peer review and approval at a regional level such 

that an entity could not avoid using sound engineering principles in obtaining the initial 

data for the model. 

8. PRC-007-0, PRC-008-0, and PRC-009-0

132. PRC-007-0 requires transmission owners, transmission operators, load-serving 

entities and distribution providers to provide, and annually update, their underfrequency 

 99 Order No. 693 at P 1197. 

100 Id. 
Docket No. RM06-16-001 - 79 - 

data to facilitate the regional reliability organization’s maintenance of the UFLS program 

database.101 PRC-008-0 requires transmission owners and distribution providers to 

implement UFLS equipment maintenance and testing programs and provide program 

results to the regional reliability organization. PRC-009-0 ensures that the performance 

of a UFLS system is analyzed and documented following an underfrequency event by 

requiring the transmission owner, transmission operator, load-serving entity and 

distribution provider to document the deployment of their UFLS systems in accordance 

with the regional reliability organization’s program. Order No. 693 approved Reliability 

Standards PRC-007-0, PRC-008-0,102 and PRC-009-0.103 

133. These Reliability Standards reference PRC-006-0, which the Commission did not 

approve or remand because the regional procedures required by the Reliability Standard 

had not been submitted and because it applies to regional reliability organizations.104 The 

 101 A UFLS program is a "safety net" that will automatically drop load at specific 

locations in the power system in an effort to re-establish the balance between generation 

and load to avoid cascading. 

102 The Commission also directed the ERO to develop a modification to PRC-008-

0 that includes a requirement that maintenance and testing of a protection system must be 

carried out within a maximum allowable interval that is appropriate to the type of the 

protection system and its impact on the reliability of the Bulk-Power System. The 

Commission’s direction to modify PRC-008-0 is not at issue in this proceeding. 

103 Order No. 693 at P 1484, 1491, and 1498. 

104 Id. at P 1479. 
Docket No. RM06-16-001 - 80 - 

Commission reasoned that since PRC-007-0, PRC-008-0, and PRC-009-0 are existing 

Reliability Standards that have been followed on a voluntary basis, transmission owners, 

transmission operators, distribution providers and load-serving entities are generally 

aware of their requirements. In addition, the Commission stated that a reference in an 

approved Reliability Standard to an unapproved Reliability Standard may be considered 

in an enforcement action, but is not a reason to delay approving and enforcing this 

Reliability Standard. 

a. Request for Rehearing

134. APPA requests rehearing of Commission approval of PRC-007-0, PRC-008-0, and 

PRC-009-0. As discussed more fully in the section concerning “Fill-in-the-Blank 

Standards above,105 APPA believes that each of these three Reliability Standards cannot 

be approved because it references a fill-in-the-blank standard that was not approved or 

remanded by the Commission. 

135. According to APPA, PRC-006-0 is the Reliability Standard that requires the 

development of regional UFLS programs and contains detailed and exacting requirements 

that the regions develop and apply to applicable entities. According to APPA, PRC-006- 

is the source of the design and documentation of regional UFLS programs and is not 

merely administrative or a simple codification of established industry practice. Rather, 

 105 See section II.C.2., Fill-in-the-Blank Standards, supra. 
Docket No. RM06-16-001 - 81 - 

APPA asserts that PRC-006-0 sets forth very specific requirements that each regional 

UFLS program must meet. 

136. APPA asserts that PRC-007-0, PRC-008-0 and PRC-009-0 go much further than 

imposing data requirements. APPA states that PRC-007-0 requires, among other things, 

that any the transmission owner and distribution provider with a UFLS program must 

ensure that its UFLS program is consistent with its regional reliability organization’s 

UFLS program requirements. PRC-008-0 requires transmission owners and distribution 

providers to implement UFLS equipment maintenance and testing programs and provide 

program results to the regional reliability organization. Finally, APPA maintains that 

PRC-009-0 requires a transmission owner, transmission operator, load-serving entity, and 

distribution provider that owns or operates a UFLS program to analyze performance 

under that unapproved program. According to APPA, because the required UFLS 

program has not been approved or reviewed by the Commission under PRC-006-0, users, 

owners and operators of the Bulk-Power System cannot be required to have a program 

consistent with it. 

137. APPA maintains that the fact that these three Reliability Standards apply to 

specific users, owners and operators of the Bulk-Power System, rather than a regional 

reliability organization, does not justify approval of a reliability standard that requires 

users, owners and operators of the Bulk-Power System to comply with regional UFLS 

programs that have not been approved by NERC, and have not been shown to meet the 
Docket No. RM06-16-001 - 82 - 

procedural and substantive requirements of section 215 of the FPA and Order No. 672 for 

Reliability Standards that qualify for approval and enforcement by the ERO and this 

Commission. Further, APPA contends that, although the Commission appears to have 

approved these Reliability Standards in part because they have “been followed on a 

voluntary basis,” many small entities have often not been part of regional reliability 

organizations and have not necessarily been aware of, much less followed, regional 

programs on a voluntary basis. 

b. Commission Determination

138. We deny APPA’s request for rehearing and affirm our approval of Reliability 

Standards PRC-007-0, PRC-008-0 and PRC-009-0. However, as explained below, we 

clarify that the limited provisions that relate to the regional UFLS program developed 

under PRC-006-0 are not enforceable until the Commission approves PRC-006-0.106 

Specifically, any entity that is responsible for compliance with PRC-007-0, PRC-008-0 or 

PRC-009-0 that currently does not have a UFLS program is not required to develop such 

a program until PRC-006-0 is approved. Likewise a responsible entity with an existing 

UFLS program is not required to comply with a regional UFLS program until the 

Commission approves PRC-006-0. An explanation for this determination follows. 

 106 Such provisions would similarly be enforceable if NERC develops and the 

Commission approves a substitute for PRC-006-0. 
Docket No. RM06-16-001 - 83 - 

139. Each of the requirements in PRC-007-0, PRC-008-0 and PRC-009-0, with the 

exception of Requirement R1 in PRC-007-0, apply only to those entities that have a 

UFLS program. Therefore, contrary to APPA’s assertion, PRC-007-0, PRC-008-0 and 

PRC-009-0 do not require any entity that does not have a UFLS program to develop one. 

That requirement would fall under PRC-006-0. To be clear, the Commission will not 

impose a penalty for the failure to have a UFLS program until such time as PRC-006-0 or 

a suitable substitute, and the attendant regional UFLS programs, are approved. 

140. However, we disagree with APPA that the fact that Requirement R1 references the 

regional UFLS program precludes us from approving PRC-007-0, PRC-008-0 and PRC009-0, which provide for updating an entity’s UFLS program (PRC-007-0), maintaining 

the entity’s UFLS facilities (PRC-008-0), and reporting on events that involve the entity’s 

UFLS (PRC-009-0). Rather, we uphold our earlier decision to approve these three 

Reliability Standards with the clarification that Requirement R1 of PRC-007-0 is not 

enforceable until the Commission approves PRC-006-0. We further clarify, consistent 

with our discussion above, that, until PRC-006-0 is approved, an entity that does not 

currently have a UFLS program is not required to develop one or to comply with PRC007-0, PRC-008-0 and PRC-009-0. However, an applicable entity that currently has a 

UFLS program must continue to maintain that program as required by these three 

Reliability Standards. As discussed below, the Requirements of PRC-007-0, PRC-008-0 
Docket No. RM06-16-001 - 84 - 

and PRC-009-0 are necessary for Bulk-Power System reliability and are not dependent on 

PRC-006-0. 

141. PRC-007-0, Requirement R2 states that the applicable entities “shall provide, and 

annually update, its underfrequency data as necessary for its Regional Reliability 

Organization to maintain and update a UFLS program database.”107 It is vital to maintain 

this safety net that each registered transmission owner, transmission operator, distribution 

provider and load-serving entity with an UFLS system has a program to annually review 

the location of their UFLS devices and the magnitude of load that can be collectively 

activated as necessary.108 The reason for the annual review is that it is not unusual for 

loads to be switched among distribution feeders and, with load growth, additional 

distribution feeders may need to be included to meet the requirements of the entities’ 

UFLS program. In addition, it is necessary to verify that sensitive and critical loads such 

as hospitals and high impact facilities continue to be excluded from the load shedding 

program. While it may be necessary to shed load to preserve the Bulk-Power System, it 

is also good public policy to limit the nature of the facilities that could be interrupted. 

 107 While Requirement R2 identifies the regional reliability organization, we note 

that this information should go to the Regional Entity or the ERO as the entities with 

statutory authority under section 215 of the FPA. 

108 Blackout Report at 62. 
Docket No. RM06-16-001 - 85 - 

142. PRC-008-0, Requirement R1 states that the applicable entities “shall have a UFLS 

equipment maintenance and testing program in place.” These programs are in place to 

assure that this last resort system, which has been proven to be necessary to limit the 

geographic scope of blackouts, operates as expected when required to in accordance with 

the reliability assessments. 

143. PRC-009-0, Requirement R1 identifies what analysis must be completed by the 

applicable entities after an underfrequency event. It states that “[t]he analysis shall 

address the performance of UFLS equipment and program effectiveness following system 

events resulting in system frequency excursions below the initializing set points of the 

UFLS program.” This requirement assures that actual data on the operation of the UFLS 

system can be correlated with simulations to provide a check on how well the UFLS 

system is performing its last resort function. 

144. Requirement R1 of PRC-007-0 requires the transmission owner and distribution 

provider to “ensure that its UFLS program is consistent with its Regional Reliability 

Organization’s UFLS program requirements.” Because the regional UFLS program 

would be developed pursuant to PRC-006-0, and the Commission has not approved or 

remanded that Reliability Standard, we agree with APPA that Requirement R1 cannot be 

enforced as written until the Commission approves PRC-006-0, because Requirement R1 

would essentially require compliance with an unapproved Reliability Standard. Because 

Requirement R1 of PRC-007-0 is not enforceable until the Commission approves PRC-
Docket No. RM06-16-001 - 86 - 

006-0, a transmission owner’s or distribution provider’s UFLS program cannot be judged 

for compliance with the unapproved regional UFLS program. 

145. While the Commission will not enforce compliance with PRC-006-0, the possible 

reduction in the amount of load available for underfrequency load shedding can 

negatively impact the Reliable Operation of the Bulk-Power System. Because of the 

importance of the UFLS programs and the fact that there currently are no Commissionapproved Reliability Standards by which to judge individual UFLS programs, the 

Commission believes it is important to monitor the current UFLS programs so that we 

can consider if they provide an adequate safety net for the Bulk-Power System. 

Therefore, the Commission directs the ERO to collect the frequency and magnitude of 

load in UFLS systems from applicable entities for this summer, from date of order 

through September 30, 2007, and perform an analysis as to the ability of the existing 

system to provide the required last resort function within 90 days of this order. This 

analysis should consider if the existing UFLS plans together provide an adequate safety 

net for the Bulk-Power System. 

146. In discussing potential ambiguities in the proposed Reliability Standards in Order 

No. 693, the Commission stated that, even if some clarification of a particular Reliability 

Standard would be desirable at the outset, making it mandatory allows the ERO and the 

Regional Entities to provide that clarification on a going-forward basis while still 
Docket No. RM06-16-001 - 87 - 

requiring compliance with Reliability Standards that have an important reliability goal.109 

We believe that this principle applies equally to a Reliability Standard where one 

Requirement may not be enforceable, but the Reliability Standard must be approved to 

enable enforcement of other Requirements. 

147. The reliability goal of PRC-007-0, PRC-008-0 and PRC-009-0 is to provide last 

resort system preservation measures by implementing an UFLS program. The 

Commission believes that this is an important reliability goal. The Commission 

understands that, until PRC-006-0 is approved, the UFLS program implemented will not 

be the one envisioned in PRC-006-0. We believe that, where a user, owner or operator 

does have a UFLS program, the data retention and reporting requirements incorporated in 

these Reliability Standards serve an extremely important goal of providing last resort 

system preservation measures. NERC can analyze the information to monitor whether 

the last resort system preservation measures are sufficient in the aggregate for the entire 

Bulk-Power System. Although the ERO and Regional Entities cannot penalize a user, 

owner or operator for an insufficient UFLS program until the Commission approves 

PRC-006-0, collection, analysis and submission of the UFLS information described 

 109 Order No. 693 at P 277. See also Order No. 693 at P 147, 157-58, explaining 

that the Commission was approving and requiring modification to five Reliability 

Standards that apply partially to a regional reliability organization. 
Docket No. RM06-16-001 - 88 - 

above will provide NERC and the Commission with invaluable information regarding the 

reliability of the Bulk-Power System 

148. We further believe that, other than R1 in Reliability Standard PRC-007-0, the 

Requirements in the PRC Reliability Standards are independently enforceable. For 

example, R2 of Reliability Standard PRC-007-0 requires a transmission owner or 

distribution provider with a UFLS program to provide, and annually update, its 

underfrequency data. Although R2 contains the phrase “(as required by its Regional 

Reliability Organization),” the Commission believes that it is of vital importance for the 

transmission owner and distribution provider to update its UFLS data annually and 

provide it to the ERO. Because we have not approved any regional programs, this 

parenthetical currently has no meaning in the context of the approved Reliability 

Standard. Therefore, the Commission believes that these three Reliability Standards only 

apply to those entities that have a UFLS program, irrespective of whether a region 

requires it. 

149. The Commission also denies rehearing of our approval of PRC-008-0. This 

Reliability Standard requires each transmission owner and distribution provider with a 

UFLS program to have a UFLS program in place that includes UFLS equipment 

identification and the schedule for UFLS equipment testing and maintenance. PRC-008-

0 further requires each transmission owner and distribution provider with a UFLS 

program to implement its UFLS equipment maintenance and testing program and provide 
Docket No. RM06-16-001 - 89 - 

UFLS maintenance and testing program results to its regional reliability organization and 

NERC on request. In this Reliability Standard, any transmission owner or distribution 

provider that already has a UFLS program must develop its own equipment maintenance 

and testing program that complies with PRC-008-0. The Commission believes it is of 

great importance to Bulk-Power System reliability for such entities to perform such 

maintenance and testing. Because the maintenance and testing programs do not rely on 

regional reliability organization requirements, but are, rather, developed by the applicable 

entity itself, the Commission continues to believe that this Reliability Standard is 

enforceable regardless whether the Commission has approved PRC-006-0. 

150. Finally, the Commission does not believe that the fact that PRC-006-0 has not 

been approved or remanded necessitates granting rehearing of our approval of PRC-009-

0. This Reliability Standard requires a transmission owner, transmission operator, loadserving entity and distribution provider that owns or operates a UFLS program to analyze 

and document its UFLS program performance in accordance with its regional reliability 

organization’s UFLS program. The Commission acknowledges, as stated above, that 

currently there is no Commission-approved UFLS program. However, R1 of PRC-009-0 

also includes independent criteria by which a user, owner or operator of the Bulk-Power 

System must analyze its UFLS program. R1states that: 

The analysis shall address the performance of UFLS equipment and 

program effectiveness following system events resulting in system 

frequency excursions below the initializing set points of the UFLS 

program. The analysis shall include, but not be limited to: 
Docket No. RM06-16-001 - 90 - 

R1.1. A description of the event including initiating conditions. 

R1.2. A review of the UFLS set points and tripping times. 

R1.3. A simulation of the event. 

R1.4. A summary of the findings. 

151. R2 of PRC-009-0 further requires the transmission owner, transmission operator, 

load-serving entity and distribution provider to provide documentation of the analysis of 

the UFLS program to its regional reliability organization and NERC on request after a 

system event. This analysis will better enable NERC to analyze system events and 

determine what actions need to be taken to ensure the Reliability of the Bulk-Power 

System. 

152. Therefore, the Commission denies rehearing of our approval of PRC-007-0, PRC008-0 and PRC-009-0. To be clear, we recognize that R1 of PRC-007-0 is not 

enforceable until the Commission approves PRC-006-0. Because, prior to that approval 

of PRC-006-0, PRC-007-0, PRC-008-0 and PRC-009-0 only apply to those entities that 

already have a UFLS program, these Reliability Standards do not require any entity that 

does not have a UFLS program to develop one, and the Commission will not impose a 

penalty for an entity’s failure to have a UFLS program until the Commission approves 

PRC-006-0. Further, until PRC-006-0 has been approved, a UFLS program cannot be 

judged for compliance with an unapproved regional UFLS program. Therefore, the 

Commission clarifies that, until PRC-006- has been approved, only the data retention and 

reporting requirements, as well as the requirements for maintenance, testing requirements 
Docket No. RM06-16-001 - 91 - 

and analysis of UFLS performance following a triggering event in PRC-007-0, PRC-008-

0 and PRC-009-0, are mandatory and enforceable. 

9. TOP-008-1

153. TOP-008-1 requires a transmission operator to take immediate steps to mitigate 

System Operating Limit (SOL) and Interconnection Reliability Operating Limit (IROL) 

violations. Order No. 693 approved Reliability Standard TOP-008-1.110 Order No. 693 

summarized TOP-008-1 as requiring a transmission owner to take immediate steps to 

mitigate SOL and IROL violations.111

a. Requests for Rehearing 

154. TANC requests clarification that the Commission intended to use the term 

transmission operator, rather than transmission owner, as the correct applicable entity in 

Reliability Standard TOP-008-1.112 TANC states that the text of the ERO-proposed 

Reliability Standard lists the transmission operator as the only entity to which TOP-008-1 

applies. Alternatively, TANC requests rehearing. 

b. Commission Determination

155. The Commission will grant TANC’s request for clarification. TANC is correct 

that the Commission’s use of the term transmission owner, rather than transmission 

 110 Id. at P 1679. 

111 See id. at P 1675. 

112 See id. 
Docket No. RM06-16-001 - 92 - 

operator, was in error. The transmission operator is the correct applicable entity in 

Reliability Standard TOP-008-1. 

III. Information Collection Statement

156. Order No. 693 contains information collection requirements for which the 

Commission obtained approval from the Office of Management and Budget (OMB). 

Given that this Order on Rehearing does not revise the regulation text of Order No. 693 

and makes only minor clarifications to Order No. 693, OMB approval for this order is not 

necessary. However, the Commission will send a copy of this order to OMB for 

informational purposes. 

IV. Document Availability

157. 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 FERC's Home Page 

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

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

Washington D.C. 20426. 

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

eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft 

Word format for viewing, printing, and/or downloading. To access this document in 
Docket No. RM06-16-001 - 93 - 

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

docket number field. 

159. User assistance is available for eLibrary and the FERC's website during normal 

business hours from our Help line at (202)502-8222 or the Public Reference Room at 

(202) 502-8371 Press 0, TTY (202)502-8659. E-Mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

By the Commission. 

( S E A L ) 

 Kimberly D. Bose, 

 Secretary.