133 FERC ¶ 61,063 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 40 

[Docket No. RM09-15-000; Order No. 740 ] 

Version One Regional Reliability Standard for Resource and Demand Balancing 

(Issued October 21, 2010) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule. 

SUMMARY: Under section 215 of the Federal Power Act, the Commission hereby 

remands a revised regional Reliability Standard developed by the Western Electricity 

Coordinating Council and approved by the North American Electric Reliability 

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

responsible for developing and enforcing mandatory Reliability Standards. The revised 

regional Reliability Standard, designated by WECC as BAL-002-WECC-1, would set 

revised Contingency Reserve requirements meant to maintain scheduled frequency and 

avoid loss of firm load following transmission or generation contingencies. 

EFFECTIVE DATE: This rule will become effective [insert date that is 30 days after 

publication in the FEDERAL REGISTER]. 
Docket No. RM09-15-000 - 2 - 

FOR FURTHER INFORMATION CONTACT: 

Nick Henery (Technical Information) 

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-8636 

Scott Sells (Technical Information) 

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6664 

A. Cory Lankford (Legal Information) 

Office of General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6711 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Version One Regional Reliability Standard for 

Resource and Demand Balancing 

Docket No. RM09-15-000 

ORDER NO. 740 

TABLE OF CONTENTS

Paragraph Numbers

I. Background...........................................................................................................................3.

A. Mandatory Reliability Standards......................................................................................3.

B. Western Electricity Coordinating Council .......................................................................6.

C. WECC Regional Reliability Standard BAL-002-WECC-1 .............................................9.

II. Discussion ............................................................................................................................14.

A. Due Weight and Effect of Remand ..................................................................................15.

B. Contingency Reserve Restoration Period.........................................................................22.

C. Calculation of Minimum Contingency Reserve...............................................................31.

D. Use of Firm Load to Meet Contingency Reserve Requirement.......................................42.

E. Demand-Side Management as a Resource .......................................................................50.

F. Miscellaneous ..................................................................................................................63.

III. Information Collection Statement...................................................................................67.

IV. Environmental Analysis ...................................................................................................68.

V. Regulatory Flexibility Act..................................................................................................69.

VI. Document Availability ......................................................................................................70.

VII. Effective Date and Congressional Notification.............................................................73.
 

133 FERC ¶ 61,063 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 John R. Norris, and Cheryl A. LaFleur. 

Version One Regional Reliability Standard for 

Resource and Demand Balancing 

Docket No. RM09-15-000 

FINAL RULE 

ORDER NO. 740 

(Issued October 21, 2010) 

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

 the Commission hereby 

remands a revised regional Reliability Standard developed by the Western Electricity 

Coordinating Council (WECC) and approved 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.2

 The revised regional Reliability Standard, designated by WECC as BAL1

 16 U.S.C. 824o (2006). 

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

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

1342 (D.C. Cir. 2009). 
Docket No. RM09-15-000 - 2 - 

 

002-WECC-1,3

 is meant to ensure that adequate resources are available at all times to 

maintain scheduled frequency, and avoid loss of firm load following transmission or 

generation contingencies. As discussed below, the Commission finds that the proposed 

regional Reliability Standard does not meet the statutory criteria for approval that it be 

just, reasonable, not unduly discriminatory or preferential, and in the public interest.4

2. The Commission remands the proposed regional Reliability Standard based on 

concerns that WECC has not provided adequate technical support to demonstrate that the 

requirements of the proposed regional Reliability Standard are sufficient to ensure the 

reliable operation of the Bulk-Power System within WECC. Specifically, WECC’s data 

indicates that extending the reserve restoration period from 60 to 90 minutes presents an 

unreasonable risk that a second major contingency could occur before reserves are 

restored after an initial contingency. Without further technical justification 

demonstrating that this less stringent requirement will adequately support reliability in 

the Western Interconnection, the Commission is unable to determine that the proposed 

regional Reliability Standard is just, reasonable, not unduly discriminatory or 

preferential, and in the public interest. Accordingly, we remand WECC regional 

3

 NERC designates the version number of a Reliability Standard as the last digit of 

the Reliability Standard number. Therefore, original Reliability Standards end with “-0” 

and modified version one Reliability Standards end with “-1.” 

4

 16 U.S.C. 824o(d)(2). 
Docket No. RM09-15-000 - 3 - 

Reliability Standard BAL-002-WECC-1 to the ERO so that the Regional Entity may 

develop further modifications consistent with this final rule.5

 

I. Background

A. Mandatory Reliability Standards

3. Section 215 of the FPA requires a Commission-certified ERO to develop 

mandatory and enforceable Reliability Standards, which are subject to Commission 

review and approval. Once approved, the Reliability Standards may be enforced by the 

ERO, subject to Commission oversight, or by the Commission independently.6

 

4. Reliability Standards that the ERO proposes to the Commission may include 

Reliability Standards that are proposed to the ERO by a Regional Entity.7

 A Regional 

Entity is an entity that has been approved by the Commission to enforce Reliability 

Standards under delegated authority from the ERO.8

 When the ERO reviews a regional 

 5

 In Order No. 672, the Commission found that it should order only the ERO to 

modify a Reliability Standard because the ERO is the only entity that may directly submit 

a proposed Reliability Standard to the Commission for approval. Rules Concerning 

Certification of the Electric Reliability Organization; Procedures for the Establishment, 

Approval, and Enforcement of Electric Reliability Standards, Order No. 672, 71 FR 8662 

(Feb. 17, 2006), FERC Stats. & Regs. ¶ 31,204, at P 423, order on reh’g, Order No. 672-

A, 71 FR 19814 (Apr. 18, 2006), FERC Stats. & Regs. ¶ 31,212 (2006). 

6

 16 U.S.C. 824o(e)(3). 

7

 16 U.S.C. 824o(e)(4). 

8

 16 U.S.C. 824o(a)(7) and (e)(4). 
Docket No. RM09-15-000 - 4 - 

 

Reliability Standard that would be applicable on an interconnection-wide basis and that 

has been proposed by a Regional Entity organized on an interconnection-wide basis, the 

ERO must rebuttably presume that the regional Reliability Standard is just, reasonable, 

not unduly discriminatory or preferential, and in the public interest.9

 In turn, the 

Commission must give “due weight” to the technical expertise of the ERO and of a 

Regional Entity organized on an interconnection-wide basis.10

5. In Order No. 672, the Commission urged uniformity of Reliability Standards, but 

recognized a potential need for regional differences.11 Accordingly, the Commission 

stated that: 

As a general matter, we will accept the following two types of regional 

differences, provided they are otherwise just, reasonable, not unduly 

discriminatory or preferential and in the public interest, as required under 

the statute: (1) a regional difference that is more stringent than the 

continent-wide Reliability Standard, including a regional difference that 

addresses matters that the continent-wide Reliability Standard does not; and 

9

 18 C.F.R. 39.5 (2010). 

10 16 U.S.C. 824o(d)(2). 

11 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 290. 
Docket No. RM09-15-000 - 5 - 

(2) a regional Reliability Standard that is necessitated by a physical 

difference in the Bulk-Power System.12 

B. Western Electricity Coordinating Council

6. On April 19, 2007, the Commission accepted delegation agreements between 

NERC and each of eight Regional Entities.13 In its order, the Commission accepted 

WECC as a Regional Entity organized on an Interconnection-wide basis. As a Regional 

Entity, WECC oversees transmission system reliability in the Western Interconnection. 

The WECC region encompasses nearly 1.8 million square miles, including 14 western 

U.S. states, the Canadian provinces of Alberta and British Columbia, and the northern 

portion of Baja California in Mexico. 

7. In June 2007, the Commission approved eight regional Reliability Standards for 

WECC including the currently effective regional Reliability Standard for operating 

reserves, WECC-BAL-STD-002-0.14 The Commission found that the current regional 

Reliability Standard was more stringent than the corresponding NERC Reliability 

Standard, BAL-002-0, since WECC required a more stringent minimum reserve 

 12 Id. P 291. 

13 North American Electric Reliability Corp., 119 FERC ¶ 61,060, at P 432 (2007). 

14 North American Electric Reliability Corp., 119 FERC ¶ 61,260, at P 53 (2007). 
Docket No. RM09-15-000 - 6 - 

 

requirement than the continent-wide requirement.15 Moreover, the Commission found 

that WECC’s requirement to restore contingency reserves within 60 minutes was more 

stringent than the 90 minute restoration period as set forth in NERC’s BAL-002-0.16 

8. The Commission directed WECC to develop certain minor modifications to 

WECC-BAL-STD-002-0, as identified by NERC in its filing letter for the current 

standard.17 For example, the Commission determined that: (1) regional definitions 

should conform to definitions set forth in the NERC Glossary of Terms Used in 

Reliability Standards (NERC Glossary) unless a specific deviation has been justified; and 

(2) documents that are referenced in the Reliability Standard should be attached to the 

Reliability Standard. The Commission also found that it is important that regional 

Reliability Standards and NERC Reliability Standards achieve a reasonable level of 

consistency in their structure so that there is a common understanding of the elements. 

Finally, the Commission directed WECC to address stakeholder concerns regarding 

ambiguities in the terms “load responsibility” and “firm transaction.”18

15 Id. 

16 Id.

17 Id. P 55. 

18 Id. P 56. 
Docket No. RM09-15-000 - 7 - 

C. WECC Regional Reliability Standard BAL-002-WECC-1

9. On March 25, 2009, NERC submitted a petition (NERC Petition) to the 

Commission seeking approval of BAL-002-WECC-119 and requesting the concurrent 

retirement of BAL-STD-002-0.20 In that March petition, NERC states that the proposed 

regional Reliability Standard was approved by the NERC Board of Trustees at its 

October 29, 2008 meeting. NERC also requests an effective date for the regional 

Reliability Standard of 90 calendar days after receipt of applicable regulatory approval. 

10. The proposed regional Reliability Standard contains three main provisions. 

Requirement R1 provides that each reserve sharing group21 or balancing authority must 

maintain a minimum contingency reserve that is the greater of (1) an amount of reserve 

equal to the loss of the most severe single contingency; or (2) an amount of reserve equal 

to the sum of three percent of the load and three percent of net generation. Requirement 

 19 See 18 C.F.R. 39.5(a) (requiring the ERO to submit regional Reliability 

Standards on behalf of a Regional Entity). 

20 The proposed regional Reliability Standard is not attached to the NOPR. It is, 

however, available on the Commission’s eLibrary document retrieval system in Docket 

No. RM09-15-000 and is on the ERO’s website, available at http://www.nerc.com. 

21 A “reserve sharing group” is a group whose members consist of two or more 

balancing authorities that collectively maintain, allocate, and supply operating reserves 

required for each balancing authority’s use in recovering from contingencies within the 

group. See NERC Glossary, available at 

http://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf. 
Docket No. RM09-15-000 - 8 - 

 

R2 states that each reserve sharing group or balancing authority must maintain at least 

half of the contingency reserve as spinning reserve. Requirement R3 identifies 

acceptable types of reserve to satisfy Requirement R1: 

R3.1. Spinning Reserve; 

R3.2. Interruptible Load; 

R3.3. Interchange Transactions designated by the source Balancing Authority as 

non-spinning contingency reserve; 

R3.4. Reserve held by the other entities by agreement that is deliverable on Firm 

Transmission Service; 

R3.5. An amount of off-line generation which can be synchronized and 

generating; or 

R.3.6. Load, other than Interruptible Load, once the Reliability Coordinator has 

declared a capacity or energy emergency. 

In addition, compliance measure M1 provides that a reserve sharing group or balancing 

authority must have documentation that it maintained 100 percent of required 

contingency reserve levels “except within the first 105 minutes (15 minute Disturbance 

Recovery Period, plus 90 minute Contingency Reserve Restoration Period) following an 

event requiring the activation of Contingency Reserves.”22

11. The NERC Petition explains that, because WECC developed the modifications to 

the regional Reliability Standard submitted in the instant proceeding, and the standard 

applies on an Interconnection-wide basis, NERC must rebuttably presume that the WECC 

22 Proposed WECC Reliability Standard BAL-002-WECC-1, Compliance Measure 

M1. 
Docket No. RM09-15-000 - 9 - 

 

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

the public interest.23 NERC states that it agrees with WECC that the proposed WECC 

regional Reliability Standard establishes requirements that are more stringent than those 

provided in the corresponding NERC Reliability Standard. 

12. On March 18, 2010, the Commission issued a Notice of Proposed Rulemaking 

(NOPR) proposing to remand the proposed regional Reliability Standard to the ERO so 

that the Regional Entity may develop further modifications.24 The Commission’s 

proposal to remand the proposed Regional Reliability Standard was based on a lack of 

technical support for the adoption of less stringent requirements than those in the 

currently effective WECC regional Reliability Standard and out of concern that the 

proposed regional Reliability Standard is less stringent than the NERC continent-wide 

Reliability Standard pertaining to contingency reserves. The Commission expressed 

particular concern with respect to a provision in the proposed regional Reliability 

Standard that would permit a balancing authority, when an emergency is declared, to 

count “Load, other than Interruptible Load” as contingency reserve. The Commission 

understood this provision to allow a balancing authority to shed firm load when a single 

23 See NERC Petition at 8; and 16 U.S.C. 824o(d)(3). 

24 North American Electric Reliability Corp., NOPR, 75 FR 14,103 

(March 24, 2010), FERC Stats. & Regs. ¶ 32,653 (2010). 
Docket No. RM09-15-000 - 10 - 

contingency occurs instead of procuring and utilizing generation or demand response 

resource held in reserve for contingencies to balance the Bulk-Power System. The 

Commission also proposed to direct WECC to develop certain modifications to the 

regional Reliability Standard that would explicitly allow demand-side management to be 

used as a resource for contingency reserves. 

13. In response to the NOPR, comments were filed by 16 interested parties.25 Several 

commenters, including WECC, opposed the proposed remand, while others supported it. 

In its comments, WECC included supplemental data to support the Commission’s 

approval of the proposed regional Reliability Standard. In the discussion below, we 

address the issues raised by these comments and, pursuant to section 215(d)(4) of the 

FPA, we adopt the NOPR proposal to remand the proposed regional Reliability Standard. 

II. Discussion

14. Applying the principal of due weight to the technical expertise of NERC and 

WECC, the Commission finds that the proposed regional Reliability Standard BAL-002-

WECC-1 does not meet the statutory criteria for approval, that it be just, reasonable, not 

unduly discriminatory or preferential, and in the public interest. In particular, the 

Commission is concerned that reliability would be reduced upon approval of the 

proposed regional Reliability Standard because WECC’s data indicates that extending the 

 25 See Appendix A, List of Commenters. 
Docket No. RM09-15-000 - 11 - 

reserve restoration period from 60 to 90 minutes would create an unreasonable risk that a 

second major contingency could occur before reserves are restored after an initial 

contingency. There must be sufficient technical justification showing that the Western 

Interconnection can be operated reliably with the reduced stringency. The Commission 

finds that the NERC and the Regional Entity have failed to demonstrate that the proposal 

is adequate to ensure the reliability of the Bulk-Power System within WECC. 

Accordingly, under section 215(d)(4) of the FPA, the Commission remands regional 

Reliability Standard BAL-002-WECC-1 to the ERO with instruction for the Regional 

Entity to develop modifications, as discussed below. 

A. Due Weight and Effect of Remand

15. Several commenters point out that, under section 215(d)(2) of the FPA, the 

Commission must give due weight to the technical expertise of the ERO and WECC as 

the Regional Entity organized on an Interconnection-wide basis.26 These parties argue 

that, applying the principal of due weight, the Commission should approve the proposed 

regional Reliability Standard. In addition, NERC states that it must rebuttably presume 

that a standard developed by WECC is just, reasonable, not unduly preferential, and in 

the public interest. NERC states that, as a Regional Entity organized on an 

interconnection-wide basis, WECC has exercised its technical expertise in regard to this 

 26 E.g., NERC, WECC, MISO, WIRAB, and Xcel. 
Docket No. RM09-15-000 - 12 - 

 

interconnection-wide Reliability Standard, supplemented by the additional technical 

analyses provided in its response. Xcel agrees and states that the Commission has not 

allowed any deference to WECC and stakeholder experts that worked diligently to 

develop this Reliability Standard. 

16. Several commenters contend that the proposed regional Reliability Standard offers 

significant benefits over the current version.27 Sempra states that the proposed standard 

would advance three goals: it simplifies reserve accounting at balancing authorities by 

clarifying which party carries reserves for power imports and exports; it includes 

renewable resources; and it clarifies reserves responsibility. If the Commission decides 

to remand the proposed Reliability Standard, Sempra urges the Commission to require 

expedited procedures because of the importance of replacing the current regional 

Reliability Standard, which, Sempra contends, contains its own flaws and ambiguities. 

WECC argues that remand of the proposed standard would cause a greater probability of 

frequency-related instability, uncontrolled separation, or cascading outages because the 

current WECC standard does not take renewable resources, such as wind and solar, into 

account when calculating minimum contingency reserve requirements. 

27 E.g., NERC, WECC, Bonneville, Idaho Power, NV Energy, SCE, WIRAB, and 

Xcel. 
Docket No. RM09-15-000 - 13 - 

17. By contrast, Puget Sound states that, while FERC is required to give due weight to 

the technical expertise of the ERO no deference is due when the action of the ERO and 

Regional Entity are patently unreasonable and arbitrary. Puget Sound contends that a 

regulatory decision based on a review of only eight hours of data, as provided by WECC, 

cannot be reasonably explained or considered to be supported by substantial evidence. 

Powerex and NV Energy agree that WECC provided insufficient data in its request for 

approval with respect to whether the proposed regional Reliability Standard is just and 

reasonable. 

Commission Determination

18. Section 215(d)(2) of the FPA provides that the Commission “shall give due weight 

to the technical expertise” of the ERO or a Regional Entity organized on an 

Interconnection-wide basis “with respect to the content of a proposed standard or 

modification.” As the Commission explained in Order No. 672, the ERO or 

Interconnection-wide Regional Entity “must justify to the Commission its contention that 

the proposed Reliability Standard is just, reasonable, not unduly discriminatory or 

preferential, and in the public interest.”28 Thus, consistent with our explanation in Order 

No. 672, it is necessary for the ERO or Regional Entity to explain adequately a 

Reliability Standard or modifications to a Reliability Standard. 

 28 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 345. 
Docket No. RM09-15-000 - 14 - 

 

19. The Commission has given due weight to the technical expertise of the Regional 

Entity as it is presented both in the NERC Petition and in WECC’s comments and 

supporting data and we have determined that WECC provided inadequate support for 

approval of the proposed regional Reliability Standard. In its petition, NERC provides a 

detailed explanation of why it believes the proposal satisfies the statutory criteria for 

approval based on the guidance provided by the Commission in Order No. 672 regarding 

the factors it would consider in making that determination.29 However, this explanation 

fails to adequately address the substantive modifications to the regional Reliability 

Standard. Moreover, WECC’s comments and supplemental data did not adequately 

address the Commission’s concerns expressed in the NOPR that the extension of the 

reserve restoration period will maintain reliable operation of the Western Interconnection. 

Without adequate explanation and technical justification, we are unable to determine 

whether the proposal satisfies the statutory criteria for approval and, therefore, remand 

the revised Reliability Standard to the ERO with instruction for the Regional Entity to 

develop modifications, as discussed below. 

20. The Commission does not take lightly its authority to remand a Reliability 

Standard. We understand that before a Reliability Standard reaches the Commission it 

must be vetted through an intensive standard development process. Nevertheless, despite 

29 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 320-337. 
Docket No. RM09-15-000 - 15 - 

the efforts of the different drafting team members who contributed to the development of 

this regional Reliability Standard, for the reasons discussed below, we believe that the 

statutory standard for approval has not been met on the record before us. 

21. We do not believe, as WECC suggests, that this remand will cause a greater 

probability of frequency-related instability, uncontrolled separation or cascading outages. 

WECC does not provide any supporting data or technical analysis to support this claim. 

By remanding the proposed regional Reliability Standard, the Commission is upholding 

the currently effective regional Reliability Standard. The Commission recognizes that the 

Western Interconnection is experiencing substantial growth in variable renewable 

generation. We believe that the current regional Reliability Standard has proved effective 

for many years and will continue to do so until WECC can modify as necessary, through 

the standards development process, this regional Reliability Standard to ensure adequate 

reserves to reliably accommodate this expansion. Furthermore, we decline to set 

expedited procedures for the development of a replacement regional Reliability Standard, 

but WECC is free to expedite its process to the extent WECC finds appropriate. 

B. Contingency Reserve Restoration Period

22. The current regional Reliability Standard sets a maximum contingency reserve 

restoration period that is more stringent than the continent-wide requirement. NERC 

Reliability Standard BAL-002-0 provides that a balancing authority or reserve sharing 

group responding to a disturbance must fully restore its contingency reserves within 90 
Docket No. RM09-15-000 - 16 - 

minutes following the disturbance recovery period, which is set at 15 minutes.30 The 

current WECC regional BAL Reliability Standard requires reserve sharing groups and 

balancing authorities to maintain 100 percent of required operating reserve levels except 

within the first 60 minutes following an event requiring the activation of operating 

reserves.31 In approving WECC-BAL-STD-002-0, the Commission found that WECC’s 

requirement to restore contingency reserves within 60 minutes was more stringent than 

the 90 minute restoration period set forth in NERC’s BAL-002-0.32 WECC now 

proposes to replace the current 60 minute restoration period requirement with a new 

provision that would require the restoration of contingency reserves within 90 minutes 

from the end of the disturbance recovery period (15 minutes), thus matching the 

continent-wide requirement. 

NOPR Proposal

23. In the NOPR, the Commission proposed to remand the regional Reliability 

Standard BAL-002-WECC-1 based on, among other things, a lack of any technical 

justification or analysis of the potential increased risk to the Western Interconnection 

 30 Reliability Standard BAL-002-0, Requirements R4 and R6. 

31 WECC regional Reliability Standard WECC-BAL-STD-002-0, Measure of 

Compliance WM1. 

32 North American Electric Reliability Corp., 119 FERC ¶ 61,260 at P 53. 
Docket No. RM09-15-000 - 17 - 

resulting from the increase in the contingency reserve restoration period. The 

Commission noted that, without sufficient data and analysis, it is unable to determine 

whether the increase in contingency reserve restoration period is sufficient to maintain 

the reliable operation of the Bulk-Power System in the Western Interconnection. The 

Commission also noted that in the Western Interconnection a significant number of 

transmission paths are voltage or frequency stability-limited, in contrast to other regions 

of the Bulk-Power System where transmission paths more often are thermally-limited. 

Disturbances that result in a stability-limited transmission path overload, generally, must 

be responded to in a shorter time frame than a disturbance that results in a thermallylimited transmission path overload. The Commission stated its understanding that this 

physical difference is one of the reasons for the need for certain provisions of regional 

Reliability Standards in the Western Interconnection. 

Comments

24. WECC, supported by Bonneville, Idaho Power, SCE, and Xcel, argues that 

additional studies are unnecessary because the proposed restoration period is identical to 

the continent-wide restoration period. WECC comments that the Commission should 

defer to WECC’s technical expertise in concluding that more stringent contingency 

reserve restoration period is no longer necessary. WECC also offers historical data that 

demonstrates that a second contingency involving the loss of a resource greater than 1000 

MW between 60 and 90 minutes after a first contingency occurred six times in the last 15 
Docket No. RM09-15-000 - 18 - 

years or 0.4 events on an annual basis, which, WECC argues, is insufficient to require 

rejection of a proposed standard on the basis of reliability impact. Bonneville and Xcel 

argue that increasing the contingency reserve restoration period will result in more 

efficient system operation without sacrificing reliability. Xcel adds that it will allow for 

more efficient communication among balancing authorities because the restoration period 

will be closer to the e-tagging system approval cycle. 

25. MISO comments that it is imperative that the Commission give due consideration 

to approving modifications to Reliability Standards so that Regional Entities can 

implement changes as understanding grows and experience is gained. MISO contends 

that disallowance of reasonable modifications, such as those presented here, will have the 

unintended consequence of fostering a reluctance to develop other regional standards, or 

encouraging a minimalist approach when standards must necessarily be developed. 

WECC echoes these concerns and argues that there is no requirement that a regional 

Reliability Standard can only be modified in a manner that makes it even more stringent. 

Such a requirement, WECC contends, would create a “one-way ratchet” that would 

severely inhibit the ability to adjust Reliability Standards to meet changing conditions, 

would encourage proposed standards reflecting the “lowest common denominator” and 

would fail to provide deference to the technical expertise of an interconnection-wide 

Regional Entity. 
Docket No. RM09-15-000 - 19 - 

Commission Determination

26. The Commission finds that the extension of the reserve restoration period has not 

been justified as an acceptable level of risk within the Western Interconnection. WECC’s 

own analysis shows that, based on historical experience, replacing the 60 minute 

requirement with the continent-wide 90 minute requirement could result in a second 

major contingency before restoration of reserves would be required, and that a second 

major contingency occurred within WECC during this extended time frame six times in 

the last 15 years.33 WECC argues that in the Western Interconnection “instability and/or 

underfrequency load shedding normally would not occur in the absence of a third 

contingency of significant magnitude within the restoration period.”34 WECC’s 

 33 WECC’s analysis shows that, over the past 15 years, the proposed increased 

contingency reserve restoration period would have resulted in 139 more events within the 

proposed 90 minute contingency reserve restoration period. Limiting the analysis to 

losses of generation greater than 500 MW, there were only 58 events occurring within the 

proposed extended contingency reserve restoration period. Limiting the analysis to losses 

of generation greater than 1000 MW, there were only six events during the extended 

contingency restoration period. WECC contends that losses of less than 1,000 MW of 

generation have a minimal impact on the system frequency response of the Western 

Interconnection and have minimal impacts on the reliability of the interconnected system. 

WECC May 24, 2010 Comments at 13. 

34 WECC May 24, 2010 Comments at 13 n.10. 
Docket No. RM09-15-000 - 20 - 

 

generalization, however, is unsupported by historical quantification or documentation in 

this record and, thus, does not persuade us.35 

27. While it is not inevitable that the proposed extension of the contingency reserve 

restoration period would result in adverse reliability impacts in the Western 

Interconnection, the data provided shows that the Western Interconnection could be 

exposed to the potential for a major disturbance every two to three years that could result 

in frequency-related instability, uncontrolled separation or cascading outages. The 

Commission is particularly concerned about these potential events occurring in the 

Western Interconnection because, as the Commission discussed in the NOPR, it is our 

understanding that a significant number of transmission paths in the Western 

Interconnection are voltage or frequency stability-limited, in contrast to other regions of 

the Bulk-Power System where transmission paths more often are thermally-limited. 

Disturbances that occur in a stability-limited transmission path overload, generally, must 

be responded to in a shorter time frame than a disturbance that occurs in a thermally35 WECC’s statement is consistent with a statement made in a 2007 compliance 

filing that “WECC operates its system in such a manner that the system is at least two 

contingencies away from a cascading failure.” WECC Compliance Filing, Docket 

No. RR07-11-000, at 5 (filed July 9, 2007). Nevertheless, WECC is proposing to change 

its operating conditions by extending the reserve restoration period. Thus, it must 

provide adequate technical justification that the revised requirements will maintain 

reliable operation of the Bulk-Power System in the Western Interconnection. 
Docket No. RM09-15-000 - 21 - 

 

limited transmission path overload.36 A thermal limit is determined by how much a line 

can overheat without damaging equipment; lines that are thermally-limited can have 

short-term emergency limits that are higher than the normal line rating, since heating 

occurs over a period of time. This is different from a stability limit, which is determined 

by a system-wide voltage or frequency stability constraint, and loading the line above this 

limit for any amount of time could result in instability and cascading outages. 

28. The reliance on stability-limited transmission paths becomes a concern during the 

contingency reserve restoration period because balancing authorities rely on imported 

power from external sources until the entity that had the disturbance replaces the resource 

lost during the disturbance.37 Since stability-limited lines do not have higher emergency 

ratings, as thermally-limited lines can, any disturbance that would result in increasing 

flows over a stability-limited line must be addressed in a shorter time-frame than a 

disturbance that only affects thermally-limited lines. There will be some situations in 

which imports stress stability-limited transmission lines. In those circumstances, 

extending the contingency reserve restoration period would extend the amount of time the 

imported power could stress the stability limited transmission lines, potentially leaving 

36 NOPR, FERC Stats. & Regs. ¶ 32,653 at P 37. 

37 See NERC, Balancing and Frequency Control, at 6-10 (Nov. 2009), available at

http://www.nerc.com/docs/oc/rs/NERC_Balancing_and_Frequency_Control_Part_1_9No

v2009_(Revision2).pdf. 
Docket No. RM09-15-000 - 22 - 

the Western Interconnection in a stressed condition that could result in adverse reliability 

impacts if another disturbance were to occur. On remand, we direct WECC to develop a 

modification to the reserve restoration period or provide evidence demonstrating that 

extending the reserve restoration period to 90 minutes and adding a disturbance recovery 

period of 15 minutes would not increase the risk of a major disturbance in the Western 

Interconnection. 

29. The fact that the proposed extension of the reserve restoration period would match 

the continent-wide requirement and, thus, would foster certain operational efficiencies 

through the use of the e-tagging system does not allay our concerns that the extension 

could be harmful to the reliable operation of the Western Interconnection. The e-tagging 

system is an efficient tool used for day-ahead and hour-ahead market accounting and as 

input for day-ahead and hour-ahead transfer capability analysis of scheduled interchange 

transactions and development of day-ahead and hour-ahead capacity and energy resource 

schedules. As such, it may allow for more efficient communication among balancing 

authorities during operational planning periods. However, in 2008, a WECC task force 

expressed concern that the “e-Tag and communications processes are time consuming 

and cumbersome when scheduling and tagging the large amounts of energy required to 
Docket No. RM09-15-000 - 23 - 

 

recover from system emergencies, particularly in mid-hour.”38 Although adoption of the 

e-tagging system may result in more efficient communication among transmission 

operators and balancing authorities for day-ahead and hour-ahead scheduling, this fact 

alone is not sufficient to justify the potential reliability impacts involved with extending 

the reserve restoration period. 

30. The Commission’s action in this proceeding does not create a “one-way ratchet” 

for the development of regional Reliability Standards. In specific circumstances, the 

Commission could approve retirement of a more stringent regional requirement if the 

Regional Entity demonstrates that the continent-wide Reliability Standard is sufficient to 

ensure the reliability of that region. In this case, however, WECC argued only three 

years earlier that the added stringency of the current regional Reliability Standard was 

critical to the reliable operation of the Western Interconnection.39 We find that WECC 

(continued...) 

38WECC Disturbance Task Force, PacifiCorp East February 14, 2008 Detailed 

Disturbance Report stated in Conclusion 17 (Aug. 2008) available at

http://www.wecc.biz/committees/BOD/081308/Lists/Agendas/1/PacifiCorp%20East%20

Disturbance%20Board%20presentation%20Aug%2008%20Final.pdf. 

39 In its letter requesting approval of the current regional Reliability Standards 

WECC states: 

The WECC Operating Committee thereafter undertook a comprehensive 

review of all WECC criteria, policies, and guidelines in an effort to identify all 

unique (i.e., those not in NERC standards) and essential (i.e., necessary to protect 

WECC reliability) criteria that it believed critical to the reliability of the Western 
Docket No. RM09-15-000 - 24 - 

provided insufficient technical detail and analysis for us to make a reasoned 

determination that the proposed requirement will adequately protect the reliability of the 

region. Regional Entities have the discretion to develop regional Reliability Standards 

and implement changes as understanding grows and experience is gained without concern 

that the Commission will always hold them to their more stringent requirements in all 

circumstances regardless of the provided justification. The Commission will evaluate 

such proposed changes, including those to a less stringent state, on their merit so long as 

adequate reliability is maintained. In this instance, given WECC’s prior statements and 

its own analysis that such an extended restoration period could lead to major system 

disturbances, WECC has failed to demonstrate that its proposal will maintain adequate 

reliability, and therefore has failed to demonstrate that its proposal is just, reasonable, and 

in the public interest. Consequently, we remand this proposal. 

C. Calculation of Minimum Contingency Reserve

31. NERC’s Disturbance Control Standard, continent-wide Reliability Standard BAL002-0, requires each balancing authority or reserve sharing group, at a minimum, to 

maintain at least enough contingency reserve to cover the most severe single 

 

Interconnection. The Operating Committee concluded that eight regional 

standards, proposed for adoption here, are of the highest priority.” 

NERC, Request for Approval of Regional Reliability Standards, Docket No. RR07-11-

000, at 4 (filed March 26, 2007) (NERC 2007 Petition). 
Docket No. RM09-15-000 - 25 - 

 

contingency. Similarly, requirement WR1(a)(ii) of WECC’s current WECC-BAL-STD002-0 requires balancing authorities to maintain a contingency reserve of spinning and 

non-spinning reserves (at least half of which must be spinning), sufficient to meet the 

NERC Disturbance Control Standard, BAL-002-0, equal to the greater of: (1) the loss of 

generating capacity due to forced outages of generation or transmission equipment that 

would result from the most severe single contingency; or (2) the sum of five percent of 

load responsibility served by hydro generation and seven percent of the load 

responsibility served by thermal generation. In approving the regional BAL-STD-002-0 

Reliability Standard, the Commission noted that the regional Reliability Standard is more 

stringent than the NERC Reliability Standard, BAL-002-0, because WECC requires a 

more stringent minimum reserve requirement than the continent-wide requirement. 

32. As proposed, Requirement R1 of BAL-002-WECC-1 would require each reserve 

sharing group or balancing authority that is not a member of a reserve sharing group to 

maintain a minimum contingency reserve. NERC contends that the proposed minimum 

contingency reserve amount is more stringent than that required by the continent-wide 

Reliability Standard.40 NERC explains that, whereas Requirement R3.1 of BAL-002-0 

requires that each balancing authority or reserve sharing group carry, at a minimum, at 

least enough contingency reserve to cover the most severe single contingency, proposed 

40 NERC Petition at 9. 
Docket No. RM09-15-000 - 26 - 

Requirement R1.1 of BAL-002-WECC-1 requires that each balancing authority or 

reserve sharing group maintain, as a minimum, contingency reserves equal to the loss of 

the most severe single contingency or an amount of reserve equal to the sum of three 

percent of the load (generation minus station service minus net actual interchange) and 

three percent of net generation (generation minus station service).41 

NOPR Proposal

33. The Commission proposed to find that the eight hours of data provided by WECC 

in its initial filing is insufficient to demonstrate that the proposed minimum contingency 

reserve requirements are sufficiently stringent to ensure that entities within the Western 

Interconnection will meet the requirements of NERC’s continent-wide Disturbance 

Control Standard, BAL-002-0. The Commission noted that, in its March 2007 petition 

proposing the currently effective regional Reliability Standard, NERC stated that the 

eight proposed regional Reliability Standards “were critical to maintaining reliability 

within the Western Interconnection.”42 The Commission expressed concern that the 

proposed regional Reliability Standard was less stringent than the current regional 

Reliability Standard and that NERC had not demonstrated that the proposed regional 

 41 Id. at 14. 

42 NERC 2007 Petition at 4. 
Docket No. RM09-15-000 - 27 - 

requirements were sufficient to meet the requirements of NERC’s continent-wide 

Disturbance Control Standard, BAL-002-0. 

34. Although the proposed Reliability Standard offers some added clarity by 

eliminating reference to the term “load responsibility” and including renewable energy 

resources in the calculation of contingency reserves, the Commission proposed to find 

that NERC and WECC did not provide sufficient technical justification to support the 

proposed revised method for calculating contingency reserves. Thus, the Commission 

proposed to remand BAL-002-WECC-1 so that WECC could develop additional support 

and make modifications as appropriate for a future proposal. 

Comments

35. Several commenters argue that the proposed calculation of minimum contingency 

reserve levels is more stringent than the continent-wide NERC requirements under BAL002-0.43 WECC comments that the Commission has failed to explain how the proposed 

regional Reliability Standard, which sets minimum contingency reserve level as the 

greater of the most severe single contingency or a calculation of net generation and load, 

could be less stringent than the continent-wide requirement, which sets a minimum 

contingency reserve level as equal to the most severe single contingency. NERC, 

 43 E.g., WECC, NERC, Bonneville, Idaho Power, NV Energy, SCE, WIRAB, and 

Xcel. 
Docket No. RM09-15-000 - 28 - 

Bonneville, Idaho Power, NV Energy, SCE, WIRAB, and Xcel all agree that the 

proposed regional requirement for calculating minimum contingency reserve levels is 

more stringent than the current continent-wide requirement. NERC adds that, in addition 

to including a more stringent calculation of minimum reserve levels, the proposed 

regional Reliability Standard is more stringent than the current continent-wide Reliability 

Standard because it includes a requirement that half of the contingency reserves must 

immediately and automatically respond proportionally to frequency deviations, e.g., 

through the action of a governor or other control system. Moreover, WECC points out 

that nothing in the proposed Reliability Standard excuses any balancing authority or 

reserve sharing group from satisfying the requirements of the continent-wide Reliability 

Standard BAL-002-0. 

36. Several commenters argue that approval of the proposed Reliability Standard does 

not require any more technical justification to support the proposed calculation of 

minimum contingency reserve levels. WECC notes that the currently approved regional 

Reliability Standard was established through negotiations in the 1960s, and was based on 

engineering judgment, rather than on technical studies or simulations. Bonneville adds 

that the Commission did not require extensive data support when it approved the current 

regional Reliability Standard. NV Energy admits that NERC has provided insufficient 

data with respect to whether the requested revision is just and reasonable and that data 

may suggest that the proposed calculation may allow responsible entities to carry less 
Docket No. RM09-15-000 - 29 - 

contingency reserves than currently required under the existing regional Reliability 

Standard. Nevertheless, NV Energy argues that the Commission should approve the 

proposed Reliability Standard without requiring any further data because reserve levels 

required under the proposed Reliability Standard will be equal to or greater and, thus, 

more stringent than reserve levels required under the continent-wide Reliability Standard. 

37. Although WECC argues that it should not be required to provide any further 

technical justification, along with its NOPR comments WECC provided additional data 

from a frequency responsive reserve study as support for the proposed regional 

Reliability Standard. WECC states that the summary of data demonstrates that, based on 

stability simulations applied to varying load scenarios, a minimum of 2,400 MW of 

response reserve is necessary to prevent underfrequency load shedding. Based on a 

review of all hours during 2007-2008, WECC contends that the proposed regional 

Reliability Standard would result in at least 2,927 MW of automatically responsive 

reserves; more than 500 MW above the amount required for stability purposes. 

38. Powerex and Puget Sound argue that the data provided by WECC in the NERC 

Petition are insufficient to support the proposed Reliability Standard and support the 

Commission’s proposed remand. Puget Sound contends that WECC’s reliance on only 

eight hours of data to support the proposed standard was unreasonable and arbitrary and, 

therefore, the Commission could not reasonably approve the proposed Reliability 

Standard. Powerex argues that the eight hours of data provided by WECC in the NERC 
Docket No. RM09-15-000 - 30 - 

Petition is insufficient to demonstrate that the proposed minimum contingency reserve 

requirements are sufficiently stringent to ensure that entities within the Western 

Interconnection will meet the requirements of the continent-wide Reliability Standard. 

Powerex reiterates a concern that it expressed during the standard development process 

that the proposed regional Reliability Standard assumes the existence of a liquid ancillary 

service market when no such market exists in WECC. Powerex comments that the 

proposed standard shifts the operating reserve responsibility away from the source to the 

load and will, thereby, result in significant increases in operating reserve requirements of 

a number of jurisdictions that are primarily load-based and will, therefore, require them 

to procure operating reserves. 

Commission Determination

39. We will accept WECC’s proposal on this issue. We believe that WECC’s 

proposed calculation of minimum contingency reserves is more stringent than the 

national requirement and could be part of a future proposal that the Commission could 

find to be just, reasonable, not unduly discriminatory or preferential, and in the public 

interest. In the NERC Petition for approval of the proposed regional Reliability Standard, 

WECC provided technical studies covering eight hours from each of the four operating 

seasons (summer, fall, winter, and spring, both on and off-peak). WECC acknowledges 

that this data illustrates that the methodology in the proposed regional Reliability 

Standard reduces the total reserves required in the Western Interconnection for each of 
Docket No. RM09-15-000 - 31 - 

rbance 

 (i) 

ee 

 

the eight hours assessed when compared with the methodology in the current regional 

Reliability Standard.44 However, WECC also states that the proposed regional 

Reliability Standard does not excuse “any non-performance with the continent-wide 

Disturbance Control Standard,” which requires each balancing authority or reserve 

sharing group to activate sufficient contingency reserve to comply with the Distu

Control Standard.45 WECC’s proposal would require reserves equal to the greater of:

the most severe single contingency; or (ii) the sum of three percent of the load and thr

percent of net generation. Moreover, the deliverability of these contingency reserves 

would continue to be assured under Requirement R7 of Reliability Standard TOP-002. 

Any lack of deliverability would violate TOP-002 regardless of whether the amount of 

contingency reserves is based on WECC’s current requirement or its proposed 

requirement. 

40. Should WECC resubmit its proposed calculation of minimum contingency 

reserves as part of its response to our remand on the issue of the restoration period, 

NERC and/or WECC could buttress its proposal with audits specifically focused on 

contingency reserves and whether balancing authorities are meeting the adequacy and 

44 See NERC Petition, Exhibit C at 1 (“The estimated impact of these changes to 

the required level of reserves in the WECC is a reduction of 650 MWs or less, a decrease 

of approximately 9 [percent] at most.”). 

45 WECC May 24, 2010 Comments at 6 n.7. 
Docket No. RM09-15-000 - 32 - 

 

deliverability requirements. This auditing could provide additional assurance to the 

Commission that the proposed requirement is just, reasonable, and in the public interest. 

This auditing also could address the concerns raised by some entities in WECC that the 

original eight hours of data provided in NERC’s petition is insufficient to demonstrate 

that the proposed minimum contingency reserve requirements are sufficiently stringent to 

ensure that entities within the Western Interconnection will meet the requirements of 

NERC’s continent-wide Disturbance Control Standard, BAL-002-0.46 Thus, the auditing 

could provide adequate technical justification to support the proposed modification. 

41. In response to Powerex’s concerns, we believe that a calculation of minimum 

contingency reserves that is based on three percent of net generation and three percent of 

net load would fairly balance the responsibilities of contingency reserve providers with 

the financial obligations of those who would benefit most from those services. Under the 

current regional Reliability Standard, the total contingency reserve that a balancing 

authority must maintain is based only on generating resources. By contrast, under the 

proposed requirement, the total contingency reserve that a balancing authority must 

maintain is based on a combination of the generating resources and the demand served 

within a balancing authority footprint. We agree with NERC that the equal split between 

46 See Powerex Comments at 4; Puget Sound Comments at 2. 
Docket No. RM09-15-000 - 33 - 

load and generation represents a reasonable balance to moderate shifts in contingency 

reserve responsibility and costs among the applicable entities.47

D. Use of Firm Load to Meet Contingency Reserve Requirement

42. Requirement R3 of proposed BAL-002-WECC-1 would require that each reserve 

sharing group or balancing authority use certain types of reserves that must be fully 

deployable within ten minutes of notification to meet their contingency reserve 

requirement. Requirement R3.6 of Reliability Standard BAL-002-WECC-1 would allow 

entities to use “Load, other than Interruptible Load, once the Reliability Coordinator has 

declared a capacity or energy emergency.”48 

NOPR Proposal

43. In its NOPR, the Commission proposed to find that Requirement R3.6 is not 

technically sound because it would allow balancing authorities and reserve sharing 

groups within WECC to use firm load to meet their minimum contingency reserve 

requirements “once the Reliability Coordinator has declared a capacity or energy 

emergency,” thus creating the possibility that firm load could be shed due to the loss of a 

 47 NERC Petition at 18. 

48 BAL-002-WECC-1, Requirement R3.6. 
Docket No. RM09-15-000 - 34 - 

single element on the system.49 The Commission stated that the currently effective 

regional Reliability Standard does not allow the use of firm load to meet minimum 

contingency reserve levels. 

Comments

44. WECC, supported by Bonneville, Idaho Power, and SCE, contends that the 

proposed regional Reliability Standard treats firm load no differently than the continentwide Reliability Standard. WECC states that the proposed regional Reliability Standard 

permits the use of load, other than interruptible load, to meet a contingency only if “the 

Reliability Coordinator has declared a capacity or energy emergency.”50 By contrast, 

WECC comments, the continent-wide Reliability Standard provides that contingency 

reserve may be met by Operating Reserve-Spinning and Operating ReserveSupplemental, which include “load fully removable from the system within the 

Disturbance Recovery Period following the contingency event” to be used to meet 

contingencies.51 WECC points out that the continent-wide Reliability Standard does not 

 49 Citing Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 324 (identifying 

guidelines for what constitutes a just and reasonable Reliability Standard). 

50 BAL-002-WECC-1, Requirement R3.6. 

51 See NERC Glossary, available at

http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf. 
Docket No. RM09-15-000 - 35 - 

refer to the declaration of an emergency. For the same reason, Idaho Power and Xcel 

state that the proposed provisions related to the use of firm load to meet contingency 

reserve requirements are more stringent than the continent-wide standards. They contend 

that, unlike the continent-wide Reliability Standard, the proposed regional Reliability 

Standard requires the declaration of an emergency prior to utilizing firm load to meet 

contingency reserve requirements. 

45. Idaho Power comments that if balancing authorities are unable to count firm load 

towards contingency reserve requirements, balancing authorities may have no choice but 

to shed firm load to remain in compliance with the continent-wide Reliability Standard 

BAL-002-0. Idaho Power explains that Requirement R6.2 of Reliability Standard EOP002-2.1 requires a balancing authority to deploy all available operating reserves if it 

cannot meet the Disturbance Control Standard. If the balancing authority deploys all 

available operating reserves, including interruptible loads pursuant to Reliability Standard 

EOP-002-2.1, but cannot declare firm load interruptible to satisfy contingency reserve 

requirements, Idaho Power contends that the balancing authority may have no choice but 

to shed firm load to maintain compliance with the continent-wide Reliability Standard 

BAL-002. Thus, Idaho Power argues that not all emergencies are created equal and the 

flexibility to count firm load toward contingency requirements, in limited circumstances, 

would promote reliability but avoid unnecessary outages. 
Docket No. RM09-15-000 - 36 - 

46. WECC also states that nothing in the proposed standard directs any entity to take 

action that would violate the requirements relating to alert levels prescribed in EOP-002-

2.1. Bonneville agrees and states that the Commission’s concern is misplaced because 

the proposed Reliability Standard does not authorize an entity to interrupt firm load for 

contingency reserves during EOP-002-2.1 energy emergency alerts 1 and 2. If the 

Commission believes that the proposed Reliability Standard should further qualify the 

circumstances under which loads may be used for contingency reserves, WECC contends 

that the issue should be addressed in a manner and at a time that does not preclude 

approval of the proposed regional Reliability Standard. WECC adds that it is prepared to 

participate in any efforts intended to address the Commission’s concerns in this regard. 

47. NERC agrees with WECC that a reliability coordinator must declare a capacity or 

energy emergency before firm load could be considered to maintain contingency reserves 

but also agrees with the Commission that greater specificity of the appropriate Energy 

Emergency Alert (EEA) level that must be declared would be helpful. Puget Sound 

argues that the proposed language could be interpreted to allow the use of firm load in a 

manner that is inconsistent with EOP-002-2.1. CDWR comments that reliability 

planning should not consider shedding firm loads as a contingency reserve. CDWR 

contends that balancing authority should plan for load interruption only if a customer 

voluntarily agrees to that specific use of its loads, and only upon clear terms and 

conditions. 
Docket No. RM09-15-000 - 37 - 

Commission Determination

48. We will accept WECC’s proposal on this issue. The Commission finds that, 

similar to the current continent-wide Reliability Standard, the proposed regional 

Reliability Standard does not allow balancing authorities or reserve sharing groups to 

curtail firm load except in compliance with NERC’s Reliability Standard EOP-002-2.1. 

49. The continent-wide Reliability Standard, BAL-002 does not contemplate the use 

of firm load as contingency reserve. In fact, it would be a violation of EOP-002-2.1 if 

balancing authorities or reserve sharing groups outside of WECC planned to shed firm 

load before the reliability coordinator issued a level 3 energy emergency alert.52 

Similarly, although Requirement R3.6 of Reliability Standard BAL-002-WECC-1 would 

allow balancing authorities and reserve sharing groups to use “Load, other than 

Interruptible Load, once the Reliability Coordinator has declared a capacity or energy 

emergency,”53 these entities would not be authorized to shed firm load unless the 

applicable reliability coordinator had issued a level 3 energy emergency alert pursuant to 

EOP-002-2.1. Thus, balancing authorities and reserve sharing groups within WECC are 

subject to the same restrictions regarding the use of firm load as contingency reserve as 

 52 EOP-002-2.1, Requirement R7 

53 BAL-002-WECC-1, Requirement R3.6. 
Docket No. RM09-15-000 - 38 - 

balancing authorities elsewhere operating under the continent-wide Reliability Standard. 

On remand, we direct WECC to develop revised language to clarify this point. 

E. Demand-Side Management as a Resource

50. In Order No. 693, the Commission directed the ERO to submit a modification to 

continent-wide Reliability Standard BAL-002-0 that includes a Requirement that 

explicitly allows that demand-side management be used as a resource for contingency 

reserves, and clarifies that demand-side management should be treated on a comparable 

basis so long as it meets similar technical requirements as other resources providing this 

service.54 The Commission directed the ERO to list the types of resources that can be 

used to meet contingency reserves to provide users, owners and operators of the BulkPower System a set of options to meet contingency reserves.55 The Commission clarified 

that the purpose of this directive was to ensure comparable treatment of demand-side 

management with conventional generation or any other technology and to allow demandside management to be considered as a resource for contingency reserves on this basis 

without requiring the use of any particular contingency reserve option.56 The 

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

72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ¶ 31,242, at P 330, order on reh’g, 

Order No. 693-A, 120 FERC ¶ 61,053 (2007). 

55 Id. P 331, 335. 

56 Id. P 333. 
Docket No. RM09-15-000 - 39 - 

Commission further clarified that in order for demand-side management to participate, it 

must be technically capable of providing contingency reserve service, with the ERO 

determining the technical requirements.57

51. In its petition, NERC states that it raised this concern with WECC, and WECC 

responded that the drafting team wrote the regional Reliability Standard “to permit load, 

Demand-Side Management, generation, or another resource technology that qualifies as 

Spinning Reserve or Contingency Reserve to be used as such.” WECC further explained 

that demand-side management that is deployable within ten minutes is a subset of 

interruptible load, which is an acceptable type of reserve set forth in proposed 

Requirement R3.2.58 WECC previously commented that, in the proposed standard, 

“Loads and [demand-side management] were not allowed as Spinning Reserve because it 

is not permitted by the NERC Spinning Reserve definition.”59 

NOPR Proposal

52. In its NOPR, the Commission stated that the proposed regional Reliability 

Standard does not explicitly address the use of demand-side management as a resource 

 57 Id. P 334. 

58 NERC Petition at 40. 

59 NERC Petition at Exhibit C (Record of Development of Proposed Reliability 

Standard) WECC’s Written Response to NERC’s Written Comments, August 13, 2008 at 

page 4. 
Docket No. RM09-15-000 - 40 - 

for contingency reserves. Accordingly, the Commission proposed to direct WECC to 

develop a modification to BAL-002-WECC-1 that explicitly provides that demand-side 

management that is technically capable of providing this service may be used as a 

resource for contingency reserves. Consistent with the Commission’s directive in Order 

No. 693, the Commission explained that the modification should list the types of 

resources, including demand-side management, which can be used to meet contingency 

reserves. The Commission also stated that the modification should ensure comparable 

treatment of demand-side management with conventional generation or any other 

technology and allow demand-side management to be considered as a resource for 

contingency reserves on this basis without requiring the use of any particular contingency 

reserve option. 

53. In addition, the Commission noted a conflict related to the definition of Spinning 

Reserve as it is used in the proposed regional Reliability Standard. The Commission 

stated that Requirement R3.1 refers to the NERC Glossary definition of Spinning 

Reserve, which omits the use of demand-side management or other technologies that 

could be used as a resource because it limits acceptable Spinning Reserve resources to 

generation resources. The Commission proposed to direct WECC to develop a 

modification to the proposed regional Reliability Standard replacing the term Spinning 

Reserve with Operating Reserve-Spinning, which includes as part of the definition of 

Operating Reserve, “load fully removable from the system within the Disturbance 
Docket No. RM09-15-000 - 41 - 

Recovery Period following the contingency event.” Since the term Spinning Reserve was 

not used in other Reliability Standards, the Commission proposed to direct the ERO to 

remove the term from the NERC Glossary upon approval of a modified Reliability 

Standard using Operating Reserve-Spinning. 

Comments

54. WECC, supported by NERC, Bonneville, CAISO, Idaho Power, and SCE, 

contends that the proposed regional Reliability Standard is inclusive of demand-side 

management as a resource to be used in the calculation of contingency reserve because it 

provides for the use of Interruptible Load for contingency reserve. WECC points out that 

the NERC Glossary defines Interruptible Load as “demand that the end-use customer 

makes available to its load-serving entity via contract or agreement for curtailment.”60 

Nevertheless, if the Commission issues a remand, CAISO urges the Commission to 

provide NERC an opportunity to resubmit BAL-002-WECC-1 to address any definitional 

concerns within 90 days. 

55. Xcel comments that the Reliability Standard should not be more explicit about the 

inclusion of demand-side management as a resource because the term demand-side 

management encompasses many types of technologies and services, including reduction 

 60 See NERC Glossary available at

http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf. 
Docket No. RM09-15-000 - 42 - 

of energy consumption by use of high-efficiency light bulbs. If demand-side 

management is more explicitly included in the proposed regional Reliability Standard, 

Xcel contends that such a revision might cause entities that are working to provide value 

to the end-use customers to claim that a customer could get revenue by providing 

reserves. 

56. By contrast, Puget Sound and CDWR comment that they agree with the 

Commission that technically qualified demand-based resources – as well as other 

qualified non-generation resources such as energy storage devices – should be allowed to 

provide ancillary services. CDWR suggests that, if Spinning Reserve is meant to connote 

two products – a contingency reserve and a frequency regulation reserve – then 

consideration should be given to better defining the services and the associated technical 

criteria. Nevertheless, CDWR comments that demand-based resources that agree to 

interruption for reliability purposes should receive reduced charges for lesser quality 

services, an exemption from charges associated with the same service that the demandbased resources are providing, and compensation for service they provide. 

57. Concerning the Commission’s proposal to direct the ERO to remove the term 

Spinning Reserve upon approval of a modified regional Reliability Standard, NERC 

points out that there are two definitions for Spinning Reserve; one from NERC, the other 

from WECC. NERC suggests that the Commission retain the NERC-defined term and 
Docket No. RM09-15-000 - 43 - 

 

retire the WECC term. NERC states that the proposed standard uses the NERC-defined 

term in Requirements R1, R2, and R3. 

58. Several commenters oppose the removal of the term Spinning Reserve from the 

NERC Glossary.61 Puget Sound states that retaining the term in the NERC Glossary is 

helpful to the development of a capacity/reserves market by facilitating the purchase and 

sale of spinning capacity that is not contingency-based. Similarly, NV Energy states that 

the term Spinning Reserve is useful because it describes a type of reserve that must be 

synchronized, unloaded generating capacity, as this is the only product that can provide 

the essential service of frequency and governor response under dynamic system 

conditions and disturbances. WSPP argues that the Commission’s proposal is based upon 

a faulty understanding of the relationship between the terms Operating Reserve-Spinning 

and Spinning Reserve. WSPP and MISO agree that Spinning Reserve is used in the 

definition of Operating Reserve, which appears more than fifty times in the NERC 

Reliability Standards. WSPP further explains that Spinning Reserve can be used for the 

spinning component of Operating Reserve but also for other critical system requirements. 

In addition, MISO argues, generally, that it is not appropriate for the Commission to 

effect changes to the continent-wide NERC standards by proposing a modification to the 

61 E.g., MISO, Puget Sound, WSPP, and Xcel. 
Docket No. RM09-15-000 - 44 - 

NERC Glossary within the context of a proceeding addressing a regional Reliability 

Standard. 

59. With respect to the Commission’s proposed revisions of the definitions of the 

terms Operating Reserve-Spinning and Operating Reserve-Supplemental, NERC agrees 

that greater clarity is necessary regarding the meaning of “load fully removable from the 

system.” NERC states, however, that these modifications must be made through NERC’s 

Reliability Standard Development Process and are, in fact, currently being addressed in 

Project 2007-05 Balancing Authority Controls, which is currently revising Reliability 

Standard BAL-002-0, as well as other standards.62 

Commission Determination

60. We find that the proposed regional Reliability Standard does not provide that 

demand-side management that is technically capable of providing this service may be 

used as a resource for contingency reserves. The WECC definition of Spinning Reserve, 

like the NERC definition of the same term, is limited to “unloaded generation which is 

synchronized and ready to serve additional demand.” Thus, neither the WECC nor the 

NERC definitions of Spinning Reserve are inclusive of demand-side management as a 

 62 As of July 28, 2010, this project has been merged with Project 2007-18 – 

Reliability-based Controls and is now listed as new Project 2010-14 – Balancing 

Authority Reliability-based Control. The new project page is available at 

http://www.nerc.com/filez/standards/Project2010-14_Balancing_Authority_RBC.html. 
Docket No. RM09-15-000 - 45 - 

 

resource.63 Nevertheless, WECC argues that the proposed regional Reliability Standard 

is inclusive of demand-side management as a resource for contingency reserves because 

it lists interruptible load as an available resource for contingency reserve. The definition 

of interruptible load, however, is not inclusive of all forms of demand-side 

management.64 NERC defines demand-side management as “all activities or programs 

undertaken by Load-Serving Entity or its customers to influence the amount or timing of 

electricity they use.”65 This could include interruptible load but, as Xcel points out, 

demand-side management may encompass the use of many types of technologies and 

services. For example, according to the NERC Glossary, demand-side management 

includes controllable load, termed Direct Control Load Management, which is defined as 

demand-side management that is under the direct control of the system operator but does 

63 In the transmittal letter of its compliance filing to Order No. 719, CAISO 

explained that demand-side management resources cannot currently provide regulation or 

spinning reserve services in its markets because of WECC’s definitions of regulation and 

spinning reserve, which are limited to generation resources. CAISO, Compliance Filing, 

Docket No. ER09-1048-000, at 28-30 (April 28, 2009). 

64 NERC defines Interruptible Load as “Demand that the end-use customer makes 

available to its Load-Serving Entity via contract or agreement for curtailment.” NERC 

Glossary available at

http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf. 

65 NERC Glossary available at

http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf. 
Docket No. RM09-15-000 - 46 - 

 

not include interruptible load.66 Thus, by simply listing interruptible load, the proposed 

regional Reliability Standard is not sufficiently inclusive of demand-side management as 

a resource.67 

61. On remand, the Commission hereby adopts its NOPR proposal and directs the 

WECC to develop modifications to the proposed regional Reliability Standard that 

explicitly provide that demand-side management technically capable of providing this 

service may be used as a resource for both spinning and non-spinning contingency 

reserves.68 Consistent with the Commission’s directive in Order No. 693, the 

modification should list the types of resources, including demand-side management, 

which can be used to meet contingency reserves.69 The modification also should ensure 

comparable treatment of demand-side management with conventional generation or any 

66 Id. 

67 We also note that WECC’s explanation that demand-side management that is 

deployable within ten minutes is a subset of interruptible load is not reflected in the 

definition of Interruptible Load. 

68 In Order No. 693, the Commission clarified that, in order for demand-side 

management to participate as a resource for contingency reserves, it must be technically 

capable of providing contingency reserve service. For example, not every end-user who 

curbs electricity usage is technically capable of providing contingency reserve service. 

The Commission expects that the ERO would determine what technical requirements 

demand-side management would need to meet to provide contingency reserves. Order 

No. 693, FERC Stats. & Regs. ¶ 31,242 at P 334. 

69 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 333. 
Docket No. RM09-15-000 - 47 - 

 

other technology and allow demand-side management to be considered as a resource for 

contingency reserves on this basis without requiring the use of any particular contingency 

reserve option. For example, consistent with our determinations in Order No. 693, the 

modification could replace the term Spinning Reserve with Operating Reserve-Spinning 

and Non-Spinning Reserve with Operating Reserve-Supplemental, since these glossary 

definitions are inclusive of demand-side management, including controllable load, in 

contrast to the current terms used in the proposed regional Reliability Standard.70 

62. As commenters have pointed out, the term Spinning Reserve is used in the 

definition of Operating Reserve and in service agreements by and among certain WECC 

entities. Therefore, the Commission will not adopt its proposal to direct the ERO to 

remove the term from the NERC Glossary. However, as NERC points out WECC has 

maintained its own definition of the term Spinning Reserve. We find no substantial 

difference between the two terms. Both terms refer to “unloaded generation that is 

synchronized and ready to serve additional demand.”71 In its order approving WECC’s 

current regional Reliability Standard, the Commission determined that regional 

definitions should conform to the definitions set forth in the NERC Glossary, unless a 

70 Id. P 1896. 

71 NERC Glossary, available at

http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf. 
Docket No. RM09-15-000 - 48 - 

specific deviation has been justified.72 WECC has not justified the need for a separate, 

regional definition of Spinning Reserve. Accordingly, we direct WECC to remove this 

regional definition from the NERC Glossary. 

F. Miscellaneous 

Comments

63. In its petition, NERC contends that the industry will benefit from the improved 

clarity of the proposed regional Reliability Standard. Among its revisions, NERC 

presents a proposal from WECC for an interpretation of the term “Load 

Responsibility.”73 In the NOPR, the Commission stated its belief than any confusion 

regarding the term “Load Responsibility” has been addressed by WECC and therefore 

does not have a reliability impact. Xcel states that it agrees that WECC’s interpretation is 

an improvement and that the standard is clearer without the term. Nevertheless, Xcel 

 72 North American Electric Reliability Corp., 119 FERC ¶ 61,260 at P 54. 

73 WECC’s interpretation of “Load Responsibility,” which was approved by the 

WECC Board of Directors September 7, 2007, places the responsibility on the balancing 

authorities to determine the amount of and assure that adequate contingency reserves are 

provided. See WECC Interpretation of Load Responsibility (Sept. 7, 2007), available at 

http://www.wecc.biz/Standards/Interpretations/Interpretation%20of%20Load%20Respon

sibility.pdf. Likewise, the current regional Reliability Standard places the responsibility 

on the balancing authorities to determine the amount of contingency reserves and assure 

that adequate contingency reserves are provided. 
Docket No. RM09-15-000 - 49 - 

 

comments that more guidance on application is needed from both WECC and FERC 

before the western markets may operate efficiently. 

64. If the Commission decides to remand the proposed regional Reliability Standard, 

the QF Parties ask the Commission to direct WECC to define the term “net generation.” 

The QF Parties explain that the calculation of the amount of contingency reserves in the 

proposed standard is based, in part, on the amount of net generation, which is not defined. 

The QF Parties contend that, consistent with Commission precedent, the definition of net 

generation should not include generation used to serve load behind the meter.74 

65. Regarding the applicability of the proposed regional Reliability Standard, NV 

Energy expresses concern that it does not assign any responsibility or obligations for 

generator owners and generator operators. NV Energy states that a balancing authority 

does not have ownership or operational control over significant shares of generating 

resources within its footprint. Thus, NV Energy contends, a balancing authority may be 

required to carry a disproportionate share of the contingency reserve obligation within the 

Western Interconnection. For this reason, NV Energy asks the Commission to direct 

WECC to address this issue on remand. 

74 Citing, Opinion No. 464, Docket No. ER98-997-000, at P 11 et seq., 38-40 

(August 12, 2003). 
Docket No. RM09-15-000 - 50 - 

Commission Determination

66. The proposed regional Reliability Standard offers certain improvements over the 

current regional Reliability Standard as commenters point out. Nevertheless, for the 

reasons discussed above, we must remand the proposed regional Reliability Standard to 

the ERO. On remand, we direct WECC to consider the concerns raised by the QF Parties 

and NV Energy. 

III. Information Collection Statement

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

approve certain reporting and recordkeeping (collections of information) imposed by an 

agency.75 The information contained here is also subject to review under section 3507(d) 

of the Paperwork Reduction Act of 1995.76 By remanding the proposed Reliability 

Standard the Commission is maintaining the status quo until future revisions to the 

Reliability Standard are approved by the Commission. Thus, the Commission’s action 

does not add to or increase entities’ reporting burden. 

IV. Environmental Analysis

68. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

 75 5 C.F.R. 1320.11. 

76 44 U.S.C. 3507(d). 
Docket No. RM09-15-000 - 51 - 

on the human environment.77 The Commission has categorically excluded certain 

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

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

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

amended.78 The actions directed herein fall within this categorical exclusion in the 

Commission’s regulations. 

V. Regulatory Flexibility Act

69. The Regulatory Flexibility Act of 1980 (RFA)79 generally requires a descriptio

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

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

accomplish the stated objectives of a final rule and that minimize any significant 

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

Administration’s Office of Size Standards develops the numerical definition of a sma

business.

n 

ves that 

ll 

 and 

 

80 For electric utilities, a firm is small if, including affiliates, it is primarily 

engaged in the transmission, generation and/or distribution of electric energy for sale

77 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, FERC Stats. & Regs. ¶ 30,783 (1987). 

78 18 C.F.R. 380.4(a)(2)(ii). 

79 5 U.S.C. 601-612. 

80 See 13 C.F.R. 121.201. 
Docket No. RM09-15-000 - 52 - 

 quo until future 

ard are approved by the Commission. 

its total electric output for the preceding twelve months did not exceed four million 

megawatt hours. The RFA is not implicated by this final rule because by remanding the 

proposed Reliability Standard the Commission is maintaining the status

revisions to the Reliability Stand

VI. Document Availability

70. In addition to publishing the full text of this document in the Federal Register

Commission provides all interested persons an opportunity to view and

contents of this document via the internet through FERC's Home Page 

( ) and in FERC's Public Reference Room during normal bu

hours (8:30 a.m. to 5:00 p

, the 

/or print the 

siness 

.m. Eastern time) at 888 First Street, NE, Room 2A, 

t 

ket number excluding the last three digits of this document in the 

l 

oom at (202) 

http://www.ferc.gov

Washington DC 20426. 

71. 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 Microsof

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

eLibrary, type the doc

docket number field. 

72. User assistance is available for eLibrary and the FERC’s website during norma

business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-

3676) or email at ferconlinesupport@ferc.gov, or the Public Reference R
Docket No. RM09-15-000 - 53 - 

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

public.referenceroom@ferc.gov. 

VII. Effective Date and Congressional Notification

73. This final rule shall become effective [insert date that is 30 days from publication 

in Federal Register]. The Commission has determined, with the concurrence of t

Administrator of the Office of Inform

he 

ation and Regulatory Affairs of OMB, that this rule 

 not a “major rule” as defined in section 351 of the Small Business Regulatory 

ist of subjects in 18 CFR Part 40

is

Enforcement Fairness Act of 1996. 

L

er, Electric utilities, Reporting and recordkeeping requirements. 

y the Commission. 

( S E A L ) 

Kimberly D. Bose, 

Secretary. 

 

Electric pow

B
Appendix A 

List of Commenters 

Commenter Name Abbreviation 

Western Electricity Coordinating Council WECC 

North American Electric Reliability Corp. NERC 

Bonneville Power Administration Bonneville 

California Independent System Operator 

Corp. 

CAISO 

California Dept of Water Resources, State 

Water Project 

CDWR 

Idaho Power Co. Idaho Power 

Midwest Independent System Operator, Inc. MISO 

Powerex Corp. Powerex 

Puget Sound Energy, Inc. Puget Sound 

Cogeneration Association of California and 

the Energy Producers and Users Coalition 

QF Parties 

Sempra Generation Sempra 

Sierra Pacific Power Co. and Nevada Power 

Co. 

NV Energy 

Southern California Edison Co. SCE 

Western Interconnection Regional Advisory 

Body 

WIRAB 

WSPP Inc. WSPP 

Xcel Energy Services Inc. Xcel