126 FERC ¶ 61,249 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 40 

[Docket Nos. RM08-19-000, RM08-19-001, RM09-5-000, RM06-16-005] 

Mandatory Reliability Standards for the Calculation of Available Transfer Capability, 

Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer Capability, 

and Existing Transmission Commitments and Mandatory Reliability Standards for the 

Bulk-Power System 

(Issued March 19, 2009) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: Pursuant to section 215 of the Federal Power Act, the Commission 

proposes to approve six Modeling, Data, and Analysis Reliability Standards submitted to 

the Commission for approval by the North American Electric Reliability Corporation, the 

Electric Reliability Organization certified by the Commission. The proposed Reliability 

Standards require certain users, owners, and operators of the Bulk-Power System to 

develop consistent methodologies for the calculation of available transfer capability or 

available flowgate capability. 

DATES: Comments are due [insert date that is 60 days after publication in the

FEDERAL REGISTER] 
Docket Nos. RM08-19-000, et al. - 2 - 

ADDRESSES: You may submit comments, identified by docket number by any of the 

following methods: 

• Agency Web Site: http://ferc.gov. Documents created electronically using word 

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

and not in a scanned format. 

• Mail/Hand Delivery: Commenters unable to file comments electronically must 

mail or hand deliver an original and 14 copies of their comments to: Federal 

Energy Regulatory Commission, Secretary of the Commission, 888 First Street, 

N.E., Washington, D.C. 20426. 

FOR FURTHER INFORMATION CONTACT: 

Mason Emnett (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6540 

Cory Lankford (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6711 

Keith O’Neal (Technical Information) 

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6339 
Docket Nos. RM08-19-000, et al. - 3 - 

Christopher Young (Technical Information)

Office of Electric Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6403 

SUPPLEMENTARY INFORMATION:
126 FERC ¶ 61,249 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Mandatory Reliability Standards for the Calculation of 

Available Transfer Capability, Capacity Benefit 

Margins, Transmission Reliability Margins, Total 

Transfer Capability, and Existing Transmission 

Commitments and Mandatory Reliability Standards for 

the Bulk-Power System 

Docket Nos. RM08-19-000 

RM08-19-001 

RM09-5-000 

RM06-16-005 

NOTICE OF PROPOSED RULEMAKING 

TABLE OF CONTENTS

(Issued March 19, 2009) 

Paragraph Numbers

I. Background................................................................................................................... 4.

A. Order Nos. 888 and 889 ........................................................................................... 4.

B. Order Nos. 890 and 693 ........................................................................................... 8.

II. Proposed Reliability Standards............................................................................... 12.

A. Coordination with Business Practice Standards..................................................... 17.

B. Available Transmission System Capability, MOD-001-1 ..................................... 19.

C. Capacity Benefit Margin Methodology, MOD-004-1 ........................................... 26.

D. Transmission Reliability Margin Methodology, MOD-008-1............................... 41.

E. Three Methodologies for Calculating Available Transfer Capability.................... 51.

1. Area Interchange Methodology, MOD-028-1.................................................... 53.

2. Rated System Path Methodology, MOD-029-1 ................................................. 61.

3. Flowgate Methodology, MOD-030-2................................................................. 65.

F. Implementation Plan ............................................................................................... 72.

III. Discussion................................................................................................................. 75.

A. Implementation of the Reliability Standards ......................................................... 80.

1. Available Transfer Capability Implementation Documents............................... 87.

2. Capacity Benefit Margin Implementation Documents....................................... 95.

3. Transmission Reliability Margin Implementation Documents .......................... 98.

B. Proposed Modifications of the Reliability Standards........................................... 102.
Docket Nos. RM08-19-000, et al. ii 

1. Availability of Implementation Documents ..................................................... 103.

2. Consistent Treatment of Assumptions.............................................................. 106.

3. Capacity Benefit Margin (MOD-004-1)........................................................... 109.

4. Calculation of Total Transfer Capability under the Rated System Path 

Methodology (MOD-029-1) .................................................................................. 112.

5. Treatment of Network Resource Designations................................................. 116.

C. Violation Risk Factors and Violation Severity Levels......................................... 121.

D. Disposition of Other Reliability Standards .......................................................... 130.

1. MOD-010-1 through MOD-025-1.................................................................... 130.

2. Reliability Standards Proposed to be Retired or Withdrawn............................ 133.

E. Definitions ............................................................................................................ 139.

IV. Information Collection Statement....................................................................... 143.

V. Environmental Analysis......................................................................................... 148.

VI. Regulatory Flexibility Act Certification ............................................................. 149.

VII. Comment Procedures.......................................................................................... 151.

VIII. Document Availability ....................................................................................... 155.
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Mandatory Reliability Standards for the Calculation of 

Available Transfer Capability, Capacity Benefit 

Margins, Transmission Reliability Margins, Total 

Transfer Capability, and Existing Transmission 

Commitments and Mandatory Reliability Standards for 

the Bulk-Power System 

Docket Nos. RM08-19-000 

RM08-19-001 

RM09-5-000 

RM06-16-005 

NOTICE OF PROPOSED RULEMAKING 

(Issued March 19, 2009) 

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

 the Federal Energy 

Regulatory Commission (Commission) proposes to approve, and direct modifications to, 

six Modeling, Data and Analysis (MOD) Reliability Standards submitted to the 

Commission by the North American Electric Reliability Corporation (NERC), which has 

been certified by the Commission as the Electric Reliability Organization (ERO) for the 

United States.2

 The proposed Reliability Standards pertain to methodologies for the 

consistent and transparent calculation of available transfer capability or available 

flowgate capability. The Commission also proposes to retire the existing MOD 

Reliability Standards replaced by the versions proposed here. The retirement of these 

 1

 16 U.S.C. 824o. 

2 North American Electric Reliability Corp., 116 FERC ¶ 61,062 (ERO 

Certification Order), order on reh’g & compliance, 117 FERC ¶ 61,126 (ERO Rehearing 

Order) (2006), appeal docketed sub nom. Alcoa, Inc. v. FERC, No. 06-1426 (D.C. Cir. 

Dec. 29, 2006). 
Docket Nos. RM08-19-000, et al. - 2 - 

Reliability Standards would be effective upon the effective date of the proposed MOD 

Reliability Standards. 

2. In Order No. 890, the Commission found that the lack of a consistent and 

transparent methodology for calculating available transfer capability is a significant 

problem because the calculation of available transfer capability, which varies greatly 

depending on the criteria and assumptions used, may allow the transmission service 

provider to discriminate in subtle ways against its competitors.3

 The calculation of 

available transfer capability is one of the most critical functions under the open access 

transmission tariff (OATT) because it determines whether transmission customers can 

access alternative power supplies. Improving transparency and consistency of available 

transfer capability calculation methodologies will eliminate transmission service 

providers’ wide discretion in calculating available transfer capability and ensure that 

customers are treated fairly in seeking alternative power supplies. The Commission 

believes that the Reliability Standards proposed here address the potential for undue 

discrimination by requiring industry-wide transparency and increased consistency 

regarding all components of the available transfer capability calculation methodology and 

certain definitions, data, and modeling assumptions. 

 3 Preventing Undue Discrimination and Preference in Transmission Service, Order 

No. 890, 72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs. ¶ 31,241 (2007), order on 

reh'g, Order No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats & Regs. ¶ 31,261 

(2007), order on reh’g, Order No. 890-B, 73 FR 39092 (July 8, 2008), 123 FERC 

¶ 61,299 (2008), order on reh’g, Order No. 890-C, 126 FERC ¶ 61,228 (2009). 
Docket Nos. RM08-19-000, et al. - 3 - 

3. The Commission proposes to approve the Reliability Standards filed by NERC in 

this proceeding as just, reasonable, not unduly discriminatory or preferential, and in the 

public interest. These Reliability Standards represent a step forward in eliminating the 

broad discretion previously afforded transmission service providers in the calculation of 

available transfer capability. The proposed Reliability Standards will enhance 

transparency in the calculation of available transfer capability, requiring transmission 

operators and transmission service providers to calculate available transfer capability 

using a specific methodology that is both explicitly documented and available to 

reliability entities who request it.4

 The proposed Reliability Standards also require 

documentation of the detailed representations of the various components that comprise 

the available transfer capability equation, including the specification of modeling and risk 

assumptions and the disclosure of outage processing rules to other reliability entities. 

These actions will make the processes to calculate available transfer capability and its 

various components more transparent, which in turn will allow the Commission and 

others to ensure consistency in their application. 

 4

 Reliability entities include: transmission service providers, planning 

coordinators, reliability coordinators, and transmission operators as those entities are 

defined in the NERC Glossary. Standards adopted by the North American Energy 

Standards Board (NAESB) govern disclosure of this information to other entities. The 

Commission addresses the proposed NAESB business practices in a Notice of Proposed 

Rulemaking issued concurrently in Docket No. RM05-5-013. See Standards for Business 

Practices and Communication Protocols for Public Utilities, 126 FERC ¶ 61,248 (2009).
Docket Nos. RM08-19-000, et al. - 4 - 

I. Background

A. Order Nos. 888 and 889

4. In April 1996, as part of its statutory obligation under sections 205 and 206 of the 

FPA5

 to remedy undue discrimination, the Commission adopted Order No. 888 

prohibiting public utilities from using their monopoly power over transmission to unduly 

discriminate against others.6

 In that order, the Commission required all public utilities 

that own, control or operate facilities used for transmitting electric energy in interstate 

commerce to file open access non-discriminatory transmission tariffs that contained 

minimum terms and conditions of non-discriminatory service. It also obligated such 

public utilities to “functionally unbundle” their generation and transmission services. 

This meant that public utilities had to take transmission service (including ancillary 

services) for their own new wholesale sales and purchases of electric energy under the 

open access tariffs, and to separately state their rates for wholesale generation, 

transmission and ancillary services.7

 Each public utility was required to file the pro 

 5

 16 U.S.C. 824d, 824e. 

6 Promoting Wholesale Competition Through Open Access Non-discriminatory 

Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities 

and Transmitting Utilities, Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. & 

Regs. ¶ 31,036 (1996), order on reh’g, Order No. 888-A, 62 FR 12274 (Mar. 14, 1997), 

FERC Stats. & Regs. ¶ 31,048 (1997), order on reh’g, Order No. 888-B, 81 FERC 

¶ 61,248 (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). 

7

 This is known as “functional unbundling” because the transmission element of a 

wholesale sale is separated or unbundled from the generation element of that sale, 

although the public utility may provide both functions. 
Docket Nos. RM08-19-000, et al. - 5 - 

forma OATT included in Order No. 888 without any deviation (except a limited number 

of terms and conditions that reflect regional practices).8

 After their OATTs became 

effective, public utilities were allowed to file, pursuant to section 205 of the FPA, 

deviations that were consistent with or superior to the pro forma OATT’s terms and 

conditions. 

5. The same day it issued Order No. 888, the Commission issued a companion order, 

Order No. 889,9

 addressing the separation of vertically integrated utilities’ transmission 

and merchant functions, the information transmission service providers were required to 

make public, and the electronic means they were required to use to do so. Order No. 889 

imposed Standards of Conduct governing the separation of, and communications 

between, the utility’s transmission and wholesale power functions, to prevent the utility 

from giving its merchant arm preferential access to transmission information. All public 

utilities that owned, controlled or operated facilities used in the transmission of electric 

energy in interstate commerce were required to create or participate in an Open Access 

 8 See Order No. 888, FERC Stats. & Regs. ¶ 31,036 at 31,769-70 (noting that the 

pro forma OATT expressly identified certain non-rate terms and conditions, such as the 

time deadlines for determining available transfer capability in section 18.4 or scheduling 

changes in sections 13.8 and 14.6, that may be modified to account for regional practices 

if such practices are reasonable, generally accepted in the region, and consistently 

adhered to by the transmission service provider). 

9 Open Access Same-Time Information System (Formerly Real-Time Information 

Networks) and Standards of Conduct, Order No. 889, 61 FR 21737 (May 10, 1996), 

FERC Stats. & Regs. ¶ 31,035 (1996), order on reh’g, Order No. 889-A, FERC Stats. 

& Regs. ¶ 31,049 (1997), order on reh’g, Order No. 889-B, 81 FERC ¶ 61,253 (1997). 
Docket Nos. RM08-19-000, et al. - 6 - 

Same-Time Information System (OASIS) that was to provide existing and potential 

transmission customers the same access to transmission information. 

6. Among the information public utilities were required to post on their OASIS was 

the transmission service provider’s calculation of available transfer capability. Though 

the Commission acknowledged that before-the-fact measurement of the availability of 

transmission service is “difficult,” the Commission concluded that it was important to 

give potential transmission customers “an easy-to-understand indicator of service 

availability.”10 Because formal methods did not then exist to calculate available transfer 

capability and total transfer capability, the Commission encouraged industry efforts to 

develop consistent methods for calculating available transfer capability and total transfer 

capability.11 Order No. 889 ultimately required transmission service providers to base 

their calculations on “current industry practices, standards and criteria” and to describe 

their methodology in an Attachment C to their tariffs.12 The Commission noted that the 

requirement that transmission service providers purchase only available transfer 

capability that is posted as available “should create an adequate incentive for them to 

calculate available transfer capability and total transfer capability as accurately and as 

uniformly as possible.”13

 10 Order No. 889, FERC Stats. & Regs. ¶ 31,035 at 21749. 

11 Id. at 21750. 

12 Id. 

13 Id. 
Docket Nos. RM08-19-000, et al. - 7 - 

7. Although Order No. 888 obligated each public utility to calculate the amount of 

transfer capability on its system available for sale to third parties, the Commission did not 

standardize the methodology for calculating available transfer capability, nor did it 

impose any specific requirements regarding the disclosure of the methodologies used by 

each transmission service provider.14 As a result, a variety of available transfer 

capability calculation methodologies have been used with very few clear rules governing 

their use. Moreover, there was often very little transparency about the nature of these 

calculations, given that many transmission service providers historically filed on

summary explanations of their available transfer capability methodologies in Attachment 

C to their O

ly 

ATTs. 

B. Order Nos. 890 and 693

8. 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. If approved, the Reliability Standards are enforced by the ERO, 

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

NERC worked with industry to develop Reliability Standards improving consistency and 

transparency of available transfer capability calculation methodologies. On April 4, 

2006, as modified on August 28, 2006, NERC submitted to the Commission a petition 

seeking approval of 107 proposed Reliability Standards, including 23 Reliability 

Standards pertaining to Modeling, Data and Analysis (MOD). The MOD group of 

 14 Order No. 888, FERC Stats. & Regs. ¶ 31,036 n.610. 
Docket Nos. RM08-19-000, et al. - 8 - 

Reliability Standards is intended to standardize methodologies and system data needed 

for traditional transmission system operation and expansion planning, reliability 

assessment and the calculation of available transfer capability in an open access 

environment. 

9. On February 16, 2007, the Commission issued Order No. 890, which addressed 

and remedied opportunities for undue discrimination under the pro forma OATT adopted 

in Order No. 888. Among other things, the Commission required industry-wide 

consistency and transparency of all components of available transfer capability 

calculation and certain definitions, data and modeling assumptions. The Commission 

concluded that the lack of industry-wide standards for the consistent calculation of 

available transfer capability poses a threat to the reliable operation of the Bulk-Power 

System, particularly with respect to the inability of one transmission service provider to 

know with certainty its neighbors’ system conditions affecting its own available transfer 

capability values. As a result of this reliability concern, the Commission asserted that the 

proposed available transfer capability reforms were also supported by FPA section 215, 

through which the Commission has the authority to direct the ERO to submit a Reliability 

Standard that addresses a specific matter.15 Thus, the Commission in Order No. 890 

directed industry to develop Reliability Standards, using the ERO’s Reliability Standards 

development procedures, that provide for consistency and transparency in the 

methodologies used by transmission owners to calculate available transfer capability. 

 15 FPA section 215(d)(5). 16 U.S.C. 824o(d)(5). 
Docket Nos. RM08-19-000, et al. - 9 - 

10. The Commission stated in Order No. 890 that the available transfer capabilityrelated Reliability Standards should, at a minimum, provide a framework for available 

transfer capability, total transfer capability and existing transmission commitments 

calculations. The Commission did not require a single computational process for 

calculating available transfer capability because, among other things, it found that the 

potential for discrimination and decline in reliability level does not lie primarily in the 

choice of an available transfer capability calculation methodology, but rather in the 

consistent application of its components, input and exchange data, and modeling 

assumptions.16 The Commission found that, if all of the available transfer capability 

components, and certain data inputs and assumptions are consistent, the three available 

transfer capability calculation methodologies would produce predictable and sufficiently 

accurate, consistent, equivalent and replicable results.17

11. On March 16, 2007, the Commission issued Order No. 693, approving 83 of the 

107 Reliability Standards filed by NERC in April 2006.18 Of the 83 approved Reliability 

Standards, the Commission approved ten MOD Reliability Standards.19 However, the 

Commission directed NERC to prospectively modify nine of the ten approved MOD 

 16 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 1029. 

17 Id. P 1030. 

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

72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ¶ 31,242, order on reh’g, Order No. 

693-A, 120 FERC ¶ 61,053 (2007). 

19 Id. P 1010. 
Docket Nos. RM08-19-000, et al. - 10 - 

Reliability Standards to be consistent with the requirements of Order No. 890.20 The 

Commission reiterated the requirement from Order No. 890 that all available transfer 

capability components (i.e., total transfer capability, existing transmission commitments, 

capacity benefit margin, and transmission reliability margin) and certain data input, data 

exchange, and assumptions be consistent and that the number of industry-wide available 

transfer capability calculation formulas be few in number, transparent and produce 

equivalent results.21 The Commission directed public utilities, working through the 

NERC Reliability Standards and NAESB business practices development processes, to 

produce workable solutions to implement the available transfer capability-related reforms 

adopted by the Commission. The Commission also deferred action on 24 proposed 

Reliability Standards, which did not contain sufficient information to enable the 

Commission to propose a disposition.22 

II. Proposed Reliability Standards

12. In response to the requirements of Order No. 890 and related directives of Order 

No. 693,23 on August 29, 2008, NERC submitted for Commission approval five MOD 

 20 Id. 

21 Id. P 1029-30; see also Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 207. 

22 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 287-303. Some of these 

Reliability Standards required the regional reliability organizations to develop criteria for 

use by users, owners or operators within each region. The Commission set aside such 

Reliability Standards and directed NERC to provide additional details prior to 

considering them for approval. Id. P 287-303. 

23 The Reliability Standards were originally due on December 10, 2007. See

Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 223. NERC requested additional time 

(continued...) 
Docket Nos. RM08-19-000, et al. - 11 - 

Reliability Standards: MOD-001-1 – Available Transmission System Capability, MOD008-1 - TRM Calculation Methodology (hereinafter Transmission Reliability Margin 

Methodology), MOD-028-1 Area Interchange Methodology, MOD-029-1 - Rated System 

Path Methodology, and MOD-030-1 - Flowgate Methodology.24 On November 21, 2008, 

NERC submitted for Commission approval a sixth MOD Reliability Standard: MOD004-1 - Capacity Benefit Margin (hereinafter Capacity Benefit Margin Methodology). 

On March 6, 2009, NERC submitted for Commission approval: MOD-030-2 – a revised 

Flowgate Methodology Reliability Standard and withdrew its request for approval of 

MOD-030-1. 

13. The Available Transmission System Capability Reliability Standard (MOD-001-1) 

serves as an “umbrella” Reliability Standard that requires each applicable entity to select 

and implement one or more of the three available transfer capability methodologies found 

in MOD-028-1, MOD-029-1, or MOD-030-2. MOD-004-1 and MOD-008-1 provide for 

the calculation of capacity benefit margin and transmission reliability margin, which are 

inputs into the available transfer capability calculation. If approved, NERC states that its 

 

to develop the Reliability Standards in order to address concerns raised in its stakeholder 

process. See NERC November 21, 2007 Request for Extension of Time, Docket 

Nos. RM05-17-000, et. al, at 7. The Commission ultimately granted three requests for 

extension of time, extending NERC’s deadline by over seven months, so that NERC 

could develop the Reliability Standards proposed here. 

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

of the Reliability Standard number. Therefore, version zero Reliability Standards end 

with “-0” and version one Reliability Standards end with “-1.” 
Docket Nos. RM08-19-000, et al. - 12 - 

filing wholly addresses eight of the 24 Reliability Standards that the Commission did not 

approve in Order No. 693 because further information was needed. 

14. NERC contends that the proposed Reliability Standards will have no undue 

negative effect on competition, nor will they unreasonably restrict available transfer 

capability on the Bulk-Power System beyond any restriction necessary for reliability and 

do not limit use of the Bulk-Power System in an unduly preferential manner. NERC 

contends that the increased rigor and transparency introduced in the development of 

available transfer capability and available flowgate capability calculations serve to 

mitigate the potential for undue advantages of one competitor over another. Under the 

proposed Reliability Standards, applicable entities are prohibited from making 

transmission capability available on a more conservative basis for commercial purposes 

than for either planning for native load or use in actual operations, thereby mitigating the 

potential for differing treatment of native load customers and transmission service 

customers. NERC states that data exchange, which has been heretofore voluntary, is now 

mandatory and it is required that the data be used in the available transfer 

capability/available flowgate capability calculations. None of these requirements exist in 

the current available transfer capability-related Reliability Standards. NERC contends 

that these improvements help the Commission achieve many of the primary objectives of 

Order No. 890 regarding transparency, standardization and consistency in available 

transfer capability calculations. 

15. NERC states that all three methodology Reliability Standards (MOD-028-1, 

MOD-029-1, and MOD-030-2) share fundamental equations that, while mathematically 
Docket Nos. RM08-19-000, et al. - 13 - 

equivalent, are written in slightly different forms. As a result, the manner of determining 

the components varies between methodologies. The employment of any two 

methodologies, given the same inputs, may produce similar, but not identical, results. As 

noted by NERC there are fundamental differences in the proposed methodologies that can 

keep them from producing identical results. For example, the rated system path 

methodology does not use the same frequent simulations of power flow used by the other 

two methodologies. NERC states that the rated system path methodology therefore will 

rarely generate numbers that identically match those determined by an entity using the 

other two methodologies. 

16. NERC proposes to make the MOD Reliability Standards proposed here applicable 

to transmission operators and transmission service providers. NERC states that the 

drafting team considered applying the Reliability Standards to the transmission operator 

instead of the transmission service provider. According to NERC, the Reliability 

Standard drafting team believes that the NERC Functional Model supports a 

determination that responsibility for several of the requirements lies with the transmission 

operator.25 NERC also states that a number of entities argued in the NERC drafting 

process that the transmission service provider actually undertakes efforts to meet those 

requirements. NERC states that the drafting team believes this points to a delegation of 

 25 NERC has developed a “Functional Model” that defines the set of functions that 

must be performed to ensure the reliability of the Bulk-Power System. The Functional 

Model identifies 14 functions and the name of a corresponding entity responsible for 

fulfilling each function. NERC’s functional model can be found at 

http://www.nerc.com/page.php?cid=2|247|108. 
Docket Nos. RM08-19-000, et al. - 14 - 

tasks to a larger entity that is the byproduct of a regional transmission organization and 

its regional transmission tariff. Accordingly, NERC states that the MOD Reliability 

Standards retain the use of transmission operators in the Reliability Standards, and 

explained to entities how delegation or joint registration organizations address the 

compliance implications of the assignment. 

A. Coordination with Business Practice Standards

17. NERC states that it has worked closely and collaboratively with NAESB, 

conducting numerous joint meetings and conference calls, to develop the Reliability 

Standards proposed here and related NAESB business-practice standards.26 NERC states 

that the focus of the proposed Reliability Standards is to address only the reliability 

aspects of available transfer capability and available flowgate capability and not to 

address the commercial aspects of available transfer capability, except to the extent that 

commercial system availability closely matches actual remaining system capability. The 

associated NAESB business practice standards are intended to focus on the competitive 

aspects of these processes. Through implementation of these Reliability Standards, 

access to the grid may indirectly be restricted, but NERC states that NAESB business 

practices and Commission orders related to these Reliability Standards ensure that any 

limitation will be applied in a manner that ensures open access and promotes competition. 

 26 As noted above, the Commission addresses the proposed NAESB business 

practices in a Notice of Proposed Rulemaking issued concurrently in Docket No. RM05-

5-013. 
Docket Nos. RM08-19-000, et al. - 15 - 

18. According to NERC, it and NAESB have coordinated the development of these 

business practices and the Reliability Standards to ensure that there are no duplications or 

double counting between the business practice standards and the Reliability Standards, 

and they will continue to coordinate as necessary so that the available transfer capabilityrelated Reliability Standards are compatible and consistent. 

B. Available Transmission System Capability, MOD-001-1

19. NERC proposes the Available Transmission System Capability Reliability 

Standard (MOD-001-1) as part of a set of Reliability Standards which are designed to 

work together to support a common reliability goal: to ensure that transmission service 

providers maintain awareness of available system capability and future flows on their 

own systems as well as those of their neighbors. NERC states that, historically, 

differences in implementation of available transfer capability methodologies and a lack of 

coordination between transmission service providers have resulted in cases where 

available transfer capability has been overestimated. As a result, systems have been 

oversold, resulting in potential or actual system operating limits and interconnection 

reliability operating limits being exceeded. NERC states that MOD-001-1 is the 

foundational Reliability Standard that obliges entities to select a methodology and then 

calculate available transfer capability or available flowgate capability using that 

methodology, thereby ensuring that the determination of available transfer capability is 

accurate and consistent across North America and that the transmission system is neither 

oversubscribed nor underutilized. 
Docket Nos. RM08-19-000, et al. - 16 - 

20. NERC states that, unlike the current set of voluntary available transfer capability 

standards, MOD-001-1 requires adherence to a specific documented and transparent 

methodology. NERC states that it requires applicable entities to calculate available 

transfer capability on a consistent schedule and for specific timeframes. According to 

NERC, MOD-001-1 requires users, owners and operators to disclose counterflow 

assumptions and outage processing rules to other reliability entities. NERC states that 

this Reliability Standard prohibits applicable entities from making transmission capability 

available on a more conservative basis for commercial purposes than the system’s 

capability in actual operations. NERC’s MOD-001-1 also requires entities, for the first 

time, to exchange and use available transfer capability data. NERC states that the 

Reliability Standard reflects industry’s consensus best practices for determining available 

transfer capability. 

21. As proposed, this Reliability Standard includes nine requirements, which would be 

applicable to all transmission service providers and transmission operators. To ensure 

consistency of enforcement, NERC states that each requirement is supported by a 

measure that identifies what is required and how the requirement will be enforced. 

22. Under NERC’s proposed Requirement R1, a transmission operator must select one 

of three methodologies for calculating available transfer capability or available flowgate 

capability for each available transfer capability path for each time frame (hourly, daily or 

monthly) for the facilities in its area. As stated above, the three proposed methodologies 

are: the area interchange methodology, the rated system path methodology, and the 

flowgate methodology. 
Docket Nos. RM08-19-000, et al. - 17 - 

23. Several proposed requirements within this Reliability Standard address the 

calculation of available transfer capability or available flowgate capability. Requirement 

R2 requires each transmission service provider to calculate available transfer capability 

or available flowgate capability values hourly for the next 48 hours, daily for the next 31 

calendar days and monthly for the next 12 months. Requirement R6 requires each 

transmission operator in its calculation of total transfer capability or total flowgate 

capability to use assumptions no more limiting than those used in its planning of 

operations. NERC contends that, consistent with the requirements of Order No. 890 and 

related directives of Order No. 693, Requirement R6 will minimize the differences 

between total transfer capability and total flowgate capability for transmission and 

transfer capability used in native load and reliability assessment studies.27 Similarly, 

Requirement R7 requires each transmission service provider, in its calculation of 

available transfer capability or available flowgate capability, to use assumptions no more 

limiting than those used in its planning of operations. NERC contends that this 

requirement addresses the Commission’s directive in Order No. 693 for the ERO to 

modify the available transfer capability Reliability Standards to include a requirement 

that the assumptions used in available transfer capability and available flowgate 

capability calculations be consistent with those used for planning the expansion or 

 27 See Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 237; Order No. 693, 

FERC Stats. & Regs. ¶ 31,242 at P 1051. 
Docket Nos. RM08-19-000, et al. - 18 - 

operation of the Bulk-Power System to the maximum extent possible.28 Requirement R8 

requires each transmission service provider to recalculate available transfer capability at a 

certain specified interval (hourly, daily, monthly) unless the input values specified in the 

available transfer capability calculation have not changed. NERC contends that 

Requirement R8 satisfies the Commission’s directive to calculate available transfer 

capability on a consistent time interval.29

24. MOD-001-1 also proposes several record keeping and information sharing 

requirements for transmission service providers. Requirement R3 requires each 

transmission service provider to keep an available transfer capability implementation 

document that explains the implementation of its chosen methodology(ies), its use of 

counterflows, the identities of entities with which it exchanges information for 

coordination purposes, any capacity allocation processes, and the manner in which it 

considers outages. Requirement R4 requires transmission service providers to keep 

specific reliability entities advised regarding changes to the available transfer capability 

implementation document.30 Requirement R5 requires the transmission service provider 

 28 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1057; see also Order 

No. 890, FERC Stats. & Regs. ¶ 31,241 at P 292. 

29 See Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 301; Order No. 693, 

FERC Stats. & Regs. ¶ 31,242 at P 1057. 

30 These include: each planning coordinator, reliability coordinator, and 

transmission operator associated with the transmission service provider’s area; and each 

planning coordinator, reliability coordinator, and transmission service provider adjacent 

to the transmission service provider’s area. 
Docket Nos. RM08-19-000, et al. - 19 - 

to make the available transfer capability implementation document available to those 

same reliability entities.31 Finally, proposed Requirement R9 allows a transmission 

service provider thirty calendar days to begin to respond to a request from any other 

transmission service provider, planning coordinator, reliability coordinator or 

transmission operator for certain data to be used in the requestor’s available transfer 

capability or available flowgate capability calculations. 

25. In Order No. 693, the Commission directed the ERO to develop modifications to 

the available transfer capability Reliability Standards to include a requirement that 

applicable entities make available assumptions and contingencies underlying available 

transfer capability and total transfer capability calculations. NERC contends that this 

Reliability Standard addresses this issue by requiring disclosure in the available transfer 

capability implementation document under Requirement R3.1 and part of the data 

exchange required by Requirement R9. NERC states that it has agreed with NAESB that 

requirements for posting information are more appropriately addressed through the 

NAESB process. Accordingly, NERC states that NAESB will be addressing the 

requirements associated with posting this information, instead of NERC. 

 31 Although the Reliability Standards only require the transmission service 

provider to make the available transfer capability implementation document available to 

certain reliability entities, the NAESB standard on OASIS posting requirements 

(Standard 001-13.1.5) requires transmission service providers to provide a link to the 

document on OASIS. 
Docket Nos. RM08-19-000, et al. - 20 - 

C. Capacity Benefit Margin Methodology, MOD-004-1 

26. As proposed, the Capacity Benefit Margin Methodology Reliability Standard 

(MOD-004-1) provides for the calculation of capacity benefit margin, which is defined 

by NERC as the amount of firm transmission capability preserved by the transmission 

service provider for load-serving entities, whose loads are located on that transmission 

service provider’s system, to enable access by the load-serving entities to generation from 

interconnected systems to meet generation reliability requirements.32 The purpose of this 

Reliability Standard is to promote the consistent and reliable calculation, verification, 

preservation, and use of capacity benefit margin to support analysis and system 

operations. NERC states that preservation of capacity benefit margin for a load-serving 

entity allows that entity to reduce its installed generating capacity below that which may 

otherwise have been necessary without interconnections to meet its generation reliability 

requirements. NERC states that the transmission transfer capability preserved as capacity 

benefit margin is intended to be used by the load-serving entities only in times of 

emergency generation deficiencies. 

27. NERC proposes to apply MOD-004-1 to transmission service providers, 

transmission planners, load-serving entities, resource planners and balancing authorities. 

As discussed more fully below, NERC states that it does not specify a particular 

methodology for calculating capacity benefit margin, but rather improves transparency by 

 32 See North American Electric Reliability Council, Glossary of Terms Used in 

Reliability Standards, (Effective February 12, 2008), available at: 

http://www.nerc.com/docs/standards/rs/Glossary_12Feb08.pdf. 
Docket Nos. RM08-19-000, et al. - 21 - 

requiring adherence to specific documented and transparent methodology to ensure 

consistent and reliable calculation, verification, preservation and use of capacity benefit 

margin. 

28. To improve consistency and transparency in the calculation of capacity benefit 

margin, the proposed Reliability Standard imposes twelve requirements on entities 

electing to use a capacity benefit margin. Requirement R1 requires the transmission 

service provider that maintains capacity benefit margin to prepare and keep current a 

capacity benefit margin implementation document that includes at a minimum: (1) the 

process through which a load-serving entity within a balancing authority associated with 

the transmission service provider, or the resource planner associated with that balancing 

authority area, may ensure that its need for transmission capacity to be set aside as 

capacity benefit margin will be reviewed and accommodated by the transmission service 

provider to the extent transmission capacity is available; (2) the procedure and 

assumptions for establishing capacity benefit margin for each available transfer capability 

path or flowgate; and (3) the procedure for a load-serving entity or balancing authority to 

use transmission capacity set aside as capacity benefit margin, including the manner in 

which the transmission service provider will manage situations where the requested use 

of capacity benefit margin exceeds the amount of capacity benefit margin available. 

29. Requirement R2 requires the transmission service provider to make its current 

capacity benefit margin implementation document available to the transmission 

operators, transmission service providers, reliability coordinators, transmission planners, 

resource planners, and planning coordinators that are within or adjacent to the 
Docket Nos. RM08-19-000, et al. - 22 - 

transmission service provider’s area, and to the load-serving entities and balancing 

authorities within the transmission service providers area, and notify those entities of any 

changes to the capacity benefit margin implementation document prior to the effective 

date of the change. 

30. Requirements R3 and R4 require each load-serving entity and resource planner 

determining the need for transmission capacity to be set aside as capacity benefit margin 

for imports into a balancing authority to develop that need by using one or more of the 

following to determine the generation capability import requirement:33 loss of load 

expectation studies, loss of load probability studies, deterministic risk-analysis studies, 

and reserve margin or resource adequacy requirements established by other entities, such 

as municipalities, state commissions, regional transmission organizations, independent 

system operators, regional reliability organizations, or regional entities.

31. Requirement R5 requires the transmission service provider to establish at least 

every 13 months a capacity benefit margin value for each available transfer capability 

path or flowgate to be used for available transfer capability or available flowgate 

capability during the 13 full calendar months (months 2 – 14) following the current 

month (the month in which the transmission service provider is establishing the capacity 

benefit margin values). Similarly, Requirement R6 requires the transmission planner to 

 33 NERC defines the generation capability import requirement as the amount of 

generation capability from external sources identified by a load-serving entity or resource 

planner to meet its generation reliability or resource adequacy requirement as an 

alternative to internal resources. 
Docket Nos. RM08-19-000, et al. - 23 - 

establish a capacity benefit margin value for each available transfer capability path or 

flowgate to be used in planning during each of the full calendar years two through ten 

following the current year (the year in which the transmission planner is establishing the 

capacity benefit margin values). All values must reflect consideration of each of the 

following, if available: (1) any studies performed by load-serving entities or resource 

planners pursuant to Requirement R3 for loads within the transmission service provider’s 

area; or (2) any reserve margin or resource adequacy requirements for loads within the 

transmission service provider’s area established by other entities, such as municipalities, 

state commissions, regional transmission organizations, independent system operators, 

regional reliability organizations, or regional entities. Once determined, the capacity 

benefit margin values will be allocated along available transfer capability paths based on 

the expected import paths or source regions provided by load-serving entities or resource 

planners. Capacity Benefit Margin values for flowgates will be allocated based on the 

expected import paths or source regions provided by load-serving entities or resource 

planners and the distribution factors associated with those paths or regions, as determined 

by the transmission service provider.

32. Requirements R7 and R8 require the transmission service provider and the 

transmission planner to notify, within 31 calendar days after the establishment of capacity 

benefit margin, all load-serving entities and resource planners that determined they had a 

need for capacity benefit margin of the amount, or the amount planned, of capacity 

benefit margin set aside.
Docket Nos. RM08-19-000, et al. - 24 - 

33. Requirement R9 requires the transmission service provider that maintains capacity 

benefit margin and the transmission planner to provide, subject to confidentiality and 

security requirements, copies of the applicable supporting data, including any models, 

used for determining capacity benefit margin or allocating capacity benefit margin over 

each available transfer capability path or flowgate to each of the associated transmission 

operators and to any transmission service provider, reliability coordinator, transmission 

planner, resource planner, or planning coordinator within 30 calendar days of their 

making a request for the data. 

34. Requirement R10 requires the load-serving entity or balancing authority to request 

to import energy over firm transfer capability set aside as capacity benefit margin only 

when experiencing a declared level 2 or higher NERC energy emergency alert. 

35. When reviewing an arranged interchange using capacity benefit margin, 

Requirement R11 requires all balancing authorities and transmission service providers to 

waive, within the bounds of reliable operation, any real-time timing and ramping 

requirements.

36. Requirement R12 requires all transmission service providers maintaining capacity 

benefit margin to approve, within the bounds of reliable operation, any arranged 

interchange using capacity benefit margin that is submitted by an “energy deficient 

entity”34 under an energy emergency alert level 2 if the capacity benefit margin is 

 34 Energy deficient entities are defined by NERC in the Capacity and Energy 

Emergencies Reliability Standard. See EOP-002-2, Attachment 1. 
Docket Nos. RM08-19-000, et al. - 25 - 

available, the emergency is declared within the balancing authority area of the energy 

deficient entity, and the load of the energy deficient entity is located within the 

transmission service provider’s area. 

37. NERC states that the proposed Reliability Standard complies with the 

requirements of Order No. 890 and related directives of Order No. 693 because it sets 

standards that allow load-serving entities to request transfer capability to be set aside in 

the form of capacity benefit margin in a consistent and transparent manner. Consistent 

with the Commission’s direction, the Reliability Standard provides an approach for 

determining capacity benefit margin that is flexible and does not mandate a particular 

methodology.35 NERC contends that this is appropriate because various parts of the 

country have already developed robust methodologies for determining capacity benefit 

margin. NERC states that Requirements R3 and R4 allow load-serving entities or 

resource planners to perform specific studies to determine their need for capacity benefit 

margin. By specifying the types of studies load-serving entities or resource planners 

must perform, NERC contends that MOD-004-1 ensures that capacity benefit margin and 

transmission reliability margin are not used for the same purpose.36 In response to the 

Commission’s transparency requirement,37 NERC states that Requirement R9 ensures 

 35 Citing Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1078; see also Order 

No. 890, FERC Stats. & Regs. ¶ 31,241 at P 257. 

36 Citing Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1105. 

37 Citing id. P 1077. 
Docket Nos. RM08-19-000, et al. - 26 - 

that capacity benefit margin studies are made available to the appropriate reliability 

entities for their review and analysis. With regard to public disclosure, NERC states that 

it has agreed with NAESB that requirements for posting information are more 

appropriately addressed through the NAESB process.

38. Requirements R5 and R6 require that the transmission service provider and 

transmission planner utilize the information contained in the studies if it has been 

provided to them when establishing capacity benefit margin values and mandate the reevaluation of capacity benefit margin at least once every thirteen months.38 NERC states 

that, consistent with Order Nos. 890 and 693, Requirements R5 and R6 also require 

allocation of capacity benefit margin based on the available transfer methodology chosen 

under MOD-001-1.39 NERC states that Requirements R10, R11 and R12 specify the 

manner in which capacity benefit margin is to be used.40 NERC states that any additional 

requirements specified by the transmission service provider must be identified in the 

capacity benefit margin implementation document, as mandated in Requirement R1.3. 

39. In response to the requirement that capacity benefit margins be verifiable,41 NERC 

states that Requirements R5, R6 and R9 ensure that the studies used to establish a need 

 38 Citing Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 358. NERC states 

that it chose thirteen months to ensure enough flexibility for a yearly update without 

being so prescriptive as to require it on a specific day. 

39 Citing id. at P 257; Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1082. 

40 Citing Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 256-7. 

41 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1077. 
Docket Nos. RM08-19-000, et al. - 27 - 

for capacity benefit margin are made available to any of the reliability entities specified 

in Requirement R9 that request them. NERC explains that the Reliability Standard does 

not mandate the verification of requested amounts of capacity benefit margin because it 

would place a functional entity (either the transmission service provider or transmission 

planner) in the position of having to judge the quality of each request, which could create 

conflicts of interest or potentially result in liability for that entity. Rather than mandate 

any particular approach for validation, NERC states that Requirements R3 and R4 

mandate the specific kinds of studies to be performed and supporting information that is 

to be maintained when determining the underlying need for capacity benefit margin. To 

the extent that entities do not use these methods or maintain this supporting information, 

NERC states that they will be in violation of the Reliability Standard. 

40. In response to the Commission’s call for clarity in the process for requesting 

capacity benefit margin,42 NERC states that Requirement R1.1 requires the transmission 

service provider explain the process by which load-serving entities and resource planners 

may ensure that their need for transmission capacity to be set aside as capacity benefit 

margin is reviewed and accommodated by the transmission service provider to the extent 

transmission capacity is available. Requirement R1.3 requires the transmission service 

provider to describe the procedure for load-serving entities and resource planners to use 

transmission capacity that has been set aside as capacity benefit margin. If the requested 

use of capacity benefit margin exceeds the amount of capacity benefit margin available, 

 42 Id. P 1081. 
Docket Nos. RM08-19-000, et al. - 28 - 

Requirement R1.3 also requires a description of how the transmission service provider 

will manage such situations. In addition, NERC states that Requirements R7 and R8 

mandate that the transmission service provider notify load-serving entities and resource 

planners that determined they had a need for capacity benefit margin of the amount of 

capacity benefit margin set aside, so that they may make informed decisions about how to 

proceed if their full request for capacity benefit margin could not be accommodated.

D. Transmission Reliability Margin Methodology, MOD-008-1

41. As proposed, the Transmission Reliability Margin Methodology Reliability 

Standard (MOD-008-1) provides for the calculation of transmission reliability margin, 

which describes the reliability aspects of determining and maintaining a transmission 

reliability margin and the components of uncertainty that may be considered when 

making that determination. The purpose of this Reliability Standard is to promote the 

consistent and reliable calculation, verification, preservation, and use of transmission 

reliability margin to support analysis and system operations. Transmission reliability 

margin is transmission transfer capability set aside to mitigate risks to operations, such as 

deviations in dispatch, load forecast, outages, and similar such conditions. It is distinctly 

different from capacity benefit margin, which is transmission transfer capability set aside 

to allow for the import of generation upon the occurrence of a generation capacity 

deficiency. 

42. NERC proposes to apply MOD-008-1 only to transmission operators that have 

elected to keep a transmission reliability margin. As discussed more fully in the 

discussion section below, NERC states that the Reliability Standard does not specify one 
Docket Nos. RM08-19-000, et al. - 29 - 

approach for calculating transmission reliability margin, but rather improves transparency 

by providing the key requirements and items that must be contained in any transmission 

reliability margin methodology.43 

43. To improve the transparency of transmission reliability margin calculations, the 

proposed Reliability Standard imposes five requirements on transmission service 

providers electing to keep a transmission reliability margin. Requirement R1 provides 

that a transmission operator must keep a transmission reliability margin implementation 

document that explains how specific risks such as aggregate load forecast uncertainty, 

load distribution uncertainty, and forecast uncertainty in transmission system topology44

are accounted for in the transmission reliability margin, how transmission reliability 

margin is allocated, and how transmission reliability margin is determined for various 

time frames. 

44. Requirement R2 allows a transmission operator to account only for the risks 

identified in Requirement R1 in transmission reliability margin, and prohibits the 

 43 NERC August 29, 2008 Filing, Docket No. RM08-19-000 at 38 (NERC Filing). 

44 This includes, but is not limited to, forced or unplanned outages and 

maintenance outages; allowances for parallel path (loop flow) impacts; allowances for 

simultaneous path interactions; variations in generation dispatch (including, but not 

limited to, forced or unplanned outages, maintenance outages and location of future 

generation); short-term system operator response (operating reserve actions); reserve 

sharing requirements; and inertial response and frequency bias. 
Docket Nos. RM08-19-000, et al. - 30 - 

transmission operator from incorporating risks that are addressed in capacity benefit 

margin.45 It allows reserve sharing to be included in transmission reliability margin. 

45. Requirement R3 requires each applicable entity to make the transmission 

reliability margin implementation document and associated information available to the 

following reliability entities if requested: transmission service provider, reliability 

coordinator, planning coordinator, transmission planner, and transmission operator. 

46. Requirement R4 provides that each applicable transmission operator must 

determine the transmission reliability margin value per the methods described in the 

transmission reliability margin implementation document at least once every thirteen 

months. Finally, Requirement R5 states that each applicable transmission operator must 

provide that transmission reliability margin value to its transmission service providers 

and transmission planners no more than seven days after it has been determined. 

47. NERC states that MOD-008-1 complies with Order No. 890 by specifying the 

critical areas of analysis required for transmission reliability margin.46 Further, it states 

that it has specified the appropriate uses of transmission reliability margin in 

Requirement R1 and prohibited the use of other values and double counting in 

Requirement R1. In addition, it maintains that MOD-008-1 complies with Order No. 693 

 45 The capacity benefit margin Reliability Standard, MOD-004-1, was filed on 

November 21, 2008 in Docket No. RM09-5-000. 

46 NERC Filing at 32 (citing Order No. 890, FERC Stats. & Regs. ¶ 31,241 at 

P 273). 
Docket Nos. RM08-19-000, et al. - 31 - 

by imposing clear requirements for making documents supporting the transmission 

reliability margin determination available through Requirements R1 and R3. 

48. In response to the requirement to expand the applicability of the transmission 

reliability margin Reliability Standard to planning authorities and reliability 

coordinators,47 NERC states that the drafting team was not able to identify any 

requirements for these entities, based on the current drafting of the Reliability Standard. 

Therefore, these entities are not included in the proposed Reliability Standard. NERC 

states that, until such time as the transmission reliability margin methodology becomes 

more detailed, there does not seem to be any measurable action that can be imposed on 

the planning coordinator48 or reliability coordinator. 

49. In response to the Commission’s statement that it would not require transfer 

capability that is set aside as transmission reliability margin to be sold on a non-firm 

basis,49 NERC states that it has included this requirement in each of the three 

methodologies as a part of firm and non-firm equations. NERC states that, because some 

of the uncertainties included in the transmission reliability margin may reduce or be 

eliminated as one approaches real time, the non-firm equations allow for the partial 

 47 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1126. 

48 The Commission notes that NERC uses the terms planning coordinator and 

planning authority interchangeably in its standards, as indicated in the proposed additions 

to the glossary of terms, addressed below. The interchangeable use of these terms may 

lack the clarity generally preferred, but the Commission understands that NERC is 

currently working on modifications to address this issue. 

49 See Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 273. 
Docket Nos. RM08-19-000, et al. - 32 - 

release of transmission reliability margin. In the Area Interchange Methodology (MOD028-1), this is addressed in Requirement R11; in the Rated System Path Methodology 

(MOD-029-1), this is addressed in Requirement R8; and in the Flowgate Methodology 

(MOD-030-2), this is addressed in Requirement R9. 

50. NERC contends that choosing a “best” approach to transmission reliability margin 

calculation would require a much more thorough technical effort. NERC therefore 

requests that the Commission provide additional guidance on this topic regarding its 

priority and a determination whether or not such an effort should be included in NERC’s 

annual planning process. 

E. Three Methodologies for Calculating Available Transfer Capability

51. In Order No. 890, the Commission did not require a uniform methodology for 

calculating available transfer capability. The Commission noted that NERC was 

developing Reliability Standards for three available transfer capability calculation 

methodologies and concluded that, if all of the available transfer capability components 

and certain data inputs and assumptions are consistent, the three available transfer 

capability calculation methodologies being developed by NERC will produce predictable 

and sufficiently accurate, consistent, equivalent and replicable results.50 Consistent with 

Order No. 890, NERC proposes three methodologies for calculating available transfer 

capability as detailed in the following Reliability Standards: MOD-028-1, MOD-029-1 

and MOD-030-2. NERC contends that these three methodologies meet the requirements 

 50 Id. P 210. 
Docket Nos. RM08-19-000, et al. - 33 - 

established by the Commission in Order No. 890, as well as those established in Order 

No. 693. 

52. NERC asserts that the three methodologies are a significant improvement over the 

existing available transfer capability related requirements. While current MOD-001-0 is 

essentially a “fill-in-the-blank” Reliability Standard,51 the proposed methodologies 

replace the original fill-in-the blank standard by specifying in detail how total transfer 

capability is to be determined – from modeling requirements, to the simulation of 

dispatch to determine native load impacts, to the treatment of reservations and to the 

incorporation of neighboring data. According to NERC, MOD-001-1 specifies how 

existing transmission commitments and available transfer capability are to be determined 

in detail and clearly describes the treatment of capacity benefit margin and transmission 

reliability margin in the available transfer capability equations. Thus, NERC contends, 

these Reliability Standards reduce the potential for seams discrepancies and improve the 

wide-area understanding of the Bulk-Power System on a forward-looking basis. NERC 

states that, by promoting consistency, standardization and transparency, they directly 

support and improve the reliability of the Bulk-Power System and help achieve the 

Commission’s objectives stated in Order No. 890. 

 51 A fill-in-the-blank Reliability Standard requires the regional entities to develop 

criteria for use by users, owners or operators within each region. In Order No. 693, the 

Commission held 24 Reliability Standards (mainly fill-in-the-blank standards) as pending 

until further information was provided on each standard and requires users, owners and 

operators to follow these pending standards as “good utility practice” pending their 

approval by the Commission. 
Docket Nos. RM08-19-000, et al. - 34 - 

1. Area Interchange Methodology, MOD-028-1

53. NERC states that the area interchange methodology is characterized by 

determination of incremental transfer capability via simulation, from which total transfer 

capability can be mathematically derived. Capacity benefit margin, transmission 

reliability margin, and existing transmission commitments are subtracted from the total 

transfer capability, and postbacks and counterflows are added, to derive available transfer 

capability. NERC also states that, under the area interchange methodology, total transfer 

capability results are generally reported on an area to area basis. 

54. MOD-028-1 describes the area interchange methodology (previously referred to as 

the network response available transfer capability methodology) for determining 

available transfer capability. NERC intends to use the Area Interchange Methodology 

Reliability Standard to increase consistency and reliability in the development and 

documentation of transfer capability calculation for short-term use performed by entities 

using the area interchange methodology to support analysis and system operations. 

55. This Reliability Standard would apply only to transmission operators and 

transmission service providers that have elected to implement this particular methodology 

as part of their compliance with MOD-001-1, Requirement R1. The proposed Reliability 

Standard consists of eleven requirements. Requirement R1 provides the additional 

information that a transmission service provider using the area interchange methodology 

must include in its available transfer capability implementation document. This includes 

information describing how the selected methodology has been implemented, in such 

detail that, given the same information used by the transmission operator, the results of 
Docket Nos. RM08-19-000, et al. - 35 - 

the total transfer capability calculations can be validated; a description of the manner in 

which the transmission operator will account for interchange schedules in the calculation 

of total transfer capability; any contractual obligations for allocation of total transfer 

capability; a description of the manner in which contingencies are identified for use in the 

total transfer capability process; and information on how sources and sinks for 

transmission service are accounted for in available transfer capability calculations. 

56. Pursuant to Requirement R2, each transmission operator must calculate total 

transfer capability using a model that meets the scope specified in the requirement and 

includes rating information specified by generator owners and transmission owners 

whose equipment is represented in the model. 

57. Requirement R3 details the information the transmission operator must include in 

its determination of total transfer capability for the on-peak and off-peak intra-day and 

next day time periods, as well as days two through 31 and for months two through 13.52 

Requirement R4 requires each transmission operator to determine total transfer capability 

while modeling contingencies and reservations consistently, and respect any contractual 

allocations of total transfer capability. 

58. Requirement R5 provides that each transmission operator must determine total 

transfer capability on a periodic basis (as specified in the requirement) or upon certain 

operating conditions significantly affecting bulk electric system topology. 

 52 This information includes: expected generation and transmission outages, 

additions, and retirements; load forecasts; and unit commitment and dispatch order. 
Docket Nos. RM08-19-000, et al. - 36 - 

59. Requirement R6 provides the detailed process by which each transmission 

operator must establish total transfer capability, which must be provided to the 

transmission service provider within the time frames specified in Requirement R7. 

60. Requirements R8 through R11 specify the formulas and detailed specifications of 

the variables for calculating firm and non-firm existing transmission commitments and 

firm and non-firm available transfer capability. 

2. Rated System Path Methodology, MOD-029-1

61. NERC states that the rated system path methodology is characterized by an initial 

total transfer capability, determined via simulation. As with the area interchange 

methodology, capacity benefit margin, transmission reliability margin, and existing 

transmission commitments are subtracted from the total transfer capability, and postbacks 

and counterflows are added, to derive available transfer capability. NERC also states 

that, under the rated system path methodology, total transfer capability results are 

generally reported as specific transmission path capabilities. 

62. MOD-029-1 describes the rated system path methodology for determining 

available transfer capability. NERC intends to use this Reliability Standard to increase 

consistency and reliability in the development and documentation of transfer capability 

calculations for short-term use performed by entities using the rated system path 

methodology to support analysis and system operations. 

63. This Reliability Standard would apply only to transmission operators and 

transmission service providers that have elected to implement rated system path 

methodology as part of their compliance with MOD-001-1 Requirement R1. To 
Docket Nos. RM08-19-000, et al. - 37 - 

implement this calculation, this Reliability Standard consists of eight requirements. 

Under Requirement R1, a transmission operator must calculate total transfer capability 

using a model that meets the scope and criteria specified in the requirement. 

Requirement R2 lists a detailed process by which the transmission operator must 

establish total transfer capability. Pursuant to Requirement R3, the transmission operator 

must establish total transfer capability as the lesser of the system operating limit or the 

value determined in Requirement R2. The transmission operator must then provide a 

transmission service provider with the appropriate total transfer capability values and 

study report within seven days of finalization of the study report required in Requirement 

R4. 

64. Requirements R5 through R8 provide that each applicable transmission service 

provider must calculate firm and non-firm existing transmission commitments and firm 

and non-firm available transfer capability using a specified formula and detailed 

specification of the variables. 

3. Flowgate Methodology, MOD-030-2

65. NERC states that the flowgate methodology is characterized by identification of 

key facilities as flowgates. Total flowgate capabilities are determined based on facility 

ratings and voltage and stability limits. The impacts of existing transmission 

commitments are determined by simulation. To determine the available flowgate 

commitments, the transmission service provider or operator must subtract the impacts of 

existing transmission commitments, capacity benefit margin, and transmission reliability 
Docket Nos. RM08-19-000, et al. - 38 - 

margin, and add the impacts of postbacks and counterflows. Available flowgate 

capability can be used to determine available transfer capability. 

66. MOD-030-2 describes the flowgate methodology (previously referred to as the 

flowgate network response available transfer capability methodology) for determining 

available transfer capability. NERC states that the purpose of the Flowgate Methodology 

Reliability Standard is to increase consistency and reliability in the development and 

documentation of transfer capability calculations for short-term use performed by entities 

using the flowgate methodology to support analysis and system operations. 

67. This Reliability Standard would apply only to transmission operators and 

transmission service providers that have elected to implement this particular methodology 

as part of their compliance with MOD-001-2. As proposed, the Flowgate Methodology 

consists of eleven requirements. Requirement R1 states that a transmission service 

provider implementing this methodology must include the following information in its 

available transfer capability implementation document in addition to that already required 

in the Available Transmission System Capability Reliability Standard (MOD-001-1): the 

criteria used by the transmission operator to identify sets of transmission facilities as 

flowgates that are to be considered in available flowgate capability calculations, and 

information on how sources and sinks for transmission service are accounted for in 

available flowgate capability calculations. 

68. Under Requirement R2, each applicable transmission operator must determine and 

manage the flowgates used in the methodology based on the criteria listed in the 

requirement, establish its total flowgate capability based on the criteria listed in the 
Docket Nos. RM08-19-000, et al. - 39 - 

requirement, and provide total flowgate capability to the transmission service provider 

within seven days of their determination.53 To achieve consistency in each component of 

the available transfer capability calculation, the Commission, in Order No. 890, directed 

public utilities, working through NERC, to develop an available flowgate capability 

definition and requirements used to identify a particular set of transmission facilities in a 

flowgate.54 As part of the development of the Flowgate Methodology, NERC states that 

the Reliability Standard drafting team developed a definition of available flowgate 

capability. In addition, NERC states that Requirement R2 of this Reliability Standard 

contains a list of minimum characteristics that are to be used to identify a particular set of 

transmission facilities as a flowgate. 

69. Requirement R3 requires the transmission operator to provide the transmission 

service provider with a transmission model that meets a specified criteria and 

Requirement R4 provides that the transmission service provider must evaluate 

reservations consistently when determining available flowgate capability. When 

 53 MOD-030-2 is identical to MOD-030-1 except for certain modifications to 

Requirements R2 and R11. First, NERC added new sub-requirements R2.1.1.3 and 

R2.1.2.3. to clarify that, if any limiting element is kept within its limit for its associated 

worst contingency by operating within the limits of another flowgate, then no new 

flowgate needs to be established for such limiting elements or contingencies. Second, 

NERC modified sub-requirement R2.1.3. to state that the list of flowgates does not need 

to include any flowgates created to address temporary operating conditions. Finally, 

NERC modified Requirement R11 to eliminate the obligation to convert total flowgate 

capability to total transfer capability. The Commission notes that the modification to 

Requirement R11 does not alter the posting requirements of 18 CFR 37.6(b)(3). 

54 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 313. 
Docket Nos. RM08-19-000, et al. - 40 - 

determining available flowgate capability, Requirement R5 provides that each 

transmission service provider must use the models given to it as described in 

Requirement R3, include appropriate outages, and use the available flowgate capability 

on external flowgates as provided by the transmission service provider calculating 

available flowgate capability for those flowgates. 

70. Requirements R6 and R7 require each transmission service provider to calculate 

the impact of firm and non-firm existing transmission commitments using a specified 

process. The transmission service provider must calculate firm and non-firm available 

flowgate capability using the formula and detailed specification of the variables found in 

Requirements R8 and R9. 

71. Under Requirement R10, each transmission service provider shall recalculate 

available flowgate capability at a certain specified interval (hourly once per hour, daily 

once per day, monthly once per week) unless the input values specified in the available 

flowgate capability calculation have not changed. NERC contends that this requirement 

satisfies the requirement in Order No. 890 and Order No. 693 that transmission service 

providers recalculate available transfer capability on a consistent time interval. Finally, 

Requirement R11 provides the formula and variables that a transmission service provider 

must use if it desires to convert available flowgate capability to available transfer 

capability.55

 

(continued...) 

55 Requirement R11 of MOD-030-1 would have directed transmission service 

providers to use the same formula to convert total flowgate capability to total transfer 

capability. The formula provided in Requirement R11 of MOD-030-2 eliminates this 
Docket Nos. RM08-19-000, et al. - 41 - 

F. Implementation Plan

72. NERC proposes that the Available Transmission System Capability Reliability 

Standard and the three methodology Reliability Standards become effective the first day 

of the first quarter no sooner than one calendar year after approval of all of these four 

Reliability Standards by all appropriate regulatory authorities where approval is required 

or is otherwise effective in those jurisdictions where approval is not explicitly required. 

According to NERC, since the three methodology Reliability Standards require 

information from neighboring reliability entities for use in the development of its 

available transfer capability and available flowgate capability values that is compulsory 

under Requirement R9 of the Available Transmission System Capability Reliability 

Standard (MOD-001-1), none of the methodology Reliability Standards can be 

effectively implemented unless and until that Reliability Standard has been implemented 

by all entities in all jurisdictions. 

73. NERC states that, although some entities may already be implementing the 

requirements in the Reliability Standards, many others are not, especially with regard to 

the data exchange requirements listed in Requirement R9 of MOD-001-1. Accordingly, 

software changes, associated testing, and possible tariff filings will be required to comply 

with the proposed Reliability Standards. Therefore, NERC maintains that a minimum of 

one year from regulatory approval should be allowed for entities to comply. 

 

obligation. As noted above, this modification does not alter the posting requirements of 

18 CFR 37.6(b)(3). 
Docket Nos. RM08-19-000, et al. - 42 - 

74. NERC proposes that each of the Capacity Benefit Margin (MOD-004-1) and 

Transmission Reliability Margin (MOD-008-1) Reliability Standards require compliance 

on the first day of the first quarter no sooner than one calendar year after approval of the 

Reliability Standard by appropriate regulatory authorities where approval is required or, 

where approval is not explicitly required, when the Reliability Standard is otherwise 

effective. According to NERC, unlike the other four proposed Reliability Standards 

included in this filing, the Transmission Reliability Margin Reliability Standard replaces 

the existing Reliability Standard MOD-008-0 and the Capacity Benefit Margin Reliability 

Standard replaces MOD-004-0. As such, they do not require coordinated 

implementation, as entities may rely on the previous version of the Reliability Standards 

if any delay in implementing the Reliability Standards occurs. NERC states that, 

although many entities already use transmission reliability margin and capacity benefit 

margin, compliance with these Reliability Standards may require software changes, 

software regression testing, and possible tariff changes. To accommodate these needs, 

NERC believes a one-year implementation period is appropriate. 

III. Discussion

75. The Commission proposes to approve the revised MOD Reliability Standards and 

related additions to the glossary of terms, to be effective as proposed by NERC, as just, 

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

Reliability Standards represent a step forward in eliminating the broad discretion 

previously afforded transmission service providers in the calculation of available transfer 

capability. As the Commission explained in Order No. 890, excessive discretion in the 
Docket Nos. RM08-19-000, et al. - 43 - 

calculation of available transfer capability gives transmission service providers the 

opportunity to discriminate in subtle ways in the provision of open access transmission 

service.56 On systems where transmission capacity is constrained, a lack of transparency 

and consistency in the calculation of available transfer capability has led to recurring 

disputes over whether transmission service providers have performed those calculations 

in a way that discriminates against competitors. 

76. The Commission acted in Order No. 890 to limit this remaining opportunity for 

discrimination by directing public utilities, working through NERC, to develop 

Reliability Standards to govern the consistent and transparent calculation of available 

transfer capability by transmission service providers. In Order No. 693, the Commission 

implemented that directive by requiring NERC to prospectively modify the MOD 

Reliability Standards it filed in April 2006 to address the requirements of Order No. 890. 

The proposed Reliability Standards satisfy these requirements by enhancing transparency 

and consistency in the calculation of available transfer capability, mandating that 

transmission service providers and transmission operators perform their calculations in 

accordance with methodologies that are both explicitly documented and available to 

reliability entities who request them. The proposed Reliability Standards also require 

documentation of the detailed representations of the various components that comprise 

the available transfer capability equation, and require transmission service providers and 

transmission operators to specify modeling and risk assumptions and disclosure of outage 

 56 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 68. 
Docket Nos. RM08-19-000, et al. - 44 - 

processing rules to other reliability entities. These actions will make the processes to 

calculate available transfer capability and its various components more transparent 

which, in turn, will allow the Commission and others to ensure that those calculations are 

performed consistently. 

77. Although the Commission believes that the proposed Reliability Standards 

generally comply with the requirements of Order No. 890 and related directives of Order 

No. 693, the Commission is concerned that the implementation documents used by each 

transmission service provider to implement the Reliability Standards could provide 

continuing opportunities to discriminate in the provision of transmission service. As 

discussed in further detail below, the Commission proposes to direct the ERO to perform 

an audit of the implementation documents to determine if they provide sufficient 

transparency to enable the Commission and others to replicate and verify each 

transmission service provider’s calculations. Without adequate transparency, it will be 

impossible for the Commission to ensure that transmission service providers are 

consistently performing their available transfer capability calculations when responding 

to requests for transmission service. Ensuring adequate transparency also will enable the 

Commission and others to verify that data and modeling assumptions used to calculate 

available transfer capability are being used consistently during relevant timeframes, such 

as in the calculation of short-term available transfer capability and the planning of 

operations, as required by the proposed Reliability Standards.57

 57 MOD-001-1, Requirements R6 and R7. 
Docket Nos. RM08-19-000, et al. - 45 - 

78. The Commission also has concern regarding several of the substantive 

requirements of the proposed Reliability Standards. To address these concerns, the 

Commission proposes to direct the ERO to develop modifications to the Reliability 

Standards to address the discrete issues involving: the availability of each transmission 

service provider’s implementation documents; the consistent treatment of assumptions in 

the calculation of available transfer capability; the calculation, allocation, and use of 

capacity benefit margin; the calculation of total transfer capability under the Rated 

System Path Methodology; and, the treatment of network resource designations in the 

calculation of available transfer capability. 

79. Finally, we note that the Commission in this proceeding addresses only those 

revisions to the Reliability Standards filed to comply with the available transfer 

capability-related requirements of Order No. 890, as implemented by Order No. 693. In 

Order No. 693, the Commission also directed the ERO to develop modifications to a 

number of other Reliability Standards. The Commission expects the ERO to comply in a 

timely and complete manner with those directives, to the extent it has not already done 

so. 

A. Implementation of the Reliability Standards

80. The Available Transmission System Capability Reliability Standard (MOD-001-1) 

serves as an “umbrella” Reliability Standard that requires each applicable entity to select 

and implement one or more of the three available transfer capability methodologies found 

in MOD-028-1, MOD-029-1, or MOD-030-2. MOD-004-1 and MOD-008-1 provide for 

the calculation of capacity benefit margin and transmission reliability margin, which are 
Docket Nos. RM08-19-000, et al. - 46 - 

inputs into the available transfer capability calculation. Together, these Reliability 

Standards require transmission service providers and transmission operators to prepare 

and keep current implementation documents that contain certain information specified in 

the Reliability Standards. The available transfer capability implementation documents 

must describe the available transfer capability methodology in such detail that the results 

of their calculations can be validated when given the same information used by the 

transmission service provider or transmission operator.58 

81. The Commission is concerned that the proposed Reliability Standards could be 

implemented by a particular transmission service provider or transmission operator in a 

way that enables them to retain the ability to unduly discriminate in the provision of open 

access transmission service. Although the Reliability Standards require transmission 

service providers to include certain minimum information in each of the implementation 

documents, transmission service providers are also permitted to include additional, 

undefined parameters and assumptions in those documents. This could include criteria 

that are themselves not sufficiently transparent to allow the Commission and others to 

determine whether they have been consistently applied by the transmission service 

provider in particular circumstances. This discretion appears in the three available 

transfer capability methodologies (MOD-028-1, MOD029-1, and MOD-030-2), as well 

as the Reliability Standards governing the calculation of capacity benefit margin (MOD004-1) and transmission reliability margin (MOD-008-1). 

 58 MOD-001-1, Requirement R3. 
Docket Nos. RM08-19-000, et al. - 47 - 

82. It is appropriate for transmission service providers to retain some level of 

discretion in the calculation of available transfer capability. Requiring absolute 

uniformity in criteria and assumptions across all transmission service providers would 

preclude transmission service providers from calculating available transfer capability in a 

way that accommodates the operation of their particular systems. The Reliability 

Standards need not be so specific that they address every unique system difference or 

differences in risk assumptions when modeling expected flows. Each transmission 

service provider should retain some discretion to reflect unique system conditions or 

modeling assumptions in its available transmission capability methodology.59 Any such 

system conditions or modeling assumptions, however, must be made sufficiently 

transparent and be implemented consistently for all transmission customers. 

83. In order to ensure that this occurs, the Commission proposes to direct the ERO to 

conduct an audit of the various implementation documents developed by transmission 

service providers to confirm that the complete available transfer capability methodologies 

reflected therein, including the calculation of each component of available transfer 

capability, are sufficiently transparent to allow the Commission and others to replicate 

and verify those calculations and thereby ensure that they are being implemented 

consistently for all transmission customers. This audit would review the additional 

parameters and assumptions included by transmission service providers in their 

implementation documents as of the date the Reliability Standards become effective, 

 59 Order No. 890-A, FERC Stats. & Regs. ¶ 31,261 at P 51. 
Docket Nos. RM08-19-000, et al. - 48 - 

analyzing all parameters and assumptions to determine if they are detailed enough to 

enable replication and verification of calculations. Upon review of this analysis, the 

Commission may direct the ERO to develop a modification to one or more of the 

Reliability Standards to address any lack of transparency that may exist in the calculation 

of available transfer capability and each of its components. 

84. The Commission proposes to direct the ERO to complete this audit no later than 

180 days after the effective date of the Reliability Standards, as approved by a final rule 

in this docket.60 The Commission also proposes to direct NERC to submit a timeline for 

the completion of this audit within 30 days of the issuance of the final rule in this docket. 

The Commission discusses below the specific issues to be analyzed by NERC in its audit. 

85. Before turning to those issues, the Commission reiterates that our intent is not to 

require the development of a single, uniform methodology for calculating available 

transfer capability or its components. In Order No. 890, the Commission found that the 

potential for discrimination does not lie primarily in the choice of an available transfer 

capability calculation methodology, but rather in the consistent application of its 

components.61 The Commission acknowledged that NERC was developing standards for 

three available transfer capability calculation methodologies. The Commission 

concluded that, if all of the available transfer capability components and certain data 

 60 The audit should be prepared and submitted by NERC staff (or any consultants 

it may choose to employ), rather than the drafting teams that developed the proposed 

Reliability Standards. 

61 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 208. 
Docket Nos. RM08-19-000, et al. - 49 - 

inputs and assumptions are consistent, the three available transfer capability calculation 

methodologies being developed by NERC would produce predictable and sufficiently 

accurate, consistent, equivalent and replicable results.62 

86. As the Commission explains in Order No. 890-C, issued concurrently with this 

order, this does not mean that the results of available transfer capability calculations on 

either side of an interface must be identical in every instance. There are fundamental 

differences in the three available transfer capability methodologies set forth in the 

proposed Reliability Standards that may keep them from producing identical results. 

Even where the same methodology is used by transmission service providers on either 

side of an interface, unique system differences or differences in risk assumptions can lead 

to variations in available transfer capability values. The central goal of the available 

transfer capability reforms adopted in Order No. 890 was to limit remaining opportunities 

for discrimination by requiring each transmission service provider’s available capability 

transfer methodology to be sufficiently transparent to allow for independent validation 

that it has been consistently applied. Subject to confirmation by NERC through its audit, 

the Commission believes that the Reliability Standards will provide the necessary level of 

transparency and, therefore, the results of available transfer capability calculations will be 

sufficiently accurate, consistent, equivalent and replicable. 

 62 Id. P 210. 
Docket Nos. RM08-19-000, et al. - 50 - 

1. Available Transfer Capability Implementation Documents

87. First, the Commission proposes to direct the ERO to study whether each available 

transfer capability implementation document developed by each transmission service 

provider under the Reliability Standards contains a level of specificity sufficient to allow 

the Commission and others to replicate and verify calculations of available transfer 

capability and available flowgate capability. Although MOD-028-1, MOD-029-1, and 

MOD-030-2 each improves transparency and consistency by requiring transmission 

service providers to use certain specified data and variables in their calculations, they also 

allow transmission service providers to use additional parameters and assumptions as 

long as they are specified in their implementation documents. Other than their inclusion 

in the available transfer capability implementation document, there do not appear to be 

any appreciable factors limiting a transmission service provider’s discretion to use 

particular parameters and assumptions. 

88. For example, in the Area Interchange Methodology (MOD-028-1), Requirement 

R3.1 establishes variables to be used when calculating on-peak and off-peak intra-day 

and next-day total transfer capabilities. The requirement also allows transmission 

operators to use “any other values and additional parameters as specified in the [available 

transfer capability implementation document].”63 The requirement does not provide any 

further limitation on the other values and additional parameters. Thus, although the 

requirement promotes transparency and consistency, it could allow an entity to adopt 

 63 MOD-028-1, Requirement R3.1. 
Docket Nos. RM08-19-000, et al. - 51 - 

values and parameters that are not sufficiently transparent to ensure that the transmission 

service provider is not discriminating in the provision of transmission service through its 

calculation of available transfer capability. 

89. Similarly, Requirement R1 of the Rated System Path Methodology (MOD-029-1) 

requires a transmission operator, when calculating total transfer capabilities for available 

transfer capability, to use a transmission model that meets the criteria set forth in the subrequirements. Requirement R1.1.9 allows a transmission operator to use a model that 

“models series compensation for each line at the expected operating level unless specified 

otherwise in the [available transfer capability implementation document].”64 

Requirement R1.1.10 allows a transmission operator to use a model that “includes any 

other modeling requirements or criteria specified in the [available transfer capability 

implementation document].”65

90. The same unrestrained discretion is found in the Flowgate Methodology (MOD030-2). Requirement R2.1 requires transmission operators to include flowgates used in 

the available flowgate capability based, at a minimum, on specified criteria. This criteria 

includes, at Requirement R2.1.3, any limiting element/contingency combination at least 

within the transmission model identified in Requirement R3.466 and R3.567 that has been 

 

(continued...) 

64 MOD-029-1, Requirement R1.1.9. 

65 MOD-029-1, Requirement R1.1.10. 

66 Requirement R3.4 requires the transmission operator to make available to the 

transmission service provider a transmission model to determine available flowgate 

capability that contains modeling data and system topology for the facilities within its 
Docket Nos. RM08-19-000, et al. - 52 - 

subjected to an interconnection-wide congestion management procedure within the last 

12 months, unless the limiting element/contingency combination is accounted for using 

another available transmission capability methodology. Requirement R2.1.4 allows 

transmission operators to consider any limiting element/contingency combination within 

the transmission model that has been requested to be included by any other transmission 

service provider using the flowgate methodology or area interchange methodology under 

certain circumstances. 

91. In Order No. 890, the Commission expressed particular concern regarding 

consistency in the use of counterflow assumptions in short-term and long-term 

calculations of available transfer capability.68 The Reliability Standards achieve 

consistency by requiring each transmission service provider to identify in its available 

transfer capability implementation document how it accounts for counterflows and to 

calculate available transfer capability using assumptions no more limiting than those used 

in the planning of operations for the corresponding time period.69 However, the 

 

(continued...) 

reliability coordinator’s area. Equivalent representation of radial lines and facilities 

161kv or below is allowed. 

67 Requirement R3.5 requires the transmission operator to make available to the 

transmission service provider a transmission model to determine available flowgate 

capability that contains modeling data and system topology (or equivalent representation) 

for immediately adjacent and beyond reliability coordination areas. 

68 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 292-93; Order 693, FERC 

Stats. & Regs. ¶ 31,242 at P 1039. 

69 MOD-001-1, Requirements R3.2, R7. NERC states in its filing that additional 

guidance from the Commission would be necessary in order to specify in greater detail a 
Docket Nos. RM08-19-000, et al. - 53 - 

Reliability Standards again place no limit on the parameters the transmission service 

provider can use to account for counterflows. Under MOD-028-1, MOD-029-1, and 

MOD-030-2, transmission service providers are permitted to make adjustments to 

available transfer capability or available flowgate capability to reflect counterflows so 

long as such adjustments are allowed under the counterflow methodology identified in 

the available transfer capability implementation document.70 

92. The Commission also expressed concern in Order No. 890 regarding the treatment 

of reservations with the same point of receipt (generator), but multiple points of delivery 

(load), in setting aside existing transmission capacity.71 The Commission found that such 

reservations should not be modeled in the existing transmission commitments calculation 

simultaneously if their combined reserved transmission capacity exceeds the generator’s 

nameplate capacity at the point of receipt. The Commission required the development of 

 

single “best” approach for treating counterflows. See NERC Filing at 101. The 

Commission did not require the development of a single approach for the treatment of 

counterflows. Rather, the Commission required the development of Reliability Standards 

that result in the use of counterflow assumptions for short-term and long-term available 

transfer capability calculations that are consistent with those used for the planning of 

operations and system expansion. See Order No. 890, FERC Stats. & Regs. ¶ 31,241 at 

P 292-93; Order 693, FERC Stats. & Regs. ¶ 31,242 at P 1039. The proposed Reliability 

Standards adequately address that requirement by directing each transmission service 

provider to identify in its implementation document how it will address counterflows in 

its calculation of available transfer capability and available flowgate capacity. 

70 MOD-028-1, Requirement R10; MOD-029-1, Requirement R7; MOD-030-2, 

Requirement R8. 

71 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 245; Order 693, FERC Stats. 

& Regs. ¶ 31,242 at P 1033. 
Docket Nos. RM08-19-000, et al. - 54 - 

Reliability Standards that lay out clear instructions on how these reservations should be 

accounted for by the transmission service provider. The proposed Reliability Standards 

achieve this by requiring transmission service providers to identify in their 

implementation documents how they have implemented MOD-028-1, MOD-029-1, or 

MOD-030-2, including the calculation of existing transmission commitments.72 

However, the Reliability Standards again place no limits on the parameters that each 

transmission service provider can use. 

93. The proposed Reliability Standards thus provide each transmission service 

provider with substantial discretion when implementing various aspects of its available 

transfer capability methodology. The Commission recognizes that there are aspects of 

calculations that require the use of parameters and assumptions tailored to the particular 

needs of a transmission service provider. In certain instances, however, this discretion 

could be used by a transmission service provider to include criteria that allow for 

discrimination in the provision of transmission service through inconsistent calculation of 

available transfer capability. For example, the use of parameters, modeling requirements, 

 72 MOD-001-1, Requirement R3.1. In its filing, NERC discusses several options 

should the Commission desire to impose a uniform approach regarding the treatment of 

reservations with the same point of receipt, but multiple points of delivery. See NERC 

Filing at 90-92. Neither Order No. 890 nor Order No. 693 directed that a single approach 

be adopted to account for such reservations and, instead, required only that instructions 

on how these reservations are accounted for by the transmission service provider be 

clearly laid out. See Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 245; Order 693, 

FERC Stats. & Regs. ¶ 31,242 at P 1033. The obligation of each transmission service 

provider to identify in its implementation document how they have implemented MOD028-1, MOD-029-1, or MOD-030-2, including the calculation of existing transmission 

capacity, satisfies this requirement. 
Docket Nos. RM08-19-000, et al. - 55 - 

criteria, or assumptions that are undefined or “black box” in nature would provide the 

transmission service provider with the opportunity and ability to vary its calculations 

depending on the customer seeking service. Such discretion undermines the ability of the 

Commission and others to replicate and verify the results of a transmission service 

provider’s calculations. 

94. In order to ensure that remaining opportunities for undue discrimination are 

identified and eliminated, the Commission proposes to direct the ERO to conduct a 

review of the additional parameters and assumptions included by each transmission 

service provider in its available transfer capability implementation document as of the 

date the Reliability Standards become effective. Based on its review, NERC would 

identify in the audit required above those instances in which parameters and assumptions 

are not sufficiently specific or transparent to allow the Commission and others to 

replicate and verify the results of the transmission service provider’s calculation of 

available transfer capability or available flowgate capacity. Upon review of NERC’s 

analysis, the Commission may direct the ERO to develop a modification to MOD-001-1 

to address any lack of transparency. The Commission seeks comment whether additional 

requirements should be directed in this proceeding to ensure that the discretion provided 

under the available transfer capability implementation documents cannot be used to 

unduly discriminate in the provision of transmission service. 

2. Capacity Benefit Margin Implementation Documents

95. Second, the Commission proposes to direct the ERO to study whether the capacity 

benefit margin implementation documents developed by transmission service providers 
Docket Nos. RM08-19-000, et al. - 56 - 

under MOD-004-1 contain a level of specificity sufficient to allow the Commission and 

others to replicate and verify the calculation, allocation, and use of capacity benefit 

margin by transmission service providers. As explained above, capacity benefit margin is 

the amount of firm transmission capability preserved by the transmission service provider 

for load-serving entities, whose loads are located on that transmission service provider’s 

system, to enable access by the load-serving entities to generation from interconnected 

systems to meet generation reliability requirements. As NERC explained in its filing, 

various entities have already developed methodologies for determining capacity benefit 

margin. Accordingly, NERC proposed a Reliability Standard that allows transmission 

service providers flexibility in choosing an appropriate methodology for calculating, 

allocating and using capacity benefit margins. Although MOD-004-1 specifies core 

elements that should be consistent among all methodologies, the transmission service 

provider has discretion to use any methodology to calculate, allocate, and use capacity 

benefit margins, provided that it is identified and described in the implementation 

document. 

96. For example, Requirements R5.1 and R6.1 of MOD-004-1 require the 

transmission service provider to establish capacity benefit margin values for each path 

and flowgate reflecting consideration of studies provided by load-serving entities and 

resource planners demonstrating a need for capacity benefit margin and applicable 

reserve margin or resource adequacy requirements. Although Requirement R1.2 requires 

the transmission service provider to identify in its capacity benefit margin 

implementation document the procedures and assumptions for establishing these path and 
Docket Nos. RM08-19-000, et al. - 57 - 

flowgate values, the Reliability Standard places no limitations or parameters on those 

procedures or assumptions. As with MOD-001-1, MOD-004-1 would permit the 

transmission service provider to adopt procedures and assumptions that are not 

sufficiently transparent to ensure that the transmission provider is similarly treating 

similarly-situated customers. The Commission is therefore concerned that the Reliability 

Standard could be implemented by a transmission service provider in a way that allows 

for undue discretion in the provision of transmission service. 

97. In order to ensure that remaining opportunities for undue discrimination are 

identified and eliminated, the Commission proposes to direct the ERO to conduct a 

review of the procedures and assumptions included by each transmission service provider 

in its capacity benefit margin implementation document as of the date the Reliability 

Standards become effective. Based on its review, NERC would identify in the audit 

required above those instances in which additional procedures and assumptions are not 

sufficiently specific or transparent to allow the Commission and others to replicate and 

verify the calculation, allocation and use of capacity benefit margin by the transmission 

service provider.73 Upon review of NERC’s analysis, the Commission may direct the 

 

(continued...) 

73 The scope of this audit should not include review of the studies supporting 

requests for capacity benefit margin. The Commission agrees with NERC that it would 

be inappropriate to place a functional entity, such as the transmission service provider, in 

the position of having to judge the quality of a study supporting a customer’s request for 

capacity benefit margin. Requirements R3 and R4 of MOD-004-1 identify the specific 

kinds of studies that must be performed and supporting information that is to be 

maintained when determining a need for capacity benefit margin. Compliance with these 

requirements can be audited by NERC and the regional entities in the normal course of 
Docket Nos. RM08-19-000, et al. - 58 - 

ERO to develop a modification to MOD-004-1 to address any lack of transparency. The 

Commission seeks comment whether additional requirements should be directed in this 

proceeding to ensure that the discretion provided under the capacity benefit margin 

implementation documents cannot be used to unduly discriminate in the provision of 

transmission service. 

3. Transmission Reliability Margin Implementation Documents

98. Finally, the Commission proposes to direct the ERO to study whether the 

transmission reliability margin implementation documents developed by each 

transmission operator under the Reliability Standards contain a level of specificity 

sufficient to allow the Commission and others to replicate and verify the calculation and 

use of transmission reliability margin. Transmission reliability margin is transmission 

transfer capability set aside to mitigate risks to operations, such as deviations in dispatch, 

load forecast, outages, and similar such conditions. As NERC explains in its filing, 

transmission reliability margin is a subjective quantity as it is almost entirely based on the 

principles of risk management and risk tolerance, which vary from entity to entity.74 

Therefore, although MOD-008-1 identifies the particular categories of uncertainty that 

transmission operators may consider when establishing transmission reliability margin, 

the transmission operator is permitted to use any methodology to calculate, allocate, and 

 

their compliance review. See Guidance Order on Compliance Audits Conducted by the 

Electric Reliability Organization and Regional Entities, 126 FERC ¶ 61,038 (2009). 

74 NERC Filing at 97. 
Docket Nos. RM08-19-000, et al. - 59 - 

use transmission reliability margins, provided that it is identified and described in the 

implementation document. 

99. NERC states in its filing that guidance from the Commission would be necessary 

in order to specify in greater detail a single “best” methodology to govern the calculation 

of a maximum transmission reliability margin.75 The Commission does not believe that 

it is necessary to establish a single methodology for calculating, allocating and using

transmission reliability margin. In Order Nos. 890 and 693, the Commission directed 

NERC to clarify how transmission reliability margin should be calculated and allocated 

across paths or flowgates and how to establish an appropriate maximum transmission 

reliability margin.

 

76 The Commission directed NERC to specify the parameters for 

entities to use in determining uncertainties for which transmission reliability margin can 

be set aside and used. The Commission also directed the ERO to modify its Reliability 

Standards to prevent the use of capacity benefit margin and transmission reserve margin 

for the same purposes (i.e. double counting). The proposed Reliability Standard 

accomplishes these directives by requiring each transmission operator to identify in its 

transmission reliability margin implementation document the components that will be 

used to calculate transmission reliability margin, how those components will be used, and 

how resulting transmission reliability margin values will be allocated across paths or 

75 Id. 

76 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 275; Order No. 693, FERC 

Stats. & Regs. ¶ 31,242 at P 1122-23, 1126. 
Docket Nos. RM08-19-000, et al. - 60 - 

flowgates.77 This level of detail satisfies the requirements of Order No. 890 and related 

directives of Order No. 693 by making each transmission operator’s transmission 

reliability margin methodologies transparent. 

100. However, as with MOD-001-1 and MOD-004-1, the Commission is concerned 

that MOD-008-1 could be implemented by a transmission operator in a way that allows 

for undue discrimination in the provision of transmission service. For example, 

Requirements R1.1 and R1.2 of MOD-008-1 require each transmission operator to 

include in its transmission reliability margin implementation document the components 

of uncertainty used in establishing a transmission reliability margin, a description of how 

those components are used in the calculation of transmission reliability margin, and a 

description of how transmission reliability margin is allocated across paths or flowgates. 

The transmission reliability margin implementation document developed by transmission 

operators could include parameters, modeling requirements, criteria or assumptions that 

are insufficiently transparent, providing the transmission operator the opportunity and 

ability to vary its calculations depending on the customer requesting transmission service. 

101. In order to ensure that remaining opportunities for undue discrimination are 

identified and eliminated, the Commission proposes to direct the ERO to conduct a 

review of the procedures identified in each transmission operator’s transmission reserve 

margin implementation document as of the date the Reliability Standards become 

effective. Based on its review, NERC would identify in the audit required above those 

 77 MOD-008-1, Requirement R1. 
Docket Nos. RM08-19-000, et al. - 61 - 

instances in which procedures, criteria, or assumptions are not sufficiently specific or 

transparent to allow the Commission and others to replicate and verify the results of the 

transmission operator’s calculation of transmission reserve margin. Upon review of 

NERC’s analysis, the Commission may direct the ERO to develop a modification to 

MOD-008-1 to address any lack of transparency. The Commission seeks comment 

whether additional requirements should be directed in this proceeding to ensure that the 

discretion provided under the transmission reserve margin implementation documents 

cannot be used to unduly discriminate in the provision of transmission service. 

B. Proposed Modifications of the Reliability Standards

102. While the Commission generally proposes to approve the Reliability Standards as 

in compliance with Order No. 890 and the related directives of Order No. 693, the 

Commission also proposes to direct the ERO to develop modifications of the Reliability 

Standards to comply with the following discrete issues: the availability of each 

transmission service provider’s implementation documents; the consistent treatment of 

assumptions in the calculation of available transfer capability; the calculation, allocation 

and use of capacity benefit margin; the calculation of total transfer capability under the 

Rated System Path Methodology; and, the treatment of network resource designations in 

the calculation of available transfer capability. Each of these issues is discussed below. 

1. Availability of Implementation Documents

a. NERC Proposal

103. The proposed Reliability Standards require that the available transfer capacity, 

capacity benefit margin, and transmission reliability margin implementation documents 
Docket Nos. RM08-19-000, et al. - 62 - 

be made available to specified entities. Requirement R4 of MOD-001-1 requires that the 

following entities have access to the available transfer capability implementation 

document: each planning coordinator, reliability coordinator, and transmission operator 

associated with the transmission service provider’s area; and each planning coordinator, 

reliability coordinator, and transmission service provider adjacent to the transmission 

service provider’s area. Requirement R2 of MOD-004-1 requires each transmission 

service provider to make its capacity benefit margin implementation document available 

to transmission operators, transmission service providers, reliability coordinators, 

transmission planners, resource planners, and planning coordinators that are within or 

adjacent to the transmission service provider’s area, and to load-serving entities and 

balancing authorities within the transmission service provider’s area. Requirement R3 of 

MOD-008-1 requires each transmission operator to provide its transmission reliability 

implementation document upon request by transmission service providers, reliability 

coordinators, transmission planners, and transmission operators. NERC states that it and 

NAESB have agreed that requirements for making information available to other entities 

are more appropriately addressed through the NAESB process. 

b. Commission Proposal

104. The Commission is concerned that the proposed Reliability Standards potentially 

restrict the disclosure of the available transfer capability, capacity benefit margin, and 

transmission reliability margin implementation documents. NERC does not explain in its 

filings why only certain entities would have access to these materials, nor why the 

specified list of recipients varies for each document. While the Commission notes that 
Docket Nos. RM08-19-000, et al. - 63 - 

the proposed NAESB standards accompanying the Reliability Standards would require 

transmission service providers to post a link to the implementation documents on their 

OASIS, which would result in disclosure beyond the specified entities listed in the 

Reliability Standards, the Commission believes that it is important for reliability purposes 

to require disclosure of the implementation documents to a broader audience than 

provided in the Reliability Standards. The Commission’s jurisdiction under section 215 

of the FPA is broader than our jurisdiction to require compliance with the NAESB 

standards under sections 205 and 206 of the FPA. These documents will describe how the 

transmission provider will implement the Reliability Standards and, therefore, should be 

disclosed by all transmission service providers, not only those who are also public 

utilities. 

105. Therefore, to ensure sufficient transparency, the Commission proposes to direct 

the ERO, pursuant to section 215(d)(5) of the FPA and section 35.19(f) of our 

regulations, to modify the proposed Reliability Standards to make the available transfer 

capability, capacity benefit margin, and transmission reliability margin implementation 

documents available to all customers eligible for transmission service in a manner that is 

consistent with relevant NAESB standards. The Commission seeks comment on any 

improvements that may be necessary to improve access by transmission customers to the 

implementation documents. 
Docket Nos. RM08-19-000, et al. - 64 - 

2. Consistent Treatment of Assumptions

a. NERC Proposal

106. Under each of the methodologies contained in the proposed Reliability Standards, 

available transfer capability is calculated as total transfer capability minus existing 

transmission commitments, capacity benefit margin, and transmission reliability margin, 

plus postbacks and counterflows. NERC contends that the Reliability Standards work 

together to ensure that similar risks will not be double counted in the calculation of 

capacity benefit margin and transmission reliability margin. Specifically, Requirement 

R2 of MOD-008-1 prohibits a transmission operator from including any of the 

components of capacity benefit margin in the components of uncertainty used to calculate 

transmission reliability margin. NERC contends that MOD-004-1 addresses this 

prohibition by describing the specific type of studies and requirements that may be used 

to determine a need for capacity benefit margin. 

b. Commission Proposal

107. The Commission is concerned that proposed Reliability Standards do not preclude 

a transmission service provider from using data and assumptions in a way that double 

counts their impact on available transfer capability and thereby skews the amount of 

capacity made available to others. NERC states that MOD-004-1 and MOD-008-1 have 

been drafted to preclude the double counting of similar risks in the calculation of capacity 

benefit margin and transmission reliability margin. However, other components of the 

available transfer capability calculation could be affected by the same data or 

assumptions, and there is no apparent restriction in the Reliability Standards from such 
Docket Nos. RM08-19-000, et al. - 65 - 

data or assumptions in a way that double counts their impact on available transfer 

capability. 

108. For example, the Reliability Standards would appear to allow the transmission 

service provider to factor a reserve margin for facility outages into more than one of the 

components of the available transfer capability calculation. If the effect of the reserve 

margin were to appear in multiple components of the available transfer capability 

calculation in a similar way, under certain modeling approaches the results of that 

calculation would be skewed. While it may be appropriate for some variables to be 

factored into multiple components of the available transfer capability calculation, such as 

facility ratings, the Reliability Standards do not require that assumptions affecting 

multiple components of the available transfer capability calculation are implemented in a 

way that is consistent with their actual effect on available transfer capability. The 

Commission proposes to direct the ERO, pursuant to section 215(d)(5) of the FPA and 

section 35.19(f) of our regulations, to modify the proposed Reliability Standards to 

ensure that the proposed Reliability Standards preclude a transmission service provider 

from using data and assumptions in a way that double counts their impact on available 

transfer capability and thereby skews the amount of capacity made available to others. 

3. Capacity Benefit Margin (MOD-004-1)

a. NERC Proposal

109. As noted above, Requirements R5.1 and R6.1 of MOD-004-1 require transmission 

service providers to establish capacity benefit margin values for each path and flowgate 

“reflect[ing] consideration of” both (i) studies provided by load-serving entities and 
Docket Nos. RM08-19-000, et al. - 66 - 

resource planners demonstrating a need for capacity benefit margin and (ii) applicable 

reserve margin or resource adequacy requirements. In preparing their studies, 

Requirements R3.1 and R4.1 direct load-serving entities and resource planners to use one 

or more of the following to determine the generation capability import requirement: 

(i) loss of load expectation studies, (ii) loss of load probability studies, (iii) deterministic 

risk-analysis studies, and (iv) applicable reserve margin or resource adequacy 

requirements. With regard to the allocation and use of transmission capacity set aside as 

capacity benefit margin, Requirement R1.3 requires the transmission service provider to 

include in its capacity benefit margin implementation document the procedure for a loadserving entity or balancing authority to use transmission capacity set aside as capacity 

benefit margin, including the manner in which the transmission service provider “will 

manage” situations where the requested use of capacity benefit margin exceeds the 

capacity benefit margin available. 

b. Commission Proposal

110. In Order Nos. 890 and 693, the Commission emphasized that each load-serving 

entity has the right to request that capacity benefit margin be set aside, and to use 

transmission capacity set aside for that purpose, to meet its verifiable generation 

reliability criteria requirement.78 The Commission is concerned that, as proposed, the 

Reliability Standard would allow a transmission service provider to calculate, allocate, 

 78 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1080; see also Order No. 

890, FERC Stats. & Regs. ¶ 31,241 at P 259; Order No. 890-A, FERC Stats. & Regs. 

¶ 31,261 at P 82. 
Docket Nos. RM08-19-000, et al. - 67 - 

and use capacity benefit margin in a way that impairs the reliable operation of the BulkPower System. Under the Reliability Standard, the transmission service provider is to 

“reflect consideration” of studies provided by load-serving entities and resource planners 

demonstrating a need for capacity benefit margin and “manage” situations where the 

requested use of capacity benefit margin exceeds the capacity benefit margin available. 

The Reliability Standard places no bounds on this “consideration” and “management” 

and, for example, would permit a transmission service provider to make decisions 

regarding the use of capacity benefit margin based solely on economic considerations 

notwithstanding a demonstration of need for capacity benefit margin by a load-serving 

entity or resource planner. The Commission proposes, pursuant to section 215(d)(5) of 

the FPA and section 39.5(f) of our regulations, to direct the ERO to develop a 

modification to the Capacity Benefit Margin Methodology (MOD-004-1) to ensure that 

the Reliability Standard would not allow a transmission service provider to calculate, 

allocate, and use capacity benefit margin in a way that impairs the reliable operation of 

the Bulk-Power System. 

111. In addition, the Commission has concern regarding references to applicable 

reserve margin and resource adequacy requirements in the determination of the 

generation capability import requirements by load-serving entities and resource planners 

under Requirements R3.1 and R4.1. Under the phrasing of those provisions, load-serving 

entities and resource planners must determine their generation capability import 

requirement by using one or more of loss of load expectation studies, loss of load 

probability studies, deterministic risk-analysis studies, and applicable reserve margin or 
Docket Nos. RM08-19-000, et al. - 68 - 

resource adequacy requirements. As a result, a load-serving entity or resource planner 

could rely solely on reserve margin and resource adequacy requirements to demonstrate a 

need for capacity benefit margin without any analysis of loss of load expectations, loss of 

load probabilities, or deterministic risk. In comparison, Requirements 5.1 and 6.1 

obligate the transmission service provider to consider both the studies provided by loadserving entities and resource planners and applicable reserve margin and resource 

adequacy requirements when calculating capacity benefit margin and allocating it to 

particular paths or flowgates. The Commission proposes, pursuant to section 215(d)(5) 

of the FPA and section 39.5(f) of our regulations, to direct the ERO to develop a 

modification to MOD-004-1 to require load-serving entities and resource planners to 

determine generation capability import requirements by reference to relevant studies and

applicable reserve margin or resource adequacy requirements, as relevant. 

4. Calculation of Total Transfer Capability under the Rated 

System Path Methodology (MOD-029-1)

a. NERC Proposal

112. Requirement R2 of the Rated System Path Methodology (MOD-029-1) provides 

the process a transmission operator must use to determine total transfer capability. 

Requirement R2.7 of that Reliability Standard requires the transmission operator to set 

the total transfer capability of an available transfer capability path to a value determined 

prior to 1994 in certain instances: 

R2.7. For available transfer capability Paths whose path 

rating, adjusted for seasonal variance, was established, known 

and used in operation since January 1, 1994, and no action 
Docket Nos. RM08-19-000, et al. - 69 - 

has been taken to have the path rated using a different 

method, set the total transfer capability at that previously 

established amount. 

b. Commission Proposal

113. In Order No. 890, the Commission required the use of consistent practices to 

calculate total transfer capability.79 In Order No. 890-A, the Commission clarified that, 

while total transfer capability need not be recalculated at consistent time intervals, the 

transmission operator should consider whether any changes in system topology, 

contingency outages, or other factors are substantial enough to merit recalculation of total 

transfer capability.80

114. NERC has not explained the inclusion of Requirement R2.7 in the Rated System 

Path Methodology. It is not clear to the Commission why certain applicable entities 

would be required to use pre-1994 total transfer capability values. The Commission is 

concerned that requiring pre-1994 total transfer capability values to remain in place 

without adequate explanation essentially exempts certain paths from the total transfer 

capability requirements in the Rated System Path Methodology and may result in total 

transfer capability values that are incorrectly based on stale assumptions and criteria. 

115. While the Commission proposes to approve the proposed Reliability Standard 

overall as just and reasonable and an improvement on available transfer capability 

transparency, as discussed above, pursuant to section 215(d)(5) of the FPA and section 

 79 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 237. 

80 Order No. 890-A, FERC Stats. & Regs. ¶ 31,261 at P 105. 
Docket Nos. RM08-19-000, et al. - 70 - 

39.5(f) of our regulations, the Commission seeks comment on whether it should direct the 

ERO to develop a modification to the Rated System Path Methodology (MOD-029-1) to 

remove Requirement R2.7 as unsupported. 

5. Treatment of Network Resource Designations

a. NERC Proposal

116. In each of the proposed Reliability Standards, transmission service providers are 

required to identify as part of their calculation of existing transmission commitments the 

amount of capacity that is set aside for network integration transmission service.81 

However, the specificity of that requirement varies among the proposed Reliability 

Standards. 

117. Under the Flowgate Methodology (MOD-030-2), Requirements R6.1 and 6.2 

provide for calculation of the impact of network integration transmission service based on 

a modeling of load forecasts for the time period being calculated and unit commitment 

and dispatch order, including all designated network resources and other resources that 

are committed or have the legal obligation to run as specified in the transmission service 

provider’s implementation document. Requirement R8 of the Area Interchange 

Methodology (MOD-028-1) and Requirement R5 of the Rated System Path Methodology 

(MOD-029-1) provide for the inclusion of firm capacity reserved for network integration 

 81 See MOD-028-001, Requirement R8; MOD-029-1, Requirement R5; MOD030-2, Requirement R6.1. 
Docket Nos. RM08-19-000, et al. - 71 - 

transmission service, but do not describe how the transmission service provider is to 

identify that amount of capacity. 

118. With regard to the frequency of these calculations, Requirement R8 of MOD-001-

1 would require every transmission service provider calculating available transfer 

capability to perform recalculations of available transfer capability at specified 

frequencies, unless none of the calculated values identified in the available transfer 

capability equation have changed. 

b. Commission Proposal

119. In Order No. 693, the Commission directed the ERO to develop requirements 

specifying how transmission service providers should determine which generators should 

be modeled in service when calculating available transfer capability.82 Among other 

things, the Commission directed the ERO to revise the Reliability Standards to specify 

that base generation dispatch schedules will reflect the modeling of all designated 

network resources and other resources that are committed to or have the legal obligation 

to run, as they are expected to run. The Commission also directed transmission service 

providers to address the effect on available transfer capability of designating and 

undesignating a network resource. 

120. NERC has not explained the failure to include in each of the available transfer 

capability methodologies a requirement that base generation dispatch schedules will 

reflect the modeling of all designated network resources and other resources that are 

 82 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1041. 
Docket Nos. RM08-19-000, et al. - 72 - 

committed to or have the legal obligation to run, as they are expected to run. It is 

therefore unclear whether the proposed Reliability Standards address the effect on 

available transfer capability of designating and undesignating a network resource. While 

the Commission proposes to approve the proposed Reliability Standards as just and 

reasonable and an improvement on available transfer capability transparency, pursuant to 

section 215(d)(5) of the FPA and section 39.5(f) of our regulations, the Commission 

proposes to direct the ERO to develop a modification to the Reliability Standards to 

address these requirements. 

C. Violation Risk Factors and Violation Severity Levels

121. To determine a base penalty amount for a violation of a requirement within a 

Reliability Standard, NERC must first determine an initial range for the base penalty 

amount. To do so, NERC will assign a violation risk factor for each requirement of a 

Reliability Standard that relates to the expected or potential impact of a violation of the 

requirement on the reliability of the Bulk-Power System. For that requirement, the ERO 

assigns a lower, medium or high violation risk factor for each mandatory Reliability 

Standard requirement.83 The Commission has established guidelines for evaluating the 

validity of each violation risk factor assignment.84 

 83 The specific definitions of high, medium and lower are provided in North 

American Electric Reliability Corp., 119 FERC ¶ 61,145 at P 9, order on reh’g, 

120 FERC ¶ 61,145 (2007) (Violation Risk Factor Rehearing Order). 

84 The guidelines are: (1) consistency with the conclusions of the blackout report; 

(2) consistency within a Reliability Standard; (3) consistency among Reliability 

Standards; (4) consistency with NERC’s definition of the violation risk factor level; and 

(continued...) 
Docket Nos. RM08-19-000, et al. - 73 - 

122. NERC will also define up to four violation severity levels – lower, moderate, high 

and severe – as measurements for the degree to which the requirement was violated in a 

specific circumstance. For a specific violation of a particular requirement, NERC or the 

Regional Entity will establish the initial value range for the base penalty amount by 

finding the intersection of the applicable violation risk factor and violation severity level 

in the base penalty amount table in appendix A of its sanction guidelines. 

123. On June 19, 2008, the Commission issued an order establishing four guidelines for 

the development of violation severity levels.85 First, the violation severity level 

assignments should not have the unintended consequence of lowering the current level of 

compliance. Second, the violation severity levels should ensure uniformity and 

consistency in the determination of penalties. Third, a violation severity level assignment 

should be consistent with the corresponding requirement. Fourth, a violation severity 

level assignment should be based on a single violation, not on a cumulative number of 

violations. 

 

(5) treatment of requirements that co-mingle more than one obligation. The Commission 

also explained that this list was not necessarily all-inclusive and that it retained the 

flexibility to consider additional guidelines in the future. A detailed explanation is 

provided in the Violation Risk Factor Rehearing Order, 120 FERC ¶ 61,145 at P 8-13. 

85 North American Electric Reliability Corp., 123 FERC ¶ 61,284, at P 20-35 

(Violation Severity Level Order), order on reh’g & compliance, 125 FERC ¶ 61,212 

(2008). 
Docket Nos. RM08-19-000, et al. - 74 - 

1. NERC Proposal

124. In its August 29, 2008 filing, NERC proposes violation severity levels that are 

specific to the individual requirements of the proposed Reliability Standards. NERC 

states that it developed violation severity level assignments for MOD-001-1, MOD-008-

1, MOD-028-1, MOD-029-1, and MOD-030-1 prior to issuance of the Violation Severity 

Level Order. As a result, NERC states that it has not analyzed the proposed violation 

severity levels relative to the Commission’s guidelines established in the Violation 

Severity Level Order. 

125. In addition, NERC states that it is not filing the associated violation risk factors 

with these Reliability Standards. While violation risk factors have been developed and 

balloted for each of the five proposed Reliability Standards, NERC states that its Board 

believes further review of the violation risk factors is warranted given recent Commission 

actions in general and the development history of these violation risk factors in particular. 

In accordance with its Rules of Procedure, NERC states that it will submit violation risk 

factors for these proposed Reliability Standards in a future filing. 

126. NERC states that each balloted Reliability Standard included a violation risk 

factor for each main requirement in the Reliability Standard. For all the requirements in 

the balloted MOD Reliability Standards, the applicable violation risk factors were 

“lower.” In developing the violation risk factor assignments, NERC states that there 

were opposing viewpoints with respect to the appropriate assignments. According to 

NERC, one view offered that available transfer capability and its associated 

methodologies do not directly affect the electrical state of the system or the ability to 
Docket Nos. RM08-19-000, et al. - 75 - 

monitor or control it as would be required under the “medium” violation risk factor 

assignment. NERC states that an incorrect available transfer capability calculation may 

lead to oversubscribing or undersubscribing the system. According to NERC, 

undersubscribing, while affecting the potential for commercial activity, actually benefits 

reliability. Oversubscribing the system as a result of an optimistic available transfer 

capability value, while somewhat beneficial to commercial activity, may lead to a 

reliability concern that if realized can be managed by the operator’s adherence to system 

limits, to the extent that the operator has options to implement some measure of 

transmission loading relief to reduce flows due to transactions. NERC states that for an 

incorrect available transfer capability to become a reliability issue requires an optimistic 

available transfer capability value, coupled with the sale of that available transfer 

capability, and an operator who is not mindful to the system limits, the last of which is 

governed by other transmission operator and interconnection operating Reliability 

Standards. On this argument, according to NERC, assigning a “medium” violation risk 

factor due to the “direct” impact is questionable. 

127. On this basis, the drafting team evaluated the scope of the remaining work to meet 

the Commission deadline and focused its attention to the technical issues, adjusting the 

violation risk factors to “lower” based on the industry comments and the arguments 

presented above. However, NERC states that its Board believes that a more thorough 

review of the violation risk factors is warranted given recent Commission actions in 

general and the development history of these violation risk factors in particular. NERC’s 

board has asked NERC staff to review these violation risk factors through an open 
Docket Nos. RM08-19-000, et al. - 76 - 

stakeholder process to ensure that they are consistent with the intent of the violation risk 

factor definitions and prior Commission decisions on violation risk factors. Accordingly, 

NERC states that it is not filing the associated violation risk factors with these Reliability 

Standards at this time. NERC states that it will submit violation risk factors for these 

proposed Reliability Standards in a future filing. 

128. In its November 21, 2008 and March 6, 2009 filings, NERC proposes violations 

severity levels for MOD-004-1 and MOD-030-2, respectively. Similar to the violation 

severity levels proposed for MOD-001-1, MOD-008-1, MOD-028-1, MOD-029-1, and 

MOD-030-1, NERC does not propose any violation severity levels for the subrequirements. In addition, NERC states that its board of trustees deferred action on the 

violation risk factors associated with these Reliability Standards and asked that they be 

reviewed through an open stakeholder process, with a report back to the board, to ensure 

that they are consistent with the intent of the violation risk factor definitions and 

Commission precedent. NERC states that it will submit violation risk factors for these 

Reliability Standards in a future filing. 

2. Commission Proposal

129. The Commission proposes to accept NERC’s commitment to file violation 

severity levels and violation risk factors at a later time. The Violation Severity Level 

Order was issued after NERC developed the violation severity level assignments for the 

Reliability Standards at issue in this proceeding. As a result, NERC was unable to 

evaluate and modify the proposed violation severity levels to comply with our guidelines 

prior to filing the proposed Reliability Standards. The Commission proposes to direct the 
Docket Nos. RM08-19-000, et al. - 77 - 

ERO to reevaluate the violation severity levels associated with all of the proposed 

Reliability Standards based on the Commission’s guidelines outlined in the Violation 

Severity Level Order and prepare appropriate revisions. In addition, the Commission 

proposes to accept NERC’s proposal to allow NERC staff to review the violation risk 

factors through an open stakeholder process to ensure that they are consistent with the 

intent of the violation risk factor definitions and guidance provided in the Violation Risk 

Factor Order and the Violation Risk Factor Rehearing Order. The Commission proposes 

to direct NERC to file revised violation severity levels and violation risk factors no later 

than 120 days before the Reliability Standards become effective. 

D. Disposition of Other Reliability Standards

1. MOD-010-1 through MOD-025-1

130. Order No. 890 directed public utilities, working through NERC, to modify the 

reliability standards MOD-010 through MOD-02586 to incorporate a requirement for the 

periodic review and modification of models for (1) load flow base cases with 

contingency, subsystem, and monitoring files, (2) short circuit data, and (3) transient and 

dynamic stability simulation data, in order to ensure that they are up to date. The 

Commission found that this requirement is essential in order to have an accurate 

simulation of the performance of the grid and from which to comparably calculate 

 86 The MOD-010 through MOD-025 Reliability Standards establish data 

requirements, reporting procedures, and system model development and validation for 

use in the reliability analysis of the interconnected transmission systems. 
Docket Nos. RM08-19-000, et al. - 78 - 

available transfer capability, therefore increasing transparency and decreasing the 

potential for undue discrimination by transmission service providers.87

a. NERC Proposal

131. NERC states that this modeling activity is outside the scope of the available 

transfer capability Reliability Standards drafting team effort because it requires a 

different skill set and expertise than that required for developing available transfer 

capability and should be addressed by a separate drafting team. NERC states that these 

Reliability Standards are part of its Reliability Standards Development Plan. NERC 

states that this is consistent with Order No. 693, which identified nine Reliability 

Standards, none of which were MOD-010 through MOD-025, as the core of the available 

transfer capability initiative directed in Order No. 890.88

b. Commission Proposal

132. The Commission proposes to allow NERC to address revisions to MOD-010 

through MOD-025 through a separate project. Those Reliability Standards are generally 

intended to establish consistent data requirements, reporting procedures and system 

models for use in reliability analysis. As such, the Commission proposes to find that 

NERC is correct that they were not a part of the available transfer capability 

modifications required in Order Nos. 890 and 693. 

 87 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 290. 

88 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 206. 
Docket Nos. RM08-19-000, et al. - 79 - 

2. Reliability Standards Proposed to be Retired or Withdrawn

a. NERC proposal

133. NERC requests that FAC-013-1, MOD-006-0, and MOD-007-0 be retired when 

the available transfer capability-related Reliability Standards become effective. In 

addition, NERC requests to withdraw its request for approval of the following Reliability 

Standards that were neither approved nor remanded in Order No. 693, effective upon 

approval of the available transfer capability-related MOD Reliability Standards in this 

proceeding: FAC-012-1, MOD-001-0, MOD-002-0, MOD-003-0, MOD-004-0, MOD005-0, MOD-008-0, and MOD-009-0. According to NERC, these Reliability Standards 

are wholly superseded by the MOD Reliability Standards addressed in this proceeding. 

b. Commission Proposal

134. The Commission proposes to approve NERC’s request to retire MOD-006-0 and 

MOD-007-0 and to withdraw its request for approval of MOD-001-0, MOD-002-0, 

MOD-003-0, MOD-004-0, MOD-005-0, MOD-008-0, and MOD-009-0. The 

Commission also proposes to find that MOD-001-0, MOD-002-0, MOD-003-0, MOD004-0, MOD-005-0, MOD-008-0, and MOD-009-0 are all superseded by the available 

transfer capability calculations required by the proposed MOD Reliability Standards in 

this proceeding and are, upon the effectiveness of the proposed MOD Reliability 

Standards, no longer necessary. 

135. With regard to FAC-012-1 and FAC-013-1, the Commission disagrees with NERC 

that these Reliability Standards are wholly superseded by the MOD Reliability Standards 

addressed in this proceeding. Under FAC-012-1, reliability coordinators and planning 
Docket Nos. RM08-19-000, et al. - 80 - 

authorities would be required to document the methodology used to establish interregional and intra-regional transfer capabilities and to state whether the methodology is 

applicable to the planning horizon or the operating horizon. Under FAC-013-1, 

reliability coordinators and planning authorities are required to establish a set of interregional and intra-regional transfer capabilities that are consistent with the methodology 

documented under FAC-012-1, which could require the calculation of transfer 

capabilities for both the planning horizon and the operating horizon. In comparison, the 

proposed MOD Reliability Standards provide only for the calculation of available 

transfer capability and its components, including total transfer capability, in the operating 

horizon.89 The proposed MOD Reliability Standards do not govern the calculation of 

transfer capabilities in the planning horizon, i.e., beyond 13 months in the future. 

136. In Order No. 693, the Commission approved FAC-013-1, but declined to approve 

or remand FAC-012-1. The Commission expressed concern that FAC-012-1 merely 

required the documentation of a transfer capability methodology without providing a 

framework for that methodology including data inputs and modeling assumptions.90 The 

Commission also expressed concern that the criteria used to calculate transfer capabilities 

for use in determining available transfer capability must be identical to those used in 

planning and operating the system.91 The Commission directed the ERO to modify FAC-

 89 See MOD-001-1, Requirement R2.3. 

90 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 777. 

91 Id. P 782. 
Docket Nos. RM08-19-000, et al. - 81 - 

012-1 to provide a framework for the transfer capability calculation methodology that 

takes account of the need for consistency in the criteria used to calculate transfer 

capabilities.92

137. The available transfer capability methodologies set forth in MOD-028-1, MOD029-1, and MOD-030-2 each provide a framework for the calculation of total transfer 

capability and total flowgate capability that specifies certain data inputs and modeling 

assumptions to be used.93 Requirement R7 of MOD-001-1 also provides that, when 

calculating available transfer capability or available flowgate capability, the transmission 

provider shall use assumptions no more limiting than those used in the planning of 

operations for the corresponding time period studied. It therefore appears that the MOD 

Reliability Standards provide a framework for the consistent calculation of total transfer 

capability for the operating horizon. However, NERC has not addressed the requirements 

of Order No. 693 with regard to the calculation of transfer capabilities in the planning 

horizon. 

138. The Commission therefore proposes not to grant NERC’s request to withdraw 

FAC-012-1, nor approve the retirement of FAC-013-1. Instead, the Commission 

proposes, pursuant to section 215(d)(5) of the FPA and section 39.5(f) of our regulations, 

to direct the ERO to submit a revised FAC-012-1 and a modification to FAC-013-1 to 

 92 Id. P 779, 782. 

93 See MOD-028-1, Requirements R3 and R4; MOD-029-1, Requirements R2 and 

R3; MOD-030-2, Requirement R2.4. 
Docket Nos. RM08-19-000, et al. - 82 - 

comply with the relevant directives of Order No. 693 and as otherwise necessary to make 

the requirements of those Reliability Standards consistent with those of the proposed 

MOD Reliability Standards and the final rule in this proceeding. The Commission 

proposes to direct the ERO to submit a revised FAC-012-1 and a modification to FAC013-1, as well as violation severity levels and violation risk factors for FAC-012-1 and 

FAC-013-1, no later than 120 days before the MOD Reliability Standards become 

effective. 

E. Definitions

139. In Order Nos. 890 and 693, the Commission noted that there was not a definition 

of available flowgate capability/total flowgate capability in the ERO’s glossary and 

directed the ERO to develop available flowgate capability/total flowgate capability 

definitions used to identify a particular set of transmission facilities as flowgates. 

1. NERC Proposal

140. NERC proposes to modify its Glossary of Terms to add the following twenty 

definitions that are used in the five proposed Reliability Standards, two of which wholly 

replace existing terms in the Commission-approved NERC Glossary:94 

Area Interchange Methodology: The Area Interchange 

Methodology is characterized by determination of 

incremental transfer capability via simulation, from which 

Total Transfer Capability (TTC) can be mathematically 

derived. Capacity Benefit Margin (CBM), Transmission 

Reliability Margin (TRM), and Existing Transmission 

Commitments (ETC) are subtracted from the TTC, and 

 94 These include Available Transfer Capability and Flowgate. 
Docket Nos. RM08-19-000, et al. - 83 - 

Postbacks and counterflows are added, to derive Available 

Transfer Capability (ATC). Under the Area Interchange 

Methodology, TTC results are generally reported on an area 

to area basis. 

ATC Path: Any combination of Point of Receipt (POR) and 

Point of Delivery (POD) for which Available Transfer 

Capability (ATC) is calculated; and any Posted Path.95

Available Flowgate Capability (AFC): A measure of the 

flow capability remaining on a Flowgate for further 

commercial activity over and above already committed uses. 

It is defined as Total Flowgate Capability (TFC) less Existing 

Transmission Commitments (ETC), less a Capacity Benefit 

Margin (CBM), less a Transmission Reliability Margin 

(TRM), plus Postbacks, and plus counterflows. 

Available Transfer Capability (ATC): A measure of the 

transfer capability remaining in the physical transmission 

network for further commercial activity over and above 

already committed uses. It is defined as Total Transfer 

Capability (TTC) less Existing Transmission Commitments 

(ETC) (including retail customer service), less a Capacity 

Benefit Margin (CBM), less a Transmission Reliability 

Margin (TRM), plus Postbacks, plus counterflows. 

Available Transfer Capability Implementation Document 

(ATCID): A document that describes the implementation of 

a methodology for calculating Available Transfer Capability 

(ATC) or Available Flowgate Capability (AFC), and provides 

information related to a Transmission Service Provider’s 

calculation of ATC or AFC. 

Block Dispatch: A set of dispatch rules such that given a 

specific amount of load to serve, an approximate generation 

dispatch can be determined. To accomplish this, the capacity 

of a given generator is segmented into loadable “blocks,” 

each of which is grouped and ordered relative to other blocks 

 95 See 18 CFR 37.6(b)(1) (2008). 
Docket Nos. RM08-19-000, et al. - 84 - 

(based on characteristics including, but not limited to, 

efficiency, run of river or fuel supply considerations, and/or 

“must-run” status). 

Business Practices: Those business rules contained in the 

Transmission Service Provider’s applicable tariff, rules, or 

procedures; associated Regional Reliability Organization or 

Regional Entity business practices; or North American 

Energy Standards Board (NAESB) Business Practices. 

Capacity Benefit Margin Implementation Document 

(CBMID): A document that describes the implementation of 

a Capacity Benefit Margin methodology. 

Dispatch Order: A set of dispatch rules such that given a 

specific amount of load to serve, an approximate generation 

dispatch can be determined. To accomplish this, each 

generator is ranked by priority. 

Existing Transmission Commitments (ETC): Committed 

uses of a Transmission Service Provider’s Transmission 

system considered when determining Available Transfer 

Capability (ATC) or Available Flowgate Capability (AFC). 

Flowgate: 

1.) A portion of the Transmission system through which the 

Interchange Distribution Calculator calculates the power flow 

from Interchange Transactions. 

2.) A mathematical construct, comprised of one or more 

monitored transmission Facilities and optionally one or more 

contingency Facilities, used to analyze the impact of power 

flows upon the Bulk Electric System. 

Flowgate Methodology: The Flowgate methodology is 

characterized by identification of key Facilities as Flowgates. 

Total Flowgate Capabilities (TFC) are determined based on 

Facility Ratings and voltage and stability limits. The impacts 

of Existing Transmission Commitments (ETCs) are 

determined by simulation. The impacts of ETC, Capacity 

Benefit Margin (CBM) and Transmission Reliability Margin 

(TRM) are subtracted from the TFC, and Postbacks and 

counterflows are added, to determine the Available Flowgate 
Docket Nos. RM08-19-000, et al. - 85 - 

Capability (AFC) value for that Flowgate. AFCs can be used 

to determine Available Transfer Capability (ATC). 

Generation Capability Import Requirement (GCIR): The 

amount of generation capability from external sources 

identified by a Load-Serving Entity (LSE) or Resource 

Planner (RP) to meet its generation reliability or resource 

adequacy requirements as an alternative to internal resources. 

Outage Transfer Distribution Factor (OTDF): In the postcontingency configuration of a system under study, the 

electric Power Transfer Distribution Factor (PTDF) with one 

or more system Facilities removed from service (outaged). 

Participation Factors: A set of dispatch rules such that 

given a specific amount of load to serve, an approximate 

generation dispatch can be determined. To accomplish this, 

generators are assigned a percentage that they will contribute 

to serve load. 

Planning Coordinator: See Planning Authority. 

Postback: Positive adjustments to Available Transfer 

Capability (ATC) or Available Flowgate Capability (AFC) as 

defined in Business Practices. Such Business Practices may 

include processing of redirects and unscheduled service. 

Power Transfer Distribution Factor (PTDF): In the precontingency configuration of a system under study, a measure 

of the responsiveness or change in electrical loadings on 

transmission system Facilities due to a change in electric 

power transfer from one area to another, expressed in percent 

(up to 100%) of the change in power transfer . 

Rated System Path Methodology: The Rated System Path 

Methodology is characterized by an initial Total Transfer 

Capability (TTC), determined via simulation. Capacity 

Benefit Margin (CBM), Transmission Reliability Margin 

(TRM), and Existing Transmission Commitments (ETC) are 

subtracted from TTC, and Postbacks and counterflows are 

added as applicable, to derive Available Transfer Capability 

(ATC). Under the Rated System Path Methodology, TTC 

results are generally reported as specific transmission path 

capabilities. 
Docket Nos. RM08-19-000, et al. - 86 - 

Total Flowgate Capability (TFC): The maximum flow 

capability on a Flowgate, is not to exceed its thermal rating, 

or in the case of a flowgate used to represent a specific 

operating constraint (such as a voltage or stability limit), is 

not to exceed the associated System Operating Limit. 

Transmission Operator Area: The collection of 

Transmission assets over which the Transmission Operator is 

responsible for operating. 

Transmission Reliability Margin Implementation 

Document (TRMID): A document that describes the 

implementation of a Transmission Reliability Margin (TRM) 

methodology, and provides information related to a 

Transmission Operator’s calculation of TRM. 

2. Commission Proposal

141. The Commission proposes to approve the addition of these terms to the NERC 

Glossary with minor modification. The Commission believes that the definition of 

Postback is not fully determinative. NERC should be able to define this term without 

reference to Business Practices, another defined term. The Commission therefore 

proposes to direct NERC to modify the definition of Postback. 

142. The definition of Business Practices includes a reference to the “regional 

reliability organization.” In Order No. 693, the Commission directed NERC to eliminate 

references to regional reliability organizations as responsible entities in the Reliability 

Standards because such entities are not users, owners or operators of the Bulk-Power 

System.96 Accordingly, the Commission proposes to direct NERC to remove from the 

proposed definition of Business Practices, the reference to regional reliability 

 96 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 157. 
Docket Nos. RM08-19-000, et al. - 87 - 

organizations and replace it with the term Regional Entity. However, Regional Entity is 

not currently defined in the NERC Glossary. The Commission therefore proposes to 

direct NERC to develop a definition of Regional Entity consistent with section 215(a) of 

the FPA97 and 18 CFR 39.1 (2008), to be included in the NERC Glossary. 

IV. Information Collection Statement

143. The following collections of information contained in this proposed rule have been 

submitted to the Office of Management and Budget (OMB) for review under section 

3507(d) of the Paperwork Reduction Act of 1995.98 OMB’s regulations require OMB to 

approve certain information collection requirements imposed by agency rule.99

144. Comments are solicited on the need for this information, whether the information 

will have practical utility, ways to enhance the quality, utility, and clarity of the 

information to be collected, and any suggested methods for minimizing respondents’ 

burden, including the use of automated information techniques. 

Burden Estimate: The public reporting and records retention burdens for the proposed 

reporting requirements and the records retention requirement are as follows.100 

 97 16 U.S.C. 824o. 

98 44 U.S.C. 3507(d). 

99 5 CFR 1320.11. 

100 These burden estimates apply only to this NOPR and do not reflect upon all of 

FERC-516 or FERC-717. 
Docket Nos. RM08-19-000, et al. - 88 - 

Data 

Collection 

Number of 

Respondents 

Number of 

Responses 

Hours per 

Response 

Total Annual 

Hours 

Mandatory data 

exchanges 

137 1 80 10,960

Explanation of 

change of ATC 

values 

137 1 100 13,700

Recordkeeping 137 1 30 3,480

Total Annual Hours for Collection: 

Reporting + recordkeeping hours = 3,480 + 24,660 = 28,140 hours. 

Cost to Comply: 

Reporting = $2,811,240 

24,660 hours @ $114 an hour (average cost of attorney ($200 per hour), 

consultant ($150), technical ($80), and administrative support ($25)) 

Recordkeeping = $185,875 (same as below) 

Labor (file/record clerk @ $17 an hour) 3,480 hours @ $17/hour = $59,150 

Storage 137 respondents @ 8,000 sq. ft. x $925 (off site storage) = $126,725 

Total costs = $2,997,115 

Labor $ ($2,811,240+ $59,150) + Recordkeeping Storage Costs ($126,725) 

OMB’s regulations require it to approve certain information collection requirements 

imposed by an agency rule. The Commission is submitting notification of this proposed 

rule to OMB. If the proposed requirements are adopted they will be mandatory 

requirements. 

Title: Mandatory Reliability Standards for the Calculation of Available Transfer 

Capability, Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer 

Capability, and Existing Transmission Commitments and Mandatory Reliability 

Standards for the Bulk-Power System 

Action: Proposed Collections 

OMB Control Nos. [to be determined] 

Respondents: Business or other for profit 
Docket Nos. RM08-19-000, et al. - 89 - 

Frequency of responses: On occasion. 

Necessity of the Information: 

145. Internal Review: The Commission has reviewed the proposed reliability standards 

and made a determination that these requirements are necessary to implement section 215 

of the Energy Policy Act of 2005. These requirements conform to the Commission’s 

plan for efficient information collection, communication and management within the 

energy industry. The Commission has to assure itself, by means of internal review, that 

there is specific, objective support for the burden estimates associated with the 

information requirements. 

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

contacting the following: Federal Energy Regulatory Commission, 888 First Street, N.E. 

Washington, D.C. 20426 [Attention: Michael Miller, Office of the Executive Director, 

Phone: (202)502-8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov.] 

147. For submitting comments concerning the collection(s) of information and the 

associated burden estimate(s), please send your comments to the contact listed above and 

to the Office of Information and Regulatory Affairs, Office of Information and 

Regulatory Affairs, Washington, D.C. 20503 [Attention: desk Officer for the Federal 

Energy Regulatory Commission, phone (202) 395-4650, fax: (202)395-7285, e-mail: 

oira_submission@omb.eop.gov.] 

V. Environmental Analysis

148. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 
Docket Nos. RM08-19-000, et al. - 90 - 

on the human environment.101 The actions proposed here fall within the categorical 

exclusion in the Commission's regulations for rules that are clarifying, corrective or 

procedural, for information gathering, analysis, and dissemination.102

VI. Regulatory Flexibility Act Certification

149. The Regulatory Flexibility Act of 1980 (RFA)103 generally requires a description 

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

number of small entities. The MOD Reliability Standards apply to transmission service 

providers and transmission operators, most of which do not fall within the definition of 

small entities.104

150. As indicated above, approximately 137 entities will be responsible for compliance 

with the three new Reliability Standards. Of these only six, or less than five percent, 

have output of four million MWh or less per year.105 The Commission does not consider 

this a substantial number.106 Based on this understanding, the Commission certifies that 

 101 Regulations Implementing the National Environmental Policy Act, Order 

No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987). 

102 18 CFR 380.4(a)(5). 

103 5 U.S.C. 601-612. 

104 The definition of “small entity” under the Regulatory Flexibility Act refers to 

the definition provided in the Small Business Act, which defines a “small business 

concern” as a business that is independently owned and operated and that is not dominant 

in its field of operation. See 15 U.S.C. 632 (2000). 

105 Id. 

106 The Regulatory Flexibility Act defines a “small entity” as “one which is 

independently owned and operated and which is not dominant in its field of operation.” 

(continued...) 
Docket Nos. RM08-19-000, et al. - 91 - 

this rule will not have a significant economic impact on a substantial number of small 

entities. Accordingly, no regulatory flexibility analysis is required. 

VII. Comment Procedures

151. The Commission invites interested persons to submit comments on the matters and 

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

proposals that commenters may wish to discuss. Comments are due [insert date that is 60

days from publication in the FEDERAL REGISTER]. Comments must refer to Docket 

Nos. RM08-19-000, RM08-19-001, RM09-5-000 and RM06-16-005, and must include 

the commenter's name, the organization they represent, if applicable, and their address in 

their comments. 

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

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

most standard word processing formats. Documents created electronically using word 

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

 

See 5 U.S.C. 601(3) and 601(6); 15 U.S.C. 632(a)(1). In Mid-Tex Elec. Coop. v. FERC, 

773 F.2d 327, 340-43 (D.C. Cir. 1985), the court accepted the Commission's conclusion 

that, since virtually all of the public utilities that it regulates do not fall within the 

meaning of the term “small entities” as defined in the Regulatory Flexibility Act, the 

Commission did not need to prepare a regulatory flexibility analysis in connection with 

its proposed rule governing the allocation of costs for construction work in progress 

(CWIP). The CWIP rules applied to all public utilities. The revised pro forma OATT 

will apply only to those public utilities that own, control or operate interstate transmission 

facilities. These entities are a subset of the group of public utilities found not to require 

preparation of a regulatory flexibility analysis for the CWIP rule. 
Docket Nos. RM08-19-000, et al. - 92 - 

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

filing. 

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

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

Secretary of the Commission, 888 First Street N.E., Washington, D.C. 20426. 

154. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

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

on other commenters. 

VIII. Document Availability

155. 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. 

156. 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 

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

docket number field. 
Docket Nos. RM08-19-000, et al. - 93 - 

157. User assistance is available for eLibrary and the FERC’s website during normal 

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 Room at (202) 502-

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

public.referenceroom@ferc.gov. 

By direction of the Commission. 

( S E A L ) 

Kimberly D. Bose, 

Secretary.