125 FERC ¶ 61,200 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 40 

Docket No. RM08-12-000 

Western Electricity Coordinating Council Regional Reliability Standard 

Regarding Automatic Time Error Correction 

 

(November 20, 2008) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: Pursuant to section 215(d)(2) of the Federal Power Act (FPA), the Federal 

Energy Regulatory Commission proposes to approve a regional Reliability Standard, 

BAL-004-WECC-01 (Automatic Time Error Correction), submitted to the Commission 

by the North American Electric Reliability Corporation (NERC). As a separate action, 

pursuant to section 215(d)(5) of the FPA, the Commission proposes to direct WECC to 

develop several modifications to the regional Reliability Standard. The proposed 

regional Reliability Standard would require balancing authorities within the Western 

Interconnection to maintain interconnection frequency within a predefined frequency 

profile and ensure that time error corrections are effectively conducted in a manner that 

does not adversely affect the reliability of the Interconnection. 

DATES: Comments are due 45 days after publication in the Federal Register. 

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

following methods: 
Docket No. RM08-12-000 - 2 - 

• 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: 

Jonathan First (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8529 

Katherine Waldbauer (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8232 

E. Nick Henery (Technical Information) 

Office of Electric Reliability 

Division of Policy Analysis and Rulemaking 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8636 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Western Electricity Coordinating Council Regional 

Reliability Standard Regarding Automatic Time Error 

Correction 

Docket No. RM08-12-000 

NOTICE OF PROPOSED RULEMAKING 

(November 20, 2008) 

1. Pursuant to section 215(d)(2) of the Federal Power Act (FPA), the Federal Energy 

Regulatory Commission proposes to approve a regional Reliability Standard, BAL-004-

WECC-01 (Automatic Time Error Correction), submitted to the Commission by the 

North American Electric Reliability Corporation (NERC). As a separate action, pursuant 

to section 215(d)(5) of the FPA, the Commission proposes to direct the Western 

Electricity Coordinating Council (WECC) to develop several modifications to the 

regional Reliability Standard. The proposed regional Reliability Standard would require 

balancing authorities within the WECC region to implement an automatic time error 

correction procedure for the purpose of maintaining Interconnection frequency within a 

predefined frequency profile and ensuring that time error corrections are effectively 

conducted in a manner that does not adversely affect reliability.1

 1

 The proposed regional Reliability Standard will be in effect within the Western 

Interconnection-wide WECC Regional Entity. In this proceeding, the Commission 

proposes to take action to make mandatory the regional Reliability Standard as it applies 

within the U.S. portion of the Western Interconnection. 
Docket No. RM08-12-000 - 2 - 

2. The proposed Reliability Standard would benefit the reliable operation of the 

Bulk-Power System by creating an operating environment that encourages system 

operators to minimize the difference between the net actual and net scheduled 

interchanges, thus reducing the number of manual time error corrections required by the 

Western Interconnection Time Monitor, and reducing accumulated inadvertent 

interchange energy between Western Interconnection balancing authorities. The 

Commission also proposes to accept three related definitions for inclusion in the NERC 

Reliability Standards Glossary (NERC glossary). The Commission further proposes 

modifications to the violation risk factors for the regional Reliability Standard. Pursuant 

to Order No. 672, 2

 the Commission may accept two types of regional Reliability 

Standards that differ from continent-wide NERC Reliability Standards, provided they are 

otherwise just, reasonable, not unduly discriminatory or preferential and in the public 

interest, as required under the statute: (1) a regional difference that is more stringent than 

the continent-wide Reliability Standard, including a regional difference that addresses 

matters that the continent-wide Reliability Standard does not, and (2) a regional 

Reliability Standard that is necessitated by a physical difference in the Bulk-Power 

System. As discussed below, the Commission is proposing to find that the regional 

 2 Rules Concerning Certification of the Electric Reliability Organization; and 

Procedures for the Establishment, Approval, and Enforcement of Electric Reliability 

Standards, Order No. 672, FERC Stats. & Regs. ¶ 31,204 (2006), order on reh’g, Order 

No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006). 
Docket No. RM08-12-000 - 3 - 

Reliability Standard proposed by WECC is more stringent than the applicable continentwide NERC Reliability Standard. 

I. Background

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

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

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

Standards may be enforced by the ERO, subject to Commission oversight, or by the 

Commission independently.3

 

4. In February 2006, the Commission issued Order No. 672, implementing section 

215 of the FPA. Pursuant to Order No. 672, the Commission certified one organization, 

NERC, as the ERO.4

 Reliability Standards that the ERO proposes to the Commission 

may include Reliability Standards that are proposed to the ERO by a Regional Entity.5

 

When the ERO reviews a regional Reliability Standard that would be applicable on an 

Interconnnection-wide basis and that has been proposed by a Regional Entity organized 

on an Interconnection-wide basis, the ERO must rebuttably presume that the regional 

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

the public interest.6

 3 See FPA 215(e)(3), 16 U.S.C. 824o(e)(3). 

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

Certification Order), order on reh’g and compliance, 117 FERC ¶ 61,126 (2006). 

5

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

6

 16 U.S.C. 824o(d)(3); 18 CFR 39.5(b). 
Docket No. RM08-12-000 - 4 - 

5. In reviewing the ERO’s submission, the Commission will give due weight to the 

ERO’s technical expertise, except concerning the effect of a proposed Reliability 

Standard on competition.7

 The Commission will also give due weight to the technical 

expertise of a Regional Entity organized on an Interconnection-wide basis with respect to 

a proposed Reliability Standard to be applicable within that Interconnection.8

 

6. The Commission may approve a proposed Reliability Standard if the Commission 

finds it is just, reasonable, not unduly discriminatory or preferential, and in the public 

interest.9

 In addition, the Commission explained in Order No. 672 that "uniformity of 

Reliability Standards should be the goal and the practice, the rule rather than the 

exception."10 Yet, the Commission recognized that "the goal of greater uniformity does 

not, however, mean that regional differences cannot exist."11 The Commission then 

provided the following guidance: 

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

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

discriminatory or preferential, and in the public interest, as required by the statute: 

(1) a regional difference that is more stringent than the continent-wide Reliability 

Standard, including a regional difference that addresses matters that the continent- 

 7

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

8 Id.

9 Id.

10 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 290. 

11 Id. P 291. 
Docket No. RM08-12-000 - 5 - 

wide Reliability Standard does not; and (2) a regional Reliability Standard that is 

necessitated by a physical difference in the Bulk-Power System.12

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

107 Reliability Standards originally proposed by NERC.13 In addition, pursuant to 

section 215(d)(5) of the FPA, the Commission directed NERC to develop modifications 

to 56 of the 83 approved Reliability Standards.14 Relevant to the immediate proceeding, 

the Commission approved continent-wide Reliability Standard BAL-004-0 (Time Error 

Correction), but noted that WECC’s regional approach appears to serve as a more 

effective means of accomplishing time error corrections.15

8. On April 19, 2007, the Commission approved delegation agreements between 

NERC and each of the eight Regional Entities, including WECC.16 Pursuant to such 

agreements, the ERO delegated responsibility to the Regional Entities to enforce the 

 12 Id. 

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

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

(2007). 

14 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, "The Commission . . . may 

order the Electric Reliability Organization to submit to the Commission a proposed 

reliability standard or a modification to a reliability standard that addresses a specific 

matter if the Commission considers such a new or modified reliability standard 

appropriate to carry out this section." 

15 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 377, 382. The Commission 

also directed NERC to develop a modification to BAL-004-0 to include Levels of NonCompliance and additional Measures for Requirement R3. 

16 See North American Electric Reliability Corp., 119 FERC ¶ 61,060, order on 

reh’g, 120 FERC ¶ 61,260 (2007) (Delegation Agreement Order). 
Docket No. RM08-12-000 - 6 - 

mandatory, Commission-approved Reliability Standards. In addition, the Commission 

approved, as part of each delegation agreement, a Regional Entity process for developing 

regional Reliability Standards. In the Delegation Agreement Order, the Commission 

accepted WECC as a Regional Entity organized on an Interconnection-wide basis and 

accepted WECC’s Standards Development Manual which sets forth the process for 

development of WECC’s Reliability Standards.17 

9. In a June 2007 Order, the Commission approved eight regional Reliability Standards 

that apply in the WECC region.18

The Proposed WECC Regional Reliability Standard

A. NERC Filing

10. On July 29, 2008, NERC submitted for Commission approval, in accordance with 

section 215(d)(1) of the FPA,19 regional Reliability Standard BAL-004-WECC-01, which 

would apply to balancing authorities within the Western Interconnection. NERC states 

that the primary purpose of the regional Reliability Standard is to reduce the number of 

time error corrections imposed on the Western Interconnection by requiring balancing 

authorities that operate synchronously to the Western Interconnection to automatically 

correct for their contribution to time error. According to NERC, BAL-004-WECC-01 

provides the added benefit of a superior approach over the current NERC 

 17 Id. PP 469-470. 

18 North American Electric Reliability Corp., 119 FERC ¶ 61,260. 

19 16 U.S.C. 824o (2006). 
Docket No. RM08-12-000 - 7 - 

manual time error correction (BAL-004-0) for assigning costs and providing the equitable 

payback of inadvertent interchange.20 

11. NERC states that Automatic Time Error Correction or "ATEC" has been a 

regional reliability practice in WECC, effectively reducing manual time error corrections, 

reducing the number of hours of manual time error correction for the Western 

Interconnection, and reducing the accumulated inadvertent interchange in the Western 

Interconnection since 2003. NERC asserts that the proposed WECC regional Reliability 

Standard is more stringent or covers matters not addressed by NERC’s continent-wide 

Reliability Standards, BAL-004-0 and BAL-006-1 (Inadvertent Interchange). 

12. Proposed regional Reliability Standard BAL-004-WECC-01 contains four 

requirements, summarized as follows: 

13. Requirement R1. Based on the ATEC methodology, this requirement is 

necessary to ensure that all balancing authorities continuously participate in Automatic 

 20 The NERC glossary defines "interchange" as the energy transfers that cross 

balancing authority boundaries, and defines "inadvertent interchange" as the difference 

between the balancing authority's net actual interchange and its net scheduled 

interchange. Within a synchronous Interconnection, during real-time operations, a 

balancing authority may engage in "inadvertent interchange," if it experiences an 

operational problem that prevents its net actual interchange of energy from matching its 

net scheduled interchange with other balancing authorities within the Interconnection. 

This discrepancy will indicate what is referred to as a "time error" – i.e., because the 

Interconnection will operate at a frequency (number of cycles per second) that is different 

from the Interconnection’s scheduled frequency of 60 Hz (60 cycles per second). Time 

error also serves as a means to measure of how much and which balancing authority 

within the Interconnection is at fault. To correct the time error using the ATEC method, 

it is necessary for the balancing authority that was at fault to adjust the Interconnection’s 

frequency so that it equalizes its prior inadvertent energy exchange with the 

Interconnection. 
Docket No. RM08-12-000 - 8 - 

Time Error Correction through their automatic generation control systems. The subrequirement (R1.1) limits the payback amount to minimize any operating metric 

violations, while R1.2. addresses actions for cases when invalidated implementation of 

the ATEC methodology occurs and requires adjustments. 

14. Requirement R2. Requires a balancing authority that operates in any automatic 

generation control operating mode other than ATEC to notify all other balancing 

authorities of its operating mode. To avoid large accumulation of inadvertent 

interchanges, Requirement R2 limits a balancing authority’s use of operating modes other 

than ATEC to a maximum of 24 hours per calendar quarter. 

15. Requirement R3. Requires balancing authorities to have the capability to switch 

between different automatic generation control operating modes in case of islanding or 

loss of frequency telemetry. 

16. Requirement R4. Requires each balancing authority to calculate and record its 

hourly "Primary Inadvertent Interchange" when hourly checkout is complete. 

17. NERC also proposes the following three new definitions. 

18. Automatic Time Error Correction: A frequency control automatic action that a 

Balancing Authority uses to offset its frequency contribution to support the 

Interconnection’s scheduled frequency. 

19. Primary Inadvertent Interchange: The component of area (n) inadvertent 

interchange caused by the regulating deficiencies of area (n) itself. 

20. Secondary Inadvertent Interchange: The component of area (n) inadvertent 

interchange caused by the regulating deficiencies of area (i). 
Docket No. RM08-12-000 - 9 - 

21. In its filing, NERC asserts that the ATEC procedure set forth in the proposed 

regional Reliability Standard has been effective in mitigating three problems relating to 

correction of time errors in the Western Interconnection. First, the ATEC procedure has 

reduced the need for the WECC Time Monitor to conduct manual time error corrections 

from 216 manual time error corrections in 2003 to 106 manual time error corrections in 

2007. Second, since time error is directly related to inadvertent interchange, the ATEC 

procedure reduces both time error and accumulated inadvertent interchange. Third, 

according to NERC, the ATEC procedure better identifies the balancing authorities 

responsible for inadvertent interchange and provides a more equitable and more 

immediate payback of the inadvertent interchange to the balancing authorities that should 

receive it (i.e., the balancing authorities that did not cause the inadvertent interchange and 

supported the interconnection’s scheduled frequency) than the current NERC time error 

correction process in BAL-004-0. 

22. NERC also states that the proposed regional Reliability Standard satisfies the 

factors set forth in Order No. 672 that the Commission considers when determining 

whether a proposed Reliability Standard is just, reasonable, not unduly discriminatory or 

preferential and in the public interest.21 According to NERC, BAL-004-WECC-01 is 

clear and unambiguous regarding what is required and who is required to comply 

(balancing authorities). NERC also states that the proposed regional Reliability Standard 

has clear and objective measures for compliance and achieves a reliability goal (namely, 

 21 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 323-337. 
Docket No. RM08-12-000 - 10 - 

creating an operating environment that encourages system operators to minimize the 

difference between the net actual and net scheduled interchanges, and to better control 

frequency) effectively and efficiently. 

23. NERC notes that, during the NERC posting process, one commenter criticized the 

proposed regional Reliability Standard as using intentionally imbalanced interchange 

schedules to correct time error without adjusting the scheduled interconnection 

frequency, and offered another approach. According to NERC, WECC considered the 

commenter's concerns and respectfully disagrees, explaining that the two approaches 

produce only a very slight variability in the calculation of the Control Performance 

Standard1 (CPS1).22

B. Development of the Regional Reliability Standard

24. NERC states that on August 7, 2007, WECC submitted a request to NERC to 

approve, and submit to the Commission for approval, BAL-004-WECC-01. NERC states 

that WECC developed the regional Reliability Standard following its Process for 

Developing and Approving WECC Standards and, therefore, NERC rebuttably presumes 

that the standard is just, reasonable, and not unduly discriminatory or preferential, and in 

the public interest. According to NERC, the proposed regional Reliability Standard 

 22 A balancing authority's Area Control Error (ACE) equation shows the 

instantaneous difference between a balancing authority’s net actual interchange and net 

scheduled interchange. The Control Performance Standard (CPS1) is a statistical 

measure of the variability of a balancing area's ACE equation over a specified period. 

Thus, the balancing authority's CPS1 serves as an operating metric that demonstrates how 

closely the balancing authority is operating to the interconnection’s frequency schedule. 
Docket No. RM08-12-000 - 11 - 

establishes requirements that are more stringent than, or covers areas not covered by, 

current continent-wide NERC Reliability Standards, thereby meeting the Commission 

criteria for consideration of a regional Reliability Standard. 

25. Upon receipt of WECC’s request, NERC commenced an evaluation of the regional 

Reliability Standard and initiated a 45-day public comment period. WECC responded to 

the comments presented during the NERC posting and requested NERC to present the 

regional Reliability Standard for board of trustees approval. During the evaluation, 

NERC identified shortcomings that WECC agreed to address by submitting a revised 

version of the regional Reliability Standard to the NERC board, which approved the 

regional Reliability Standard on March 26, 2008. 

II. Discussion

26. The Commission proposes to approve BAL-004-WECC-01, effective as proposed 

by NERC (the first quarter after approval by the Commission). In addition, the 

Commission proposes to direct modifications of BAL-004-WECC-01 pursuant to the 

Process for Developing and Approving WECC Standards and relevant NERC Rules of 

Procedure. The Commission also proposes to approve the three proposed new 

definitions, Automatic Time Error Correction, Primary Inadvertent Interchange and 

Secondary Inadvertent Interchange. The Commission proposes to approve the Violation 

Risk Factors, but proposes specific modifications to the Violation Risk Factors as well. 

A. Regional Reliability Standard

27. Pursuant to section 215(d) of the FPA, the Commission proposes to approve BAL004-WECC-01 as just, reasonable, not unduly discriminatory or preferential and in the 
Docket No. RM08-12-000 - 12 - 

public interest. Further, the Commission proposes to find that the regional Reliability 

Standard is more stringent than the related continent-wide NERC Reliability Standard, 

BAL-004-1 (Time Error Correction).23 Pursuant to section 215(d)(5) of the FPA, the 

Commission also proposes to direct modifications to BAL-004-WECC-01, as discussed 

below. 

28. Pursuant to the continent-wide NERC Reliability Standard BAL-004-1, when 

accumulated time error increases to a predetermined level, the Interconnection’s "time 

monitor" instructs all balancing authorities in the Interconnection to manually change the 

scheduled Interconnection’s frequency until the Interconnection’s accumulated time error 

has been reduced to a set level. However, the requirements of BAL-004-1 do not require 

each balancing authority to determine what portion of the Interconnection’s time error 

that it alone caused. 

29. Under the proposed WECC ATEC methodology, each balancing authority in the 

Western Interconnection is required to calculate its “primary inadvertent interchange”24

and enter its “primary inadvertent interchange” into its ACE equation. When all 

balancing authorities input their portion of "primary inadvertent interchange" into their 

 23 See Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 291. 

24 The balancing authority causing the frequency error is said to have created 

"primary time error" and caused "primary inadvertent interchange." The other balancing 

authorities in the Interconnection responding to correct system frequency are said to have 

created "secondary time error" and caused "secondary inadvertent interchange." 
Docket No. RM08-12-000 - 13 - 

ACE equation,25 they continuously correct for their own “primary time error” and, in 

turn, reduce the Western Interconnection’s total time error. 

30. This differs from the methodology used in NERC's BAL-004-1, in that ATEC is 

designed to place the responsibility to correct primary time error on the balancing 

authority that causes it. Further, as explained by NERC, the proposed regional Reliability 

Standard is more stringent or covers matters not addressed by the related continent-wide 

NERC Reliability Standards BAL-004-0 and BAL-006-1. It appears that the proposed 

regional Reliability Standard provides for automatic correction of time error, using a 

more refined primary inadvertent interchange term than that included in the continentwide NERC Reliability Standards for manual correction of time error.26 The 

Commission is proposing to find that the regional Reliability Standard proposed by 

WECC is more stringent than the continent-wide NERC Reliability Standard, because it 

provides for continuous capture of inadvertent interchange, and thereby (1) contributes to 

better operation of balancing authorities by operators, and (2) ensures that discrepancies 

between a balancing area's net scheduled interchange and its net actual interchange are 

adjusted more quickly and accurately. Based on this understanding, pursuant to section 

215(d) of the FPA, the Commission proposes to approve BAL-004-WECC-01 as just, 

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

 25 See n.20, supra.

26 NERC filing at 10. 
Docket No. RM08-12-000 - 14 - 

31. During the NERC posting of the WECC ATEC standard, one commenter asserted 

that BAL-004-WECC-01 does not maintain the integrity of the CPS1 reliability 

requirement because the WECC ATEC methodology uses intentionally imbalanced 

interchange schedules to correct time error without adjusting the scheduled 

interconnection frequency, and thus the adjustment to the scheduled frequency is not 

transparent. Contending that the failure to have balanced interchange schedules causes a 

failure to comply with necessary conditions to maintain the integrity of the CPS1 criteria, 

the commenter argues, the WECC ATEC methodology poses a threat to the reliability of 

the Interconnection. 

32. According to NERC, WECC disagrees with the commenter because the increase in 

variability of CPS1 measurement that occurs with the use of the ATEC methodology is 

still well within the threshold defined by NERC’s Reliability Standard BAL-001-0 (Real 

Power Balancing Control Performance), and the only difference between the two 

methods is a slight variability in the calculation of CPS1.27 When balancing the slight 

loss of precision in CPS1 scores with the benefit of fewer manual time error corrections, 

WECC does not believe the ultimate impact of using the ATEC procedure is a threat to 

reliability.28 According to NERC and WECC, empirical data from the use of the ATEC 

procedure over the past four years confirm this view. Further, WECC states, 

 27 NERC filing at 31. 

28 Id.
Docket No. RM08-12-000 - 15 - 

implementation of the commenter’s proposed alternative – requiring each WECC 

balancing authority to undertake significant changes to Automatic Generation Control 

technology – could have a potential cost in excess of $1 million, for a marginal increase 

in precision (not accuracy) of calculation of the operating metric CPS1. 

33. Order No. 672 provides that a reliability standard must be designed to achieve a 

specified reliability goal and must contain a technically sound means to achieve this 

goal.29 Likewise, the Reliability Standard should be based on actual data and lessons 

learned from actual operations.30 The Commission believes that the ATEC procedure 

satisfies these considerations. NERC and WECC make clear that balancing authorities in 

the Western Interconnection have applied the ATEC methodology since 2003, improving 

time error and reducing the need for manual adjustments. Moreover, the ACE equation 

with ATEC currently being used in the Western Interconnection to maintain the 

interconnection frequency is identical in value to the ACE Equation with ATEC 

recommended by the commenter, and differs from the commenter's proposed ACE 

equation with ATEC only in form.31 Thus, we consider the use of the ATEC procedure 

 29 Order No. 672, FERC Stats. & Regs. ¶ 31,204 at P 324. 

30 Id.

31 As noted at footnote 22, supra, CPS1 is the operating metric that demonstrates 

how well a balancing authority is controlling its area (i.e., the extent to which a balancing 

authority is meeting the Interconnection’s scheduled frequency and preventing 

inadvertent interchange). To comply with NERC Standard BAL-001, the balancing 

authority must operate in such a way that CPS1 will be calculated to be equal to or 

greater than 100 percent. The commenter's recommended ACE equation with ATEC 

(continued) 
Docket No. RM08-12-000 - 16 - 

to be compliant with Order No. 672's directive that the proposed Reliability Standard 

achieves a reliability goal and contains a technically sounds means to achieve the goal, 

and is based on actual data and lessons learned. 

B. Proposed Definitions

34. As mentioned above, the Commission proposes to accept the three new 

definitions, Automatic Time Error Correction, Primary Inadvertent Interchange and 

Secondary Inadvertent Interchange. 

C. Modifications Required by the Commission 

35. While the Commission is satisfied with the substance of the regional Reliability 

Standard, the Commission has identified a number of concerns with regard to the style 

and format of the Standard.32

36. Requirement R1.2 provides in part, " [l]arge accumulations of primary inadvertent 

[energy] point to an invalid implementation of ATEC, loose control, metering or 

accounting errors. A [balancing authority] in such a situation should identify the source 

 

term allows CPS1 to be calculated with slightly greater precision than the WECCproposed ACE equation with ATEC. However, WECC points out and NERC agrees, that 

"[p]resent Balancing Authority CPS1 scores in the Western Interconnection are generally 

well above the 100% minimum NERC requirement" (NERC filing at 20; see also

http://www.nerc.com/filez/cps.html, showing that as of May 2007, the average CPS1 

score of the WECC entities is 185 percent, and the lowest is 156 percent). Thus, any 

reductions in CPS1 due to the above calculation issue would have only a minimal effect 

on the measurement of overall interconnection reliability. 

32 Cf., North American Electric Reliability Corporation, 119 FERC ¶ 61,260 at 

P 54-55. 
Docket No. RM08-12-000 - 17 - 

of the error(s) and make the corrections."33 The phrases "large accumulation" and "in 

such a situation" are not defined and thus, while likely obvious in many circumstances, 

leaves to individual interpretation when a "large" amount of primary inadvertent has 

accumulated. Likewise, the phrase "in such a situation" is not sufficiently clear. The 

Commission proposes to direct WECC to develop revisions to this provision so that a 

balancing authority will know with specificity the circumstances that trigger the actions 

required by Requirement R1.2. 

37. Requirement R2 states that "[e]ach [balancing authority] while synchronously 

connected to the Western Interconnection will be allowed to have ATEC out of service 

for a maximum of 24 hours per calendar quarter, for reasons including maintenance and 

testing"34 (emphasis added). The Commission proposes to direct WECC to develop a 

modification that clarifies whether the "maximum of 24 hours per calendar quarter" refers 

to a single occurrence of up to 24 hours in the calendar quarter, or whether several 

occurrences are permitted as long as they add up to 24 hours or less within a calendar 

quarter. 

D. Violation Risk Factors

1. Background

38. As part of its compliance and enforcement program, NERC must assign a “lower,” 

“medium,” or “high” violation risk factor to each Requirement of each mandatory 

 33 NERC filing, Exhibit A at 4. 

34 Id. 
Docket No. RM08-12-000 - 18 - 

Reliability Standard to associate a violation of the Requirement with its potential impact 

on the reliability of the Bulk-Power System. Violation risk factors are defined as 

follows: 

39. High Risk Requirement: (a) is a requirement that, if violated, could directly cause 

or contribute to Bulk-Power System instability, separation, or a cascading sequence of 

failures, or could place the Bulk-Power System at an unacceptable risk of instability, 

separation, or cascading failures; or (b) is a requirement in a planning time frame that, if 

violated, could, under emergency, abnormal, or restorative conditions anticipated by the 

preparations, directly cause or contribute to Bulk-Power System instability, separation, or 

a cascading sequence of failures, or could place the Bulk-Power System at an 

unacceptable risk of instability, separation, or cascading failures, or could hinder 

restoration to a normal condition. 

40. Medium Risk Requirement: (a) is a requirement that, if violated, could directly 

affect the electrical state or the capability of the Bulk-Power System, or the ability to 

effectively monitor and control the Bulk-Power System, but is unlikely to lead to BulkPower System instability, separation, or cascading failures; or (b) is a requirement in a 

planning time frame that, if violated, could, under emergency, abnormal, or restorative 

conditions anticipated by the preparations, directly affect the electrical state or capability 

of the Bulk-Power System, or the ability to effectively monitor, control, or restore the 

Bulk-Power System, but is unlikely, under emergency, abnormal, or restoration 

conditions anticipated by the preparations, to lead to Bulk-Power System instability, 

separation, or cascading failures, nor to hinder restoration to a normal condition. 
Docket No. RM08-12-000 - 19 - 

41. Lower Risk Requirement: is administrative in nature and (a) is a requirement that, 

if violated, would not be expected to affect the electrical state or capability of the BulkPower System, or the ability to effectively monitor and control the Bulk-Power System; 

or (b) is a requirement in a planning time frame that, if violated, would not, under the 

emergency, abnormal, or restorative conditions anticipated by the preparations, be 

expected to affect the electrical state or capability of the Bulk-Power System, or the 

ability to effectively monitor, control, or restore the Bulk-Power System.35 

42. In the Violation Risk Factor Order, the Commission addressed violation risk 

factors filed by NERC for Version 0 and Version 1 Reliability Standards. In that order, 

the Commission used five guidelines for evaluating the validity of each violation risk 

factor assignment: (1) consistency with the conclusions of the Blackout Report, (2) 

consistency within a Reliability Standard, (3) consistency among Reliability Standards 

with similar Requirements, (4) consistency with NERC’s proposed definition of the 

violation risk factor level, and (5) assignment of violation risk factor levels to those 

Requirements in certain Reliability Standards that co-mingle a higher risk reliability 

objective and a lower risk reliability objective.36

 35 North American Electric Reliability Corp., 119 FERC ¶ 61,145, at P 9 

(Violation Risk Factor Order), order on reh’g, 120 FERC ¶ 61,145 (2007) (Violation Risk 

Factor Rehearing Order). 

36 For a complete discussion of each factor, see the Violation Risk Factor Order at 

P 19-36. 
Docket No. RM08-12-000 - 20 - 

43. The Commission notes that in NERC’s July 29, 2008 petition, a “lower” violation 

risk factor is assigned to only the main Requirements and no violation risk factor is 

assigned to any of the sub-Requirements. The Commission understands that NERC, and 

WECC, will apply the violation risk factor for the main Requirement to any violation of a 

sub-Requirement, unless separate violation risk factors are assigned to the Requirement 

and the sub-Requirement. The Commission also notes that neither NERC nor WECC 

provided in the petition a discussion explaining the justification of the proposed violation 

risk factor assignments. 

2. Commission Proposal

44. The Commission proposes to direct the ERO to modify the violation risk factor 

assigned to BAL-004-WECC-01, Requirements R1, R2, R3, and R4 from “lower” to 

“medium” as discussed below. In the absence of justification for the proposed violation 

risk factor assignments, the Commission generally believes that each of the subject 

Requirements provides an element necessary for a balancing authority’s participation in 

time error correction within the Western Interconnection. As such, the Commission 

believes that the potential reliability risk that a violation of any of the subject 

Requirements presents with regard to participation in time error correction in the Western 

Interconnection is the same. 

3. Requirements R1, R2, R3, and R4

45. Proposed regional Reliability Standard BAL-004-WECC-01, Requirements R1, 

R2, R3, and R4, collectively, have the reliability objective to provide for a balancing 

authority’s participation in time error correction within the Western Interconnection. 
Docket No. RM08-12-000 - 21 - 

Requirement R1 specifies a methodology and establishes that a balancing authority must 

continuously operate utilizing time error correction methodology in its automatic 

generation control system. Requirement R2 establishes that a balancing authority that 

operates its automatic generation control using any other methodology other than time 

error correction methodology must notify all other balancing authorities of its operating 

mode. Requirement R3 establishes that a balancing authority must have the capability to 

switch between different automatic generation control modes. Requirement R4 

establishes that each balancing authority must calculate and record its hourly primary 

inadvertent interchange to correct the time error. 

46. The continent-wide NERC Reliability Standard BAL-004-0, Requirement R3 

shares the same reliability objective as the proposed regional Reliability Standard: 

namely, to provide for participation of all balancing authorities in time error correction. 

The Commission has previously determined that participation in an interconnection’s 

time error correction is critical and can directly affect the state of the Bulk-Power 

System.37 The Commission explained that, “[i]f a balancing authority does not 

participate in time error correction when called upon, coordinated actions with the other 

balancing authorities to correct the deviation will not reflect that balancing authority’s 

contribution to the deviation and, thus, those corrective actions will not be fully effective, 

 37 North American Electric Reliability Corporation, 121 FERC ¶ 61,179, at P 43 

(2007). 
Docket No. RM08-12-000 - 22 - 

thereby adversely affecting the state of the Bulk-Power System.”38 The Commission 

determined that the potential reliability risk that a violation of Reliability Standard BAL004-0, Requirement R3 presents is consistent with the definition of a “medium” violation 

risk factor. Accordingly, BAL-004-0, Requirement R3 is assigned a “medium” violation 

risk factor. 

47. The Commission expects consistency among violation risk factor assignments of 

Requirements that share the same reliability objective.39 As explained previously in the 

NOPR, BAL-004-WECC-01, Requirements R1, R2, R3, and R4, collectively, and 

Reliability Standard BAL-004-0, Requirement R3 have the same reliability objective – to 

ensure a balancing authority’s participation in time error correction. BAL-004-WECC01 seeks to accomplish this objective regionally through automatic correction, and BAL004-0 seeks to do so nationally through manual correction. Therefore, consistent with 

Guideline 3, the Commission proposes to direct the ERO to modify the assigned violation 

risk factor for BAL-004-WECC-01, Requirements R1, R2, R3, and R4 from “lower” to 

“medium” and requests comment on this proposal. 

E. Violation Severity Levels

48. For each Requirement of a Reliability Standard, NERC states that it will also 

define up to four violation severity levels – lower, moderate, high and severe – as 

measurements of the degree to which the Requirement was violated. For a specific 

 38 Id.

39 Violation risk factor Guideline 3. 
Docket No. RM08-12-000 - 23 - 

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 NERC’s Sanction Guidelines.40 

49. In its July 29, 2008 petition, NERC proposes violation severity levels that apply 

generally to all violations of the Requirements of BAL-004-WECC-01 and not to any one 

specific Requirement. Therefore, the Commission proposes to direct the ERO to submit 

new violation severity levels for each Requirement and sub-Requirement that has been 

assigned a violation risk factor. With regard to the assignment of violation risk factors, 

the Commission reiterates that it understands that NERC and WECC will apply the 

violation risk factor for the main Requirement to any violation of a sub-Requirement, 

unless separate violation risk factors are assigned to the Requirement and the subRequirement. 

50. In summary, proposed Regional Reliability Standard BAL004-WECC-01 appears 

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

Accordingly, the Commission proposes to approve regional Reliability Standard BAL004-WECC-01 as mandatory and enforceable. In addition, the Commission proposes to 

direct the ERO to modify the proposed regional reliability standard and the proposed 

 40 See North American Electric Reliability Corp., 119 FERC ¶ 61,248, at P 74 

(2007) (directing NERC to develop up to four violation severity levels (lower, moderate, 

high, and severe) as measurements of the degree of a violation for each requirement and 

sub-requirement of a Reliability Standard and submit a compliance filing by March 1, 

2008).
Docket No. RM08-12-000 - 24 - 

violation risk factors and violation severity levels, as described above. The Commission 

invites comments on these proposals. 

III. Information Collection Statement

51. The Office of Management and Budget (OMB) regulations require approval of 

certain information collection requirements imposed by agency rules.41 Upon approval 

of a collection(s) of information, OMB will assign an OMB control number and a

expiration date. Respondents subject to the filing requirements of an agency rule will not 

be penalized for failing to respond to these collections of information unless the 

collections of information display a valid OMB control number. The Paperwork 

Reduction Act (PRA)

n 

 

42 requires each federal agency to seek and obtain OMB approval 

before undertaking a collection of information directed to ten or more persons, or 

continuing a collection for which OMB approval and validity of the control number are 

about to expire.43 

52. This order approves and requires modifications of one regional Reliability 

Standard that was submitted by NERC as the ERO. Section 215 of the FPA authorizes 

the ERO to submit Reliability Standards to provide for the reliable operation of the Bulk41 5 CFR 1320.8. 

42 44 U.S.C. 3501-3520. 

43 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3). 
Docket No. RM08-12-000 - 25 - 

Power System. Pursuant to the statute, the ERO must submit each Reliability Standard 

that it proposes to be made effective to the Commission for approval.44

53. The proposed regional Reliability Standard, which applies to approximately 35 

balancing authorities in the U.S. portion of the Western Interconnection, does not require 

balancing authorities to file information with the Commission. It does require balancing 

authorities to develop and maintain certain information for a specified period of time, 

subject to inspection by WECC. However, the Commission does not believe that 

approval of the WECC regional Reliability Standard will result in an increase in reporting 

burdens as compared to current practices in WECC. As NERC indicates, since 2003, 

WECC has used the automatic time error correction practice set forth in BAL-004-

WECC-01. Thus, the Commission finds that the requirement to develop and maintain 

information in the regional Reliability Standard mirrors customary and usual business 

practice and, therefore, imposes minimal burden on balancing authorities and eliminates 

any possible confusion between current industry practice and the standard, and that the 

proposed modifications to the current Reliability Standard effected by this proposed rule 

will not increase the reporting burden nor impose any additional information collection 

requirements. 

54. The Commission does not foresee any impact on the reporting burden for small 

businesses. However, we will submit this proposed rule to OMB for informational 

purposes. 

 44 See 16 U.S.C. 824(d). 
Docket No. RM08-12-000 - 26 - 

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

contacting: 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]. Comments on 

the requirements of this order may also be sent to the Office of Information and 

Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission], e-mail: 

oira_submission@omb.eop.gov. 

IV. Environmental Analysis

56. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.45 The Commission has categorically excluded certain 

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

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

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

amended.46 The actions proposed herein fall within this categorical exclusion in the 

Commission’s regulations. 

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

Act of 1969, 52 FR 47,897 (Dec. 17, 1987), FERC Stats. & Regs., Regulations Preambles 

1986-1990 ¶ 30,783 (1987). 

46 18 CFR 380.4(a)(2)(ii). 
Docket No. RM08-12-000 - 27 - 

V. Regulatory Flexibility Act Certification

57. The Regulatory Flexibility Act of 1980 (RFA)47 generally requires a description 

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

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

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

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

Administration’s Office of Size Standards develops the numerical definition of a small 

business. (See 13 CFR 121.201.) For electric utilities, a firm is small if, including its 

affiliates, it is primarily engaged in the transmission, generation and/or distribution of 

electric energy for sale and its total electric output for the preceding twelve months did 

not exceed four million megawatt hours. 

58. In drafting a rule an agency is required to: (1) assess the effect that its regulation 

will have on small entities; (2) analyze effective alternatives that may minimize a 

regulation’s impact; and (3) make the analyses available for public comment.48 In its 

NOPR, the agency must either include an initial regulatory flexibility analysis (initial 

RFA)49 or certify that the proposed rule will not have a “significant impact on a 

substantial number of small entities.”50

 47 5 U.S.C. 601-612. 

48 5 U.S.C. 601-604. 

49 5 U.S.C. 603(a). 

50 5 U.S.C. 605(b). 
Docket No. RM08-12-000 - 28 - 

59. As noted above, the Commission has determined that the regional Reliability 

Standard will not impose any new burden on balancing authorities within the Western 

Interconnection, as the practice has been used in the region since 2003. Further, the 

regional reliability standard would apply to about 35 balancing areas in the Western 

Interconnection. The Commission estimates that of these balancing areas, approximately 

two to four qualify as small entities, because the total electric output of each of these 

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

Thus, few small entities are impacted by the proposed rule. Therefore, the Commission 

certifies, for informational purposes only, that the regional Reliability Standard will not 

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

VI. Comment Procedures

60. 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 45 

days from publication in the Federal Register]. Comments must refer to Docket No. 

RM08-12-000, and must include the commenter's name, the organization they represent, 

if applicable, and their address in their comments. 

61. 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 
Docket No. RM08-12-000 - 29 - 

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

filing. 

62. 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, DC, 20426. 

63. 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. 

VII. Document Availability

64. 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. 

65. 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 No. RM08-12-000 - 30 - 

66. 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. 

List of subjects in 18 CFR Part 40 

Electric power, Electric Utilities, Reporting and record keeping requirements 

 By direction of the Commission. 

Kimberly D. Bose, 

Secretary.