131 FERC ¶ 61,022 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 38 

[Docket No. RM05-5-017; Order No. 676-F] 

Standards for Business Practices and 

Communication Protocols for Public Utilities 

(Issued April 15, 2010) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending 

its regulations at 18 CFR 38.2 to incorporate by reference business practice standards 

adopted by the Wholesale Electric Quadrant of the North American Energy Standards 

Board (NAESB) to categorize various demand response products and services and to 

support the measurement and verification of these products and services in wholesale 

electric energy markets. This rule ensures that participants in wholesale energy markets 

where demand response products are administered receive standardized access to 

information that will enable them to participate in those markets and addresses 

performance evaluation methods appropriate to use for demand response products. This 

rule facilitates the ability of demand response providers to participate in electricity 

markets, reducing transaction costs and providing an opportunity for more customers to 

participate in these programs, especially customers that operate in more than one 
Docket No. RM05-5-017 ii

organized market. It also provides a foundation for further business practice 

standardization efforts, and participants in the NAESB process can use these standards to 

identify those elements for which standardization would be beneficial. Further, adoption 

of measurement and verification standards will improve the methods and procedures for 

measuring accurately the performance of demand response resources and assist in 

monitoring demand response services for potential manipulation. 

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

publication in the FEDERAL REGISTER]. Dates for implementation of the standards 

are provided in the Final Rule. This incorporation by reference of certain publications in 

the rule is approved by the Director of the Federal Register as of [insert date 30 days after 

publication in the FEDERAL REGISTER]. 

FOR FURTHER INFORMATION CONTACT: 

Ryan Irwin (technical issues) 

Office of Energy Policy and Innovation 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6454 

Gary D. Cohen (legal issues) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-8321 

SUPPLEMENTARY INFORMATION: 
Docket No. RM05-5-017 iii

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Standards for Business Practices and 

 Communication Protocols for Public Utilities 

Docket No. RM05-5-017 

ORDER NO. 676-F 

FINAL RULE 

TABLE OF CONTENTS

Paragraph Numbers

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

II. Discussion.............................................................................................................................9.

A. Overview ..........................................................................................................................9.

B. NAESB Phase I M&V Standards.....................................................................................15.

1. Adoption of NAESB Phase I M&V Standards ............................................................15.

2. Clarification of Jurisdictional Concerns.......................................................................17.

3. Nomenclature................................................................................................................21.

C. Phase II M&V Standards..................................................................................................24.

1. Proper Organization(s) to Develop Phase II M&V Standards ....................................24.

2. Guidance on the Scope of the Phase II M&V Standards..............................................29.

3. Suggested Improvements to Standards.........................................................................35.

4. Deadline for Phase II M&V Standards Development ..................................................38.

D. Incorporation by Reference..............................................................................................42.

III. Implementation Dates and Procedures ................................................................................43.

IV. Notice of Use of Voluntary Consensus Standards ..............................................................47.

V. Information Collection Statement ........................................................................................48.

VI. Environmental Analysis ......................................................................................................54.

VII. Regulatory Flexibility Act .................................................................................................55.

VIII. Document Availability .....................................................................................................58.

IX. Effective Date and Congressional Notification...................................................................61.
 

131 FERC ¶ 61,022 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 and John R. Norris. 

Standards for Business Practices and 

 Communication Protocols for Public Utilities 

Docket No. RM05-5-017 

ORDER NO. 676-F 

FINAL RULE 

(Issued April 15, 2010) 

1. The Federal Energy Regulatory Commission (Commission) is amending its 

regulations at 18 CFR 38.2(a) (which establish standards for business practices and 

electronic communications for public utilities)1

 to incorporate by reference business 

practice standards adopted by the Wholesale Electric Quadrant (WEQ) of the North 

American Energy Standards Board (NAESB) to categorize various demand response 

products and services and to support the measurement and verification of these products 

and services in wholesale electric energy markets. We also take this opportunity to 

update 18 CFR 38.2(b) to reflect NAESB’s new address. 

2. These standards identify operational information about demand response products 

that system operators need to make available to participants in markets where such 

products are offered and address performance evaluation methods appropriate to use for 

1

 18 CFR 38.2(a). 
Docket No. RM05-5-017 - 2 -

demand response products. They also facilitate the ability of demand response providers 

to participate in electricity markets, reducing transaction costs and providing an 

opportunity for more customers to participate in these programs, especially customers 

that operate in more than one organized market. In addition, these standards provide a 

foundation for further business practice standardization efforts, which participants in 

NAESB’s WEQ process can use to identify those elements for which standardization 

would be beneficial. Further, adoption of measurement and verification standards will 

improve the methods and procedures for measuring accurately the performance of 

demand response resources and assist in monitoring demand response services for 

potential manipulation. 

I. Background

3. NAESB is a private consensus standards developer that divides its activities 

among four quadrants, each of which is composed of members from all segments of its 

respective industry.2

 NAESB is an accredited standards organization under the auspices 

of the American National Standards Institute (ANSI). NAESB’s procedures are designed 

to ensure that all industry members can have input into the development of a standard, 

whether or not they are members of NAESB, and each wholesale electric standard that 

NAESB’s WEQ adopts is supported by a consensus of the seven industry segments: End 

 2

 The four quadrants are the wholesale and retail electric quadrants and the 

wholesale and retail natural gas quadrants. 
Docket No. RM05-5-017 - 3 -

 

Users, Distribution/Load Serving Entities, Transmission, Generation, Marketers/Brokers, 

Independent Grid Operators/Planners and Technology/Services. Under the WEQ 

process, for a standard to be approved, it must receive a super-majority vote of 67 percent 

of the members of the WEQ's Executive Committee with support from at least 40 percent 

of each of the seven industry segments.3

 For final approval, 67 percent of the WEQ's 

general membership must ratify the standards.4

 NAESB’s standards are voluntary. 

However, the Commission has made compliance with these standards mandatory in those 

instances where it has incorporated such standards by reference into its regulations. 

4. In 2006, the Commission adopted Order No. 676, a Final Rule that incorporated 

by reference business practice standards adopted by NAESB applicable to public 

utilities.5

 Since 2006, the NAESB consensus industry stakeholder process has reviewed 

the NAESB business practice standards for public utilities with a view to creating a more 

efficient marketplace and it has adopted revisions that, in a number of instances, the 

3

 Under NAESB’s procedures, interested persons may attend and participate in 

NAESB committee meetings, and phone conferences, even if they are not NAESB 

members. 

4 See Standards for Business Practices and Communication Protocols for Public 

Utilities, Order No. 676, FERC Stats. & Regs. ¶ 31,216, n.5 (2006), reh’g denied, Order 

No. 676-A, 116 FERC ¶ 61,255 (2006). 

5 Id. 
Docket No. RM05-5-017 - 4 -

 

Commission has made mandatory by incorporating the standards by reference into the 

Commission’s regulations.6

5. NAESB began work on the development of business practice standards pertaining 

to the measurement and verification of demand response products and services in July 

2007, when the NAESB WEQ Demand Side Management - Energy Efficiency (DSM) 

subcommittee began work on this issue. This effort led to the adoption and ratification 

by NAESB of measurement and verification standards early in 2009. Key to obtaining 

consensus on the initial set of standards was the agreement to proceed with further work 

on more detailed technical standards for the measurement and verification of demand 

response resources. 

6. On April 17, 2009, NAESB filed a report informing the Commission that it had 

adopted an initial set of business practice standards to categorize various demand 

response products and services and to support the measurement and verification of these 

products and services in wholesale electric energy markets. The NAESB report 

recognized that these standards would need to be followed by the development of more 

detailed technical standards for the measurement and verification of demand response 

6 Standards for Business Practices and Communication Protocols for Public 

Utilities, Order No. 676-E, Final Rule, 74 FR 63288 (Dec. 3, 2009), FERC Stats. & Regs. 

¶ 31,299 (2009), Order No. 676-D, order granting clarification and denying reh’g, 

124 FERC ¶ 61,317 (2008), Order No. 676-C, Final Rule, FERC Stats. & Regs. ¶ 31,274 

(2008), Order No. 676-B, Final Rule, FERC Stats. & Regs. ¶ 31,246 (2007). 
Docket No. RM05-5-017 - 5 -

 

products and services in independent system operator/regional transmission organization 

(ISO/RTO) footprint areas. 

7. After a review of NAESB’s April 2009 Report, the Commission issued a notice of 

proposed rulemaking on September 17, 2009 that proposed to amend the Commission’s 

regulations at 18 CFR 38.2 to incorporate by reference the consensus standards adopted 

by NAESB’s WEQ on March 16, 2009 (NAESB Phase I M&V Standards).7

 NAESB has 

initiated specific plans to improve and adopt additional technical standards (Phase II 

M&V Standards).8

 In the Phase I M&V NOPR, the Commission specifically requested 

7 Standards for Business Practices and Communication Protocols for Public 

Utilities, Notice of Proposed Rulemaking, 74 FR 48173 (Sep. 22, 2009), FERC Stats. & 

Regs. ¶ 32,646 (2009) (Phase I M&V NOPR). 

8

 Item 4a of NAESB’s 2010 Annual Plan calls for the WEQ to review the NAESB 

Business Practices for Measurement and Verification of Wholesale Electricity Demand 

Response (WEQ-015) in conjunction with the Demand Response Matrix developed by 

the ISO/RTO Council and to identify business practice requirements that could be 

improved or made clearer through the addition of specific technical detail. The ISO/RTO 

Council’s 2009 “North American Wholesale Electricity Demand Response Program 

Comparison” may be viewed at the ISO/RTO Council’s website at “www.isorto.org.” 

The Annual Plan provides that wholesale and retail demand response work groups and 

the Smart Grid task force should actively and timely communicate and coordinate work 

products to ensure consistency among the three work groups. The Annual Plan further 

provides that each work group should take into account the work products developed by 

the other groups. 

Item 4b of NAESB’s 2010 Annual Plan calls for the WEQ, using the ISO/RTO 

Council’s matrix as a starting point, to review each performance evaluation type/service 

type combination identified in WEQ-015 to assess and determine what standards or 

guidelines, if any, should be developed to aid all participants in the use of measurement 

and verification methods for demand response programs in organized wholesale electric 

(continued...) 
Docket No. RM05-5-017 - 6 -

comments on whether the Commission should establish a deadline for the development of 

these remaining critical standards and, if so, what that deadline should be. 

8. In response to the Phase I M&V NOPR, comments were filed by 19 entities.9

II. Discussion

A. Overview

9. In this Final Rule, the Commission is revising its regulations at 18 CFR 38.2 to 

incorporate by reference the NAESB Phase I M&V Standards. The new standards will 

facilitate development of standardized business practices for measuring and verifying 

demand resource products and services for the wholesale electric market. In addition, 

they will help create a framework for a more seamless electronic marketplace by 

providing consistent terms and definitions that can be used in electronic protocols across 

both the wholesale and retail electric markets. Further, adoption of measurement and 

 

markets. If the determination is made that standards or guidelines will be developed, 

those items will be added as sub-items to 4(b). 

Item 4c of NAESB’s 2010 Annual Plan calls for the WEQ to develop a glossary of 

terms used in demand response business practice standards. 

Item 4d of NAESB’s 2010 Annual Plan calls for the WEQ to develop business 

practice standards to measure and verify energy reductions that are made to comply with 

a Renewable Portfolio Standard that includes energy efficiency or a stand-alone Energy 

Efficiency Portfolio Standard as part of an overall effort to measure and verify reductions 

in energy and demand from energy efficiency in wholesale and retail markets. 

9

 The entities that filed comments and the abbreviations used in this Final Rule to 

identify these entities are listed in Appendix A. 
Docket No. RM05-5-017 - 7 -

 

verification standards will improve the methods and procedures for measuring accurately 

the performance of demand response resources and assist in monitoring demand response 

services for potential manipulation. 

10. The NAESB Phase I M&V Standards were approved by the WEQ and ratified by 

the NAESB membership under NAESB's consensus procedures.10 As the Commission 

found in Order No. 587,11 adoption of consensus standards is appropriate because the 

consensus process helps ensure the reasonableness of the standards by requiring that the 

standards draw support from a broad spectrum of industry participants representing all 

segments of the industry. Moreover, since the industry itself has to conduct business 

under these standards, the Commission's regulations should reflect those standards that 

have the widest possible support. In section 12(d) of the National Technology Transfer 

and Advancement Act of 1995 (NTT&AA), Congress affirmatively requires federal 

agencies to use technical standards developed by voluntary consensus standards 

organizations, like NAESB, as a means to carry out policy objectives or activities 

10 This process first requires a super-majority vote of 67 percent of the members of 

the WEQ's Executive Committee with support from at least 40 percent of each of the 

seven industry segments, which are enumerated in P 3, supra. For final approval, 67 

percent of the WEQ's general membership voting must ratify the standards. 

11 Standards for Business Practices of Interstate Natural Gas Pipelines, Order 

No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. & Regs., ¶ 31,038 (1996). 
Docket No. RM05-5-017 - 8 -

 

determined by the agencies unless use of such standards would be inconsistent with 

applicable law or otherwise impractical.12 

11. The specific NAESB standards that we are incorporating by reference in this Final 

Rule are business practices for Measurement and Verification of Wholesale Electricity 

Demand Response. The standards have three sections; the first section (Introduction and 

Definition of Terms) contains an overview of the standards and definitions, the second 

section (Standards 015-1.0 through 015-1.15) contains standards on Provision of 

Wholesale Electric Demand Response Energy, Capacity, Reserve and Regulation 

Products, and the third section (Standards 015-1.16 through 015-1.30) contains standards 

on the five performance evaluation methodologies: (1) Maximum Base Load; (2) Meter 

Before / Meter After; (3) Baseline Type-I (Interval Meter); (4) Baseline Type-II (NonInterval Meter); and (5) Metering Generator Output. 

12. The NAESB Phase I M&V Standards also provide a foundation for further 

business practice standardization efforts, and participants in the WEQ process can use 

these standards to identify those elements for which standardization would be beneficial. 

We believe that development of the Phase II M&V Standards to which NAESB has 

committed will help improve the methods and procedures for measuring accurately the 

performance of demand responders. Such standards also will facilitate the ability of 

12 Pub. L. No. 104-113, § 12(d), 110 Stat. 775 (1996), 15 U.S.C. § 272 note 

(1997). This requirement is further discussed at P 48, infra. 
Docket No. RM05-5-017 - 9 -

demand response providers to participate in electricity markets, in particular customers 

and aggregators that may participate in multiple markets. Standards for measuring and 

verifying demand response can help these customers reduce the transaction costs of 

participating in these markets. 

13. Because of the importance of moving forward on the development and adoption of 

the Phase II M&V Standards, we urge NAESB to complete its development of these 

standards within one year, as discussed below. If NAESB is unable to meet this goal, we 

request that it file with the Commission within one year, a report of the progress it has 

made, as well as the areas in which consensus has not been reached. 

14. We address below the issues raised by the commenters. 

B. NAESB Phase I M&V Standards

1. Adoption of NAESB Phase I M&V Standards 

a. Comments

15. Nearly all the commenters support the proposal to incorporate the NAESB Phase I 

M&V Standards by reference. California Commission, Comverge, EEI, EnerNOC, 

EPSA, Indiana Commission, ISO/RTO Council, NARUC, NRECA, Public Interest Orgs, 

SDG&E, TVA and Westar all express support for the proposal. For example, EnerNOC 

asserts the NAESB Phase I M&V Standards address a need within the industry to develop 

consistent measurement and verification (M&V) practices across the country. While 

NRECA and Indiana Commission raised concerns about the costs of obtaining NAESB 
Docket No. RM05-5-017 - 10 -

standards, addressed below, they did not oppose the incorporation by reference of the 

NAESB Phase I M&V Standards. 

b. Commission Determination

16. The Commission is revising its regulations at 18 CFR 38.2 to incorporate by 

reference the NAESB Phase I M&V Standards. The new standards define terms and 

definitions that can be used to facilitate communications and provide standards for 

measurement and verification methodologies for demand resources in wholesale electric 

markets. 

2. Clarification of Jurisdictional Concerns

17. As we explained in the Phase I M&V NOPR, the NAESB Phase I M&V Standards 

will enhance transparency and consistency in the methodology used to measure and 

verify demand response products in wholesale markets administered by the ISOs and 

RTOs.13 

a. Comments

18. FirstEnergy, the California Commission and NARUC all caution that these 

standards are only applicable in the wholesale energy market and that the states have 

jurisdiction over retail demand response programs, meters and infrastructure. 

19. FirstEnergy argues that the Commission’s involvement in demand response 

activities must continue to acknowledge that the states have jurisdiction in retail markets. 

 13 Phase I M&V NOPR at P 10. 
Docket No. RM05-5-017 - 11 -

Similarly, NARUC states that the Commission should continue to work closely with the 

states to outline jurisdictional boundaries with respect to the standards being proposed in 

the NAESB process. 

b. Commission Determination

20. We agree with the commenters that the NAESB Phase I M&V Standards that we 

are incorporating by reference in this Final Rule are applicable to wholesale energy 

markets under the Commission’s jurisdiction and nothing in this Final Rule is intended to 

interfere with the states’ jurisdiction over retail demand response programs. 

3. Nomenclature

21. The NAESB Phase I M&V Standards include 40 definitions. These definitions 

“identify basic product categories, i.e., energy service, capacity service, reserve service 

and regulation service. They identify the measurement and verification characteristics of 

demand response products and services offered in organized wholesale electricity 

markets, such as reduction deadlines, advance notification instructions, telemetry 

accuracy, and communication protocols.”14 

a. Comments

22. ELCON suggests in several instances that the definition included in the NAESB 

Phase I M&V Standards should be revised to add more specificity. For example, it 

would add further operating characteristics to the definitions of Normal Operations, 

 14 Id. at P 6. 
Docket No. RM05-5-017 - 12 -

Recovery Period and Demand Resource Availability Measurement.15 Additionally, 

ELCON suggests several edits and clarifications to these same terms and to the definition 

of Triggering Events and Telemetry.16 EPSA, likewise, asserts the standards in their 

current form do not provide enough detail to ensure demand response resources receive 

comparable treatment to those of other resources.17 

b. Commission Determination

23. We find the definitions included in the NAESB Phase I M&V Standards adequate 

for the purposes of Phase I and we will incorporate them by reference as proposed in the 

Phase I M&V NOPR. Also, as we noted above, item 4c of the WGQ 2010 Action Plan is 

devoted to the formulation of a glossary of demand response terminology. ELCON and 

EPSA may pursue their concerns about the need for greater specificity in the definition of 

demand response terms by continuing their participation in the NAESB process. 

 15 ELCON Comments at 4-7. 

16 Id. at 5. 

17 EPSA Comments at 4. 
Docket No. RM05-5-017 - 13 -

C. Phase II M&V Standards

1. Proper Organization(s) to Develop Phase II M&V Standards 

a. Comments

24. Nearly all the comments support NAESB as the proper organization to develop the 

Phase II M&V Standards.18 For example, ISO/RTO Council asserts the NAESB process 

has been an effective way to bring demand response organizations together to create the 

NAESB Phase I M&V Standards. Comverge commends the efforts of NAESB to 

develop this initial set of standards. EPSA also supports the NAESB process and notes 

the ANSI-certified consensus-based approach is an effective means to craft standards. 

Comverge expresses appreciation to NAESB for its efforts and is supportive of its efforts 

that ensure increased demand response participation. 

25. By contrast, Duke is the sole commenter raising an objection to the continuing role 

of NAESB in developing the Phase II M&V Standards. Duke contends that the ISOs and 

RTOs are in a better position to develop these standards, due to regional differences. 

 18 See supporting comments on this subject by Comverge, Curtailment Specialists, 

EEI, EPSA, ISO/RTO Council, NARUC and Westar. FirstEnergy also supports these 

efforts, although it cautions that we need to keep jurisdictional concerns in mind. See

discussion at P 18-19, supra. TVA also stresses the need for the proper coordination of 

efforts. See P 39, infra. The objections of Industrial Coalitions on its preference for the 

Commission developing all standards are discussed in P 42, infra. 
Docket No. RM05-5-017 - 14 -

b. Commission Determination

26. In our view, NAESB is best suited to develop these common Phase II M&V 

Standards. The NAESB DSM subcommittee has the membership and participation of 

demand response providers, ISOs, RTOs, public utilities and trade groups. 

27. The continued cooperation and efforts of all these participants in the NAESB 

Phase II M&V Standards process will create an environment conducive to creating 

transparent and consistent standards for the measurement and verification of demand 

response resources offered into wholesale electricity markets. Furthermore, the efforts of 

a single group sponsored by NAESB will allow for more efficient participation in the 

standards development process and will help provide greater consistency than might be 

possible from the individual efforts sponsored by six separate regional organizations. 

28. Improvement in measurement and verification standards will work to ensure that 

the performance of demand response resources can be accurately quantified. 

Standardization of measurement and verification methods also will help to reduce costs 

for customers participating in multiple markets. Without consistent standards, customers 

and demand response providers that participate in more than one RTO or ISO would then 

have to incur the costs of developing different business processes to adapt to the differing 

RTO/ISO requirements, increasing the cost and complexity of their business. 

Furthermore, the Phase II M&V Standards should help achieve greater efficiency in the 

operation and evaluation of the performance of demand response products and services. 
Docket No. RM05-5-017 - 15 -

2. Guidance on the Scope of the Phase II M&V Standards

a. Comments

29. Many of the commenters find that NAESB’s development of Phase II M&V 

Standards and the Commission’s incorporation by reference of such standards will have 

the benefit of creating additional consistency and standardization across markets. These 

same commenters also noted the benefits to adoption of a common terminology for M&V 

methods. For example, Public Interest Orgs supports the standardization of M&V 

business rules and asserts that such standardization will increase participation, eliminate 

gaming opportunities and enable aggregators to overcome varying business practices. 

EPSA also finds benefit in the Commission acting to reduce needless and costly 

disparities among the ISOs and RTOs, but is concerned that the standards provide too 

much deference to ISO/RTO policies and that this will hinder efforts to standardize 

demand response rules. ELCON does not object to the role of NAESB in developing the 

Phase II M&V Standards, but finds that the process needs improvement in Phase II so 

that the concerns of demand response providers are given more consideration and the 

views of ISOs and RTOs are given less deference.19

30. SDG&E supports the adoption of standards that promote transparency and 

consistency across markets. SDG&E further states that adopting consistent standards 

 19 ELCON Comments at 3. 
Docket No. RM05-5-017 - 16 -

across ISOs and RTOs could reduce barriers to demand response providers who operate 

in multiple markets. Industrial Coalitions states the standardization of demand response 

practices across power markets will improve their business objectives.20 Comverge 

supports Phase II M&V Standards that would simplify baseline approaches and expand 

the deployment of demand response. ISO/RTO Council notes approvingly that the use of 

common terminology has accelerated the development of retail standards as well as 

supported development of other demand response initiatives. TVA states that NAESB’s 

Phase II M&V Standards efforts should concentrate on the measurement and verification 

of demand response. 

31. Both Duke and FirstEnergy request guidance as to the content of the Phase II 

M&V Standards and what information is needed to facilitate and promote demand 

response in markets. 

b. Commission Determination

32. While NAESB’s Phase I M&V Standards represent a good first step, additional 

substantive standards would appear beneficial in creating transparent and consistent 

measurement and verification of demand response products and services in wholesale 

 20 Industrial Coalitions members include: Coalition of Midwest Transmission 

Customers; NEPOOL Industrial Customer Coalition; and PJM Industrial Customer 

Coalition. 
Docket No. RM05-5-017 - 17 -

electric markets. The measurement and verification standards needed to accomplish this 

goal should be a focus of NAESB’s Phase II M&V Standards development efforts. 

33. While the development of the Phase II M&V Standards should be an industrydriven consensus-seeking process, we agree with commenters that more detailed 

measurement and verification standards will reduce costs for customers and market 

participants, particularly those participating in multiple markets. As discussed earlier, 

demand response providers that participate in more than one RTO or ISO should not have 

to incur the costs of developing different business processes to adapt to the differing 

RTO/ISO requirements, increasing the cost and complexity of their business. 

34. In response to Duke’s and FirstEnergy’s requests for additional guidance as to the 

content of the Phase II M&V Standards, we agree with NAESB’s plan to start the process 

by reviewing the elements of the performance evaluation methods detailed in the 

ISO/RTO Council’s demand response program matrix. While we do not expect NAESB 

to develop a single performance evaluation method, we reiterate that greater 

standardization of the performance evaluation methods will improve the accuracy of 

measuring and verifying demand response performance and may reduce costs. ELCON 

expresses concern that the views of RTOs and ISOs will be given greater consideration 

than those of other participants in the NAESB process. As discussed earlier, the NAESB 

process requires consensus agreement from all seven segments of the industry and no 

segment, therefore, can dominate the development of a standard. We expect the 
Docket No. RM05-5-017 - 18 -

participants in the NAESB process actively to consider and be open to proposals and 

concerns from any source and to try to reconcile differences so that the standards promote 

accurate measurement and verification of the performance of demand resources. 

3. Suggested Improvements to Standards

35. In the Phase I M&V NOPR, the Commission stated that these standards represent 

a starting place to develop a more comprehensive set of standards, with the development 

of more detailed technical standards for the measurement and verification of demand 

response resources, to take place in the Phase II M&V Standards development process. 

36. A few of the commenters have raised some specific concerns that they would like 

addressed in the Phase II M&V Standards development process. For example, ELCON 

complains that the NAESB process gives too much weight to the views of ISOs and 

RTOs and argues that the standards place specific requirements on demand response 

providers while not spelling out the complementary obligations of system operators. 

ELCON would like this corrected in the Phase II M&V Standards process.21 Water 

Project stresses that the Phase II M&V Standards should be designed to accurately verify 

the performance of demand response resources according to the specific service they are 

providing. Curtailment Specialists suggests the DSM subcommittee concentrate its 

 21 ELCON Comments at 3. 
Docket No. RM05-5-017 - 19 -

efforts on developing the five baseline types; Baseline Type-I and Type-II, Meter Before 

/ Meter After, Maximum Base Load and Metering Generator Output. 

a. Commission Determination

37. As discussed above, the NAESB process provides for a reasonable balance of 

interests so that no one sector, RTOs or any other sector, can dominate the process. We 

agree that the process needs to consider the issues and views of the participants. We 

expect the NAESB process to develop Phase II M&V standards which incorporate the 

interests of all stakeholders in the process of developing consensus standards. In 

response to Curtailment Specialists, we expect Phase II will address issues related to 

baseline development, but we do not believe that Phase II should be limited to baseline 

development issues alone. 

4. Deadline for Phase II M&V Standards Development

38. In the Phase I M&V NOPR, the Commission invited comment on whether the 

Commission should establish a deadline to complete the Phase II M&V Standards. The 

comments we received were split on this issue. 

a. Comments

39. ELCON strongly supports a deadline for the development of the Phase II M&V 

Standards.22 EPSA and TVA support a deadline that should take into consideration 

efforts underway at the North American Electric Reliability Corporation (NERC) and the 

 22 ELCON Comments at 3. 
Docket No. RM05-5-017 - 20 -

 

National Institute for Standards and Technology (NIST) for both demand response and 

Smart Grid activities. Similarly, FirstEnergy recommends that the Commission 

coordinate its efforts with those of NERC, NIST and the Electric Power Research 

Institute. EPSA also supports prompt action and notes that NERC is in the process of 

developing demand response measurement standards through its Demand Response 

Availability Data System (DADS). EPSA expresses concern that a long delay in the 

Phase II M&V Standards development process may hinder NERC’s demand response 

registration processes. Likewise, Comverge and EnerNOC also both support an 

aggressive deadline for the timely completion of the Phase II M&V Standards 

development process. 

40. By contrast, ISO/RTO Council, FirstEnergy, EEI, SDG&E, NRECA and the 

Indiana Commission all oppose a deadline. They all argue that setting a deadline would 

be premature and contend that the NAESB process should be allowed to run its course. 

Many of these commenters, however, agree that, absent a deadline, it would be 

appropriate for NAESB to provide the Commission with regular status reports on the 

progress made in the development of the Phase II M&V Standards.23 

23 See comments by FirstEnergy, EEI, Indiana Commission and ISO/RTO 

Council. 
Docket No. RM05-5-017 - 21 -

b. Commission Determination

41. We request that NAESB seek to conclude its Phase II M&V Standards 

development within one year from the effective date of this order. In light of the 

importance of measuring and verifying demand response products, as well as the utility 

of these standards to the NIST and NERC initiatives, the Phase II M&V Standards should 

be developed as soon as possible. Prompt action in developing the Phase II M&V 

Standards is essential, in light of the importance of these standards in ensuring that the 

performance of demand response resources can be accurately quantified. A year for 

development of such standards is reasonable. Due to the importance of these standards, if 

NAESB is unable to fully develop standards within the one-year period, we request that it 

file a report with the Commission indicating the progress it has made, including the 

standards it has considered and the issues on which it has been unable to reach consensus. 

The Commission can then build upon the information developed during the NAESB 

process to propose standards or establish procedures for the development of such 

standards. 

D. Incorporation by Reference

42. A number of organizations (Industrial Coalitions, NRECA, and the Indiana 

Commission) filed comments objecting to the incorporation by reference of the NAESB 

standards, maintaining they should not have to pay to obtain copies of the copyrighted 
Docket No. RM05-5-017 - 22 -

standards. We addressed this issue at length in Order No. 676-E24 in November of 2009, 

concluding that the NAESB process is the most efficient and cost-effective method of 

developing these standards, incorporation by reference is the appropriate method for the 

Commission to adopt the regulations, and the Commission must respect NAESB’s 

copyright.25 As we pointed out in that order, obtaining these standards is not cost 

prohibitive. NAESB, in fact, makes the standards available for free for three consecutive 

business days for those who want to view the standards in order to make comments with 

the Commission.26 Even for those non-members seeking to purchase a copy, the 

standards are available for $900, which is not prohibitive, given the costs of otherwise 

participating in a notice and comment rulemaking proceeding, including the hiring of 

legal counsel. 

III. Implementation Dates and Procedures

43. The Commission is requiring, consistent with our regulation at 18 CFR 

35.28(c)(vi), each ISO and RTO to revise its OATT to include the NAESB Phase I M&V 

Standards we are incorporating by reference herein. For standards that do not require 

implementing tariff provisions, the Commission will allow the ISO or RTO to 

incorporate the WEQ standard by reference in its OATT. Compliance with the standards 

 24 Order No. 676-E, FERC Stats. & Regs. ¶ 31,299 at P 115-121. 

25 Id.

26 http://www.naesb.org/misc/NAESB_Nonmember_Evaluation_LockLizard.pdf. 
Docket No. RM05-5-017 - 23 -

incorporated in this Final Rule will be required beginning on the same date that the rule 

becomes effective (i.e., thirty days after publication in the Federal Register), even if this 

precedes the filing of a revised OATT reflecting these new requirements. 

44. However, as we proposed in the Phase I M&V NOPR, to lighten the burden 

associated with an immediate, stand-alone filing of a revised tariff reflecting the 

standards incorporated by reference in this Final Rule, we are giving ISOs and RTOs the 

option of including these changes as part of an unrelated tariff filing, even though 

compliance with the revised standards is required beginning on the effective date of this 

Final Rule.27

45. If adoption of these standards does not require any changes or revisions to 

existing OATT provisions, ISOs and RTOs may comply with this rule by adding a 

provision to their OATTs that incorporates the standards adopted in this rule by 

reference, including the standard number used to identify the standard. To incorporate 

this standard into their OATTs, ISOs and RTOs must use the following language in their 

OATTs: Measurement and Verification of Wholesale Electricity Demand Response 

(WEQ-015, 2008 Annual Plan Item 5(a), March 16, 2009). 

 27 See Order No. 676, P 100 (2006). If the ISO or RTO makes no unrelated tariff 

filing by December 31, 2010, it must make a separate tariff filing incorporating these 

standards by that date. 
Docket No. RM05-5-017 - 24 -

46. If an ISO or RTO requests waiver of a standard, it will not be required to comply 

with the standard until the Commission acts on its waiver request. Therefore, if an ISO 

or RTO has obtained a waiver or has a pending request for a waiver, its proposed revision 

to its OATT should not include the standard number associated with the standard for 

which it has obtained or seeks a waiver. Instead, the ISO or RTO’s OATT should specify 

those standards for which the ISO or RTO has obtained a waiver or has pending a request 

for waiver. Once a waiver request is denied, the ISO or RTO will be required to include 

in its OATT the standard(s) for which waiver was denied.

IV. Notice of Use of Voluntary Consensus Standards

47. In section 12(d) of NTT&AA, Congress affirmatively requires federal agencies to 

use technical standards developed by voluntary consensus standards organizations, like 

NAESB, as the means to carry out policy objectives or activities determined by the 

agencies unless use of such standards would be inconsistent with applicable law or 

otherwise impractical.28 NAESB approved the standards under its consensus procedures. 

Office of Management and Budget Circular A-119 (§ 11) (February 10, 1998) provides 

that federal agencies should publish a request for comment in a NOPR when the agency 

is seeking to issue or revise a regulation proposing to adopt a voluntary consensus 

 28 See n.12 supra. 
Docket No. RM05-5-017 - 25 -

standard or a government-unique standard. The Commission published a request for 

comment in the Phase I M&V NOPR. 

V. Information Collection Statement

48. The Office of Management and Budget’s (OMB) regulations in 5 CFR 1320.11 

require that it approve certain reporting and recordkeeping requirements (collections of 

information) imposed by an agency. Upon approval of collections of information, OMB 

is expected to assign new expiration dates to FERC-516 (OMB Control Number 1902-

0096) and FERC-717 (OMB Control Number 1902-0173). The OMB Control Numbers 

will not be displayed in the NAESB standards; an explanation will be included in the 

clearance package submitted to OMB. The Commission will not enforce the 

requirements of this rule until OMB approval is obtained. 

49. This Final Rule upgrades the Commission’s current business practice and 

communication standards to include NAESB’s Phase I M&V Standards. The 

implementation of these standards is necessary to increase the efficiency of demand 

response in wholesale electric energy markets. In addition, requiring such information 

ensures a common means of communication and ensures common business practices that 

provide participants engaged in transactions with demand response programs with timely 

information and consistent business procedures across multiple markets. The 

implementation of these data requirements will help the Commission carry out its 

responsibilities under the Federal Power Act. 
Docket No. RM05-5-017 - 26 -

50. The Commission sought comments on its estimate provided in the NOPR of the 

burden associated with adoption of the NOPR proposals. In response to the NOPR, no 

comments were filed that addressed the reporting burden imposed by these requirements. 

Therefore the Commission will use these same estimates in this Final Rule. 

Data Collection No. of 

Respondents 

No. of 

Responses Per 

Respondent 

Hours Per 

Response 

Total No. of 

Hours 

FERC-51629 6 1 6 36 

FERC-71730 6 1 12 72 

Totals 108 

Total Annual Hours for Collection 

(Reporting and Recordkeeping, if appropriate) = 108 hours 

Information Collection Costs: The Commission seeks comments on the costs to comply 

with these requirements. The Commission projects the average annualized cost for all 

respondents as follows:31

 

(continued...) 

29 “FERC-516” is the Commission’s identifier that corresponds to OMB control 

no. 1902-0096 which identifies the information collection associated with Electric Rate 

Schedules and Tariff Filings. 

30 “FERC-717” is the Commission’s identifier that corresponds to OMB control 

no. 1902-0173 which identifies the information collection associated with Standards for 

Business Practices and Communication Protocols for Public Utilities. 

31 The total annualized costs for the information collection is $39,960. This 

number is reached by multiplying the total hours to prepare responses (108) by an hourly 
Docket No. RM05-5-017 - 27 -

FERC-516 FERC-717 

Annualized Capital/Startup Costs $13,320 $26,640 

Annualized Costs (Operations & Maintenance) N/A 

Total Annualized Costs $13,320 $26,64032

51. OMB regulations33 require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting this Final Rule to 

OMB. These information collections are mandatory requirements. 

Title: Standards for Business Practices and Communication Protocols for Public Utilities 

(formerly Open Access Same Time Information System) (FERC-717); Electric Rate 

Schedule Filings (FERC-516). 

Action: Information collection. 

OMB Control No.: 1902-0096 (FERC-516); 1902-0173 (FERC-717). 

Respondents: Business or other for profit (Public Utilities - Not applicable to small 

businesses). 

 

wage estimate of $370 (a composite estimate that includes legal, technical and support 

staff rates, $250+$95+$25=$370), 108 hours x $370/hour= $39,960. 

32 We note that 36 hours at $370/hour= $13,320 and 72 hours at 

$370/hour=$26,640. Together, $13,320+$26,640=$39,960 as shown in note 32, supra. 

33 5 CFR 1320.11. 
Docket No. RM05-5-017 - 28 -

Frequency of Responses: One-time implementation (business procedures, capital/startup). 

52. Necessity of Information: The Commission’s regulations adopted in this rule 

upgrade the Commission’s current business practices and communication standards by 

standardizing the definitions used by ISOs and RTOs to identify their various demand 

response products and to measure and verify the results obtained by these products. 

Moreover, the implementation of these data requirements will help ensure consistency 

among the ISOs/RTOs with respect to the measurement and verification of demand 

response performance in their wholesale electricity markets. 

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

contacting: Federal Energy Regulatory Commission, Attn: Ellen Brown, Office of the 

Executive Director, 888 First Street, NE, Washington, DC 20426 Tel: (202) 502-8663, 

fax: (202) 273-0873, email: DataClearance@ferc.gov or by contacting: Office of 

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

20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission, email: 

oira_submission@omb.eop.gov; Tel: (202) 395-4638, fax: (202) 395-7285]. Comments 

to OMB should include the appropriate OMB Control Number(s) and collection 

number(s) (OMB Control No. 1902-0096 for FERC-516, and/or OMB Control No. 1902-

0173 for FERC-717) as a point of reference. 
Docket No. RM05-5-017 - 29 -

VI. Environmental Analysis

54. 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.34 The Commission has categorically excluded certain 

actions from these requirements as not having a significant effect on the human 

environment.35 The actions adopted here fall within categorical exclusions in the

Commission’s regulations for rules that are clarifying, corrective, or procedural, fo

information gathering analysis, and dissemination, and for sales, exchange, and 

transportation of natural gas and electric power that requires no construction of facilitie

Therefore, an environmental assessment is unnecessary and has not been prepared in this

r 

s. 

Final Rule. 

VII. Regulatory Flexibility Act

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

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

number of small entities. In drafting a rule an agency is required to: (1) assess the effect

36 n 

that its regulation will have on small entities; (2) analyze effective alternatives that may 

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

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

(1987). 

35 18 CFR 380.4. 

36 5 U.S.C. 601-612. 
Docket No. RM05-5-017 - 30 -

minimize a regulation’s impact; and (3) make the analysis available for public 

comment. 37

56. The regulations we are adopting in this Final Rule impose filing requirements only 

on ISOs and RTOs, none of which is a small business. Moreover, these requirements are 

designed to benefit all customers, including small businesses. As noted above, adoption 

of consensus standards helps ensure the reasonableness of the standards by requiring that 

the standards draw support from a broad spectrum of industry participants representing 

all segments of the industry. Because of that representation and the fact that industry 

conducts business under these standards, the Commission’s regulations should reflect 

those standards that have the widest possible support. 

57. Accordingly, pursuant to section 605(b) of the RFA, the Commission hereby 

certifies that the regulations adopted herein will not have a significant adverse impact on 

a substantial number of small entities. 

VIII. Document Availability

58. 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 

 37 5 U.S.C. 601-604. 
Docket No. RM05-5-017 - 31 -

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

Washington, DC 20426. 

59. 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. 

60. 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. email the Public Reference Room at 

public.referenceroom@ferc.gov. 

IX. Effective Date and Congressional Notification

61. These regulations are effective [insert date 30 days from publication in 

FEDERAL REGISTER]. The Commission has determined (with the concurrence of the 

Administrator of the Office of Information and Regulatory Affairs of OMB) that this rule 

is not a “major rule” as defined in section 351 of the Small Business Regulatory 

Enforcement Fairness Act of 1996. 
Docket No. RM05-5-017 - 32 -

List of subjects in 18 CFR Part 38

Conflict of interests, Electric power plants, Electric utilities, Incorporation by reference, 

Reporting and recordkeeping requirements. 

By the Commission. 

( S E A L ) 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 
Docket No. RM05-5-017 - 33 -

 In consideration of the foregoing, the Commission amends part 38, 

Chapter I, Title 18, Code of Federal Regulations, as follows. 

 PART 38 – BUSINESS PRACTICE STANDARDS AND COMMUNICATION 

PROTOCOLS FOR PUBLIC UTILITIES 

1. The authority citation for part 38 continues to read as follows: 

Authority: 16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352. 

2. In § 38.2, paragraphs (a)(10), (a)(11), and (b) are revised and paragraph (a)(12) is 

added to read as follows: 

§ 38.2 Incorporation by Reference of North American Energy Standards Board 

Wholesale Electric Quadrant standards.

(a) * * * * * 

(10) Public Key Infrastructure (PKI) (WEQ-012, Version 002.1, March 11, 

2009, with minor corrections applied on May 29, 2009 and September 8, 2009); 

(11) Open Access Same-Time Information Systems 

(OASIS) Implementation Guide, Version 1.5 (WEQ-013, Version 002.1, March 11, 2009, 

with minor corrections applied on May 29, 2009 and September 8, 2009); and 

(12) Measurement and Verification of Wholesale Electricity Demand 

Response (WEQ-015, 2008 Annual Plan Item 5(a), March 16, 2009). 

(b) This incorporation by reference was approved by the Director of the 

Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of these 

standards may be obtained from the North American Energy Standards Board, 
Docket No. RM05-5-017 - 34 -

801 Travis Street, Suite 1675, Houston, TX 77002, Tel: (713) 356-0060. NAESB’s 

website is at http://www.naesb.org/. Copies may be inspected at the Federal Energy 

Regulatory Commission, Public Reference and Files Maintenance Branch, 888 First 

Street, NE, Washington, DC 20426, Tel: (202) 502-8371, www.ferc.gov, or at the 

National Archives and Records Administration (NARA). For information on the 

availability of this material at NARA, call 202-741-6030, or go to: 

http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html 

* * * * * 
Docket No. RM05-5-017 - 35 -

Note: The following Appendix will not appear in the Code of Federal Regulations.

 Appendix A 

List of Commenters38 

California Department of Water Resources State Water Project (Water Project) 

California Public Utilities Commission (California Commission) (with notice of 

intervention) 

Comverge, Inc. (Comverge) 

Duke Energy Corporation (Duke) 

Edison Electric Institute (EEI) 

FirstEnergy Service Company (FirstEnergy) 

Electric Power Supply Association (EPSA) 

Electricity Consumers Resource Council (ELCON) 

Energy Curtailment Specialists, Inc. (Curtailment Specialists) (also filed motion to 

intervene) 

EnerNOC, Inc. (EnerNOC) (also filed motion to intervene) 

Indiana Utility Regulatory Commission (Indiana Commission) (with notice of 

intervention) 

Industrial Coalitions39 

 38 The abbreviations used to identify these commenters in this Final Rule are 

shown parenthetically. 

39 Filed on behalf of Coalition of Midwest Transmission Customers, NEPOOL 

Industrial Customer Coalition, and PJM Industrial Customer Coalition. 
Docket No. RM05-5-017 - 36 -

List of Commenters

ISO/RTO Council40 

National Association of Regulatory Utility Commissioners (NARUC) 

National Rural Electric Cooperative Association (NRECA) 

Public Interest Organizations (Public Interest Orgs)41 

San Diego Gas & Electric Company (SDG&E) 

Tennessee Valley Authority (TVA) (with motion to intervene) 

Westar Energy, Inc. (Westar) (with motion to intervene) 

 40 ISO/RTO Council includes the Independent System Operators operating as the 

Alberta Electric System Operator, the California Independent System Operator, Electric 

Reliability Council of Texas, the Independent Electricity System Operator of Ontario, 

Inc., ISO New England, Inc., Midwest Independent Transmission System Operator, Inc., 

New York Independent System Operator, Inc., PJM Interconnection, L.L.C., Southwest 

Power Pool, Inc., and New Brunswick System Operator. 

41 Jointly filed on behalf of Project for Sustainable FERC Energy Policy, Natural 

Resources Defense Council, the Pace Energy and Climate Center and Conservation Law 

Foundation.