139 FERC ¶ 61,041 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 38 

[Docket No. RM05-5-020] 

Standards for Business Practices and 

Communication Protocols for Public Utilities 

(April 19, 2012) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

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

to amend its regulations to incorporate by reference the business practice standards 

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

Board (NAESB) that pertain to the measurement and verification of demand response and 

energy efficiency resources participating in organized wholesale electricity markets. 

NAESB adopted the measurement and verification of demand response standards in 

response to the Commission’s findings in Order No. 676-F. These standards can be 

obtained from NAESB at 801 Travis Street, Suite 1675, Houston, TX 77002, telephone: 

(713) 356-0060, http://www.naesb.org, and are available for viewing in the 

Commission’s Public Reference Room. 

DATES: Comments are due [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER]. 
Docket No. RM05-5-020 - 2 - 

ADDRESSES: Comments, identified by docket number RM05-5-020, may be filed in 

the following ways: 

 Electronic Filing through http://www.ferc.gov. Documents created electronically 

using word processing software should be filed in native applications or print-toPDF format and not in a scanned format. 

 Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver 

comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE, Washington, DC 20426. 

Instructions: For detailed instructions on submitting comments and additional 

information on the rulemaking process, see the Comment Procedures Section of this 

document 

FOR FURTHER INFORMATION CONTACT: 

David Kathan (Technical Issues) 

Office of Energy Policy and Innovation 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6404 

david.kathan@ferc.gov 

 

Dennis Hough (Legal Issues) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-8631 

dennis.hough@ferc.gov 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Standards for Business Practices and 

Communication Protocols for Public Utilities 

Docket No. RM05-5-020 

NOTICE OF PROPOSED RULEMAKING 

TABLE OF CONTENTS

Paragraph Numbers

I. Background ............................................................................................................................2.

II. Discussion.............................................................................................................................10.

A. NAESB Phase II Demand Response M&V Standards ....................................................11.

1. Description....................................................................................................................12.

2. Discussion.....................................................................................................................15.

B. NAESB Wholesale Energy Efficiency M&V Standards .................................................20.

1. Description....................................................................................................................21.

2. Discussion.....................................................................................................................23.

III. Notice of Use of Voluntary Consensus Standards ..............................................................25.

IV. Information Collection Statement .......................................................................................26.

V. Environmental Analysis .......................................................................................................32.

VI. Regulatory Flexibility Act Certification .............................................................................33.

VII. Comment Procedures .........................................................................................................35.

VIII. Document Availability .....................................................................................................39.
139 FERC ¶ 61,041 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Standards for Business Practices and 

Communication Protocols for Public Utilities 

Docket No. RM05-5-020 

NOTICE OF PROPOSED RULEMAKING 

(April 19, 2012) 

1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy Regulatory 

Commission (Commission) proposes to amend its regulations at 18 CFR 38.2 under the 

Federal Power Act1

 to incorporate by reference the business practice standards adopted 

by the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards 

Board (NAESB) that pertain to the measurement and verification of demand response and 

energy efficiency resources participating in organized wholesale electricity markets.2

 

Adoption of these standards is intended to improve the methods and procedures used to 

accurately measure demand response and energy efficiency resource performance. 

 1

 16 U.S.C. 791a et seq. (2006). 

2 See Report, North American Energy Standards Board, Measurement and 

Verification of Demand Response Products, Docket No. RM05-5-020 (filed May 3, 

2011) (May 3 Report) (providing a status update and description of the proposed 

standards). In accordance with applicable copyright laws, complete versions of the 

standards are available from NAESB at 801 Travis Street, Suite 1675, Houston, TX 

77002, telephone: (713) 356-0060, http://www.naesb.org, and are available for viewing 

in the Commission’s Public Reference Room. 
Docket No. RM05-5-020 - 2 - 

Additionally, these standards should help Regional Transmission Organizations (RTO) 

and Independent System Operators (ISO) to properly credit demand response and energy 

efficiency resources for their services.3

I. Background

2. 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.4

 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 electricity standard that 

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

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 

 3

 The Commission has also sought RTO and ISO proposals regarding their 

measurement and verification methodologies, including in Order No. 745, Demand 

Response Compensation in Organized Wholesale Energy Markets, Order No. 745, 

76 Fed. Reg. 16,658 (Mar. 24, 2011), FERC Stats. & Regs. ¶ 31,322, at P 93-95 (2011), 

order on reh’g, Order No. 745-A, 137 FERC ¶ 61,215, at P 123 (2011). 

4

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

wholesale and retail natural gas quadrants. 
Docket No. RM05-5-020 - 3 - 

each of the seven industry segments.5

 For final approval, 67 percent of the WEQ’s 

general membership must ratify the standard.6

3. In 2006, the Commission issued Order No. 676, a Final Rule that incorporated by 

reference business practice standards for the WEQ adopted by NAESB applicable to 

public utilities.7

 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 Commission has made mandatory by incorporating by reference into the 

Commission’s regulations.8

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

to the measurement and verification of demand response9

 products and services in 

 

(continued...) 

5

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

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

members. 

6 See May 3 Report at 2. 

7 See Standards for Business Practices and Communication Protocols for Public 

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

No. 676-A, 116 FERC ¶ 61,255 (2006). 

8 Standards for Business Practices and Communication Protocols for Public 

Utilities, Order No. 676-F, FERC Stats. & Regs. ¶ 31,309 (2010); Order No. 676-E, 

FERC Stats. & Regs. ¶ 31,299 (2009); Order No. 676-D, 124 FERC ¶ 61,317 (2008), 

Order No. 676-C, FERC Stats. & Regs. ¶ 31,274 (2008), Order No. 676-B, FERC Stats. 

& Regs. ¶ 31,246 (2007). 

9

 Demand response means a reduction in the consumption of electric energy by 

customers from their expected consumption in response to an increase in the price of 
Docket No. RM05-5-020 - 4 - 

July 2007, when the NAESB WEQ Demand Side Management - Energy Efficiency 

(DSM-EE) subcommittee began work on this issue. This effort led to the adoption and 

ratification by NAESB of initial measurement and verification standards early in 2009. 

5. On April 17, 2009, NAESB filed a report (April 2009 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 organized wholesale electricity markets 

(Phase I Demand Response M&V Standards).10 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. 

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 products and services in RTO and ISO areas. 

6. On April 15, 2010, the Commission issued Order No. 676-F, incorporating by 

reference11 the Phase I Demand Response M&V Standards12 that categorize various 

 

electric energy or to incentive payments designed to induce lower consumption of electric 

energy. 18 C.F.R. § 35.28(b)(4) (2011). 

10 Report, North American Energy Standards Board, Measurement and 

Verification of Demand Response Products, Docket No. RM05-5-017, at 2 

(filed Apr. 17, 2009) (April 2009 Report). 

11 Incorporation by reference makes compliance with these standards mandatory 

for public utilities subject to Part 38 of the Commission’s regulations. 
Docket No. RM05-5-020 - 5 - 

demand response products and services and support the measurement and verification of 

these products and services in organized wholesale electricity markets.13 The 

Commission stated that “[w]hile NAESB’s Phase I [Demand Response] 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 electric markets.”14 The Commission also stated that 

“we expect Phase II will address issues related to baseline development . . . .”15 The 

Commission anticipated that the measurement and verification standards needed to 

accomplish this goal would be a focus of NAESB’s Phase II measurement and 

verification standards development efforts.16

7. NAESB subsequently initiated specific plans to improve and adopt additional 

technical standards and filed a report17 with the Commission on May 3, 2011 (May 3 

Report) that informed the Commission that NAESB had adopted a revised set of 

 12 See Standards for Business Practices and Communication Protocols for Public 

Utilities, Notice of Proposed Rulemaking, FERC Stats. & Regs. ¶ 32,646 (2009) (2009 

NOPR). 

13 Standards for Business Practices and Communication Protocols for Public 

Utilities, Order No. 676-F, FERC Stats. & Regs. ¶ 31,309 (2010). 

14 Order No. 676-F, FERC Stats. & Regs. ¶ 31,309 at P 32. 

15 Id. P 37. 

16 Id. P 32. 

17 See supra n.2. 
Docket No. RM05-5-020 - 6 - 

standards covering measurement and verification (Phase II Demand Response M&V 

Standards) and a new set of standards covering energy efficiency,18 and explained its 

efforts to develop these standards. 

8. As discussed in more detail below, the Phase II Demand Response M&V 

Standards add more specifications to the existing Phase I Demand Response M&V 

Standards’ definitions and business practice standards in the following areas: meter data 

reporting deadline, advanced notification, telemetry interval, meter accuracy for after-the- 

 18 Energy efficiency: 

[r]efers to programs that are aimed at reducing the energy 

used by specific end-use devices and systems, typically 

without affecting the services provided. These programs 

reduce overall electricity consumption (reported in 

megawatthours), often without explicit consideration for the 

timing of program-induced savings. Such savings are 

generally achieved by substituting technologically more 

advanced equipment to produce the same level of end-use 

services (e.g. lighting, heating, motor drive) with less 

electricity. Examples include high-efficiency appliances, 

efficient lighting programs, high-efficiency heating, 

ventilating and air conditioning (HVAC) systems or control 

modifications, efficient building design, advanced electric 

motor drives, and heat recovery systems. 

U.S. Energy Information Administration Glossary, 

http://www.eia.gov/tools/glossary/index.cfm?id=E (last visited Feb. 24, 2012). 
Docket No. RM05-5-020 - 7 - 

fact metering, meter data reporting interval, and adjustment window.19 During NAESB’s 

work on Phase II, the WEQ DSM-EE Wholesale Demand Response Work Group (WEQ 

DR work group) discussed the level of detail to be included in the standards, with most 

participants agreeing that the standards developed should not “duplicate efforts 

undertaken in the ISO-RTO stakeholder process,” which vetted the adopted programs 

extensively.20 NAESB states that a majority of the WEQ DR work group agreed that 

“impacting the stakeholder process would require guidance from the FERC.”21

9. In addition to demand response standards, NAESB drafted, discussed, and adopted 

business practice standards for the measurement and verification of energy efficiency in 

organized wholesale electricity markets (Wholesale Energy Efficiency M&V Standards). 

NAESB reports that the work took place between July 2009 and December 2010, and 

was considered in NAESB’s DSM-EE subcommittee meetings and WEQ’s Executive 

Committee meetings. The standards are designed to create a standard method for 

quantifying the energy reductions from energy efficiency measures. The Wholesale 

Energy Efficiency M&V Standards include six new definitions and 63 business practice 

 19 NAESB states that “advance notification” involves a communication to the 

demand response resource made prior to when its services are required. The “telemetry 

interval,” as described by NAESB, is the period of time between submissions of data. 

NAESB defines “adjustment window” as a period of time used to calculate a baseline 

adjustment. 

20 May 3 Report at 1-2. 

21 Id. at 1. 
Docket No. RM05-5-020 - 8 - 

standards. Included are definitions for energy efficiency baseline and demand reduction 

value. The standards contain criteria for the use of energy efficiency products in 

organized wholesale electricity markets, general measurement and verification plan 

requirements, and detailed criteria of acceptable measurement and verification 

methodologies. NAESB states that the standards are built upon PJM Interconnection, 

L.L.C. and ISO New England Inc. manuals, the Federal Energy Management Program 

(FEMP) measurement and verification standards,22 the International Performance 

Measurement and Verification Protocol (IPMVP),23 and several state protocols.24 

II. Discussion

10. The Commission proposes to incorporate by reference into our regulations both 

the Phase II Demand Response M&V Standards and associated terms, and the Wholesale 

Energy Efficiency M&V Standards and associated terms. 

A. NAESB Phase II Demand Response M&V Standards

11. The Commission proposes to incorporate by reference into its regulations the 

Phase II Demand Response M&V Standards as a further step toward transparency and 

consistency in the methods RTOs and ISOs use to measure and verify demand response 

 22 U.S. Department of Energy, FEMP, M&V Guidelines: Measurement and 

Verification for Federal Energy Projects, Version 3.0, April 2008, 

http://www1.eere.energy.gov/femp/pdfs/mv_guidelines.pdf. 

23 Efficiency Valuation Organization, IPMVP Public Library of Documents, 

http://www.evo-world.org/. 

24 May 3 Report at 3. 
Docket No. RM05-5-020 - 9 - 

in their organized wholesale electricity markets.25 Additionally, the Commission seeks 

comment on the Phase II Demand Response M&V Standards and on certain aspects of 

measurement and verification of demand response more generally, including the degree 

to which standardization is important, the appropriate degree of detail and specificity that 

any such standards should contain, and the appropriate mechanism for achieving any 

necessary improvements in this area. 

1. Description

12. The Phase II Demand Response M&V Standards build on the Phase I Demand 

Response M&V Standards. These new standards also include updates to certain 

associated definitions as well as some formatting and organizational changes. The 

collective set of Phase I and Phase II Demand Response M&V Standards comprise two 

parts: the first part establishes criteria for the use of equipment, technology, and 

 25 We propose to incorporate by reference the following standards collectively 

identified by NAESB as 2010 Wholesale Electric Quadrant Annual Plan Item 4(a) and 

4(b): General – Section 015-1.0; Telemetry – Section 015-1.1; After-the-Fact Metering – 

Section 015-1.2; Performance Evaluation – Section 015-1.3; General – Section 015-1.4; 

Telemetry – Section 015-1.5; After-the-Fact Metering – Section 015-1.6; Performance 

Evaluation – Section 015-1.7; General – Section 015-1.8; Telemetry – Section 015-1.9; 

After-the-Fact Metering – Section 015-1.10; Performance Evaluation – Section 015-1.11; 

General – Section 015-1.12; Telemetry – Section 015-1.13; After-the-Fact Metering – 

Section 015-1.14; Performance Evaluation – Section 015-1.15; Baseline Information – 

Section 015-1.16; Event Information – Section 015-1.17; Special Processing – Section 

015-1.18; Baseline Information – Section 015-1.19; Event Information – Section 015-

1.20; Special Processing – Section 015-1.21; Baseline Information – Section 015-1.22; 

Event Information – Section 015-1.23; Special Processing – Section 015-1.24; Baseline 

Information – Section 015-1.25; Event Information – Section 015-1.26; Special 

Processing – Section 015-1.27; Baseline Information – Section 015-1.28; Event 

Information – Section 015-1.29; and Special Processing – Section 015-1.30. 
Docket No. RM05-5-020 - 10 - 

procedures to quantify the demand reduction value26 of four product categories,27 and the 

second part includes business practice requirements for five performance evaluation 

types.28 

13. In the Phase II Demand Response M&V Standards, NAESB consistently replaced 

references to the “System Operator” with the term “Governing Documents” 29 throughout 

most of the standards. Other changes include adding a meter data reporting deadline 

(103 days for the energy and capacity product categories and 55 days for reserve and 

regulation product categories); specifying an advanced notification of one day maximum 

to the demand response resource that its capacity product category will be required; 

establishing a telemetry interval of six seconds for the provider of the regulation product 

category to submit data to the system operator; tightening the requirement for meter 

accuracy for after-the-fact metering for all four product categories; and defining an 

 26 NAESB defines “demand reduction value” as the amount of a demand 

resource’s reduced electricity usage. 

27 The four product categories are energy service, capacity service, reserve service, 

and regulation service. 

28 The five performance evaluation types are maximum base load, meter 

before/meter after, baseline type-I, baseline type-II, and metering generator output. 

29 “Governing Documents” are documents that control or affect the interaction and 

relationship between a system operator and other parties, for example, applicable statutes 

and regulations, tariffs, contracts, manuals, and other relevant procedures. The DSM-EE 

subcommittee made this change to remove system operator discretion and to more 

accurately reflect that rules are developed by markets not the system operator. See 2008 

WEQ AP Item 5(a) Recommendation to the NAESB WEQ Executive Committee at 37 

(Sept. 30, 2010) (available at May 3 Report, Appendix B, Page 5, 

http://www.naesb.org/pdf4/dsmee_group3_093010reqcom_a1.doc). 
Docket No. RM05-5-020 - 11 - 

adjustment window of four hours for calculating baseline adjustments for the baseline 

type-I and baseline type-II performance evaluation types. 

14. As characterized by NAESB, the set of business practice standards represented by 

the combination of Phase I and Phase II efforts “provide a framework that may be used to 

develop performance evaluation methodologies for specific Demand Response services; 

they do not specify detailed characteristics of performance evaluation methodologies.”30 

The standards state that, should a conflict arise between the business practice standards 

and a System Operator’s Governing Documents, the Governing Documents would have 

precedence.31

2. Discussion

15. As noted above, when the Commission approved the Phase I Demand Response 

M&V Standards in Order No. 676-F, it recognized that “additional substantive standards 

would appear beneficial in creating transparent and consistent measurement and 

verification . . . in wholesale electric markets.”32 The Commission agreed with 

commenters “that more detailed measurement and verification standards will reduce costs 

for customers and market participants, particularly those participating in multiple 

markets” and that “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 

 30 2010 WEQ AP Item 4(a) and 4(b) Final Action at 12 (ratified Mar. 21, 2011). 

31 Id. at 10. 

32 Order No. 676-F, FERC Stats. & Regs. ¶ 31,309 at P 32. 
Docket No. RM05-5-020 - 12 - 

to the differing RTO/ISO requirements, increasing the cost and complexity of their 

business.”33 While the Commission acknowledged that NAESB’s efforts may not result 

in a single performance evaluation method, the Commission emphasized that “greater 

standardization of the performance evaluation methods will improve the accuracy of 

measuring and verifying demand response performance and may reduce costs.”34 

16. The 2009 NOPR noted that the key to several NAESB participants’ willingness to 

accept the Phase I Demand Response M&V Standards was an agreement among 

participants to include more specific technical measurement and verification standards in 

NAESB’s annual work plan and to proceed with further work on more detailed technical 

standards.35 Similarly, in its April 2009 Report, NAESB stressed that “more technical 

standards would be needed to support the standards provided in the recommendation,” 

that “[a]ll WEQ [Executive Committee] members agreed to have a follow-up 

development effort to provide additional technical context to the standards,” and that “the 

DSM-EE subcommittee [had already] begun efforts to scope the development of more 

detailed technical standards for the measurement and verification of demand response 

products and services in ISO-RTO footprint areas.”36 

 33 Id. P 33. 

34 Id. P 34. 

35 NOPR, FERC Stats. & Regs. ¶ 32,646 at P 6. 

36 April 2009 Report at 2. 
Docket No. RM05-5-020 - 13 - 

17. As noted above, NAESB acknowledges that the resulting set of business practice 

standards represented by the combination of Phase I and Phase II efforts set forth a 

generalized performance evaluation methodology that lacks specific provisions or 

detailed requirements.37 The Commission invites comments on the proposed Phase II 

standards. Further, in light of the Commission’s statements in Order No. 676-F 

regarding the importance of consistency and specificity, we invite comment as to whether 

the Phase II Demand Response M&V Standards that we propose to adopt herein are 

sufficiently detailed to provide transparent measurement and verification among regions, 

and whether greater detail or prescriptiveness would be appropriate. We also seek 

comment on the degree to which encouraging greater consistency among markets and 

regions would reduce costs for customers and market participants or otherwise facilitate 

participation by end users in multiple markets. 

18. To the extent that greater detail is recommended, the Commission seeks comment 

as to whether sufficient experience in demand response is available to identify best 

practices in the area of measurement and verification, particularly for performance 

evaluation types such as baseline calculations. Similarly, we seek comment about the 

particular areas where enhancing such detail or consistency would be most useful. For 

example, are consistent telemetry and metering requirements more or less important than 

consistent approaches to the determination of baselines; would it be worthwhile to 

 37 See 2010 WEQ AP Item 4(a) and 4(b) Final Action at 12 (ratified Mar. 21, 

2011). 
Docket No. RM05-5-020 - 14 - 

address procedures for weather adjustments; or are any other particular aspects of 

measurement and verification appropriate for further effort regarding the addition of 

increased specificity and more consistency across RTOs and ISOs? 

19. The Commission appreciates the efforts of the WEQ thus far in developing these 

standards. The Commission also understands that various participants in the NAESB 

process expressed concern that the NAESB process should not duplicate efforts 

undertaken in the stakeholder processes of the RTOs and ISOs, which vetted their 

individual programs extensively.38 As a result, many of the standards defer to the 

existing Governing Documents of the RTOs and ISOs. The Commission seeks comment 

on whether further development of more substantive measurement and verification 

standards broadly applicable to RTOs and ISOs are required and, if so, whether a NAESB 

or a Commission-led, or other process should carry out the task. If commenters prefer 

the NAESB process, we request comment on the best relationship framework between 

NAESB and the RTO and ISO stakeholder processes to facilitate the formulation of 

standards. 

B. NAESB Wholesale Energy Efficiency M&V Standards

20. The Commission proposes to incorporate by reference into our regulations the 

Wholesale Energy Efficiency M&V Standards.39 These business practice standards 

 

(continued...) 

38 See May 3 Report at 1. 

39 We propose to incorporate by reference the following standards collectively 

identified by NAESB as 2010 Wholesale Electric Quadrant Annual Plan Item 4(d): 
Docket No. RM05-5-020 - 15 - 

provide criteria for energy efficiency resources participating in organized wholesale 

electricity markets, general requirements for the structure of a measurement and 

verification plan, and detailed criteria for acceptable measurement and verification 

methodologies. The standards incorporate documentation and reporting requirements 

applicable to installed energy efficiency measures. The standards also consider technical 

requirements such as identification of energy efficiency baseline conditions, statistical 

significance requirements for measurement methodologies requiring statistical estimation 

techniques, and technical requirements for measurement equipment. 

1. Description

21. The purpose of these business practice standards is to establish a standard method 

for quantifying the energy reductions associated with energy efficiency measures such as 

lighting, appliances, industrial process improvements, and building management. 

NAESB describes the Wholesale Energy Efficiency M&V Standards as an initial set of 

standards for the participation of energy efficiency products in organized wholesale 

electricity markets. 

 

Energy Efficiency Resource Use Criteria in Wholesale Markets – Section 021-3.1; 

General Measurement and Verification Plan Requirements – Section 021-3.2; Post 

Installation M&V Report Components – Section 021-3.3; Performance Reporting – 

Section 021-3.4; M&V Supporting Documents – Section 021-3.5; M&V Methodologies – 

Section 021-3.6; Energy Efficiency Baseline Conditions – Section 021-3.7; Statistical 

Significance – Section 021-3.8; Nominated Energy Efficiency Value 

Calculations/Demand Reduction Value Calculations – Section 021-3.9; Measurement and 

Monitoring – Section 021-3.10; Measurement Equipment Specifications – Section 021-

3.11; and Data Validation – Section 021-3.12. 
Docket No. RM05-5-020 - 16 - 

22. NAESB adopted its Wholesale Energy Efficiency M&V Standards under its 

consensus procedures. The consensus process developed by NAESB requires the 

organization to be fully aware of the positions of each of NAESB’s six wholesale electric 

segments (i.e., end users, distribution/load serving entities, transmission, generation, 

marketers/brokers, and independent grid operators/planners). 

2. Discussion

23. The Commission preliminarily finds that the Wholesale Energy Efficiency M&V 

Standards provide substantive detail to assure more effective evaluation of the 

performance of energy efficiency products and services. The standards provide the 

means for demonstrating consistent and reliable evidence of reductions in electricity 

usage attributable to energy efficiency resources that qualify to participate in organized 

wholesale electricity markets. The NAESB standards are intended to provide for proper 

measurement and verification of energy efficiency resources so that the resources may be 

compensated in accordance with how well they perform, and how performance continues 

as equipment or systems age. The standards should also help to ensure that energy 

efficiency resources and other electricity resources are treated comparably. 

24. The Commission appreciates the detail provided within the Wholesale Energy 

Efficiency M&V Standards. The standards provide four measurement and verification 

methodologies (Sections 021-3.6.1.1 - 021-3.6.1.4), as well as a mechanism by which 

energy efficiency resource providers may propose, and RTOs and ISOs may consider, 

alternative measurement and verification methodologies (Section 021-3.6.2). The 

Commission recognizes that the establishment of baseline performance data and 
Docket No. RM05-5-020 - 17 - 

monitoring of post-installation performance of energy efficiency measures is conducted 

by directly measuring and monitoring system loads, or extrapolating from a selection of 

available measurement variables. The standards contain 15 technical requirements for all 

measurement equipment devices used by energy efficiency resource providers (Sections 

021-3.11.1 - 021-3.11.15). Specifically, the 15 technical requirements provide standards 

for interval meters that record electricity usage data as well as for the measurement or 

monitoring of “proxy variables” that do not directly measure electricity consumption. 

The technical requirements for proxy variable measurement include detailed accuracy 

and precision requirements. The standards also contain five statistical requirements 

intended to ensure accuracy for the measurement methodologies requiring statistical 

estimation techniques (Sections 021-3.8.2 - 021-3.8.6). The Commission invites 

comment on the proposed standards. 

III. Notice of Use of Voluntary Consensus Standards

25. Office of Management and Budget Circular A-119 (section 11) (Feb. 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 

standard or a government-unique standard. In this NOPR, the Commission is proposing 

to incorporate by reference voluntary consensus standards developed by the NAESB 

WEQ. 

IV. Information Collection Statement

26. The collections of information contained in this proposed rule have been 

submitted to the Office of Management and Budget (OMB) for review under section 
Docket No. RM05-5-020 - 18 - 

3507(d) of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d). The Commission 

solicits comments on the Commission’s need for this information, whether the 

information will have practical utility, the accuracy of the provided burden estimates, 

ways to enhance the quality, utility, and clarity of the information to be collected, and any 

suggested methods for minimizing respondents’ burden, including the use of automated 

information techniques. Respondents subject to the filing requirements of this 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. 

27. The following burden estimate is based on the projected costs for the industry to 

implement revisions to the WEQ Standards currently incorporated by reference into the 

Commission’s regulations at 18 CFR 38.2 and to implement the new standards adopted 

by NAESB that we propose here to incorporate by reference. 

FERC 

Collection 

Number 

No. of 

Respondents

(A) 

No. of 

Responses 

Per 

Respondent

(B) 

Hours Per 

Response 

(C) 

Total No. of 

Hours 

(A)x(B)x(C)

FERC-51640 Demand 6 1 4 24

Response 

Standards FERC-71741 6 1 9 54

 40 “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. 

41 “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. 
Docket No. RM05-5-020 - 19 - 

FERC-516 6 1 6 36 Energy 

Efficiency 

Standards FERC-717 6 1 12 72

Total for 

FERC-516 78

Total for 

FERC-717 108

Total OneTime 

Burden 

186

Total Annual Hours for Collection: (Reporting and Recordkeeping, (if appropriate)) = 

186 hours. 

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

with these requirements. It has projected the average annualized cost for all respondents 

to be the following:42

FERC-516 FERC-717 

Demand Response Standards Annualized 

Capital/Startup Costs 

$1416 $3186

Demand Response Standards Annualized Costs 

(Operations & Maintenance) 

N/A N/A

Energy Efficiency Standards Annualized 

Capital/Startup Costs 

$2124 $4248

 42 The Total Annual Cost for information collection is $10,974. This number is 

reached by multiplying the total hours to prepare responses (186) by an hourly wage 

estimate of $59 (a composite estimate of wages plus benefits that includes legal, technical 

and support staff rates. Based on data from the Bureau of Labor Statistics at 

http://bls.gov/oes/current/naics3_221000.htm and 

http://www.bls.gov/news.release/ecec.nr0.htm). (78 hours for demand response 

standards + 108 hours for energy efficiency standards) x $59/hour= $10,974. 
Docket No. RM05-5-020 - 20 - 

Energy Efficiency Standards Annualized Costs 

(Operations & Maintenance) 

N/A N/A

Demand Response Standards Total Annualized 

Costs 

$1416 $318643

Energy Efficiency Standards Total Annualized 

Costs 

$2124 $424844

All Standards Total Annualized Costs $3,540 $7,434

28. OMB regulations require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting notification of this 

proposed 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: Proposed collection. 

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

Respondents for this Rulemaking: RTOs and ISOs. 

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

 

43 We note that 24 hours at $59/hour= $1,416 and 54 hours at 

$59/hour= $3,186. 

44 We note that 36 hours at $59/hour= $2,124 and 72 hours at $59/hour= $4,248. 
Docket No. RM05-5-020 - 21 - 

Necessity of the Information: This proposed rule, if implemented, will help to 

standardize the methods and procedures used by RTOs and ISOs to accurately measure 

demand response and energy efficiency resource performance, thereby improving an 

RTO’s or ISO’s capability to detect anti-competitive or manipulative behavior. 

Additionally, this proposed rule will help RTOs and ISOs to properly credit demand 

response and energy efficiency resources for their efforts. 

29. Internal Review: The Commission has reviewed the business practice standards 

proposed in this NOPR and has made a preliminary determination that these standards are 

necessary to maintain consistency and help increase the effectiveness of RTO and ISO 

rules pertaining to measurement and verification of demand response and energy 

efficiency resource practices. The Commission has assured itself, by means of its 

internal review, that there is specific, objective support for the burden estimate associated 

with the information requirements. 

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

contacting the Federal Energy Regulatory Commission, Office of the Executive Director, 

888 First Street, NE, Washington, DC 20426 [Attention: Ellen Brown, e-mail: 

DataClearance@ferc.gov, phone: (202) 502-8663, fax: (202) 273-0873]. 

31. Comments concerning the information collections proposed in this NOPR and the 

associated burden estimates, should be sent to the Commission in this docket and may 

also be sent to the Office of Management and Budge, Office of Information and 

Regulatory Affairs, Washington, DC 20503 [Attention: Desk Officer for the Federal 

Energy Regulatory Commission]. For security reasons, comments should be sent by 
Docket No. RM05-5-020 - 22 - 

e-mail to OMB at the following e-mail address: oira_submission@omb.eop.gov. Please 

reference FERC-xxx and the docket number of this proposed rulemaking (Docket 

No. RM05-5-020) in your submission. 

V. Environmental Analysis

32. 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 these requirements as not having a significant effect on the human 

environment.46 The actions proposed to be taken here fall within categorical ex

in the Commission’s regulations for rules that are corrective, clarifying, or procedura

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

transportation of electric power that requires no construction of facilities.

clusions 

l, for 

47 Therefore an 

environmental review is unnecessary and has not been prepared in this rulemaking. 

VI. Regulatory Flexibility Act Certification

33. The Regulatory Flexibility Act of 1980 (RFA)48 generally requires an 

administrative agency to perform an analysis of rulemakings that will have a significant 

 45 Regulations Implementing the National Environmental Policy Act, Order 

No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Regulations Preambles 

1986-1990 ¶ 30,783 (1987). 

46 18 CFR 380.4. 

47 See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), and 380.4(a)(27). 

48 5 U.S.C. 601-612. 
Docket No. RM05-5-020 - 23 - 

economic impact on a substantial number of small entities. The RFA mandates 

consideration of regulatory alternatives that accomplish the stated objectives of a 

proposed rulemaking while minimizing any significant economic impact on a substantial 

number of small entities. The Small Business Administration (SBA) develops the 

numerical definition of a small business.49 The SBA has established a size standard for 

electric utilities, stating that 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 fiscal year did not exceed four million megawatt 

hours.50 

34. The regulations proposed here impose requirements only on RTOs and ISOs, 

which are not small businesses. Moreover, these requirements are designed to benefit all 

customers, including small businesses. Accordingly, the Commission hereby certifies, 

pursuant to section 605(b) of the RFA,51 that the regulations proposed herein will not 

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

VII. Comment Procedures

35. 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 60 

 49 13 CFR 121.101. 

50 13 CFR 121.201, Sector 22 Utilities n.1. 

51 5 U.S.C. 605(b). 
Docket No. RM05-5-020 - 24 - 

days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM05-5-020, and must include the commenter's name, the organization they 

represent, if applicable, and their address in their comments. 

36. 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 

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

filing. 

37. Commenters that are not able to file comments electronically must send an 

original of their comments to: Federal Energy Regulatory Commission, Secretary of the 

Commission, 888 First Street NE, Washington, DC, 20426. 

38. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters. 

VIII. Document Availability

39. 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 the Commission's Home Page 

(http://www.ferc.gov) and in the Commission's Public Reference Room during normal 
Docket No. RM05-5-020 - 25 - 

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

Washington DC 20426. 

40. From the Commission'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. 

41. User assistance is available for eLibrary and the Commission’s website during 

normal business hours from the Commission’s 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 38

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

Reporting and recordkeeping requirements. 

By direction of the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

 
Docket No. RM05-5-020 - 26 - 

 In consideration of the foregoing, the Commission proposes to amend 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. Section 38.2 is amended by revising paragraph (a)(12) and adding paragraph 

(a)(13) to read as follows: 

§ 38.2 Incorporation By Reference Of North American Energy Standards Board 

Wholesale Electric Quadrant Standards 

 (a) * * * 

 (12) Business Practices for Measurement and Verification of Wholesale 

Electricity Demand Response (WEQ-015, 2010 Annual Plan Items 4(a) and 4(b), 

March 21, 2011). 

 (13) Business Practice Standards for Measurement and Verification of Energy 

Efficiency Products (WEQ-021, 2010 Annual Plan Item 4(d), May 13, 2011). 

* * * * *