Document ID: FERC-2009-1443-0001
Agency: ferc
Document Type: Proposed Rule
Title: Standards for Business Practices and Communication Protocols for Public Utilities
Posted Date: 2009-09-22T04:00Z

[Federal Register: September 22, 2009 (Volume 74, Number 182)]
[Proposed Rules]               
[Page 48173-48177]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22se09-15]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 38

[Docket No. RM05-5-017]

 
Standards for Business Practices and Communication Protocols for 
Public Utilities

Issued September 17, 2009.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes 
to incorporate by reference in its regulations regarding 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.

DATES: Comments on the proposed rule are due October 22, 2009.

ADDRESSES: You may submit comments identified by Docket No. RM05-5-017, 
by one of the following methods:
     Agency Web site: http://www.ferc.gov. Follow the 
instructions for submitting comments via the eFiling link found in the 
Comment Procedures Section of the preamble.
    Mail: Commenters unable to file comments electronically must mail 
or hand deliver an original and 14 copies of their comments to the 
Federal Energy Regulatory Commission, Secretary of the Commission, 888 
First Street, NE., Washington, DC 20426. Please refer to the Comment 
Procedures Section of the preamble for additional information on how to 
file paper comments.

FOR FURTHER INFORMATION CONTACT:
Bruce McAllister (technical issues), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-8296.
Ryan M. Irwin (technical issues), Office of Energy Market Regulation, 
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: 

Notice of Proposed Rulemaking

Issued September 17, 2009

    1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy 
Regulatory Commission (Commission) proposes to amend its regulations 
under the Federal Power Act \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.
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    \1\ 16 U.S.C. 791a, et seq.
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I. Background

    2. NAESB is a non-profit standards development organization that 
serves as an industry forum for the development of business practice 
standards. These standards promote a seamless marketplace for wholesale 
and retail natural gas and electricity.\2\ Since 1995, NAESB and its 
predecessor, the Gas Industry Standards Board, have been accredited 
members of the American National Standards Institute (ANSI), complying 
with ANSI's requirements that its standards reflect a consensus of the 
affected industries.\3\
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    \2\ See Standards for Business Practices and Communication 
Protocols for Public Utilities, Final Rule, FERC Stats. & Regs. ] 
31,274, at P 2 (2008).
    \3\ Id.
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    3. NAESB's standards include business practices that streamline the 
transactional processes of the natural gas and electric industries, as 
well as communication protocols and related standards designed to 
improve the efficiency of communication within each industry. NAESB 
supports all four quadrants of the gas and electric industries--
wholesale gas, wholesale electric, retail gas, and retail electric. All 
participants in the gas and electric industries are eligible to join 
NAESB and participate in standards development.\4\
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    \4\ Id. P 3.
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    4. Wholesale electric industry business practice standards are 
developed by the WEQ (Wholesale Electric Quadrant) of NAESB. To become 
a WEQ standard, a consensus of six industry segments, transmission, 
generation, marketer/brokers, distribution/load serving entities, end 
users, and independent grid operators/planners, must approve the 
standard. 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

[[Page 48174]]

percent of each of the six industry segments. For final approval, 67 
percent of the WEQ's general membership must ratify the standards.\5\ 
In a series of Orders,\6\ the Commission has incorporated certain of 
NAESB's standards into its regulations. These standards include 
standards for business practices as well as standards and protocols for 
electronic communication, and business practice standards related to 
reliability standards promulgated by NERC and approved by the 
Commission.
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    \5\ Standards for Business Practices and Communication Protocols 
for Public Utilities, Notice of Proposed Rulemaking, FERC Stats. & 
Regs. ] 32,582, at P 13 (2005); Standards for Business Practices of 
Interstate Natural Gas Pipelines, Final Rule, Order No. 587-O, FERC 
Stats. & Regs. ] 31,129, n. 14 (2002).
    \6\ See n.2 supra.
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    5. On April 17, 2009, after two years of development, NAESB 
reported to the Commission that, on March 16, 2009, it adopted its 
initial set of business practice standards for the measurement and 
verification of demand response products and services (NAESB Phase I 
M&V Standards).\7\ NAESB states that these initial standards will need 
to be followed by the development of more detailed technical standards 
for the measurement and verification of demand response products and 
services in independent system operator/regional transmission 
organization (ISO/RTO) footprint areas. NAESB states that its Demand 
Side Management-Energy Efficiency subcommittee has already begun 
efforts to plan the development of these more detailed (Phase II) 
standards; however, actual standards development has not yet started.
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    \7\ When NAESB adopts a business practice standard as a Final 
Action, the standard is considered complete from NAESB's 
perspective, but, from the Commission's perspective, compliance with 
such a standard is not mandatory until such time as the Commission 
takes formal action to incorporate such a standard by reference into 
its regulations. NAESB's Phase I M&V Standards were adopted in the 
WEQ's 2009 Annual Plan 5(a) Final Action. NAESB's Apr. 17, 2009 
submittal is also available for viewing in eLibrary under Docket No. 
RM05-5-017. The link to eLibrary is as follows: http://www.ferc.gov/
docs-filing/efiling.asp.
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    6. The NAESB Phase I M&V Standards include 40 definitions and 31 
business practice standards. The 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. The business practice standards address the 
major operational categories associated with demand response. NAESB 
stresses that the key to several NAESB participants' willingness to 
accept the standards submitted on April 17th was the agreement among 
participants to include more specific technical measurement and 
verification standards in NAESB's current annual work plan and to 
proceed with further work on more detailed technical standards.

II. Description of NAESB's Phase I M&V Standards

    7. The Phase I M&V Standards include two parts. First, there are 
standards that identify operational information about demand response 
products that system operators need to make available. Second, specific 
standards address the performance evaluation methods appropriate to use 
for demand response products. These standards are described briefly 
below. In addition, associated terms are defined in a glossary.
    8. First, the NAESB Phase I M&V Standards address transparency of 
the provision of four wholesale electric demand response products: 
Energy (WEQ-015-1.0 through WEQ-015-1.3); capacity (WEQ-015-1.4 through 
1.7); reserves (WEQ-015-1.8 through 1.11); and regulation (WEQ-015-1.12 
through 1.15). For each of these products, the standards require system 
operators to make information publicly available on: (1) Specific 
operational requirements listed in the business practice standards, 
e.g., notification requirements; (2) telemetry requirements, e.g., the 
telemetry interval shall not exceed five minutes; (3) after-the-fact 
metering requirements, e.g., the metering accuracy shall not exceed 
three percent of full scale; and (4) performance evaluation rules, 
e.g., the performance evaluation method applicable to the product being 
delivered. Most of these transparency requirements are the same for all 
four products, although some only apply where appropriate. Other 
requirements apply only to one product; for example, demand resources 
providing regulation services are required to automatically respond to 
grid frequency deviations, similar to the governor action provided by 
generation resources, unless otherwise specified by the system 
operator.
    9. Second, the NAESB Phase I M&V Standards require the system 
operator to make publicly available the specific method to be used and 
the information required for the performance of resources providing 
demand response products (the performance evaluation method). 
Information standards specify that a system operator must define 
criteria and requirements for telemetry, metering, and performance 
evaluation, including baseline window, calculation type, sampling, 
baseline adjustments and measurement methods for each method that may 
be used to evaluate the performance of each demand response product. 
The system operator must specify that some or all of five methods may 
be used: Maximum Base Load Evaluation (WEQ-015-1.16 through WEQ-015-
1.18); Meter Before/Meter After (WEQ-015-1.19 through WEQ-015-1.21); 
Baseline Type I--Interval Meter (WEQ-015-1.22 through WEQ-015-1.24); 
Baseline Type II--Non-Interval Meter (WEQ-015-1.25 through WEQ-015-
1.27); and Metering Generator Output (WEQ-015-1.28 through WEQ-015-
1.30).

III. Discussion

    10. The Commission proposes to incorporate by reference into our 
regulations the NAESB Phase I M&V Standards and associated terms used 
in the WEQ-015 glossary.\8\ The Phase I M&V Standards are primarily 
intended to enhance the transparency and consistency of the methods 
used to measure and verify demand response products in wholesale 
electricity markets administered by RTOs and ISOs. The glossary 
provides standardized definitions of demand response services, 
operational terms and performance measurements. The NAESB Phase I M&V 
Standards that we are proposing to incorporate by reference in this 
NOPR provide a starting place to develop a more comprehensive set of 
standards for the provision of demand response products in wholesale 
markets.
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    \8\ We propose to incorporate by reference the following 
standards collectively identified by NAESB as 2008 Annual Plan Item 
5(a): Provision of Wholesale Electric Demand Response Energy 
Products--Standards 015-1.0-1.3; Provision of Wholesale Electric 
Demand Response Capacity Products--Standards 015-1.4-1.7; Provision 
of Wholesale Electric Demand Response Reserve Products--Standards 
015-1.8-1.11; Provision of Wholesale Electric Demand Response 
Regulation Products--Standards 015-1.12-1.15; Maximum Base Load 
Evaluation--Standards 015-1.16-1.18; Meter Before/Meter After--
Standards 015-1.19-1.21; Baseline Type I--(Interval Meter)--
Standards 015-1.22-1.24; Baseline Type II--(Non-Interval Meter)--
Standards 015-1.25-1.27; and Metering Generator Output--Standards 
015-1.28-1.30.
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    11. NAESB adopted its Phase I M&V Standards under its consensus 
procedures.\9\ Adoption of consensus standards is appropriate because 
the consensus process helps to ensure the reasonableness of the 
standards by requiring that the standards draw support from a broad 
spectrum of all

[[Page 48175]]

segments of the industry. Moreover, because 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 determined by the agencies unless use of such standards 
would be inconsistent with applicable law or otherwise impractical.\10\
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    \9\ See P 4 supra.
    \10\ Pub. L. 104-113, 12(d), 110 Stat. 775 (1996), 15 U.S.C. 272 
note (1997).
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    12. The NAESB Phase II M&V Standards are intended to establish 
business practice standards that 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. The NAESB Phase I M&V Standards provide 
a framework 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 it is appropriate to develop criteria and standards that system 
operators can use to determine how demand response will be initiated, 
communicated, controlled, adjusted, measured and verified.
    13. We appreciate the efforts of the WEQ thus far in developing 
these standards. It is clear, however, that much work still needs to be 
done. Members of the WEQ need to continue their efforts to develop the 
substantive standards needed to achieve greater efficiency in the 
operation and evaluation of the performance of demand response products 
and services. The Commission continues to believe that the industry 
should take the lead in developing and implementing demand response 
standards that will be both practical and workable. However, we request 
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.

IV. Notice of Use of Voluntary Consensus Standards

    14. 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 a voluntary consensus standard developed by 
the NAESB WEQ.

V. Information Collection Statement

    15. The following collections of information contained in this 
proposed rule have been submitted to the Office of Management and 
Budget (OMB) for review under section 3507(d) of the Paperwork 
Reduction Act of 1995, 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.
    16. 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.

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                                                                     Number of
                 Data collection                     Number of     responses per     Hours per     Total Number
                                                    respondents     respondent       response        of hours
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FERC-516 \11\...................................               6               1               6              36
FERC-717 \12\...................................               6               1              12              72
                                                 ---------------------------------------------------------------
    Totals......................................  ..............  ..............  ..............             108
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    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. It has projected the average 
annualized cost for all respondents to be the following: \13\
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    \11\ ``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.
    \12\ ``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.
    \13\ 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 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.

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                                                FERC-516      FERC-717
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Annualized Capital/Startup Costs............       $13,320       $26,640
Annualized Costs (Operations & Maintenance).           N/A  ............
                                             ---------------------------
    Total Annualized Costs..................        13,320   \14\ 26,640
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    \14\ We note that 36 hours at $370/hr. = $13,320 and 72 hours at 
$370/hr. = $26,640. Together, $13,320 + $26,640 = $39,960 as in note 
13 supra.
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    17. OMB regulations\15\ require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission is

[[Page 48176]]

submitting notification of this proposed rule to OMB. These information 
collections are mandatory requirements.
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    \15\ 5 CFR 1320.11.
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    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: Business or other for profit, (Public Utilities--Not 
applicable to small businesses).
    Frequency of Responses: One-time implementation (business 
procedures, capital/start-up).
    Necessity of the Information: This proposed rule, if implemented 
would standardize 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.
    18. Internal Review: The Commission has reviewed the revised 
business practice standards proposed in this NOPR and has made a 
preliminary determination that these standards are necessary to 
maintain consistency among the ISOs/RTOs as to the demand response 
products they offer in their wholesale electricity markets. 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.
    19. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, Attn: Michael Miller, Office of the Executive Director, 888 
First Street, NE., Washington, DC 20426, Tel: (202) 502-8415/Fax: (202) 
273-0873, E-mail: michael.miller@ferc.gov.
    20. Comments concerning the information collections proposed in 
this NOPR and the associated burden estimates, should be sent to the 
contact listed above and to the Office of Management and Budget, Office 
of Information and Regulatory Affairs, Washington, DC 20503 [Attention: 
Desk Officer for the Federal Energy Regulatory Commission, phone: (202) 
395-7345, fax: (202) 395-7285].

VI. Environmental Analysis

    21. 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.\16\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\17\ The actions proposed here fall within categorical 
exclusions in the Commission's regulations for rules that are 
clarifying, corrective, or procedural, for information gathering, 
analysis, and dissemination, and for sales, exchange, and 
transportation of electric power that requires no construction of 
facilities.\18\ Therefore, an environmental assessment is unnecessary 
and has not been prepared in this NOPR.
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    \16\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \17\ 18 CFR 380.4.
    \18\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).
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VII. Regulatory Flexibility Act Certification

    22. The Regulatory Flexibility Act of 1980 (RFA) \19\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The regulations proposed here impose requirements only on ISOs and 
RTOs, which are not small businesses. Moreover, these requirements are 
designed to benefit all customers, including small businesses.
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    \19\ 5 U.S.C. 601-612.
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    23. The Commission has followed the provisions of both the RFA and 
the Paperwork Reduction Act on potential impact on small business and 
other small entities. Specifically, the RFA directs agencies to 
consider four regulatory alternatives to be considered in a rulemaking 
to lessen the impact on small entities: Tiering or establishment of 
different compliance or reporting requirements for small entities, 
classification, consolidation, clarification or simplification of 
compliance and reporting requirements, performance rather than design 
standards, and exemptions. As these proposed standards would only be 
applicable to ISOs and RTOs, which are not small entities, the 
Commission hereby certifies, pursuant to section 605(b) of the RFA,\20\ 
that the regulations proposed herein will not have a significant 
adverse impact on a substantial number of small entities.
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    \20\ 5 U.S.C. 605(b).
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VIII. Comment Procedures

    24. 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 October 22, 2009. Comments must refer to 
Docket No. RM05-5-017, and must include the commenter's name, the 
organization they represent, if applicable, and their address. Comments 
may be filed either in electronic or paper format.
    25. Comments may 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 and commenters may attach 
additional files with supporting information in certain other file 
formats. Commenters filing electronically do not need to make a paper 
filing. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street, NE., Washington, DC 20426.
    26. 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.

IX. Document Availability

    27. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    28. From FERC's Home Page on the Internet, this information is 
available in the eLibrary. The full text of this document is available 
in the eLibrary both in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, go 
to the FERC Web site at http://www.ferc.gov and type the docket number 
``RM05-5'' in the docket number field, type ``017'' under the subdocket 
field, and request submittals filed on April 17, 2009.
    29. User assistance is available for eLibrary and the FERC's Web 
site during our normal business hours. For assistance contact FERC 
Online Support at FERCOnlineSupport@ferc.gov or toll-free at (866) 208-
3676, or for TTY, contact (202) 502-8659.

[[Page 48177]]

List of Subjects in 18 CFR Part 38

    Conflict 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.
    In consideration of the foregoing, the Commission proposes to 
revise Chapter I, Title 18, part 38 of the 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 Sec.  38.2, paragraph (a)(12) is added to read as follows:

Sec.  38.2  Incorporation by Reference of North American Energy 
Standards Board Wholesale Electric Quadrant Standards.

    (a) * * *
    (12) Measurement and Verification of Wholesale Electricity Demand 
Response (WEQ-015, 2008 Annual Plan Item 5(a), Mar. 16, 2009).
* * * * *
[FR Doc. E9-22784 Filed 9-21-09; 8:45 am]

BILLING CODE 6717-01-P