Document ID: FERC-2006-0372-0001
Agency: ferc
Document Type: Rule
Title: Interpretive Order Relating to the Standards of Conduct
Posted Date: 2006-02-24T05:00Z

[Federal Register: February 24, 2006 (Volume 71, Number 37)]
[Rules and Regulations]               
[Page 9446-9448]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe06-8]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 358

[Docket No. RM01-10-005]

 
Interpretive Order Relating to the Standards of Conduct

Issued February 16, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Interpretive order.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
issuing this Order to clarify that Transmission Providers may 
communicate with affiliated nuclear power plants regarding certain 
matters related to the safety and reliability of the transmission 
system on the nuclear power plants, in order to comply with 
requirements of the Nuclear Regulatory Commission.

DATES: The interpretive order will become effective February 24, 2006. 
Comments are due March 20, 2006. Reply comments are due April 19, 2006.

FOR FURTHER INFORMATION CONTACT: Demetra Anas, Office of the Market 
Oversight and Investigations, Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426, (202) 502-8178, 
Demetra.Anas@ferc.gov.

SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, 
Chairman; Nora Mead Brownell, and Suedeen G. Kelly.
    Standards of Conduct for Transmission Providers.
    1. The Federal Energy Regulatory Commission (Commission) clarifies 
that sections 358.5(a) and (b) of the Commission's regulations, 18 CFR 
358.5(a) and (b) (2005), do not prohibit a Transmission Provider and 
its affiliated nuclear power plant from engaging in necessary 
communications related to the safety and reliability of the 
transmission system or the nuclear power plant, including information 
relating to the loss of or potential loss of transmission lines that 
provide off-site power to the nuclear power plant regardless of 
ownership of those lines. The Commission is issuing this Interpretive 
Order to clarify that Transmission Providers may communicate with 
affiliated and non-affiliated nuclear power plants to enable the 
nuclear power plants to comply with the requirements of the Nuclear 
Regulatory Commission (NRC) as described in the NRC's February 1, 2006 
Generic Letter 2006-002, Grid Reliability and the Impact on Plant Risk 
and the Operability of Offsite Power (Generic Letter).\1\
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    \1\ Nuclear Regulatory Commission's Generic Letter 2006-002, 
Grid Reliability and the Impact on Plant Risk and the Operability of 
Offsite Power. February 1, 2006. OMB Control No.: 3150-0011.
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I. Background

    2. On November 25, 2003, the Commission issued a Final Rule 
adopting Standards of Conduct for Transmission Providers (Order No. 
2004).\2\ Under Order No. 2004, the Standards of Conduct govern the 
relationships between Transmission Providers \3\ and all of their 
Marketing Affiliates \4\ and Energy Affiliates.\5\ The Standards of 
Conduct also contain various information sharing prohibitions to help 
ensure that Transmission Providers do not use their access to 
information about transmission to unfairly benefit their own or their 
affiliates' sales to the detriment of competitive markets. Absent one 
of the exceptions articulated in section 358.5, if a Transmission 
Provider discloses transmission information to its Marketing or Energy 
Affiliate, the Transmission Provider is required to immediately post 
that information on its OASIS or Internet Web site.\6\
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    \2\ Standards of Conduct for Transmission Providers, Order No. 
2004, FERC Stats. & Regs., Regulations Preambles ] 31,155 (2003), 
order on reh'g, Order No. 2004-A, III FERC Stats. & Regs. ] 31,161 
(2004), 107 FERC ] 61,032 (2004), order on reh'g, Order No. 2004-B, 
III FERC Stats. & Regs. ] 31,166 (2004), 108 FERC ] 61,118 (2004), 
order on reh'g, Order No. 2004-C, 109 FERC ] 61,325 (2004), order on 
reh'g, Order No. 2004-D, 110 FERC ] 61,320 (2005), appeal docketed 
sub nom., National Gas Fuel Supply Corporation v. FERC, No. 04-1183 
(D.C. Cir. June 9, 2004).
    \3\ A Transmission Provider means: (1) Any public utility that 
owns, operates or controls facilities used for the transmission of 
electric energy in interstate commerce; or (2) Any interstate 
natural gas pipeline that transports gas for others pursuant to 
subpart A of part 157 or subparts B or G of part 284 of this 
chapter. A Transmission Provider does not include a natural gas 
storage provider authorized to charge market-based rates that is not 
interconnected with the jurisdictional facilities of any affiliated 
interstate natural gas pipeline, has no exclusive franchise area, no 
captive ratepayers and no market power. 18 CFR 358.3(a) (2005).
    \4\ A Marketing Affiliate means an affiliate as that term is 
defined in section 358.3(b) or a unit that engages in marketing, 
sales or brokering activities as those terms are defined at section 
358.3(e). 18 CFR 358.3(k) (2005).
    \5\ An Energy Affiliate means an affiliate of a Transmission 
Provider that:
    (1) Engages in or is involved in transmission transactions in 
U.S. energy or transmission markets; or
    (2) Manages or controls transmission capacity of a Transmission 
Provider in U.S. energy or transmission markets; or
    (3) Buys, sells, trades or administers natural gas or electric 
energy in U.S. energy or transmission markets; or
    (4) Engages in financial transactions relating to the sale or 
transmission of natural gas or electric energy in U.S. energy or 
transmission markets.
    (5) An LDC division of an electric public utility Transmission 
Provider shall be considered the functional equivalent of an Energy 
Affiliate, unless it qualifies for the exemption in Sec.  
358.3(d)(6)(v). 18 CFR 358.3(d) (2005). Affiliates that are not 
Energy Affiliates are described at 18 CFR 358.3(d)(6)(i)-(vi) 
(2005).
    \6\ The information sharing prohibitions of the Standards of 
Conduct are found at 18 CFR 358.5(a) and (b).
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    3. On January 9, 2006, at the request of the NRC, FERC Staff 
participated in a public meeting/workshop of the NRC regarding its 
then-proposed Generic Letter concerning Grid Reliability and the 
Operability of Offsite Power. During that discussion, participants 
expressed concern that the Commission's Standards of Conduct appear to 
restrict communications between Transmission Providers and their 
affiliated nuclear power plants, which are Energy Affiliates, thereby 
limiting the ability of the nuclear power plants to comply with all the 
requirements of the NRC. The participants also expressed concern that 
the information sharing prohibitions of the Standards of Conduct would 
prevent the nuclear power plants from answering all the questions posed 
in the NRC's draft Generic Letter.
    4. The NRC's Generic Letter information request focuses on four 
areas: (1) Use of protocols, communications and coordination procedures 
between the nuclear power plant and the transmission system operators 
(TSO), independent system operator (ISO) or reliability coordinator/
authority (RC), including the use of real-time contingency analysis or 
other programs to monitor the operability of

[[Page 9447]]

offsite power systems; (2) describing procedures and the sharing of 
information between the NPP and the TSO/ISO/RC regarding real time 
contingency analysis to assist the NPP in monitoring grid 
considerations in maintenance risk assessments; (3) communications and 
procedures between the NPP and the TSO/ISO/RC regarding offsite power 
restoration procedures; and (4) losses of offsite power caused by grid 
failures at a frequency equal to or greater than once in 20 site-years. 
The February 1, 2006, Generic Letter asks nuclear power plant owners/
operators to submit to the NRC a variety of information, within 60 days 
of its issuance, so that the NRC can determine if the nuclear power 
plants are complying with its regulations. Based on its inspection 
information and risk insights following the August 14, 2003 blackout, 
the NRC staff expressed concern that several issues associated with 
assurance of grid reliability may impact public health and safety and/
or compliance with applicable regulations.\7\ Accordingly, through the 
questions posed in the Generic Letter, the NRC is trying to identify 
the types of communications, protocols and procedures, both formal and 
informal, that are in place between the TSO, ISO or RC and nuclear 
power plants to ensure that off-site power is available in the event of 
a significant power outage, such as the one that occurred on August 14, 
2003.
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    \7\ Nuclear Regulatory Commission's Generic Letter 2006-003, 
Grid Reliability and the Impact on Plant Risk and the Operatibility 
of Offsite Power. February 1, 2006.
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II. Discussion

    5. At the January 9, 2006 workshop, representatives of the nuclear 
power plants raised the concern that the Standards of Conduct prevent 
Transmission Providers from communicating with the nuclear power plants 
limiting their ability to comply with the NRC's requirements 
articulated in the Generic Letter. The Standards of Conduct are not 
intended to impede necessary communications related to safety or 
reliability between operators of transmission systems and nuclear power 
plant generators. The Commission recognizes the NRC's stringent 
requirements on nuclear power plants as part of the nuclear power 
plants' operating licenses to satisfy NRC standards for offsite and 
onsite electric power systems. See 10 CFR Part 50, Appendix A, Design 
Criterion 17 (2005).
    6. During the Standards of Conduct rulemaking proceeding, the 
Commission adopted an exception to the information sharing prohibitions 
to permit the types of communications necessary for the nuclear power 
plants to comply with the requirements of NRC's Generic Letter. 
Specifically, the Commission permits a Transmission Provider to share 
with its Energy Affiliates information necessary to maintain the 
operations of the transmission system. 18 CFR 358.5(b)(8) (2005). This 
information is defined as information necessary to operate and maintain 
the transmission system on a day-to-day basis as well as information 
relating to maintenance of interconnected facilities and operational 
data relating to interconnection points, but does not include 
transmission or marketing information that would give a Transmission 
Provider's Marketing or Energy Affiliates undue preference over a 
Transmission Provider's non-affiliated customers in the energy 
marketplace. See Order No. 2004-A at P 203. Thus, communications 
between nuclear power plants and Transmission Providers as required by 
NRC's Generic Letter are permitted without violating the information 
disclosure prohibitions or triggering a posting requirement under the 
Standards of Conduct.\8\ Of course, nuclear power plant operators are 
prohibited from being a conduit for sharing transmission or customer 
information with other employees of the Marketing or Energy Affiliates. 
18 CFR 358.5(b)(7) (2005).
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    \8\ During the rulemaking proceeding, one commenter expressed 
concern that nuclear power plant operators belonging to an Energy 
Affiliate of the Transmission Provider would be prohibited from 
receiving information they need to satisfy certain requirements of 
the NRC's regulations. The commenter also pointed out that station 
blackout rules require that nuclear stations have real-time 
information on grid disturbances and duration of power 
unavailability under 10 CFR 50.63. In Order No. 2004, the Commission 
ruled that in such situations the Transmission Provider would be 
permitted to share this type of information with its Energy 
Affiliates. See Order No. 2004 at P 144 and Order No. 2004-A at 206.
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    7. In this Interpretive Order, the Commission also recognizes that, 
in addition to permitting communications necessary to operate and 
maintain the transmission system, the Transmission Provider and its 
interconnected nuclear power plant must engage in certain limited 
communications to operate and maintain the operations of the 
interconnection and the safety and reliability of the nuclear power 
plant. The Commission clarifies that such communications may include: 
(1) communications between the transmission control center and the 
nuclear power plant control room regarding switching, output, 
transformer availability; opening or closing breakers and other 
operational parameters necessary to maintain the safety and reliability 
of the transmission system and the nuclear power plant; (2) information 
necessary to coordinate switching and maintenance at the interconnected 
nuclear power plants; and (3) information on grid disturbances and the 
duration of power unavailability in order for the nuclear power plant 
to plan for off-site power in the event of a grid-related loss of power 
or station blackout, as required by the NRC. Although such 
communications are permitted, as noted earlier, the nuclear power plant 
operators are prohibited from being a conduit for sharing this 
information with employees of other Marketing or Energy Affiliates. 18 
CFR 358.5(b)(7) (2005). For example, a nuclear power plant operator may 
communicate to an employee of the Marketing Affiliate that output from 
the nuclear power plant is not available, but cannot disclose that the 
plant output is not available because there is an outage at a certain 
location on the transmission system. (unless that information is 
already publicly available.)
    8. In addition to this exception for nuclear power plants' 
operations and reliability, Transmission Providers can communicate any 
information to nuclear power plants if that information is also 
simultaneously posted on an OASIS. Many Transmission Providers already 
post much of the information that might be needed by nuclear power 
plants on their respective OASIS sites. Part 37 of the Commission's 
regulations require Transmission Providers to post on their OASIS 
information regarding: transmission service schedules (18 CFR 37.6(f)); 
constrained posted paths (18 CFR 37.6(b)(3)(1)); and curtailments or 
interruptions (18 CFR 37.6(e)(3)) so that all transmission customers 
have the information at the same time.
    9. Finally, under emergency conditions, the Commission created an 
exception that permits a Transmission Provider to take whatever steps 
are necessary to keep a system in operation. 18 CFR 358.4(2) (2005). 
For example during such emergency situations, such as the 2003 Blackout 
or Hurricanes Katrina and Rita, a Transmission Provider is permitted to 
engage in any type of communications and to share any employees needed 
to keep the system in operation. Subsequently, the Transmission 
Provider is required to report to the Commission each emergency that 
resulted in any deviation from the Standards of Conduct. 18 CFR 
358.4(2) (2005).

III. Comment Procedures

    10. No public notice or comment on this Interpretive Order is 
necessary

[[Page 9448]]

pursuant to section 4(b)(A) of the Administrative Procedure Act, 5 
U.S.C. 533(b)(A) (2000), which exempts from such notice or comment 
``interpretive rules, general statements of policy or rules of agency 
organization, procedure or practice.'' However, the Commission herein 
invites all interested persons to submit written comments on this 
Interpretive Order. The Commission invites interested persons to submit 
comments on the matters and issues proposed in this Interpretive Order, 
including any related matters or alternative proposals that commenters 
may wish to discuss. Comments are due March 20, 2006. Reply comments 
are due April 19, 2006. Comments and reply comments must refer to 
Docket No. RM01-10-005, and must include the commenters' names, the 
organizations they represent, if applicable, and their address in their 
comments. Comments and reply comments may be filed either in electronic 
or paper format.
    11. Comments and reply 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 paper filings. Commenters that are not able to file comments and 
reply 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.
    12. All comments and reply 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 and reply comments on other commenters.

IV. Document Availability

    13. 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 business hours 
(8:30 a.m. to 5 p.m. eastern time) at 888 First Street, NE., Room 2A, 
Washington, DC 20426.
    14. From the Commission's Home Page on the Internet, this 
information is available in the Commission's document management 
system, 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.
    15. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours. For assistance, please contact 
FERC Online Support at 1-866-208-3676 (toll free) or (202) 502-8222 (e-
mail at FERCOnlineSupport@FERC.gov), or the Public Reference Room at 
(202) 502-8371, TTY (202) 502-8659 (e-mail at 
public.referenceroom@ferc.gov).

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. 06-1654 Filed 2-23-06; 8:45 am]

BILLING CODE 6717-01-P