Document ID: FERC-2009-0443-0001
Agency: ferc
Document Type: Rule
Title: Modification of Interchange and Transmission Loading Relief Reliability Standards, etc.
Posted Date: 2009-03-24T04:00Z

[Federal Register: March 24, 2009 (Volume 74, Number 55)]
[Rules and Regulations]               
[Page 12256-12265]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr09-12]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket Nos. RM08-7-000 and RM08-7-001; Order No. 713-A]

 
Modification of Interchange and Transmission Loading Relief 
Reliability Standards; and Electric Reliability Organization 
Interpretation of Specific Requirements of Four Reliability Standards

Issued March 19, 2009.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the 
Federal Energy Regulatory Commission (Commission) approves Reliability 
Standard IRO-006-4, submitted to the Commission for approval by the 
North American Electric Reliability Corporation (NERC). The Reliability 
Standard addresses transmission loading relief requirements, which 
provide a mechanism to manage and, if necessary, curtail interchange 
transactions. In addition, pursuant to section 215(d)(5) of the FPA, 
the Commission directs NERC to develop modifications to Reliability 
Standard IRO-006-4 to address specific Commission concerns.

DATES: Effective Date: This rule will become effective April 23, 2009.

FOR FURTHER INFORMATION CONTACT:
Patrick Harwood (Technical Information), Office of Electric 
Reliability, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-6125, patrick.harwood@ferc.gov.
Christopher Daignault (Legal Information), Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8286, christopher.daignault@ferc.gov.

SUPPLEMENTARY INFORMATION:

                            Table of Contents

                                                               Paragraph
                                                                Numbers

I. Background...............................................           2
    A. Procedural Background................................           2
    B. Reliability Standard IRO-006-4.......................           6
II. Discussion..............................................          11
    A. Approval of Reliability Standard IRO-006-4...........          11
        1. Transfer of Business-Related Requirements to               15
         NAESB..............................................
        2. Improvements to the TLR Procedure................          18
    B. Requirement R1.......................................          22
        1. Use of TLR Procedure in Conjunction With Other             23
         Procedures To Mitigate an IROL Violation...........
        2. Use of TLR Procedure Alone To Mitigate an IROL             37
         Violation..........................................
        3. Use of Demand-Side Management To Mitigate IROL             41
         Violations.........................................
    C. Violation Risk Factors...............................          46
        1. Comments.........................................          47
        2. Commission Determination on Violation Risk                 59
         Factors............................................
        3. Commission Determination on Violation Severity             70
         Levels.............................................
III. Information Collection Statement.......................          73
IV. Environmental Analysis..................................          76
V. Regulatory Flexibility Act...............................          77
VI. Document Availability...................................          78
VII. Effective Date and Congressional Notification..........          81

    1. Pursuant to section 215 of the Federal Power Act (FPA) \1\ the 
Commission approves Reliability Standard IRO-006-4, submitted to the 
Commission for approval by the North American Electric Reliability 
Corporation (NERC). The Reliability Standard addresses transmission 
loading relief requirements, which provide a mechanism to manage and, 
if necessary, curtail interchange transactions. In addition, pursuant 
to section 215(d)(5) of the FPA, the Commission directs NERC to develop 
modifications to Reliability Standard IRO-006-4 to address specific 
concerns identified by the Commission.
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    \1\ 16 U.S.C. 824o (2006).
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I. Background

A. Procedural Background

    2. On December 21, 2007, NERC, the Commission-certified electric 
reliability

[[Page 12257]]

organization (ERO), submitted for Commission approval modifications to 
Reliability Standard IRO-006-4 (Reliability Coordination--Transmission 
Loading Relief), known as the transmission loading relief or ``TLR'' 
procedure.\2\
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    \2\ Reliability Standard IRO-006-4 is not codified in the 
Commission's regulations and is not attached to this Supplemental 
Final Rule. It is, however, available on the Commission's eLibrary 
document retrieval system in Docket No. RM08-7-000 and also is 
available on the ERO's Web site, http://www.nerc.com.
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    3. On April 21, 2008, as supplemented on May 16, 2008, the 
Commission issued a Notice of Proposed Rulemaking (NOPR) that proposed 
to approve three NERC filings, including Reliability Standard IRO-006-
4.\3\ In response, nine interested persons filed comments, six of which 
address the TLR procedure at issue here.\4\ (The Commission 
consolidated three ERO submissions in the RM08-7-000 rulemaking 
proceeding. This Supplemental Final Rule only addresses the ERO's 
December 21, 2007 filing pertaining to the TLR Reliability Standard. 
The Commission addressed the other two ERO filings in Order No. 713, 
i.e., the Final Rule in this proceeding.)
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    \3\ Modification of Interchange and Transmission Loading Relief 
Reliability Standards; and Electric Reliability Organization 
Interpretation of Specific Requirements of Four Reliability 
Standards, Notice of Proposed Rulemaking, 73 FR 22856 (Apr. 28, 
2008), FERC Stats. & Regs. ] 32,632, at P 48 (2008) (NOPR), 
Supplemental Notice of Proposed Rulemaking, 73 FR 30326 (May 27, 
2008), FERC Stats. & Regs. ] 32,635 (2008) (Supplemental NOPR).
    \4\ Appendix A identifies the NOPR commenters.
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    4. On July 21, 2008, the Commission issued a Final Rule in this 
proceeding, which approved five Reliability Standards and approved 
NERC's interpretation of other Reliability Standards.\5\ The 
Commission, however, did not make a determination in the Final Rule 
regarding Reliability Standard IRO-006-4 and, instead, directed NERC to 
submit a filing explaining one aspect of the TLR procedure.
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    \5\ Modification of Interchange and Transmission Loading Relief 
Reliability Standards; and Electric Reliability Organization 
Interpretation of Specific Requirements of Four Reliability 
Standards, Order No. 713, 73 FR 43613 (July 28, 2008), 124 FERC ] 
61,071 (2008) (Order No. 713 or Final Rule).
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    5. On September 11, 2008, NERC submitted a filing as directed in 
the Final Rule. Notice of NERC's September 11, 2008 filing was 
published in the Federal Register, 73 FR 75,429. Three interested 
persons submitted comments.\6\
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    \6\ Appendix B identifies the commenters on NERC's September 11, 
2008 filing. In addition, NERC filed reply comments.
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B. Reliability Standard IRO-006-4

    6. Reliability Standard IRO-006-4 applies to balancing authorities, 
reliability coordinators, and transmission operators. Reliability 
Standard IRO-006-4 modifies Reliability Standard IRO-006-3, which the 
Commission approved in Order No. 693.\7\ In its December 2007 filing, 
NERC explained that it modified the TLR procedure to ``extract'' 
commercial requirements and business practices.\8\ Further, the 
modified Reliability Standard includes changes directed by the 
Commission in Order No. 693 related to the appropriateness of using the 
TLR procedure to mitigate a violation of an interconnection reliability 
operating limit (IROL).\9\
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    \7\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
    \8\ The commercial requirements were transferred to a North 
American Energy Standards Board (NAESB) business practices document. 
The Commission approved the NAESB TLR standard, WEQ-008, to coincide 
with the effective date of Reliability Standard IRO-006-4. See 
Standards for Business Practices and Communication Protocols for 
Public Utilities, Order No. 676-C, 73 FR 43848 (July 29, 2008), FERC 
Stats. & Regs. ] 31,274, at P 7 n.11, P 9, P 80 (2008); see also 
Order No. 713, 124 FERC ] 61,071 at P 8.
    \9\ An IROL is a system operating limit that, if violated, could 
lead to instability, uncontrolled separation, or cascading outages 
that adversely impact the reliability of the Bulk-Power System.
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    7. Reliability Standard IRO-006-4 contains five requirements. 
Requirement R1 obligates a reliability coordinator experiencing a 
potential or actual system operating limit (SOL) or IROL violation 
within its reliability coordinator area to select one or more 
procedures to mitigate potential or actual transmission overloads. The 
requirement also identifies the regional TLR procedures in WECC and 
ERCOT. Requirement R1 includes a warning that the TLR procedure alone 
is an inappropriate and ineffective tool to mitigate an actual IROL 
violation and provides alternatives.
    8. Requirement R2 mandates that the reliability coordinator only 
use local TLR or congestion management procedures to which the 
transmission operator experiencing the potential or actual SOL or IROL 
is a party.
    9. Requirement R3 establishes that a reliability coordinator with a 
TLR obligation from an interconnection-wide procedure follow the 
curtailments as directed by the interconnection-wide procedure. It also 
requires that a reliability coordinator desiring to use a local 
procedure as a substitute for curtailments as directed by the 
interconnection-wide procedure must obtain prior approval from the ERO.
    10. Requirement R4 mandates that each reliability coordinator 
comply with interconnection-wide procedures, once they are implemented, 
to curtail transactions that cross interconnection boundaries. 
Requirement R5 directs balancing authorities and reliability 
coordinators to comply with applicable interchange-related Reliability 
Standards during the implementation of TLR procedures.

II. Discussion

A. Approval of Reliability Standard IRO-006-4

    11. In the NOPR, the Commission proposed to approve IRO-006-4 as 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest.\10\
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    \10\ NOPR, FERC Stats. & Regs. ] 32,632 at P 47.
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    12. NERC and IESO support approval of the Reliability Standard. 
Lafayette and LEPA state that they support the Commission's effort to 
reduce the use of TLRs; they support adoption of the Reliability 
Standards as proposed by the Commission.
    13. Pursuant to section 215(d) of the FPA, the Commission approves 
Reliability Standard IRO-006-4 as mandatory and enforceable. The ERO's 
proposal implements the Commission's directives in Order No. 693 to 
include a warning that the TLR procedure is an inappropriate and 
ineffective tool to mitigate actual IROL violations and identify 
available alternatives to mitigate an IROL violation.\11\ Further, as 
discussed below, the Commission believes that the separation of 
business practices from the Reliability Standards will not compromise 
Bulk-Power System reliability. Accordingly, the Commission approves 
IRO-006-4 as just, reasonable, not unduly discriminatory or 
preferential, and in the public interest, as discussed below.
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    \11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 577.
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    14. As a separate matter, pursuant to section 215(d)(5) of the FPA, 
the Commission directs the ERO to develop, pursuant to its Reliability 
Standards development procedure, modifications to IRO-006-4 to address 
the Commission's specific concerns, as discussed below. Further, the 
Commission approves the proposed violation risk factors and violation 
severity levels and directs the ERO to submit a filing within 60 days 
of the effective date of this Supplemental Final Rule revising 
specified violation risk factors and violation severity levels.

[[Page 12258]]

1. Transfer of Business-Related Requirements to NAESB
    15. The Commission, in the NOPR, sought comments on whether the 
removal and transfer to NAESB of the business-related issues formerly 
contained in Reliability Standard IRO-006-3 could compromise Bulk-Power 
System reliability.\12\
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    \12\ NOPR, FERC Stats. & Regs. ] 32,632 at P 49.
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a. Comments
    16. NERC states that it has coordinated with NAESB and believes 
there is no compromise in reliability as a result of the removal and 
transfer to NAESB of the business-related issues formerly contained in 
the earlier standard, IRO-006-3. NERC notes that there are minor 
differences in terminology and language between the NERC and NAESB 
documents. It states that, although these differences may be confusing 
to industry, they do not affect the ability to successfully implement 
the standards as written. Further, NERC indicates that it is working 
with NAESB to develop more in-depth coordination procedures to ensure 
that language is consistent.
b. Commission Determination
    17. Based on the ERO's explanation, we are persuaded that the 
separation of business practices from the Reliability Standards will 
not compromise Bulk-Power System reliability. However, we are concerned 
with respect to the ERO's acknowledgement that there are differences in 
terminology and language used between the ERO Reliability Standard and 
the NAESB standard that pertain to TLR procedures. The ERO indicates 
that it is currently working with NAESB to develop more in-depth 
coordination procedures to ensure that language is consistent. Thus, we 
expect that the ERO, working with NAESB, will resolve the 
inconsistencies in terminology between the Reliability Standard and 
NAESB standard regarding TLR procedures as their agendas permit; we do 
not find a need to direct changes at this time.
2. Improvements to the TLR Procedure
a. Comments
    18. Several commenters raise concerns regarding needed improvements 
to the TLR procedure. Lafayette and LEPA comment that they have often 
``suffered'' from the curtailment of firm transmission service pursuant 
to the TLR procedure and support efforts to reduce its use. NRG 
comments that the excessive use of TLRs is reducing system reliability 
in some non-organized markets and that the Commission should require 
NERC to modify its TLR rules to limit the excessive use of TLRs. NRG 
states that the Interchange Distribution Calculator (IDC) is critical 
to the TLR process,\13\ since reliability coordinators rely on the 
curtailments specified by the IDC. NRG identifies two significant 
problems with the IDC that IRO-006-4 does not address: (1) The 
generation and load data relied on by the IDC is static, with no 
requirement that it be regularly updated or accurately reflect real-
time conditions; and (2) the IDC methodology does not curtail certain 
schedules or determine native network load obligations accurately in 
some cases, leading to a discriminatory assignment of reliability 
obligations. NRG urges the Commission to direct NERC to modify the IDC 
to base its curtailment decisions on accurate native load information 
and to base them consistently on local load and generation amounts.
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    \13\ The IDC is a mechanism used by the reliability coordinators 
in the Eastern Interconnection to calculate the distribution of 
interchange transactions over specific flowgates. It includes a 
database of all interchange transactions and a matrix of the 
distribution factors for the Eastern Interconnection.
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    19. Further, NRG states that there is a gap in the proposed TLR 
procedures that allows certain non-firm transactions to escape 
curtailment prior to the issuance of a Level 5 TLR (i.e., curtailment 
of firm transactions and firm native load). NRG reiterates its concerns 
in its comments on NERC's September 11, 2008 filing in this proceeding.
    20. ISO/RTO Council suggests that the Commission clarify that, 
although TLR should not be ruled out as a congestion management tool, 
NERC should address the use of more sophisticated tools to respond to 
the impacts that loop flow and the lack of transparency in non-RTO 
regions can have on congestion management at the ``seams.''
b. Commission Determination
    21. The above comments on suggested improvements to the TLR 
procedure are beyond the scope of this proceeding, which pertains to 
the separation of business practices from the ERO's TLR procedure and 
implementation of the Commission's directives set forth in Order No. 
693.\14\ We note, however, that the ERO indicated in its December 21, 
2007 filing that it has a three-phase plan to improve the TLR 
procedures, and the third phase will consist of ``a complete redrafting 
to incorporate enhancement and changes beyond the separation of 
reliability and business practice issues.'' \15\ Therefore, the phase 
three proceeding would provide a proper forum for commenters to raise 
their concerns. The Commission believes that NRG and other commenters 
raise valid issues and urges the commenters to raise--and expects the 
ERO to consider--these matters in an appropriate proceeding. We also 
note that NERC states it is currently updating the IDC to more 
accurately determine the impacts of native load and network 
service.\16\
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    \14\ NERC's comments in reply to NRG, as well as Constellation's 
and, in their joint supplemental pleading, Lafayette and LEPA's 
comments relating to the TLR procedure are likewise beyond the scope 
of this proceeding.
    \15\ NERC December 21, 2007 Filing at 7. Moreover, pursuant to 
the ERO's Rules of Procedure, a commenter can submit a Standard 
Authorization Request to the ERO to propose revisions to a 
Reliability Standard.
    \16\ See NERC September 11, 2008 Response at 10.
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B. Requirement R1

    22. Requirement R1 of IRO-006-4 provides, in part:

    R1. A Reliability Coordinator experiencing a potential or actual 
SOL or IROL violation within its Reliability Coordinator Area shall, 
with its authority and at its discretion, select one or more 
procedures to provide transmission loading relief. These procedures 
can be a ``local'' (regional, interregional, or sub-regional) 
transmission loading relief procedure or one of the following 
Interconnection-wide procedures:
    R1.1 The Interconnection-wide Transmission Loading Relief (TLR) 
procedure for use in the Eastern Interconnection is provided in 
Attachment 1-IRO-006-4. The TLR procedure alone is an inappropriate 
and ineffective tool to mitigate an IROL violation due to the time 
required to implement the procedure. Other acceptable and more 
effective procedures to mitigate actual IROL violations include: 
Reconfiguration, redispatch, or load shedding.

    Below, we address three concerns regarding Requirement R1: (1) Use 
of the TLR procedure in conjunction with other procedures to mitigate 
an IROL violation; (2) use of the TLR procedure to mitigate an actual 
IROL violation is a violation of the Reliability Standard; and (3) use 
of demand-side management as an effective procedure to mitigate IROL 
violations.
1. Use of TLR Procedure in Conjunction With Other Procedures To 
Mitigate an IROL Violation
a. Final Rule Discussion
    23. In the Final Rule, the Commission did not approve or remand 
IRO-006-4 but rather directed the ERO to submit a filing addressing the 
Commission's concerns regarding Requirements R1 and R1.1 of the 
Reliability Standard.\17\ Specifically, the Final Rule explained

[[Page 12259]]

that, consistent with the Final Blackout Report,\18\ Order No. 693 
directed NERC to develop a modification to the TLR procedure that the 
Commission accepted in IRO-006-3 that ``(1) includes a clear warning 
that the TLR procedure is an inappropriate and ineffective tool to 
mitigate actual IROL violations and (2) identifies in a Requirement the 
available alternatives to mitigate an IROL violation other than use of 
the TLR procedure.''\19\
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    \17\ Order No. 713, 124 FERC ] 61,071 at P 46-50.
    \18\ See U.S.-Canada Power System Outage Task Force, Final 
Report on the August 14, 2003 Blackout in the United States and 
Canada: Causes and Recommendations, at 163 (April 2004) (Final 
Blackout Report), available at http://www.ferc.gov/industries/
electric/indus-act/blackout.asp. Recommendation 31 of the report 
provides that NERC should ``[c]larify that the [TLR] process should 
not be used in situations involving an actual violation of an 
Operation Security Limit.''
    \19\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 577, 
964.
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    24. In its December 2007 filing, NERC stated that it modified the 
Reliability Standard in response to the Order No. 693 directive. In 
particular, the ERO modified Requirement R1.1 of IRO-006-4 to provide 
that ``[t]he TLR procedure [for the Eastern Interconnection] alone is 
an inappropriate and ineffective tool to mitigate an IROL violation due 
to the time required to implement the procedure.'' (Emphasis added.)
    25. In Order No. 713, the Commission queried whether the language 
of Requirements R1 and R1.1 are adequate to satisfy the concern of the 
Final Blackout Report and Order No. 693 that the TLR procedure not be 
used in response to an actual IROL violation. The Commission explained:

    An entity is not prevented from using the TLR procedure to avoid 
a potential IROL violation before a violation occurs. If, while a 
TLR procedure is in progress, an IROL violation occurs, it is not 
necessary for the entity to terminate the TLR procedure. However, 
the Commission believes that it is inappropriate and ineffective to 
rely on the TLR procedure, even in conjunction with another tool, to 
address an actual IROL violation.[\20\]
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    \20\ Order No. 713, 124 FERC ] 61,071 at P 49.

Accordingly, the Commission directed the ERO to explain Requirements R1 
and R1.1 of IRO-006-4 in light of this concern.
b. NERC Responsive Filing
    26. NERC responds that the most immediate reliability goal is the 
mitigation of the IROL violation. NERC states that there are four 
acceptable options to respond to an IROL violation: inter-area 
redispatch, intra-area redispatch, reconfiguration of the transmission 
system, and voluntary or involuntary reductions in load. According to 
NERC, Requirement R1.1 of IRO-006-4 identifies these options as 
``reconfiguration, redispatch, or load shedding.''
    27. Further, NERC believes that taking concurrent action, i.e., 
using TLR in conjunction with one of the above operation actions, ``can 
result in positive outcomes.'' \21\ NERC agrees with the Commission 
that the use of TLR prior to an actual IROL violation is an acceptable 
practice. NERC also agrees that a TLR should not be terminated 
following the occurrence of an IROL violation if the TLR procedure was 
already in progress. However, NERC points out that it is impossible to 
decouple the TLR actions of the previous hour from those of the current 
hour. According to NERC, the progressive nature of TLR requires 
constant management to ensure that reliability and open access are 
maintained. NERC maintains that the Commission should endorse a 
situation where, on a continuing basis, a TLR can be reissued for a 
constrained facility in order to assist in providing relief, in 
addition to the more immediate operator actions taken to alleviate the 
actual overload. NERC disagrees that all interchange transactions 
should be frozen at current levels while any new transactions are held, 
because this could result in aggravation of the IROL violation from an 
increase in native load and/or parallel flows. For similar reasons, 
NERC also believes it is inappropriate to let the curtailments issued 
for the current hour expire and not reissue the TLR, because this 
practice also could aggravate the IROL violation, as the single-hour 
established curtailments would expire and transactions would be 
reloaded.
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    \21\ NERC September 11, 2008 Response at 4.
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    28. NERC avers that the intent of the Commission's directive is 
that, should an entity experience an actual IROL violation, that entity 
should not invoke the TLR process with the belief that the IROL 
violation will be mitigated by the TLR within an acceptable timeframe. 
NERC contends, however, that any standard that would require a 
reliability coordinator to explicitly not use TLR as one of the tools 
it has in responding to an actual IROL violation could compromise 
reliability, open access, or both. NERC states that it is appropriate 
for an entity to use the TLR process in response to an actual IROL, 
provided such use is a complementary action to other operator actions 
employed to mitigate the IROL violation more expeditiously and, as 
such, invoking TLR is not the only action taken.
    29. NERC provides examples of use of TLR in conjunction with other 
acceptable options to provide a more rapid and effective return from 
emergency conditions. For example, NERC states that if an entity 
redispatches generation and invokes a TLR at the same time in response 
to an actual IROL violation, that entity may utilize the generation to 
respond immediately to mitigate the violation and bring the flow below 
the IROL, then reduce the generation once the TLR is able to 
effectively and more equitably address the issue.
c. Comments on NERC Responsive Filing
    30. Southern agrees with NERC's explanation regarding the ways in 
which a reliability coordinator may use the TLR procedure. Southern 
believes that the TLR procedure, when used in conjunction with 
reconfiguration, redispatch, or load shedding, is an indispensable 
means for providing relief for constrained facilities. Southern 
comments that any revision to Reliability Standard IRO-006-4 should be 
developed through the Reliability Standards development process.
    31. ISO/RTO Council comments that it generally agrees with the 
sequencing of TLR procedures as explained by NERC. While ISO/RTO 
Council supports limiting the wide-scale use of TLR as a congestion 
management tool, it believes that the Commission's interpretation may 
draw too fine a line in ``hard wiring'' a particular sequence of the 
use of TLRs. It agrees with NERC that ``it is impossible to decouple 
the actions of the previous hour from those of the current hour,'' and 
urges the Commission to avoid placing artificial barriers in the 
sequencing of the use of the TLR procedure.
d. Commission Determination
    32. The Commission is satisfied with the ERO's response. We agree 
with the ERO that acceptable immediate actions to mitigate an IROL 
violation may include one or more of the following: inter-area 
redispatch, intra-area redispatch of generation, reconfiguration of the 
transmission system, and voluntary or involuntary load reductions. When 
an IROL violation occurs, the reliability coordinator should use the 
above tools appropriate to the circumstance and duration of the actual 
IROL violation for mitigation.
    33. We understand from its explanation that the ERO agrees that use 
of the TLR procedure is not one of the acceptable immediate actions to 
mitigate an IROL violation. Rather, use

[[Page 12260]]

of the TLR procedure is complementary to, and may be used in 
conjunction with, the identified tools to mitigate an IROL violation, 
provided that the action to implement the TLR procedure does not 
interfere with or delay an entity taking the immediate action required 
to mitigate the IROL violation.\22\ The Commission understands this is 
the intent of the language in Requirement R1.1 that ``[t]he TLR 
procedure alone is an inappropriate and ineffective tool to mitigate an 
IROL violation due to the time required to implement the procedure.''
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    \22\ The ERO states that ``it is appropriate for an entity to 
use the TLR process in response to an actual IROL, provided that it 
is a complementary action to other operator actions employed to 
mitigate the IROL violation more expeditiously and, as such, 
invoking TLR is not the only action taken.'' NERC September 11, 2008 
Response at 5 (emphasis added).
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    34. The Commission reiterates that the use of a TLR is not required 
to be terminated following the occurrence of an IROL violation if the 
TLR procedure was already in progress prior to exceeding the IROL. 
Thus, if an IROL is exceeded after a TLR procedure is in progress, the 
reliability coordinator does not need to revoke the TLR. Moreover, in 
the event that a potential IROL violation progresses to an actual IROL 
violation near the top of the hour and a TLR is already in progress, it 
is acceptable for the reliability coordinator to reissue the TLR to 
prevent reloading or exacerbating interchange schedules, while more 
immediate actions are taken to relieve the IROL violation.
    35. During an actual IROL violation, the primary concern of the 
reliability coordinator should be to mitigate the violation 
immediately. Because the TLR procedure may take an extended time to 
fully implement, it is not acceptable for a reliability coordinator to 
invoke the TLR process with the belief that the IROL violation will be 
mitigated by the TLR. Therefore, during an actual IROL violation, a 
reliability coordinator should initiate more immediate actions to 
relieve the IROL violation before initiating a TLR and at no point 
should implementing a TLR divert operator resources or delay 
implementation of more immediate IROL mitigation actions. In accord 
with this understanding, we find Requirement R1.1 consistent with the 
Final Blackout Report and Order No. 693.
    36. As discussed above, based on the ERO's response we believe that 
our understanding of Requirement R1.1 comports with that of the ERO. 
While IRO-006-4, Requirement R1.1, should be implemented and enforced 
with the above understanding, we believe that the term ``alone'' in the 
provision could be improved to more precisely convey that it is a 
violation of Requirement R1.1 to rely on the TLR procedure when an 
entity is in the process of mitigating an IROL violation and the entity 
has not taken more immediate and effective means to achieve relief. 
Accordingly, pursuant to section 215(d)(5) of the FPA, the Commission 
directs the ERO to develop a modification of Requirement R1.1 with 
respect to the term ``alone,'' consistent with this discussion.
2. Use of TLR Procedure Alone To Mitigate an IROL Violation
    37. In the NOPR, the Commission proposed to approve the Reliability 
Standard based on the interpretation that using a TLR procedure alone 
to mitigate an actual IROL violation is a violation of the Reliability 
Standard.\23\
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    \23\ NOPR, FERC Stats. & Regs. ] 32,632 at P 48.
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a. Comments
    38. ISO/RTO Council objects to the Commission's proposal to approve 
the proposed Reliability Standard IRO-006-4 based on the interpretation 
that using a TLR alone to mitigate an IROL violation is a violation of 
the Reliability Standard. ISO/RTO Council expresses concern that the 
ERO has procedures for interpreting Reliability Standards and those 
procedures may be eroded through after-the-fact Commission 
interpretation without the opportunity for NERC stakeholder review. 
ISO/RTO Council urges greater deference to following the Commission-
approved NERC process for the interpretation of Reliability Standards. 
Should that process prove too time-consuming, ISO/RTO Council suggests 
that the Commission revisit the process itself rather than undertaking 
de facto amendments to it by interpreting the Reliability Standard in 
ways not addressed through the NERC stakeholder process.
b. Commission Determination
    39. This issue raised in the NOPR is somewhat overtaken by the 
further Commission inquiry in the Final Rule regarding the appropriate 
tools for mitigating an IROL violation and our discussion immediately 
above on this issue. As we state above, IRO-006-4, Requirement R1.1, 
should be ``implemented and enforced'' based on our understanding in 
this order of the issue.
    40. In any case, we adopt our NOPR proposal and approve Reliability 
Standard IRO-006-4 with the understanding that using a TLR procedure to 
mitigate an actual IROL violation is a violation of the Requirement 
R1.1 of the Reliability Standard, as discussed above. While ISO/RTO 
Council raises procedural concerns regarding the Commission's 
interpretation, neither ISO/RTO Council nor any other commenter 
expresses concern regarding the substance of the Commission's 
interpretation. Further, the Commission previously has determined--or 
interpreted--when a violation of a Reliability Standard would 
occur.\24\
---------------------------------------------------------------------------

    \24\ N. Am. Elec. Reliability Corp., 119 FERC ] 61,321, at P 10 
(2007) (``A vegetation-related transmission outage would result in a 
violation of Requirement R1, R2 or both.'').
---------------------------------------------------------------------------

3. Use of Demand-Side Management To Mitigate IROL Violations
    41. In a joint concurrence to the NOPR, then-Commissioner 
Wellinghoff and Commissioner Kelly noted that demand-side management is 
not explicitly included in Requirement R1.1 of IRO-006-4 among the 
acceptable tools to mitigate an IROL violation. The concurrence noted 
that nothing in the Reliability Standard precludes the use of demand-
side management that can quickly respond to emergencies and discussed 
available demand-side management technologies currently used that may 
be deployed as readily, if not faster, than involuntary load shedding. 
The joint concurrence expressed a preference to expressly include 
demand-side management among the list of tools to mitigate IROL 
violations, set forth in Requirement R1.1.
a. Comments
    42. NERC comments that it did not intend the list of tools in 
Requirement R1.1 for addressing IROL violations to be an exhaustive 
list; effective demand-side response could also be considered.
    43. Alcoa comments that demand-side management should be included 
in the list of alternatives to the TLR procedure in IRO-006-4. Alcoa 
claims that its smelters have demonstrated an ability to curb demand to 
assist in TLR efforts and alleviate IROL violations. In addition, Alcoa 
claims that in some instances load may be able to respond to IROL 
violations more quickly and effectively than generation reserves. 
According to Alcoa, flexible loads served at transmission voltages are 
most effective for immediate demand response to IROL violations.
    44. ISO/RTO Council comments that IRO-006-4 does not preclude 
reliance on demand-side management that can respond quickly to 
emergencies. It believes that the Reliability Standards should be 
resource-neutral in their

[[Page 12261]]

application. ISO/RTO Council states that, consistent with Order No. 
693, so long as a resource can address system conditions, it should be 
recognized in the Reliability Standards as a tool upon which the system 
operator can rely. ISO/RTO Council also notes initiatives by NERC and 
NAESB to develop rules for classifying demand-side management and 
identifying methods for measurement and verification.
b. Commission Determination
    45. It is clear from the comments of the ERO, Alcoa, and ISO/RTO 
Council that the Reliability Standard includes effective demand-side 
management as a tool to mitigate an IROL violation pursuant to 
Requirement R1.1 of IRO-006-4. In its September 11, 2008 filing, the 
ERO states that there are four acceptable options to respond to an IROL 
violation: inter-area redispatch, intra-area redispatch, 
reconfiguration of the transmission system, and voluntary or 
involuntary reductions in load. The ERO further explains that the 
reference in Requirement R1.1 to ``load shedding'' refers to voluntary 
or involuntary reductions in load.\25\ Thus, as clarified by NERC, 
Requirement R1.1 allows the use of effective demand-side management as 
one tool to mitigate an IROL violation. The Commission will implement 
and enforce this Reliability Standard as clarified by NERC.
---------------------------------------------------------------------------

    \25\ NERC September 11, 2008 Response at 4.
---------------------------------------------------------------------------

C. Violation Risk Factors

    46. In the NOPR, the Commission proposed to direct the ERO to 
modify the violation risk factors assigned to Requirements R1 through 
R4 by raising them to ``high.'' This proposal was based on the 
Commission's guidelines for evaluating validity of violation risk 
factor assignments.\26\ In particular, the Commission reasoned that a 
``high'' violation risk factor assignment for Requirements R1 through 
R4 is consistent with findings of the Final Blackout Report.\27\
---------------------------------------------------------------------------

    \26\ The guidelines are: (1) Consistency with the conclusions of 
the Blackout Report; (2) consistency within a Reliability Standard; 
(3) consistency among Reliability Standards; (4) consistency with 
NERC's definition of the violation risk factor level; and (5) 
treatment of requirements that co-mingle more than one obligation. 
The Commission also explained that this list was not necessarily 
all-inclusive and that it retains the flexibility to consider 
additional guidelines in the future. A detailed explanation is 
provided in North American Electric Reliability Corp., 120 FERC ] 
61,145, at P 8-13 (2007).
    \27\ Recommendation 31 states, ``Clarify that the transmission 
loading relief (TLR) process should not be used in situations 
involving an actual violation or an Operation Security Limit.'' 
Final Blackout Report at 163.
---------------------------------------------------------------------------

1. Comments
    47. NERC, IESO, and ISO/RTO Council urge the Commission to adopt 
the violation risk factors proposed by NERC. NERC contends that the 
Commission's reliance on the violation risk factors for IRO-006-3, 
Requirements R1 through R4, submitted in 2007 is not appropriate.\28\ 
NERC explains that the violation risk factors submitted in the current 
proceeding for IRO-006-4 received significant industry review and 
scrutiny, which was not the case with the 2007 submission.
---------------------------------------------------------------------------

    \28\ See NOPR, FERC Stats. & Regs. ] 32,632 at P 51 (noting that 
the corresponding requirements in the earlier Commission-approved 
version of the Reliability Standard were assigned a ``high'' 
violation risk factor).
---------------------------------------------------------------------------

a. Violation Risk Factors for Requirement R1
    48. NERC agrees with the Commission that Requirements R1.1 through 
R1.3 are explanatory text and that a violation risk factor need not be 
assigned to each subsection. However, NERC, ISO/RTO Council, and IESO 
disagree with the Commission's proposal to direct the ERO to raise the 
violation risk factor from ``medium'' to ``high.''
    49. Specifically, NERC and ISO/RTO Council disagree with the 
Commission's statement that a ``high'' violation risk factor assignment 
is consistent with the findings of the Final Blackout Report. According 
to NERC, the main thrust of Recommendation 31 in the Final Blackout 
Report (regarding the use of TLR in response to actual violations) has 
been addressed in Requirement R1.1 of the Reliability Standard and does 
not warrant a ``high'' violation risk factor designation. ISO/RTO 
Council contends that the Final Blackout Report does not identify and 
rank the associated risk of not implementing each recommendation. ISO/
RTO Council claims that the Final Blackout Report Recommendation 31 
simply focuses on reliability coordinators using tools other than TLRs 
for a real-time emergency.
    50. Further, NERC contends that IRO-006-4, Requirement R1 and its 
sub-requirements are procedural in nature, because they focus on how 
relief is achieved rather than on whether relief is achieved. NERC 
recognizes that ``the result of an ineffective application of this 
requirement could impact the electrical state of the grid.'' \29\ 
However, NERC posits that IRO-005-1, Requirement R5 is the principal 
source of the reliability coordinator's obligation to relieve actual or 
potential IROL violations. For these reasons, NERC believes Requirement 
R1 merits a ``medium'' violation risk factor.
---------------------------------------------------------------------------

    \29\ NERC Comments at 19. Unless otherwise indicated, citations 
to parties' comments refer to comments filed after the NOPR, prior 
to the Final Rule.
---------------------------------------------------------------------------

    51. IESO agrees with NERC's assessment that Requirement R1 is 
administrative in nature. IESO states that Requirement R1 provides the 
initiating reliability coordinator options from which to choose to 
relieve transmission constraints, and it becomes a reliability 
requirement only when a reliability coordinator chooses an 
interconnection-wide procedure as one of the means to relieve 
transmission constraints. IESO explains that if a reliability 
coordinator chooses other control actions but not an interconnection-
wide TLR procedure to prevent or mitigate an IROL violation, this 
Reliability Standard will not apply, and the reliability coordinator 
will not be subject to the requirements in the standard. Further, IESO 
contends that if a reliability coordinator chooses to apply an 
interconnection-wide procedure and the requirements stipulated therein 
are not complied with, there is a potential risk on the control and 
operation of the system, because non-compliance with the TLR procedure 
may affect other actions that are also being applied to prevent or 
mitigate an IROL violation.
    52. IESO and ISO/RTO Council disagree with the Commission's 
statement that, if the reliability coordinator chooses an unapproved 
and ineffective procedure for relief or fails to choose a procedure 
entirely, potential or actual IROL violations will not be mitigated as 
intended by the reliability coordinator.\30\ According to IESO and ISO/
RTO Council, with or without the interconnection-wide relief procedure, 
reliability coordinators and transmission operators are required by 
other Reliability Standards such as TOP-002, TOP-004, and IRO-005 to 
apply local control actions and procedures to prevent and mitigate SOL 
and IROL violations.
---------------------------------------------------------------------------

    \30\ See NOPR, FERC Stats. & Regs. ] 32,632 at P 52.
---------------------------------------------------------------------------

    53. ISO/RTO Council also favors a ``medium'' violation risk factor 
assignment for Requirement R1, stating that interconnection-wide 
procedures are only one tool in the toolbox to restore system 
integrity.
b. Violation Risk Factors for Requirement R2
    54. NERC does not believe that a reliability coordinator could 
successfully implement a local procedure to which the particular 
transmission operator is not a party. In any event, NERC does not 
believe that

[[Page 12262]]

the implementation of such a procedure would in itself create a 
``high'' reliability risk. NERC states that if the reliability 
coordinator were able to achieve the relief, then it would be 
considered as having the lesser infraction of using the wrong tools to 
achieve the correct results. Further, it states that if such a 
procedure did not provide the required relief, the reliability 
coordinator would be in violation of IRO-005-1, Requirement R5. NERC 
claims this requirement is focused on ``how'' the relief is provided, 
not ``whether'' the relief is provided. In addition, NERC states that 
the use of a local procedure is implemented at the discretion of the 
reliability coordinator and is not obligatory. Accordingly, NERC 
believes that a violation risk factor of ``lower'' is appropriate.
    55. IESO argues the intent of Requirement R2 is to ensure that a 
reliability coordinator who initiates actions to relieve transmission 
constraints in a transmission operator's area applies the actions that 
are either totally local to the transmission operator's area or which 
have been developed by the transmission operator jointly with other 
transmission operators. IESO states that choosing which procedures to 
relieve transmission constraints is an administrative requirement since 
the reliability coordinator, having the authority to ensure wide area 
reliability, may apply any procedures that it deems necessary to 
relieve transmission constraints. IESO contends that in the event the 
reliability coordinator applies a relief procedure to which the 
constrained transmission operator is not a party, it should not be a 
presumption that prevention or mitigation of an IROL violation will not 
be achieved since the reliability coordinator is obligated to ensure 
operating reliability through compliance with IRO-005-1. For these 
reasons, IESO believes that Requirement R2 is administrative and 
deserves a ``lower'' violation risk factor.
    56. IESO disagrees with the Commission assessment that 
``[v]iolation risk factors should not be assigned differently for 
requirements in separate Reliability Standards based on compliance with 
another Reliability Standard,'' on the basis that ``[t]wo requirements 
either achieve separate reliability goals and, therefore, violation of 
them represents independent risks, or two requirements share the same 
reliability goal.'' \31\ IESO states that, while the IRO-005-1 
requirements and the TLR requirements share the same reliability goal, 
the latter is in fact subordinate to the former. Thus, IESO maintains 
that there should not be two simultaneous ``high'' risk penalties 
assessed for a reliability coordinator for failing to comply with the 
TLR procedure of Requirements R1 or R2 and for failing to prevent or 
mitigate an IROL violation as required in IRO-005-1.
---------------------------------------------------------------------------

    \31\ IESO Comments at 8 (quoting NOPR, FERC Stats. & Regs. ] 
32,632 at P 53).
---------------------------------------------------------------------------

c. Violation Risk Factors for Requirement R3
    57. NERC maintains that Requirement R3 is focused on the procedural 
aspects of the Reliability Standard, i.e., how the relief is provided 
rather than whether the relief was provided. NERC argues that if the 
entity is able to achieve the relief through other means that were not 
pre-approved, then it would have committed an administration violation 
of using the wrong tools to achieve the correct results. According to 
NERC, if such a procedure did not provide the required relief, the 
reliability coordinator would be in violation of IRO-005-1, Requirement 
R5. For reasons similar to those provided for Requirement R2, IESO 
agrees with NERC that Requirement R3 is administrative and deserves a 
``lower'' violation risk factor.
d. Violation Risk Factors for Requirement R4
    58. NERC claims that a violation of Requirement R4 is ``a specific 
kind of violation of the INT family of Reliability Standards that is 
being caused by a reliability coordinator's inaction, resulting in an 
imbalance in one or both of the interconnections involved.'' \32\ NERC 
comments that Requirement R4 complements the INT group of Reliability 
Standards in the same fashion as Requirement R5, which the Commission 
supported with a violation risk factor of ``medium.'' IESO concurs with 
NERC's assignment of a ``medium'' violation risk factor to Requirement 
R4. IESO reasons that complying with the provisions of the 
interconnection-wide procedure of the initiating reliability 
coordinator is no more stringent than complying with the request for 
relief based on the TLR procedure within the same interconnection, the 
latter being the requirement in R1.
---------------------------------------------------------------------------

    \32\ NERC Comments at 21-22.
---------------------------------------------------------------------------

2. Commission Determination on Violation Risk Factors
    59. For the reasons stated in the NOPR and as discussed below, the 
Commission directs the ERO to modify the violation risk factors of 
Requirements R1 through R4 of IRO-006-4 to ``high.''
    60. The Commission disagrees with NERC and others and finds that it 
is appropriate to use the Final Blackout Report as a basis for setting 
violation risk factors of the proposed Reliability Standard at ``high'' 
for several reasons. The Final Blackout Report is the result of the 
U.S-Canada Task Force's investigation of the August 14, 2003 blackout 
where the Task Force identified contributing factors and causes that 
put the Bulk-Power System at risk for that event. Specifically, the 
Final Blackout Report identified an attempt to use the TLR process to 
address transmission power flows without recognizing that the 
imposition of a TLR procedure would not solve the problem as one 
contributing cause for the initiation of the blackout of August 2003. 
Based on its findings, the Task Force developed recommendations to 
reduce the possibility of future outages and to reduce the scope of 
future blackouts that may nonetheless occur.\33\ Thus, the Task Force 
developed Recommendation No. 31 to prevent the initiation of a TLR 
procedure during an actual violation of an SOL.\34\ Since the Final 
Blackout Report was developed to document the August 14, 2003 
blackout's contributing factors and causes, which include specific 
violations of then voluntary reliability policies, guidelines, and 
standards, the Commission believes it is appropriate to use the 
findings of the Final Blackout Report as one of the guidelines for the 
determination of a requirement's violation risk factor. Specifically, 
the Commission believes the findings of the Final Blackout Report are 
particularly relevant in the determination of violation risk factors of 
then-voluntary reliability policies, guidelines, and standards 
identified as causes and factors of the August 14, 2003 blackout that 
the ERO proposes as mandatory Reliability Standards, such as IRO-006-4. 
The Commission also disagrees for the same reasons with commenters that 
argue the Final Blackout Report does not identify and rank the 
associated risk of not implementing each recommendation.
---------------------------------------------------------------------------

    \33\ Final Blackout Report at 20.
    \34\ Id. at 163.
---------------------------------------------------------------------------

    61. While we agree that Requirement R.1.1 discourages the use of a 
TLR to mitigate a real-time IROL violation, Requirement R1.1, is merely 
explanatory text. It is Requirement R1 that establishes that the 
reliability coordinator shall choose one or more of the procedures, 
listed as sub-requirements, to provide the appropriate

[[Page 12263]]

transmission relief. The selection of a procedure to provide relief to 
address a potential or actual SOL or IROL violation is directly 
relevant to Final Blackout Report Recommendation No. 31. If an 
inappropriate procedure is selected in an attempt to mitigate an IROL, 
the Bulk-Power System is vulnerable to cascading outages, as was the 
case on August 14, 2003.
    62. The Commission is not persuaded by NERC's argument relative to 
``using the wrong tools to achieve the correct results'' in the 
assignment of a requirement's violation risk factor. Contrary to this 
argument, the Commission has recognized that there may be some 
Reliability Standards where the means, or the ``how,'' is inextricably 
linked to the effectiveness of the Reliability Standard.\35\ We find 
that this is the case here. The Commission has explained that the 
inclusion of implementation practices within requirements of such a 
standard is to reduce uncertainty and further objectives that foster 
reliability which, if violated, would pose increased reliability risk 
to the Bulk-Power System.\36\
---------------------------------------------------------------------------

    \35\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, at P 260; see also id., Order No. 672-A, 
FERC Stats. & Regs. ] 31,212 (2006).
    \36\ N. Am. Elec. Reliability Corp., 121 FERC ] 61,179, at P 15 
(2007).
---------------------------------------------------------------------------

    63. Similarly, NERC's argument that, if the reliability coordinator 
were able to achieve the relief desired without complying with 
Requirement R1, it would be considered as having the lesser infraction 
of using the wrong tools to achieve the correct results is also flawed. 
The purpose of the violation risk factor is to accurately portray the 
risk a violation poses to the Bulk-Power System,\37\ notwithstanding a 
violator's avoidance of reliability problems in a particular case by 
using an unreliable operation. This Commission determination is 
relevant to arguments that a ``high'' violation risk factor is not 
appropriate because the subject requirement overlaps other 
requirements, duplicates other requirements, or could be implemented by 
alternative means. The Commission has previously determined that NERC 
should address those issues through the Reliability Standard 
development process.\38\
---------------------------------------------------------------------------

    \37\ Id. P 16.
    \38\ Id. P 39.
---------------------------------------------------------------------------

    64. The Commission also disagrees with the characterization of 
Requirements R1, R2, and R3 as procedural choices without reliability-
related consequences. For example, failure to implement Requirement R1, 
i.e., failure to select one or more procedures to provide transmission 
relief, is not just a procedural or administrative choice; it is a 
decision that has the potential to place the Bulk-Power System at risk 
of cascading outages. Although commenters argue that a violation of 
Requirement R2 is essentially administrative in nature and that the 
prevention or mitigation of the potential or actual SOL or IROL may be 
achieved through compliance with another Reliability Standard, which 
would justify a ``lower'' violation risk factor, the Commission 
disagrees. Requirements R1 through R4 require that a reliability 
coordinator choose and follow the appropriate procedure to provide 
relief. If the reliability coordinator chooses an unapproved and/or 
ineffective procedure for relief or fails to choose a procedure 
entirely, potential or actual IROL violations will not be mitigated as 
intended by the reliability coordinator. Therefore, the Commission 
finds that violation of Requirements R1 through R4 present a high 
reliability risk to Bulk-Power System. Assigning a ``high'' violation 
risk factor to Requirements R1 through R4 is consistent with the Final 
Blackout Report.
    65. A violation risk factor represents the reliability risk a 
violation of that requirement presents to the Bulk-Power System. 
Violation risk factors should not be assigned differently for 
requirements in separate Reliability Standards based on compliance with 
another standard. This assessed reliability risk is independent and not 
contingent upon compliance with other requirements of Reliability 
Standards. While the Commission recognizes the complementary nature of 
proposed Reliability Standard IRO-006-4, Requirement R1 and Reliability 
Standard IRO-005-1, Requirement R5, the fact that requirements may 
share the same reliability objective as another requirement does not 
justify lowering one or more of the requirements' violation risk 
factors. In fact, the Commission expects the assignment of violation 
risk factors corresponding to requirements that address similar 
reliability goals in different Reliability Standards to be treated 
comparably.\39\ The Commission notes that Reliability Standard IRO-005-
1, Requirement R5, is assigned a ``high'' violation risk factor.
---------------------------------------------------------------------------

    \39\ N. Am. Elec. Reliability Corp., 119 FERC ] 61,145, at P 25 
(2007).
---------------------------------------------------------------------------

    66. Further, the argument that a ``lower'' violation risk factor 
assigned to Requirement R1 is appropriate since Requirement R1 is 
administrative in nature (because it provides the initiating 
reliability coordinator with options to choose among available 
procedures and only becomes a reliability requirement when a 
reliability coordinator chooses an interconnection-wide procedure) is 
flawed. First, the fact that a requirement provides ``options'' does 
not automatically make that requirement administrative. It is the 
potential reliability risks the failure to take options mandated by the 
requirement presents to the Bulk-Power System that determines that 
requirement's violation risk factor. Second, requirements become 
mandatory and enforceable reliability requirements only after 
Commission approval and not after any action, or inaction, by an 
applicable entity.
    67. For the same reasons explained above, the Commission disagrees 
with comments that Requirement R3 focuses on procedural aspects of the 
Reliability Standard founded on the arguments that the requirement 
related to ``how'' the relief is provided rather than ``whether'' the 
relief was provided, where the ``wrong tools'' were used to achieve the 
``correct results.'' Even if an entity, having violated a Reliability 
Standard, achieves correct results, the entity's success should be 
attributed to a matter of chance and may be more risky than the 
operation set forth in the Reliability Standard.
    68. IESO's comment that there should not be two simultaneous 
``high'' risk penalties assessed to a reliability coordinator who fails 
to comply with the TLR procedure of Requirements R1 and R2 is outside 
the scope of this proceeding. The determination of monetary penalties 
for a violation of a requirement is a compliance issue, which is best 
addressed in the context of a compliance proceeding.\40\
---------------------------------------------------------------------------

    \40\ We note that section 3.10 of NERC's Sanction Guidelines 
addresses multiple violations related to a single act or common 
incidence of noncompliance.
---------------------------------------------------------------------------

    69. We do not agree that a violation of Requirement R4 is a 
specific type of violation of the INT Reliability Standards as NERC and 
IESO suggest. Requirement R4 requires a reliability coordinator to 
comply with interconnection-wide curtailment procedures whereas 
Requirement R5 requires reliability coordinators and balancing 
authorities to adhere to INT standards that largely specify interchange 
scheduling procedures. Failure to implement curtailment procedures 
poses a higher reliability risk, since it may place the Bulk-Power

[[Page 12264]]

System at risk of cascading outages, than failure to implement 
scheduling procedures; therefore, it should receive a ``high'' 
violation risk factor.
3. Commission Determination on Violation Severity Levels
    70. The ERO's December 21, 2007 filing included proposed violation 
severity levels corresponding to the requirements of IRO-006-4. 
Violation severity levels, which the ERO or the Regional Entity will 
apply to establish an initial base penalty range when assessing a 
penalty for the violation of a Reliability Standard, constitutes a 
post-violation measurement of the degree to which a requirement was 
violated.\41\ The Commission accepts the violation severity levels 
proposed by the ERO that correspond to the Requirements of Reliability 
Standard IRO-006-4.
---------------------------------------------------------------------------

    \41\ See N. Am. Elec. Reliability Corp., 123 FERC ] 61,284, at P 
3 (Violation Severity Levels Order), order on reh'g, 125 FERC ] 
61,212 (2008) (extending compliance date).
---------------------------------------------------------------------------

    71. Further, in the Violation Severity Levels Order, the Commission 
directed the ERO to submit a compliance filing certifying that it has 
reviewed each of the violation severity level assignments for 
consistency with certain guidelines set forth in that order.\42\ The 
Commission also directed that the ERO either validate the existing 
violation severity level designations or propose revisions to specific 
approved violation severity level assignments where the ERO determines 
that such assignments do not meet the specified guidelines. Consistent 
with the Violation Severity Levels Order, the Commission now directs 
the ERO to review the violation severity levels for IRO-006-4. The ERO 
must include in the compliance filing required by Ordering Paragraph 
(E) of the Violation Severity Levels Order a certification that it has 
reviewed each violation severity level assignment corresponding to the 
requirements of IRO-006-4 for consistency with certain guidelines 
(specifically, guidelines 2b, 3, and 4), validating the assignments 
that meet the guidelines and proposing revisions to those that fail to 
meet the guidelines.
---------------------------------------------------------------------------

    \42\ See Violation Severity Level Order, 123 FERC ] 61,284 at P 
41 and Ordering Paragraph (E).
---------------------------------------------------------------------------

    72. Accordingly, with respect to the violation risk factors and 
severity levels, we approve IRO-006-4 as mandatory and enforceable. In 
addition, we direct the ERO submit a compliance filing within 60 days 
that revises violation risk factors to ``high'' for Requirements R1 
through R4. The Commission approves the proposed violation severity 
levels and requires the ERO to submit a compliance filing, as discussed 
above.

III. Information Collection Statement

    73. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping (collections of 
information) imposed by an agency.\43\ The information contained here 
is also subject to review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\44\ As stated above, the Commission previously 
approved, in Order No. 693, Reliability Standard IRO-006, which is the 
subject of this supplemental final rule. In the NOPR, the Commission 
explained that the modifications to the Reliability Standard are minor; 
therefore, they do not add to or increase entities' reporting burden. 
Thus, in the NOPR, the Commission stated that the modified Reliability 
Standard does not materially affect the burden estimates relating to 
the earlier version of Reliability Standard IRO-006 presented in Order 
No. 693.\45\
---------------------------------------------------------------------------

    \43\ 5 CFR 1320.11.
    \44\ 44 U.S.C. 3507(d).
    \45\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1905-
07. The NOPR, FERC Stats. & Regs. ] 32,632 at P 76-78, provided a 
detailed explanation why each modification has a negligible, if any, 
effect on the reporting burden.
---------------------------------------------------------------------------

    74. In response to the NOPR, the Commission received no comments 
concerning its estimate for the burden and costs and therefore uses the 
same estimate here.
    Title: Modification of Interchange and Transmission Loading Relief 
Reliability Standards; and Electric Reliability Organization 
Interpretation of Specific Requirements of Four Reliability Standards.
    Action: Proposed Collection.
    OMB Control No.: 1902-0244.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: On Occasion.
    Necessity of the Information: This Supplemental Final Rule approves 
one modified Reliability Standard that pertains to transmission loading 
relief procedures. The Supplemental Final Rule finds the Reliability 
Standard just, reasonable, not unduly discriminatory or preferential, 
and in the public interest.
    75. Interested persons may obtain information on the reporting 
requirements by contacting: 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, or by contacting: Office of Information 
and Regulatory Affairs, Attn: Desk Officer for the Federal Energy 
Regulatory Commission (Re: OMB Control No. 1902-0244), Washington, DC 
20503, Tel: (202) 395-4650, Fax: (202) 395-7285, e-mail: oira_
submission@omb.eop.gov.

IV. Environmental Analysis

    76. 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.\46\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. Included in the exclusion are rules that are clarifying, 
corrective, or procedural or that do not substantially change the 
effect of the regulations being amended.\47\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
---------------------------------------------------------------------------

    \46\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \47\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    77. The Regulatory Flexibility Act of 1980 (RFA) \48\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on a substantial number of small 
entities. The Small Business Administration's Office of Size Standards 
develops the numerical definition of a small business. (See 13 CFR 
121.201.) For electric utilities, a firm is small if, including its 
affiliates, it is primarily engaged in the transmission, generation 
and/or distribution of electric energy for sale and its total electric 
output for the preceding twelve months did not exceed four million 
megawatt hours. The RFA is not implicated by this Final Rule because 
the minor modifications and interpretations discussed herein will not 
have a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \48\ 5 U.S.C. 601-12.
---------------------------------------------------------------------------

VI. Document Availability

    78. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to

[[Page 12265]]

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.
    79. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    80. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or e-mail 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.

VII. Effective Date and Congressional Notification

    81. The Supplemental Final Rule is effective April 23, 2009. The 
Commission has determined, with the concurrence of the Administrator of 
the Office of Information and Regulatory Affairs of OMB, that this rule 
is not a ``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

Appendix A--NOPR Commenters \49\
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    \49\ An asterisk (*) indicates that the commenter addressed 
Reliability Standard IRO-006-4.
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Alcoa Inc. (Alcoa)*
Constellation Energy Commodities Group, Inc. (Constellation)*
Independent Electricity System Operator of Ontario (IESO)*
ISO/RTO Council*
ITCTransmission; Michigan Electric Transmission Company, LLC; and 
ITC Midwest LLC
Lafayette Utilities and the Louisiana Energy and Power Authority 
(Lafayette and LEPA)*
North American Electric Reliability Corp. (NERC)*
NRG Companies (NRG)*
Southern Company Services, Inc. (Southern)

Appendix B--Comments in Response to NERC's September 11, 2008 Filing 
\50\
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    \50\ M-S-R Public Power Agency filed a motion to intervene 
without comments.
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ISO/RTO Council
NRG
Southern

[FR Doc. E9-6416 Filed 3-23-09; 8:45 am]

BILLING CODE 6717-01-P