Document ID: FERC-2011-0410-0001
Agency: ferc
Document Type: Rule
Title: Planning Resource Adequacy Assessment Reliability Standard
Posted Date: 2011-03-23T04:00Z

[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Rules and Regulations]
[Pages 16250-16263]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6763]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-10-000; Order No. 747]

Planning Resource Adequacy Assessment Reliability Standard

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: Under section 215(d)(2) of the Federal Power Act, the Federal 
Energy Regulatory Commission approves regional Reliability Standard, 
BAL-502-RFC-02 (Planning Resource Adequacy Analysis, Assessment and

[[Page 16251]]

Documentation), developed by ReliabilityFirst Corporation (RFC) and 
submitted to the Commission by the North American Electric Reliability 
Corporation. The approved regional Reliability Standard requires 
planning coordinators within the RFC geographical footprint to analyze, 
assess and document resource adequacy for load in the RFC footprint 
annually, to utilize a ``one day in ten years'' loss of load criterion, 
and to document and post load and resource capability in each area or 
transmission-constrained sub-area identified. The Commission also 
approves four regional reliability definitions related to the approved 
regional Reliability Standard and the violation risk factors and 
violation severity levels assigned to the BAL-502-RFC-02 Requirements.

DATES: Effective Date: This Rule will become effective May 23, 2011.

FOR FURTHER INFORMATION CONTACT:

Karin L. Larson (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8236.
Scott Sells (Technical Information), Office of Electric Reliability, 
Division of Policy Analysis and Rulemaking, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6664.

SUPPLEMENTARY INFORMATION:

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.

Final Rule

Issued March 17, 2011.
    1. Under section 215(d)(2) of the Federal Power Act (FPA), the 
Commission approves regional Reliability Standard BAL-502-RFC-02 
(Planning Resource Adequacy Analysis, Assessment and Documentation), 
developed by ReliabilityFirst Corporation (RFC) and submitted to the 
Commission by the North American Electric Reliability Corporation 
(NERC). The approved regional Reliability Standard requires planning 
coordinators within the RFC geographical footprint to analyze, assess 
and document resource adequacy for load in the RFC footprint annually, 
to utilize a ``one day in ten years'' loss of load criterion, and to 
document and post load and resource capability in each area or 
transmission-constrained sub-area identified. The Commission also 
approves four regional reliability definitions related to the approved 
regional Reliability Standard and the violation risk factors and 
violation severity levels assigned to the BAL-502-RFC-02 Requirements.

I. Background

    2. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards, which are subject to Commission review and 
approval. Once approved, the Reliability Standards may be enforced by 
the ERO, subject to Commission oversight, or by the Commission 
independently.\1\ In July 2006, the Commission certified NERC as the 
ERO.\2\ Reliability Standards that the ERO proposes to the Commission 
may include Reliability Standards that are developed by a Regional 
Entity.\3\ In Order No. 672, the Commission urged uniformity of 
Reliability Standards, but recognized a potential need for regional 
differences.\4\ Accordingly, the Commission stated that:

    \1\ See 16 U.S.C. 824o(e)(3) (2006).
    \2\ North American Electric Reliability Corp., 116 FERC ] 61,062 
(ERO Certification Order), order on reh'g & compliance, 117 FERC ] 
61,126 (2006), aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 
(D.C. Cir. 2009).
    \3\ 16 U.S.C. 824o(e)(4).
    \4\ Rules Concerning Certification of the Electric Reliability 
Organization; Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, at P 290; order on reh'g, Order No. 672-A, 
FERC Stats. & Regs. ] 31,212 (2006).

    As a general matter, we will accept the following two types of 
regional differences, provided they are otherwise just, reasonable, 
not unduly discriminatory or preferential and in the public 
interest, as required under the statute: (1) A regional difference 
that is more stringent than the continent-wide Reliability Standard, 
including a regional difference that addresses matters that the 
continent-wide Reliability Standard does not; and (2) a regional 
Reliability Standard that is necessitated by a physical difference 
in the Bulk-Power System.[\5\]
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    \5\ Id. P 291.
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A. ReliabilityFirst

    3. On April 19, 2007, the Commission approved delegation agreements 
between NERC and eight Regional Entities.\6\ In the Delegation 
Agreement Order, the Commission accepted RFC as a Regional Entity and 
accepted RFC's Standards Development Manual, which sets forth the 
process for RFC's development of regional Reliability Standards.\7\ The 
RFC region is a less than interconnection-wide region that covers all 
or portions of 14 states and the District of Columbia.
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    \6\ See North American Electric Reliability Corp., 119 FERC ] 
61,060, at P 316-350 (Delegation Agreement Order), order on reh'g, 
120 FERC ] 61,260 (2007).
    \7\ Id. P 339.
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B. Regional Reliability Standard BAL-502-RFC-02

    4. On December 14, 2009, NERC submitted for Commission approval, in 
accordance with section 215(d)(1) of the FPA,\8\ regional Reliability 
Standard BAL-502-RFC-02 and four associated new definitions.\9\ NERC 
stated that the proposed regional Reliability Standard establishes 
requirements for planning coordinators in the RFC region regarding 
resource adequacy assessment, which subject matter is not currently 
addressed in NERC's continent-wide Reliability Standards.\10\ The 
stated purpose of this regional Reliability Standard is to establish 
common criteria, based on ``one day in ten years'' loss of load 
expectation principles, for the analysis, assessment and documentation 
of resource adequacy for load in the RFC region.\11\
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    \8\ 16 U.S.C. 824o.
    \9\ NERC Petition for Approval of Proposed RFC Regional 
Reliability Standard BAL-502-RFC-02, Docket No. RM10-10-000 (Dec. 
14, 2009) (Petition).
    \10\ Id. at 7. NERC notes that it has a pending continent-wide 
project, Project 2009-05, Resource Adequacy Assessments, which is 
intended to address resource adequacy assessments.
    \11\ NERC Petition at 7.
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    5. Regional Reliability Standard BAL-502-RFC-02 contains the 
following two main requirements. Requirement R1 requires each planning 
coordinator in RFC's footprint \12\ to perform and document an annual 
resource adequacy analysis. The sub-requirements of Requirement R1 set 
forth the criteria to be used for the resource adequacy analysis. 
Requirement R2 requires each planning coordinator to annually document 
the projected load and resource capability for each area and 
transmission constrained sub-area identified in the analysis. The sub-
requirements of Requirement R2 set forth the specific documentation 
requirements. Each of the two main requirements is assigned a violation 
risk factor (VRF) and violation severity level (VSL). RFC did not 
assign VRFs or VSLs to the sub-requirements.
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    \12\ Currently, there are four registered planning coordinators 
in the RFC region: American Transmission Co., LLC; International 
Transmission Company (ITC Transmission); Midwest Independent 
Transmission System Operator, Inc. (Midwest ISO); and PJM 
Interconnection, LLC (PJM).
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    6. The NERC Petition also includes the following four new regional 
definitions related to regional Reliability Standard BAL-502-RFC-02. 
First, ``Resource Adequacy,'' which is defined as the ability of 
supply-side and demand-side resources to meet the

[[Page 16252]]

aggregate electrical demand (including losses). Second, ``Net Internal 
Demand,'' which is defined as the total of all end-use customer demand 
and electric system losses within specified metered boundaries, less 
Direct Control Load Management and Interruptible Demand. Third, ``Peak 
Period,'' which is defined as a period consisting of two (2) or more 
calendar months but less than seven (7) calendar months, which includes 
the period during which the responsible entity's annual peak demand is 
expected to occur. Fourth, ``Year One,'' the planning year that begins 
with the upcoming annual Peak Period. These four defined terms would 
apply in the RFC region only.

C. Notice of Proposed Rulemaking

    7. On October 21, 2010, the Commission issued its Notice of 
Proposed Rulemaking (NOPR) proposing to approve regional Reliability 
Standard BAL-502-RFC-02, stating that the standard will improve the 
reliable operation of the Bulk-Power System by ensuring use in the RFC 
region of a common criterion, the ``one day in ten years'' principle, 
to assess resource adequacy during the planning horizon.\13\ In the 
NOPR, the Commission proposed to direct RFC, at the time it conducts 
its scheduled five-year review of regional Reliability Standard BAL-
502-RFC-02, to: (1) Add time horizons to the two main requirements, and 
(2) consider modifying the regional Reliability Standard to include a 
requirement that the planning coordinators identify any gap between the 
needed amount of planning reserves defined in Requirement R1.1 and the 
planning reserves determined from the resource adequacy analysis. The 
Commission also proposed to accept the four related definitions for 
inclusion in NERC's Glossary for use with RFC's regional Reliability 
Standards,\14\ and proposed to defer ruling on the proposed VRFs and 
VSLs for the standard.
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    \13\ Planning Resource Adequacy Assessment Reliability Standard, 
75 FR 66038 (October 27, 2010), FERC Stats. & Regs. ] 32,662 (2010) 
(``NOPR'').
    \14\ NERC's Glossary lists each term that has been defined for 
use in one or more of NERC's continent-wide or regional Reliability 
Standards.
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    8. In addition, in the NOPR, the Commission sought clarification or 
comment on a few aspects of BAL-502-RFC-02. With respect to the 
regional Reliability Standard's resource adequacy analysis, the 
Commission sought comment on three issues: (1) The loss of load 
calculation; (2) consideration of the capacity benefit margin; and (3) 
evaluation of common mode outages. The Commission also sought comment 
on: (1) How planning coordinators, when conducting the resource 
adequacy analysis, will address load and resources outside of the RFC 
footprint; (2) whether planning coordinators should have a common 
process or procedure that addresses the planning reserves assessments; 
and (3) whether the planning coordinators have experienced problems 
collecting the data necessary to perform the resource adequacy 
analysis.
    9. In response to the NOPR, comments were filed by 13 interested 
parties. These comments assisted us in the evaluation of BAL-502-RFC-
02. In the discussion below, we address the issues raised by these 
comments. In addition, five entities filed motions to intervene and 
three state utility commissions filed notices of intervention. Appendix 
A to this Final Rule lists the entities that filed comments and 
interventions.

II. Discussion

    10. In this Final Rule, the Commission approves regional 
Reliability Standard BAL-502-RFC-02 as just, reasonable, not unduly 
discriminatory or preferential, and in the public interest. To that 
end, the Commission finds that BAL-502-RFC-02 satisfies the Order No. 
672 factors on how the Commission determines whether a regional 
Reliability Standard is just and reasonable in that BAL-502-RFC-02: (1) 
Is clear and unambiguous regarding what is required and who is required 
to comply (planning coordinator); (2) has clear and objective measures 
for compliance and achieves a reliability goal (namely, providing a 
common framework for resource adequacy analysis, assessment, and 
documentation) using one effective methodology, and (3) is ``more 
stringent'' in that NERC's continent-wide standards currently do not 
address assessment of resource adequacy in the planning horizon.
    11. The Commission also denies the requests made by NARUC, Ohio 
PUC, Borlick, and the Illinois Commerce Commission that the Commission 
hold a technical conference in this proceeding to ``foster needed 
dialogue'' by state regulatory commissions, economists, and 
stakeholders regarding the one in ten years criterion. First, the 
Commission finds that there is adequate information in the record in 
this proceeding to act on NERC's Petition. Second, the more appropriate 
venue to discuss technical details, such as the appropriateness of the 
one day in ten years criterion compared with other methodologies, is in 
the standards development process itself. The Commission's decision 
here does not preclude other entities, such as NERC, from holding 
technical conferences to foster further dialogue and to discuss 
improvements in criteria used for resource planning.
    12. The following discussion addresses first, the two challenges to 
approval of BAL-502-RFC-02, the Commission's jurisdictional authority 
to approve a resource adequacy assessment standard and the propriety of 
using the one day in ten years criterion. As discussed below, on these 
two issues the Commission determines first, that it is within our 
authority to approve a resource adequacy assessment regional 
Reliability Standard and, second, that the one day in ten years 
criterion is a just and reasonable method to use to conduct resource 
adequacy assessments for purposes of BAL-502-RFC-02. Next, the 
Commission discusses the six issues on which we sought comment in the 
NOPR. Finally, the Commission discusses the following remaining issues 
related to BAL-502-RFC-02: (i) Missing time horizons, (ii) effective 
date, (iii) regional definitions, and (iv) VRFs and VSLs.

A. Challenges To Approving BAL-502-RFC-02

    13. NERC, RFC and other commenters support approval of regional 
Reliability Standard BAL-502-RFC-02. NARUC and Ohio PUC raise concerns 
regarding the Commission's jurisdiction to approve this regional 
Reliability Standard. Commenters also raise concerns regarding the 
appropriateness of the one day in ten years criterion. These issues are 
discussed below.
1. Jurisdiction
Comments
    14. NARUC and the Ohio PUC raise several jurisdictional arguments 
regarding the Commission's authority under section 215 of the FPA to 
approve regional Reliability Standard BAL-502-RFC-02. These comments 
are endorsed by the Illinois Commerce Commission. NARUC and the Ohio 
PUC argue that the Commission lacks jurisdiction under section 215 of 
the FPA to approve a regional Reliability Standard that pertains to 
resource adequacy, asserting that BAL-502-RFC-02 is, in reality, a 
capacity requirement that RFC has couched as a planning tool. The Ohio 
PUC quotes Order No. 672, in which the Commission stated: ``The 
proposed Reliability Standard must address a reliability concern that 
falls within the requirements of section 215 of the FPA. That is, it 
must provide for the reliable operation of Bulk-Power System

[[Page 16253]]

facilities. It may not extend beyond reliable operation of such 
facilities or apply to other facilities.'' \15\ The Ohio PUC and NARUC 
argue that BAL-502-RFC-02 fails this parameter as it does not provide 
for the reliable operation of Bulk-Power System facilities. 
Specifically, they point to the definitions of ``Reliability Standard'' 
and ``Reliable Operation'' set forth in section 215 of the FPA, which 
definitions they argue make clear that Congress did not intend for a 
resource adequacy planning criterion to be the subject of a FPA section 
215 Reliability Standard. They claim that the statutory definition of 
``Reliability Standard,'' specifically precludes the Commission from 
instituting any capacity requirements.\16\ They next posit that the 
definition of ``Reliable Operation'' pertains to cascading outages, not 
the orderly shedding of load due to a capacity shortage.\17\ The Ohio 
PUC argues that a lack of adequate resources to serve all ``firm'' load 
at current prices does not lead to ``instability, uncontrolled 
separation, or cascading failures'' in the Bulk-Power System. Thus, 
NARUC and Ohio PUC argue that BAL-502-RFC-02, which requires a resource 
adequacy assessment, does not address a reliability concern as resource 
adequacy issues are not relevant to the ``Reliable Operation'' of Bulk-
Power System facilities as that term is defined in section 215 of the 
FPA.
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    \15\ Ohio PUC Comments at 7, Order No. 672, FERC Stats. & Regs. 
] 31,204 at P 331.
    \16\ ``Reliability Standard'' is defined to mean ``a 
requirement, approved by the Commission under this section, to 
provide for reliable operation of the bulk-power system. The term 
includes requirements for the operation of existing bulk-power 
system facilities, including cybersecurity protection, and the 
design of planned additions or modifications to such facilities to 
the extent necessary to provide for reliable operation of the bulk-
power system, but the term does not include any requirement to 
enlarge such facilities or to construct new transmission capacity or 
generation capacity.'' 16 U.S.C. 824o(a)(3).
    \17\ The term ``Reliable Operation,'' as defined in section 
215(a)(4) of the FPA, means ``operating the elements of the bulk-
power system within equipment and electric system thermal, voltage, 
and stability limits so that instability, uncontrolled separation, 
or cascading failures of such system will not occur as a result of a 
sudden disturbance, including a cybersecurity incident, or 
unanticipated failure of system elements.''
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    15. NARUC and Ohio PUC also contend that resource adequacy is a 
traditional state concern that is outside of the Commission's domain. 
They argue that both capacity requirements and resource adequacy 
planning criteria involve economic and policy decisions that impact the 
reasonableness of rates, generation decisions and retail demand 
response programs, all of which are within the states' domain. The Ohio 
PUC states that a Commission-mandated resource adequacy Reliability 
Standard, such as BAL-502-RFC-02, infringes on a state's authority to 
balance need for capacity investments against the risk of curtailments. 
Following up on this point, the Ohio PUC states in a footnote that it 
is unreasonable for anyone to argue that planning coordinators would 
plan using one criterion and then use a different criterion to make the 
economic determination of what resources should be acquired as doing so 
would be a waste of the planning coordinator's time and resources.
    16. NERC, RFC, and the PJM Power Providers respond to the 
jurisdictional questions raised by NARUC and Ohio PUC in their reply 
comments. In its Petition, NERC asserted that regional Reliability 
Standard BAL-502-RFC-02 does not adversely affect competition or cause 
restriction on the grid because it does not require entities to secure 
the needed resources as an outcome of the planning coordinators 
resource adequacy analysis. In their reply comments, NERC, RFC, and PJM 
Power Providers reiterate that BAL-502-RFC-02 is consistent with the 
provisions and stated goals of the Energy Policy Act of 2005.
    17. NERC counters NARUC's and the Ohio PUC's comments, arguing that 
section 215(a)(3), which contains the definition of ``Reliability 
Standard,'' does not preclude NERC from including a resource adequacy 
planning criterion. NERC states that the key distinction is between 
NERC's ability to include resource adequacy planning criterion in a 
Reliability Standard, which is clearly allowed under section 215(a)(3) 
and prior Commission orders, and NERC's ability to require the building 
or acquisition of new generating capacity, which is prohibited by 
section 215(a)(3) of the FPA. To support this argument, NERC quotes 
Order No. 672 in which the Commission stated:

    We agree with PG&E's recommendation that the Commission require 
the ERO to obtain information on resource adequacy and make related 
recommendations where entities are found to have inadequate 
resources. Resource adequacy is a fundamental aspect of reliability. 
The ERO is in a unique position to obtain and analyze information 
regarding resource adequacy across all regions of the Bulk-Power 
System in interconnected North America. Although section 215(a)(3) 
of the FPA provides that the term Reliability Standard does not 
include any requirement to enlarge Bulk-Power System facilities or 
to construct new transmission capacity or generation capacity, it 
does not preclude the ERO from obtaining information relating to 
resource adequacy for the purposes of making its required reports on 
the adequacy of the Bulk-Power System pursuant to section 215(g) of 
the FPA.\18\
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    \18\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 806 
(emphasis added).

    NERC asserts that the common criterion established in regional 
Reliability Standard BAL-502-RFC-02 to be used to complete a resource 
adequacy assessment serves a reliability purpose as the ``common 
criterion is necessary so that recommendations can be made in the [RFC] 
Region regarding inadequate resource adequacy requirements that could 
negatively impact the reliability of the bulk power system.'' \19\
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    \19\ NERC Reply Comments at 5.
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    18. RFC argues that Reliability Standards are not simply 
engineering standards and that many Reliability Standards, like BAL-
502-RFC-02, involve long horizons and are intended to prevent the Bulk-
Power System from coming anywhere near ``instability, uncontrolled 
separation, or cascading failures.'' As an example, RFC cites to NERC 
Reliability Standard FAC-010, which requires planning authorities to 
identify system operating limits (SOLs) and interconnection reliability 
operating limits (IROLs) in the planning horizon. RFC also cites to 
NERC Reliability Standard TPL-001, which requires that the transmission 
system be able to supply projected customer demands over the range of 
forecast system demands under no contingency conditions for the 
planning horizon. With respect to proposed regional Reliability 
Standard BAL-502-RFC-02, RFC states that the resource adequacy data 
produced under the standard will be a ``valuable reliability tool that 
can be used by registered entities in working to ensure, well in 
advance of any identified concerns, that `instability, uncontrolled 
separation, or cascading failures' never occur.'' \20\
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    \20\ RFC Reply Comments at 11.
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    19. With respect to NARUC and the Ohio PUC's arguments that a 
resource adequacy assessment standard will infringe on areas within a 
state's jurisdiction, RFC responds that BAL-502-RFC-02 does not 
encroach on the authority of the states to make the policy decisions 
that weigh resource adequacy against cost. RFC notes that states within 
the RFC region are free to use the data and documentation developed 
under BAL-502-RFC-02 in imposing resource adequacy obligations and 
making policy decisions regarding what level of service they are 
willing to pay to achieve. RFC further asserts that each state 
commission remains the ultimate arbiter of economic decisions regarding 
how to balance capacity

[[Page 16254]]

investments against the risk of curtailment as no economic decisions of 
any kind are mandated by BAL-502-RFC-02. RFC reiterates that the only 
enforceable mandate under BAL-502-RFC-02 is the obligation to perform 
and document the resource adequacy analysis in a consistent way across 
the RFC region.
Commission Determination
    20. As explained herein, the Reliability Standard before us does 
not preclude or preempt any action by a state PUC with regard to 
resource adequacy. As the Commission has previously recognized, 
resource adequacy raises ``complex jurisdictional concerns'' which at 
times are at the ``confluence of state-federal jurisdiction.'' \21\ As 
the Commission stated in the order in which the Commission certified 
NERC as the ERO, with respect to FPA section 215(g), ``Reliability 
Reports'': \22\

    \21\ Cal. Indep. Sys. Operator Corp., 116 FERC ] 61,274, at P 
1112 (2006) (stating that resource adequacy affects the ability of 
the operator of the interstate transmission grid to ensure reliable 
service).
    \22\ FPA section 215(g) provides that the ``ERO shall conduct 
periodic assessments of the reliability and adequacy of the bulk-
power system in North America.'' 16 U.S.C. 824o(g) (emphasis added).

    We agree * * * that the ERO's assessments of Bulk-Power System 
reliability and adequacy cannot themselves provide the basis for 
preempting state or regional transmission planning and resource 
adequacy programs. The Commission can, however, order the ERO to 
submit adequacy assessments, including recommendations that some 
entities are found to have inadequate resources. In addition, our 
regulations provide for a determination of consistency between state 
actions and a Reliability Standard, as well as an assessment of the 
Reliability Standard's effectiveness as the Commission may deem 
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appropriate.\23\

    \23\ North American Electric Reliability Corporation, 116 FERC ] 
61,062, at P 292 (2006) (citing Order No. 672, FERC Stats. & Regs. ] 
31,204 at P 805-806).

    Although the Commission was addressing the interplay between the 
ERO's role with respect to resource adequacy assessments and states' 
resource adequacy programs in the context of section 215(g), this 
interplay is equally relevant to the ERO's role with respect to the 
development of Reliability Standards because the Commission is 
acknowledging that FPA section 215 establishes resource adequacy 
assessments as being relevant to reliability and, further, that the 
reliability aspect of resource adequacy assessments does not preempt 
state action.
    21. The Commission, by approving BAL-502-RFC-02, is not usurping, 
intruding on, or preempting any authority exclusively within a state's 
jurisdiction because, as recognized in Order No. 672, the FPA does not 
reserve authority for the states over all matters related to or that 
flow from ``resource adequacy.'' Moreover, the ``savings'' provision in 
section 215, section 215(i)(3), is clear that nothing in section 215 
shall be ``construed to preempt any authority of any State to take 
action to ensure the safety, adequacy, and reliability of electric 
service within that State, as long as such [State] action is not 
inconsistent with any reliability standard.'' As we have clarified in a 
prior order, the saving provision in section 215(i) is not a grant of 
new authority to the states, but merely preserves any authority states 
may have under state law ``to take action to ensure the safety, 
adequacy, and reliability of electric service within that State, so 
long as such action is not inconsistent with any reliability standard * 
* * .'' \24\ Thus, we do not agree with NARUC or the Ohio PUC that the 
approval of BAL-502-RFC-02 will impinge on states' jurisdiction over 
matters related to resource adequacy. BAL-502-RFC-02 does not touch the 
establishment of specific resource adequacy requirements, and thus does 
not intrude on the state's decisional authority with respect to 
building or acquisition of assets or capacity to meet resource adequacy 
needs.
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    \24\ New York State Reliability Council, 122 FERC ] 61,153, at P 
33 (2008) (emphasis added).
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    22. With respect to the Ohio PUC's argument that by approving a 
regional Reliability Standard mandating the use of a specific resource 
adequacy planning criterion (the one day in ten years criterion), the 
Commission is establishing that criterion as the de facto criterion to 
be used to set resource investment requirements, this argument appears 
to be borne out of the Ohio PUC's concern regarding preserving its 
authority to set resource adequacy standards. The standard does not 
impinge on Ohio PUC's authority to set or determine how to meet 
resource adequacy standards. Contrary to the Ohio PUC's concerns, the 
Commission believes that establishing a common criterion for resource 
planning will provide states with a uniform framework of information 
regarding resource adequacy. The information the reliability 
assessments provide would then be available to the states to use or 
could serve as a platform on which to layer additional factors, such as 
costs, as the states see fit.
    23. The Commission also finds that the proposed resource adequacy 
analyses and documentation requirements in BAL-502-RFC-02 fall within 
the definition of ``Reliability Standard'' as that term is defined in 
section 215(a)(3) and pertain to the ``Reliable Operation'' of the 
Bulk-Power System as that term is defined in section 215(a)(4). Under 
section 215(a)(3), the only type of requirement that is explicitly 
precluded from being part of an enforceable Reliability Standard is a 
``requirement to enlarge [bulk-power system facilities] or to construct 
new transmission capacity or generation capacity.'' \25\ BAL-502-RFC-02 
does not include any such requirement. Specifically, BAL-502-RFC-02 
mandates planning, it does not require entities to secure any resources 
as an outcome of the resource adequacy assessment.
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    \25\ 16 U.S.C. 824o(a)(3).
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    24. BAL-502-RFC-02 also falls within the definition of Reliability 
Standard, as it provides for the reliable operation of the Bulk-Power 
System because it serves to identify potential resource adequacy 
deficiencies in a planning horizon with time to mitigate projected 
resource adequacy problems before shortages of resources occur in the 
operating horizon. Shortages of resources in the operating horizon can 
lead to blackouts and even cascading outages. Under these conditions, 
operators may be continually challenged to balance load with energy to 
prevent major power or voltage swings across the grid that can lead to 
blackouts and cascading outages. Because the standard does not 
prescribe that action must be taken, entities with authority for 
planning and siting new resources, including demand response resources 
or any other resource type, can determine the appropriate course of 
action, if any, that should be taken, including performing additional 
resource adequacy studies. The standard therefore does not preclude or 
preempt any action by a state commission with regard to resource 
adequacy. The Ohio PUC argues that NERC and RFC ``conflate[] resource 
adequacy with reliable operation of the Bulk-Power System,'' stating 
that the definition of ``Reliable Operation'' cannot be enlarged and 
manipulated to include planning to build such capacity.\26\ The 
Commission finds that the Ohio PUC, in making this argument, is reading 
into BAL-502-RFC-02 a requirement that registered entities within RFC 
build or acquire new generating capacity. Such a requirement simply 
does not exist in BAL-502-RFC-02.
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    \26\ Ohio PUC Comments at 5-6.

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[[Page 16255]]

    25. Ohio PUC further argues that a lack of adequate resources to 
serve firm load does not lead to ``instability, uncontrolled separation 
or cascading failures,'' which are hallmarks of the term ``Reliable 
Operation.'' We disagree with the Ohio PUC's interpretation of the 
definition of ``Reliable Operation'' as stated in section 215. A more 
careful reading reveals that the ``hallmarks'' of this term, 
instability, uncontrolled separation or cascading failures, are not to 
occur upon the unanticipated failure of a system element. If resources 
cannot meet load, or are insufficient to provide a reserve margin above 
expected load, then instability, uncontrolled separation or cascading 
failures can result from the unanticipated loss of a system element. If 
this situation occurs, reliable operation is not achieved due to 
resource inadequacy. Thus, like other planning standards, BAL-502-RFC-
02 provides for the reliable operation of the Bulk-Power System as it 
will help identify areas of concern that, if left unresolved, could 
result in future instability, uncontrolled separation, or cascading 
failures of the Bulk-Power System.
    26. The only other affirmative limitation on the scope of 
Commission-approved and enforceable Reliability Standards under FPA 
section 215 is the savings clause in section 215(i)(2), which states: 
``This section does not authorize the ERO or the Commission to order 
the construction of additional generation or transmission capacity or 
to set and enforce compliance with standards for adequacy or safety of 
electric facilities or services.'' \27\ Regional Reliability Standard 
BAL-502-RFC-02 does not set any resource adequacy standards. 
Specifically, BAL-502-RFC-02 does not impose on any registered entity a 
resource adequacy obligation because the standard contains no 
requirement for an entity to construct or otherwise invest in 
additional transmission, distribution, or generation resources or 
capacity. Nothing in BAL-502-RFC-02 requires any entity to use or take 
any action with respect to the resulting resource adequacy assessment. 
Regional Reliability Standard BAL-502-RFC-02 only requires a resource 
adequacy analysis and documentation of such analysis. Importantly, the 
Commission is not, through BAL-502-RFC-02, setting, enforcing or in any 
way mandating the resource adequacy levels that are derived through the 
BAL-502-RFC-02 resource adequacy analyses. Accordingly, BAL-502-RFC-02 
does not run afoul of the prohibitions in FPA sections 215(a)(3) or 
215(i)(2).
---------------------------------------------------------------------------

    \27\ 16 U.S.C. 824o(i)(2).
---------------------------------------------------------------------------

2. One Day in Ten Years Criterion
    27. Regional Reliability Standard BAL-502-RFC-02 requires planning 
coordinators to perform an annual resource adequacy analysis and 
calculate a planning reserve margin that meets the ``one day in ten 
years'' criterion.\28\ The analysis must be ``performed or verified 
separately'' for: (i) Year one, (ii) for one year falling in the second 
through fifth years, and (iii) at least one year in the sixth through 
tenth years.\29\
---------------------------------------------------------------------------

    \28\ The ``one day in ten years'' criterion is used to plan 
resource adequacy such that reserve margins are planned so that the 
expected frequency of loss of load due to inadequate resources does 
not exceed 0.1 events per year, which equates to one event in ten 
years.
    \29\ See proposed Reliability Standard BAL-502-RFC-02, 
Requirement R1.2.
---------------------------------------------------------------------------

Comments
    28. Several commenters expressed that the ``one day in ten years'' 
criterion is not economically efficient, is outdated, and is too 
conservative of a requirement.\30\ OCC comments that the ``one day in 
ten years'' criterion does not account for changes in the electric 
industry such as markets, demand response, energy advancements, 
distributed generation, energy efficiency or the smart grid. Thus, OCC 
recommends that the Commission consider alternative planning reserve 
margin methodologies rather than a conservative one day in ten years 
methodology. The Ohio PUC argues that the one day in ten years 
criterion has not been shown to be just and reasonable because: (1) The 
criterion is outdated; (2) it may negatively impact competition such as 
the development of price responsive demand; and (3) no analysis has 
been done to confirm that a one day in ten years criterion produces a 
reserve margin that reasonably balances the value of avoiding scarcity 
and the cost of maintaining the target reserve margin.
---------------------------------------------------------------------------

    \30\ See Comments submitted by Borlick, Carden, OCC, Ohio PUC, 
and Wilson.
---------------------------------------------------------------------------

    29. Carden supports annual resource adequacy assessments that are 
based on common criteria for reliability. Wilson comments that the 
conservative assumptions in a one day in ten years analysis often lead 
to less reliance on neighboring systems that results in excess 
generation.
    30. Responding to these criticisms of the one day in ten years 
criterion, RFC points out that the only RFC stakeholder that voted 
against the BAL-502-RFC-02 cast a negative vote because that 
stakeholder favors implementing a continent-wide resource adequacy 
planning standard rather than a regional standard. RFC asserts that the 
one day in ten years criterion is just and reasonable because its use 
will ensure, for the first time, that similar assessments of resource 
adequacy are performed for every part of the RFC region, including in 
states that have deregulated electric markets, which will provide a 
consistent and mutually understandable target against which to assess 
adequacy. RFC rejects as unreasonable, burdensome and unnecessary the 
other commenters' suggestion that the one day in ten years criterion 
must be first proven to balance the benefit of avoiding scarcity with 
the cost of maintaining an appropriate reserve. RFC further notes that 
even though the criterion used in regional Reliability Standard BAL-
502-RFC-02 could be improved in the future, that does not make the 
standard unreasonable now. To that end, RFC encourages interested 
parties to participate regularly in its regional Reliability Standards 
development process as well as at its informal stakeholder meetings.
Commission Determination
    31. The comments on this issue reveal a level of disagreement 
regarding the appropriateness of using the ``one day in ten years'' 
criterion for an annual resource adequacy assessment. In approving this 
regional Reliability Standard, the Commission need not determine that 
the ``one day in ten years'' criterion represents the most effective or 
most economically efficient method of measuring resource adequacy. 
Rather, the Commission is to determine whether the proposed standard is 
just and reasonable, not unduly discriminatory or preferential, and in 
the public interest. Thus, in this case, the Commission considers 
whether the requirements in BAL-502-RFC-02 are a just and reasonable 
means of achieving the reliability objective of the standard. As noted 
by RFC in its reply comments, the reliability objective of BAL-502-RFC-
02 is to provide a common framework for analyzing, assessing, and 
documenting resource adequacy, in part to resolve RFC's concerns 
regarding the lack of standardization and the lack of a measure for 
resource adequacy in deregulated states within its footprint.\31\ The 
Commission finds that BAL-502-RFC-02 achieves the reliability objective 
of establishing a common criteria for analyzing, assessing and 
documenting resource adequacy in a

[[Page 16256]]

just and reasonable manner through the imposition of the one day in ten 
years criterion for measuring resource adequacy. The Commission 
emphasizes that the one day in ten years criterion is one common 
approach for resource adequacy assessment, and by approving this 
regional Reliability Standard, the Commission does not establish the 
one day in ten years criterion to be the de facto, or the only 
acceptable metric for resource adequacy assessment. Rather, the 
Commission is acknowledging that the one day in ten years criterion is 
a well-established and common criterion for assessing resource 
adequacy.\32\ The use of a known and understood criterion should result 
in consistent, transparent and understandable resource adequacy 
analyses within the RFC region, and thus meets the reliability goal of 
establishing a common criterion to assess resource adequacy.
---------------------------------------------------------------------------

    \31\ RFC Reply Comment at 13.
    \32\ See, e.g., Midwest Independent Transmission System 
Operator, Inc., 122 FERC ] 61,283, at P 108 (2008) (accepting the 
Midwest ISO's proposal to use the one day in ten years standard as 
reasonable and consistent with industry standard); Devon Power LLC, 
et al., 110 FERC ] 61,313, at P 8 (2005) (noting that the ISO-NE 
uses as a regional planning criteria the one day in ten years 
criterion); see also North American Electric Reliability Council, 
Resource and Transmission Adequacy Task Force, Resource and 
Transmission Adequacy Recommendations, June 15, 2004, available at 
http://www.nerc.com/docs/docs/pubs/Resource_and_Transmission_Adequacy_Recommendations.pdf (survey of the criteria used for 
resource adequacy planning during 2003-2004 timeframe showed that of 
the eight regional reliability councils polled in the East, five use 
the one day in ten years LOLE criteria); PJM Interconnection, 
L.L.C., PJM Generation Adequacy Analysis: Technical Methods Capacity 
Adequacy Planning Department, at 1 (October 2003), available at 
http://www.nerc.com/docs/pc/ris/PJM_Generation_Adequacy_Analysis_Technical_Methods.pdf (stating ``This `one day in ten 
year' loss-of-load expectation (LOLE) is the standard observed in 
most NERC regions and is the basis for determining PJM's required 
Installed Reserve Margin (IRM).'').
---------------------------------------------------------------------------

    32. The Commission does not disagree with commenters' arguments 
that the one day in ten years criterion could be improved upon as an 
assessment tool or replaced with another methodology, but this does not 
mean that RFC's proposed one day in ten years criterion is unjust or 
unreasonable. NERC endorsed the one day in ten years criterion in its 
Petition, stating that ``experience has demonstrated that correlating 
generating capacity and customer load in a `loss of load' methodology 
with a target of `one day in 10 year' criterion has provided adequate 
generating capacity in real time operation * * * to supply all customer 
firm loads, even under extreme conditions.'' \33\ The Commission 
further notes that approving this regional Reliability Standard with 
the one day in ten years criterion does not prevent future changes or 
improvements to this resource assessment methodology. Our approval of 
BAL-502-RFC-02 does not prevent RFC or NERC from proposing other 
methodologies from replacing the one day in ten years criterion to 
assess resource adequacy and determine a level of planning reserve 
margin necessary to maintain reliability of the Bulk-Power System.\34\
---------------------------------------------------------------------------

    \33\ NERC Petition at 10.
    \34\ See e.g., Version One Regional Reliability Standard 
Resource and Demand Balancing, 133 FERC ] 61,063, at P 30 (2010) 
(Order No. 740) (remanding regional Reliability Standard BAL-002-
WECC-1).
---------------------------------------------------------------------------

    33. The only obligations under BAL-502-RFC-02 are analysis and 
documentation requirements. This regional Reliability Standard does not 
specify how the results of the analysis required in this standard are 
to be used. For example, BAL-502-RFC-02 does not require state 
commissions to use the resource assessment analysis resulting from BAL-
502-RFC-02 for economic decisions regarding resource adequacy 
requirements. Thus, the Commission rejects the Ohio PUC's argument that 
the one day in ten years criterion is unreasonable because the 
criterion does not consider the economics of resource adequacy such as 
the cost of additional resources or the value of energy to the 
consumers whose service would be interrupted in the event of a 
shortfall. Certainly, the BAL-502-RFC-02 assessments will be available 
as a tool to help inform the policy decisions to determine the level of 
service entities are willing to pay for and resource adequacy 
requirements. However, the Commission repeats, these activities are not 
required by this regional Reliability Standard.
    34. In response to the Ohio PUC's claim that BAL-502-RFC-02 was 
developed with limited visibility to and involvement by many of those 
most involved in resource adequacy issues, e.g., state commissions and 
economists, the Commission emphasizes that BAL-502-RFC-02 was developed 
through an open and transparent process, allowing anyone with an 
interest to participate.\35\ As documented by RFC, during the standard 
development process, entities had multiple opportunities to express 
concerns regarding anything related to the regional Reliability 
Standard, including the one day in ten year criterion. The RFC 
Reliability Standards Development Procedure (RSDP) also includes an 
opportunity for submitting a ``standard authorization request'' to 
suggest a modification to any regional Reliability Standard or 
development of a new regional Reliability Standard. The Commission also 
notes that RFC will review BAL-502-RFC-02 at least every five years, 
thereby affording future opportunities for interested entities to 
participate in these reviews.
---------------------------------------------------------------------------

    \35\ NERC Petition at 5-6, 19-21; RFC Reply Comments at 15-16.
---------------------------------------------------------------------------

B. Issues Regarding Specific BAL-502-RFC-02 Requirements

    35. In the NOPR, the Commission stated that it believes that the 
factors or characteristics to be considered in the resource adequacy 
analysis as set forth in Requirement R1 of BAL-502-RFC-02 are a 
technically sound means to set up the analysis for ascertaining the 
probability of not having enough resources in order to meet demand and 
avoid loss of load. In addition, the Commission sought clarification 
regarding three aspects of the resource adequacy analysis: (i) The loss 
of load calculation, (ii) use of capacity benefit margin; and (iii) the 
meaning of common mode outages.
1. Loss of Load Calculation
    36. Regional Reliability Standard BAL-502-RFC-02, Requirement R1.1 
states that the planning coordinator's assessment shall calculate a 
planning reserve margin that results in the sum of probabilities for 
loss of load for each planning year equal to 0.1, or comparable to 
``one day in ten years'' when available capacity will not meet the 
load. With respect to the loss of load calculation, BAL-502-RFC-02 
specifically identifies two circumstances that do not contribute to the 
loss of load probability: (1) Utilization of direct control load 
management \36\ and (2) curtailment of interruptible load.\37\ 
Notwithstanding these two exceptions to the loss of load probability, 
the Commission sought comment on how other system operator actions, 
such as voltage reduction or other, non-voluntary types of load 
reduction plans, would be modeled and documented in this analysis.\38\
---------------------------------------------------------------------------

    \36\ NERC defines direct control load management (DCLM) as 
``Demand-Side Management that is under the direct control of the 
system operator. DCLM may control the electric supply to individual 
appliances or equipment on customer premises. DCLM as defined here 
does not include Interruptible Demand.'' Glossary of Terms Used in 
NERC Reliability Standards, April 20, 2010 (NERC Glossary), 
available at: http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
    \37\ The NERC Glossary defines Interruptible Load as ``Demand 
that the end-use customer makes available to its Load-Serving Entity 
via contract or agreements for curtailment.''
    \38\ NOPR, FERC Stats. & Regs. ] 32,662 at P 18.
---------------------------------------------------------------------------

Comments
    37. RFC and Midwest ISO comment that real-time operating actions, 
like voltage reductions or other non-

[[Page 16257]]

voluntary types of load reduction plans are not intended to be included 
in the BAL-502-RFC-02 assessment. RFC and Midwest ISO explain that 
these types of load reduction are only considered during the operating 
horizon and are not included in planning time frame assessments to 
comply with requirements associated with the planning horizon.
    38. Borlick, Midwest ISO, OCC, Ohio PUC and Wilson comment on 
various demand side resources and their inclusion or exclusion from the 
BAL-502-RFC-02 resource adequacy assessment. Borlick comments that 
price responsive demand should not be counted both in Requirement 
R1.3.1 (load forecast characteristics) \39\ and in Requirement R1.4 
(resource availability characteristics).\40\ Midwest ISO states that 
the regional Reliability Standard does not limit which demand response 
programs are excluded from the loss of load calculation, thereby 
allowing for, not preventing, future innovations in demand side 
programs. OCC asserts that the NOPR and BAL-502-RFC-02 imply that 
voluntary curtailment services, including demand response, are 
completely excluded from consideration in the loss of load calculation. 
OCC further argues that complete exclusion of voluntary curtailment 
service from the loss of load calculation would undervalue demand 
response resources. OCC states that demand response resources should be 
taken into account in the loss of load calculation because they reduce 
the need for additional capacity. Accordingly, OCC urges the Commission 
to require including historical demand response rates for resources in 
the loss of load calculation. The Ohio PUC comments that price 
responsive demand is not accounted for in this regional Reliability 
Standard. Last, Wilson notes that approving BAL-502-RFC-02 could 
actually prevent demand response or price responsive demand from 
developing.
---------------------------------------------------------------------------

    \39\ BAL-502-RFC-1, Requirement R1.3.1 sets forth the load 
forecast characteristics that are to be included and documented in 
the resource adequacy analysis. Specifically, Requirement R1.3.1 
identifies the following six load forecast characteristics: (1) 
Median (50:50) forecast peak load; (2) load forecast uncertainty; 
(3) load diversity; (4) seasonal load variations; (5) daily demand 
modeling assumptions; and (6) contractual arrangements concerning 
curtailable/interruptible demand.
    \40\ BAL-502-RFC-1, Requirement R1.4 requires the consideration 
in the resource adequacy analysis of eight resource availability 
characteristics and documentation of how and why they were included 
in the analysis or why they were not included. The resource 
availability characteristics include: (1) Availability and 
deliverability of fuel; (2) common mode outages that affect resource 
availability; (3) environmental or regulatory restrictions of 
resource availability; (4) any other demand (load) response programs 
not included in R1.3.1; (5) sensitivity to resource outage rates; 
(6) impacts of extreme weather/drought conditions that affect unit 
availability; (7) modeling assumptions for emergency operation 
procedures used to make reserves available; and (8) market resources 
not committed to serving load within the planning coordinator area.
---------------------------------------------------------------------------

Commission Determination
    39. Based on the Midwest ISO and RFC comments, the Commission 
accepts that for planning assessments conducted under BAL-502-RFC-02, 
typical system operator actions, such as voltage reduction or other 
non-voluntary types of load reduction plans should not be included 
given that they pertain to the operating, not planning, horizon. The 
Commission agrees with Borlick's comment, and emphasizes that any type 
of demand response program, including price responsive demand, should 
not be represented twice in the assessment under both Requirement 
R1.3.1 and Requirement R1.4. The clause contained in Requirement R1.4 
for considering ``Any other demand (Load) response programs not 
included in R1.3.1'' (emphasis added) is sufficient to prevent any 
responsible entity from counting any type of demand response program 
multiple times within this assessment.
    40. The Commission also agrees with Midwest ISO's comment that BAL-
502-RFC-02's requirements are not so restrictive that they would limit 
any specific types of demand response programs from being included in 
the BAL-502-RFC-02 assessment. Contrary to the comments from OCC, Ohio 
PUC and Wilson, the requirements for conducting the BAL-502-RFC-02 
assessment are general enough to include interruptible loads, voluntary 
curtailment services, price responsive demand, and other types of 
demand response programs, and therefore would not hinder the 
development of new programs or technologies related to demand-side 
resources. Regarding OCC's comment that BAL-502-RFC-02 completely 
excludes voluntary curtailment services from consideration in the loss 
of load calculation, thus undervaluing demand response, the Commission 
notes that demand response is addressed elsewhere in the assessment. 
While Requirement R1.1.1 makes clear that utilization of direct control 
load management or curtailment of interruptible demand shall not 
contribute to the loss of load probability, Requirement R1.1.1 does not 
prevent demand related resources from being considered under other 
parts of the assessment, such as under Requirement R1.3.1 or R1.4.
    41. Specifically, the Commission agrees with OCC that historical 
demand response rates or performance should be considered in the BAL-
502-RFC-02 assessment to determine the effectiveness of a demand 
response program and typical performance achieved by the demand 
response program. Assessing how resources, including demand side 
resources, have performed in the past, how a resource's performance 
changed over time, and how a resource's performance varied under 
different scenarios is an effective way to estimate how the resource 
might perform under the conditions considered for the analysis. To that 
end, the Commission notes that BAL-502-RFC-02, Requirement R1.3.2 
includes ``historical resource performance and any projected changes'' 
as one of the resource characteristics to be considered in performing 
the resource adequacy analysis. Similarly, Requirement R1.4 requires 
consideration of resource availability characteristics of ``any other 
demand (Load) response programs not included in R1.3.1,'' which could 
include historical performance of such demand response programs. 
Requirement R1.4 also requires the planning coordinator to document how 
and why each resource availability characteristic was included in the 
analysis, or why the characteristic was not included.
    42. Based on the foregoing, the Commission affirms that the loss of 
load calculation performed under Requirement R1.1 of BAL-502-RFC-02 
does not include typical system operator actions or non-voluntary types 
of load loss. The Commission further notes that demand response 
programs should be considered under aspects of a BAL-502-RFC-02 
resource adequacy assessment, specifically under either R1.3.1 or R1.4 
as appropriate.
2. Use of Capacity Benefit Margin
    43. With respect to the capacity benefit margin (CBM), the 
Commission in the NOPR noted that the requirements do not explicitly 
state whether planning coordinators may rely upon CBM \41\ to satisfy 
BAL-502-RFC-

[[Page 16258]]

02's requirements. During the standard development posting period, RFC 
received comments regarding potential conflicts or lack of coordination 
between BAL-502-RFC-02 and the continent-wide NERC Reliability Standard 
MOD-004-1--Capacity Benefit Margin.\42\ The Commission stated in the 
NOPR that it does not believe that BAL-502-RFC-02 conflicts with NERC 
Reliability Standard MOD-004-1. However, the Commission noted that 
there could be some confusion regarding whether CBM could or could not 
be used in order to meet the requirements of BAL-502-RFC-02,\43\ and 
sought comment on the issue.
---------------------------------------------------------------------------

    \41\ NOPR, FERC Stats. & Regs. ] 32,662 at P 19. The NERC 
Glossary defines capacity benefit margin (CBM) as ``the amount of 
firm transmission transfer capability preserved by the transmission 
provider for Load-Serving Entities (LSE), whose loads are located on 
that Transmission Service Provider's system, to enable access by the 
LSEs to generation from interconnected systems to meet generation 
reliability requirements. Preservation of CBM for an LSE allows that 
entity to reduce its installed generating capacity below that which 
may otherwise have been necessary without interconnections to meet 
its generation reliability requirements. The transmission transfer 
capability preserved as CBM is intended to be used by the LSE only 
in times of emergency generation deficiencies.'' Glossary of Terms 
Used in NERC Reliability Standards, April 20, 2010, available at: 
http://www.nerc.com/docs/standards/rs/Glossary_of_Terms_2010April20.pdf.
    \42\ See NERC Petition, Exhibit C, Comments from ITC 
Transmission.
    \43\ NOPR, FERC Stats. & Regs. ] 32,662 at P 19. Reliability 
Standard MOD-004-1 addresses CBM, or a capacity preserved for firm 
transmission transfer capability. Conversely, the Requirements in 
proposed Reliability Standard BAL-502-RFC-02 address an analysis 
regarding the capability of generation to serve the projected load. 
While CBM could be a method of meeting the Requirements of BAL-502-
RFC-02, the two Reliability Standards do not contradict each other.
---------------------------------------------------------------------------

Comments
    44. Carden, Midwest ISO, RFC and Wilson responded to the 
Commission's question regarding utilization of CBM to meet BAL-502-RFC-
02's requirements. Carden and Wilson support allowing CBM to be used to 
meet the requirements for the planning reserve margins. Midwest ISO 
comments that BAL-502-RFC-02 correctly neither excludes nor includes 
the use of CBM to meet the requirements. RFC states that CBM alone 
cannot satisfy the regional Reliability Standard.
Commission Determination
    45. Based on these comments, the Commission understands and agrees 
that the intent of BAL-502-RFC-02 is that while CBM may be used to meet 
the requirements, it is not mandatory to include CBM in the assessment. 
The Commission also understands and agrees, as RFC stated, that CBM 
cannot be the only source assessed in order to satisfy BAL-502-RFC-02's 
requirements.
3. Meaning of Common Mode Outages
    46. With respect to Requirement R1.4, which requires the resource 
adequacy analysis to consider resource availability characteristics 
including ``common mode outages that affect resource availability,'' 
the Commission sought comment on whether planning coordinators, when 
evaluating ``common mode outages that affect resource availability'' 
will consider only outages within the generation facility, or if the 
analysis will also consider outages of transmission facilities that 
would have an impact on resource or generator availability.\44\
---------------------------------------------------------------------------

    \44\ NOPR, FERC Stats. & Regs. ] 32,662 at P 20.
---------------------------------------------------------------------------

Comments
    47. Both Midwest ISO and RFC agree that Requirement R1.4 only 
explicitly requires common mode outages of resources, but does not 
limit the consideration of transmission outages that could affect 
resource deliverability. Midwest ISO further explains that Requirements 
R1.3.3 and R1.3.4 \45\ apply to transmission facilities within and 
outside of the planning coordinator area and these requirements 
properly allow for the inclusion and documentation of consideration of 
common mode outages within a study, while not explicitly requiring the 
consideration of common mode outages.
---------------------------------------------------------------------------

    \45\ Requirements R1.3.3 and R1.3.4 list items that must be 
considered in conducting the BAL-502-RFC-02 resource adequacy 
analysis. R1.3.3 refers to transmission limitations that prevent the 
delivery of generation reserves. R1.3.4 refers to assistance from 
other interconnected systems including multi-area assessment 
considering transmission limitations into the study area.
---------------------------------------------------------------------------

Commission Determination
    48. Based on the RFC and Midwest ISO comments, the Commission 
understands that common mode outages discussed in Requirement R1.4 do 
not explicitly require consideration of transmission facility outages. 
Notwithstanding that Requirement R1.4 does not explicitly require 
consideration of transmission facility outages, the Commission agrees 
with the Midwest ISO that nothing in the standard limits a planning 
coordinator's flexibility to consider such outages.
    49. Consistent with Midwest ISO comments, the Commission 
understands Requirements R1.3.3 and R1.3.4 apply to transmission 
facilities, specifically documenting transmission limitations that 
would prevent the delivery of generation reserves and considering 
transmission limitations impacting assistance from other interconnected 
systems. These transmission limitations could include, but do not 
explicitly require, outage assessments of transmission facilities that 
would result in preventing delivery of generation reserves. The 
Commission notes that the outage assessment would likely benefit from 
analyzing transmission facility outages that would directly impact the 
ability to deliver resources to demand, or decrease the amount of 
resources delivered to an area from interconnected systems. Not all 
transmission facilities would need to be included in the assessment as 
many individual transmission facilities would have minimal impact on 
resource deliverability. Thus, determining which transmission outages 
to assess would require some engineering judgment to determine the 
impact of the transmission outage on resource deliverability. The 
Commission encourages planning coordinators to consider transmission 
outages to determine which, if any, transmission outages have the 
greatest impact on delivery of resources and to include those limiting 
elements when evaluating common mode outages.

C. Other Issues Raised in NOPR

1. Missing Time Horizons
    50. The NERC Petition explained that the template for Reliability 
Standards dictates that each main requirement in a Reliability Standard 
be assigned one of the following time horizons: \46\ (1) Long-term 
Planning (a planning horizon of one year or longer), (2) operations 
planning (operating and resource plans from day-ahead up to and 
including seasonal), (3) same-day operations (routine actions required 
within the timeframe of a day, but not real-time), (4) real-time 
operations (actions required within one hour or less to preserve the 
reliability of the bulk electric system), and (5) operations assessment 
(follow-up evaluations and reporting of real time operations). In the 
Petition, NERC noted the absence of a time horizon in BAL-502-RFC-02 
and explained that RFC had stated that it did not include time horizons 
because its Commission-approved Reliability Standard Development 
Process does not include time horizons as a required element in its 
template for Reliability Standards. As stated in the NERC Petition, RFC 
also noted that ``the [BAL-502-RFC-02] focuses on `planning oriented' 
subject matter for one year and beyond,'' and, as such, the appropriate 
time horizon, long-term planning, is relatively straight forward.\47\
---------------------------------------------------------------------------

    \46\ Time horizons are used as a factor in determining the size 
of a sanction. If an entity violates a Requirement and there is no 
time to mitigate the violation because the Requirement takes place 
in real-time, then, depending on the violation's specific facts, the 
sanction associated with the violation generally would be higher 
than it would be for violation of a Requirement that could be 
mitigated over a longer period of time. See NERC's ``Time Horizons'' 
document, available on NERC's Web site at http://www.nerc.com/files/Time_Horizons.pdf.
    \47\ NERC Petition at 24.
---------------------------------------------------------------------------

    51. In the NOPR, the Commission noted that it is important to 
identify the

[[Page 16259]]

time horizons for each Reliability Standard, but acknowledged that time 
horizons are not critical to its determination of whether to approve a 
Reliability Standard. Moreover, the Commission agreed with RFC that 
with respect to BAL-502-RFC-02, the time horizon ``long-term planning'' 
can be gleaned from the context of the standard for the purpose of 
determining the severity of a violation risk factor, or for determining 
the penalty for a violation. Based on RFC's statement that it is moving 
towards requiring the assignment of time horizons as part of its 
standard drafting process, the Commission proposed to direct RFC to add 
time horizons to the two main requirements when RFC reviews BAL-502-
RFC-02 at the scheduled five-year review.
Comments
    52. RFC states in its comments that it does not oppose the 
Commission's proposal to direct RFC to add time horizons to BAL-502-
RFC-02 during its scheduled five-year review. The only other commenter 
on the issue of time horizons, Midwest ISO, supports the NOPR's 
proposal, noting that time horizons should be specifically identified 
in Reliability Standards because they are a factor for determining the 
size of a sanction.
Commission Determination
    53. The Commission agrees with the Midwest ISO that time horizons 
are a factor in NERC's determination of a penalty for a violation and 
acknowledges that RFC is modifying its standards development process 
such that it will include time horizons as an element in its regional 
Reliability Standards template. Accordingly, as proposed in the NOPR, 
the Commission directs RFC to add time horizons to the two main 
requirements when RFC reviews BAL-502-RFC-02 at the scheduled five-year 
review.
2. Proposed Effective Date
    54. Proposed regional Reliability Standard BAL-502-RFC-02's stated 
effective date is ``upon RFC Board approval,'' which occurred on 
December 4, 2008. In the NOPR, the Commission noted that, while the 
effective date for Commission approved Reliability Standards is 
generally ``the first day of the first quarter after regulatory 
approval,'' with respect to BAL-502-RFC-02, no additional 
implementation time is necessary as the four registered planning 
coordinators in the RFC region are already subject to BAL-502-RFC-02 by 
the terms of the RFC membership agreement. Accordingly, the Commission 
proposed in the NOPR that BAL-502-RFC-02 become mandatory and 
enforceable on the effective date of the Commission's final rule 
approving the regional Reliability Standard.
Comments
    55. Dominion is the sole commenter regarding the effective date. 
Dominion, noting the potential pitfalls that may occur when regions 
like RFC implement multiple effective dates for the same standard,\48\ 
seeks two clarifications. First, Dominion requests that the Commission 
clarify that the effective date of regional Reliability Standard BAL-
502-RFC-02 is the effective date of the Commission's final rule 
approving the standard and that the standard will be enforced 
prospectively only. Second, Dominion requests that the Commission 
clarify that all future regional Reliability Standards shall not have 
effective dates that are prior to the effective date of the 
Commission's order approving the regional Reliability Standard and that 
RFC should modify its governance documents accordingly.
---------------------------------------------------------------------------

    \48\ Dominion notes that with respect to BAL-502-RFC-02, the 
stated effective date is ``upon RFC Board approval,'' which was 
December 4, 2008. However, under section 215 of the FPA, a 
Reliability Standard may not become effective until after Commission 
approval.
---------------------------------------------------------------------------

Commission Determination
    56. Under section 215(d)(2) of the FPA, it is clear that a proposed 
Reliability Standard ``shall take effect upon approval by the 
Commission.'' Accordingly, a Reliability Standard cannot have an 
effective date in the United States that is prior to the effective date 
of the final rule issued by the Commission approving the Reliability 
Standard at issue. Thus, the effective date of BAL-502-RFC-02 is the 
effective date of this Final Rule, and further, BAL-502-RFC-02 first 
becomes enforceable upon this effective date.\49\
---------------------------------------------------------------------------

    \49\ For this Final Rule, the effective date is 60 days after 
publication in the Federal Register.
---------------------------------------------------------------------------

3. Provision of Data
    57. In the NOPR, the Commission, noting that BAL-502-RFC-02 does 
not require other entities (load-serving entities, balancing 
authorities, transmission operators, resource planners, or transmission 
planners) to provide the planning coordinators subject to BAL-502-RFC-
02 the necessary data for the resource adequacy analysis, sought 
comment on whether the planning coordinators have encountered problems 
with collecting necessary data in order to complete the resource 
adequacy assessment that is the subject of BAL-502-RFC-02.
Comments
    58. In response, both RFC and the Midwest ISO report that, to their 
knowledge planning coordinators have not had problems collecting the 
necessary data.
Commission Determination
    59. Based on the comments of Midwest ISO and RFC, and the fact that 
no entity has raised a concern about the ability of RFC's planning 
coordinators' to obtain the data necessary to comply with BAL-502-RFC-
02, we are satisfied that no action is necessary now on this issue.
4. Consideration of Resources Beyond the RFC Footprint
    60. In the NOPR, the Commission sought comment on how to address 
load and resources outside of the RFC footprint during a planning 
assessment and on how entities currently perform this task or other 
similar planning tasks where load and resources are located outside of 
boundaries required by the assessment.
Comments
    61. RFC states that current Requirements R1.3.4, R1.6 and R1.7 
address consideration of resources beyond the RFC footprint. Midwest 
ISO comments that while a common method for considering external 
support or modeling external systems appears beneficial, this would be 
an onerous task, and might limit valid methodologies for considering 
external support. Midwest ISO further comments that it considers 
resource adequacy on a footprint-wide basis, and includes resources 
outside of the RFC footprint, holding the entire Midwest ISO region to 
the ``one day in ten years'' criterion. Midwest ISO notes that if other 
regional entities develop potentially conflicting regional Reliability 
Standards, Midwest ISO could be subject to conflicting Reliability 
Standards for its planning coordinator footprint.
Commission Determination
    62. The Commission agrees with RFC's comment that Requirements 
R1.3.4, R1.6 and R1.7 are a means to address consideration of resources 
outside of the RFC footprint. By identifying what assistance from 
external areas is included in the assessment (R1.3.4) and what capacity 
resources and load are included within the planning coordinator area 
(R1.6 and R1.7), an entity can determine the area for which the 
assessment is being performed, and whether or not that area includes 
areas beyond the RFC footprint. The Commission agrees with

[[Page 16260]]

Midwest ISO that identifying a common process for all planning 
coordinators to use might be onerous and might limit valid 
methodologies for determining whether or not to consider resources or 
loads outside of the RFC footprint when conducting the BAL-502-RFC-02 
resource adequacy assessment. However, the Commission expects that, as 
a foundational element of a reliability assessment, each planning 
coordinator would document its own consideration of resources and loads 
in the assessment.\50\
---------------------------------------------------------------------------

    \50\ For example, the PJM Manual 20: PJM Resource Adequacy 
Analysis, Section 3 provides ``a guide for fostering consistency 
from year to year and across all related analysis,'' and further 
describes input data and models, including what is identified as the 
PJM area and areas adjacent to PJM referred to as the ``World.'' See 
PJM Manual 20: PJM Resource Adequacy Analysis, Revision 3, 6/1/2007, 
at 17-28, available at http://www.pjm.com/documents/manuals.aspx.
---------------------------------------------------------------------------

5. Planning Gap Identification
    63. In the NOPR, the Commission noted that BAL-502-RFC-02 does not 
include a requirement to document any gap between the planning reserve 
margin calculated in Requirement R1.1 (the amount of planning reserve 
needed to ensure a ``one day in ten years'' criterion) and the actual 
planning reserve determined in the resource adequacy analysis. The 
Commission stated that it believes that it would be useful for planning 
coordinators to identify and document a deficiency in planning reserves 
to help ensure that entities are aware of potential risks regarding the 
capability to balance resources and demand in a planning timeframe. 
Accordingly, the Commission proposed to direct RFC, when reviewing BAL-
502-RFC-02 during its scheduled five-year review, to consider modifying 
BAL-502-RFC-02 to include a new requirement to identify any gap between 
the needed amount of planning reserves defined in Requirement R1.1 and 
the planning reserves determined from the resource adequacy analysis. 
The Commission further clarified that this would be a documentation 
requirement only and would not require entities to install additional 
generation or transmission capacity.
Comments
    64. RFC submitted the sole comment on this issue. RFC supports the 
proposal in the NOPR on this issue and stated that it ``will consider 
modifying the Standard in its scheduled five-year review, to include a 
requirement to identify any gap between the needed amount of planning 
reserves defined in Requirement 1.1 and the planning reserves 
determined from the [Resource Adequacy] Analysis.'' \51\
---------------------------------------------------------------------------

    \51\ RFC Comment at 6.
---------------------------------------------------------------------------

Commission Determination
    65. The Commission accepts RFC's commitment to consider, at the 
time of its five-year review, whether to add a requirement to BAL-502-
RFC-02 that would require Planning Coordinators to identify any gap 
between the needed amount of planning reserves defined in Requirement 
R1.1 and the planning reserves determined from the resource adequacy 
analysis.

D. Regional Definitions

    66. Regional Reliability Standard BAL-502-RFC-02 includes four new 
defined terms that apply only to the RFC region: Resource Adequacy, Net 
Internal Demand, Peak Period, and Year One. In the NOPR, the Commission 
proposed to accept the four new defined terms to be applicable only in 
the RFC region.
Comments
    67. No comments were filed regarding the four regional definitions.
Commission Determination
    68. The Commission approves the inclusion of the four new regional 
definitions related to BAL-502-RFC-02 in the NERC Glossary, 
specifically as RFC regional terms.

E. Violation Risk Factors/Violation Security Levels

    69. With respect to BAL-502-RFC-02, RFC assigned VRFs only to the 
two main requirements and did not propose VRFs for any of the sub-
requirements.\52\ RFC assigned Requirement R1 a ``medium'' VRF and 
Requirement R2 a ``lower'' VRF. Requirement R1 is assigned a ``medium'' 
VRF based on RFC and NERC's conclusion that it is a Requirement in a 
planning time frame and, if violated, could affect the capability of 
the Bulk-Power System. Requirement R2 is assigned a ``lower'' VRF 
because it is a documentation only requirement and therefore is 
considered to be administrative. Similarly, RFC assigned VSLs only to 
the main Requirements, R1 and R2, of proposed BAL-502-RFC-02, and not 
to any of the sub-requirements. NERC notes that RFC's assignment of 
VRFs and VSLs only to the main requirements is consistent with NERC's 
``roll-up'' proposal in its August 10, 2009 Informational Filing 
Regarding the Assignment of VRFs and VSLs.\53\ NERC also stated that 
RFC followed applicable NERC and FERC guidance in developing the VSLs 
and VRFs for BAL-502-RFC-02.
---------------------------------------------------------------------------

    \52\ We note that in Version Two Facilities Design, Connections 
and Maintenance Reliability Standards, Order No. 722, 126 FERC ] 
61,255, at P 45 (2009), the ERO proposed to develop VRFs and VSLs 
for requirements but not sub-requirements. The Commission denied the 
proposal as ``premature'' and, instead, encouraged the ERO to 
``develop a new and comprehensive approach that would better 
facilitate the assignment of violation severity levels and violation 
risk factors.'' As directed, on March 5, 2010, NERC submitted a 
comprehensive approach in Docket No. RR08-4-005, which is currently 
pending before the Commission.
    \53\ NERC Petition at 24.
---------------------------------------------------------------------------

    70. In the NOPR, the Commission proposed deferring action on the 
proposed VRFs and VSLs assigned to BAL-502-RFC-02 until after the 
Commission acts on NERC's pending petition in Docket No. RR08-4-005, in 
which NERC proposes a ``roll-up'' approach for VRF and VSL assignments 
by which NERC would only assign VRFs and VSLs to the main requirements 
and not to the sub-requirements.
Comments
    71. Borlick and Midwest ISO comment on the VRF and VSL assignments. 
The Midwest ISO states that the VRF for Requirement R1 should be 
assigned a lower VRF because Requirement R1 will never directly affect 
the electrical state of the RFC Region. Borlick makes a generic comment 
regarding VSLs, stating that ``the assignment of qualitative [VSLs] to 
various infractions is too `fluffy'.'' \54\
---------------------------------------------------------------------------

    \54\ Borlick Comments at 7.
---------------------------------------------------------------------------

Commission Determination
    72. A VRF is assigned to each Requirement of a Reliability Standard 
that relates to the expected or potential impact of a violation of the 
requirement on the reliability of the Bulk-Power System. VRFs are 
either: Lower, medium or high.\55\ The Commission has established 
guidelines for evaluating the validity of each VRF assignment.\56\
---------------------------------------------------------------------------

    \55\ The specific definitions of high, medium and lower are 
provided in North American Electric Reliability Corp., 119 FERC ] 
61,145, at P 9 (VRF Order), order on reh'g, 120 FERC ] 61,145 (2007) 
(VRF Rehearing Order).
    \56\ 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 com-mingle more than one obligation. 
See VRF Rehearing Order, 120 FERC ] 61,145 at P 8-13.
---------------------------------------------------------------------------

    73. NERC will also define up to four VSLs (low, moderate, high, and 
severe) as measurements for the degree to which the requirement was 
violated in a specific circumstance. For a specific violation of a 
particular Requirement, NERC or the Regional Entity will

[[Page 16261]]

establish the initial value range for the base penalty amount by 
finding the intersection of the applicable VRF and VSL in the base 
penalty amount table in Appendix A of its sanction guidelines. On June 
19, 2008, the Commission issued an order establishing four guidelines 
for the development of VSLs.\57\
---------------------------------------------------------------------------

    \57\ North American Electric Reliability Corp., 123 FERC ] 
61,284, at P 20-35 (VSL Order), order on reh'g & compliance, 125 
FERC ] 61,212 (2008). The VSL guidelines are: (1) VSL assignments 
should not have the unintended consequence of lowering the current 
level of compliance; (2) the VSL should ensure uniformity and 
consistency in the determination of penalties; (3) a VSL assignment 
should be consistent with the corresponding requirement; and (4) a 
VSL assignment should be based on a single violation, not on a 
cumulative number of violations.
---------------------------------------------------------------------------

    74. The Commission has reviewed the VRF and VSL assignments for 
BAL-502-RFC-02 and it is our view that both the VRFs and VSLs are 
consistent with the above-described Commission guidance. The Commission 
does not agree with Midwest ISO that Requirement R1 should be assigned 
a ``lower'' VRF instead of ``medium.'' Midwest ISO states that the VRF 
for Requirement R1 should be ``lower'' because Requirement R1: (1) Will 
never directly affect the electrical state or capability of the bulk 
electric system, and (2) only establishes administrative requirements 
to conduct an analysis without compelling planning coordinators to take 
actions based upon the analysis. The Commission finds that Requirement 
R1 is not administrative in nature as it requires an analysis of the 
state of the Bulk-Power System in the planning horizon to be able to 
meet demand with available resources. While this standard does not 
specifically require planning coordinators to take action per the 
results of this analysis, not performing the analysis would create a 
lack of awareness of the Bulk-Power System's ability to meet demand 
with available resources during the planning horizon, which, if no 
actions were taken, could directly affect the electrical state or 
capability of the Bulk-Power System. Thus, the nature of Requirement R1 
is consistent with NERC's definition of a ``medium'' VRF level rather 
than the ``lower'' level.\58\
---------------------------------------------------------------------------

    \58\ The VRF Order guidance emphasizes consistency with NERC's 
definition of the VRF level. NERC defines a ``medium'' risk 
requirement, which will be assigned a medium VRF, as follows: ``A 
requirement that, if violated, could directly affect the electrical 
state or the capability of the bulk electric system, or the ability 
to effectively monitor and control the bulk electric system. 
However, violation of a medium risk requirement is unlikely to lead 
to bulk electric system instability, separation, or cascading 
failures; or, a requirement in a planning time frame that, if 
violated, could, under emergency, abnormal, or restorative 
conditions anticipated by the preparations, directly and adversely 
affect the electrical state or capability of the bulk electric 
system, or the ability to effectively monitor, control, or restore 
the bulk electric system. * * *.'' NERC Violation Risk Factor, 
available at http://www.nerc.com/files/Violation_Risk_Factors.pdf.
---------------------------------------------------------------------------

    75. With respect to Borlick's comment that the assignment of 
qualitative VSLs to various infractions is too ``fluffy,'' the 
Commission finds this to be a generic concern regarding VSLs that is 
outside the scope of this proceeding.
    76. Accordingly, the Commission approves the VRFs and VSLs assigned 
to the two main Requirements in BAL-502-RFC-02. Although the Commission 
is approving the VRFs and VSLs, which are assigned only to the main 
Requirements of the Reliability Standard, the Commission is not making 
any determination regarding NERC's and RFC's decision to apply its 
proposed ``roll-up'' approach to BAL-502-RFC-02, i.e., to not assign 
VRFs and VSLs to any Sub-requirement. The appropriateness of the roll-
up approach is pending before the Commission in Docket No. RR08-4-005.

III. Information Collection Statement

    77. 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.\59\ OMB's regulations require OMB to approve 
certain information collection requirements imposed by agency rule.\60\ 
Upon approval of a collection(s) of information, OMB will assign an OMB 
control number and an expiration date. Respondents subject to the 
filing requirements of an agency 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.
---------------------------------------------------------------------------

    \59\ 44 U.S.C. 3507(d).
    \60\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    78. The Commission solicited comments on the need for and the 
purpose of the information contained in regional Reliability Standard 
BAL-502-RFC-02 and the corresponding burden to implement it. The 
Commission received comments on specific Requirements in the regional 
Reliability Standard, which we address in this Final Rule. However, we 
did not receive any comments on our reporting burden estimates. The 
Commission has not directed any immediate modifications to the 
Requirements in the regional Reliability Standard being approved. Thus, 
the Final Rule does not affect the burden estimate provided in the 
NOPR.
    Burden Estimate: Regional Reliability Standard BAL-502-RFC-02 
requires planning coordinators within the RFC geographical footprint to 
analyze, assess and document resource adequacy, annually, and to 
document and post projected load and resource capability in each area 
and transmission-constrained sub-area identified in the resource 
adequacy assessment. BAL-502-RFC-02, which applies to four planning 
coordinators located in the eastern portion of the U.S., does not 
require the planning coordinators to file information with the 
Commission. It does require planning coordinators to develop, document, 
publically post, and retain certain information, subject to compliance 
monitoring by RFC. However, the Commission does not believe that 
approval of BAL-502-RFC-02 will result in a substantive increase in 
reporting burdens because the Reliability Standard implements the 
current, mandatory and enforceable practices in RFC. As RFC has 
represented, the affected RFC-member planning coordinators have been 
subject to these requirements since December 2008 and would continue to 
be subject to them even if the Commission did not approve BAL-502-RFC-
02 as a regional Reliability Standard subject to Commission, NERC and 
RFC enforcement under section 215 of the FPA. As stated in the RFC's 
implementation plan for BAL-502-RFC-02, once this standard was approved 
by RFC's Board of Trustees, which occurred on December 4, 2008, the 
requirements under the standard became effective with respect to RFC 
members and subject to the enforcement mechanism under the ``Term of 
Membership'' in RFC's by-laws.\61\ Thus, the Commission finds that the 
requirements to develop, document, and maintain information in the 
regional Reliability Standard are current and ongoing requirements for 
RFC members and, therefore, the Commission's proposed action in this 
Final Rule would not impose any additional burden on RFC-member 
planning coordinators. The proposed regional Reliability Standard is a 
new standard and was not included in the original standards submitted 
for review and approval by OMB. In addition, Commission approval of 
proposed regional Reliability Standard BAL-502-RFC-02 makes the 
standard mandatory and enforceable. Therefore, the

[[Page 16262]]

Commission will submit this final rule to OMB for review and approval 
of the reporting requirements and propose a de minimis burden to 
reflect the prior implementation by RFC as part of its region's 
standard practices.
---------------------------------------------------------------------------

    \61\ See RFC's Planning Resource Adequacy Analysis, Assessment 
and Documentation Implementation Plan, available online at https://rsvp.rfirst.org/BAL502RFC02/SupportingDocuments/BAL-502-RFC-02_Implementation_Plan.pdf.
---------------------------------------------------------------------------

    79. The Commission estimates that the increased Public Reporting 
Burden of approving BAL-502-RFC-02 is de minimis as follows:

----------------------------------------------------------------------------------------------------------------
                                              Number of         Number of         Hours per       Total annual
   Proposed data collection FERC-725-H       respondents        responses        respondent           hours
----------------------------------------------------------------------------------------------------------------
Registered planning coordinators \62\ in                 4                 1                10                40
 the RFC region.........................
                                         -----------------------------------------------------------------------
    Total...............................  ................  ................  ................                40
----------------------------------------------------------------------------------------------------------------

    Information Collection Costs:
     Total annual costs: $2,651.41 ((40 hours/2080 hours/year) 
x $137,874/year).
---------------------------------------------------------------------------

    \62\ At this time, there are only four registered planning 
coordinators in the RFC region.
---------------------------------------------------------------------------

     Title: FERC-725-H, RFC Regional Reliability Standard.
     Action: Collection of information.
     OMB Control No: To be determined.
     Respondents: Registered planning coordinators in the RFC 
region.
     Frequency of Responses: On occasion.
     Necessity of the Information: This Final Rule approves a 
regional Reliability Standard that requires planning coordinators to 
document and maintain, for the current and prior two years, their 
resource adequacy analyses and the projected load and resource 
capability subject to review by the Commission, NERC, and RFC to ensure 
compliance with the regional Reliability Standard.
     Internal review: The Commission has reviewed the regional 
Reliability Standard BAL-502-RFC-02 and determined that the standard's 
Requirements are necessary to meet the statutory provisions of the 
Energy Policy Act of 2005. The Commission has assured itself, by means 
of internal review, that there is specific, objective support for the 
burden estimates associated with the information requirements.
    80. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Ellen Brown, Office 
of the Executive Director, e-mail: DataClearance@ferc.gov, Phone: (202) 
502-8663, fax: (202) 273-0873]. Comments on the requirements of this 
Final Rule may also be sent to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503 
[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 
For security reasons, comments should be sent by e-mail to OMB at 
oira_submission@omb.eop.gov. Please reference FERC-725H and the docket 
number of this final rule in your submission.

IV. Environmental Analysis

    81. 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.\63\ 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.\64\ The actions taken in this 
Final Rule fall within this categorical exclusion as the regional 
Reliability Standard reflects a continuation of existing resource 
planning assessment requirements for these planning coordinators and is 
``new'' only with respect to the fact that once approved by the 
Commission, it will be subject to enforcement by RFC, NERC or the 
Commission. Accordingly, neither an environmental impact statement nor 
environmental assessment is required.
---------------------------------------------------------------------------

    \63\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486 52 FR 47,897 (Dec. 17, 1987), FERC Stats. 
& Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \64\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act Certification

    82. The Regulatory Flexibility Act of 1980 (RFA) \65\ 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 (SBA) Office of Size 
Standards develops the numerical definition of a small business.\66\ 
The SBA has established a size standard for electric utilities, stating 
that a firm is small if, including its affiliates, it is primarily 
engaged in the transmission, generation and/or distribution of electric 
energy for sale and its total electric output for the preceding twelve 
months did not exceed four million megawatt hours.\67\ The entities to 
which the requirements of this Rule would apply, i.e., planning 
coordinators within the RFC region, do not fall within the definition 
of small entities. Moreover, the regional Reliability Standard reflects 
a continuation of existing resource planning assessment requirements 
for these planning coordinators and is ``new'' only with respect to the 
fact that once approved by the Commission, it will be subject to 
enforcement by RFC, NERC or the Commission. Based on the foregoing, the 
Commission certifies that this Rule will not have a significant impact 
on a substantial number of small entities. Accordingly, no regulatory 
flexibility analysis is required.
---------------------------------------------------------------------------

    \65\ 5 U.S.C. 601-612.
    \66\ 13 CFR 121.101.
    \67\ 13 CFR 121.201, Sector 22, Utilities & n. 1.
---------------------------------------------------------------------------

VI. Document Availability

    83. 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.
    84. 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.
    85. User assistance is available for eLibrary and the FERC's Web 
site during

[[Page 16263]]

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

    86. These regulations, including regional Reliability Standard BAL-
502-RFC-02, are effective May 23, 2011. 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.

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

Appendix A: Entities That Filed Comments, Motions To Intervene or 
Notices of Intervention

----------------------------------------------------------------------------------------------------------------
         Abbreviation                                              Commenter
----------------------------------------------------------------------------------------------------------------
                                                   Commenters
----------------------------------------------------------------------------------------------------------------
Dominion.....................  Dominion Resources Services, Inc.
Carden.......................  Kevin Carden, Johannes Pfeifenberger, and Nick Wintermantel.
ICC..........................  Illinois Commerce Commission.
Midwest ISO..................  Midwest Independent Transmission System Operator, Inc.
MRO..........................  Midwest Reliability Organization.
NARUC........................  National Association of Regulatory Utility Commissioners.
NERC.........................  North American Electric Reliability Corporation\+\.
OCC..........................  Office of the Ohio Consumers' Counsel.
OMS..........................  Organization of MISO States.
Ohio PUC.....................  Public Utilities Commission of Ohio.
PJM Power Providers..........  PJM Power Providers Group.
RFC..........................  ReliabilityFirst Corporation\+\.
Borlick......................  Robert L. Borlick.
Wilson.......................  James F. Wilson.
----------------------------------------------------------------------------------------------------------------
                                                   Intervenors
----------------------------------------------------------------------------------------------------------------
Constellation Energy
 Commodities Group, Inc.
Dayton Power and Light
 Company.
Designated FirstEnergy
 Affiliates*.
Exelon Corp..................
New York State Public Service
 Commission.
Pennsylvania Public Utility
 Commission.
PSEG Companies...............
Public Utilities Commission
 of the State of California.
----------------------------------------------------------------------------------------------------------------
\+\ NERC and RFC filed both comments and reply comments.
* The Designated FirstEnergy Affiliates include: Ohio Edison Co., Cleveland Electric Illuminating Co.,
  Pennsylvania Power Co., Toledo Edison Co., American Transmission Systems, Inc., Jersey Central Power & Light
  Co., Metropolitan Edison Co., Pennsylvania Electric Co., and FirstEnergy Solutions Corp.

[FR Doc. 2011-6763 Filed 3-22-11; 8:45 am]
BILLING CODE 6717-01-P