Document ID: FERC-2011-0555-0001
Agency: ferc
Document Type: Rule
Title: Standards of Conduct for Transmission Providers
Posted Date: 2011-04-14T04:00Z

[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Rules and Regulations]
[Pages 20838-20840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9059]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 358

[Docket No. RM07-1-003; Order No. 717-D]

Standards of Conduct for Transmission Providers

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Order on rehearing and clarification.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) issued 
Order No. 717-A to address requests for rehearing and make clearer the 
Standards of Conduct as implemented by Order No. 717. The Commission 
issued Order No. 717-B to address expedited requests for rehearing and 
clarification concerning paragraph 80 of Order No. 717-A and whether an 
employee who is not making business decisions about contract non-price 
terms and conditions is considered a ``marketing function employee.'' 
Order No. 717-C addressed requests for rehearing and clarification 
concerning Order No. 717-A. This order addresses an additional request 
for rehearing and clarification concerning Order No. 717-C.

DATES:  Effective Date: This rule will become effective May 16, 2011.

FOR FURTHER INFORMATION CONTACT:  Susan Miller, Office of the General 
Counsel--Energy Markets, Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426. (202) 502-8977.

SUPPLEMENTARY INFORMATION:

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

    Issued April 8, 2011.

I. Introduction

    1. On October 16, 2008, the Commission issued Order No. 717 
amending the Standards of Conduct for Transmission Providers (the 
Standards of Conduct or the Standards) to make them clearer and to 
refocus the rules on the areas where there is the greatest potential 
for abuse.\1\ On October 15, 2009, the Commission issued Order No. 717-
A to address requests for rehearing and clarification of Order No. 717, 
largely affirming the reforms adopted in Order No. 717.\2\ On November 
16, 2009, the Commission issued Order No. 717-B to address expedited 
requests for rehearing and clarification concerning paragraph 80 of 
Order No. 717-A and whether an employee who is not making business 
decisions about contract non-price terms and conditions is considered a 
``marketing function employee''.\3\ On April 16, 2010 the

[[Page 20839]]

Commission issued Order No. 717-C to provide additional clarification 
concerning matters petitioners raised regarding the Commission's 
determinations in Order No. 717-A.\4\ In this order, the Commission 
addresses an additional request for rehearing and clarification 
concerning Order No. 717-C.
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    \1\ Standards of Conduct for Transmission Providers, Order No. 
717, 73 FR 63796 (Oct. 27, 2008), FERC Stats. & Regs. ] 31,280 
(Order No. 717).
    \2\ Standards of Conduct for Transmission Providers, Order No. 
717-A, 74 FR 54463 (Oct. 22, 2009), FERC Stats. & Regs. ] 31,297 
(Order No. 717-A).
    \3\ Standards of Conduct for Transmission Providers, Order No. 
717-B, 74 FR 60153 (Nov. 20, 2009), 129 FERC ] 61,123 (2009) (Order 
No. 717-B). On October 30, 2009, Edison Electric Institute (EEI) 
filed a request for expedited clarification of a single issue 
addressed in Order No. 717-A. The Commission determined that it 
should address this issue expeditiously even though the time allowed 
under the regulations for filing rehearing requests had not yet 
expired. For this reason, the Commission issued Order No. 717-B on 
November 16, 2009, in which it addressed a single clarification 
request of EEI, Western Utilities, Otter Tail and Central Vermont. 
All other timely requests for rehearing, i.e. those filed by 
November 16, 2009, were addressed in Order No. 717-C.
    \4\ Standards of Conduct for Transmission Providers, Order No. 
717-C, 75 FR 20909 (Apr. 22, 2010), 131 FERC ] 61,045 (2010) (Order 
No. 717-C).
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II. Discussion

    2. In paragraph 16 of Order No. 717-C, the Commission clarified 
that ``a system impact study performed pursuant to a request for energy 
resource interconnection service or network resource interconnection 
service is similar to long-range planning and therefore not a 
transmission function, because the focus of such a study is to 
determine the impact of the proposed interconnection on the safety and 
reliability of the transmission provider's transmission system, but 
without conveying a right to transmission service''.\5\ As a result, 
the Commission concluded that the performance of a system impact study 
in the context of evaluating an energy resource interconnection service 
and network resource interconnection service is not a transmission 
function.
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    \5\ Id. P 16.
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    3. The Transmission Access Policy Study Group (TAPS) requests 
rehearing and clarification of one aspect of Order No. 717-C. 
Specifically, TAPS requests that the Commission grant rehearing to hold 
that employees who perform system impact studies (or other studies) in 
connection with interconnection service requests are transmission 
function employees. TAPS argues that the consequence of a finding that 
``performance of a system impact study in the context of evaluating an 
energy resource interconnection service and network resource 
interconnection service is not a transmission function'' is that the 
studies may be performed by the Transmission Provider's ``merchant-
function'' personnel.
    4. TAPS further argues that the Commission created an inconsistency 
with its regulatory text when it clarified in Order No. 717-C that the 
performance of a system impact study in the context of evaluating an 
energy resource interconnection service and network resource 
interconnection service is not a transmission function. Specifically, 
TAPS cites 18 CFR 358.3(h), which defines ``transmission functions'' as 
``the planning, directing, organizing or carrying out of day-to-day 
transmission operations, including the granting and denying of 
transmission service requests.'' TAPS then argues that because 18 CFR 
358.3(f) defines ``transmission'' as ``the interconnection with 
jurisdictional transmission facilities,'' employees who perform studies 
that identify upgrades needed for interconnection, or who otherwise 
help to determine the terms on which interconnection may occur, perform 
a transmission function.
    5. Alternatively, TAPS requests that the Commission clarify that 
system study information be treated like other planning information, 
which the Commission requires transmission providers to make available 
on a non-discriminatory basis to all interested transmission customers. 
TAPS is concerned that if ``merchant-function'' personnel are permitted 
to conduct interconnection-related studies and have access to customer 
information, ``merchant-function'' personnel would obtain undue 
competitive advantages over any other transmission customer.
    6. TAPS further requests clarification of paragraph 17 of Order No. 
717-C to make clear that where an employee performs system impact 
studies in response to transmission service requests, the employee's 
designation as a transmission-function employee does not turn on the 
duration of the requested transmission service.

Commission Determination

    7. We deny TAPS' request that we classify employees who perform 
system impact studies in connection with interconnection service 
requests as transmission function employees.\6\ Whether an employee 
performing a system impact study is a transmission function employee 
depends upon the purpose for which that study is being performed. The 
key factor in determining whether the employee is performing a 
transmission function in conducting the system impact study is whether 
the performance of that study implicates the day-to-day operation of 
the transmission system. Thus, an employee performing system impact 
studies that do not implicate the day-to-day operations of the 
transmission system would not be a transmission function \7\ employee, 
even in those instances where the system impact study pertains to 
interconnection.
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    \6\ In a footnote, TAPS contends that employees who perform 
facility studies and feasibility studies in response to requests for 
interconnection service should be transmission function employees. 
TAPS, Motion for Rehearing at p. 3-4 n.4. TAPS concedes that Order 
No. 717-C does not address the performance of these types of 
studies. Given that TAPS failed to proffer this argument during 
previous stages of the process and that Order No. 717-C does not 
address this issue, TAPS cannot raise this argument at this juncture 
in the proceeding. See, e.g., PJM Interconnection, LLC, 126 FERC ] 
61,030, at P 15 & n.10 (2009) (A request for rehearing of a new 
issue is outside the proper scope of the rehearing). See also, 
Wholesale Competition in Regions with Organized Electric Markets, 
129 FERC ] 61,252, at P 9 & n.18 (2009).
    \7\ 18 CFR 358.3(h).
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    8. In Order No. 717-C, we found that a system impact study 
performed pursuant to a request for energy resource interconnection 
service or network resource interconnection service is similar to long-
range planning and therefore not a transmission function because it 
does not involve the conveyance of a right to transmission service. 
Contrary to the argument raised by TAPS, our focus in reaching this 
determination was not based on a distinction between transmission and 
interconnection. Our conclusion was based upon our finding that these 
types of system impact studies are analogous to transmission long range 
planning studies, and that neither type of study implicates day-to-day 
transmission operations.\8\ The performance of a system impact study is 
not a transmission function so long as the performance of this system 
impact study is not carried out as part of day-to-day transmission 
operations, including the granting or denying of transmission 
service.\9\
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    \8\ See Order No. 717-C, 131 FERC ] 61,045 at P 11-17. See also 
Order No. 717, FERC Stats. & Regs. ] 31,280 at P 146-147.
    \9\ Order No. 717-C, 131 FERC ] 61,045 at P 17.
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    9. TAPS is also incorrect that the Commission's clarification in 
Order No. 717-C concerning the performance of system impact studies 
created an inconsistency with its regulatory text. The definition of 
``transmission functions'' includes ``the planning, directing, 
organizing or carrying out of day-to-day transmission operations, 
including the granting and denying of transmission service 
requests.''\10\ ``Transmission'' is defined to include ``the 
interconnection with jurisdictional transmission facilities.''\11\ 
Thus, the definition of transmission functions includes the planning, 
directing, organizing or carrying out of day-to-day interconnection 
operations with jurisdictional transmission facilities. Because of the 
limiting phrase ``day-to-day transmission operations,'' TAPS is 
incorrect in its conclusion that ``transmission functions'' always 
include

[[Page 20840]]

interconnection-related system impact studies.
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    \10\ 18 CFR 358.3(h).
    \11\ 18 CFR 358.3(f).
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    10. Similarly, we deny TAPS's request that the information from 
system impact studies be made available on a non-discriminatory basis 
to all interested transmission customers. TAPS erroneously assumes that 
the Commission determined that system impact studies (or other studies) 
performed in response to interconnection requests are planning 
activities that may be conducted by marketing function employees. 
Marketing function employees may not perform system impact studies (or 
other studies) in response to interconnection requests since the 
studies would involve the use and analysis of non-public transmission 
information. As we stated in Order No. 717, planning personnel who do 
not qualify as marketing function employees may discuss information 
with transmission function employees.\12\ However, we reiterated that 
the No Conduit Rule applied in this situation, stating that if 
transmission employees share transmission function information with 
planning personnel, the planning personnel may not pass such 
information on to marketing function employees. The clear implication 
of these statements is that while planning studies may be conducted by 
personnel who are not transmission function employees, marketing 
function employees may not participate in the preparation of studies 
which involve the use and analysis of non-public transmission 
information.\13\
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    \12\ Order No. 717, FERC Stats. & Regs ] 31,280 at P 151.
    \13\ Order No. 717 specifically recognized that there are 
employees who are neither transmission function employees nor 
marketing function employees. See, e.g., Order No. 717, FERC Stats. 
& Regs. ] 31,280 at P 174 (``Transmission function employees are no 
longer barred from interacting with all the employees of a marketing 
or energy affiliate (only marketing function employees)'').
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    11. We grant TAPS's clarification request that when an employee 
performs a system impact study in response to a transmission service 
request, that employee is a transmission function employee regardless 
of the duration of the requested transmission service. This 
clarification is consistent with our previous conclusion that the 
designation of an employee as a transmission function employee does not 
depend upon the duration of the requested transmission service.\14\
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    \14\ See Standards of Conduct for Transmission Providers, Order 
No. 717-A, 74 FR 54463 (Oct. 22, 2009), FERC Stats. & Regs. ] 
31,297, at P 27 (2009).
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III. Document Availability

    12. 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.
    13. 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.
    14. User assistance is available for eLibrary and the FERC's 
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

IV. Effective Date

    15. Changes to Order No. 717-C adopted in this order on rehearing 
and clarification are effective May 16, 2011.

    By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-9059 Filed 4-13-11; 8:45 am]
BILLING CODE 6717-01-P