Document ID: FERC-2011-1626-0001
Agency: ferc
Document Type: Proposed Rule
Title: Transmission Planning Reliability Standards
Posted Date: 2011-10-26T04:00Z

[Federal Register: October 26, 2011 (Volume 76, Number 207)]
[Proposed Rules]               
[Page 66229-66235]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26oc11-23]                         

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM11-18-000]

 
Transmission Planning Reliability Standards

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: Transmission Planning (TPL) Reliability Standards are intended 
to ensure that the transmission system is planned and designed to meet 
an appropriate and specific set of reliability criteria. Reliability 
Standard TPL-002-0a references a table which identifies different 
categories of contingencies and allowable system impacts in the 
planning process. The table includes a footnote regarding planned or 
controlled interruption of electric supply where a single contingency 
occurs on a transmission system. North American Electric Reliability 
Corporation (NERC), the Commission-certified Electric

[[Page 66230]]

Reliability Organization, requests approval of a revision to the 
footnote. In this notice, the Commission proposes to remand NERC's 
proposed revision to the footnote.

DATES: Comments are due December 27, 2011.

ADDRESSES: You may submit comments, identified by docket number by any 
of the following methods:
     Agency Web Site: http://www.ferc.gov. Documents created 
electronically using word processing software should be filed in native 
applications or print-to-PDF format and not in a scanned format.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver comments to: Federal Energy 
Regulatory Commission, Secretary of the Commission, 888 First Street, 
NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:

Robert T. Stroh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8473.
Eugene Blick (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, Telephone: (202) 502-8066.

SUPPLEMENTARY INFORMATION:

Notice of Proposed Rulemaking

October 20, 2011.
    1. On March 31, 2011, the North American Electric Reliability 
Corporation (NERC) filed a petition seeking approval of Table 1, 
footnote `b' of four Reliability Standards: Transmission Planning: TPL-
001-1--System Performance Under Normal (No Contingency) Conditions 
(Category A), TPL-002-1b--System Performance Following Loss of a Single 
Bulk Electric System Element (Category B), TPL-003-1a--System 
Performance Following Loss of Two or More Bulk Electric System Elements 
(Category C), and TPL-004-1- System Performance Following Extreme 
Events Resulting in the Loss of Two or More Bulk Electric System 
Elements (Category D).\1\ Pursuant to section 215(d)(4) of the Federal 
Power Act (FPA) \2\, the Commission proposes to remand the proposed 
Table 1, footnote b. As discussed below, the Commission believes that 
the proposed Reliability Standard does not meet the statutory criteria 
for approval that it be just, reasonable, not unduly discriminatory or 
preferential, and in the public interest.\3\ The Commission seeks 
comments on its proposal.
---------------------------------------------------------------------------

    \1\ While footnote `b' appears in all four of the above 
referenced TPL Reliability Standards, its relevance and practical 
applicability is limited to TPL-002-0a.
    \2\ 18 U.S.C. 824o(d)(4) (2006).
    \3\ 16 U.S.C. 824o(d)(2) (2006).
---------------------------------------------------------------------------

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. Approved Reliability Standards are enforced by the ERO, 
subject to Commission oversight, or by the Commission independently.
    3. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO \4\ and, subsequently, certified 
NERC as the ERO.\5\ On March 16, 2007, the Commission issued Order No. 
693, approving 83 of the 107 Reliability Standards filed by NERC, 
including Reliability Standard TPL-002-0, Table 1, footnote `b.' \6\ In 
addition, pursuant to section 215(d)(5) of the FPA,\7\ the Commission 
directed NERC to develop modifications to 56 of the 83 approved 
Reliability Standards, including footnote `b' of Reliability Standard 
TPL-002-0.\8\
---------------------------------------------------------------------------

    \4\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \5\ North American Electric Reliability Corp., 116 FERC ] 
61,062, 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).
    \6\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
    \7\ 16 U.S.C. 824o(d)(5)(2006).
    \8\ Order No. 693, FERC Stats & Regs. ] 31,242 at P 1797.
---------------------------------------------------------------------------

A. Transmission Planning (TPL) Reliability Standards

    4. Currently-effective Reliability Standard TPL-002-0a addresses 
Bulk-Power System planning and related system performance for single 
element contingency conditions. Requirement R1 of TPL-002-0a requires 
that each Planning Authority and Transmission Planner ``demonstrate 
through a valid assessment that its portion of the interconnected 
transmission system is planned such that the Network can be operated to 
supply projected customer demands and projected Firm Transmission 
Services, at all demand levels over the range of forecast system 
demands, under the contingency conditions as defined in Category B of 
Table I.'' \9\ Table I identifies different categories of contingencies 
and allowable system impacts in the planning process. With regard to 
system impacts, Table I further provides that a Category B (single) 
contingency must not result in cascading outages, loss of demand or 
curtailed firm transfers, system instability or exceeded voltage or 
thermal limits. With regard to the clause regarding loss of demand, 
current footnote `b' of Table 1 states:
---------------------------------------------------------------------------

    \9\ Reliability Standard TPL-002-0a, Requirement R1.

    Planned or controlled interruption of electric supply to radial 
customers or some local Network customers, connected to or supplied 
by the Faulted element or by the affected area, may occur in certain 
areas without impacting the overall reliability of the 
interconnected transmission systems. To prepare for the next 
contingency, system adjustments are permitted, including 
curtailments of contracted Firm (non-recallable reserved) electric 
power Transfers.

B. Order No. 693 Directive

    5. In Order No. 693, the Commission stated that it believes that 
the transmission planning Reliability Standard should not allow an 
entity to plan for the loss of non-consequential firm load in the event 
of a single contingency.\10\ The Commission directed the ERO to develop 
certain modifications, including a clarification of Table 1, footnote 
`b'. The Commission stated that:
---------------------------------------------------------------------------

    \10\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1794. 
Non-consequential load loss includes the removal, by any means, of 
any planned firm load that is not directly served by the elements 
that are removed from service as a result of the contingency. 
Currently-effective footnote `b' deals with both consequential load 
loss and non-consequential load loss. NERC's proposed footnote `b' 
characterizes both types of load loss as ``Firm Demand.'' The focus 
of this NOPR is NERC's proposed treatment of non-consequential load 
loss or planned interruption of ``Firm Demand.''

    Based on the record before us, we believe that the transmission 
planning Reliability Standard should not allow an entity to plan for 
the loss of non-consequential load in the event of a single 
contingency. The Commission directs the ERO to clarify the 
Reliability Standard. Regarding the comments of Entergy and Northern 
Indiana that the Reliability Standard should allow entities to plan 
for the loss of firm service for a single contingency, the 
Commission finds that their comments may be considered through the 
Reliability Standards development process. However, we strongly 
discourage an approach that reflects the lowest common denominator. 
The Commission also clarifies that an entity may seek a regional 
difference to the Reliability Standard from the ERO for case-
specific circumstances.\11\
---------------------------------------------------------------------------

    \11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1794 
(footnotes omitted).

---------------------------------------------------------------------------

[[Page 66231]]

    6. In a subsequent clarifying order, the Commission stated that it 
believed that a regional difference, or a case-specific exception 
process that can be technically justified, to plan for the loss of firm 
service ``at the fringes of various systems'' would be an acceptable 
approach in limited circumstances.\12\ Specifically, the Commission 
clarified that:
---------------------------------------------------------------------------

    \12\ Mandatory Reliability Standards for the Bulk Power System, 
131 FERC ] 61,231, at P 21 (2010) (June 2010 Order).

    Moreover, the Commission, in * * * Order No. 693, then provided 
a clarification that an entity may seek a regional difference to the 
Reliability Standard from the ERO for case-specific circumstances. 
We believe that a regional difference, or a case-specific exception 
process that can be technically justified, to plan for the loss of 
firm service ``at the fringes of various systems'' would be an 
acceptable approach. Thus, the Commission did not dictate a single 
solution as NERC and others now claim. In any event, NERC must 
provide a strong technical justification for its proposal.\13\
---------------------------------------------------------------------------

    \13\ Id.
---------------------------------------------------------------------------

C. NERC's Petition for Approval of TPL-002-0a, Footnote b

    7. On March 31, 2011, NERC filed a petition seeking approval of its 
proposal to revise and clarify footnote `b' ``in regard to load loss 
following a single contingency.'' \14\ NERC stated that it did not 
eliminate the ability of an entity to plan for the loss of non-
consequential load in the event of a single contingency but drafted a 
footnote that, according to NERC, ``meets the Commission's directive 
while simultaneously meeting the needs of industry and respecting 
jurisdictional bounds.'' \15\ NERC states that its proposed footnote 
`b' establishes the requirements for the limited circumstances when and 
how an entity can plan to interrupt Firm Demand for Category B 
contingencies. It allows for planned interruption of Firm Demand when 
``subject to review in an open and transparent stakeholder process.'' 
\16\ NERC's proposed footnote `b' states:
---------------------------------------------------------------------------

    \14\ NERC Petition at 10.
    \15\ Id.
    \16\ Id.

    An objective of the planning process should be to minimize the 
likelihood and magnitude of interruption of firm transfers or Firm 
Demand following Contingency events. Curtailment of firm transfers 
is allowed when achieved through the appropriate redispatch of 
resources obligated to re-dispatch, where it can be demonstrated 
that Facilities, internal and external to the Transmission Planner's 
planning region, remain within applicable Facility Ratings and the 
re-dispatch does not result in the shedding of any Firm Demand. It 
is recognized that Firm Demand will be interrupted if it is: (1) 
Directly served by the Elements removed from service as a result of 
the Contingency, or (2) Interruptible Demand or Demand-Side 
Management Load. Furthermore, in limited circumstances Firm Demand 
may need to be interrupted to address BES performance requirements. 
When interruption of Firm Demand is utilized within the planning 
process to address [Bulk Electric System] performance requirements, 
such interruption is limited to circumstances where the use of 
Demand interruption are documented, including alternatives 
evaluated; and where the Demand interruption is subject to review in 
an open and transparent stakeholder process that includes addressing 
stakeholder comments.

D. Supplemental Information

    8. On June 7, 2011, in response to a Commission deficiency letter, 
NERC explained that ``the approach proposed in footnote `b' is equally 
efficient because many of the stakeholder processes that will be used 
in footnote `b' planning decisions are already in place, as implemented 
by FERC in Order No. 890 and in state regulatory jurisdictions.'' \17\ 
NERC also pointed to state public utility commission processes or 
processes existing in local jurisdictions that address transmission 
planning issues that could serve to provide a case-specific review of 
the planned interruption of Firm Demand. NERC added that an ERO-
sponsored planning process is not likely to be efficient or effective 
because of extensive jurisdictional issues between NERC, the 
Commission, and the many authorities having jurisdiction that would 
have to be resolved before implementation could occur. NERC added that 
an ERO-specific process would lead to conflicts among federal, 
provincial, state and local governing bodies that have jurisdiction 
over various parts of the planning, siting and construction process. 
NERC also believes that a NERC-centered process would duplicate 
planning actions occurring elsewhere (e.g., where resource allocation 
decisions are actually being made), and such a process could lead to 
inconsistent results. NERC concluded that a more reasonable and 
expeditious path would be to rely on existing stakeholder processes. 
According to NERC, such processes would more likely engage the 
appropriate local-level decision-makers and policy-makers.
---------------------------------------------------------------------------

    \17\ NERC Data Response at 4.
---------------------------------------------------------------------------

    9. With respect to review and oversight by NERC and the Regional 
Entities, NERC submitted that an ERO-specific process would place the 
ERO in the position of managing and actively participating in a 
planning process, which conflicts with its role as the compliance 
monitor and enforcement authority. NERC also stated that neither the 
ERO nor the Regional Entities will review decisions regarding planned 
interruptions. Their role will be limited to reviewing whether the 
registered entity participated in a stakeholder process when planning 
to interrupt Firm Demand. NERC explained that Regional Entities will 
have oversight after-the-fact by auditing the entity's implementation 
of footnote `b' to determine if the entity planned on interrupting Firm 
Demand and whether the decision by the entity to rely on planned 
interruption of Firm Demand was vetted through the stakeholder process 
and qualified as one of the situations identified in footnote b.
    10. Furthermore, NERC stated that an objective of the planning 
process should be to minimize the likelihood and magnitude of planned 
Firm Demand interruptions. NERC recognizes that there may be 
topological or system configurations where allowing planned 
interruptions of Firm Demand may provide more reliable service. NERC 
contends that due to the wide variety of system configurations and 
regulatory compacts, it is not feasible for the ERO to develop a one-
size-fits-all criterion for limiting the planned firm load 
interruptions for Category B events. According to NERC, the standards 
drafting team evaluated setting a certain magnitude of planned 
interruption of Firm Demand, but there was no analytical data to 
support a single value, and it would be viewed as arbitrary.

II. Discussion

    11. The Commission proposes to remand NERC's proposal to modify 
Reliability Standard TPL-002-0a, Table 1, footnote `b.' The Commission 
believes that NERC's proposal does not meet the directives in Order No. 
693 and the June 2010 Order and does not clarify or define the 
circumstances in which an entity can plan to interrupt Firm Demand for 
a single contingency. Specifically, the Commission is concerned that 
the procedural and substantive parameters of NERC's proposed 
stakeholder process are too undefined to provide assurances that the 
process will be effective in determining when it is appropriate to plan 
for interrupting Firm Demand, does not contain NERC-defined criteria on 
circumstances to determine when an exception for planned interruption 
of Firm Demand is permissible, and could result in inconsistent results 
in implementation. In proposing a stakeholder process without 
specification of any technical means by which exceptions are to be 
evaluated,

[[Page 66232]]

the proposed footnote effectively turns the processes into a 
reliability standards development process outside of NERC's existing 
procedures. Furthermore, the Commission believes that regardless of the 
process used, the result could lead to inconsistent reliability 
requirements within and across reliability regions. While the 
Commission recognizes that some variation among regions or entities is 
reasonable given varying grid topography and other legitimate 
considerations, there are no technical or other criteria to determine 
whether varied results are arbitrary or based on meaningful 
distinctions. While the Commission acknowledges that NERC has 
flexibility in developing alternative approaches, we believe that the 
proposed approach is not equally efficient or effective as the 
Commission's directives and that NERC has failed to provide a strong 
technical justification for its proposal.
    12. As an initial matter, the Commission is concerned that the 
process lacks parameters. The standard requires that, when planning to 
interrupt Firm Demand, the Firm Demand interruption must be ``subject 
to review in an open and transparent stakeholder process that includes 
addressing stakeholder comments.'' \18\ However, without any 
substantive parameters governing the stakeholder process, the 
enforceability of this obligation by NERC and the Regional Entities' 
would be limited to a review to ensure only that a stakeholder process 
occurred. Indeed, NERC's explanation appears to confirm this concern, 
as NERC explained that Regional Entities' involvement is limited to 
oversight after-the-fact by auditing the entity's implementation of 
footnote `b' to determine if the entity planned on interrupting Firm 
Demand and whether the decision by the entity to rely on planned 
interruption of Firm Demand was vetted through the stakeholder process 
and qualified as one of the situations identified in footnote `b'.
---------------------------------------------------------------------------

    \18\ NERC Petition at 10.
---------------------------------------------------------------------------

    13. Further, the Commission is concerned that the NERC proposal 
leaves undefined the circumstances in which it is allowable to plan for 
Firm Demand to be interrupted in response to a Category B contingency. 
The TPL-002-0a Reliability Standard requires Planning Authorities and 
Transmission Planners to demonstrate through a valid assessment that 
the transmission system is planned and can be operated to supply 
projected Firm Demand at all demand levels over a range of forecasted 
system demands.\19\ Moreover, the planner must consider all single 
contingencies applicable to Table I, Category B and demonstrate that 
system performance is met. For those instances where system performance 
is not met, the planner must provide a written summary of its plans to 
achieve system performance including implementation schedules, in 
service dates of facilities and implementation lead times.\20\ In 
regard to NERC's proposal, the Commission is concerned that footnote 
`b' would function as a means to override the reliability objective and 
system performance requirements of the TPL Reliability Standard without 
any technical or other criteria specified to determine when planning to 
interrupt Firm Demand would be allowable. In this case NERC has 
provided no technically sound means of determining situations in which 
planning to interrupt Firm Demand would be allowable, and instead has 
removed such decision-making to an unspecified stakeholder process 
without any assurance that such processes will deploy technically sound 
means of approving or denying exceptions. Without any technical or 
other criteria specified to determine when planning to interrupt Firm 
Demand would be allowable, the Commission is concerned that multiple 
stakeholder processes across the country engaging in such 
determinations could lead to inconsistent and arbitrary exceptions 
including, potentially, allowing entities to plan to interrupt any 
amount of Firm Demand in any location and at any voltage level. While 
the Commission recognizes that some variation among regions or entities 
is reasonable given varying grid topography and other legitimate 
considerations, there are no technical or other criteria to determine 
whether varied results are arbitrary or based on meaningful 
distinctions. The Commission is thus concerned that there may be a lack 
of consistency in determinations to allow the planned interruption of 
Firm Demand. The proposed stakeholder process does not have any 
parameters except for openness and transparency. As a result, multiple 
processes that could be adopted across the country would likely lead to 
inconsistent determinations to allow for the planned interruption of 
Firm Demand.
---------------------------------------------------------------------------

    \19\ Reliability Standard TPL-002-0a, Requirement R1.
    \20\ Reliability Standard TPL-002-0a, Requirements R1.5 and R2.
---------------------------------------------------------------------------

    14. The Commission believes that a remand would give NERC and 
industry flexibility to develop an approach that would address the 
issues identified by the Commission with the proposed footnote `b' 
stakeholder process including, as discussed below, definition of the 
process and criteria or guidelines for the process.

A. Lack of Technical or Other Criteria

    15. NERC's proposal does not prescribe the criteria that would 
define the parameters of permissible interruption of Firm Demand. In 
Order No. 693 the Commission expressed concern that, as a general rule, 
footnote `b' should not allow an entity to plan for the loss of non-
consequential load in the event of a single contingency and directed 
NERC to clarify the standard. The Commission stated in the June 2010 
Order that a regional difference or a case-specific exception process 
that could be technically justified would be acceptable. While the 
Commission allows NERC to propose an equally effective and efficient 
solution to a Commission's proposed solution, the Commission does not 
believe that the proposal is equally effective and efficient. First, 
NERC's proposed footnote `b' contains no constraints and could allow an 
entity to plan to interrupt any amount of Firm Demand, in any location 
or at any voltage level as needed for any single contingency, provided 
that it is documented and subjected to a stakeholder process. This 
result is contrary to the underlying standard and our prior orders.\21\ 
Further, NERC did not technically justify its proposal, instead relying 
on the benefit of having transparency in the process. The Commission 
does not believe transparency in this instance can substitute for a 
technical justification.
---------------------------------------------------------------------------

    \21\ See Order No. 693, see also June 2010 Order.
---------------------------------------------------------------------------

    16. In its supplemental filing, NERC states that it is not feasible 
for the ERO to develop a one-size-fits-all criterion for limiting the 
planned interruption of Firm Demand due to the wide variety of system 
configurations and regulatory compacts.\22\ NERC states that the 
standards drafting team believes there is no analytical data to support 
a single level and therefore any single value was viewed as arbitrary.
---------------------------------------------------------------------------

    \22\ NERC Data Response at 6.
---------------------------------------------------------------------------

    17. We are not persuaded by NERC's reasoning. First, both NERC and 
the Commission have developed thresholds in other reliability contexts 
that have overcome similar claims of arbitrariness. For example, the 
threshold for conducting vegetation management pursuant to Reliability 
Standard FAC-003-1 applies to all transmission lines operated at 200 kV 
and above.\23\ In the

[[Page 66233]]

same vein, NERC's Statement of Compliance Registry Criteria has 
numerous thresholds for determining eligibility for registration.\24\ 
The Commission did not suggest a one size fits all exceptions process. 
If the ERO were to perform an exception process, it might include 
flexibility in decisions based on disparate topology or on other 
matters since it could utilize its technical expertise to determine the 
reliability impact from one region to another. Moreover, the 
Commission's proposal to remand revised footnote `b' due to a lack of 
criteria does not preclude NERC from developing another alternative, 
provided that it is equally ``efficient and effective.''
---------------------------------------------------------------------------

    \23\ Reliability Standard FAC-003-1.
    \24\ See, e.g., NERC Statement of Registry Criteria, Section 
III. The Commission approved Statement of Registry Criteria in Order 
No. 693.
---------------------------------------------------------------------------

    18. Finally, the Commission understands that there are a wide 
variety of system configurations and regulatory compacts. NERC 
indicates that the standards drafting team considered a variety of 
limits; however, it is not clear whether NERC considered a blend of 
quantitative and qualitative thresholds. For example, a standard could 
require a process with a quantitative limitation on how much Firm 
Demand could be planned for interruption and that standard could 
provide an exception process where a registered entity would submit 
documents and explanation to the ERO or a Regional Entity for approval 
based upon certain considerations.\25\ In short, we believe that a more 
defined process would be needed but, by itself, would not be adequate 
without NERC-defined technical or other criteria to determine planned 
interruption of Firm Demand. The Commission seeks comment on these 
proposals.
---------------------------------------------------------------------------

    \25\ While we encourage NERC to exercise flexibility in 
designing an appropriate standard, under this example, the exception 
process could consist of a stakeholder process that has some level 
of due process as long as that process does not allow the entity 
that proposes its exception to make the decision on whether to grant 
the exception.
---------------------------------------------------------------------------

B. Stakeholder Process

    19. The Commission believes that NERC's proposed footnote `b' 
stakeholder process does not meet Order No. 693 and the June 2010 Order 
directive. According to NERC, the type of stakeholder process used 
under its proposed footnote `b' can vary from one planning entity to 
the next. NERC offers several stakeholder processes as examples, such 
as the Order 890-type process, a state public utility commission or 
local jurisdiction process, or a Regional Transmission Organization/
Independent System Operator (RTO/ISO) stakeholder process.
    20. First, because NERC's proposed footnote `b' does not define the 
stakeholder process, the express terms of the standard would allow an 
applicable entity to form or participate in any stakeholder process and 
be compliant with the proposed standard. Second, as we have mentioned, 
NERC has offered no technical justification for exceptions to be 
granted through the stakeholder process and therefore no means for the 
Commission to judge whether the process will protect the reliability of 
the Bulk-Power System. Nothing in the proposed footnote `b' restricts 
the stakeholder process, other than that it must be an open and 
transparent stakeholder process that includes addressing stakeholder 
comments. The Commission is concerned that any meeting that is open to 
stakeholders could meet this standard. Further, because the stakeholder 
process is not defined, the proposal could allow a transmission planner 
to develop a process that provides insufficient process and 
transparency and still comply with the standard. The Commission 
believes that such process would be insufficient because it allows any 
stakeholder process to essentially become a reliability standards 
development processes outside of NERC's existing procedures. 
Furthermore, the Commission believes that regardless of the stakeholder 
process used, the outcome could lead to inconsistent results, with no 
technical or other criteria to determine whether varied results are 
arbitrary or based on meaningful distinctions. The Commission seeks 
comment on whether a stakeholder process is the appropriate vehicle to 
approve or deny exceptions to allow entities to plan to interrupt Firm 
Demand for a single contingency and if so, whether the proposed 
footnote `b' would require any stakeholder due process.
    21. Nor does the standard describe what would be entailed in 
addressing the stakeholder comments. As described above, the process 
under the standard does not provide for any technical rigor to address 
stakeholder concerns. While the standard requires transparency and an 
opportunity for stakeholder comments on the transmission planner's 
proposed plan to interrupt Firm Demand, it does not mandate any 
particular stakeholder involvement, nor does it mandate that interested 
governmental authorities be afforded notice and an opportunity to 
comment. As we read the proposed standard, a responsible entity could 
define when it would plan to interrupt Firm Demand on its own, then ask 
for stakeholder input on that plan. While the standard requires the 
responsible entity to ``address'' stakeholder comments, the responsible 
entity is not required to specify or support the technical basis upon 
which it rendered a decision. The Commission believes that the 
stakeholder process in proposed footnote `b' would allow the 
transmission planner to define the circumstances when it would rely on 
planned interruption of Firm Demand, provide that definition for review 
by regulators and other stakeholders, receive comments from regulators 
and stakeholders requesting a more narrow definition, and explain to 
the regulators and stakeholders why it is declining the request and 
maintaining the broader definition, even if every other transmission 
planner facing similar circumstances would reach the opposite 
conclusion.
    22. In Order No. 693 and the June 2010 Order, the Commission stated 
that a regional difference or a case-specific exception process, among 
other things, would be an acceptable approach. With regard to a case-
specific process, NERC replied it would ``create undesirable delays and 
uncertainty in the transmission planning process.'' \26\ However, the 
proposed footnote `b' does not provide a time limitation by which 
planning decisions to interrupt Firm Demand must be made. The 
Commission is not persuaded that NERC's proposed approach ameliorates 
this concern. The Commission seeks comment on whether an exceptions 
process that provides defined criteria, with some allowance or 
consideration for unique circumstances, could be crafted that would 
resolve NERC's concerns of ``undesirable delays'' and ``uncertainty.''
---------------------------------------------------------------------------

    \26\ NERC Data Response at 2.
---------------------------------------------------------------------------

    23. In sum, the Commission is concerned that the stakeholder 
process set forth in the NERC proposal is not sufficiently defined, 
rendering it potentially unenforceable. As mentioned above, the 
proposed stakeholder process includes no parameters other than openness 
and transparency. NERC states that it and the Regional Entities will 
review a responsible entity's decision to plan to interrupt Firm Demand 
using an after-the-fact audit, to determine if the entity's 
implementation of footnote `b' to plan Firm Demand interruption and 
whether the decision by the entity was vetted through the stakeholder 
process and qualified as one of the situations

[[Page 66234]]

identified in footnote `b.' \27\ The Commission believes that this 
could result in a transmission planner invoking a process that provides 
for minimal stakeholder involvement, providing scant reasons to reject 
any stakeholder input and then defending its decision by claiming that 
it has satisfied the provision. While the Compliance Enforcement 
Authority would verify that the process fulfilled the letter of NERC's 
proposed footnote `b'--that some open, transparent stakeholder process 
was involved and that the responsible entity in some way addressed 
stakeholder concerns--there is no mechanism for the ERO or a Regional 
Entity to enforce a finding that the evidence does not support an 
acceptable instance of planned interruption of Firm Demand. The 
Commission seeks comment on the concerns raised above.
---------------------------------------------------------------------------

    \27\ NERC Data Response at 7-8.
---------------------------------------------------------------------------

C. Commission Proposal

    24. The Commission believes that NERC's proposed footnote `b' does 
not meet the Commission's Order No. 693 directives, nor is it an 
equally effective and efficient alternative. On this basis, the 
Commission proposes to remand the proposal to NERC.
    25. The Commission also proposes to provide further guidance on 
acceptable approaches to footnote `b'. We seek comment on all of the 
options below. In addition, while the Commission is proposing certain 
options for revising footnote `b', we also seek comment on other 
potential options to solve the concerns outlined in this NOPR. As noted 
above, the Commission understands that there are a wide variety of 
system configurations and regulatory compacts. We believe that a more 
defined process than that provided in the proposed footnote `b' would 
be needed but, by itself, would not be adequate without NERC-defined 
technical or other criteria to determine an acceptable planned 
interruption of Firm Demand at the fringes of the system.\28\
---------------------------------------------------------------------------

    \28\ Any exceptions process to determine specific requests for 
planned interruption of Firm Demand may not necessarily be limited 
to the fringes of the system.
---------------------------------------------------------------------------

    26. We acknowledge that the standards drafting team considered a 
variety of limits; however, setting some form of criteria within the 
standard itself for planning to interrupt Firm Demand may be an 
acceptable approach to setting criteria for footnote `b' and would be 
an option for NERC to consider. We also seek comment on whether 
existing protocols could provide guidance to NERC in devising criteria. 
For example, the Department of Energy's Electric Emergency Incident and 
Disturbance Report (Form OE-417) requires, among other things, an 
entity to report the uncontrolled loss of 300 Megawatts or more of firm 
system loads for more than 15 minutes from a single incident, load 
shedding of 100 Megawatts or more implemented under emergency 
operational policy, and the loss of service for more than 1 hour to 
50,000 customers. While these are reporting requirements for the 
operational timeframe, and may include distribution level load 
shedding, the Commission requests comments on whether they could also 
serve as a basis for setting limits on when an entity can plan to 
interrupt Firm Demand on the Bulk-Power System. Another existing 
document that could provide guidance on how to set a limit on the 
planned interruption of Firm Demand is NERC's Statement of Compliance 
Registry Criteria, which uses, for example, 25 MW as a threshold in 
determining when a load-serving entity or distribution provider should 
register with NERC. We seek comments on this proposed option, and any 
other external documents that could be used to guide a revision to 
footnote `b.'
    27. Second, as stated above, it is not clear whether NERC 
considered a blend of quantitative and qualitative thresholds. The 
Commission seeks comments on whether this would be an option for 
providing criteria that would be generally applicable, but also for 
allowing for certain cases that may exceed the criteria. For example, a 
standard could require a process with a quantitative limitation on how 
much Firm Demand could be planned for interruption and that standard 
could provide an exception process where a registered entity would 
submit documents and explanation to the ERO or a Regional Entity for 
approval based upon certain considerations. NERC has raised concerns 
about conflicts among federal, provincial, state and local governing 
bodies that have jurisdiction over various parts of the planning, 
siting and construction process. The Commission believes that this 
approach may satisfy the need for technical criteria that we have 
described, while accounting for NERC's concerns about the difficulty of 
developing a one-size-fits-all criterion for limiting planned Firm 
Demand interruptions and the appropriateness and feasibility of 
managing and actively participating in each planning process. As NERC 
states, the objective of footnote `b' should be to minimize the 
likelihood and magnitude of planned Firm Demand interruptions. The 
Commission believes that setting generally applicable criteria for when 
an applicable entity can plan to shed Firm Demand, coupled with an 
exceptions process overseen by NERC and the Regional Entities, could 
mean that few exception requests must be processed by NERC and the 
Regional Entities. We seek comment on this option, and which entities 
should be involved in the review and subsequent determination as to 
whether an exception should be allowed.
    28. NERC has raised concerns about conflicts among federal, 
provincial, state and local governing bodies that have jurisdiction 
over various parts of the planning, siting and construction process. 
There also may be concerns about the costs of planning to avoid Firm 
Demand shedding. The Commission seeks comment on whether a feasible 
option would be to revise footnote `b' to allow for the planned 
interruption of Firm Demand in circumstances where the transmission 
planner can show that it has customer or community consent and there is 
no adverse impact to the Bulk-Power System. This presumably would not 
require affirmative consent by every individual retail customer, but we 
recognize that either term, customer or community, would need to be 
adequately defined. The Commission therefore seeks comments on who 
might be able to represent the customer or community in this option and 
how customer or community consent might be demonstrated. Additionally, 
we seek comment on how it would be determined that firm demand shedding 
with customer consent would not adversely impact the Bulk-Power System. 
However, we also seek comment on whether a customer who would otherwise 
consent to having its planning authority or transmission planner plan 
to interrupt Firm Demand pursuant to this option could instead select 
interruptible or conditional firm service under the tariff to address 
cost concerns.
    29. Finally, regardless of how NERC revises footnote `b' to resolve 
the concerns outlined in this NOPR and in previous orders, the 
Commission notes that NERC will need to support the revision to 
footnote `b.' If there is a threshold component to the revised 
footnote, the Commission believes that NERC would need to support the 
threshold and show that instability, uncontrolled separation, or 
cascading failures of the system will not occur as a result of planning 
to shed Firm Demand up to the threshold. In addition, if there is an 
individual exception option, the Commission

[[Page 66235]]

believes that the applicable entities should be required to find that 
there is no adverse impact to the Bulk-Power System from the exception 
and that it is considered in wide-area coordination and operations. 
Further, we believe that any exception should be subject to further 
review by the Regional Entity, NERC, and the Commission. This does not 
necessarily mean that the Regional Entity, NERC, or the Commission 
should have to approve the exception, but that any of the three could 
later audit its implementation.
    30. In conclusion, while the Commission provides three options for 
revising footnote `b' in this Notice of Proposed Rulemaking, we seek 
comments on the feasibility of the options and on ways in which the 
options might be improved. In addition, we seek comment on whether 
there are other ways for NERC to solve the concerns outlined above in 
an equally effective and efficient manner.

III. Information Collection Statement

    31. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping (collections of 
information) imposed by an agency.\29\ The information contained here 
is also subject to review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\30\
---------------------------------------------------------------------------

    \29\ 5 CFR 1320.11.
    \30\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    32. As stated above, the subject of this NOPR is NERC's proposed 
modification to Table 1, footnote `b' applicable in four TPL 
Reliability Standards. This NOPR proposes to remand the footnote `b' 
modification to NERC. By remanding footnote `b' the applicable 
Reliability Standards and any information collection requirements are 
unchanged. Therefore, the Commission will submit this NOPR to OMB for 
informational purposes only.
    33. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE. Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, e-mail: 
data.clearance@ferc.gov, phone: (202) 502-8663, or fax: (202) 273-
0873].

IV. Regulatory Flexibility Act

    34. The Regulatory Flexibility Act of 1980 (RFA) \31\ 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.\32\ 
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.\33\ The RFA is not 
implicated by this NOPR because the Commission is remanding footnote' 
b' and not proposing any modifications to the existing burden or 
reporting requirements. With no changes to the Reliability Standards as 
approved, the Commission certifies that this NOPR will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \31\ 5 U.S.C. 601-612.
    \32\ 13 CFR 121.201.
    \33\ Id. n.22.
---------------------------------------------------------------------------

V. Comment Procedures

    35. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due 60 days from publication in the Federal 
Register. Comments must refer to Docket No. RM11-18-000, and must 
include the commenter's name, the organization they represent, if 
applicable, and their address in their comments.
    36. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://
www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    37. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street, NE., 
Washington, DC 20426.
    38. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VI. Document Availability

    39. 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.
    40. 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.
    41. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

    By direction of the Commission. Commissioner Spitzer is not 
participating.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2011-27624 Filed 10-25-11; 8:45 am]
BILLING CODE 6717-01-P