Standards for Business Practices and Communication Protocols for Public Utilities, 26199-26213 [06-4072]

Download as PDF Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations Suffolk, VA, Suffolk Executive, RNAV (GPS) RWY 4, Amdt 1 Suffolk, VA, Suffolk Executive, RNAV (GPS) RWY 7, Orig Suffolk, VA, Suffolk Executive, GPS RWY 7, Orig-B, CANCELLED Suffolk, VA, Suffolk Executive, Takeoff Minimums and Textual DP, Amdt 3 Oak Harbor, WA, Wes Lupien, RNAV (GPS) RWY 7, Orig-A Oak Harbor, WA, Wes Lupien, RADAR–1, Orig Laramie, WY, Laramie Regional, RNAV (GPS) RWY 12, Orig Laramie, WY, Laramie Regional, RNAV (GPS) RWY 30, Orig Laramie, WY, Laramie Regional, VOR/DME OR TACAN RWY 12, Amdt 6 Laramie, WY, Laramie Regional, VOR/DME OR TACAN RWY 30, Amdt 7 * * * Effective 03 August 2006 Chickasha, OK, Chickasha Muni, NDB RWY 17, Amdt 1, CANCELLED Washington, PA, Washington County, NDB RWY 27, Amdt 1, CANCELLED [FR Doc. 06–4067 Filed 5–3–06; 8:45 am] BILLING CODE 4910–13–P DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Parts 35, 37 and 38 [Docket No. RM05–5–000; Order No. 676] Standards for Business Practices and Communication Protocols for Public Utilities Issued April 25, 2006. Federal Energy Regulatory Commission, DOE. ACTION: Final rule. AGENCY: The Federal Energy Regulatory Commission is amending its regulations under the Federal Power Act to incorporate by reference the following standards promulgated by the Wholesale Electric Quadrant of the North American Energy Standards Board: Business Practices for Open Access Same-Time Information Systems (OASIS); Business Practices for OASIS Standards and Communication Protocols; OASIS Data Dictionary; Coordinate Interchange; Area Control Error (ACE) Equation Special Cases; Manual Time Error Correction; and Inadvertent Interchange Payback. Incorporating these standards by reference into the Commission’s regulations will standardize utility business practices and transactional processes and OASIS procedures. DATES: This Final Rule will become effective June 5, 2006. The incorporation by reference of certain mstockstill on PROD1PC68 with RULES SUMMARY: VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 standards listed in this Final Rule is approved by the Director of the Federal Register as of June 5, 2006. Public utilities must implement the standards adopted in this Final Rule by July 1, 2006, and must file revisions to their open access transmission tariffs (OATTs) to include these standards in accordance with the following schedule. On or after June 1, 2006, a public utility proposing OATT revisions unrelated to this rule is required to include the standards adopted in this Final Rule as part of that filing. (Prior to June 1, 2006, a public utility making OATT revisions unrelated to this rule has the option of including the standards adopted in this Final Rule as part of that filing.) As the standards adopted in this Final Rule must be implemented by July 1, 2006, the OATT revisions filed to comply with this rule are to include an effective date of July 1, 2006. Any requests for waiver of any of these standards must be filed on or before June 1, 2006. FOR FURTHER INFORMATION CONTACT: Marvin Rosenberg (technical issues), Office of Energy Markets and Reliability, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. (202) 502–8292. Kay Morice (technical issues), Office of Energy Markets and Reliability, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. (202) 502–6507. Gary D. Cohen (legal issues), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. (202) 502–8321. SUPPLEMENTARY INFORMATION: Table of Contents I. Background II. Discussion A. Business Practice Standards Complementing NERC Reliability Standards 1. Inadvertent Interchange Payback 2. Manual Time Error Correction 3. Coordinate Interchange 4. Definition of Terms B. OASIS Business Practice Standards 1. Redirect Standard 001–9.7 2. Standard 001–10.6 3. Standard 002–4.2.10.2 and OASIS Data Dictionary 4. Standard 002–4.5 5. Standards of Conduct C. Applicability, Waivers, and Variances 1. General Principles 2. Specific Issues D. Other Issues 1. Cost Recovery 2. Fees for Obtaining NAESB–WEQ Standards III. Implementation Dates and Procedures IV. Notice of Use of Voluntary Consensus Standards V. Information Collection Statement PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 26199 VI. Environmental Analysis VII. Regulatory Flexibility Act Certification VIII. Document Availability IX. Effective Date and Congressional Notification Appendix—List of Commenters to Standards NOPR Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead Brownell, and Suedeen G. Kelly. 1. The Federal Energy Regulatory Commission (Commission) is amending its regulations under the Federal Power Act (FPA)1 to incorporate by reference certain standards promulgated by the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards Board (NAESB). These standards establish a set of business practice standards and communication protocols for the electric industry that will enable industry members to achieve efficiencies by streamlining utility business and transactional processes and communication procedures. The standards replace, with modifications, the Commission’s existing Business Practice Standards for Open Access Same-Time Information Systems (OASIS) Transactions and OASIS Standards and Communication Protocols and Data Dictionary requirements. In addition, the standards include business practices to complement the North American Electric Reliability Council’s (NERC) Version 0 reliability standards and ultimately the standards to be adopted by the Electric Reliability Organization (ERO) pursuant to Order Nos. 672 and 672–A.2 Adopting these standards will establish a formal ongoing process for reviewing and upgrading the Commission’s OASIS standards as well as adopting other electric industry business practice standards. I. Background 2. When the Commission developed its OASIS regulations, OASIS Standards and Communication Protocols, Data Dictionary, and OASIS Business Practice Standards, it relied heavily on the assistance provided by all segments of the wholesale electric power industry and its customers in the ad hoc working groups that came together and offered consensus proposals for the 1 16 U.S.C. 791a, et seq. 18 CFR Part 39 Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the Establishment, Approval, and Enforcement of Electric Reliability Standards, Order No. 672, 71 FR 8662 (corrected at 71 FR 11505), FERC Stats. & Regs. ¶ 31, 204, Order No. 672–A, 71 FR 19814 (2006), 114 FERC ¶ 61,328 (2006). 2 See E:\FR\FM\04MYR1.SGM 04MYR1 26200 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations mstockstill on PROD1PC68 with RULES Commission’s consideration.3 While this process was very successful, it became apparent to the Commission that ongoing issues remained that would be better addressed by an ongoing industry group dedicated to drafting consensus industry standards to implement the Commission’s OASISrelated policies as well as to complement policies on other industry business practices. 3. On December 19, 2001, the Commission issued an order asking the wholesale electric power industry to develop business practice standards and communication protocols by establishing a single consensus, industry-wide standards organization for the wholesale electric industry.4 4. Subsequently, in 2002, the Gas Industry Standards Board stepped forward and volunteered to play this role by modifying its organization to broaden the scope of its activities to address electric power standards. The result of this reorganization has been the emergence of NAESB’s WEQ, a nonprofit, industry-driven organization working to reach consensus on standards to streamline the business practices and transactional processes within the wholesale electric industry and proposing and adopting voluntary communication standards and model business practices. 5. The WEQ’s procedures ensure that all industry members can have input into the development of a business practice standard, whether or not they are members of NAESB, and each standard it adopts is supported by a consensus of the five industry segments: transmission, generation, marketer/ brokers, distribution/load serving entities, and end users.5 6. The Commission also urged the industry to expeditiously establish the procedures for ensuring coordination between NERC and NAESB, and requested NAESB and others to file an update on the progress on coordination 3 See Open Access Same-Time Information System and Standards of Conduct, Order No. 889, 61 FR 21737, FERC Stats. & Regs., Regulations Preambles 1991–1996 ¶ 31,035 at 31,588–9 (1996), Order No. 889–A, 62 FR 12484, FERC Stats. & Regs., Regulations Preambles 1996–2000 ¶ 31, 049 (1997). See Open Access Same-Time Information System and Standards of Conduct, Order No. 638, 65 FR 17370, FERC Stats. & Regs., Regulations Preambles 1996–2000 ¶ 31,093 (2000). 4 See Electricity Market Design and Structure, 97 FERC ¶ 61,289 (2001) (December 2001 Order), 99 FERC ¶ 61,171 (2002) (May 2002 Order), reh’g denied, 101 FERC ¶ 61,297 (December 2002 Order). 5 Under the WEQ process, for a standard to be approved, it must receive a super-majority vote of 67 percent of the members of the WEQ’s Executive Committee with support from at least 40 percent of each of the five industry segments. For final approval, 67 percent of the WEQ’s general membership must ratify the standards. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 between it and NERC 90 days after the formation of the WEQ.6 In response to the Commission’s request, NAESB and NERC filed a joint letter, on December 16, 2002, explaining that they had signed a memorandum of understanding (MOU) ‘‘designed to ensure that the development of wholesale electric business practices and reliability standards are harmonized and that every practicable effort is made to eliminate overlap and duplication of efforts between the two organizations.’’ The MOU describes, among other coordination procedures, the establishment of a Joint Interface Committee (JIC) that will review all standards development proposals received by either organization and determine which organization should be assigned to draft the relevant standards. 7. On January 18, 2005, NAESB submitted a status report to the Commission detailing the WEQ’s activities over the two years since the group’s inception, and informed the Commission that it had adopted its first set of business practice and communication standards for the electric industry (Version 000). NAESB stated that these standards, in addition to adopting the Commission’s existing OASIS standards, included improvements and revisions to: (1) Facilitate the redirection of transmission service; (2) address multiple submissions of identical transmission requests/queuing issues; (3) address OASIS posting requirements under Order No. 2003 (the Large Generator Interconnection rule); 7 and (4) provide non-substantive editing to improve the formatting, organization, and clarity of the text. 8. In its report, NAESB also informed the Commission that the WEQ adopted four business practice standards to complement NERC’s Version 0 reliability standards.8 NAESB stated that these business practice standards were developed as part of a joint effort with NERC in which the JIC divided the existing NERC operating policies into 6 May 2002 Order at P 22. Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, 68 FR 49846, 68 FR 69599, FERC Stats. & Regs., Regulations Preambles ¶ 31,146 (2003), order on reh’g, Order No. 2003–A, 69 FR 15932, FERC Stats. & Regs., Regulations Preambles ¶ 31,160 (2004), order on reh’g, Order No. 2003–B, 70 FR 265, FERC Stats & Regs., Regulations Preambles ¶ 31,171 (2004), order on rehearing, Order No. 2003–C, 70 FR 37661, FERC & Stats. ¶ 31,190 (2005), appeal pending sub nom. National Ass’n of Regulatory Commissioners v. FERC, D.C. Cir. Nos. 04–1148, et al. 8 These standards include: Coordinate Interchange; Area Control Error (ACE) Equation Special Cases; Manual Time Error Correction; and Inadvertent Interchange Payback. 7 See PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 reliability standards for development by NERC and business practices standards for development by NAESB. 9. Further, NAESB stated that the WEQ had adopted business practice standards for Standards of Conduct to implement the Commission’s requirements in Order Nos. 2004, 2004– A, and 2004–B.9 10. In response to NAESB’s report, on May 9, 2005, the Commission issued a Notice of Proposed Rulemaking (Standards NOPR) 10 that proposed to incorporate by reference the following Version 000 standards developed by the WEQ: (1) Business Practices for Open Access Same-Time Information Systems (OASIS), with the exception of standards that duplicate the Commission’s regulations; (2) Business Practices for Open Access Same-Time Information Systems (OASIS) Standards & Communication Protocols; and (3) an OASIS Data Dictionary. The Commission also proposed to incorporate by reference the WEQ’s business practice standards on Coordinate Interchange, Area Control Error (ACE) Equation Special Cases, Manual Time Error Correction, and Inadvertent Interchange Payback. The Commission did not propose to incorporate by reference Standard 001– 9.7 concerning redirects of transmission service,11 because the standard was unclear and could be interpreted to conflict with provisions of the pro forma open access transmission tariff (OATT).12 The Commission also did not propose to incorporate by reference the WEQ’s Standards of Conduct for Electric Transmission Providers (WEQ–009) because they duplicate the 9 Standards of Conduct for Transmission Providers, Order No. 2004, 68 FR 69134, FERC Stats. & Regs., Regulations Preambles ¶ 31,155 (2003) (Order No. 2004), order on reh’g, Order No. 2004–A, 69 FR 23562, FERC Stats. & Regs., Regulations Preambles ¶ 31,161 (2004), order on reh’g and clarification, Order No. 2004–B, 69 FR 48371, FERC Stats. & Regs., Regulations Preambles ¶ 31,166 (2004), order on reh’g and clarification, Order No. 2004–C, 70 FR 284, FERC Stats. & Regs., Regulations Preambles ¶ 31,172 (2005), order on reh’g and clarification, Order No. 2004–D, 110 FERC ¶ 61,320 (2005), appeal pending sub nom. American Gas Association v. FERC, D.C. Cir. No. 04–1178, et al. (filed June 9, 2004 and later). 10 Standards for Business Practices and Communication Protocols for Public Utilities, Notice of Proposed Rulemaking, 70 FR 28222 (May 17, 2005), FERC Stats. & Regs. ¶ 32,582 (2005). 11 On November 16, 2005, NAESB filed a report notifying the Commission that the WEQ business practice standards had been renumbered for ease of reference and to ensure the uniqueness of the number, but the text of the standards had not been changed. References in this order are to the revised standard numbers. 12 The Commission did, however, invite comment on this issue. E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations Commission’s regulations on this subject. 11. Twenty-three comments were filed in response to the Standards NOPR.13 These comments raise a number of issues concerning the relationship of the standards to reliability standards, the substance of specific standards, and the availability and process for obtaining regional variances and waivers of the standards. mstockstill on PROD1PC68 with RULES II. Discussion 12. The Commission is pleased that the WEQ has begun the process of developing business practice and communication standards for the electric industry. Standardization of business practices and communication processes will benefit the electric industry by providing for uniform methods of doing business with different transmission providers. Many participants in electric markets conduct business transactions involving a number of different transmission providers and establishing a uniform set of procedures and communication protocols will help make such transactions more efficient. Moreover, having the industry consider business practice standards through a consensus process may result in the industry devising ways to improve and make business practices more efficient. 13. The Version 000 standards adopted by the WEQ establish the baseline upon which future wholesale electric business practice standards can be built. The WEQ has, for example, adopted the existing Commission OASIS standards, but significantly has modified these standards to provide customers with greater flexibility. 14. The WEQ also adopted business practice standards that complement NERC’s Version 0 reliability standards. The development of such standards will be of increasing importance in the future as the Commission approves reliability standards under the recently enacted Energy Policy Act of 2005 (EPAct 2005).14 Business practice and reliability standards must complement each other to support an efficient grid. Companies need to have means of conducting business that ensure compliance with the reliability standards. We, therefore, are pleased NERC and NAESB have developed operating protocols that synchronize their standards development to provide for efficient and coordinated 13 The Appendix provides a list of the comments received and the abbreviations used to refer to individual commenters in this rule. 14 Energy Policy Act of 2005, Pub. L. 109–58, 119 Stat. 594 (2005), 42 U.S.C. 15801 et seq. See Order Nos. 672 and 672–A. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 implementation of their respective standards. 15. In addition, since the electric industry relies heavily on natural gas as a fuel source, it is becoming increasingly important for the business practices and communication protocols of these industries to work together efficiently. Because NAESB develops business practice and communication standards for the wholesale and retail natural gas and electric industries, NAESB standards will enable participants in these industries to better coordinate their activities and improve their communications.15 16. Nonetheless, while standardization of business practice and communication standards will promote efficient transactions, we recognize that different regions may conduct business differently and regional variations may be needed. The WEQ standards we adopt in this order include standards recognizing such regional differences. Similarly, transmission providers use different business models. For example, independent system operators (ISOs), regional transmission organizations (RTOs), and traditional vertically integrated public utilities conduct business in very different ways, and the WEQ standards will need to recognize such differences. 17. A number of parties have raised issues with respect to the applicability of certain WEQ standards to specific circumstances. In the future, we would encourage all industry participants to raise such issues during the standard development process so that all industry segments can determine whether a particular standard should recognize such differences. This process may resolve requests before they reach the Commission. Even if the request is not satisfactorily resolved by the WEQ, the process will help create a record should the requester seek a variance or waiver when the standard is presented to the Commission. 18. We recognize that with respect to the standards being incorporated in this Final Rule, parties cannot seek review of their issues at the WEQ prior to implementation. Rather than seek to resolve these specific issues in a generic proceeding, we are establishing a process for those parties to file requests for waiver with respect to particular 15 Indeed, NAESB already has developed business practice standards to enable the wholesale gas and electric industries to communicate more effectively. See NAESB reports in Docket Nos. RM05–28–000, RM96–1–027, and RM05–5–001, where NAESB submitted to the Commission business practice standards it had adopted for the wholesale gas and electric industries (filed on June 27 and 28, 2005). PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 26201 standards prior to implementation of this Final Rule. 19. The specific standards developed by the WEQ that we are incorporating by reference in this Final Rule are as follows: Business Practices for Open Access SameTime Information Systems (OASIS) (WEQ– 001, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standards 001– 0.2 through 001–0.8, 001–2.0 through 001– 9.6.2, 001–9.8 through 001–10.8.6, and Examples 001–8.3–A, 001–9.2–A, 001– 10.2–A, 001–9.3–A, 001–10.3–A, 001– 9.4.1–A, 001–10.4.1–A, 001–9.4.2–A, 001– 10.4.2–A, 001–9.5–A, 001–10.5–A, 001– 9.5.1–A, and 001–10.5.1–A; Business Practices for Open Access SameTime Information Systems (OASIS) Standards & Communication Protocols (WEQ–002, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standards 002– 1 through 002–5.10; Open Access Same-Time Information Systems (OASIS) Data Dictionary (WEQ– 003, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standard 003– 0; Coordinate Interchange (WEQ–004, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 004–0 through 004–13, and 004–A through 004–D; Area Control Error (ACE) Equation Special Cases Standards (WEQ–005, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 005–0 through 005–3.1.3, and 005–A; Manual Time Error Correction (WEQ–006, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 006–0 through 006–12; and Inadvertent Interchange Payback (WEQ–007, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 007–0 through 007–2, and 007–A. 20. The Commission will also require public utilities to modify their OATTs to include the WEQ standards that we are incorporating by reference, the next time they make any unrelated filing to revise their OATTs. We also clarify that, to the extent that a public utility’s OASIS obligations are administered by an ISO or RTO and are not covered in its OATT, the public utility will not need to modify its OATT to meet these particular requirements. E:\FR\FM\04MYR1.SGM 04MYR1 26202 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations 21. We will address below the issues raised in the comments on the standards. A. Business Practice Standards Complementing NERC Reliability Standards 22. As explained above, when NAESB’s WEQ was formed, NERC and NAESB signed an MOU that set up the JIC.16 The MOU was subsequently amended to include participation by the ISO/RTO Council.17 Among other duties, the JIC determines whether a proposed standard is a reliability standard to be developed by NERC or is a business practice standard to be developed by NAESB. 23. The JIC unanimously approved the drafting committee’s determination that certain standards be developed as business practice standards by NAESB. Among them were: Coordinate Interchange; ACE Equation Special Cases; Manual Time Error Correction; and Inadvertent Interchange Payback.18 These standards previously had been part of NERC’s policy statements, which included both reliability and commercial components. The translation of the reliability and commercial components of the existing NERC policy statements into standards resulted in the NERC Version 0 reliability standards dealing with the reliability component and the complementary WEQ Version 000 business practice standards dealing with the commercial component. Any changes that were required to bring the standards up to date were to be made in subsequent Version 1 standards.19 mstockstill on PROD1PC68 with RULES Comments 24. NERC and other commenters20 supporting NERC’s position, requested that the Commission defer action on three of the WEQ standards designed to complement NERC’s Version 0 16 Memorandum of Understanding between North American Energy Standards Board and North American Electric Reliability Council, dated November 30, 2002 and filed in Docket No. RM01– 12 on December 16, 2002. 17 The ISO/RTO Council is comprised of the nine ISOs and RTOs in North America, including: Alberta Electric System Operator; California Independent System Operator Corporation; the Independent Electricity System of Ontario; ISO New England, Inc.; Midwest Independent Transmission System Operator, Inc.; New York Independent System Operator, Inc.; PJM Interconnection, LLC; the Electric Reliability Council of Texas (ERCOT); and the Southwest Power Pool. 18 See NAESB Report on WEQ Business Practices, filed with the Commission on January 18, 2005, at 25–26. 19 Id. at 2. 20 Bonneville, CAISO, EEI, ISO/RTO Council, LADWP, Midwest ISO, NY Transmission Owners, and Southern Companies. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 reliability standards, so that these standards could be developed as reliability standards by NERC.21 Other commenters expressed confidence that NERC and NAESB could resolve any differences.22 25. Subsequently, NERC and NAESB have resolved this issue. In comments filed on February 21, 2006, by NERC and on February 17, 2006 by NAESB, they report that NERC is withdrawing its request to the Commission to defer action on the three standards, and NERC states that the three standards complement and are consistent with the existing NERC Version 0 reliability standards.23 In addition, NERC and NAESB inform the Commission that they are in the process of finalizing new procedures for coordinating the development of standards in areas that affect both reliability and business practices. The new approach will allow reliability standards to be developed under the NERC process and business practices to be developed under the NAESB process, while the actual development work will be done by a joint team sponsored by NERC and NAESB. Commission Conclusion 26. The Commission is pleased that NERC and NAESB have reached agreement on how to deal with the three standards 24 and commends their efforts to develop an improved process for standards development. The Commission agrees that appropriate classification of standards between reliability and business practices is important, because the statutory procedures under which the Commission adopts business practice and reliability standards differ significantly. An improved process by NERC and NAESB for standards development should form a firm foundation for ensuring that standards in these two important areas are properly developed, classified, and coordinated so that the grid can run efficiently. We look forward to hearing that the parties have finalized their process. 27. The Commission incorporates by reference the four NAESB standards complementing NERC reliability standards: Coordinate Interchange, Area Control Error (ACE) Equation Special Cases, Manual Time Error Correction, 21 ACE Equation Special Cases, Manual Time Error Correction, and Inadvertent Interchange Payback standards. 22 EEI, FirstEnergy, and Exelon. 23 NERC Supplementary Comments at 1. 24 The three standards are: Area Control Error (ACE) Equation Special Cases, Manual Time Error Correction, and Inadvertent Interchange Payback. PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 and Inadvertent Interchange Payback. We address below issues raised in comments with respect to some of the standards. 1. Inadvertent Interchange Payback 28. The Inadvertent Interchange Payback standards define the methods by which energy imbalances between Balancing Authorities can be repaid. Inadvertent Interchange occurs when a Balancing Authority is not able to fully balance generation and load within its area. The standards permit Balancing Authorities to repay imbalances though bilateral in-kind payback, unilateral inkind payback, or ‘‘other payback methods,’’ e.g., through financial payments. Comments 29. In its February 17, 2006 comments, NAESB informs the Commission that based on the report of its Inadvertent Interchange Payback Task Force (Task Force), it does not recommend any additional changes to the commercial business practices for inadvertent interchange payback at this time. The Task Force report recognized that significant effort was expended by NAESB and its member organizations to develop an Inadvertent Interchange settlement standard that would mitigate the potential financial gain that misuse of the payback-in-kind methodology might create. However, a majority of the Task Force members determined that, at this time, no consensus regarding any proposed solutions considered by the task force could gain approval. Each of the proposed solutions considered had one or more significant implementation hurdles to overcome, including but not limited to: data acquisition and integrity; pricing; credit; funding; and 100 percent participation of the affected interconnection. 30. TAPS claims that the proposed business practice continues the current practice of ‘‘return-in-kind’’ payment for inadvertent energy exchange between Balancing Authorities/control areas, while non-control areas remain subject to a $100/MWh charge for energy imbalance. TAPS argues that this treatment of non-control areas is discriminatory compared to the treatment of control area imbalances.25 Commission Conclusion 31. We are adopting the WEQ business practice standards (Standard WEQ–007) because they follow a longstanding industry practice for repaying imbalances between Balancing Authorities. TAPS does not claim that 25 TAPS E:\FR\FM\04MYR1.SGM at 3–4. 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations return-in-kind payback should not be used by Balancing Authorities/control area; it contends only that it is discriminatory to limit this approach to Balancing Authorities. TAPS has raised the same issue in the Commission’s rulemaking in RM05–25–000, where the Commission has issued a notice of inquiry to consider reforms to the Order No. 888 pro forma OATT and the OATTs of public utilities.26 We find the issue of whether non-control areas should be allowed in-kind payback, as raised by TAPS, is more appropriately considered in the rulemaking in RM05– 25–000, and we will address it there. 32. We are concerned that, as reported by NAESB, the existing Inadvertent Interchange Payback standards are susceptible to abuse for financial gain, particularly if such abuse can lead Balancing Authorities to create imbalances that may jeopardize reliability. We urge NERC and NAESB to continue to work cooperatively to revise these standards to ensure that Inadvertent Interchange Payback cannot be abused and that reliability is not jeopardized by such actions. We emphasize that these standards refer only to inadvertent interchange, not to advertent actions, and that the Commission does not condone abusive actions taken by any party. The Commission retains authority under section 206 of the FPA to take actions in the event of such abuse.27 2. Manual Time Error Correction 33. The Manual Time Error Correction standards specify the procedure to be used for reducing a time error. The need for manual time error correction stems from the inability of Balancing Authorities to perfectly balance generation and load. The frequency of the Interconnection is normally scheduled to 60.00 Hz and Balancing Authorities attempt to balance generation and load in order to meet this objective. However, the balancing function is imperfect and over time the frequency will average slightly above or below 60.00 Hz resulting in mechanical electric clocks developing an error relative to true time.28 mstockstill on PROD1PC68 with RULES Comments 34. Bonneville and EEI claim that the chart on the second page of the Manual Time Error Correction standards 26 Preventing Undue Discrimination and Preference in Transmission Services, Notice of Inquiry, 70 FR 55796 (2005). 27 Southern California Edison Co. v. FERC, 172 F.3d 74 (D.C. Cir. 1999). 28 True time refers to the time maintained by the National Institute of Standards and Technology (NIST) in Boulder, Colorado. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 (Standard 006–5) does not reflect a NERC waiver setting the Western Electricity Coordinating Council (WECC) initiation of manual time error as plus or minus five seconds instead of two seconds.29 Commission Conclusion 35. We will accept the WEQ’s Manual Time Error standard (Standard WEQ– 006). As to the concerns raised by the commenters, the waiver expired on February 8, 2004.30 If a different timing requirement is needed by the WECC, the WECC or its members may seek such a change from the WEQ and, while that change is pending, request a waiver from the Commission allowing deviations from the requirements of the chart in Standard 006–5 in appropriate circumstances. 3. Coordinate Interchange 36. The Coordinate Interchange standards define procedures for market participants to request implementation of transactions crossing one or more Balancing Authority boundaries. Comment 37. The ISO/RTO Council states that Appendix A of the Coordinate Interchange standards (Standard 004– A), dealing with interchange transactions from the Eastern Interconnection through the Southwest Power Pool (SPP) to ERCOT, is out of date. The ISO/RTO Council states that certain provisions of SPP’s tariff recently have been changed and the Coordinate Interchange standards should be revised accordingly. Commission Conclusion 38. We expect that, given the ever changing nature of the industry, the WEQ will revise its standards when appropriate.31 In fact, the WEQ is already in the process of revising the Coordinate Interchange standards, including Appendix A.32 We encourage the ISO/RTO Council to participate in the development of revised standards. In the meantime, we will accept the WEQ’s Coordinate Interchange standards (Standard WEQ–004). The 29 Bonneville at 7 and EEI at 4. NERC Operating Committee letter issued on August 8, 2003 granting a waiver request on Western Interconnection thresholds to initiate manual corrections for time error. 31 See Standards for Business Practices of Interstate Natural Gas Pipelines; Order No. 587, 61 FR 39053 (Jul. 26, 1996), FERC Stats. & Regs., Regulations Preambles ¶ 31,038, at 30,060 (Jul. 17, 1996) (‘‘standards development is not like a sculptor forever casting his creation in bronze, but like a jazz musician who takes a theme and constantly revises, enhances, and reworks it’’). 32 See WEQ request for comments at https:// www.naesb.org/pdf2/weq_cibp010506req_com.doc. 30 See PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 26203 ISO/RTO Council, or its members, may request a waiver allowing deviations from the requirements of Appendix A in appropriate circumstances. 4. Definition of Terms Comments 39. The ISO/RTO Council reports that the four NAESB standards define terms somewhat differently from the NERC definitions. The ISO/RTO Council would have NERC define reliability terms and NAESB use these definitions. In support of its argument, the ISO/RTO Council argues that operators should not have to understand more than one definition of the same item.33 Commission Conclusion 40. While we will accept the definitions associated with the four existing standards complementing NERC’s Version 0 reliability standards so that these standards can be implemented, we agree with the ISO/ RTO Council that in the future there should be a single definition of reliability terms. It is appropriate that NERC take the lead on defining these terms, as they are reliability-related, and that these same definitions be used by the WEQ in its standards. In future versions of the standards, NAESB should use the NERC definitions relating to reliability. B. OASIS Business Practice Standards 1. Redirect Standard 001–9.7 41. The WEQ adopted standards intended to facilitate the redirect of transmission services. In the Standards NOPR, the Commission expressed concerns, and requested comment, about Standard 001–9.7 in relation to the policies the Commission has adopted in the pro forma OATT. Standard 001–9.7 states: 42. Unless otherwise mutually agreed to by the primary provider and original customer, a request for Redirect on a Firm basis does not impact the [Transmission Customer’s] long term firm renewal rights (e.g., rollover or evergreen rights) on the original path, nor does it confer any renewal rights on the redirected path. 43. In the Standards NOPR, the Commission expressed concern about how to interpret this standard in light of the rollover rights as defined in the pro forma OATT. The Commission requested comment on whether, if it determines that this standard is in conflict with its policies, there is an immediate need for a standard on this issue or whether the Commission can 33 IRC E:\FR\FM\04MYR1.SGM at 12–13. 04MYR1 26204 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations mstockstill on PROD1PC68 with RULES wait for the WEQ to reconsider this issue and develop alternate language. Comments 44. NAESB states that, during the deliberations on Standard 001–9.7, there was a concern that in some instances a transmission customer may wish to retain all rollover rights under an existing service agreement yet still request service over alternate points of receipt or delivery. Because of these issues, the WEQ determined that there may be circumstances with respect to redirects on a firm basis where the parties may mutually agree as to the disposition of rollover rights. NAESB states that it will develop alternate language, if the Commission determines that this standard conflicts with its policy.34 45. Bonneville asserts that Standard 001–9.7 can be read in harmony with the pro forma OATT and urges the Commission to adopt Standard 001–9.7 with one suggested modification. According to Bonneville, the Commission has stated that the redirect requestor retains the reservation priority rights afforded by section 2.2 of the pro forma OATT on the parent (or original) path. In the Standards NOPR, Bonneville contends, the Commission has suggested that the redirect requestor holds section 2.2 rights on both the parent path and the redirect path. Bonneville argues that, if this is allowed, a redirect requestor could encumber the future available transmission capability (ATC) of two paths for the price of one. It argues that the practical impact of requiring section 2.2 rights on both paths is that firm redirects will not be granted. Bonneville agrees with NAESB that rollover should not be given to the redirect request. However, Bonneville would create an exception when a long-term firm redirect reservation terminates when the service agreement terminates. Then Bonneville recommends moving the reservation priority from the original request path to the redirect request path and initiating a contract amendment for this type of redirect, thus allowing for contract modification on a firm basis with all the rights that flow with the service agreement. Bonneville contends that this approach will allow the redirect requestor to choose which path it values most, releasing the other path to new entrants.35 46. Southern Companies contends that a request by a transmission customer to redirect service on a firm basis does not change that customer’s 34 NAESB at 1–2. at 2–5. 36 Southern 35 Bonneville VerDate Aug<31>2005 15:18 May 03, 2006 rollover rights on the original path and does not confer rollover rights on the redirected path. However, Southern Companies argues that transmission providers and transmission customers should have the ability to mutually agree to change the rollover rights from the original path to the redirected path if both parties find this beneficial. Southern Companies believes that Standard 001–9.7 allows for this flexibility.36 47. On the other hand, Cinergy shares the Commission’s concern in the Standards NOPR that Standard 001–9.7 does not appear to be consistent with the pro forma OATT. Accordingly, Cinergy does not support its adoption. Cinergy contends that requests for redirect transmission service should be treated as a new transmission service request and the customer should be able to indicate whether any rollover rights are requested on the new path. If the remaining term of service on the original path with long-term firm rights is requested on the redirected path, the customer should be able to request rollover rights on the redirected path at the time of the request. If the redirected request is approved, the rollover rights on the existing path should terminate for the amount of service being redirected on a long-term firm basis.37 48. Likewise, Exelon argues that Standard 001–9.7 not be adopted for the reasons stated in the Standards NOPR. In Exelon’s view, Standard 001–9.7 would permit a customer to relinquish rollover rights, contrary to the Commission’s policy that transmission customers should not be permitted to contract away rollover rights because transmission owners could unfairly induce customers to give up their rollover rights. 49. Exelon also opposes adoption of Standard 001–9.7 because it would change the present Commission policy that allows rollover rights on a redirect of transmission. Exelon interprets Standard 001–9.7 to provide that a customer who is granted transmission on a new path would have to forego rollover rights on that new path. Exelon agrees with the Commission that rollover rights should be transferred to the new path. Exelon also states that Standard 001–9.7 begs the question of what would be the effect of a ‘‘request’’ for redirected service. Exelon believes that acceptance and confirmation by the transmission provider are necessary to grant the right for redirected service, but 37 Cinergy Jkt 208001 PO 00000 Companies at 1–2. at 3–4. Frm 00016 Fmt 4700 Sfmt 4700 Standard 001–9.7 does not make that clear.38 50. The Midwest ISO believes that there is no immediate need to change the Commission’s policy on redirect service and rollover rights and that the WEQ should be given a further opportunity to discuss with the industry any departure from the Commission’s policy on rollover rights.39 Commission Conclusion 51. Standard 001–9.7 does not specify clearly the parties’ responsibilities with respect to the ability of a customer requesting a firm redirect to obtain rollover rights on the redirect path.40 Under section 22.2 of the pro forma OATT, a request for a firm redirect is like a request for new transmission service. The transmission provider, therefore, is required to offer rollover rights to a customer requesting a firm redirect if rollover rights are available on the redirect path. However, the transmission provider may not operationally be able to offer rollover rights on the requested redirect path due to reasonably forecasted native load needs for the transmission capacity. 52. Standard 001–9.7 provides that ‘‘unless otherwise mutually agreed to by the primary provider and original customer, a request for a Redirect on a Firm basis * * * [does not] confer any renewal rights on the redirect path.’’ (Emphasis added). This phrase could be interpreted to mean that the parties to an agreement may mutually agree to eliminate rollover rights and that a transmission provider may agree, but is not obligated, to offer rollover rights on the redirect path even when such rights are available. These provisions are inconsistent with the pro forma OATT and the Commission’s policies. In addition, the last phrase of the standard also conflicts with the last sentence of section 22.2 of the pro forma OATT, which is limited to the period while the new request for service is pending. Therefore, we will not adopt Standard 001–9.7 at this time, but will allow the WEQ to reconsider the standard and to adopt a revised standard consistent with the Commission’s policies. 53. The comments on this issue show that there is confusion in the industry regarding the provisions of sections 22.1 and 22.2 of the pro forma OATT. To assist the WEQ in developing a standard 38 Exelon at 2–3. ISO at 3–4. 40 Standard 001–9.7 appears consistent with section 22.2 of the existing pro forma OATT insofar as it provides that a customer requesting a firm redirect does not relinquish its rollover rights over its primary path simply by making the request. 39 Midwest E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations mstockstill on PROD1PC68 with RULES that is consistent with the Commission’s policy, we offer the following guidance. 54. Section 22 of the pro forma OATT addresses changes in service specifications. Section 22.1 pertains to modifications on a non-firm basis and section 22.2 covers modifications on a firm basis. Under section 22.1, a firm point-to-point transmission customer may request non-firm transmission service at secondary receipt and delivery points (points other than those specified in the service agreement). Section 22.1(c) provides that the transmission customer shall retain its right to schedule firm point-to-point transmission service at the receipt and delivery points specified in its relevant service agreement in the amount of its original capacity reservation. 55. Under section 22.2, any request by a transmission customer to modify receipt and delivery points on a firm basis is treated as a new request for service. This section also provides that, ‘‘[w]hile such new request is pending, the Transmission Customer shall retain its priority for service at the existing firm Receipt and Delivery Points specified in its Service Agreement’’ (emphasis added). Once the new request is accepted and confirmed, the transmission customer loses all rights to the original receipt and delivery points, including rollover rights associated with the original path. 56. Bonneville asserts that the Commission has stated that the redirect requestor retains section 2.2 reservation priority rights on its original path.41 Under section 22.1(c), which pertains to redirects on a non-firm basis, the transmission customer retains its right to schedule firm point-to-point service on its original path. This means that the transmission customer retains its original rights on its original path including its rollover rights on its original path and the requestor does not obtain new rollover rights on the redirected path. However, there is no similar provision in section 22.2 for redirects on a firm basis.42 41 As explained in the notice of inquiry in Docket No. RM05–25–000, 70 FR 55796, FERC Stats. & Regs. ¶ 35,553 at P 18 (2005), section 2.2 of the pro forma OATT (Reservation Priority for Existing Firm Service Customers) provides that ‘‘existing firm service customers (wholesale requirements and transmission-only, with a contract term of one-year or more) have the right to continue to take transmission service from the public utility transmission provider when the contract expires, rolls over or is renewed. It specifically provides that this transmission reservation priority is independent of whether the existing customer continues to purchase capacity and energy from the public utility transmission provider or elects to purchase capacity and energy from another supplier.’’ 42 Bonneville at 2. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 26205 57. Southern Companies argues that a request by a transmission customer to redirect service on a firm basis cannot change that customer’s rollover rights on the original path and does not confer rollover rights on the redirected path. We disagree. Section 22.2 provides that, while a transmission customer’s request for new service on a firm basis is pending, the transmission customer retains its priority for service on its existing path, including rollover rights on its existing path. However, once a transmission customer’s request for firm transmission service at new receipt and delivery points is accepted and confirmed, the new reservation governs the rights at the new receipt and delivery points and the transmission customer can obtain rollover rights with respect to the redirected capacity. In addition, at the time the transmission customer’s request for the redirected capacity is accepted and confirmed, the transmission customer loses all rights to the original receipt and delivery points, including rollover rights associated with the original path. 58. As part of its process of review, NAESB identified several questions that were raised regarding rollover rights under the pro forma OATT during members’ deliberations on Standard 001–9.7. These questions generally raised issues with respect to whether customers retain rollover rights on both the original and the redirected path. 59. A long-term firm transmission customer may request multiple, successive redirects and, as provided in section 22.2 of the pro forma OATT, each such successive request is treated as a new request for service in accordance with section 17 of the pro forma OATT. As a new request for service, each request is subject to the availability of capacity and subject to the possibility that the transmission provider may not be able to provide rollover rights on the new, redirected path. For example, assume a transmission customer with a one-year agreement for service between points A and B. If the transmission customer seeks to redirect on a firm basis in month 4 to points C to D and then redirect back to points A to B thereafter, at the end of the one year agreement the transmission customer would have rollover rights only with respect to points A to B.43 With the same assumptions, if the transmission customer begins with points A to B, but redirects in month 4 to points C to D for the remainder of the one-year agreement, the transmission customer would have rollover rights only with respect to points C to D. If the transmission provider is unable to provide rollover rights on any redirected path, whether to points C to D or, thereafter, to points A to B, it would have to demonstrate at the time of the redirect request that it has native load growth or contracts that commence in the future that prevent it from providing rollover rights.44 60. If a transmission provider claims, either at the time of the original transmission request or at the time of a redirect request, that it is unable to provide rollover rights because it has native load growth or a contract that commences in the future, it must still offer transmission service for the time preceding the native load growth or commencement of the future contract. As explained above, however, it may limit rollover rights based on native load growth or contracts that commence in the future. 61. Further, if a transmission customer with a long-term firm transmission agreement requests to redirect on a firm basis for one month and then redirect on a firm basis back to its original receipt and delivery points for the remainder of the term of the agreement, such requests do not convert its existing long-term firm transmission service agreement into separate short-term transmission service agreements.45 Under this scenario, the transmission customer has rollover rights for the original receipt and delivery points, because those are the points to which it has rights at the end of the agreement. 43 The Commission assumes that a transmission customer would make the two requests to redirect to points C to D and then back to points A to B at the same time. Otherwise, the transmission customer would put itself at risk of not being able to redirect back to points A to B because of an intervening request for transmission service. 44 See, e.g., Tenaska Power Services Co. v. Southwest Power Pool, Inc., 99 FERC 61,344 (2002), reh’g denied, 102 FERC ¶ 61,140 at P 33, 38 (2003); Nevada Power Company, 97 FERC ¶ 61,324, at 62,492 (2001). 45 See, e.g., Commonwealth Edison Co., 95 FERC ¶ 61,027 (2001). PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 Standard 001–10.6 62. Standard 001–10.6 states: For the purposes of curtailment and other capacity reductions, confirmed Redirects on a Non-Firm basis shall be treated comparably to all other types of Non-Firm Secondary Point-to-Point Service. 63. In this standard, the phrase ‘‘all other types’’ is not defined. In the Standards NOPR, the Commission interpreted this phrase to apply only to services that are comparable to non-firm secondary point-to-point service, proposed to accept the standard based E:\FR\FM\04MYR1.SGM 04MYR1 26206 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations on this interpretation, and invited comments on this interpretation. Comments 64. Cinergy, the Midwest ISO and NAESB support the Commission’s interpretation of Standard 001–10.6 in the Standards NOPR. Cinergy also proposes that the WEQ consider revising the standard to read as follows: For the purposes of curtailment and other capacity reductions, confirmed Redirects on a Non-Firm basis shall be treated comparably to other Non-Firm Secondary Point-to-Point Service.46 Commission Conclusion 65. Since there is no disagreement with the Commission’s interpretation of Standard 001–10.6 in the Standards NOPR, we will adopt this standard as proposed. We will allow the WEQ to determine whether this standard would be clearer if revised as Cinergy proposes. 3. Standard 002–4.2.10.2 and OASIS Data Dictionary mstockstill on PROD1PC68 with RULES Comments 66. Bonneville states that the Commission’s current OASIS Standards and Communication Protocols and OASIS Data Dictionary and the NAESB WEQ version of those documents contain some definition discrepancies, most likely due to editing errors during the reformatting process. It proposes four minor technical revisions to Standard 002–4.2.10.2, Status Value, for the status values for COUNTEROFFER, DECLINED, DISPLACED and REFUSED. In addition, Bonneville suggests that a data element ‘‘ANNULLED’’ be added to the OASIS Data Dictionary and that it be defined as ‘‘assigned by Provider or Seller when, by mutual agreement with the Customer, a confirmed reservation is to be voided (Final State).’’ 47 Commission Conclusion 67. Bonneville’s request for the four technical revisions is moot. On March 25, 2005, the WEQ made the requested minor revisions to its January 15, 2005 standards. As to Bonneville’s suggestion that a data element ‘‘ANNULLED’’ be added to the OASIS Data Dictionary, this definition is included in Standard 002–4.2.10.2, but is not currently included in the Commission’s Data Dictionary. If Bonneville wishes to have this definition included in the OASIS Data Dictionary, it may submit a request to the WEQ to make such a change. In that way, the requested change will receive consideration by all industry segments before it is approved. If approved, the Commission will then have the opportunity to incorporate the change by reference in its regulations when the WEQ reports the next version of its standards to the Commission. 4. Standard 002–4.5 Comments 68. Bonneville and the ISO/RTO Council raise concerns about Standard 002–4.5, Information Supported by Web page, which states: When a regulatory order requires informational postings on OASIS and there is no OASIS [Standards and Communication Protocols] template to support the postings or it is deemed inappropriate to use a template, there shall be a reference in INFO.HTM to the required information, including, but not limited to, references to the following * * * For the purposes of this section, any link to required informational postings that can be accessed from INFO.HTM would be considered to have met the OASIS posting requirements, provided that the linked information meets all other OASIS accessibility requirements. 69. Bonneville contends that this standard requires the exclusive use of INFO.HTM. It argues that as long as postings are logically organized, user friendly and transparent to all users, exclusive use of INFO.HTM should not be mandated to provide links to the required informational postings.48 70. The ISO/RTO Council recommends that the Commission consider revising the standard to allow the information defined in Standard 002–4.5 to be posted on either the OASIS Main/Home page (as customers are accustomed to that posting) or INFO.HTM—rather than prescribing that they all must be on INFO.HTM. The ISO/RTO Council contends that very few OASIS sites use an INFO.HTM page. Thus, enforcing this requirement would be a new practice and would add confusion to the finding of such information, and may create duplicate links to the same information that would only lead to further confusion.49 Commission Conclusion 71. We do not interpret Standard 002– 4.5 to mandate the exclusive use of INFO.HTM to provide links to required informational postings. While this standard requires certain information to be made available through a link from INFO.HTM, this does not preclude the posting of the same information elsewhere on OASIS, such as on the main or home page, as the ISO/RTO Council suggests, or, as Bonneville suggests, in a manner that is logically organized, user friendly and transparent to all users. Requiring informational postings to be available through a link from INFO.HTM provides for standardization and helps new users find the required information. At the same time, permitting links from other areas of OASIS allows flexibility. 5. Standards of Conduct 72. In the Standards NOPR, the Commission declined to propose adopting the WEQ’s Standards of Conduct for Electric Transmission Providers (WEQ–009) because they duplicate, with some problematic revisions, the Commission’s existing regulations codifying the Standards of Conduct, rather than implementing these standards.50 In addition, the Commission stated that ‘‘it would be useful if the WEQ would adopt standards comparable to those NAESB adopted regarding standards of conduct on the gas side.’’ 51 Comments 73. APPA supported the Commission’s proposal in the Standards NOPR not to incorporate duplicative standards.52 NAESB stated that it would review the wholesale gas quadrant standards of conduct to prepare comparable standards for the wholesale electric quadrant which would amend the WEQ standards.53 Commission Conclusion 74. We will not incorporate by reference the WEQ’s Standards of Conduct for Electric Transmission Providers (WEQ–009) since they duplicate the Commission’s regulations. As explained above, the WEQ has offered to revise its standards of conduct to implement the Commission’s standard of conduct regulations, rather than duplicate them. We look forward to reviewing this work product when it is completed. C. Applicability, Waivers, and Variances 1. General Principles 75. The Commission proposed in the Standards NOPR to incorporate by reference in its regulations most of the standards adopted by the WEQ and to require that all public utilities revise their OATTs to include these standards. Some commenters question the applicability of the standards or possible waiver of the standards. These commenters raise issues concerning: (1) 50 See 18 CFR 358.1–358.5. NOPR at P 47. 52 APPA at 2–3. 53 NAESB at 1–2. 51 Standards 46 Cinergy at 4–5. at 5–6. 48 Id. 47 Bonneville VerDate Aug<31>2005 15:18 May 03, 2006 at 5. 49 ISO/RTO Jkt 208001 PO 00000 Council at 9. Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations mstockstill on PROD1PC68 with RULES Possible variances for regional practices that may be inconsistent with the national standards; (2) waivers of certain standards for small entities or for ISOs and RTOs; and (3) whether nonpublic utilities (including Canadian entities) that participate in the wholesale electric power market can generally meet the open access reciprocity requirement established in Order Nos. 888 54 and 889 without complying with these standards and whether they may apply for waivers of particular standards on a case-by-case basis. 76. The Commission recognizes, as it did in Order Nos. 888 and 889, that there is a need for regional variances and waivers. Certain regions may conduct business differently than other regions. The current WEQ standards recognize this. We also recognize that ISOs and RTOs operate using a business model for making transmission reservations to which certain OASIS and other standards may not be applicable. 77. In implementing the OASIS standards, the Commission has sought to determine whether compliance with a standard should be required of all public utilities or whether waivers or variances of those standards should be allowed. In some cases, the Commission has insisted on uniform national standards. For example, the Commission has required ISOs and RTOs to comply with naming standards for paths into, through and out of their territory, in order to facilitate moving power across the grid.55 78. Now that the WEQ is developing these standards, we prefer that initially all regional and other generic requests for variances, such as to accommodate different business models, be raised during the WEQ standards development process, and we encourage participation by all interested persons in that process.56 The standards adopted by the 54 See Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, 61 FR 21540, FERC Stats. & Regs., Regulations Preambles 1991–1996 ¶ 31,036 at 31,691 (1996), order on reh’g, Order No. 888 A, 62 FR 12274, FERC Stats. & Regs., Regulations Preambles 1996–2000 ¶ 31048 (1997), order on reh’g, Order No. 888 B, 81 FERC ¶ 61,248 (1997), order on reh’g, Order No. 888 C, 82 FERC ¶ 61,046 (1998), aff’d in relevant part sub nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2002), aff’d sub nom. New York v. FERC, 535 U.S. 1 (2002). 55 See New York Independent System Operator, Inc., 94 FERC ¶ 61,215 (2001). 56 NAESB has recognized the need for standards reflecting different business models. In developing standards for pipeline nominations, for example, NAESB recognized that pipelines used three VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 WEQ recognize the need, in specific circumstances, for regional differences to be recognized in a national standard.57 Having the WEQ consider requests for regional differences to be reflected in a specific business practice standard will allow all industry segments, at the outset, to determine whether the standard should recognize such differences. By first submitting the request to the WEQ during development of the standard, the request may be resolved during the WEQ process. Even if the request is not resolved by the WEQ, the process will help create a record should the requester seek a variance or waiver when the standard is presented to the Commission. 79. We recognize that with respect to the standards being incorporated in this rule, some commenters request specific waivers or variances of certain of the WEQ standards and they cannot seek review of their issues at the WEQ prior to implementation. We do not have a sufficient record to resolve such issues in this proceeding. Therefore, we will require each public utility that wants a waiver of any standard we are incorporating by reference in this Final Rule to file a request for waiver. In its request for waiver the public utility should explain that it is seeking the waiver under this Final Rule, citing the caption and docket number of this proceeding, and should identify the specific standard(s) for which it requests waiver and make its arguments as to why the waiver should be granted. Utilities, including ISOs and RTOs, that have existing waivers of certain OASIS standards may reapply for such waivers using the following simplified procedures. They should identify the specific standards from which they are seeking waivers and provide the caption, date and docket number of the proceeding in which they received the waiver and of this Final Rule and must certify that the circumstances warranting such waivers have not changed. Requests for waivers must be filed on or before June 1, 2006. 80. Moreover, the exemptions previously granted by the Commission will not be expanded to apply to the new WEQ OASIS standards dealing with redirects and multiple requests because it is not clear, at this point, that all public utilities that previously obtained waivers of the OASIS posting requirements will need waivers of these standards. different models for nominations, and it developed standards to fit each model. 57 For example, the WEQ’s standards on Coordinate Interchange, Manual Time Error Correction, and Inadvertent Interchange Payback each recognize regional differences. PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 26207 81. NY Transmission Owners argues that ISOs and RTOs should be allowed to upgrade from the minimally acceptable business practice required in a business practice standard. The business practice standards we are adopting here are minimum standards and all public utilities, including ISOs and RTOs, can provide customers with more flexibility than afforded by the standards. Such improvements must provide customers with increased flexibility, but should not affect customers’ ability to utilize the standard procedure or adversely affect the rights of those not a party to the revision to meet the minimum standards criteria established.58 Any such improvement would need to be filed with the Commission as a request to amend the public utility’s OATT. 2. Specific Issues a. Compliance by ISO/RTO Members Comment 82. NY Transmission Owners asks that public utilities that are members of ISOs and RTOs not be required to revise their OATTs to incorporate the proposed OASIS standards, because the ISOs or RTOs operate their OASIS. Commission Conclusion 83. We agree with NY Transmission Owners. A public utility whose OASIS is administered by an ISO or RTO may comply with the requirement to include the OASIS standards in its OATT by adding a provision to its OATT stating that the ISO or RTO will be performing these functions on its behalf. b. Waivers for Small Entities Comments 84. Several commenters 59 argue that small utilities that previously have obtained waivers from the Commission from compliance with the requirements of Order Nos. 888 and 889 should be granted an automatic waiver of the OASIS-related business practice 58 The same standard has been applied to judge improvements to NAESB standards for natural gas pipelines. See Order No. 587, 61 FR 39053 at 39062, FERC Stats. & Regs. Regulations Preambles ¶ 31,038 at 30,069. For example, a NAESB business practice standard requires pipelines to offer three intraday nominations. 18 CFR 284.12(a)(1)(ii) (2005). Some pipelines have improved upon this standard by offering hourly nominations, which the Commission accepted because they add additional intraday nomination times for the pipelines’ customers, but do not prevent shippers from relying on the three intraday nomination times required by the standard. See, e.g., Tennessee Gas Pipeline Company, 104 FERC ¶ 61,063 at P 88 (2003); Reliant Energy Gas Transmission Company, 93 FERC ¶ 61,141 at 61,430 (2000), order on reh’g, 94 FERC ¶ 61,322 (2001). 59 This argument is raised in comments filed by GCEC, Lockhart, and NRECA. E:\FR\FM\04MYR1.SGM 04MYR1 26208 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations standards proposed to be incorporated by reference by the Standards NOPR. Moreover, to the extent that public utilities need to apply for a waiver of the OASIS-related business practice standards, TAPS requests that the Commission clarify that the waiver criteria provided in Order Nos. 888, 889, and 2004 should be applied to the pertinent WEQ standards, rather than the criteria in the two orders cited in the Standards NOPR,60 which relate to the stricter standard for waivers under Order No. 2001.61 mstockstill on PROD1PC68 with RULES Commission Conclusion 85. We will extend to small entities (that the Commission previously granted waivers of the Commission’s OASIS-related standards) a streamlined procedure for requesting waivers of the corresponding newly adopted OASISrelated standards, as long as the circumstances warranting such waivers remain unchanged. For small entities to obtain such a waiver, they must file a letter explaining that they are seeking a waiver under this Final Rule, citing the caption and docket number of this proceeding, and identifying the caption, date and docket number of the proceeding in which they received their waiver and certifying that the circumstances warranting such waivers have not changed. These waivers would not apply to newly created standards, including standards to: Facilitate redirects of transmission service; address multiple submissions of identical transmission requests and queuing issues; and address Coordinate Interchange, ACE Equation Special Cases, Manual Time Error Correction, and Inadvertent Interchange Payback. 86. We also note that, while the costs of creating a fully functional OASIS Web site may be beyond the resources of a small company, such a company could comply with the redirect standards without undue additional cost. Nevertheless, a small company that believes that compliance with a particular redirect or other business practice standards would cause it hardship may request a waiver of a particular standard for good cause. Such 60 Bridger Valley Electric Association, Inc., 101 FERC ¶ 61,146 (2002) and Sussex Rural Electric Cooperative, 103 FERC ¶ 61,299 (2003). 61 Unitil Companies argues, alternatively, that, if entities granted waivers under Order No. 889 are not eligible for waivers, then the Commission should clarify that waivers should not be limited to entities that fall within the Regulatory Flexibility Act (RFA) definition of ‘‘small entities.’’ As discussed below, entities granted waivers under Order No. 889 are eligible, upon a proper showing, for waivers of the OASIS-related standards adopted in this rule. Thus, we find Unitil Companies’ alternative proposal to be moot. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 a request will be evaluated on a case-bycase basis. In its waiver request, the requesting entity should specifically reference the standard at issue, describe its problems in complying with the standard, and describe how the entity intends to process such transactions. 87. We agree with TAPS and clarify that the appropriate criteria governing waiver requests relating to OASISrelated business practice standards should be the applicable criteria regarding waivers under Order Nos. 888 and 889, which were laid out in Black Creek Hydro, Inc., 77 FERC ¶ 61,232 (1996) (Black Creek),62 and in Inland Power & Light Company, 84 FERC ¶ 61,301 (1998) (Inland P&L) and for the Commission’s Standards of Conduct under Order No. 2004,63 which were laid out in Bear Creek Storage Company, 108 FERC ¶ 61,011 (2004) (Bear Creek), among other cases. In Inland P&L, the Commission explained that waiver of Order No. 889 is appropriate: (1) If the applicant owns, operates, or controls only limited and discrete transmission facilities (rather than an integrated transmission grid); or (2) if the applicant is a small public utility 64 that owns, operates, or controls an integrated transmission grid (unless it is a member of a tight power pool, or other circumstances are present that indicate that a waiver is not justified). The waiver would last until such time as the public utility receives a request for transmission service, at which time the public utility must file a pro forma OATT within 60 days.65 Moreover, as the Commission explained in Inland P&L, the Commission has held, among other matters, that a waiver of Order No. 889 remains in effect until an entity evaluating its transmission needs finds that it needs the information not being reported (because of the waiver) and files a complaint on this subject with the Commission and the Commission takes action in response to the complaint.66 88. Finally, the Commission routinely processes requests for waivers and does not see a need to include a specific reference to waivers for non-public utilities in Part 38, as requested by NRECA. We will apply the same principles in granting waivers that the 62 See also Order No. 638 at 31,451. No. 2004 states that transmission providers may request waivers or exemptions from all or some of the requirements of part 358 for good cause. See 18 CFR 358.1(d)(2005). 64 To qualify as a small public utility, the applicant must meet the Small Business Administration definition of a small electric utility, i.e., disposes of no more than four million Mwh annually. 65 84 FERC at 62,387. 66 Id. 63 Order PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 Commission established in Inland P&L and other relevant Commission cases. c. Reciprocity for Canadian Entities Comment 89. The ISO/RTO Council argues that requiring compliance with business practice standards by Canadian entities, which are non-jurisdictional, through the imposition of reciprocity conditions is not appropriate. It contends that the open access considerations underlying Order No. 888 should not be assumed to apply to the business practice standards. The ISO/RTO Council urges that, at a minimum, the Commission should defer consideration of this condition at this time, pending further review.67 Commission Conclusion 90. The Commission previously found that OASIS-related rules are necessary for reciprocity tariffs of nonjurisdictional entities unless an entity has shown that a waiver is justified. Canadian entities have not requested any generic changes to this policy.68 Thus, at this time, we will retain our current policy. Canadian entities with reciprocity tariffs that need a waiver of particular standards may request such a waiver. D. Other Issues 1. Cost Recovery Comment 91. The Standards NOPR included an information collection statement that projected the annualized cost of complying with the proposals in the Standards NOPR and invited comments on this cost estimate. In response, FirstEnergy Companies states that it ‘‘cannot comment on the estimated cost of compliance’’ but requests that the Commission approve the recovery of the actual costs of compliance. FirstEnergy Companies argues that such cost recovery is warranted because compliance with the WEQ standards will be mandatory.69 Commission Conclusion 92. The Commission typically allows recovery in rates of prudently incurred costs to comply with standards such as those promulgated by the WEQ, and we 67 ISO/RTO Council at 12. note, however, that two Canadian entities, the Alberta Electric System Operator and the Independent Electricity System Operator of Ontario, are members of the ISO/RTO Council, which did file comments on this issue. We also note that some Canadian entities are members of NAESB and are represented in the standards development process and Canadian non-NAESB members, like their U.S. counterparts, may also participate in the NAESB process. 69 FirstEnergy Companies at 4. 68 We E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations will make those determinations on a case-by-case basis. 2. Fees for Obtaining NAESB–WEQ Standards 93. In the Standards NOPR, the Commission explained that, in section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Congress requires federal agencies to use technical standards developed by voluntary consensus standards organizations, like NAESB’s WEQ, as a means to carry out policy objectives or activities.70 As the Commission has pointed out on several occasions,71 incorporation by reference is the appropriate, and indeed the required, method for adopting copyrighted standards material.72 The Standards NOPR also explained that, as required by the NTTAA, the WEQ standards are reasonably available from NAESB. mstockstill on PROD1PC68 with RULES Comments 94. Three commenters oppose the proposal to allow NAESB to charge a fee to obtain its copyrighted materials. They argue that these materials should be made available at no charge. In particular, NEPOOL cautions against mandating compliance with standards that are only accessible to NAESB members, to those that pay a fee or to those that travel to the FERC Public Reference Room in Washington, DC, and that carry licensing restrictions. NEPOOL argues that these accessibility concerns extend not only to all the public utilities that will be affected by any final rule in this proceeding, but also to all customers of transmission services that need to review them. 95. Similarly, IRH requests that the Commission remove any fee or membership restrictions currently 70 Pub. L. 104–113, section 12(d), 110 Stat. 783, as amended Pub. L. 107–107, Div. A Title XI, section 1115 (2001), 15 U.S.C. 272 note (2005). 71 See, e.g., Standards for Business Practices of Interstate Natural Gas Pipelines, Order No. 587–R, 68 FR 13813, FERC Stats. & Regs., Regulation Preambles ¶ 31,141 at P 29–37 (2003). 72 Standards for Business Practices of Interstate Natural Gas Pipelines, Order No. 587–A , 61 FR 55208, 77 FERC ¶ 61,061, at 61,232 (1996); Order No. 587–K, 64 FR 17276, FERC Stats. & Regs., Regulations Preambles 1996–2000 ¶ 31,072 at 30,775 (1999). See Freedom of Information Act, 5 U.S.C. 552 (a)(1) (2000); 1 CFR 51.7(4) (requirements established for incorporation by reference); Federal Participation in the Development and Use of Voluntary Standards, OMB Circular A–119, at 6(a)(1) (Feb. 10, 1998), https:// www.whitehouse.gov/omb/circulars/a119/ a119.html (incorporation by reference appropriate means of adopting private sector standards under the NTTAA). Indeed, the Commission could not reproduce the WEQ standards in violation of the NAESB copyright. See 28 U.S.C. 1498 (government not exempt from patent and copyright infringement). VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 placed by NAESB on obtaining access to the most current standards incorporated by reference by the Commission. IRH argues that these documents should be freely available to the public. UI similarly claims that these fee and licensing restrictions will seriously limit the ability of entities to obtain access to applicable regulatory requirements pertaining to OASIS. UI argues that existing OASIS standards are presently available to the public, at no charge, and any amendments proposed by the WEQ to those standards as part of this rulemaking proceeding should also be publicly available. Commission Conclusion 96. The Commission neither determined the fees for the standards, nor are we in a position to waive the fees charged by NAESB. NAESB’s policies are set by the industry, and the industry has determined that charging fees for access to the standards is appropriate. To the extent the commenters wish to change this NAESB policy, they need to pursue this issue at NAESB to craft an approach that a consensus of the industry finds reasonable. 97. As the Commission has explained in previous orders,73 the Commission cannot waive or otherwise change the NAESB policy. Section 12 of NTTAA establishes a government policy under which agencies are to rely upon, and adopt, private sector standards, such as those adopted by the WEQ, whenever practicable and appropriate.74 The Freedom of Information Act and its implementing regulations establish that the proper method of adopting such copyrighted material by a federal agency is to incorporate it by reference into the agency’s regulations.75 To be eligible for incorporation by reference, the document must be reasonably available to the class of persons affected by the publication.76 Once adopted, a copy must be provided to the Office of the Federal Register for viewing and the material must be available and readily 73 Order No. 587–R, 68 FR 13813, FERC Stats. & Regs., Regulation Preambles ¶ 31,141 at P 29–37 (2003); Order No. 587–A, 61 FR 55208, 77 FERC ¶ 61,061 at 61,232 (1996); Order No. 587–K, 64 FR 17276, FERC Stats. & Regs., Regulations Preambles 1996–2000 ¶ 31,072 at 30,775 (1999). 74 See note 71, supra. 75 5 U.S.C. 552(a)(1) (for the purpose of this paragraph, matter reasonably available to the class of persons affected thereby is deemed published in the Federal Register when incorporated by reference therein with the approval of the Director of the Federal Register); 1 CFR 51.7(4). Indeed, the Commission could not reproduce the WEQ standards in violation of the NAESB copyright. See 28 U.S.C. 1498 (government not exempt from patent and copyright infringement). 76 1 CFR 51.7(a)(2)–(4). PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 26209 obtainable. Neither the statute nor the regulations require that the standards be available at no cost. Indeed, standards incorporated by reference are exempt from the requirement that the agency charge fees for providing copies of documents according to its fee schedule.77 The Office of the Federal Register has approved the WEQ standards for incorporation by reference. Most standards incorporated by reference in government regulations require a fee or charge to obtain the standards. The American National Standards Institute (ANSI), which administers and coordinates the U.S. voluntary standardization and conformity assessment system, explains that fees for standards are necessary because ‘‘while most of the people working on standards development are volunteers, standards developers incur expense in the coordination of these voluntary efforts.’’ 78 98. The Commission finds that the WEQ standards meet the test of being reasonably accessible to all industry members. Members of NAESB obtain access to the standards for free. Those who choose not to join can obtain the standards booklet for a fee of $100.79 The commenters do not, and cannot reasonably, contend that a $100 cost constitutes an extreme burden to members of the electric industry. 99. As to NEPOOL’s argument that these standards will need to be accessed not only by public utilities, but also by their customers, we do not find that $100 is beyond the means of most customers, and the public utilities may be willing to make the standards available to their customers to review. In our view, the costs public utilities will incur to obtain these standards from NAESB are a de minimis expense since the benefits to the industry and the public of replacing a Commissiondriven approach to standards development with the NAESB process far outweighs the burden of these costs. In fact, one of the major reasons for having the WEQ develop standards is that it is far more efficient and cost effective for the industry than having the Commission develop standards, like OASIS, using Commission processes. 77 5 U.S.C. 553(a)(3). See American National Standards Institute, Why Charge for Standards?, https://www.ansi.org/ help/charge_standards.aspx?menuid=help (accessed 12/9/05). Allowing non-NAESB members free access to these standards would permit them to free ride off of the time and money invested by those who have joined NAESB and are actively participating to make the standards process beneficial to the entire industry. 79 NAESB Home Page, https://www.naesb.org/pdf/ ordrform.pdf. 78 E:\FR\FM\04MYR1.SGM 04MYR1 26210 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations III. Implementation Dates and Procedures 100. The Version 000 standards we are incorporating by reference in this Final Rule must be implemented by July 1, 2006. Public utilities are required to include these standards in their OATTs. Public utilities filing proposed revisions to their OATTs to include these standards must do so with their next unrelated OATT filing in accordance with the following schedule. On or after June 1, 2006, a public utility filing proposed OATT revisions unrelated to this rule is required to file proposed revisions to its OATT to include the standards adopted in this Final Rule as part of that filing. (Prior to June 1, 2006, a public utility filing proposed OATT revisions unrelated to this rule has the option of filing proposed OATT revisions to include the standards adopted in this Final Rule as part of that filing.) As the standards adopted in this Final Rule must be implemented by July 1, 2006, the OATT revisions filed to comply with this rule are to include an effective date of July 1, 2006.80 Any requests for waiver of any of these standards must be filed on or before June 1, 2006. 101. If adoption of these standards does not require any changes or revisions to existing OATT provisions, public utilities may comply with this rule by adding a provision to their OATTs that incorporates the standards adopted in this rule by reference, including the standard number and Version 000 to identify the standard. To incorporate these standards into their OATTs, public utilities must use the following language in their OATTs: • Business Practices for Open Access Same-Time Information Systems (OASIS) (WEQ–001, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standards 001–0.2 through 001–0.8, 001–2.0 through 001–9.6.2, 001–9.8 through 001–10.8.6, and Examples 001–8.3–A, 001–9.2–A, 001–10.2–A, 001–9.3–A, 001–10.3–A, 001–9.4.1–A, 001–10.4.1– A, 001–9.4.2–A, 001–10.4.2–A, 001– 9.5–A, 001–10.5–A, 001–9.5.1–A, and 001–10.5.1–A; • Business Practices for Open Access Same-Time Information Systems (OASIS) Standards & Communication Protocols (WEQ–002, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standards 002–1 through 002–5.10; • Open Access Same-Time Information Systems (OASIS) Data Dictionary (WEQ–003, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Standard 003–0; • Coordinate Interchange (WEQ–004, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 004–0 through 004–13, and 004–A through 004–D; • Area Control Error (ACE) Equation Special Cases Standards (WEQ–005, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 005–0 through 005–3.1.3, and 005–A; • Manual Time Error Correction (WEQ–006, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 006–0 through 006–12; and • Inadvertent Interchange Payback (WEQ–007, Version 000, January 15, 2005, with minor corrections applied on March 25, 2005, and additional numbering added October 3, 2005) including Purpose, Applicability, and Standards 007–0 through 007–2, and 007–A. 102. If a public utility requests waiver of a standard, it will not be required to comply with the standard until the Commission acts on its waiver request. Therefore, if a public utility has obtained a waiver or has a pending request for a waiver, its proposed Number of respondents Data collection revision to its OATT should not include the standard number associated with the standard for which it has obtained or seeks a waiver. Instead, the public utility’s OATT should specify those standards for which the public utility has obtained a waiver or has pending a request for waiver. Once a waiver request is denied, the public utility will be required to include in its OATT the standard(s) for which waiver was denied. IV. Notice of Use of Voluntary Consensus Standards 103. Office of Management and Budget (OMB) Circular A–119 (section 11) (February 10, 1998) provides that when a Federal agency issues or revises a regulation containing a standard, the agency should publish a statement in the final rule stating whether the adopted standard is a voluntary consensus standard or a governmentunique standard. In this rulemaking, the Commission is incorporating by reference voluntary consensus standards developed by the WEQ. V. Information Collection Statement 104. OMB’s regulations in 5 CFR 1320.11 (2005) require that it approve certain reporting and recordkeeping requirements (collections of information) imposed by an agency. Upon approval of a collection of information, OMB assigns an OMB control number and an expiration date. Respondents subject to the filing requirements of this Final 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. 105. This Final Rule will affect the following existing data collections: Electric Rate Schedule Filings (FERC– 516) and Standards for Business Practices and Communication Protocols for Public Utilities (FERC–717) (formerly Open Access Same Time Information System). 106. The following burden estimates cover compliance with this rule: Public Reporting Burden: Number of responses per respondent Hours per response Total number of hours mstockstill on PROD1PC68 with RULES FERC–516 ....................................................................................................... FERC–717 ....................................................................................................... 220 220 1 1 6 24 1,320 5,280 Totals ........................................................................................................ ........................ ........................ 30 6,600 80 Please note that the standards adopted in this Final Rule must be implemented as of July 1, 2006, VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 regardless of whether the public utility has yet filed OATT revisions incorporating these standards. PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1 26211 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations Information Collection Costs: The Commission has projected the average annualized cost for all respondents to Total Annual Hours for Collection (Reporting and Recordkeeping, (if appropriate)) = 6,600 comply with these requirements to be the following: 81 FERC–516 FERC–717 Annualized Capital/Startup Costs ............................................................................................................................ Annualized Costs (Operations & Maintenance) ...................................................................................................... $198,000 N/A $792,000 N/A Total Annualized Costs .................................................................................................................................... 198,000 792,000 mstockstill on PROD1PC68 with RULES 107. The Commission sought comments on the burden of complying with the requirements imposed by these requirements. No comments addressed the reporting burden. 108. The Commission’s regulations adopted in this rule are necessary to establish a more efficient and integrated wholesale electric power grid. Requiring such information ensures both a common means of communication and common business practices that provide entities engaged in the wholesale transmission of electric power with timely information and uniform business procedures across multiple transmission providers. These requirements conform to the Commission’s goal for efficient information collection, communication, and management within the electric power industry. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements. 109. OMB regulations 82 require it to approve certain information collection requirements imposed by agency rule. The Commission is submitting notification of this Final Rule to OMB. These information collections are mandatory requirements. 110. Title: Electric Rate Schedule Filings (FERC–516). Standards for Business Practices and Communication Protocols for Public Utilities (FERC–717) (formerly Open Access Same Time Information System). Action: Proposed collections. OMB Control Nos.: 1902–0096 and 1902–0173. Respondents: Business or other for profit (Public Utilities (Not applicable to small business.)). Frequency of Responses: One-time implementation (business procedures, capital/start-up). Necessity of Information: This rule upgrades the Commission’s current business practice and communication 81 The total annualized costs for the two information collections is $198,000 + $792,000 = $990,000. This number is reached by multiplying the total hours to prepare a response (6,600 hours) by an hourly wage estimate of $150. $990,000 = $150 × 6,600. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 standards to include standardized practices and address currently unresolved issues. The implementation of these standards and regulations is necessary to increase the efficiency of the wholesale electric power grid. 111. The information collection requirements of this Final Rule are based on the transition from transactions being made under the Commission’s existing OASIS posting requirements and business practice standards to conducting transactions under the NAESB WEQ standards. This Final Rule requires utilities to include the incorporated standards in their respective tariffs and requires OASIS postings to be reported in forums that are directly accessible by industry users. The implementation of these data requirements will help the Commission carry out its responsibilities under the FPA. The Commission will use the data in rate proceedings to review rate and tariff changes by public utilities, for general industry oversight, and to supplement the documentation used during the Commission’s audit process. 112. Interested persons may obtain information on the reporting requirements by contacting: Federal Energy Regulatory Commission, Attn: Michael Miller, Office of the Executive Director, 888 First Street, NE., Washington, DC 20426, Tel: (202) 502– 8415/Fax: (202) 273–0873, E-mail: michael.miller@ferc.gov; or by contacting: Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503, Attention: Desk Officer for the Federal Energy Regulatory Commission (Re: OMB Control Nos. 1902–0096 & 1902– 0173), Tel: (202) 395–4650, E-mail: omb_submissions@omb.eop.gov. VI. Environmental Analysis 113. The Commission is required to prepare an environmental assessment or an environmental impact statement for 82 5 CFR 1320.11. Implementing the National Environmental Policy Act, Order No. 486, 52 FR 47897, FERC Stats. & Regs., Regulations Preambles 1986–1990 ¶ 30,783 (1987). 83 Regulations PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 any action that may have a significant adverse effect on the human environment.83 As the Commission stated in the Standards NOPR, the Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in this categorical exclusion are rules that are clarifying, corrective, or procedural, or that do not substantially change the effect of the regulations being amended.84 The categorical exclusion also includes information gathering, analysis, and dissemination.85 The requirements imposed by this Final Rule fall within categorical exclusions in the Commission’s regulations for rules that are clarifying, corrective, or procedural, for information gathering, analysis, and dissemination, and for sales, exchange, and transportation of electric power that requires no construction of facilities.86 As a result, neither an environmental impact statement nor an environmental assessment is required. VII. Regulatory Flexibility Act Certification 114. The Regulatory Flexibility Act of 1980 (RFA) 87 generally requires a description and analysis of any final rule that will have significant economic impact on a substantial number of small entities. The rule adopted here imposes requirements only on public utilities, which are not small businesses, and, these requirements are, in fact, designed to benefit all customers, including small businesses. 115. The Commission has followed the provisions of both the RFA and the Paperwork Reduction Act on potential impact on small businesses and other small entities. Specifically, the RFA directs agencies to consider four regulatory alternatives to be considered in a rulemaking to lessen the impact on small entities: Tiering or establishment of different compliance or reporting 84 18 CFR 380.4(a)(2)(ii). CFR 380.4(a)(5). 86 See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27). 87 5 U.S.C. 601–612. 85 18 E:\FR\FM\04MYR1.SGM 04MYR1 26212 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations § 35.28 Non-discriminatory open access transmission tariffs. in eLibrary, type ‘‘RM05–5’’ in the docket number field. 119. User assistance is available for eLibrary and the FERC’s Web site during the Commission’s normal business hours. For assistance contact FERC Online Support at FERCOnlineSupport@ferc.gov or tollfree at (866) 208–3676, or for TTY, contact (202) 502–8659. VIII. Document Availability 18 CFR Part 38 Sec. 38.1 38.2 117. 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 (https://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. 118. From FERC’s Home Page on the Internet, this information is available in the eLibrary. The full text of this document is available in the eLibrary both in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document mstockstill on PROD1PC68 with RULES requirements for small entities, classification, consolidation, clarification or simplification of compliance and reporting requirements, performance rather than design standards, and exemptions. As the Commission originally stated in Order No. 889, the OASIS regulations now known as ‘‘Standards for Business Practices and Communication Protocols for Public Utilities’’ apply only to public utilities that own, operate, or control transmission facilities subject to the Commission’s jurisdiction, and should a small entity be subject to the Commission’s jurisdiction, it may file for waiver of these regulations.88 As discussed above, in response to comments on this issue, in this order we are extending (to small entities that previously were granted waivers from the requirements of Order Nos. 888 and 889) waivers of the OASIS requirements adopted in this Final Rule, with the condition that these entities file a short letter identifying the case name, date, and docket number of the proceeding in which they received their waiver. In addition, if material circumstances change that would affect their continued qualification for a waiver, they must report this to the Commission. 116. The procedures the Commission is following in this Final Rule are in keeping with exemption provisions of the RFA. Accordingly, pursuant to section 605(b) of the RFA,89 the Commission hereby certifies that the regulations proposed herein will not have a significant adverse impact on a substantial number of small entities. Conflict of interests, Electric power plants, Electric utilities, Incorporation by reference, Reporting and recordkeeping requirements. Authority: 16 U.S.C. 791–825r, 2601–2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352. 88 Small entities that qualified for a waiver from the requirements of Order Nos. 888 and 889 may apply for a waiver of the requirement to comply with the standards incorporated by reference in the regulations we are adopting in this Final Rule. 89 5 U.S.C. 605(b). I VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 IX. Effective Date and Congressional Notification 120. This Final Rule will take effect June 5, 2006. The Commission has determined with the concurrence of the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, that this rule is not a major rule within the meaning of section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996.90 The incorporation by reference of certain standards listed in this Final Rule is approved by the Director of the Federal Register as of June 5, 2006. The Commission will submit this Final Rule to both houses of Congress and the Government Accountability Office.91 List of Subjects 18 CFR Part 35 Electric utilities, Reporting and recordkeeping requirements. 18 CFR Part 37 Conflict of interests, Electric utilities, Reporting and recordkeeping requirements. By the Commission. Magalie R. Salas, Secretary. In consideration of the foregoing, the Commission revises parts 35 and 37 and adds part 38 in Chapter I, Title 18, Code of Federal Regulations, as follows: PART 35—FILING OF RATE SCHEDULES AND TARIFFS 1. The authority citation for part 35 continues to read as follows: I Authority: 16 U.S.C. 791a–825r, 2601– 2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352. 2. In § 35.28, add paragraph (c)(1)(vi) to read as follows: 91 See PO 00000 5 U.S.C. 804(2). 5 U.S.C. 801(a)(1)(A). Frm 00024 Fmt 4700 * * * * (c) Non-discriminatory open access transmission tariffs. (1) * * * (vi) Each public utility’s open access transmission tariff must include the standards incorporated by reference in part 38 of this chapter. * * * * * PART 37—OPEN ACCESS SAME-TIME INFORMATION SYSTEMS 3. The authority citation for part 37 continues to read as follows: I Authority: 16 U.S.C. 791–825r, 2601–2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352. 4. In § 37.5, paragraph (b) is revised to read as follows: I § 37.5 Obligations of transmission providers and responsible parties. * * * * * (b) A Responsible Party must provide access to an OASIS providing standardized information relevant to the availability of transmission capacity, prices, and other information (as described in this part) pertaining to the transmission system for which it is responsible. * * * * * I 5. Part 38 is added to read as follows: PART 38—BUSINESS PRACTICE STANDARDS AND COMMUNICATION PROTOCOLS FOR PUBLIC UTILITIES Applicability. Incorporation by reference of North American Energy Standards Board Wholesale Electric Quadrant standards. § 38.1 I 90 See * Sfmt 4700 Applicability. This part applies to any public utility that owns, operates, or controls facilities used for the transmission of electric energy in interstate commerce and to any non-public utility that seeks voluntary compliance with jurisdictional transmission tariff reciprocity conditions. § 38.2 Incorporation by reference of North American Energy Standards Board Wholesale Electric Quadrant standards. (a) All entities to which § 38.1 is applicable must comply with the following business practice and electronic communication standards promulgated by the North American Energy Standards Board Wholesale Electric Quadrant, which are incorporated herein by reference: E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 71, No. 86 / Thursday, May 4, 2006 / Rules and Regulations (1) Business Practices for Open Access Same-Time Information Systems (OASIS) (WEQ–001, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005) with the exception of Standards 001–0.1, 001–0.9 through 001–0.13, 001–1.0 through 001–1.8, and 001–9.7. (2) Business Practices for Open Access Same-Time Information Systems (OASIS) Standards & Communication Protocols (WEQ–002, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005); (3) Open Access Same-Time Information Systems (OASIS) Data Dictionary (WEQ–003, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005); (4) Coordinate Interchange (WEQ– 004, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005); (5) Area Control Error (ACE) Equation Special Cases (WEQ–005, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005); (6) Manual Time Error Correction (WEQ–006, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005); and (7) Inadvertent Interchange Payback (WEQ–007, Version 000, January 15, 2005, with minor corrections applied March 25, 2005, and additional numbering added October 3, 2005). (b) This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 26213 U.S.C. 552(a) and 1 CFR part 51. Copies of these standards may be obtained from the North American Energy Standards Board, 1301 Fannin, Suite 2350, Houston, TX 77002. Copies may be inspected at the Federal Energy Regulatory Commission, Public Reference and Files Maintenance Branch, 888 First Street, NE., Washington, DC 20426 and at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call (202) 741–6030, or go to: https://www.archives.gov/ federal_register/ code_of_federal_regulations/ ibr_locations.html. Editorial Note: The following appendix will not appear in the Code of Federal Regulations. Appendix LIST OF COMMENTERS TO STANDARDS NOPR Abbreviation Name APPA ........................................................................................................................ Bonneville ................................................................................................................. CAISO ....................................................................................................................... Cinergy ...................................................................................................................... EEI ............................................................................................................................ Exelon ....................................................................................................................... FirstEnergy Companies ............................................................................................ GCEC ........................................................................................................................ IRH ............................................................................................................................ ISO/RTO Council ...................................................................................................... LADWP ..................................................................................................................... Lockhart .................................................................................................................... Midwest ISO ............................................................................................................. NAESB ...................................................................................................................... NEPOOL ................................................................................................................... NERC ........................................................................................................................ NRECA ..................................................................................................................... NY Transmission Owners ......................................................................................... SCE ........................................................................................................................... Southern Companies ................................................................................................ TAPS ......................................................................................................................... UI .............................................................................................................................. Unitil Companies ....................................................................................................... [FR Doc. 06–4072 Filed 5–3–06; 8:45 am] BILLING CODE 6717–01–P American Public Power Association. Bonneville Power Administration. California Independent System Operator Corporation. Cinergy Services, Inc., et al. Edison Electric Institute and Alliance of Energy Suppliers. Exelon Corporation. FirstEnergy Companies. Graham County Electric Cooperative, Inc. Interconnection Rights Holders Management Committee. ISO/RTO Council. City of Los Angeles Department of Water and Power. Lockhart Power Company. Midwest Independent Transmission System Operator, Inc. North American Energy Standards Board. New England Power Pool Participants Committee. North American Electric Reliability Council. National Rural Electric Cooperative Association. Indicated New York Transmission Owners. Southern California Edison Company. 92 Southern Company Services, Inc., et al. Transmission Access Policy Study Group. United Illuminating Company. Unitil Energy Systems, Inc., et al. DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA37 mstockstill on PROD1PC68 with RULES Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations— Requirement That Mutual Funds Report Suspicious Transactions Financial Crimes Enforcement Network, Department of the Treasury. ACTION: Final rule. AGENCY: SUMMARY: This document amends the regulations implementing the statute generally known as the Bank Secrecy Act to require mutual funds to report suspicious transactions to the Financial Crimes Enforcement Network. The amendment constitutes a further step in the enhancement of the comprehensive system for the reporting of suspicious transactions by major categories of financial institutions operating in the United States, as a part of the Department of the Treasury’s countermoney laundering program. 92 SCE filed a motion to intervene, but no comments. VerDate Aug<31>2005 15:18 May 03, 2006 Jkt 208001 PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 E:\FR\FM\04MYR1.SGM 04MYR1

Agencies

[Federal Register Volume 71, Number 86 (Thursday, May 4, 2006)]
[Rules and Regulations]
[Pages 26199-26213]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4072]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 35, 37 and 38

[Docket No. RM05-5-000; Order No. 676]


Standards for Business Practices and Communication Protocols for 
Public Utilities

Issued April 25, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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

SUMMARY: The Federal Energy Regulatory Commission is amending its 
regulations under the Federal Power Act to incorporate by reference the 
following standards promulgated by the Wholesale Electric Quadrant of 
the North American Energy Standards Board: Business Practices for Open 
Access Same-Time Information Systems (OASIS); Business Practices for 
OASIS Standards and Communication Protocols; OASIS Data Dictionary; 
Coordinate Interchange; Area Control Error (ACE) Equation Special 
Cases; Manual Time Error Correction; and Inadvertent Interchange 
Payback. Incorporating these standards by reference into the 
Commission's regulations will standardize utility business practices 
and transactional processes and OASIS procedures.

DATES: This Final Rule will become effective June 5, 2006. The 
incorporation by reference of certain standards listed in this Final 
Rule is approved by the Director of the Federal Register as of June 5, 
2006. Public utilities must implement the standards adopted in this 
Final Rule by July 1, 2006, and must file revisions to their open 
access transmission tariffs (OATTs) to include these standards in 
accordance with the following schedule. On or after June 1, 2006, a 
public utility proposing OATT revisions unrelated to this rule is 
required to include the standards adopted in this Final Rule as part of 
that filing. (Prior to June 1, 2006, a public utility making OATT 
revisions unrelated to this rule has the option of including the 
standards adopted in this Final Rule as part of that filing.) As the 
standards adopted in this Final Rule must be implemented by July 1, 
2006, the OATT revisions filed to comply with this rule are to include 
an effective date of July 1, 2006. Any requests for waiver of any of 
these standards must be filed on or before June 1, 2006.

FOR FURTHER INFORMATION CONTACT: Marvin Rosenberg (technical issues), 
Office of Energy Markets and Reliability, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8292.
    Kay Morice (technical issues), Office of Energy Markets and 
Reliability, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426. (202) 502-6507.
    Gary D. Cohen (legal issues), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. (202) 502-8321.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Discussion
    A. Business Practice Standards Complementing NERC Reliability 
Standards
    1. Inadvertent Interchange Payback
    2. Manual Time Error Correction
    3. Coordinate Interchange
    4. Definition of Terms
    B. OASIS Business Practice Standards
    1. Redirect Standard 001-9.7
    2. Standard 001-10.6
    3. Standard 002-4.2.10.2 and OASIS Data Dictionary
    4. Standard 002-4.5
    5. Standards of Conduct
    C. Applicability, Waivers, and Variances
    1. General Principles
    2. Specific Issues
    D. Other Issues
    1. Cost Recovery
    2. Fees for Obtaining NAESB-WEQ Standards
III. Implementation Dates and Procedures
IV. Notice of Use of Voluntary Consensus Standards
V. Information Collection Statement
VI. Environmental Analysis
VII. Regulatory Flexibility Act Certification
VIII. Document Availability
IX. Effective Date and Congressional Notification
Appendix--List of Commenters to Standards NOPR

Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead 
Brownell, and Suedeen G. Kelly.

    1. The Federal Energy Regulatory Commission (Commission) is 
amending its regulations under the Federal Power Act (FPA)\1\ to 
incorporate by reference certain standards promulgated by the Wholesale 
Electric Quadrant (WEQ) of the North American Energy Standards Board 
(NAESB). These standards establish a set of business practice standards 
and communication protocols for the electric industry that will enable 
industry members to achieve efficiencies by streamlining utility 
business and transactional processes and communication procedures. The 
standards replace, with modifications, the Commission's existing 
Business Practice Standards for Open Access Same-Time Information 
Systems (OASIS) Transactions and OASIS Standards and Communication 
Protocols and Data Dictionary requirements. In addition, the standards 
include business practices to complement the North American Electric 
Reliability Council's (NERC) Version 0 reliability standards and 
ultimately the standards to be adopted by the Electric Reliability 
Organization (ERO) pursuant to Order Nos. 672 and 672-A.\2\ Adopting 
these standards will establish a formal ongoing process for reviewing 
and upgrading the Commission's OASIS standards as well as adopting 
other electric industry business practice standards.
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 791a, et seq.
    \2\ See 18 CFR Part 39 Rules Concerning Certification of the 
Electric Reliability Organization; and Procedures for the 
Establishment, Approval, and Enforcement of Electric Reliability 
Standards, Order No. 672, 71 FR 8662 (corrected at 71 FR 11505), 
FERC Stats. & Regs. ] 31, 204, Order No. 672-A, 71 FR 19814 (2006), 
114 FERC ] 61,328 (2006).
---------------------------------------------------------------------------

I. Background

    2. When the Commission developed its OASIS regulations, OASIS 
Standards and Communication Protocols, Data Dictionary, and OASIS 
Business Practice Standards, it relied heavily on the assistance 
provided by all segments of the wholesale electric power industry and 
its customers in the ad hoc working groups that came together and 
offered consensus proposals for the

[[Page 26200]]

Commission's consideration.\3\ While this process was very successful, 
it became apparent to the Commission that ongoing issues remained that 
would be better addressed by an ongoing industry group dedicated to 
drafting consensus industry standards to implement the Commission's 
OASIS-related policies as well as to complement policies on other 
industry business practices.
---------------------------------------------------------------------------

    \3\ See Open Access Same-Time Information System and Standards 
of Conduct, Order No. 889, 61 FR 21737, FERC Stats. & Regs., 
Regulations Preambles 1991-1996 ] 31,035 at 31,588-9 (1996), Order 
No. 889-A, 62 FR 12484, FERC Stats. & Regs., Regulations Preambles 
1996-2000 ] 31, 049 (1997). See Open Access Same-Time Information 
System and Standards of Conduct, Order No. 638, 65 FR 17370, FERC 
Stats. & Regs., Regulations Preambles 1996-2000 ] 31,093 (2000).
---------------------------------------------------------------------------

    3. On December 19, 2001, the Commission issued an order asking the 
wholesale electric power industry to develop business practice 
standards and communication protocols by establishing a single 
consensus, industry-wide standards organization for the wholesale 
electric industry.\4\
---------------------------------------------------------------------------

    \4\ See Electricity Market Design and Structure, 97 FERC ] 
61,289 (2001) (December 2001 Order), 99 FERC ] 61,171 (2002) (May 
2002 Order), reh'g denied, 101 FERC ] 61,297 (December 2002 Order).
---------------------------------------------------------------------------

    4. Subsequently, in 2002, the Gas Industry Standards Board stepped 
forward and volunteered to play this role by modifying its organization 
to broaden the scope of its activities to address electric power 
standards. The result of this reorganization has been the emergence of 
NAESB's WEQ, a non-profit, industry-driven organization working to 
reach consensus on standards to streamline the business practices and 
transactional processes within the wholesale electric industry and 
proposing and adopting voluntary communication standards and model 
business practices.
    5. The WEQ's procedures ensure that all industry members can have 
input into the development of a business practice standard, whether or 
not they are members of NAESB, and each standard it adopts is supported 
by a consensus of the five industry segments: transmission, generation, 
marketer/brokers, distribution/load serving entities, and end users.\5\
---------------------------------------------------------------------------

    \5\ Under the WEQ process, for a standard to be approved, it 
must receive a super-majority vote of 67 percent of the members of 
the WEQ's Executive Committee with support from at least 40 percent 
of each of the five industry segments. For final approval, 67 
percent of the WEQ's general membership must ratify the standards.
---------------------------------------------------------------------------

    6. The Commission also urged the industry to expeditiously 
establish the procedures for ensuring coordination between NERC and 
NAESB, and requested NAESB and others to file an update on the progress 
on coordination between it and NERC 90 days after the formation of the 
WEQ.\6\ In response to the Commission's request, NAESB and NERC filed a 
joint letter, on December 16, 2002, explaining that they had signed a 
memorandum of understanding (MOU) ``designed to ensure that the 
development of wholesale electric business practices and reliability 
standards are harmonized and that every practicable effort is made to 
eliminate overlap and duplication of efforts between the two 
organizations.'' The MOU describes, among other coordination 
procedures, the establishment of a Joint Interface Committee (JIC) that 
will review all standards development proposals received by either 
organization and determine which organization should be assigned to 
draft the relevant standards.
---------------------------------------------------------------------------

    \6\ May 2002 Order at P 22.
---------------------------------------------------------------------------

    7. On January 18, 2005, NAESB submitted a status report to the 
Commission detailing the WEQ's activities over the two years since the 
group's inception, and informed the Commission that it had adopted its 
first set of business practice and communication standards for the 
electric industry (Version 000). NAESB stated that these standards, in 
addition to adopting the Commission's existing OASIS standards, 
included improvements and revisions to: (1) Facilitate the redirection 
of transmission service; (2) address multiple submissions of identical 
transmission requests/queuing issues; (3) address OASIS posting 
requirements under Order No. 2003 (the Large Generator Interconnection 
rule); \7\ and (4) provide non-substantive editing to improve the 
formatting, organization, and clarity of the text.
---------------------------------------------------------------------------

    \7\ See Standardization of Generator Interconnection Agreements 
and Procedures, Order No. 2003, 68 FR 49846, 68 FR 69599, FERC 
Stats. & Regs., Regulations Preambles ] 31,146 (2003), order on 
reh'g, Order No. 2003-A, 69 FR 15932, FERC Stats. & Regs., 
Regulations Preambles ] 31,160 (2004), order on reh'g, Order No. 
2003-B, 70 FR 265, FERC Stats & Regs., Regulations Preambles ] 
31,171 (2004), order on rehearing, Order No. 2003-C, 70 FR 37661, 
FERC & Stats. ] 31,190 (2005), appeal pending sub nom. National 
Ass'n of Regulatory Commissioners v. FERC, D.C. Cir. Nos. 04-1148, 
et al.
---------------------------------------------------------------------------

    8. In its report, NAESB also informed the Commission that the WEQ 
adopted four business practice standards to complement NERC's Version 0 
reliability standards.\8\ NAESB stated that these business practice 
standards were developed as part of a joint effort with NERC in which 
the JIC divided the existing NERC operating policies into reliability 
standards for development by NERC and business practices standards for 
development by NAESB.
---------------------------------------------------------------------------

    \8\ These standards include: Coordinate Interchange; Area 
Control Error (ACE) Equation Special Cases; Manual Time Error 
Correction; and Inadvertent Interchange Payback.
---------------------------------------------------------------------------

    9. Further, NAESB stated that the WEQ had adopted business practice 
standards for Standards of Conduct to implement the Commission's 
requirements in Order Nos. 2004, 2004-A, and 2004-B.\9\
---------------------------------------------------------------------------

    \9\ Standards of Conduct for Transmission Providers, Order No. 
2004, 68 FR 69134, FERC Stats. & Regs., Regulations Preambles ] 
31,155 (2003) (Order No. 2004), order on reh'g, Order No. 2004-A, 69 
FR 23562, FERC Stats. & Regs., Regulations Preambles ] 31,161 
(2004), order on reh'g and clarification, Order No. 2004-B, 69 FR 
48371, FERC Stats. & Regs., Regulations Preambles ] 31,166 (2004), 
order on reh'g and clarification, Order No. 2004-C, 70 FR 284, FERC 
Stats. & Regs., Regulations Preambles ] 31,172 (2005), order on 
reh'g and clarification, Order No. 2004-D, 110 FERC ] 61,320 (2005), 
appeal pending sub nom. American Gas Association v. FERC, D.C. Cir. 
No. 04-1178, et al. (filed June 9, 2004 and later).
---------------------------------------------------------------------------

    10. In response to NAESB's report, on May 9, 2005, the Commission 
issued a Notice of Proposed Rulemaking (Standards NOPR) \10\ that 
proposed to incorporate by reference the following Version 000 
standards developed by the WEQ: (1) Business Practices for Open Access 
Same-Time Information Systems (OASIS), with the exception of standards 
that duplicate the Commission's regulations; (2) Business Practices for 
Open Access Same-Time Information Systems (OASIS) Standards & 
Communication Protocols; and (3) an OASIS Data Dictionary. The 
Commission also proposed to incorporate by reference the WEQ's business 
practice standards on Coordinate Interchange, Area Control Error (ACE) 
Equation Special Cases, Manual Time Error Correction, and Inadvertent 
Interchange Payback. The Commission did not propose to incorporate by 
reference Standard 001-9.7 concerning redirects of transmission 
service,\11\ because the standard was unclear and could be interpreted 
to conflict with provisions of the pro forma open access transmission 
tariff (OATT).\12\ The Commission also did not propose to incorporate 
by reference the WEQ's Standards of Conduct for Electric Transmission 
Providers (WEQ-009) because they duplicate the

[[Page 26201]]

Commission's regulations on this subject.
---------------------------------------------------------------------------

    \10\ Standards for Business Practices and Communication 
Protocols for Public Utilities, Notice of Proposed Rulemaking, 70 FR 
28222 (May 17, 2005), FERC Stats. & Regs. ] 32,582 (2005).
    \11\ On November 16, 2005, NAESB filed a report notifying the 
Commission that the WEQ business practice standards had been 
renumbered for ease of reference and to ensure the uniqueness of the 
number, but the text of the standards had not been changed. 
References in this order are to the revised standard numbers.
    \12\ The Commission did, however, invite comment on this issue.
---------------------------------------------------------------------------

    11. Twenty-three comments were filed in response to the Standards 
NOPR.\13\ These comments raise a number of issues concerning the 
relationship of the standards to reliability standards, the substance 
of specific standards, and the availability and process for obtaining 
regional variances and waivers of the standards.
---------------------------------------------------------------------------

    \13\ The Appendix provides a list of the comments received and 
the abbreviations used to refer to individual commenters in this 
rule.
---------------------------------------------------------------------------

II. Discussion

    12. The Commission is pleased that the WEQ has begun the process of 
developing business practice and communication standards for the 
electric industry. Standardization of business practices and 
communication processes will benefit the electric industry by providing 
for uniform methods of doing business with different transmission 
providers. Many participants in electric markets conduct business 
transactions involving a number of different transmission providers and 
establishing a uniform set of procedures and communication protocols 
will help make such transactions more efficient. Moreover, having the 
industry consider business practice standards through a consensus 
process may result in the industry devising ways to improve and make 
business practices more efficient.
    13. The Version 000 standards adopted by the WEQ establish the 
baseline upon which future wholesale electric business practice 
standards can be built. The WEQ has, for example, adopted the existing 
Commission OASIS standards, but significantly has modified these 
standards to provide customers with greater flexibility.
    14. The WEQ also adopted business practice standards that 
complement NERC's Version 0 reliability standards. The development of 
such standards will be of increasing importance in the future as the 
Commission approves reliability standards under the recently enacted 
Energy Policy Act of 2005 (EPAct 2005).\14\ Business practice and 
reliability standards must complement each other to support an 
efficient grid. Companies need to have means of conducting business 
that ensure compliance with the reliability standards. We, therefore, 
are pleased NERC and NAESB have developed operating protocols that 
synchronize their standards development to provide for efficient and 
coordinated implementation of their respective standards.
---------------------------------------------------------------------------

    \14\ Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594 
(2005), 42 U.S.C. 15801 et seq. See Order Nos. 672 and 672-A.
---------------------------------------------------------------------------

    15. In addition, since the electric industry relies heavily on 
natural gas as a fuel source, it is becoming increasingly important for 
the business practices and communication protocols of these industries 
to work together efficiently. Because NAESB develops business practice 
and communication standards for the wholesale and retail natural gas 
and electric industries, NAESB standards will enable participants in 
these industries to better coordinate their activities and improve 
their communications.\15\
---------------------------------------------------------------------------

    \15\ Indeed, NAESB already has developed business practice 
standards to enable the wholesale gas and electric industries to 
communicate more effectively. See NAESB reports in Docket Nos. RM05-
28-000, RM96-1-027, and RM05-5-001, where NAESB submitted to the 
Commission business practice standards it had adopted for the 
wholesale gas and electric industries (filed on June 27 and 28, 
2005).
---------------------------------------------------------------------------

    16. Nonetheless, while standardization of business practice and 
communication standards will promote efficient transactions, we 
recognize that different regions may conduct business differently and 
regional variations may be needed. The WEQ standards we adopt in this 
order include standards recognizing such regional differences. 
Similarly, transmission providers use different business models. For 
example, independent system operators (ISOs), regional transmission 
organizations (RTOs), and traditional vertically integrated public 
utilities conduct business in very different ways, and the WEQ 
standards will need to recognize such differences.
    17. A number of parties have raised issues with respect to the 
applicability of certain WEQ standards to specific circumstances. In 
the future, we would encourage all industry participants to raise such 
issues during the standard development process so that all industry 
segments can determine whether a particular standard should recognize 
such differences. This process may resolve requests before they reach 
the Commission. Even if the request is not satisfactorily resolved by 
the WEQ, the process will help create a record should the requester 
seek a variance or waiver when the standard is presented to the 
Commission.
    18. We recognize that with respect to the standards being 
incorporated in this Final Rule, parties cannot seek review of their 
issues at the WEQ prior to implementation. Rather than seek to resolve 
these specific issues in a generic proceeding, we are establishing a 
process for those parties to file requests for waiver with respect to 
particular standards prior to implementation of this Final Rule.
    19. The specific standards developed by the WEQ that we are 
incorporating by reference in this Final Rule are as follows:

Business Practices for Open Access Same-Time Information Systems 
(OASIS) (WEQ-001, Version 000, January 15, 2005, with minor 
corrections applied on March 25, 2005, and additional numbering 
added October 3, 2005) including Standards 001-0.2 through 001-0.8, 
001-2.0 through 001-9.6.2, 001-9.8 through 001-10.8.6, and Examples 
001-8.3-A, 001-9.2-A, 001-10.2-A, 001-9.3-A, 001-10.3-A, 001-9.4.1-
A, 001-10.4.1-A, 001-9.4.2-A, 001-10.4.2-A, 001-9.5-A, 001-10.5-A, 
001-9.5.1-A, and 001-10.5.1-A;
Business Practices for Open Access Same-Time Information Systems 
(OASIS) Standards & Communication Protocols (WEQ-002, Version 000, 
January 15, 2005, with minor corrections applied on March 25, 2005, 
and additional numbering added October 3, 2005) including Standards 
002-1 through 002-5.10;
Open Access Same-Time Information Systems (OASIS) Data Dictionary 
(WEQ-003, Version 000, January 15, 2005, with minor corrections 
applied on March 25, 2005, and additional numbering added October 3, 
2005) including Standard 003-0;
Coordinate Interchange (WEQ-004, Version 000, January 15, 2005, with 
minor corrections applied on March 25, 2005, and additional 
numbering added October 3, 2005) including Purpose, Applicability, 
and Standards 004-0 through 004-13, and 004-A through 004-D;
Area Control Error (ACE) Equation Special Cases Standards (WEQ-005, 
Version 000, January 15, 2005, with minor corrections applied on 
March 25, 2005, and additional numbering added October 3, 2005) 
including Purpose, Applicability, and Standards 005-0 through 005-
3.1.3, and 005-A;
Manual Time Error Correction (WEQ-006, Version 000, January 15, 
2005, with minor corrections applied on March 25, 2005, and 
additional numbering added October 3, 2005) including Purpose, 
Applicability, and Standards 006-0 through 006-12; and
Inadvertent Interchange Payback (WEQ-007, Version 000, January 15, 
2005, with minor corrections applied on March 25, 2005, and 
additional numbering added October 3, 2005) including Purpose, 
Applicability, and Standards 007-0 through 007-2, and 007-A.

    20. The Commission will also require public utilities to modify 
their OATTs to include the WEQ standards that we are incorporating by 
reference, the next time they make any unrelated filing to revise their 
OATTs. We also clarify that, to the extent that a public utility's 
OASIS obligations are administered by an ISO or RTO and are not covered 
in its OATT, the public utility will not need to modify its OATT to 
meet these particular requirements.

[[Page 26202]]

    21. We will address below the issues raised in the comments on the 
standards.

A. Business Practice Standards Complementing NERC Reliability Standards

    22. As explained above, when NAESB's WEQ was formed, NERC and NAESB 
signed an MOU that set up the JIC.\16\ The MOU was subsequently amended 
to include participation by the ISO/RTO Council.\17\ Among other 
duties, the JIC determines whether a proposed standard is a reliability 
standard to be developed by NERC or is a business practice standard to 
be developed by NAESB.
---------------------------------------------------------------------------

    \16\ Memorandum of Understanding between North American Energy 
Standards Board and North American Electric Reliability Council, 
dated November 30, 2002 and filed in Docket No. RM01-12 on December 
16, 2002.
    \17\ The ISO/RTO Council is comprised of the nine ISOs and RTOs 
in North America, including: Alberta Electric System Operator; 
California Independent System Operator Corporation; the Independent 
Electricity System of Ontario; ISO New England, Inc.; Midwest 
Independent Transmission System Operator, Inc.; New York Independent 
System Operator, Inc.; PJM Interconnection, LLC; the Electric 
Reliability Council of Texas (ERCOT); and the Southwest Power Pool.
---------------------------------------------------------------------------

    23. The JIC unanimously approved the drafting committee's 
determination that certain standards be developed as business practice 
standards by NAESB. Among them were: Coordinate Interchange; ACE 
Equation Special Cases; Manual Time Error Correction; and Inadvertent 
Interchange Payback.\18\ These standards previously had been part of 
NERC's policy statements, which included both reliability and 
commercial components. The translation of the reliability and 
commercial components of the existing NERC policy statements into 
standards resulted in the NERC Version 0 reliability standards dealing 
with the reliability component and the complementary WEQ Version 000 
business practice standards dealing with the commercial component. Any 
changes that were required to bring the standards up to date were to be 
made in subsequent Version 1 standards.\19\
---------------------------------------------------------------------------

    \18\ See NAESB Report on WEQ Business Practices, filed with the 
Commission on January 18, 2005, at 25-26.
    \19\ Id. at 2.
---------------------------------------------------------------------------

Comments
    24. NERC and other commenters\20\ supporting NERC's position, 
requested that the Commission defer action on three of the WEQ 
standards designed to complement NERC's Version 0 reliability 
standards, so that these standards could be developed as reliability 
standards by NERC.\21\ Other commenters expressed confidence that NERC 
and NAESB could resolve any differences.\22\
---------------------------------------------------------------------------

    \20\ Bonneville, CAISO, EEI, ISO/RTO Council, LADWP, Midwest 
ISO, NY Transmission Owners, and Southern Companies.
    \21\ ACE Equation Special Cases, Manual Time Error Correction, 
and Inadvertent Interchange Payback standards.
    \22\ EEI, FirstEnergy, and Exelon.
---------------------------------------------------------------------------

    25. Subsequently, NERC and NAESB have resolved this issue. In 
comments filed on February 21, 2006, by NERC and on February 17, 2006 
by NAESB, they report that NERC is withdrawing its request to the 
Commission to defer action on the three standards, and NERC states that 
the three standards complement and are consistent with the existing 
NERC Version 0 reliability standards.\23\ In addition, NERC and NAESB 
inform the Commission that they are in the process of finalizing new 
procedures for coordinating the development of standards in areas that 
affect both reliability and business practices. The new approach will 
allow reliability standards to be developed under the NERC process and 
business practices to be developed under the NAESB process, while the 
actual development work will be done by a joint team sponsored by NERC 
and NAESB.
---------------------------------------------------------------------------

    \23\ NERC Supplementary Comments at 1.
---------------------------------------------------------------------------

Commission Conclusion
    26. The Commission is pleased that NERC and NAESB have reached 
agreement on how to deal with the three standards \24\ and commends 
their efforts to develop an improved process for standards development. 
The Commission agrees that appropriate classification of standards 
between reliability and business practices is important, because the 
statutory procedures under which the Commission adopts business 
practice and reliability standards differ significantly. An improved 
process by NERC and NAESB for standards development should form a firm 
foundation for ensuring that standards in these two important areas are 
properly developed, classified, and coordinated so that the grid can 
run efficiently. We look forward to hearing that the parties have 
finalized their process.
---------------------------------------------------------------------------

    \24\ The three standards are: Area Control Error (ACE) Equation 
Special Cases, Manual Time Error Correction, and Inadvertent 
Interchange Payback.
---------------------------------------------------------------------------

    27. The Commission incorporates by reference the four NAESB 
standards complementing NERC reliability standards: Coordinate 
Interchange, Area Control Error (ACE) Equation Special Cases, Manual 
Time Error Correction, and Inadvertent Interchange Payback. We address 
below issues raised in comments with respect to some of the standards.
1. Inadvertent Interchange Payback
    28. The Inadvertent Interchange Payback standards define the 
methods by which energy imbalances between Balancing Authorities can be 
repaid. Inadvertent Interchange occurs when a Balancing Authority is 
not able to fully balance generation and load within its area. The 
standards permit Balancing Authorities to repay imbalances though 
bilateral in-kind payback, unilateral in-kind payback, or ``other 
payback methods,'' e.g., through financial payments.
Comments
    29. In its February 17, 2006 comments, NAESB informs the Commission 
that based on the report of its Inadvertent Interchange Payback Task 
Force (Task Force), it does not recommend any additional changes to the 
commercial business practices for inadvertent interchange payback at 
this time. The Task Force report recognized that significant effort was 
expended by NAESB and its member organizations to develop an 
Inadvertent Interchange settlement standard that would mitigate the 
potential financial gain that misuse of the payback-in-kind methodology 
might create. However, a majority of the Task Force members determined 
that, at this time, no consensus regarding any proposed solutions 
considered by the task force could gain approval. Each of the proposed 
solutions considered had one or more significant implementation hurdles 
to overcome, including but not limited to: data acquisition and 
integrity; pricing; credit; funding; and 100 percent participation of 
the affected interconnection.
    30. TAPS claims that the proposed business practice continues the 
current practice of ``return-in-kind'' payment for inadvertent energy 
exchange between Balancing Authorities/control areas, while non-control 
areas remain subject to a $100/MWh charge for energy imbalance. TAPS 
argues that this treatment of non-control areas is discriminatory 
compared to the treatment of control area imbalances.\25\
---------------------------------------------------------------------------

    \25\ TAPS at 3-4.
---------------------------------------------------------------------------

Commission Conclusion
    31. We are adopting the WEQ business practice standards (Standard 
WEQ-007) because they follow a long-standing industry practice for 
repaying imbalances between Balancing Authorities. TAPS does not claim 
that

[[Page 26203]]

return-in-kind payback should not be used by Balancing Authorities/
control area; it contends only that it is discriminatory to limit this 
approach to Balancing Authorities. TAPS has raised the same issue in 
the Commission's rulemaking in RM05-25-000, where the Commission has 
issued a notice of inquiry to consider reforms to the Order No. 888 pro 
forma OATT and the OATTs of public utilities.\26\ We find the issue of 
whether non-control areas should be allowed in-kind payback, as raised 
by TAPS, is more appropriately considered in the rulemaking in RM05-25-
000, and we will address it there.
---------------------------------------------------------------------------

    \26\ Preventing Undue Discrimination and Preference in 
Transmission Services, Notice of Inquiry, 70 FR 55796 (2005).
---------------------------------------------------------------------------

    32. We are concerned that, as reported by NAESB, the existing 
Inadvertent Interchange Payback standards are susceptible to abuse for 
financial gain, particularly if such abuse can lead Balancing 
Authorities to create imbalances that may jeopardize reliability. We 
urge NERC and NAESB to continue to work cooperatively to revise these 
standards to ensure that Inadvertent Interchange Payback cannot be 
abused and that reliability is not jeopardized by such actions. We 
emphasize that these standards refer only to inadvertent interchange, 
not to advertent actions, and that the Commission does not condone 
abusive actions taken by any party. The Commission retains authority 
under section 206 of the FPA to take actions in the event of such 
abuse.\27\
---------------------------------------------------------------------------

    \27\ Southern California Edison Co. v. FERC, 172 F.3d 74 (D.C. 
Cir. 1999).
---------------------------------------------------------------------------

2. Manual Time Error Correction
    33. The Manual Time Error Correction standards specify the 
procedure to be used for reducing a time error. The need for manual 
time error correction stems from the inability of Balancing Authorities 
to perfectly balance generation and load. The frequency of the 
Interconnection is normally scheduled to 60.00 Hz and Balancing 
Authorities attempt to balance generation and load in order to meet 
this objective. However, the balancing function is imperfect and over 
time the frequency will average slightly above or below 60.00 Hz 
resulting in mechanical electric clocks developing an error relative to 
true time.\28\
---------------------------------------------------------------------------

    \28\ True time refers to the time maintained by the National 
Institute of Standards and Technology (NIST) in Boulder, Colorado.
---------------------------------------------------------------------------

Comments
    34. Bonneville and EEI claim that the chart on the second page of 
the Manual Time Error Correction standards (Standard 006-5) does not 
reflect a NERC waiver setting the Western Electricity Coordinating 
Council (WECC) initiation of manual time error as plus or minus five 
seconds instead of two seconds.\29\
---------------------------------------------------------------------------

    \29\ Bonneville at 7 and EEI at 4.
---------------------------------------------------------------------------

Commission Conclusion
    35. We will accept the WEQ's Manual Time Error standard (Standard 
WEQ-006). As to the concerns raised by the commenters, the waiver 
expired on February 8, 2004.\30\ If a different timing requirement is 
needed by the WECC, the WECC or its members may seek such a change from 
the WEQ and, while that change is pending, request a waiver from the 
Commission allowing deviations from the requirements of the chart in 
Standard 006-5 in appropriate circumstances.
---------------------------------------------------------------------------

    \30\ See NERC Operating Committee letter issued on August 8, 
2003 granting a waiver request on Western Interconnection thresholds 
to initiate manual corrections for time error.
---------------------------------------------------------------------------

3. Coordinate Interchange
    36. The Coordinate Interchange standards define procedures for 
market participants to request implementation of transactions crossing 
one or more Balancing Authority boundaries.
Comment
    37. The ISO/RTO Council states that Appendix A of the Coordinate 
Interchange standards (Standard 004-A), dealing with interchange 
transactions from the Eastern Interconnection through the Southwest 
Power Pool (SPP) to ERCOT, is out of date. The ISO/RTO Council states 
that certain provisions of SPP's tariff recently have been changed and 
the Coordinate Interchange standards should be revised accordingly.
Commission Conclusion
    38. We expect that, given the ever changing nature of the industry, 
the WEQ will revise its standards when appropriate.\31\ In fact, the 
WEQ is already in the process of revising the Coordinate Interchange 
standards, including Appendix A.\32\ We encourage the ISO/RTO Council 
to participate in the development of revised standards. In the 
meantime, we will accept the WEQ's Coordinate Interchange standards 
(Standard WEQ-004). The ISO/RTO Council, or its members, may request a 
waiver allowing deviations from the requirements of Appendix A in 
appropriate circumstances.
---------------------------------------------------------------------------

    \31\ See Standards for Business Practices of Interstate Natural 
Gas Pipelines; Order No. 587, 61 FR 39053 (Jul. 26, 1996), FERC 
Stats. & Regs., Regulations Preambles ] 31,038, at 30,060 (Jul. 17, 
1996) (``standards development is not like a sculptor forever 
casting his creation in bronze, but like a jazz musician who takes a 
theme and constantly revises, enhances, and reworks it'').
    \32\ See WEQ request for comments at https://www.naesb.org/pdf2/
weq_cibp010506req_com.doc.
---------------------------------------------------------------------------

4. Definition of Terms
Comments
    39. The ISO/RTO Council reports that the four NAESB standards 
define terms somewhat differently from the NERC definitions. The ISO/
RTO Council would have NERC define reliability terms and NAESB use 
these definitions. In support of its argument, the ISO/RTO Council 
argues that operators should not have to understand more than one 
definition of the same item.\33\
---------------------------------------------------------------------------

    \33\ IRC at 12-13.
---------------------------------------------------------------------------

Commission Conclusion
    40. While we will accept the definitions associated with the four 
existing standards complementing NERC's Version 0 reliability standards 
so that these standards can be implemented, we agree with the ISO/RTO 
Council that in the future there should be a single definition of 
reliability terms. It is appropriate that NERC take the lead on 
defining these terms, as they are reliability-related, and that these 
same definitions be used by the WEQ in its standards. In future 
versions of the standards, NAESB should use the NERC definitions 
relating to reliability.

B. OASIS Business Practice Standards

1. Redirect Standard 001-9.7
    41. The WEQ adopted standards intended to facilitate the redirect 
of transmission services. In the Standards NOPR, the Commission 
expressed concerns, and requested comment, about Standard 001-9.7 in 
relation to the policies the Commission has adopted in the pro forma 
OATT. Standard 001-9.7 states:
    42. Unless otherwise mutually agreed to by the primary provider and 
original customer, a request for Redirect on a Firm basis does not 
impact the [Transmission Customer's] long term firm renewal rights 
(e.g., rollover or evergreen rights) on the original path, nor does it 
confer any renewal rights on the redirected path.
    43. In the Standards NOPR, the Commission expressed concern about 
how to interpret this standard in light of the rollover rights as 
defined in the pro forma OATT. The Commission requested comment on 
whether, if it determines that this standard is in conflict with its 
policies, there is an immediate need for a standard on this issue or 
whether the Commission can

[[Page 26204]]

wait for the WEQ to reconsider this issue and develop alternate 
language.
Comments
    44. NAESB states that, during the deliberations on Standard 001-
9.7, there was a concern that in some instances a transmission customer 
may wish to retain all rollover rights under an existing service 
agreement yet still request service over alternate points of receipt or 
delivery. Because of these issues, the WEQ determined that there may be 
circumstances with respect to redirects on a firm basis where the 
parties may mutually agree as to the disposition of rollover rights. 
NAESB states that it will develop alternate language, if the Commission 
determines that this standard conflicts with its policy.\34\
---------------------------------------------------------------------------

    \34\ NAESB at 1-2.
---------------------------------------------------------------------------

    45. Bonneville asserts that Standard 001-9.7 can be read in harmony 
with the pro forma OATT and urges the Commission to adopt Standard 001-
9.7 with one suggested modification. According to Bonneville, the 
Commission has stated that the redirect requestor retains the 
reservation priority rights afforded by section 2.2 of the pro forma 
OATT on the parent (or original) path. In the Standards NOPR, 
Bonneville contends, the Commission has suggested that the redirect 
requestor holds section 2.2 rights on both the parent path and the 
redirect path. Bonneville argues that, if this is allowed, a redirect 
requestor could encumber the future available transmission capability 
(ATC) of two paths for the price of one. It argues that the practical 
impact of requiring section 2.2 rights on both paths is that firm 
redirects will not be granted. Bonneville agrees with NAESB that 
rollover should not be given to the redirect request. However, 
Bonneville would create an exception when a long-term firm redirect 
reservation terminates when the service agreement terminates. Then 
Bonneville recommends moving the reservation priority from the original 
request path to the redirect request path and initiating a contract 
amendment for this type of redirect, thus allowing for contract 
modification on a firm basis with all the rights that flow with the 
service agreement. Bonneville contends that this approach will allow 
the redirect requestor to choose which path it values most, releasing 
the other path to new entrants.\35\
---------------------------------------------------------------------------

    \35\ Bonneville at 2-5.
---------------------------------------------------------------------------

    46. Southern Companies contends that a request by a transmission 
customer to redirect service on a firm basis does not change that 
customer's rollover rights on the original path and does not confer 
rollover rights on the redirected path. However, Southern Companies 
argues that transmission providers and transmission customers should 
have the ability to mutually agree to change the rollover rights from 
the original path to the redirected path if both parties find this 
beneficial. Southern Companies believes that Standard 001-9.7 allows 
for this flexibility.\36\
---------------------------------------------------------------------------

    \36\ Southern Companies at 1-2.
---------------------------------------------------------------------------

    47. On the other hand, Cinergy shares the Commission's concern in 
the Standards NOPR that Standard 001-9.7 does not appear to be 
consistent with the pro forma OATT. Accordingly, Cinergy does not 
support its adoption. Cinergy contends that requests for redirect 
transmission service should be treated as a new transmission service 
request and the customer should be able to indicate whether any 
rollover rights are requested on the new path. If the remaining term of 
service on the original path with long-term firm rights is requested on 
the redirected path, the customer should be able to request rollover 
rights on the redirected path at the time of the request. If the 
redirected request is approved, the rollover rights on the existing 
path should terminate for the amount of service being redirected on a 
long-term firm basis.\37\
---------------------------------------------------------------------------

    \37\ Cinergy at 3-4.
---------------------------------------------------------------------------

    48. Likewise, Exelon argues that Standard 001-9.7 not be adopted 
for the reasons stated in the Standards NOPR. In Exelon's view, 
Standard 001-9.7 would permit a customer to relinquish rollover rights, 
contrary to the Commission's policy that transmission customers should 
not be permitted to contract away rollover rights because transmission 
owners could unfairly induce customers to give up their rollover 
rights.
    49. Exelon also opposes adoption of Standard 001-9.7 because it 
would change the present Commission policy that allows rollover rights 
on a redirect of transmission. Exelon interprets Standard 001-9.7 to 
provide that a customer who is granted transmission on a new path would 
have to forego rollover rights on that new path. Exelon agrees with the 
Commission that rollover rights should be transferred to the new path. 
Exelon also states that Standard 001-9.7 begs the question of what 
would be the effect of a ``request'' for redirected service. Exelon 
believes that acceptance and confirmation by the transmission provider 
are necessary to grant the right for redirected service, but Standard 
001-9.7 does not make that clear.\38\
---------------------------------------------------------------------------

    \38\ Exelon at 2-3.
---------------------------------------------------------------------------

    50. The Midwest ISO believes that there is no immediate need to 
change the Commission's policy on redirect service and rollover rights 
and that the WEQ should be given a further opportunity to discuss with 
the industry any departure from the Commission's policy on rollover 
rights.\39\
---------------------------------------------------------------------------

    \39\ Midwest ISO at 3-4.
---------------------------------------------------------------------------

Commission Conclusion
    51. Standard 001-9.7 does not specify clearly the parties' 
responsibilities with respect to the ability of a customer requesting a 
firm redirect to obtain rollover rights on the redirect path.\40\ Under 
section 22.2 of the pro forma OATT, a request for a firm redirect is 
like a request for new transmission service. The transmission provider, 
therefore, is required to offer rollover rights to a customer 
requesting a firm redirect if rollover rights are available on the 
redirect path. However, the transmission provider may not operationally 
be able to offer rollover rights on the requested redirect path due to 
reasonably forecasted native load needs for the transmission capacity.
---------------------------------------------------------------------------

    \40\ Standard 001-9.7 appears consistent with section 22.2 of 
the existing pro forma OATT insofar as it provides that a customer 
requesting a firm redirect does not relinquish its rollover rights 
over its primary path simply by making the request.
---------------------------------------------------------------------------

    52. Standard 001-9.7 provides that ``unless otherwise mutually 
agreed to by the primary provider and original customer, a request for 
a Redirect on a Firm basis * * * [does not] confer any renewal rights 
on the redirect path.'' (Emphasis added). This phrase could be 
interpreted to mean that the parties to an agreement may mutually agree 
to eliminate rollover rights and that a transmission provider may 
agree, but is not obligated, to offer rollover rights on the redirect 
path even when such rights are available. These provisions are 
inconsistent with the pro forma OATT and the Commission's policies. In 
addition, the last phrase of the standard also conflicts with the last 
sentence of section 22.2 of the pro forma OATT, which is limited to the 
period while the new request for service is pending. Therefore, we will 
not adopt Standard 001-9.7 at this time, but will allow the WEQ to 
reconsider the standard and to adopt a revised standard consistent with 
the Commission's policies.
    53. The comments on this issue show that there is confusion in the 
industry regarding the provisions of sections 22.1 and 22.2 of the pro 
forma OATT. To assist the WEQ in developing a standard

[[Page 26205]]

that is consistent with the Commission's policy, we offer the following 
guidance.
    54. Section 22 of the pro forma OATT addresses changes in service 
specifications. Section 22.1 pertains to modifications on a non-firm 
basis and section 22.2 covers modifications on a firm basis. Under 
section 22.1, a firm point-to-point transmission customer may request 
non-firm transmission service at secondary receipt and delivery points 
(points other than those specified in the service agreement). Section 
22.1(c) provides that the transmission customer shall retain its right 
to schedule firm point-to-point transmission service at the receipt and 
delivery points specified in its relevant service agreement in the 
amount of its original capacity reservation.
    55. Under section 22.2, any request by a transmission customer to 
modify receipt and delivery points on a firm basis is treated as a new 
request for service. This section also provides that, ``[w]hile such 
new request is pending, the Transmission Customer shall retain its 
priority for service at the existing firm Receipt and Delivery Points 
specified in its Service Agreement'' (emphasis added). Once the new 
request is accepted and confirmed, the transmission customer loses all 
rights to the original receipt and delivery points, including rollover 
rights associated with the original path.
    56. Bonneville asserts that the Commission has stated that the 
redirect requestor retains section 2.2 reservation priority rights on 
its original path.\41\ Under section 22.1(c), which pertains to 
redirects on a non-firm basis, the transmission customer retains its 
right to schedule firm point-to-point service on its original path. 
This means that the transmission customer retains its original rights 
on its original path including its rollover rights on its original path 
and the requestor does not obtain new rollover rights on the redirected 
path. However, there is no similar provision in section 22.2 for 
redirects on a firm basis.\42\
---------------------------------------------------------------------------

    \41\ As explained in the notice of inquiry in Docket No. RM05-
25-000, 70 FR 55796, FERC Stats. & Regs. ] 35,553 at P 18 (2005), 
section 2.2 of the pro forma OATT (Reservation Priority for Existing 
Firm Service Customers) provides that ``existing firm service 
customers (wholesale requirements and transmission-only, with a 
contract term of one-year or more) have the right to continue to 
take transmission service from the public utility transmission 
provider when the contract expires, rolls over or is renewed. It 
specifically provides that this transmission reservation priority is 
independent of whether the existing customer continues to purchase 
capacity and energy from the public utility transmission provider or 
elects to purchase capacity and energy from another supplier.''
    \42\ Bonneville at 2.
---------------------------------------------------------------------------

    57. Southern Companies argues that a request by a transmission 
customer to redirect service on a firm basis cannot change that 
customer's rollover rights on the original path and does not confer 
rollover rights on the redirected path. We disagree. Section 22.2 
provides that, while a transmission customer's request for new service 
on a firm basis is pending, the transmission customer retains its 
priority for service on its existing path, including rollover rights on 
its existing path. However, once a transmission customer's request for 
firm transmission service at new receipt and delivery points is 
accepted and confirmed, the new reservation governs the rights at the 
new receipt and delivery points and the transmission customer can 
obtain rollover rights with respect to the redirected capacity. In 
addition, at the time the transmission customer's request for the 
redirected capacity is accepted and confirmed, the transmission 
customer loses all rights to the original receipt and delivery points, 
including rollover rights associated with the original path.
    58. As part of its process of review, NAESB identified several 
questions that were raised regarding rollover rights under the pro 
forma OATT during members' deliberations on Standard 001-9.7. These 
questions generally raised issues with respect to whether customers 
retain rollover rights on both the original and the redirected path.
    59. A long-term firm transmission customer may request multiple, 
successive redirects and, as provided in section 22.2 of the pro forma 
OATT, each such successive request is treated as a new request for 
service in accordance with section 17 of the pro forma OATT. As a new 
request for service, each request is subject to the availability of 
capacity and subject to the possibility that the transmission provider 
may not be able to provide rollover rights on the new, redirected path. 
For example, assume a transmission customer with a one-year agreement 
for service between points A and B. If the transmission customer seeks 
to redirect on a firm basis in month 4 to points C to D and then 
redirect back to points A to B thereafter, at the end of the one year 
agreement the transmission customer would have rollover rights only 
with respect to points A to B.\43\ With the same assumptions, if the 
transmission customer begins with points A to B, but redirects in month 
4 to points C to D for the remainder of the one-year agreement, the 
transmission customer would have rollover rights only with respect to 
points C to D. If the transmission provider is unable to provide 
rollover rights on any redirected path, whether to points C to D or, 
thereafter, to points A to B, it would have to demonstrate at the time 
of the redirect request that it has native load growth or contracts 
that commence in the future that prevent it from providing rollover 
rights.\44\
---------------------------------------------------------------------------

    \43\ The Commission assumes that a transmission customer would 
make the two requests to redirect to points C to D and then back to 
points A to B at the same time. Otherwise, the transmission customer 
would put itself at risk of not being able to redirect back to 
points A to B because of an intervening request for transmission 
service.
    \44\ See, e.g., Tenaska Power Services Co. v. Southwest Power 
Pool, Inc., 99 FERC 61,344 (2002), reh'g denied, 102 FERC ] 61,140 
at P 33, 38 (2003); Nevada Power Company, 97 FERC ] 61,324, at 
62,492 (2001).
---------------------------------------------------------------------------

    60. If a transmission provider claims, either at the time of the 
original transmission request or at the time of a redirect request, 
that it is unable to provide rollover rights because it has native load 
growth or a contract that commences in the future, it must still offer 
transmission service for the time preceding the native load growth or 
commencement of the future contract. As explained above, however, it 
may limit rollover rights based on native load growth or contracts that 
commence in the future.
    61. Further, if a transmission customer with a long-term firm 
transmission agreement requests to redirect on a firm basis for one 
month and then redirect on a firm basis back to its original receipt 
and delivery points for the remainder of the term of the agreement, 
such requests do not convert its existing long-term firm transmission 
service agreement into separate short-term transmission service 
agreements.\45\ Under this scenario, the transmission customer has 
rollover rights for the original receipt and delivery points, because 
those are the points to which it has rights at the end of the 
agreement.
---------------------------------------------------------------------------

    \45\ See, e.g., Commonwealth Edison Co., 95 FERC ] 61,027 
(2001).
---------------------------------------------------------------------------

Standard 001-10.6
    62. Standard 001-10.6 states:

    For the purposes of curtailment and other capacity reductions, 
confirmed Redirects on a Non-Firm basis shall be treated comparably 
to all other types of Non-Firm Secondary Point-to-Point Service.

    63. In this standard, the phrase ``all other types'' is not 
defined. In the Standards NOPR, the Commission interpreted this phrase 
to apply only to services that are comparable to non-firm secondary 
point-to-point service, proposed to accept the standard based

[[Page 26206]]

on this interpretation, and invited comments on this interpretation.
Comments
    64. Cinergy, the Midwest ISO and NAESB support the Commission's 
interpretation of Standard 001-10.6 in the Standards NOPR. Cinergy also 
proposes that the WEQ consider revising the standard to read as 
follows:

    For the purposes of curtailment and other capacity reductions, 
confirmed Redirects on a Non-Firm basis shall be treated comparably 
to other Non-Firm Secondary Point-to-Point Service.\46\
---------------------------------------------------------------------------

    \46\ Cinergy at 4-5.

Commission Conclusion
    65. Since there is no disagreement with the Commission's 
interpretation of Standard 001-10.6 in the Standards NOPR, we will 
adopt this standard as proposed. We will allow the WEQ to determine 
whether this standard would be clearer if revised as Cinergy proposes.
3. Standard 002-4.2.10.2 and OASIS Data Dictionary
Comments
    66. Bonneville states that the Commission's current OASIS Standards 
and Communication Protocols and OASIS Data Dictionary and the NAESB WEQ 
version of those documents contain some definition discrepancies, most 
likely due to editing errors during the reformatting process. It 
proposes four minor technical revisions to Standard 002-4.2.10.2, 
Status Value, for the status values for COUNTEROFFER, DECLINED, 
DISPLACED and REFUSED. In addition, Bonneville suggests that a data 
element ``ANNULLED'' be added to the OASIS Data Dictionary and that it 
be defined as ``assigned by Provider or Seller when, by mutual 
agreement with the Customer, a confirmed reservation is to be voided 
(Final State).'' \47\
---------------------------------------------------------------------------

    \47\ Bonneville at 5-6.
---------------------------------------------------------------------------

Commission Conclusion
    67. Bonneville's request for the four technical revisions is moot. 
On March 25, 2005, the WEQ made the requested minor revisions to its 
January 15, 2005 standards. As to Bonneville's suggestion that a data 
element ``ANNULLED'' be added to the OASIS Data Dictionary, this 
definition is included in Standard 002-4.2.10.2, but is not currently 
included in the Commission's Data Dictionary. If Bonneville wishes to 
have this definition included in the OASIS Data Dictionary, it may 
submit a request to the WEQ to make such a change. In that way, the 
requested change will receive consideration by all industry segments 
before it is approved. If approved, the Commission will then have the 
opportunity to incorporate the change by reference in its regulations 
when the WEQ reports the next version of its standards to the 
Commission.
4. Standard 002-4.5
Comments
    68. Bonneville and the ISO/RTO Council raise concerns about 
Standard 002-4.5, Information Supported by Web page, which states:

    When a regulatory order requires informational postings on OASIS 
and there is no OASIS [Standards and Communication Protocols] 
template to support the postings or it is deemed inappropriate to 
use a template, there shall be a reference in INFO.HTM to the 
required information, including, but not limited to, references to 
the following * * *
    For the purposes of this section, any link to required 
informational postings that can be accessed from INFO.HTM would be 
considered to have met the OASIS posting requirements, provided that 
the linked information meets all other OASIS accessibility 
requirements.

    69. Bonneville contends that this standard requires the exclusive 
use of INFO.HTM. It argues that as long as postings are logically 
organized, user friendly and transparent to all users, exclusive use of 
INFO.HTM should not be mandated to provide links to the required 
informational postings.\48\
---------------------------------------------------------------------------

    \48\ Id. at 5.
---------------------------------------------------------------------------

    70. The ISO/RTO Council recommends that the Commission consider 
revising the standard to allow the information defined in Standard 002-
4.5 to be posted on either the OASIS Main/Home page (as customers are 
accustomed to that posting) or INFO.HTM--rather than prescribing that 
they all must be on INFO.HTM. The ISO/RTO Council contends that very 
few OASIS sites use an INFO.HTM page. Thus, enforcing this requirement 
would be a new practice and would add confusion to the finding of such 
information, and may create duplicate links to the same information 
that would only lead to further confusion.\49\
---------------------------------------------------------------------------

    \49\ ISO/RTO Council at 9.
---------------------------------------------------------------------------

Commission Conclusion
    71. We do not interpret Standard 002-4.5 to mandate the exclusive 
use of INFO.HTM to provide links to required informational postings. 
While this standard requires certain information to be made available 
through a link from INFO.HTM, this does not preclude the posting of the 
same information elsewhere on OASIS, such as on the main or home page, 
as the ISO/RTO Council suggests, or, as Bonneville suggests, in a 
manner that is logically organized, user friendly and transparent to 
all users. Requiring informational postings to be available through a 
link from INFO.HTM provides for standardization and helps new users 
find the required information. At the same time, permitting links from 
other areas of OASIS allows flexibility.
5. Standards of Conduct
    72. In the Standards NOPR, the Commission declined to propose 
adopting the WEQ's Standards of Conduct for Electric Transmission 
Providers (WEQ-009) because they duplicate, with some problematic 
revisions, the Commission's existing regulations codifying the 
Standards of Conduct, rather than implementing these standards.\50\ In 
addition, the Commission stated that ``it would be useful if the WEQ 
would adopt standards comparable to those NAESB adopted regarding 
standards of conduct on the gas side.'' \51\
---------------------------------------------------------------------------

    \50\ See 18 CFR 358.1-358.5.
    \51\ Standards NOPR at P 47.
---------------------------------------------------------------------------

Comments
    73. APPA supported the Commission's proposal in the Standards NOPR 
not to incorporate duplicative standards.\52\ NAESB stated that it 
would review the wholesale gas quadrant standards of conduct to prepare 
comparable standards for the wholesale electric quadrant which would 
amend the WEQ standards.\53\
---------------------------------------------------------------------------

    \52\ APPA at 2-3.
    \53\ NAESB at 1-2.
---------------------------------------------------------------------------

Commission Conclusion
    74. We will not incorporate by reference the WEQ's Standards of 
Conduct for Electric Transmission Providers (WEQ-009) since they 
duplicate the Commission's regulations. As explained above, the WEQ has 
offered to revise its standards of conduct to implement the 
Commission's standard of conduct regulations, rather than duplicate 
them. We look forward to reviewing this work product when it is 
co

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