Mandatory Reliability Standards for the Bulk-Power System, 40717-40737 [E7-14340]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 72, Number 142 (Wednesday, July 25, 2007)]
[Rules and Regulations]
[Pages 40717-40737]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14340]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM06-16-001; Order No. 693-A]


Mandatory Reliability Standards for the Bulk-Power System

Issued July 19, 2007.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule; order on rehearing.

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SUMMARY: The Commission denies rehearing and otherwise reaffirms its 
determinations in Order No. 693. 72 FR 16,416 (April 4, 2007). We 
further clarify certain portions of the Preamble to that order. Order 
No. 693 approved 83 of 107 proposed Reliability Standards, six of the 
eight proposed regional differences, and the Glossary of Terms Used in 
Reliability Standards developed by the North American Electric 
Reliability Corporation, which the Commission has certified as the 
Electric Reliability Organization (ERO) responsible for developing and 
enforcing mandatory Reliability Standards. Order No. 693 also required 
the ERO to submit significant improvements to 56 of the 83 Reliability 
Standards that are being approved as mandatory and enforceable. 
Finally, Order No. 693 provided that the remaining 24 Reliability 
Standards will remain pending at the Commission until further 
information is provided. Order No. 693 adds a new part to the 
Commission's regulations, which states that this part applies to all 
users, owners and operators of the Bulk-Power System within the United 
States (other than Alaska or Hawaii) and requires that each Reliability 
Standard identify the subset of users, owners and operators to which 
that particular Reliability Standard applies. The new regulations also 
require that each Reliability Standard that is approved by the 
Commission will be maintained on the ERO's Internet website for public 
inspection.

DATES: Effective Date: The final rule became effective on June 18, 
2007.

FOR FURTHER INFORMATION CONTACT:
Jonathan First (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8529.
Christy Walsh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6523.
Robert Snow (Technical Information), Office of Energy Markets and 
Reliability, Division of Reliability, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6716.

SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. 
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

Order on Rehearing

[[Page 40718]]



 
                                                               Paragraph
 
I. Introduction.............................................           1
    A. Summary of Order No. 693.............................           3
    B. Procedural Matters...................................           4
II. Discussion..............................................           7
    A. Applicability Issues.................................           7
        1. Bulk-Power System v. Bulk Electric System........           7
        2. NERC Registry....................................          20
        3. Use of the NERC Functional Model.................          48
    B. Mandatory Reliability Standards......................          57
        1. Prioritizing Modifications to Reliability                  57
         Standards..........................................
        2. Trial Period.....................................          61
    C. Common Issues Pertaining to Reliability Standards....          65
        1. Blackout Report Recommendation on Liability                65
         Limitations........................................
        2. Fill-in-the-Blank Standards......................          70
    D. Discussion of Individual Reliability Standards.......          82
        1. EOP-001-0........................................          82
        2. EOP-002-2........................................          86
        3. EOP-008-0........................................          90
        4. FAC-003-1........................................          95
        5. IRO-001-1........................................         100
        6. IRO-005-1 and IRO-005-2..........................         120
        7. MOD-013-1........................................         123
        8. PRC-007-0, PRC-008-0, and PRC-009-0..............         132
        9. TOP-008-1........................................         153
III. Information Collection Statement.......................         156
IV. Document Availability...................................         157
 

I. Introduction

    1. On March 16, 2007, the Commission issued a Final Rule (Order No. 
693) \1\ approving, pursuant to section 215 of the Federal Power Act 
(FPA),\2\ 83 of 107 proposed Reliability Standards, six of the eight 
proposed regional differences, and the Glossary of Terms Used in 
Reliability Standards (glossary) developed by the North American 
Electric Reliability Corporation (NERC), which the Commission has 
certified as the Electric Reliability Organization (ERO) responsible 
for developing and enforcing mandatory Reliability Standards. However, 
the Commission stated that, although it believed it is in the public 
interest to make these Reliability Standards mandatory and enforceable, 
it also found that much work remains to be done. Specifically, it 
stated that many of these Reliability Standards require significant 
improvement to address, among other things, the recommendations of the 
Blackout Report.\3\ Therefore, pursuant to section 215(d)(5), we 
required the ERO to submit significant improvements to 56 of the 83 
Reliability Standards that are being approved as mandatory and 
enforceable. The Commission stated that the remaining 24 Reliability 
Standards will remain pending at the Commission until further 
information is provided.
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    \1\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, 72 FR 16,416 (Apr. 4, 2007), FERC Stats. & Regs. ] 
31,242 (2007).
    \2\ 16 U.S.C. 824o (2000).
    \3\ U.S.-Canada Power System Outage Task Force, Final Report on 
the August 14 Blackout in the United States and Canada: Causes and 
Recommendations (April 2004) (Blackout Report). The Blackout Report 
is available on the Internet at https://www.ferc.gov/cust-protect/
moi/blackout.asp.
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    2. Order No. 693 added a new part to the Commission's regulations, 
which states that this part applies to all users, owners and operators 
of the Bulk-Power System within the United States (other than Alaska or 
Hawaii) and requires that each Reliability Standard identify the subset 
of users, owners and operators to which that particular Reliability 
Standard applies. The new regulations also require that each 
Reliability Standard that is approved by the Commission will be 
maintained on the ERO's Internet Web site for public inspection.

A. Summary of Order No. 693

    3. In Order No. 693, the Commission stated that there were four 
possible courses of action that it would take with regard to each 
proposed Reliability Standard: (1) Approve; (2) approve as mandatory 
and enforceable; and direct modification pursuant to section 215(d)(5); 
(3) request additional information; or (4) remand. As mentioned above, 
the Commission approved 83 Reliability Standards and directed NERC to 
develop modifications to 56 of the approved Reliability Standards. In 
approving the Reliability Standards, Order No. 693 stated that, for an 
initial period, the Commission would rely on the NERC definition of 
bulk electric system, rather than the statutory Bulk-Power System, and 
NERC's registration process to provide as much certainty as possible 
regarding the applicability to and the responsibility of specific 
entities to comply with the Reliability Standards in the start-up phase 
of a mandatory Reliability Standard regime.\4\ Further, while the 
Commission did not institute a formal ``trial period,'' it directed the 
ERO and Regional Entities to ``focus their resources'' on the ``most 
serious violations'' during an initial period through December 31, 
2007.\5\
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    \4\ Order No. 693 at P 75.
    \5\ Id. at P 221-22.
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B. Procedural Matters

    4. The following entities have filed timely requests for rehearing 
or for clarification of Order No. 693: American Public Power 
Association (APPA); Avista Corporation, Portland General Electric 
Company, and Puget Sound Energy, Inc. (collectively, Avista); City of 
Santa Clara, California (Santa Clara); Cogeneration Association of 
California and the Energy Producers and Users Coalition (California 
Cogeneration); ISO-New England, Inc. (ISO-New England); Midwest 
Independent Transmission System Operator, Inc. (Midwest ISO); National 
Association of Regulatory Utility Commissioners (NARUC); National Rural 
Electric Cooperative Association (NRECA); Pacific Northwest Security 
Coordinator (PNSC); Transmission Agency of Northern California (TANC); 
and Xcel Energy Services, Inc. (Xcel).
    5. PNSC's rehearing request is deficient because it fails to 
include a Statement of Issues section separate from its arguments, as 
required by Rule

[[Page 40719]]

713 of the Commission's Rules of Practice and Procedure.\6\ Rule 
713(c)(2) requires that a rehearing request must include a separate 
section entitled ``Statement of Issues'' listing each issue presented 
to the Commission in a separately enumerated paragraph that includes 
representative Commission and court precedent on which the participant 
is relying.\7\ Under Rule 713, any issue not so listed will be deemed 
waived. Accordingly, we will dismiss PNSC's rehearing request.\8\
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    \6\ 18 CFR 385.713(c)(2) (2006). See Revision of Rules of 
Practice and Procedure Regarding Issue Identification, Order No. 
663, 70 FR 55,723 (September 23, 2005), FERC Stats. and Regs. ] 
31,193 (2005). See also, Order 663-A, effective March 23, 2006, 
which amends Order No. 663 to limit its applicability to rehearing 
requests. Revision of Rules of Practice and Procedure Regarding 
Issue Identification, Order No. 663-A, 71 FR 14,640 (March 23, 
2006), FERC Stats. and Regs. ] 31,211 (2006) (codified at 18 CFR 
385.713(c)(2) (2006)).
    \7\ As explained in Order No. 663, supra, the purpose of this 
requirement is to benefit all participants in a proceeding by 
ensuring that the filer, the Commission, and all other participants 
understand the issues raised by the filer, and to enable the 
Commission to respond to these issues. Having a clearly articulated 
Statement of Issues ensures that issues are properly raised before 
the Commission and avoids the waste of time and resources involved 
in litigating appeals regarding whether the courts of appeals lack 
jurisdiction because the issues on appeal were not clearly 
identified before the Commission. See Order No. 663 at P 3-4.
    \8\ See, e.g., Duke Power Co., LLC, 116 FERC ] 61,171 (2006); 
and South Carolina Electric & Gas Co., 116 FERC ] 61,218 (2006).
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    6. In any event, PNSC's arguments on rehearing are beyond the scope 
of this proceeding. PNSC asks the Commission to clarify that PNSC is in 
compliance with IRO-001 because it has written agreements delineating 
the responsibilities and authority of the operating personnel who staff 
its reliability center. Whether any one entity is in compliance with a 
Reliability Standard is not an issue in the rulemaking.

II. Discussion

A. Applicability Issues

1. Bulk-Power System v. Bulk Electric System
    7. Section 215 of the FPA defines the term ``Bulk-Power System'' as 
follows:

    (A) facilities and control systems necessary for operating an 
interconnected electric energy transmission network (or any portion 
thereof) and (B) electric energy from generating facilities needed 
to maintain transmission system reliability. The term does not 
include facilities used in the local distribution of electric 
energy.

    8. The NERC glossary, in contrast, states that Reliability 
Standards apply to the ``bulk electric system,'' which is defined by 
its regions in terms of a voltage threshold and configuration, as 
follows:

    As defined by the Regional Reliability Organization, the 
electrical generation resources, transmission lines, 
interconnections with neighboring systems, and associated equipment, 
generally operated at voltages of 100 kV or higher. Radial 
transmission facilities serving only load with one transmission 
source are generally not included in this definition.

    9. In Order No. 693, the Commission stated that, for an initial 
period, it would rely on the NERC definition of bulk electric system 
and NERC's registration process to provide as much certainty as 
possible regarding the applicability to and the responsibility of 
specific entities to comply with the Reliability Standards in the 
start-up phase of a mandatory Reliability Standard regime.\9\ However, 
the Commission stated that it was concerned about the need to address 
the potential for gaps in coverage of facilities. The Commission 
intends to address this matter in future proceedings. As a first step 
in enabling the Commission to understand the reach of the Reliability 
Standards, we directed the ERO to provide the Commission with an 
informational filing that includes a complete set of regional 
definitions of bulk electric system and any regional documents that 
identify critical facilities to which the Reliability Standards apply 
(i.e., facilities below a 100 kV threshold that have been identified by 
the regions as critical to system reliability).
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    \9\ Order No. 693 at P 75.
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    10. However, the Commission disagreed with commenters who suggested 
that there is no intentional distinction between Bulk-Power System and 
bulk electric system. This distinction was evidenced by the fact that 
``Congress did not borrow the term of art--bulk electric system--but 
instead chose to create a new term, Bulk-Power System, with a 
definition that is distinct from the term of art used by industry.'' 
\10\ Thus, the Commission ``confirmed'' that the Bulk-Power System 
reaches farther than those facilities that are included in NERC's 
definition of the bulk electric system, although choosing to rely on 
the NERC definition for determining the immediate applicability of the 
approved Reliability Standards. The Commission indicated that it 
remained concerned about potential gaps in coverage of facilities and 
that any change in applicability would be addressed in future 
Commission proceedings.
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    \10\ Id. at P 76.
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a. Requests for Rehearing
    11. NRECA asks that the Commission clarify that it has not 
definitively decided that the term Bulk-Power System as defined in 
section 215 of the FPA encompasses more than NERC's definition of bulk 
electric system. Rather, NRECA understands that the Commission deferred 
on determining whether its jurisdiction expands beyond the bounds of 
the bulk electric system. NRECA is concerned that Order No. 693 may 
suggest that the Bulk-Power System is broader than the bulk electric 
system out of a misapprehension that NERC's definition imposes a 
rigorous 100 kV ``cutoff'' when, according to NRECA, it actually 
provides for more flexibility. Alternatively, if the Commission has 
definitively interpreted the term Bulk-Power System to encompass more 
than the bulk electric system, NRECA seeks rehearing.
    12. In support of its request for rehearing, NRECA raises three 
arguments that the Commission erred in determining that the statutory 
definition of Bulk-Power System is broader than NERC's definition of 
bulk electric system. First, it contends that such a determination 
violates a rule of law that the parts of a statute should be construed 
in accordance with the statute's overall legislative purpose.\11\ NRECA 
explains that section 215 was intended to replace the prior voluntary 
reliability standards with a mandatory scheme but, to the best of 
NRECA's knowledge, no participant in the drafting of the legislation 
expressed the view that Congress intended to expand NERC's scope.\12\ 
NRECA states that, if the issue had been presented, it would have 
prompted a legislative record. The absence of such record confirms that 
an intent to expand NERC's scope was never expressed.
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    \11\ NRECA at 7-11, citing United States v. Public Utilities 
Commission of California, 345 U.S. 295, 315 (1953).
    \12\ NRECA at 7-8.
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    13. Second, NRECA contends that an expansive definition of Bulk-
Power System is contrary to the text of section 215, which narrows the 
Commission's reach. Specifically, NRECA contends that the statutory 
definition of Bulk-Power System makes clear that the term does not 
encompass all transmission facilities but, rather, only those 
facilities and control systems ``necessary for operating an 
interconnected electric energy transmission network.'' It also points 
to the statutory definitions of Reliability Standard and Reliable

[[Page 40720]]

Operation that refer to protecting the system from instability, 
uncontrolled separation or cascading failures. NRECA infers from this 
that there is no reason to conclude that Congress included in the 
definition of Bulk-Power System any facilities other than those that 
could materially contribute to instability, uncontrolled separation or 
cascading outages.
    14. Third, NRECA posits that, if Congress borrows a term of art 
that has an established meaning, the established meaning is to 
apply.\13\ NRECA claims that the terms Bulk-Power System and bulk 
electric system have been used interchangeably for decades and cites 
examples from both industry documents and Commission orders. According 
to NRECA, Congress did not adopt NERC's exact definition of bulk 
electric system because it was insufficiently specific for legislation. 
NRECA asserts that ``Congress used more and different words than NERC 
in order to provide clarity, but the definition of Bulk-Power System 
incorporated the exact same facilities as NERC and the regions had 
always included in their working definition of bulk electric system * * 
*'' \14\
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    \13\ Id. at 11-16, citing Morissette v. United States, 342 U.S. 
246, 263 (1952).
    \14\ NRECA at 16.
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    15. NARUC seeks clarification that the Commission will ``continue 
relying on NERC's definition of Bulk-Power System'' and NERC's 
registration process beyond the initial period during which mandatory 
Reliability Standards are in effect.\15\ It states that section 215 of 
the FPA was enacted based on an industry consensus that it would apply 
to facilities and entities covered by the historical definition of 
Bulk-Power System. According to NARUC, the term applies to higher-
voltage, network facilities that integrate regional transmission 
networks to ensure the reliability of interconnected system operations. 
NARUC states that NERC's definition of Bulk-Power System is consistent 
with section 215 and that a broader interpretation is inconsistent with 
Congressional intent because such a definition could sweep in 
facilities such as load centers and local transmission facilities that 
do not have a material impact on system reliability.
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    \15\ NARUC at 3. NARUC refers repeatedly to ``NERC's definition 
of Bulk-Power System.'' It is not clear from NARUC's pleading 
whether this is simply a typographical error or it seeks to make a 
point that NERC's definition of bulk electric system is equivalent 
to the statutory term Bulk-Power System.
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    16. NARUC also seeks clarification that, if the Commission 
determines that NERC's current definition requires revision, NERC 
should revise the definition using its American National Standards 
Institute (ANSI)-accredited process. Further, NARUC expresses concern 
that the Commission has directed the ERO to submit a complete set of 
regional definitions of bulk electric system and, thus, asks the 
Commission to clarify that it will continue to defer to the ERO's and 
Regional Entities' determinations concerning which facilities and 
entities materially affect the reliability of the interconnected 
transmission network and should be included in the compliance registry.
b. Commission Determination
    17. The Commission will grant NRECA's request for clarification, 
and thus dismisses its request for rehearing. We agree with NRECA that 
NERC's definition of bulk electric system does not impose a 100 kV 
cutoff and provides some flexibility in its application.\16\ Although 
Order No. 693 stated that the Commission believes that the Bulk-Power 
System reaches farther than those facilities that are included in 
NERC's definition of the bulk electric system, the Commission has not 
definitively defined the extent of the facilities covered by the Bulk-
Power System. As we stated in Order No. 693, the Commission intends to 
address concerns regarding the scope of the term Bulk-Power System in 
future proceedings. NRECA and others will not be legally precluded from 
presenting arguments in such a proceeding that the terms Bulk-Power 
System and bulk electric system encompass the same facilities.
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    \16\ See Mandatory Reliability Standards for the Bulk Power 
System, Notice of Proposed Rulemaking, 71 FR 64,770 (Nov. 3, 2006), 
FERC Stats. & Regs., ] 32,608 at P 63 (2006).
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    18. The Commission notes NRECA's assertion that the Commission's 
determination that the Bulk-Power System reaches farther than the bulk 
electric system is contrary to the text of section 215 of the FPA. 
Because the Commission has not definitively defined the extent of the 
facilities covered by the Bulk-Power System, the Commission believes 
that this determination is best made in the context of a Commission 
proceeding determining the extent of the Bulk-Power System. We make no 
finding on the matter at this time. The Commission defers judgment on 
this matter to a later proceeding so that the Commission can develop a 
record on which to base its final determination.
    19. In response to NARUC, the Commission will continue to rely on 
NERC's definition of bulk electric system, with the appropriate 
regional differences, and NERC's registration process until the 
Commission determines in future proceedings the extent of the Bulk-
Power System. The requirement that the ERO file a complete set of 
regional differences was to enable the Commission to understand the 
current reach of the Reliability Standards. However, we do not agree 
with NARUC that NERC should be allowed to define Bulk-Power System 
using its American National Standards Institute (ANSI)-accredited 
process. The statutory term Bulk-Power System defines the jurisdiction 
of the Commission. Although the Commission has chosen to defer, for the 
time being, to the ERO as to which entities must comply with 
Reliability Standards, the fundamental matter of determining the extent 
of Commission's jurisdiction cannot and will not be delegated to the 
ERO.
2. NERC Registry
    20. Order No. 693 accepted the ERO's compliance registry process as 
an appropriate approach to identify the set of entities that are 
responsible for compliance with a particular Reliability Standard.\17\ 
Further, Order No. 693 explained that NERC has developed a Statement of 
Compliance Registry Criteria that describes how NERC will identify 
organizations that may be candidates for registration and assign them 
to the compliance registry. NERC's compliance registry process 
identifies and registers entities based on categories of functions 
within the Bulk-Power System and related Commission-approved 
Reliability Standards. For example, NERC plans to register individual 
generator units of 20 MVA or greater that are directly connected to the 
bulk electric system, generating plants with an aggregate rating of 75 
MVA or greater, any blackstart unit material to a restoration plan, or 
any generator ``regardless of size, that is material to the reliability 
of the Bulk-Power System.'' The Commission accepted the Statement of 
Compliance Registry Criteria, stating that ``[w]e believe that NERC has 
set reasonable criteria for registration* * *''.\18\
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    \17\ Order No. 693 at P 92-101.
    \18\ Id. at P 95.
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    21. Further, Order No. 693 noted that the Commission's regulations 
then exempted most qualifying facilities (QFs) from specific provisions 
of the FPA including section 215.\19\ The Commission, however, 
expressed concerned whether it is appropriate to

[[Page 40721]]

grant QFs a complete exemption from compliance with Reliability 
Standards that apply to other generator owners and operators, and noted 
that the Commission was concurrently issuing a notice of proposed 
rulemaking proposing to amend the Commission's regulation that exempts 
most QFs from section 215 of the FPA. The Commission has since issued a 
final rule eliminating the exemption of QFs from the requirements of 
section 215 of the FPA.\20\
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    \19\ 18 CFR 292.601(c) (2006).
    \20\ Applicability of Federal Power Act Section 215 to 
Qualifying Small Power Production and Cogeneration Facilities, Order 
No. 696, FERC Statutes and Regulations ] 31,248 (2007).
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c. Requests for Rehearing
    22. California Cogeneration argues that the Commission improperly 
relied on the ERO's compliance registry process. It contends that the 
Commission, rather than determining who the ``users'' of the Bulk-Power 
System are, has improperly delegated this task to the ERO and Regional 
Entities. California Cogeneration notes that the NERC registry criteria 
were submitted for information purposes only. Further, it contends that 
these criteria are being applied inconsistently among the Regional 
Entities, noting in particular that Western Electricity Coordinating 
Council (WECC) has developed supplemental criteria that may result in 
the registration of entities not captured by the ERO criteria.\21\ It 
also points to discrepancies in ERCOT's registration process.
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    \21\ California Cogeneration at 5, Referencing WECC Supplemental 
Registration Criteria and Dispute Resolution Process, available at 
https://www.wecc.biz.
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    23. California Cogeneration also argues that Reliability Standards 
that are not clear in how they are applied or are applied 
inconsistently are not just and reasonable. It contends that the 
examples of regional variation in the registration process demonstrate 
a lack of required clarity and consistency.
    24. NRECA asks the Commission to clarify that, in expanding the 
applicability of certain Reliability Standards,\22\ it has not departed 
from the compliance registry concept or sought to dictate actions by 
the ERO. Alternatively, the Commission should grant rehearing. 
According to NRECA, it appears possible, even likely, that the 
Commission was not specifying that additional entities register, but 
was merely specifying that the ERO should consider whether entities 
otherwise required to register (because they meet or exceed specified 
thresholds, or because they had been to shown to have a material impact 
on grid reliability) should also be subject to these particular 
Reliability Standards.\23\ If that is the Commission's intended 
meaning, NRECA requests that the Commission specify the requested 
clarification and resolve the matter (subject to subsequent 
consideration by the ERO). However, if the Commission intends to impose 
a broader obligation, i.e., to encompass additional entities in the 
Reliability Standards, then NRECA seeks rehearing.
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    \22\ NRECA at 20-23. Specifically, NRECA cites the Commission's 
requirement that (1) COM-001-1, or some replacement Reliability 
Standard addressing black start capability, and COM-002-2 apply to 
all distribution providers, (2) TOP-003-0 apply to all load-serving 
entities, even those below specified thresholds, based on the 
opinion of the transmission operator, balancing authority, or 
reliability coordinator, and (3) VAR-001-1 apply to all load-serving 
entities. See Order No. 693 at P 487, 492, 512, 540, 1624, 1626, 
1848, 1858 and 1990.
    \23\ NRECA at 20, citing see, e.g., Order No. 693 at P 512 
(``APPA's concern that 2,000 public power systems would have to be 
added to the compliance registry is misplaced, since, as we explain 
in our Applicability discussed above, we are approving NERC's 
registry process, including the registry criteria'').
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    25. Further, NRECA argues that the Commission should not, as it 
recognized in Order No. 672-A, prescribe either the text or the 
substance of a Reliability Standard, including which entities are 
subject to the Reliability Standards, because that responsibility is 
reserved to the ERO, subject to the Commission's review. NRECA 
maintains that the Commission lacks the authority to dictate what a 
Reliability Standard requires or who it encompasses, as the Commission 
has recognized previously in Order No. 672-A. NRECA notes that Order 
No. 693 states that the Commission ``agrees that a direction for 
modification should not be so overly prescriptive as to preclude the 
consideration of viable alternatives in the ERO's Reliability Standards 
development process * * *. Thus, in some instances, while we provide 
specific details regarding the Commission's expectations, we intend by 
doing so to provide useful guidance to assist in the Reliability 
Standards development process, not to impede it.'' \24\
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    \24\ Order No. 693 at P 185-86.
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    26. Beyond that, NRECA asserts that the Reliability Standards 
should not apply at all to entities whose scope of activities is too 
limited to have a material impact on grid reliability. In other words, 
the specific Reliability Standards should not apply to a distribution 
provider or a load-serving entity just because it is a distribution 
provider or a load-serving entity; instead, the Reliability Standards 
at issue, as well as the Reliability Standards generally, should not 
apply unless an entity has a material impact on grid reliability. 
According to NRECA, this concept is central to NERC's compliance 
registry, and the Commission has not articulated a sound basis for 
departing from it, notwithstanding the Commission's lack of authority 
to do so.
    27. With respect to COM-001-1 or some replacement standard 
addressing black start capability, and COM-002-2, for example, NRECA 
asserts that some entities are functionally irrelevant for black start 
activities. It argues that having to coordinate black start operations 
with a large number of small entities, most, if not all, of which are 
served through interconnections with larger and bigger entities in the 
hierarchy of the Functional Model, would hinder, rather than 
facilitate, black start operations. NRECA maintains that the Commission 
should defer to the ERO's technical expertise.
    28. NRECA raises similar concerns with respect to TOP-003-1. 
According to NRECA, read literally, the Commission appears to recommend 
delegating the determination of whether entities that fall below the 
threshold of NERC's definition of bulk electric system should be 
subject to the standard to ``the opinion of the transmission operator, 
balancing authority, or reliability coordinator.'' If so, NRECA asserts 
that this approach would appear to override both the compliance 
registry and the ERO, and the Commission would effectively delegate 
authority that it does not have to entities that could well face 
incentives to favor their own interests over those of load-serving 
entities that could be made subject to the Reliability Standards. The 
Commission cannot delegate authority it does not have in the first 
place, and the determination should be that of the ERO and the Regional 
Entity. While NRECA agrees that the ERO and the Regional Entities may 
and should take the views of the transmission operators, balancing 
authorities, and reliability coordinators into account, it argues that 
this is considerably different than simply abdicating the matter to 
them.
    29. NRECA has similar concerns with the treatment of VAR-001-1 with 
respect to the Commission's ``direct[ing] the ERO to address the 
reactive power requirements of load-serving entities on a comparable 
basis with purchasing-selling entities.'' While NRECA agrees that this 
may be an appropriate matter for the ERO to consider, it argues that 
the Commission should not be dictating a particular action, nor should 
the Commission be overriding the compliance registry approach that it 
elsewhere endorses in its Final Rule.

[[Page 40722]]

    30. Accordingly, NRECA requests the Commission to clarify that it 
has not overridden the compliance registry with respect to COM-001-1, 
COM-002-2, and TOP-003-0, nor dictated specific changes to those 
Reliability Standards. Alternatively, NRECA seeks rehearing. Absent the 
requested clarification, NRECA asserts that the Commission has sought 
to prescribe the substance of a Reliability Standard in excess of its 
statutory authority under section 215, contrary to its own recognition 
of the limitations on its authority in Order No. 672-A, and contrary to 
Order No. 693 itself. NRECA maintains that the proposed changes could 
undermine rather than enhance reliability for the reasons stated, and 
thus involve matters where the Commission should and is required to 
defer to the ERO's technical expertise.
    31. Xcel notes that, pursuant to NERC's registry criteria, NERC 
will generally register individual generator units of 20 MVA or greater 
that are directly connected to the bulk electric system. According to 
Xcel, under NERC's criteria, generators that are connected to 
distribution facilities are generally exempt from registration as they 
are not connected to the Bulk-Power System. Xcel seeks rehearing of the 
Commission's decision to accept this aspect of the ERO's registration 
process, contending that generating facilities that are connected at a 
distribution voltage but deliver energy to the transmission system can 
affect transmission system reliability and, thus, should be subject to 
mandatory Reliability Standards. Further, Xcel contends that the 
exclusion of facilities connected at a distribution level creates 
inappropriate incentives for entities to interconnect generating 
facilities at the distribution level rather than the transmission 
level.
    32. TANC requests clarification of the Commission's statement that:

we believe our concerns can be addressed by having the ERO, through 
its compliance registry process, ensure that each user, owner and 
operator of the Bulk-Power System is registered for each Requirement 
in the Reliability Standards that relate to transmission owners to 
assure there are no gaps in coverage of the type discussed 
here.[\25\]
---------------------------------------------------------------------------

    \25\ Id. at P 145.

    33. According to TANC, this statement seems to require all entities 
subject to the Reliability Standards to register for each requirement 
applicable to transmission owners, which it states is inconsistent with 
the Commission's goal of preventing overlap and negates the 
transmission owner classification in the NERC Functional Model. 
Therefore, TANC asks the Commission to clarify that only those entities 
that meet the description of transmission owner provided in NERC's 
compliance registry and the NERC Functional Model descriptions are 
required to register as responsible entities for the Requirements 
applicable to transmission owners.
    34. TANC asks that the Commission specify that, where an existing 
contract between two parties provides that one is the transmission 
owner, but the other has agreed to perform the TOP functions, the 
latter entity be listed in the compliance registry as the responsible 
entity for the TOP Reliability Standards. Further, TANC maintains that 
the transmission owner should not be the default entity ultimately 
responsible for compliance with the TOP Reliability Standards. 
According to TANC, only the entity accepting responsibility to perform 
the tasks delegated to it in the agreement should be accountable for 
the responsibilities assigned to it in the agreement. TANC asserts 
that, where entities have assigned responsibilities by contract, there 
is no reason to register those responsibilities to another entity.
    35. California Cogeneration claims that Order No. 693 failed to 
adequately address the unique characteristics of QFs. It states that 
reliance on the registry process, which is based on the 14 functions 
identified in the NERC functional model, does not adequately 
distinguish among different types of generators, including size and 
location, and their impact on reliability. California Cogeneration 
states that the Commission, as a remedy to these infirmities, should 
direct NERC to immediately initiate a stakeholder process to revise the 
Reliability Standards to identify in greater detail the entities that 
are responsible for compliance and revise requirements to recognize the 
operational constraints of different generators. It states that this 
process should be completed before Reliability Standards become 
enforceable. Further, California Cogeneration states that the 
stakeholder process should also develop criteria for determining 
whether an entity has a ``material impact'' on reliability.
    36. Finally, California Cogeneration states that the Commission was 
not responsive to issues raised by California Cogeneration in its 
rulemaking comments regarding individual Reliability Standards that 
apply to generator owners and operators and needed revisions if they 
are to be applied to cogenerators. It states that some of these 
Reliability Standards seem to require information regarding gross 
generation or load behind the customer's point of interconnection, 
contrary to an earlier Commission order.\26\ While the Commission 
directed the ERO to consider these concerns during its three-year Work 
Plan to review each Reliability Standard, California Cogeneration 
contends this approach does not suffice because cogenerators must 
comply with the Reliability Standards in the interim.
---------------------------------------------------------------------------

    \26\ California Cogeneration at 12, citing California 
Independent System Operator, Corp., 96 FERC ] 63,015 (2001) (Initial 
Decision); Opinion No. 464, 104 FERC ] 61,196 (2003) (affirming 
Initial Decision).
---------------------------------------------------------------------------

d. Commission Determination
    37. The Commission denies California Cogeneration's request for 
rehearing concerning the definition of users of the Bulk-Power System. 
The Commission has not improperly delegated this definition to the ERO 
and Regional Entities. While NERC proposed the registry criteria, the 
Commission reviewed the criteria and approved them as appropriate under 
section 215 of the FPA. Further, the Commission has provided a method 
by which any entity that disagrees with NERC's determination to place 
it in the compliance registry may submit a challenge in writing to NERC 
and, if still not satisfied, may lodge an appeal with the 
Commission.\27\ Therefore, the Commission has the ultimate ability to 
determine whether an entity should be on the NERC registry.
---------------------------------------------------------------------------

    \27\ See Order No. 693 at P 101; ERO Certification Order at P 
679.
---------------------------------------------------------------------------

    38. With regard to the fact that certain Regional Entities have 
created supplemental criteria to determine which entities should be on 
the registry, we agree with California Cogeneration that this is not 
appropriate.\28\ Order No. 693 accepted NERC's compliance

[[Page 40723]]

registration process ``to provide as much certainty as possible 
regarding the applicability and responsibility of specific entities 
under the approved standards.'' \29\ NERC's Statement of Compliance 
Registry does not reference supplemental compliance registries created 
by Regional Entities. While both the Commission and the ERO have made 
it clear that an entity that falls below the minimum registry criteria 
may be included on the compliance registry on a facility-by-facility 
basis, nonetheless NERC's compliance registry places the burden on the 
Regional Entity to reasonably demonstrate that the organization is a 
user, owner or operator of the Bulk-Power System.\30\ This language 
contemplates a case-by-case registration of entities outside the NERC 
criteria, provided that a reasonable demonstration of the need to 
register the entity \31\ is made by the Regional Entity.\32\
---------------------------------------------------------------------------

    \28\ We note that the example cited by California Cogeneration 
appears to assert that the NERC registry criteria incorporates a 
bright line test as to which entities should be registered:
    The application of the different sets of criteria to a 30 MW 
generator interconnected at 69 kv illustrates the inconsistency in 
treatment. Under NERC's criteria, the generator is interconnected at 
less than 100 kv, and it is not therefore a user of the bulk 
electric system. The generator would be eliminated from registration 
by the first step of NERC's process. WECC's Supplemental Criteria, 
however, state that a generator greater than 20 MW must be 
registered regardless of the voltage at which it is interconnected.
    California Cogeneration at 5. We disagree with this 
interpretation. NERC's compliance registry would also allow the ERO 
and Regional Entities to register ``[a]ny generator, regardless of 
size, that is a blackstart unit material to and designated as part 
of a transmission operator entity's restoration plan, or; * * * 
[a]ny generator, regardless of size, that is material to the 
reliability of the bulk power system.'' NERC Statement of Compliance 
Registry at 7.
    \29\ Order No. 693 at P 33.
    \30\ NERC Statement of Compliance Registry at 10, n.1.
    \31\ The entity registered would also have to be a user, owner 
or operator of NERC's definition of bulk electric system.
    \32\ The Commission notes that no Regional Entity has filed a 
supplemental registry with the Commission. The Commission makes its 
determination to reject regional registry criteria without prejudice 
to a Regional Entity creating supplemental registry criteria, 
provided that the Regional Entity affords due process to those 
entities that would be subject to them, and requests ERO and 
Commission approval of such criteria.
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    39. In response to NRECA, in directing the ERO to expand the 
applicability of certain Reliability Standards, the Commission did not 
intend to expand the applicability beyond those entities that are on 
the compliance registry. Rather, we indicated where the Commission 
believed there was a reliability concern in not applying certain 
Reliability Standards to a category of registered entities. For 
example, in COM-001-0, where the Commission directed the ERO to add 
distribution providers that are essential to the implementation of a 
black start plan to the Applicability section, this would include only 
those distribution providers that are on the compliance registry.
    40. The Commission agrees with NRECA to the extent that we do not 
wish that a direction for modification be so overly prescriptive as to 
preclude the consideration of viable alternatives in the ERO's 
Reliability Standards development process. However, as stated in Order 
No. 693, in identifying a specific matter to be addressed in a 
modification to a Reliability Standard, it is important that the 
Commission provide sufficient guidance so that the ERO has an 
understanding of the Commission's concerns and an appropriate, but not 
necessarily exclusive, outcome to address those concerns. Without such 
direction and guidance, the ERO might not know how to respond 
adequately to a Commission proposal to modify a Reliability 
Standard.\33\ Thus, in some instances, while we provided specific 
details regarding the Commission's expectations, we intended by doing 
so to provide useful guidance to assist in the Reliability Standards 
development process, not to impede it.
---------------------------------------------------------------------------

    \33\ Order No. 693 at P 185.
---------------------------------------------------------------------------

    41. With respect to the specific Reliability Standards cited by 
NRECA, the Commission first notes that NRECA does not appear to request 
rehearing on the substance of the directed modifications, but argues 
that the Commission was too prescriptive procedurally. In many 
instances, the Commission provided guidance to the ERO and stated that 
it could develop an alternative to our direction, so long as the 
alternative is as effective and efficient as the Commission's proposal. 
However, with respect to the Reliability Standards cited by NRECA, the 
Commission has identified specific concerns about the gap in 
applicability in the Reliability Standard. For example, as to COM-001-1 
and COM-002-2, the Commission was concerned about having a reliability 
gap during normal and emergency operations. Section 215(d)(5) of the 
FPA states:

    The Commission, upon its own motion or upon complaint, may order 
the Electric Reliability Organization to submit to the Commission a 
proposed reliability standard or a modification to a reliability 
standard that addresses a specific matter if the Commission 
considers such a new or modified reliability standard appropriate to 
carry out this section.

In the instances cited by NRECA, the Commission has identified a 
deficiency in the applicability of the Reliability Standard. To correct 
this deficiency, the ERO must add the specific entity to the 
Applicability section of the Reliability Standard.
    42. TOP-003-0 contains Requirements that can have a significant 
impact on both the reliability of the Bulk-Power System and on 
competition with regard to available transfer capability (ATC). The 
Commission's approval of TOP-003-0 does not override either the 
compliance registry or the ERO. The planning authority or transmission 
planner should inform its Regional Entity if it is not receiving 
cooperation in getting the information it requires. We note that 
section 39.2(d) of our regulations requires each user, owner or 
operator of the Bulk-Power System to provide the Commission, the ERO 
and the applicable Regional Entity such information as is necessary to 
implement section 215 of the FPA. If a problem arises in obtaining 
information necessary to calculate ATC, the Commission may revisit this 
matter in the future. For example, if entities are unable to obtain the 
required information under TOP-003-0, the Commission might require the 
ERO, through the Reliability Standards development process, to develop 
a provision to ensure that all jurisdictional entities that must 
provide information pursuant to TOP-003-0 because of a particular 
reliability need are added to the registry, even if only to meet the 
requirements of TOP-003-0.
    43. The Commission denies Xcel's request for rehearing. As noted by 
Xcel, NERC's registry criteria state that the ERO and Regional Entities 
will ``generally'' register generators greater than 20 MVA and will 
``generally'' exempt generators that are connected to distribution 
facilities. The use of the term ``generally'' allows the ERO and 
Regional Entities flexibility to register a generator meeting those 
descriptions if the ERO or a Regional Entity determines that the 
facility is needed for Bulk-Power System reliability. Further, Order 
No. 693 specifically provided for such an outcome.\34\ Therefore, those 
generating facilities that Xcel is concerned about, which are connected 
at a distribution voltage but deliver energy to the transmission 
system, may be required to comply with Reliability Standards depending 
on a possible case-by-case determination by the ERO or a Regional 
Entity. Xcel does not provide any support for its claim that this 
general exclusion of facilities connected at a distribution level 
creates inappropriate incentives for entities to interconnect 
generating facilities at the distribution level rather than the 
transmission level.
---------------------------------------------------------------------------

    \34\ Id. at P 101. ``Finally, the Commission agrees that, 
despite the existence of a voltage or demand threshold for a 
particular Reliability Standard, the ERO or Regional Entity should 
be permitted to include an otherwise exempt facility on a facility-
by-facility basis if it determines that the facility is needed for 
Bulk-Power System reliability.''
---------------------------------------------------------------------------

    44. In response to TANC's concern that Order No. 693 appears to 
require all entities subject to the Reliability Standards to register 
for each requirement applicable to transmission owners, we disagree. 
This statement was made only to ensure that there are no gaps or 
unnecessary redundancies with regard to the entity or entities 
responsible for compliance. The

[[Page 40724]]

Commission did not intend to imply that each user, owner and operator 
of the Bulk-Power System must comply with those Reliability Standards 
which apply to transmission owners. Rather, the Commission intended for 
the ERO to ensure that there is clarity in the registering of entities 
and that the registration process results in no gaps or unnecessary 
redundancies.
    45. Further, the Commission clarifies that it did not intend to 
change existing contracts, agreements or other understandings as to who 
is responsible for a particular function under a Reliability 
Standard.\35\ The Commission believes that allowing an organization to 
accept compliance responsibility on behalf of its members should cover 
TAPS' concerns regarding a situation in which two entities have a 
contract regarding which will perform functions under the Reliability 
Standards.\36\ NERC has filed procedures for allowing such agreements 
in Docket No. RM06-16-003. The Commission will rule on the particulars 
of those procedures in that proceeding.
---------------------------------------------------------------------------

    \35\ See id. at P 107.
    \36\ See id. at P 107-09.
---------------------------------------------------------------------------

    46. The Commission denies California Cogeneration's request for 
rehearing with respect to exemption of QFs from compliance with 
mandatory Reliability Standards. As stated in Order No. 696, for 
reliability purposes, there is no meaningful distinction between QF and 
non-QF generators that would warrant generic exemption of QFs from 
mandatory Reliability Standards.\37\ Therefore, we disagree with 
California Cogeneration that Order No. 693 failed to adequately address 
the unique characteristics of QFs.
---------------------------------------------------------------------------

    \37\ Order No. 696 at P 28.
---------------------------------------------------------------------------

    47. Whether a generation facility should be subject to Reliability 
Standards should depend on whether electric energy from the generation 
facility is needed to maintain the reliability of the Bulk-Power 
System. The registration criteria adopted by NERC and approved by the 
Commission, as well as the compliance registry process adopted by NERC 
and approved by the Commission, are designed to ensure that only those 
facilities needed to maintain the reliability of the Bulk-Power System 
are subject to the Reliability Standards. The ultimate decision with 
respect to individual generation units or plants is, and must be, made 
on a case-by-case basis. Thus, whether a particular QF or type of QF 
should be exempt from Reliability Standards is an issue that is more 
appropriately raised in the context of NERC's establishment of registry 
criteria for owners and operators of generators, and in the context of 
NERC's compliance registry process. The reliability of the Bulk-Power 
System will be better protected by addressing this issue in the NERC 
compliance registry process, which will ensure that no generator that 
is needed to maintain the reliability of the Bulk-Power System will be 
exempt from Reliability Standards, while excusing those generators that 
are not needed to maintain reliability. Therefore, the Commission 
rejects California Cogeneration's request that it direct NERC to 
immediately initiate a stakeholder process to revise the Reliability 
Standards to identify in greater detail the entities that are 
responsible for compliance and revise requirements to recognize the 
operational constraints of QF generators.
3. Use of the NERC Functional Model
    48. Order No. 693 explained that NERC has developed a ``Functional 
Model'' that defines the set of functions that must be performed to 
ensure the reliability of the Bulk-Power System. The Functional Model 
identifies 14 functions and the name of a corresponding entity 
responsible for fulfilling each function. While the Commission had 
proposed to require that NERC file future revisions to the Functional 
Model, Order No. 693 determined that such filing was not necessary.\38\ 
The Commission made this determination based on the characterization 
offered by numerous commenters that the Functional Model is an evolving 
guidance document that is not intended to convey firm rights and 
responsibilities. Further, the Commission agreed with commenters that 
the applicability section of a particular Reliability Standard should 
be the ultimate determinant of applicability of each Reliability 
Standard. While some commenters asked that all revisions to the 
Functional Model be developed through NERC's ANSI-accredited process, 
the Commission left to the discretion of the ERO the appropriate means 
of allowing stakeholder input when revising the Functional Model.
---------------------------------------------------------------------------

    \38\ Order No. 693 at P 127-29.
---------------------------------------------------------------------------

e. Requests for Rehearing
    49. TANC requests rehearing of the Commission's determination that 
future modifications of the Functional Model do not need to be 
submitted to the Commission for approval. TANC contends that the 
Functional Model is more than just a guidance document and, rather, is 
fundamental to determining the applicability of each Reliability 
Standard. It asserts that the ERO's compliance registry process that is 
used to identify users, owners and operators of the Bulk-Power System 
that must comply with Reliability Standards relies on the Functional 
Model. Thus, according to TANC, a change in the Functional Model 
affects the applicability and enforcement of each Reliability Standard.
    50. Further, TANC contends that the Reliability Standards are not 
``complete,'' a quality objective identified by NERC in the development 
of Reliability Standards, because the Reliability Standards are 
dependent on an external document. TANC is concerned that revising the 
Functional Model could result in additional entities having to comply 
with Reliability Standards without affording these entities adequate 
notice of what is expected of them. It notes that terms used in the 
Functional Model are also defined in the NERC glossary, which was 
approved by the Commission. Thus, TANC requests that the Commission 
require the ERO to submit revisions to the Functional Model for 
Commission approval, either as revisions to the Functional Model or 
revised terms in the NERC glossary, after development through the ERO's 
full Reliability Standards development process.
    51. Midwest ISO contends that the Commission erred in failing to 
require NERC to define the distinct roles of the ``planning 
coordinator'' and ``planning authority.'' According to Midwest ISO, 
while NERC used the term planning authority when it developed the 
``Version 0'' Reliability Standards, it was recognized that there was 
``[no] common understanding of who or what the Planning Authority 
was.'' \39\ Further, Midwest ISO explains that many Reliability 
Standards describe roles for both the planning authority and 
transmission planner. Midwest ISO states that, while the latest 
revision to the Functional Model substitutes the term ``planning 
coordinator'' for ``planning authority,'' this has not resolved the 
problem because the responsibilities of the planning coordinator ``are 
both more limited and wide-area in nature'' and may not be simply 
substituted for those of planning authority. Midwest ISO notes that 
certain Regional Entities are registering entities based on the 
planning authority function as previously defined, and Midwest ISO asks 
rhetorically whether the ERO can hold a company accountable to a set of 
Reliability

[[Page 40725]]

Standards applicable to an entity that it no longer recognizes as 
valid.
---------------------------------------------------------------------------

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

    52. Midwest ISO maintains that the Commission did not adequately 
address Midwest ISO's concerns when it stated in Order No. 693 that the 
ERO can address such concerns as it updates and revises the Functional 
Model. According to Midwest ISO, the Reliability Standards state that 
regions should work closely with the planning coordinators on a common 
understanding of roles and responsibilities, but such a process will be 
lengthy and perhaps futile without Commission guidance. Further, 
Midwest ISO states that, while NERC will address this issue in the long 
term, the Commission's failure to provide interim clarification or 
direct NERC to specify the role of the planning coordinator is an 
error.
f. Commission Determination
    53. The Commission denies TANC's request for rehearing. The 
Commission disagrees with TANC that the Commission-approved Reliability 
Standards are incomplete. As stated in Order No. 693, the applicability 
section of a particular Reliability Standard should be the ultimate 
determinant of applicability of each Reliability Standard.\40\ Further, 
the Commission notes that we required the ERO to update the Glossary of 
Terms Used in Reliability Standards through the Reliability Standards 
development process whenever a new or revised Reliability Standard 
includes a new defined term.\41\
---------------------------------------------------------------------------

    \40\ Order No. 693 at P 127.
    \41\ Id. at P 1893.
---------------------------------------------------------------------------

    54. The Commission disagrees with TANC that the Functional Model is 
used to identify users, owners and operators of the Bulk-Power System 
that must comply with Reliability Standards. The compliance registry 
criteria are used to determine which entities must be listed on the 
compliance registry, and therefore must comply with Reliability 
Standards. Changes in the Functional Model cannot require additional 
entities to comply with Reliability Standards. Consistent with our 
explanation in Order No. 693, if an entity is registered as a result of 
a change that emanated from a revision of the Functional Model, the 
entity would have an opportunity to seek review by the ERO and the 
Commission. Accordingly, we deny the request for rehearing and will not 
require NERC to file revisions to the Functional Model.
    55. Further, we reject Midwest ISO's contention that the Commission 
erred in failing to provide guidance in directing NERC to define the 
distinct roles of the planning authority and planning coordinator. 
First, as recognized by Midwest ISO, NERC will address this issue as 
part of its long range plan. This is consistent with the Commission's 
statement in Order No. 693 that ``given that the Functional Model is an 
evolving guidance document, the ERO can address such concerns as it 
updates and revises the Functional Model.'' \42\ Midwest ISO has 
provided insufficient support for its contention that addressing this 
matter may be lengthy and futile without Commission intervention. 
Moreover, consistent with Order No. 693, any ambiguity regarding roles 
and the responsibility of a particular entity for compliance with a 
particular Reliability Standard is a matter that should be addressed in 
the registration of a particular entity.
---------------------------------------------------------------------------

    \42\ Id. at P 129.
---------------------------------------------------------------------------

    56. Finally, we disagree with Midwest ISO's suggestion that it is 
inappropriate to register entities as planning authorities given that 
the applicability provisions of the Commission-approved Reliability 
Standards refer to the planning authority and not the planning 
coordinator. Consistent with our discussion above, revisions to the 
Functional Model do not convey rights and responsibilities but, rather, 
the modification to the applicability provision of a Reliability 
Standard or NERC glossary ultimately determines an entity's 
obligations.

B. Mandatory Reliability Standards

1. Prioritizing Modifications to Reliability Standards
    57. In Order No. 693, the Commission directed the ERO to submit a 
revised Work Plan to: (1) Reflect modification directives contained in 
Order No. 693; (2) include the timeline for completion of ATC-related 
Reliability Standards as ordered in Order No. 890; and (3) account for 
the views of its stakeholders, including those raised in this 
proceeding. The Commission required that the ERO set specific delivery 
dates, explaining that ``[a] Work Plan with specific target dates will 
provide a valuable tool and incentive to timely address the 
modifications directed in this Final Rule.'' \43\ Further, Order No. 
693 stated that:
---------------------------------------------------------------------------

    \43\ Id. at P 207.

the ERO should make every effort to meet such delivery dates. 
However, we understand that there may be certain cases in which the 
ERO is not able to meet [the] Commission's deadline. In those 
instances, the ERO must inform the Commission of its inab