Mandatory Reliability Standard for Nuclear Plant Interface Coordination, 63770-63794 [E8-25139]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 73, Number 208 (Monday, October 27, 2008)]
[Rules and Regulations]
[Pages 63770-63794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-25139]



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Part II





Department of Energy





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Federal Energy Regulatory Commission



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18 CFR Part 40



 Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination; Final Rule

Federal Register / Vol. 73, No. 208 / Monday, October 27, 2008 / 
Rules and Regulations

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-3-000; Order No. 716]


Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination

Issued October 16, 2008.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the 
Commission approves the Nuclear Plant Interface Coordination 
Reliability Standard developed by the North American Electric 
Reliability Corporation (NERC). In addition, pursuant to section 
215(d)(5) of the FPA, the Commission directs NERC to develop a 
modification to the Reliability Standard to address a specific concern. 
The Reliability Standard requires a nuclear plant generator operator 
and its suppliers of back-up power and related transmission and/or 
distribution services to coordinate concerning nuclear licensing 
requirements for safe nuclear plant operation and shutdown and system 
operating limits. The Commission also approves four related definitions 
for addition to the NERC Glossary of Terms, and directs various changes 
to proposed violation risk factors, which measure the potential impact 
of violations of the Reliability Standard on the reliability of the 
Bulk-Power System.

DATES: Effective Dates: The final rule will become effective November 
26, 2008.

FOR FURTHER INFORMATION CONTACT:
Robert Snow (Technical Information), Office of Electric Reliability, 
Division of Reliability Standards, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6716;
Michael Gandolfo (Technical Information), Office of Electric 
Reliability, Division of Reliability Standards, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-6817;
Richard M. Wartchow (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8744;
Christy Walsh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6523.

SUPPLEMENTARY INFORMATION: 

 
                 Table of Contents                      Paragraph Nos.
 
I. Background......................................  2
    A. Proposed Reliability Standard NUC-001-1.....  2
    B. Proposed NERC Glossary Definitions..........  9
    C. Notice of Proposed Rulemaking...............  10
    D. Procedural Matters..........................  12
II. Discussion.....................................  13
    A. Approval of NUC-001-1.......................  14
    B. Applicability...............................  20
        1. Notification of Parties to Interface      22
         Agreements.
        2. Transmission Entities and Agreements on   32
         NPIRs.
        3. Dispute Resolution......................  74
    C. Form of Agreements..........................  83
    D. Enforcement and Conflicts with Other          89
     Regulations.
    E. Scope of Agreements.........................  95
        1. Commission Questions....................  98
        2. Other Scope Related Issues..............  105
    F. Coordination................................  117
        1. Coordination Among Transmission Entities  119
        2. Addressing System Changes...............  128
    G. Violation Risk Factors......................  132
        1. General Violation Risk Factor Issues....  137
        2. Requirement-Specific Issues.............  151
    H. Violation Severity Levels...................  188
III. Information Collection Statement..............  193
IV. Environmental Analysis.........................  203
V. Regulatory Flexibility Act Analysis.............  204
VI. Document Availability..........................  207
Appendix A: List of Comments to Notice of Proposed
 Rulemaking.
 

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

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Commission approves the Nuclear Plant Interface Coordination 
Reliability Standard (NUC-001-1) developed by the North American 
Electric Reliability Corporation (NERC), the Commission-certified 
Electric Reliability Organization (ERO). In addition, pursuant to 
section 215(d)(5) of the FPA, the Commission directs NERC to develop a 
modification to the Reliability Standard to address a specific 
concern.\2\ The Reliability Standard requires a nuclear plant generator 
operator and its suppliers of back-up power and transmission and/or 
distribution services to coordinate concerning nuclear licensing 
requirements for safe nuclear plant operation and shutdown and system 
operating limits (SOLs).\3\

[[Page 63771]]

The Commission also approves four related definitions for addition to 
the NERC Glossary of Terms,\4\ and directs various changes to proposed 
violation risk factors, which measure the potential impact of 
violations of the Reliability Standard on the reliability of the Bulk-
Power System.\5\
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    \1\ 16 U.S.C. 824o (2006).
    \2\ 16 U.S.C. 824o(d)(5).
    \3\ NERC proposes to define nuclear plant generator operator as 
any generator operator or generator owner that is a nuclear plant 
licensee responsible for operation of a nuclear facility licensed to 
produce commercial power. See the discussion of NERC's proposed 
Glossary terms below. The Reliability Standard itself defines those 
suppliers who provide such generation, transmission and distribution 
services pursuant to agreements under NUC-001-1 as ``transmission 
entities,'' as discussed below.
    \4\ See, e.g., Mandatory Reliability Standards for the Bulk-
Power System, Order No. 693, RM06-16-000, 72 FR 16416, FERC Stats. & 
Regs. ] 31,242, at P 1893 (Apr. 4, 2007), order on reh'g, Order No. 
693-A, 120 FERC ] 61,053 (2007) (approving the NERC Glossary of 
Terms Used in Reliability Standards (as revised) (Glossary) 
originally filed April 4, 2006).
    \5\ The Commission is not proposing any new or modified text to 
its regulations. Rather, as set forth in 18 CFR Part 40, a proposed 
Reliability Standard will not become effective until approved by the 
Commission, and the ERO must post on its Web site each effective 
Reliability Standard.
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I. Background

A. Proposed Reliability Standard NUC-001-1

    2. On November 19, 2007, NERC filed its petition for Commission 
approval of the Nuclear Plant Interface Coordination Reliability 
Standard, designated NUC-001-1 (November 19, 2007 Petition).\6\ NERC 
supplemented the filing on December 11, 2007 (December 11, 2007 
Supplement) to propose four related NERC Glossary terms: ``Nuclear 
Plant Generator Operator,'' ``Nuclear Plant Off-site Power Supply (Off-
site Power),'' ``Nuclear Plant Licensing Requirements (NPLRs),'' and 
``Nuclear Plant Interface Requirements (NPIRs).'' In the November 19, 
2007 Petition, NERC stated that the proposed Reliability Standard 
addresses the coordination of interface requirements for two domains: 
(i) Bulk-Power System planning and operations and (ii) nuclear power 
plant licensing requirements for off-site power necessary to enable 
safe nuclear plant operation and shutdown.
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    \6\ NUC-001-1 is attached in Appendix A to the March 20 Notice 
of Proposed Rulemaking (NOPR) in this proceeding, and is available 
on the Commission's eLibrary document retrieval system in Docket No. 
RM08-3-000 and also on NERC's Web site, https://www.nerc.com. See 18 
CFR Part 40, Mandatory Reliability Standard for Nuclear Plant 
Interface Coordination, NOPR, Docket No. RM08-3-000, 73 FR 16,586 
(March 28, 2008), FERC Stats. and Regs. ] 32,629 (2008).
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    3. Reliability Standard NUC-001-1 applies to nuclear plant 
generator operators and ``transmission entities.'' To account for the 
variations in nuclear plant design and grid interconnection 
characteristics, the Reliability Standard defines transmission entities 
as ``all entities that are responsible for providing services related 
to Nuclear Plant Interface Requirements (NPIRs)'' and lists eleven 
types of functional entities that could provide services related to 
NPIRs.\7\
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    \7\ The list of functional entities consists of transmission 
operators, transmission owners, transmission planners, transmission 
service providers, balancing authorities, reliability coordinators, 
planning authorities, distribution providers, load-serving entities, 
generator owners and generator operators. Applicability issues are 
addressed in a separate section, below.
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    4. In the November 19, 2007 Petition, NERC explained that nuclear 
plant generator operators and transmission entities operate according 
to separate, established reliability and safety procedures. To provide 
for coordination of these separate procedures, the ERO developed NUC-
001-1 to require a nuclear plant generator operator to coordinate 
operations and planning with its transmission entities by developing 
procedures that reflect nuclear plant licensing requirements and 
SOLs,\8\ including interconnection reliability operating limits 
(IROLs), affecting nuclear plant operations.\9\ The Reliability 
Standard requires nuclear plant generator operators and transmission 
entities to develop expectations and procedures for coordinating 
operations to meet the nuclear plant licensing requirements, as well as 
SOLs and IROLs, and to develop agreements or arrangements, which may 
include mutually agreed upon procedures or protocols, reflecting those 
expectations and procedures. These agreements or arrangements are known 
as interface agreements. The resulting operations and planning 
requirements developed in the agreements to address the nuclear plant 
licensing requirements, SOLs and IROLs are called nuclear plant 
interface requirements or NPIRs.\10\ NERC stated that Requirements R3 
through R8, which state that the interface agreement parties will 
address the NPIRs in planning, operations, and facility upgrade and 
outage coordination, provide additional specificity on these 
expectations.
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    \8\ The NERC Glossary defines system operating limit or SOL as 
``the value * * * that satisfies the most limiting of the prescribed 
operating criteria for a specified system configuration to ensure 
operation within acceptable reliability criteria. * * * ''
    \9\ The NERC Glossary defines IROL as a ``system operating limit 
that, if violated, could lead to instability, uncontrolled 
separation, or Cascading Outages that adversely impact the 
reliability of the bulk electric system.''
    \10\ See NUC-001-1, Requirement R2 and the proposed NERC 
Glossary term, Nuclear Plant Interface Requirements (NPIR).
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    5. In the November 19, 2007 Petition, NERC noted that nuclear plant 
generator operators must already fulfill nuclear licensing requirements 
for off-site power.\11\ NERC stated that, while various forms of 
agreements exist to meet the nuclear power plant general design 
criterion for off-site power, NUC-001-1 places a new, mandatory and 
enforceable obligation under section 215 of the FPA on both nuclear 
plant generator operators and transmission entities. NUC-001-1 requires 
these entities to inform one another of limits and requirements on 
their systems and to enter into agreements to coordinate and operate 
their systems to address nuclear plant licensing requirements and 
related system limits.
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    \11\ The Nuclear Regulatory Commission (NRC), which regulates 
facilities that are associated with reactor safety or emergency 
response at a nuclear generation plant, has regulatory requirements 
for offsite power systems, as provided in the NRC regulations, 10 
CFR Part 50, Appendix A--General Design Criteria for Nuclear Power 
Plants, criterion 17.
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    6. The nuclear plant licensing requirements addressed in the 
Reliability Standard include requirements for off-site power to enable 
safe operation and shutdown during an electric system or plant event 
and requirements for avoiding nuclear safety issues as a result of 
changes in electric system conditions during a disturbance, transient, 
or normal conditions. NERC cited general design criterion 17 for 
nuclear power plants, which requires nuclear plant generator operators 
to obtain off-site electric power that will provide sufficient capacity 
to permit safety systems to function, assure that reactor coolant 
design limits are not exceeded, prevent core cooling, and maintain 
containment integrity and other vital functions.
    7. NERC stated that NUC-001-1, in combination with the nuclear 
license general design criteria requirements, achieves the vital public 
interest of assuring safe nuclear power generation. According to NERC, 
the Reliability Standard is beneficial to nuclear plant generator 
operators because it will assist them in meeting nuclear plant 
licensing requirements to safely produce nuclear power. It is also 
beneficial to Bulk-Power System users, due to the significant support 
that nuclear power plants provide to the Reliable Operation of the 
Bulk-Power System.
    8. NERC requested that NUC-001-1 take effect in areas subject to 
the Commission's jurisdiction on the first day of the first full 
calendar quarter falling 15 months after Commission approval.

B. Proposed NERC Glossary Definitions

    9. In the December 11, 2007 Supplement, NERC proposed to add the 
following four terms to the NERC Glossary:


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    Nuclear Plant Generator Operator: Any Generator Operator or 
Generator Owner that is a [n]uclear [p]lant [l]icensee responsible 
for operation of a nuclear facility licensed to produce commercial 
power.
    Nuclear Plant Off-site Power Supply or Off-site Power: The 
electric power supply provided from the electric system to the 
nuclear power plant distribution system as required per the nuclear 
power plant license.
    Nuclear Plant Licensing Requirements (NPLRs): Requirements 
included in the design basis of the nuclear plant and statutorily 
mandated for the operation of the plant, including nuclear power 
plant licensing requirements for: (1) Off-site power supply to 
enable safe shutdown of the plant during an electric system or plant 
event; and (2) Avoiding preventable challenges to nuclear safety as 
a result of an electric system disturbance, transient, or condition.
    Nuclear Plant Interface Requirements (NPIRs): The requirements, 
based on NPLRs and Bulk Electric System requirements, that have been 
mutually agreed to by the Nuclear Plant Generator Operator and the 
applicable Transmission Entities.

C. Notice of Proposed Rulemaking

    10. On March 20, 2008, the Commission issued a Notice of Proposed 
Rulemaking (NOPR), which proposed to approve Reliability Standard NUC-
001-1 as mandatory and enforceable. In the NOPR, the Commission also 
raised a number of concerns and asked for clarification from the ERO 
and comments from the public. The Commission proposed to approve the 
NERC definitions and proposed revisions to the violation risk factors 
for NUC-001-1.
    11. As described more fully below, the ERO and other interested 
parties provided comments in response to the NOPR. These comments are 
summarized and addressed in the discussion portion of this Final Rule.

D. Procedural Matters

    12. The NOPR required that comments be filed within 30 days after 
publication in the Federal Register, or April 28, 2008. On April 16, 
2008, the Commission granted a motion filed by EEI and NEI extending 
the comment date to May 13, 2008. Approximately 23 entities filed 
comments, including several late-filed comments. The Commission accepts 
these late filed comments. Appendix A provides a list of the 
commenters.

II. Discussion

    13. In this Final Rule, the Commission approves Reliability 
Standard, NUC-001-1, effective as proposed by the ERO. In addition, 
pursuant to section 215(d)(5) of the FPA, the Commission directs the 
ERO to develop a modification to one provision, Requirement R9.3.5, to 
clarify the impact of the Requirement on two important operating 
procedures, in response to comments received. This Final Rule largely 
accepts the explanations and clarifications provided in the ERO's 
comments and addresses the positions raised by NERC and the other 
commenters on the specific issues raised in the NOPR. As proposed in 
the NOPR, this Final Rule does not take any action on the regional 
difference, because it applies outside of the United States and is not 
applicable to any facilities within the Commission's jurisdiction.\12\ 
The Final Rule directs modifications to the violation risk factors for 
the Reliability Standard, as discussed below. Finally, the Final Rule 
approves the additional Glossary terms.
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    \12\ NERC proposes to adopt as a regional difference for Canada 
a separate definition of nuclear plant licensing requirements that 
does not reference regulatory requirements for off-site power supply 
for safe plant shutdown because Canada does not have regulatory 
standards for off-site power comparable to those established by the 
NRC.
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A. Approval of NUC-001-1

    14. NERC and other commenters generally support the NOPR proposal 
to approve Reliability Standard NUC-001-1.\13\ EEI, Ameren, Dominion, 
and Ontario IESO and Hydro One state that they support approval of the 
Reliability Standard as improving coordination between nuclear plant 
generator operators and transmission entities.
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    \13\ See, e.g., Constellation, Detroit Edison, Dominion, EEI, 
Entergy, Exelon, Ontario IESO and Hydro One, Midwest ISO, and 
Ontario Power comments.
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    15. In contrast, CenterPoint Energy asserts that NUC-001-1 is 
flawed and unnecessary, arguing that it deals with contractual matters 
that should be addressed through a tariff or standard agreement, not a 
Reliability Standard, to ensure that nuclear plant generator operators 
do not receive unreasonable competitive advantages over other 
competitors.\14\ CenterPoint Energy also states that the Commission 
should mitigate potential market power and transparency concerns 
created by the Reliability Standard in regions where an independent 
transmission operator is not the entity that performs interconnected 
operations with the nuclear plant generator operators.\15\ CenterPoint 
Energy is concerned that a requirement in a NPIR could result in a 
change in transmission operations and cause significant reliability or 
market disruptions. According to CenterPoint Energy, this could be 
mitigated by a requirement that nuclear plant generator operators 
retain documentation ``whenever a nuclear plant operator effectively 
alters transmission operating decisions of the independent operator due 
to alleged NPIR concerns.'' \16\
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    \14\ CenterPoint Energy comments at 1.
    \15\ Id. at 3.
    \16\ Id. at 4.
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    16. National Grid emphasizes that NUC-001-1 is intended to address 
technical aspects of the interface between transmission entities and 
nuclear plant generator operators as opposed to the commercial aspects. 
According to National Grid, the proposed Reliability Standard obliges 
all responsible entities to work together on creating NPIRs suitable to 
each nuclear power plant, whether the service provided to the nuclear 
power plant is subject to federal or state jurisdiction. According to 
National Grid, execution of an interface agreement and subsequent 
compliance with NPIRs should not change the jurisdictional status of 
the services provided. National Grid also requests that the Commission 
direct the ERO and its Regional Entities to ensure that nuclear plant 
generator operators look to the proper transmission entities for the 
provision of NPIR-related services and that they bear incremental costs 
of NPIR compliance.
Commission Determination
    17. Pursuant to section 215(d) of the FPA, the Commission approves 
Reliability Standard NUC-001-1 as mandatory and enforceable. The 
Commission finds that coordination of nuclear licensing requirements 
and grid operating limits through auditable interface agreements will 
ensure that an important resource is operated safely and reliably, 
while minimizing grid disturbances from separation of nuclear power 
plants from the grid, due to the loss or degradation of auxiliary power 
supply. Further, the Commission disagrees with CenterPoint Energy that 
the Reliability Standard is flawed and unnecessary. Nuclear power 
plants represent an important power resource and provide reliability 
support throughout the Bulk-Power System. Unlike other large units, 
nuclear power plants are subject to separate regulatory oversight that 
mandates stringent operating and auxiliary power requirements, which, 
if not met, require the plant to separate from the grid. We find that 
NUC-001-1 is an appropriate means to ensure that the particular 
requirements faced by nuclear power plants are met, maximizing the 
reliability support to be provided while minimizing the potential for 
grid disruption caused by separation.
    18. CenterPoint Energy provides no evidence to support its claims 
that assertions by nuclear plant generator operators concerning NPIRs 
could be

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used to affect grid or market operations. We note that the NRC oversees 
a nuclear power plant's development of and compliance with its 
licensing requirements related to facilities that are associated with 
reactor safety or emergency response through its regulatory 
proceedings. NUC-001-1 supplements NRC oversight of nuclear plant 
facilities by providing oversight of the transmission entities that 
operate facilities on the Bulk-Power System providing off-site power 
supply and delivery service to meet nuclear plant licensing 
requirements.
    19. Neither National Grid nor CenterPoint Energy has provided any 
information on how the NPIRs could result in undue negative impact on 
competition. Because all jurisdictional tariffs have requirements for 
the provision of non-discriminatory service, the Commission does not 
anticipate that transmission entities would agree to NPIRs that do not 
provide for comparable service. While comparable service includes 
appropriate cost allocations, that subject is outside of the scope of 
this proceeding.\17\ In regard to National Grid's non-cost-related 
comments, National Grid has not suggested any way in which the 
Reliability Standard could change the jurisdictional status of service 
provided to a nuclear plant generator operator, and therefore, we do 
not see a need to address this concern here.
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    \17\ See NERC November 19, 2007 Petition, Exhibit B, Record of 
Proposed Reliability Standard Development, ``Consideration of 
Comments, Draft 2 SAR on Nuclear Plant Offsite Power Reliability, 
May 23, 2005'' at 3 of 25 (agreeing that the Nuclear Reliability 
Standard does not address cost recovery issues).
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B. Applicability

    20. Reliability Standard NUC-001-1 applies to nuclear plant 
generator operators and transmission entities, such as off-site power 
suppliers and entities that provide distribution and transmission 
services that affect plant operations. NERC states that the Reliability 
Standard meets the criteria that it apply to users, owners and 
operators of the Bulk-Power System because it will apply to 
transmission entities, which are responsible for providing NPIR-related 
services. Therefore, these entities are subject to the Reliability 
Standard and may be registered pursuant to the NERC compliance registry 
process.
    21. The Commission approves the applicability provisions of NUC-
001-1 as appropriately identifying the applicable entities, while 
providing the flexibility to accommodate differing design criteria, 
grid configurations and services procured by the various nuclear power 
plants addressed. The Commission finds appropriate the ERO's use of the 
term transmission entities in NUC-001-1 to refer to the subset of 
registered entities that provide services to nuclear plant generator 
operators. Similarly, the term nuclear plant generator operators refers 
to the subset of generator owners and generator operators that are NRC 
licensees. While the Commission prefers that Reliability Standards 
apply to all entities within a functional category defined in the 
Registry Criteria, it has approved appropriate limitations incorporated 
into an applicability provision.\18\ We address the specific questions 
raised by the Commission in the NOPR, as well as responses and 
comments, on an issue-by-issue basis below.
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    \18\ See, e.g., MOD-010-0 (limiting applicability to members of 
NERC functional classes specified in the MOD-011-0, Requirement R1); 
and PRC-007-0 (limiting applicability to members of functional 
classes owning and operating an underfrequency load shedding 
program).
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1. Notification of Parties to Interface Agreements
    22. Requirement R1 of NUC-001-1 provides: ``[t]he Nuclear Plant 
Generator Operator shall provide the proposed NPIRs in writing to the 
applicable transmission entities and shall verify receipt.'' In the 
NOPR, the Commission indicates its understanding that Requirement R1 
means that if a nuclear plant generator operator fails to provide all 
appropriate NPIRs to an applicable transmission entity, the operator 
will not be in compliance with the Reliability Standard.\19\ Further, 
the Commission observed that a nuclear plant generator operator will 
know, as a result of the NRC licensing process, which applicable 
entities to contact and what services are needed to meet NRC 
requirements.
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    \19\ NOPR at P 21.
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a. Comments
    23. NERC and Entergy agree that it is unlikely that a nuclear plant 
generator operator would fail to obtain appropriate services and 
identify and contact transmission entities. They concur that a nuclear 
plant generator operator will know the applicable services it needs 
through the NRC licensing process. NERC explains that, as an NRC 
licensing requirement, the nuclear plant generator operator would have 
previously coordinated with transmission entities.
    24. Entergy describes the NRC licensing process and explains that a 
nuclear plant generator operator will know the capability of its 
offsite power supplier to supply the power required during operations 
as well as situations that could result in a loss of off-site power. 
Entergy concludes that ``it is very unlikely'' that a nuclear plant 
generator operator would fail to contact the entities necessary to 
receive the appropriate services.
    25. NEI agrees with the Commission's observation that nuclear plant 
generator operators are capable of identifying and contacting the 
appropriate transmission entities. However, NEI opposes any proposal to 
expand this notification requirement into an affirmative requirement 
that nuclear plant generator operators must ``obtain appropriate 
services'' from transmission entities. NEI requests that the Commission 
clarify that this is a notification requirement, not a requirement to 
obtain services (that, according to NEI, should not be included in the 
Reliability Standard).
    26. According to NEI, the obligations of the nuclear plant 
generator operator to provide notice to transmission entities should be 
limited to those entities known or reasonably knowable by the nuclear 
plant generator operator, since the identity of some transmission 
entities could be proprietary. NEI argues that transmission entities 
that have been notified by the nuclear plant generator operator that 
they are responsible for providing services relating to NPIRs should 
then have the obligation to provide further notice to other applicable 
transmission entities that provide services to the first transmission 
entities.
    27. ATC proposes replacing the phrase ``proposed NPIRs'' with a 
reference to nuclear plant licensing requirements including an explicit 
recognition of a transmission entity's ability to propose transmission 
system operating limits to be addressed as NPIRs in the interface 
agreement. According to ATC, this will remedy the current conundrum, 
where a nuclear power plant is obligated to ``propose NPIRs,'' while 
NPIRs are defined as having been agreed to by both parties.
b. Commission Determination
    28. The Commission accepts NERC's proposal to require nuclear plant 
generator operators to identify entities that provide services related 
to off-site power supply or delivery. With NERC's and other industry 
representatives' assurances, the Commission is satisfied that the 
appropriate transmission entities can be identified based on the 
nuclear plant generator operators' historical compliance with NRC 
licensing requirements to obtain off-site

[[Page 63774]]

power and develop solutions with grid operators to avoid service 
interruptions from foreseeable grid disturbances.
    29. The Commission does not share the concern expressed by 
commenters that Requirement R1 imposes an affirmative obligation on a 
nuclear plant generator operator to obtain appropriate services. 
Requirement R1 obligates a nuclear plant generator operator to provide 
proposed NPIRs in writing to transmission entities. The nuclear plant 
generator operator is already obligated to obtain service to meet NPIRs 
that are based on nuclear plant licensing requirements enforced by the 
NRC. We note that Requirement R2 does contain an affirmative obligation 
that the nuclear plant generator operator and transmission entities 
develop and execute an interface agreement to implement NPIRs. With 
this understanding, we find that the nuclear plant generator operators' 
role in providing notice of proposed NPIRs to all applicable 
transmission entities is appropriate. A nuclear plant generator 
operator may be found in noncompliance for failing to provide notice to 
an entity responsible for providing services relating to its off-site 
power-related licensing requirements.
    30. NERC and industry representatives clarify that the entities 
that the nuclear plant generator operator is to provide with proposed 
NPIRs are known to the nuclear plant generator operator based on the 
nuclear plant generator operator's historic need to obtain service to 
meet their license requirements. The Commission does not share NEI's 
concern that the nuclear plant generator operator may not know upstream 
utilities that provide service to the primary service providers. We 
note that Requirement R1 obligates a nuclear plant generator operator 
to contact entities that provide services to meet NPIRs, which are 
based on nuclear licensing requirements for off-site power supply and 
avoiding foreseeable grid disruptions. Any upstream service providers 
that provide services related to NPIRs must be identified by the 
nuclear plant generator operator in the NPIRs. Otherwise there is no 
obligation to identify non-primary service providers.
    31. As for ATC's concern with the use of the phrase ``proposed 
NPIRs'' as opposed to a reference to nuclear plant licensing 
requirements that will form the basis for NPIRs, the Commission finds 
the current Requirements are sufficiently clear and flexible to 
accommodate counterproposals by transmission entities to address system 
limits during interface agreement development.\20\
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    \20\ The Commission notes that ATC originally suggested the 
language ``proposed NPIRs'' as an alternative to the original draft 
language ``current'' NPIRs. NERC November 19, 2007 Petition, Exhibit 
B, ``Consideration of Comments on 1st Draft of Nuclear Plant Off-
site Power Coordination Standard,'' at 15 of 69 (Aug. 15, 2006).
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2. Transmission Entities and Agreements on NPIRs
    32. NUC-001-1 applies to nuclear plant generator operators and 
transmission entities. The Applicability section of the Reliability 
Standard (i) defines transmission entities as ``all entities that are 
responsible for providing services related to Nuclear Plant Interface 
Requirements (NPIRs),'' and (ii) lists 11 types of entities, identified 
in the NERC registry criteria based on the NERC Functional Model,\21\ 
that may serve as transmission entities.
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    \21\ NERC Statement of Compliance Registry Criteria (Revision 
3), filed with its Supplemental Information Filing, Docket No. RM06-
16-000 (Feb. 6, 2007), approved in Order No. 693 at P 92-96; NERC 
Functional Model, Version 3 (approved by NERC Board of Trustees, 
Feb. 13, 2007).
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    33. NERC explained in its November 19, 2007 Petition:

    Because the relationship of each nuclear plant generator 
operator with its provider of transmission-related services is 
unique, it will be important and necessary for the registration 
process to identify on a plant-by-plant basis the specific 
transmission entities required to identify NPIRs and develop the 
requisite agreement. Once the agreement becomes final, all 
applicable nuclear plant generator operator and transmission 
entities for each agreement will be identified by name and specific 
function. The respective Regional Entity will then be responsible 
for ensuring that each nuclear plant generator operator and 
transmission entities identified in the agreement(s) is registered 
on the NERC Compliance Registry for the applicable function(s). NERC 
will work with the Regional Entities to ensure that all nuclear 
plant generator operator and transmission entities included in the 
agreements that result from the NPIRs are listed in the Compliance 
Registry for this specific reliability standard.\22\
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    \22\ NERC November 19, 2007 Petition at 12-13.
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a. NOPR Proposals
    34. In the NOPR, the Commission proposed to accept the 
identification and registration process described by NERC in the 
November 19, 2007 Petition with the understanding that NERC will use 
its authority under the compliance registry process to register all 
users, owners, and operators of the Bulk-Power System that provide 
transmission or generating services relating to off-site power supply 
or delivery.\23\ Further, the Commission requested clarification from 
the ERO, as well as public comment, on three issues: (i) How NERC's 
plan to identify transmission entities on a ``plant-by-plant basis'' in 
the compliance registration process relates to the definition of bulk 
electric system; (ii) whether NUC-001-1 is enforceable against a 
transmission entity upon execution of an interface agreement or some 
earlier time; and (iii) how the Reliability Standard will be 
implemented for an entity that both operates a nuclear power plant and 
is responsible to provide services related to NPIRs.
---------------------------------------------------------------------------

    \23\ See id. at 12.
---------------------------------------------------------------------------

i. Identification of Entities Subject to NUC-001-1 Through the 
Compliance Registry
(1) NOPR
    35. As mentioned above, the Commission proposed in the NOPR to 
accept NERC's Applicability approach for NUC-001-1 with the 
understanding that NERC would use its authority under the compliance 
registry process to register all users, owners and operators of the 
Bulk-Power System that provide transmission or generating services 
relating to off-site power supply or delivery.\24\ Further, the NOPR 
noted that certain auxiliary power suppliers and transmission service 
providers may serve nuclear power plants through facilities that fall 
outside the definition of bulk electric system. The NOPR stated that:
---------------------------------------------------------------------------

    \24\ NOPR at P 25-26.

    The Commission understands that NERC and the Regional Entities 
will register these and other service providers that provide 
interconnection and/or auxiliary power facilities vital to nuclear 
plant operation through NERC's authority to register an owner or 
operator of an otherwise exempt facility that is needed for Bulk-
Power System reliability, on a facility-by-facility basis. Once 
registered, the transmission entity providing such services to a 
nuclear generating plant may be subject to other Reliability 
Standards applicable to the functional class within the NERC 
functional model for which the transmission entity has been 
registered, as deemed appropriate through the registration process. 
With this understanding, the Commission proposes to accept the scope 
of the definition of transmission entities as appropriate.\25\
---------------------------------------------------------------------------

    \25\ Id. P 26 (footnotes omitted).
---------------------------------------------------------------------------

(2) Comments
    36. NERC states that it concurs with the Commission's understanding 
that NERC will use its authority under the compliance registry process 
to register all users, owners and operators of the Bulk-Power System 
that provide transmission or generating services relating to off-site 
power supply or

[[Page 63775]]

delivery. NERC will register the owner of an otherwise exempt facility 
on a facility-by-facility basis. Further, NERC agrees that, once 
registered, the transmission entity may be subject to other Reliability 
Standards applicable to the functional class within the NERC Functional 
Model, as deemed appropriate through the registration process, with an 
exception for low-voltage facilities, as discussed in section 
II(B)(2)(b) below.
    37. EEI generally agrees with the Commission's conclusion that, 
once registered, a transmission entity providing services to a nuclear 
generating plant may be subject to other Reliability Standards 
applicable to the function for which the transmission entity has been 
registered. EEI also supports NERC's interpretation that identification 
as a transmission entity under NUC-001-1 Requirements should not change 
a party's obligations under other Reliability Standards.
    38. NEI suggests that entities that are not currently subject to 
NERC registration, jurisdiction, and enforcement authority should be 
able to sign an interface agreement without submitting to NERC 
jurisdiction. NEI states that such an entity may be bound to comply 
with the interface agreement, but should not automatically be subject 
to all other NERC Reliability Standards and enforcement authority. NEI 
predicts that subjecting entities to NERC jurisdiction and enforcement 
authority will dissuade parties from signing interface agreements, 
contrary to the intent of this Reliability Standard. The applicability 
of the other Reliability Standards should be determined by the 
governing statute and regulations, and the terms of the other 
Reliability Standards, and should not be incorporated through this 
Reliability Standard. According to NEI, the Regional Entity 
registration process, not the execution of an interface agreement, 
determines whether an entity is subject to NUC-001-1. NEI asks the 
Commission to clarify that entities that sign an interface agreement 
are not automatically subject to NERC jurisdiction for Reliability 
Standards beyond NUC-001-1.
    39. Southern suggests that it may not be appropriate to apply 
certain Reliability Standards requirements to nuclear plant generator 
operators, in particular those relating to ``functions of supplying 
energy and Interconnected Operations Services.'' On the other hand, 
entities registered as a generator owner or generator operator may 
fulfill the requirements set forth in NERC's definitions of these 
terms, but may not be licensed by the NRC and may not be ``responsible 
for operation of a nuclear facility.'' Southern asks the Commission to 
direct NERC to review the application of its registration requirements 
to nuclear plant generator operators.
    40. Several commenters object to the use of the term transmission 
entities. Wisconsin Electric suggests that NUC-001-1 does not follow 
the NERC Functional Model, due to use of the term transmission 
entities. TVA makes a similar objection to the term nuclear plant 
generator operator, which does not appear in the NERC functional model, 
and suggests use of the term generator operators of nuclear plants with 
the Applicability section only listing generator operator. Southern 
suggests that, under the definition of nuclear plant generator 
operator, there may be licensees that do not meet the definition of a 
generator operator or generator owner, as nuclear plant generator 
operator is defined. According to Southern, some NRC licensees may be 
responsible for operating nuclear facilities but may not meet NERC's 
definitions of a generator owner or generator operator.
    41. Constellation agrees that the nuclear plant generator operator 
must take the lead in identifying transmission entities, but urges the 
Commission to implement a dispute resolution process to assist the 
nuclear plant generator operators. Constellation is concerned that, 
under NUC-001-1, the nuclear plant generator operator will have the 
primary burden of ensuring that the parties enter into NPIR agreements; 
however, Constellation also argues that a transmission entity must be 
appropriately identified and have entered into an NPIR agreement before 
it is formally included in the NERC Compliance Registry.
(3) Commission Determination
    42. The Commission accepts NERC's approach to determining 
applicable entities. The Commission agrees with the ERO that the 
identification of transmission entities, which may fit any one of 11 
functional categories described in the NERC Functional Model, provides 
the ERO with needed breadth and flexibility in identifying and 
registering all users, owners and operators of the Bulk-Power System 
that provide services related to NPIRs.
    43. Further, the ERO makes clear that, in implementation, it plans 
to register an owner or operator of an otherwise exempt facility that 
is needed for Bulk-Power System reliability, on a facility-by-facility 
basis. Once registered, a transmission entity may be subject to other 
applicable Reliability Standards, as deemed appropriate through the 
registration process. The Commission agrees that it is appropriate that 
a registered transmission entity comply with other applicable 
Reliability Standards for the functional category for which it is 
registered. This approach will support Bulk-Power System reliability 
and better assure that a transmission entity is capable of satisfying 
responsibilities set forth in an interface agreement.
    44. NEI requests clarification that entities that sign an interface 
agreement are not automatically subject to ERO jurisdiction for 
Reliability Standards beyond NUC-001-1. As discussed above, the 
Commission agrees with the ERO that Reliability Standards beyond NUC-
001-1 should apply to a newly-registered transmission entity, for the 
functional category for which it is registered. Further, we observe 
that the ERO indicates that it will make this determination ``as deemed 
appropriate through the registration process.'' We understand this to 
mean that the ERO has reserved some flexibility in determining which 
Reliability Standards are to be applied to a newly-registered 
transmission entity, and the ERO may consider individual circumstances 
in the process. The Commission agrees with NEI that the applicability 
of particular Reliability Standards beyond NUC-001-1 should not be 
decided in this proceeding. Rather, we leave it to the ERO to make such 
determinations in the first instance in the registration process.
    45. Southern comments that it may not be appropriate to require 
nuclear plant generator operators to comply with certain Reliability 
Standards that apply to generator owners and generator operators. The 
Commission, however, is not convinced that a blanket waiver is 
warranted. Rather, similar to our explanation immediately above, the 
ERO may consider the individual circumstances of a generator owner or 
generator operator and determine whether, for example, a registered 
entity is needed for Bulk-Power System reliability and operates 
facilities that are addressed in a particular Reliability Standard.
    46. Southern has not provided any specific examples of nuclear 
plant licensees that would not meet NERC's definition of nuclear plant 
generator operator. The Commission addresses NERC's registry 
determinations in appropriate proceedings on appeal. A registry 
proceeding may address whether a generator owner or operator meets the 
NERC registry criteria or should otherwise be registered based on a 
finding that the facility is material to Bulk-Power System reliability. 
We also

[[Page 63776]]

reject the concerns raised by Wisconsin Electric and TVA that the terms 
transmission entity and nuclear plant generator operator do not appear 
in the NERC Functional Model. While the NERC Functional Model is a 
useful guidance document, ``the Applicability section of a particular 
Reliability Standard should be the ultimate determinant of 
applicability of each Reliability Standard.'' \26\ Moreover, the ERO's 
definition of transmission entity is linked to the functional 
categories set forth in the NERC Functional Model.\27\ Likewise, the 
nuclear plant generator operator can simply be viewed as a sub-category 
of the generator operator function.
---------------------------------------------------------------------------

    \26\ Order No. 693 at P 127.
    \27\ See Reliability Standard NUC-001-1, Section A.4.2.
---------------------------------------------------------------------------

b. Applicability to Small Entities and Low Voltage Facilities
i. NOPR
    47. In the NOPR, the Commission noted that some nuclear power 
plants may obtain auxiliary power through lower voltage facilities that 
are not included in a Regional Entity's definition of bulk electric 
system and that other nuclear power plants may retain alternate sources 
of auxiliary power provided through lower voltage facilities operated 
by a small utility or cooperative that is not included in a Regional 
Entity's definition of bulk electric system.\28\ The Commission sought 
clarification from NERC on how it would register such entities and how 
this relates to the definition of bulk electric system.
---------------------------------------------------------------------------

    \28\ NOPR at P 26.
---------------------------------------------------------------------------

ii. Comments
    48. NERC clarifies that ``for lower voltage facilities that provide 
such services to a Nuclear Power Plant, the registration of those 
entities and the applicability of the NERC Reliability Standards 
therein to that functional class of entities will be limited to those 
facilities identified by the Nuclear Plant Generator Operator in its 
NPIRs.'' \29\
---------------------------------------------------------------------------

    \29\ NERC comments at 8.
---------------------------------------------------------------------------

    49. Constellation anticipates that some transmission entities, in 
particular those that are not previously registered, may be reluctant 
to enter into nuclear interface agreements. Constellation is concerned 
that small generators that are currently exempt from registration may 
be unwilling to continue to provide services or enter into new 
agreements for services if provision of such services causes them to be 
registered by NERC. Constellation cites the cost burdens and risk of 
penalties as having a chilling effect on these entities' willingness to 
continue to provide their discrete services to nuclear power plants. 
Constellation suggests that the curtailment of such services could 
impair the ability of nuclear plant generator operators to meet their 
license requirements. To address these concerns, Constellation requests 
that the Commission direct NERC to evaluate these risks and to propose 
mechanisms to ensure that small entities will not be deterred from 
providing services.
    50. Entergy explains that under the NRC license requirements, a 
nuclear power plant is required to have two sources of off-site power. 
For one of Entergy's plants, one of those sources relies, at certain 
times, on reactive power support from a small hydropower facility that 
generates power at a distribution level voltage, and Entergy and the 
facility have entered into an agreement for that reactive power 
support. According to Entergy, this facility is not currently 
registered or part of the bulk electric system. Entergy expresses 
concern that if this entity becomes subject to NUC-001-1, it may cancel 
its current service agreement with Entergy because the risk of 
potential penalties and future compliance costs could be too high, thus 
jeopardizing Entergy's NRC license. Therefore, Entergy asks the 
Commission to clarify that if an entity does not currently qualify for 
inclusion on the NERC Compliance Registry, provision of NPIR-related 
services will not subject that entity to registration.
iii. Commission Determination
    51. The Commission accepts NERC's clarification that registration 
of lower voltage facilities and the applicability of NUC-001-1 will be 
limited to those facilities identified by the nuclear plant generator 
operator in its NPIRs.\30\ We would expect that any NPIRs agreed to 
between a nuclear plant generator operator and transmission entity 
would include all facilities needed to transmit offsite power and 
auxiliary power to the nuclear facility. The Commission remains 
sensitive to the need for NERC to register operators of lower-voltage 
facilities used to deliver off-site power.\31\ The NOPR stated the 
Commission's understanding that NERC would register entities operating 
facilities not currently identified in the Regional Entities' 
definition of bulk electric system that are needed for Bulk-Power 
System reliability, through NERC's authority to register an owner or 
operator of an otherwise exempt facility that is needed for Bulk-Power 
System reliability, on a facility-by-facility basis.\32\ We note that 
it is in the best interest of the nuclear plant generator operator to 
have any such facility identified in the NPIRs.
---------------------------------------------------------------------------

    \30\ This approach for lower voltage facilities is consistent 
with our determination in prior proceedings that the ERO may 
register an entity that falls below the minimum registry criteria on 
a facility-by-facility basis. See Order No. 693-A at P 38.
    \31\ See NOPR at P 22 and 26.
    \32\ Id. P 26 (citing Order No. 693-A at P 38; NERC Statement of 
Compliance Registry, Revision 3.1 at 8).
---------------------------------------------------------------------------

    52. We find that NERC's approach should mitigate the concerns of 
commenters who speculate that small entities may wish to cease 
providing services rather than become subject to other Reliability 
Standards applicable to the functional class in which they would be 
registered. In this manner, application of the Reliability Standard to 
smaller entities operating lower voltage facilities that were not 
previously registered is limited to the facilities used to provide 
services to the nuclear plant generator operator. Commenters' other 
concerns largely address smaller entities' potential reluctance to 
continue providing service--that is, so long as these entities are 
users, owners or operators of the Bulk-Power System they may be 
registered by NERC and subject to the Reliability Standard. An entity 
that has failed to execute an interface agreement will be found in 
violation of the Reliability Standard.
    53. We believe that limited registration of smaller entities, in 
combination with NERC's use of the registry process and tying 
enforceability to the receipt of a proposed NPIR (rather than execution 
of a formal agreement), should limit the majority of concerns raised by 
commenters on behalf of small entities. Entergy's concern with 
obtaining reactive power is mitigated by the fact that the Commission's 
policies recognize alternate sources for ancillary services--reactive 
power is a required ancillary service to be provided by transmission 
providers--and the Commission's policies also provide for merchant 
ancillary service sales where appropriate. However, these issues are 
best resolved in appropriate registration proceedings.
    54. The Commission notes that in addition to smaller, previously 
unregistered entities, larger currently-registered entities may also 
provide service over lower voltage facilities that may be material to 
the reliability of the Bulk-Power System. These entities' lower-voltage 
facilities highlight a potential gap in applicability, because it could 
be argued that those facilities are

[[Page 63777]]

not currently subject to the Reliability Standards since they may fall 
outside a Regional Entity's definition of the bulk electric system. 
This potential gap is illustrated where a larger entity essentially 
provides a transmission service, but the applicability of NUC-001-1 and 
other Reliability Standards is uncertain, because service is provided 
over lower voltage facilities. We direct the ERO to review the impact 
on the Bulk-Power System for registration purposes of any entity 
providing service related to NPIRs over a lower-voltage facility 
similar to other facilities used to provide service, regardless of 
whether such service is provided by a currently-registered entity or a 
previously unregistered entity.\33\
---------------------------------------------------------------------------

    \33\ The Commission notes, however, that the NUC-001-1 drafting 
team has described such cases of distribution level supply as ``the 
exception, not the rule.'' See NERC Nuclear Reliability Standard 
drafting team, Consideration of Comments on 2nd Draft of Nuclear 
Off-site Power Supply Standard, at 54 (Feb. 7, 2007), filed in 
November 19, 2007 Petition, Exhibit B, Record of Development of 
Proposed Reliability Standard.
---------------------------------------------------------------------------

c. Critical Facilities
i. NOPR
    55. In the NOPR, the Commission asked whether NERC would, in 
registering entities not otherwise registered, consider lower voltage 
facilities needed to serve NPIRs to be critical facilities.
ii. Comments
    56. NERC responded that it does not currently have an approved NERC 
Glossary definition for ``critical facility'' per Order No. 693's 
directive.\34\ Consequently NERC states it will refrain from using the 
term in its response and until such time as the definition is developed 
and approved. However, NERC notes that a nuclear power plant would be 
unable to operate without transmission services from lower voltage 
facilities supplying off-site power, and the absence of such services 
would result in the real and reactive output of the plant being 
unavailable to the system. NERC states that the determination of 
whether a plant is material to the reliability of the Bulk-Power System 
is determined at the Regional Entity level, but notes that nuclear 
power plants typically provide both real and reactive power to the 
transmission grid.
---------------------------------------------------------------------------

    \34\ Section III.d.2 of the NERC compliance registry states that 
the functions transmission owner and transmission operator shall 
include an entity ``that owns/operates a transmission element below 
100 kV associated with a facility that is included on a critical 
facilities list that is defined by the Regional Entity.''
---------------------------------------------------------------------------

    57. SCE&G states that it finds the Commission's reference in the 
NOPR to ``critical facilities'' to be troubling, since NUC-001-1 should 
not affect the characterization of a facility as critical and such 
determination should be made by NERC. According to SCE&G, the existing 
NERC definition of ``critical asset,'' combined with the methodology in 
Reliability Standard CIP-002-1 is the correct method to determine if a 
facility is ``critical'' to the bulk electric system. SCE&G also 
maintains that NUC-001-1 does not affect the characterization of a 
critical facility, which is determined instead by the NERC definition 
of critical asset and the methodology provided in CIP-002-1.
iii. Commission Determination
    58. The Commission notes that the term ``critical facility'' under 
Order No. 693 is a facility not otherwise included in a Regional 
Entity's definition of the bulk electric system but that has been 
identified by the Regional Entity as being critical to the system 
reliability.\35\ This is different from the definition of ``critical 
asset'' under CIP-002-1. The Commission accepts NERC's explanation of 
whether it would consider lower voltage facilities needed to serve 
NPIRs to be critical facilities when it registers new entities and 
notes that the definition of the term ``critical facility'' will be 
resolved in a future proceeding.
---------------------------------------------------------------------------

    \35\ Order No. 693 at P 77.
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d. Timing of NUC-001-1 Enforceability to Transmission Entities
i. NOPR
    59. In the NOPR, the Commission sought comment on its understanding 
that NUC-001-1 would become applicable to, and enforceable against, a 
transmission entity only when the transmission entity executed an 
interface agreement. In other words, the provider of NPIR-related 
service would become a transmission entity, as that term is defined by 
NUC-001-1, subject to NUC-001-1 and other Reliability Standards, upon 
execution of the interface agreement.
ii. Comments
    60. In response to the Commission's question on timing, NERC 
clarified that the interface agreement with a nuclear plant generator 
operator is not the mechanism that determines whether an entity is a 
transmission entity subject to NUC-001-1. Instead, a nuclear plant 
generator operator initiates the identification by proposing an NPIR to 
an applicable transmission entity, and, at this point, the identified 
transmission entity is placed on the Compliance Registry and becomes 
subject to the requirements of NUC-001-1, not when the agreement 
required in Requirement R2 is established.\36\
---------------------------------------------------------------------------

    \36\ NERC comments at 11.
---------------------------------------------------------------------------

    61. Several commenters support approaches similar to the NERC 
position.\37\ These commenters generally agree that NUC-001-1 applies 
to a transmission entity once it has been notified of an NPIR by the 
nuclear plant generator operator. EEI, for instance, states its 
understanding that the NUC-001-1 drafting team and NERC staff intended 
that a nuclear plant generator operator would identify the transmission 
entities for each nuclear power plant under NUC-001-1, whether or not 
they had already entered into an agreement. NEI recommends that a 
potential transmission entity should be deemed a transmission entity 
subject to the requirements of NUC-001-1 once it becomes registered as 
a transmission entity under NUC-001-1 and receives proposed NPIRs from 
the nuclear plant generator operator pursuant to Requirement R1. NEI 
states that transmission entity status should continue unless and until 
NERC determines otherwise, based on a full and fair analysis of the 
facts and evidence presented by the affected parties.\38\
---------------------------------------------------------------------------

    \37\ See EEI, Exelon, Detroit Edison, and NEI comments.
    \38\ See also Detroit Edison comments.
---------------------------------------------------------------------------

    62. EEI states that, for a newly identified entity that is not on 
the Compliance Registry, the Regional Entities should examine whether 
an entity is properly classified as a transmission entity before 
registering the entity and thus requiring it to comply with the 
Reliability Standard. Entergy concurs that the NERC registration 
process, rather than the execution of an interface agreement, 
determines whether an entity is subject to NUC-001-1.
    63. The commenters supporting the NERC clarification generally 
state that holding that NUC-001-1 is only applicable to a transmission 
entity after it executes an interface agreement would be inequitable 
because, in the event of disagreement, the nuclear plant generator 
operator could be held in violation, while the transmission owner would 
not.\39\ NEI states that the need to prompt all potential transmission 
entities to conform to NUC-001-1 is particularly important where 
potential transmission entities have no corporate affiliation with the 
nuclear plant generator operator, because such an entity may wish to 
avoid executing an

[[Page 63778]]

interface agreement to avoid exposure to NUC-001-1.
---------------------------------------------------------------------------

    \39\ See EEI, Exelon, and NEI comments; See also Constellation 
comments at 8.
---------------------------------------------------------------------------

    64. EEI notes that, in some cases, the failure to agree may be the 
result of good-faith differences between the parties such that 
sanctions should not be imposed, except as a last resort. NEI also 
suggests that no enforcement action, other than arbitration through a 
Regional Entity, should be taken in the absence of agreement, but asks 
the Commission to clarify that while the Reliability Standard may not 
be enforceable by NERC or the Commission without an agreement, the 
contractual service commitments may be enforceable by other means. 
Constellation requests clarification that only Requirement R1 is 
enforceable against the nuclear plant generator operator until the NPIR 
agreement is executed, because the other requirements involve 
implementation of an agreement, which the nuclear plant generator 
operator cannot do unilaterally.
    65. NEI emphasizes that licensing requirements should already be 
known to affected transmission entities and a