Modification of Interchange and Transmission Loading Relief Reliability Standards; and Electric Reliability Organization Interpretation of Specific Requirements of Four Reliability Standards, 12256-12265 [E9-6416]
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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations
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[FR Doc. E9–5953 Filed 3–23–09; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 40
[Docket Nos. RM08–7–000 and RM08–7–
001; Order No. 713–A]
Modification of Interchange and
Transmission Loading Relief Reliability
Standards; and Electric Reliability
Organization Interpretation of Specific
Requirements of Four Reliability
Standards
Issued March 19, 2009.
AGENCY: Federal Energy Regulatory
Commission.
ACTION: Final rule.
SUMMARY: Pursuant to section 215 of the
Federal Power Act (FPA), the Federal
Energy Regulatory Commission
(Commission) approves Reliability
Standard IRO–006–4, submitted to the
Commission for approval by the North
American Electric Reliability
Corporation (NERC). The Reliability
Standard addresses transmission
loading relief requirements, which
provide a mechanism to manage and, if
necessary, curtail interchange
transactions. In addition, pursuant to
section 215(d)(5) of the FPA, the
Commission directs NERC to develop
modifications to Reliability Standard
IRO–006–4 to address specific
Commission concerns.
DATES: Effective Date: This rule will
become effective April 23, 2009.
FOR FURTHER INFORMATION CONTACT:
Patrick Harwood (Technical
Information), Office of Electric
Reliability, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–
6125, patrick.harwood@ferc.gov.
Christopher Daignault (Legal
Information), Office of the General
Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–
8286, christopher.daignault@ferc.gov.
SUPPLEMENTARY INFORMATION:
TABLE OF CONTENTS
Paragraph
Numbers
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I. Background ............................................................................................................................................................................................
A. Procedural Background ................................................................................................................................................................
B. Reliability Standard IRO–006–4 ..................................................................................................................................................
II. Discussion ............................................................................................................................................................................................
A. Approval of Reliability Standard IRO–006–4 .............................................................................................................................
1. Transfer of Business-Related Requirements to NAESB .......................................................................................................
2. Improvements to the TLR Procedure ....................................................................................................................................
B. Requirement R1 ............................................................................................................................................................................
1. Use of TLR Procedure in Conjunction With Other Procedures To Mitigate an IROL Violation ......................................
2. Use of TLR Procedure Alone To Mitigate an IROL Violation .............................................................................................
3. Use of Demand-Side Management To Mitigate IROL Violations ........................................................................................
C. Violation Risk Factors ..................................................................................................................................................................
1. Comments ...............................................................................................................................................................................
2. Commission Determination on Violation Risk Factors .......................................................................................................
3. Commission Determination on Violation Severity Levels ..................................................................................................
III. Information Collection Statement ......................................................................................................................................................
IV. Environmental Analysis .....................................................................................................................................................................
V. Regulatory Flexibility Act ...................................................................................................................................................................
VI. Document Availability .......................................................................................................................................................................
VII. Effective Date and Congressional Notification ................................................................................................................................
1. Pursuant to section 215 of the
Federal Power Act (FPA) 1 the
Commission approves Reliability
Standard IRO–006–4, submitted to the
Commission for approval by the North
American Electric Reliability
1 16
U.S.C. 824o (2006).
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Corporation (NERC). The Reliability
Standard addresses transmission
loading relief requirements, which
provide a mechanism to manage and, if
necessary, curtail interchange
transactions. In addition, pursuant to
section 215(d)(5) of the FPA, the
Commission directs NERC to develop
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modifications to Reliability Standard
IRO–006–4 to address specific concerns
identified by the Commission.
I. Background
A. Procedural Background
2. On December 21, 2007, NERC, the
Commission-certified electric reliability
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organization (ERO), submitted for
Commission approval modifications to
Reliability Standard IRO–006–4
(Reliability Coordination—Transmission
Loading Relief), known as the
transmission loading relief or ‘‘TLR’’
procedure.2
3. On April 21, 2008, as
supplemented on May 16, 2008, the
Commission issued a Notice of
Proposed Rulemaking (NOPR) that
proposed to approve three NERC filings,
including Reliability Standard IRO–
006–4.3 In response, nine interested
persons filed comments, six of which
address the TLR procedure at issue
here.4 (The Commission consolidated
three ERO submissions in the RM08–7–
000 rulemaking proceeding. This
Supplemental Final Rule only addresses
the ERO’s December 21, 2007 filing
pertaining to the TLR Reliability
Standard. The Commission addressed
the other two ERO filings in Order No.
713, i.e., the Final Rule in this
proceeding.)
4. On July 21, 2008, the Commission
issued a Final Rule in this proceeding,
which approved five Reliability
Standards and approved NERC’s
interpretation of other Reliability
Standards.5 The Commission, however,
did not make a determination in the
Final Rule regarding Reliability
Standard IRO–006–4 and, instead,
directed NERC to submit a filing
explaining one aspect of the TLR
procedure.
5. On September 11, 2008, NERC
submitted a filing as directed in the
Final Rule. Notice of NERC’s September
11, 2008 filing was published in the
Federal Register, 73 FR 75,429. Three
interested persons submitted
comments.6
2 Reliability Standard IRO–006–4 is not codified
in the Commission’s regulations and is not attached
to this Supplemental Final Rule. It is, however,
available on the Commission’s eLibrary document
retrieval system in Docket No. RM08–7–000 and
also is available on the ERO’s Web site, https://
www.nerc.com.
3 Modification of Interchange and Transmission
Loading Relief Reliability Standards; and Electric
Reliability Organization Interpretation of Specific
Requirements of Four Reliability Standards, Notice
of Proposed Rulemaking, 73 FR 22856 (Apr. 28,
2008), FERC Stats. & Regs. ¶ 32,632, at P 48 (2008)
(NOPR), Supplemental Notice of Proposed
Rulemaking, 73 FR 30326 (May 27, 2008), FERC
Stats. & Regs. ¶ 32,635 (2008) (Supplemental
NOPR).
4 Appendix A identifies the NOPR commenters.
5 Modification of Interchange and Transmission
Loading Relief Reliability Standards; and Electric
Reliability Organization Interpretation of Specific
Requirements of Four Reliability Standards, Order
No. 713, 73 FR 43613 (July 28, 2008), 124 FERC
¶ 61,071 (2008) (Order No. 713 or Final Rule).
6 Appendix B identifies the commenters on
NERC’s September 11, 2008 filing. In addition,
NERC filed reply comments.
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B. Reliability Standard IRO–006–4
6. Reliability Standard IRO–006–4
applies to balancing authorities,
reliability coordinators, and
transmission operators. Reliability
Standard IRO–006–4 modifies
Reliability Standard IRO–006–3, which
the Commission approved in Order No.
693.7 In its December 2007 filing, NERC
explained that it modified the TLR
procedure to ‘‘extract’’ commercial
requirements and business practices.8
Further, the modified Reliability
Standard includes changes directed by
the Commission in Order No. 693
related to the appropriateness of using
the TLR procedure to mitigate a
violation of an interconnection
reliability operating limit (IROL).9
7. Reliability Standard IRO–006–4
contains five requirements. Requirement
R1 obligates a reliability coordinator
experiencing a potential or actual
system operating limit (SOL) or IROL
violation within its reliability
coordinator area to select one or more
procedures to mitigate potential or
actual transmission overloads. The
requirement also identifies the regional
TLR procedures in WECC and ERCOT.
Requirement R1 includes a warning that
the TLR procedure alone is an
inappropriate and ineffective tool to
mitigate an actual IROL violation and
provides alternatives.
8. Requirement R2 mandates that the
reliability coordinator only use local
TLR or congestion management
procedures to which the transmission
operator experiencing the potential or
actual SOL or IROL is a party.
9. Requirement R3 establishes that a
reliability coordinator with a TLR
obligation from an interconnection-wide
procedure follow the curtailments as
directed by the interconnection-wide
procedure. It also requires that a
reliability coordinator desiring to use a
local procedure as a substitute for
curtailments as directed by the
interconnection-wide procedure must
obtain prior approval from the ERO.
7 Mandatory Reliability Standards for the BulkPower System, Order No. 693, FERC Stats. & Regs.
¶ 31,242, order on reh’g, Order No. 693–A, 120
FERC ¶ 61,053 (2007).
8 The commercial requirements were transferred
to a North American Energy Standards Board
(NAESB) business practices document. The
Commission approved the NAESB TLR standard,
WEQ–008, to coincide with the effective date of
Reliability Standard IRO–006–4. See Standards for
Business Practices and Communication Protocols
for Public Utilities, Order No. 676–C, 73 FR 43848
(July 29, 2008), FERC Stats. & Regs. ¶ 31,274, at P
7 n.11, P 9, P 80 (2008); see also Order No. 713,
124 FERC ¶ 61,071 at P 8.
9 An IROL is a system operating limit that, if
violated, could lead to instability, uncontrolled
separation, or cascading outages that adversely
impact the reliability of the Bulk-Power System.
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10. Requirement R4 mandates that
each reliability coordinator comply with
interconnection-wide procedures, once
they are implemented, to curtail
transactions that cross interconnection
boundaries. Requirement R5 directs
balancing authorities and reliability
coordinators to comply with applicable
interchange-related Reliability
Standards during the implementation of
TLR procedures.
II. Discussion
A. Approval of Reliability Standard
IRO–006–4
11. In the NOPR, the Commission
proposed to approve IRO–006–4 as just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest.10
12. NERC and IESO support approval
of the Reliability Standard. Lafayette
and LEPA state that they support the
Commission’s effort to reduce the use of
TLRs; they support adoption of the
Reliability Standards as proposed by the
Commission.
13. Pursuant to section 215(d) of the
FPA, the Commission approves
Reliability Standard IRO–006–4 as
mandatory and enforceable. The ERO’s
proposal implements the Commission’s
directives in Order No. 693 to include
a warning that the TLR procedure is an
inappropriate and ineffective tool to
mitigate actual IROL violations and
identify available alternatives to
mitigate an IROL violation.11 Further, as
discussed below, the Commission
believes that the separation of business
practices from the Reliability Standards
will not compromise Bulk-Power
System reliability. Accordingly, the
Commission approves IRO–006–4 as
just, reasonable, not unduly
discriminatory or preferential, and in
the public interest, as discussed below.
14. As a separate matter, pursuant to
section 215(d)(5) of the FPA, the
Commission directs the ERO to develop,
pursuant to its Reliability Standards
development procedure, modifications
to IRO–006–4 to address the
Commission’s specific concerns, as
discussed below. Further, the
Commission approves the proposed
violation risk factors and violation
severity levels and directs the ERO to
submit a filing within 60 days of the
effective date of this Supplemental Final
Rule revising specified violation risk
factors and violation severity levels.
10 NOPR,
11 Order
FERC Stats. & Regs. ¶ 32,632 at P 47.
No. 693, FERC Stats. & Regs. ¶ 31,242 at
P 577.
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1. Transfer of Business-Related
Requirements to NAESB
15. The Commission, in the NOPR,
sought comments on whether the
removal and transfer to NAESB of the
business-related issues formerly
contained in Reliability Standard IRO–
006–3 could compromise Bulk-Power
System reliability.12
a. Comments
16. NERC states that it has
coordinated with NAESB and believes
there is no compromise in reliability as
a result of the removal and transfer to
NAESB of the business-related issues
formerly contained in the earlier
standard, IRO–006–3. NERC notes that
there are minor differences in
terminology and language between the
NERC and NAESB documents. It states
that, although these differences may be
confusing to industry, they do not affect
the ability to successfully implement
the standards as written. Further, NERC
indicates that it is working with NAESB
to develop more in-depth coordination
procedures to ensure that language is
consistent.
b. Commission Determination
17. Based on the ERO’s explanation,
we are persuaded that the separation of
business practices from the Reliability
Standards will not compromise BulkPower System reliability. However, we
are concerned with respect to the ERO’s
acknowledgement that there are
differences in terminology and language
used between the ERO Reliability
Standard and the NAESB standard that
pertain to TLR procedures. The ERO
indicates that it is currently working
with NAESB to develop more in-depth
coordination procedures to ensure that
language is consistent. Thus, we expect
that the ERO, working with NAESB, will
resolve the inconsistencies in
terminology between the Reliability
Standard and NAESB standard
regarding TLR procedures as their
agendas permit; we do not find a need
to direct changes at this time.
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2. Improvements to the TLR Procedure
a. Comments
18. Several commenters raise
concerns regarding needed
improvements to the TLR procedure.
Lafayette and LEPA comment that they
have often ‘‘suffered’’ from the
curtailment of firm transmission service
pursuant to the TLR procedure and
support efforts to reduce its use. NRG
comments that the excessive use of
TLRs is reducing system reliability in
12 NOPR,
FERC Stats. & Regs. ¶ 32,632 at P 49.
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some non-organized markets and that
the Commission should require NERC to
modify its TLR rules to limit the
excessive use of TLRs. NRG states that
the Interchange Distribution Calculator
(IDC) is critical to the TLR process,13
since reliability coordinators rely on the
curtailments specified by the IDC. NRG
identifies two significant problems with
the IDC that IRO–006–4 does not
address: (1) The generation and load
data relied on by the IDC is static, with
no requirement that it be regularly
updated or accurately reflect real-time
conditions; and (2) the IDC methodology
does not curtail certain schedules or
determine native network load
obligations accurately in some cases,
leading to a discriminatory assignment
of reliability obligations. NRG urges the
Commission to direct NERC to modify
the IDC to base its curtailment decisions
on accurate native load information and
to base them consistently on local load
and generation amounts.
19. Further, NRG states that there is
a gap in the proposed TLR procedures
that allows certain non-firm transactions
to escape curtailment prior to the
issuance of a Level 5 TLR (i.e.,
curtailment of firm transactions and
firm native load). NRG reiterates its
concerns in its comments on NERC’s
September 11, 2008 filing in this
proceeding.
20. ISO/RTO Council suggests that the
Commission clarify that, although TLR
should not be ruled out as a congestion
management tool, NERC should address
the use of more sophisticated tools to
respond to the impacts that loop flow
and the lack of transparency in nonRTO regions can have on congestion
management at the ‘‘seams.’’
b. Commission Determination
21. The above comments on suggested
improvements to the TLR procedure are
beyond the scope of this proceeding,
which pertains to the separation of
business practices from the ERO’s TLR
procedure and implementation of the
Commission’s directives set forth in
Order No. 693.14 We note, however, that
the ERO indicated in its December 21,
2007 filing that it has a three-phase plan
to improve the TLR procedures, and the
third phase will consist of ‘‘a complete
13 The IDC is a mechanism used by the reliability
coordinators in the Eastern Interconnection to
calculate the distribution of interchange
transactions over specific flowgates. It includes a
database of all interchange transactions and a
matrix of the distribution factors for the Eastern
Interconnection.
14 NERC’s comments in reply to NRG, as well as
Constellation’s and, in their joint supplemental
pleading, Lafayette and LEPA’s comments relating
to the TLR procedure are likewise beyond the scope
of this proceeding.
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redrafting to incorporate enhancement
and changes beyond the separation of
reliability and business practice
issues.’’ 15 Therefore, the phase three
proceeding would provide a proper
forum for commenters to raise their
concerns. The Commission believes that
NRG and other commenters raise valid
issues and urges the commenters to
raise—and expects the ERO to
consider—these matters in an
appropriate proceeding. We also note
that NERC states it is currently updating
the IDC to more accurately determine
the impacts of native load and network
service.16
B. Requirement R1
22. Requirement R1 of IRO–006–4
provides, in part:
R1. A Reliability Coordinator experiencing
a potential or actual SOL or IROL violation
within its Reliability Coordinator Area shall,
with its authority and at its discretion, select
one or more procedures to provide
transmission loading relief. These procedures
can be a ‘‘local’’ (regional, interregional, or
sub-regional) transmission loading relief
procedure or one of the following
Interconnection-wide procedures:
R1.1 The Interconnection-wide
Transmission Loading Relief (TLR) procedure
for use in the Eastern Interconnection is
provided in Attachment 1–IRO–006–4. The
TLR procedure alone is an inappropriate and
ineffective tool to mitigate an IROL violation
due to the time required to implement the
procedure. Other acceptable and more
effective procedures to mitigate actual IROL
violations include: Reconfiguration,
redispatch, or load shedding.
Below, we address three concerns
regarding Requirement R1: (1) Use of the
TLR procedure in conjunction with
other procedures to mitigate an IROL
violation; (2) use of the TLR procedure
to mitigate an actual IROL violation is
a violation of the Reliability Standard;
and (3) use of demand-side management
as an effective procedure to mitigate
IROL violations.
1. Use of TLR Procedure in Conjunction
With Other Procedures To Mitigate an
IROL Violation
a. Final Rule Discussion
23. In the Final Rule, the Commission
did not approve or remand IRO–006–4
but rather directed the ERO to submit a
filing addressing the Commission’s
concerns regarding Requirements R1
and R1.1 of the Reliability Standard.17
Specifically, the Final Rule explained
15 NERC December 21, 2007 Filing at 7. Moreover,
pursuant to the ERO’s Rules of Procedure, a
commenter can submit a Standard Authorization
Request to the ERO to propose revisions to a
Reliability Standard.
16 See NERC September 11, 2008 Response at 10.
17 Order No. 713, 124 FERC ¶ 61,071 at P 46–50.
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that, consistent with the Final Blackout
Report,18 Order No. 693 directed NERC
to develop a modification to the TLR
procedure that the Commission
accepted in IRO–006–3 that ‘‘(1)
includes a clear warning that the TLR
procedure is an inappropriate and
ineffective tool to mitigate actual IROL
violations and (2) identifies in a
Requirement the available alternatives
to mitigate an IROL violation other than
use of the TLR procedure.’’19
24. In its December 2007 filing, NERC
stated that it modified the Reliability
Standard in response to the Order No.
693 directive. In particular, the ERO
modified Requirement R1.1 of IRO–006–
4 to provide that ‘‘[t]he TLR procedure
[for the Eastern Interconnection] alone
is an inappropriate and ineffective tool
to mitigate an IROL violation due to the
time required to implement the
procedure.’’ (Emphasis added.)
25. In Order No. 713, the Commission
queried whether the language of
Requirements R1 and R1.1 are adequate
to satisfy the concern of the Final
Blackout Report and Order No. 693 that
the TLR procedure not be used in
response to an actual IROL violation.
The Commission explained:
An entity is not prevented from using the
TLR procedure to avoid a potential IROL
violation before a violation occurs. If, while
a TLR procedure is in progress, an IROL
violation occurs, it is not necessary for the
entity to terminate the TLR procedure.
However, the Commission believes that it is
inappropriate and ineffective to rely on the
TLR procedure, even in conjunction with
another tool, to address an actual IROL
violation.[20]
Accordingly, the Commission directed
the ERO to explain Requirements R1
and R1.1 of IRO–006–4 in light of this
concern.
b. NERC Responsive Filing
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26. NERC responds that the most
immediate reliability goal is the
mitigation of the IROL violation. NERC
states that there are four acceptable
options to respond to an IROL violation:
inter-area redispatch, intra-area
redispatch, reconfiguration of the
transmission system, and voluntary or
involuntary reductions in load.
18 See U.S.-Canada Power System Outage Task
Force, Final Report on the August 14, 2003
Blackout in the United States and Canada: Causes
and Recommendations, at 163 (April 2004) (Final
Blackout Report), available at https://www.ferc.gov/
industries/electric/indus-act/blackout.asp.
Recommendation 31 of the report provides that
NERC should ‘‘[c]larify that the [TLR] process
should not be used in situations involving an actual
violation of an Operation Security Limit.’’
19 See Order No. 693, FERC Stats. & Regs.
¶ 31,242 at P 577, 964.
20 Order No. 713, 124 FERC ¶ 61,071 at P 49.
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According to NERC, Requirement R1.1
of IRO–006–4 identifies these options as
‘‘reconfiguration, redispatch, or load
shedding.’’
27. Further, NERC believes that taking
concurrent action, i.e., using TLR in
conjunction with one of the above
operation actions, ‘‘can result in
positive outcomes.’’ 21 NERC agrees
with the Commission that the use of
TLR prior to an actual IROL violation is
an acceptable practice. NERC also agrees
that a TLR should not be terminated
following the occurrence of an IROL
violation if the TLR procedure was
already in progress. However, NERC
points out that it is impossible to
decouple the TLR actions of the
previous hour from those of the current
hour. According to NERC, the
progressive nature of TLR requires
constant management to ensure that
reliability and open access are
maintained. NERC maintains that the
Commission should endorse a situation
where, on a continuing basis, a TLR can
be reissued for a constrained facility in
order to assist in providing relief, in
addition to the more immediate operator
actions taken to alleviate the actual
overload. NERC disagrees that all
interchange transactions should be
frozen at current levels while any new
transactions are held, because this could
result in aggravation of the IROL
violation from an increase in native load
and/or parallel flows. For similar
reasons, NERC also believes it is
inappropriate to let the curtailments
issued for the current hour expire and
not reissue the TLR, because this
practice also could aggravate the IROL
violation, as the single-hour established
curtailments would expire and
transactions would be reloaded.
28. NERC avers that the intent of the
Commission’s directive is that, should
an entity experience an actual IROL
violation, that entity should not invoke
the TLR process with the belief that the
IROL violation will be mitigated by the
TLR within an acceptable timeframe.
NERC contends, however, that any
standard that would require a reliability
coordinator to explicitly not use TLR as
one of the tools it has in responding to
an actual IROL violation could
compromise reliability, open access, or
both. NERC states that it is appropriate
for an entity to use the TLR process in
response to an actual IROL, provided
such use is a complementary action to
other operator actions employed to
mitigate the IROL violation more
expeditiously and, as such, invoking
TLR is not the only action taken.
21 NERC
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29. NERC provides examples of use of
TLR in conjunction with other
acceptable options to provide a more
rapid and effective return from
emergency conditions. For example,
NERC states that if an entity
redispatches generation and invokes a
TLR at the same time in response to an
actual IROL violation, that entity may
utilize the generation to respond
immediately to mitigate the violation
and bring the flow below the IROL, then
reduce the generation once the TLR is
able to effectively and more equitably
address the issue.
c. Comments on NERC Responsive
Filing
30. Southern agrees with NERC’s
explanation regarding the ways in
which a reliability coordinator may use
the TLR procedure. Southern believes
that the TLR procedure, when used in
conjunction with reconfiguration,
redispatch, or load shedding, is an
indispensable means for providing relief
for constrained facilities. Southern
comments that any revision to
Reliability Standard IRO–006–4 should
be developed through the Reliability
Standards development process.
31. ISO/RTO Council comments that
it generally agrees with the sequencing
of TLR procedures as explained by
NERC. While ISO/RTO Council
supports limiting the wide-scale use of
TLR as a congestion management tool,
it believes that the Commission’s
interpretation may draw too fine a line
in ‘‘hard wiring’’ a particular sequence
of the use of TLRs. It agrees with NERC
that ‘‘it is impossible to decouple the
actions of the previous hour from those
of the current hour,’’ and urges the
Commission to avoid placing artificial
barriers in the sequencing of the use of
the TLR procedure.
d. Commission Determination
32. The Commission is satisfied with
the ERO’s response. We agree with the
ERO that acceptable immediate actions
to mitigate an IROL violation may
include one or more of the following:
inter-area redispatch, intra-area
redispatch of generation,
reconfiguration of the transmission
system, and voluntary or involuntary
load reductions. When an IROL
violation occurs, the reliability
coordinator should use the above tools
appropriate to the circumstance and
duration of the actual IROL violation for
mitigation.
33. We understand from its
explanation that the ERO agrees that use
of the TLR procedure is not one of the
acceptable immediate actions to
mitigate an IROL violation. Rather, use
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of the TLR procedure is complementary
to, and may be used in conjunction
with, the identified tools to mitigate an
IROL violation, provided that the action
to implement the TLR procedure does
not interfere with or delay an entity
taking the immediate action required to
mitigate the IROL violation.22 The
Commission understands this is the
intent of the language in Requirement
R1.1 that ‘‘[t]he TLR procedure alone is
an inappropriate and ineffective tool to
mitigate an IROL violation due to the
time required to implement the
procedure.’’
34. The Commission reiterates that
the use of a TLR is not required to be
terminated following the occurrence of
an IROL violation if the TLR procedure
was already in progress prior to
exceeding the IROL. Thus, if an IROL is
exceeded after a TLR procedure is in
progress, the reliability coordinator does
not need to revoke the TLR. Moreover,
in the event that a potential IROL
violation progresses to an actual IROL
violation near the top of the hour and
a TLR is already in progress, it is
acceptable for the reliability coordinator
to reissue the TLR to prevent reloading
or exacerbating interchange schedules,
while more immediate actions are taken
to relieve the IROL violation.
35. During an actual IROL violation,
the primary concern of the reliability
coordinator should be to mitigate the
violation immediately. Because the TLR
procedure may take an extended time to
fully implement, it is not acceptable for
a reliability coordinator to invoke the
TLR process with the belief that the
IROL violation will be mitigated by the
TLR. Therefore, during an actual IROL
violation, a reliability coordinator
should initiate more immediate actions
to relieve the IROL violation before
initiating a TLR and at no point should
implementing a TLR divert operator
resources or delay implementation of
more immediate IROL mitigation
actions. In accord with this
understanding, we find Requirement
R1.1 consistent with the Final Blackout
Report and Order No. 693.
36. As discussed above, based on the
ERO’s response we believe that our
understanding of Requirement R1.1
comports with that of the ERO. While
IRO–006–4, Requirement R1.1, should
be implemented and enforced with the
above understanding, we believe that
22 The ERO states that ‘‘it is appropriate for an
entity to use the TLR process in response to an
actual IROL, provided that it is a complementary
action to other operator actions employed to
mitigate the IROL violation more expeditiously and,
as such, invoking TLR is not the only action taken.’’
NERC September 11, 2008 Response at 5 (emphasis
added).
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the term ‘‘alone’’ in the provision could
be improved to more precisely convey
that it is a violation of Requirement R1.1
to rely on the TLR procedure when an
entity is in the process of mitigating an
IROL violation and the entity has not
taken more immediate and effective
means to achieve relief. Accordingly,
pursuant to section 215(d)(5) of the
FPA, the Commission directs the ERO to
develop a modification of Requirement
R1.1 with respect to the term ‘‘alone,’’
consistent with this discussion.
violation is a violation of the
Requirement R1.1 of the Reliability
Standard, as discussed above. While
ISO/RTO Council raises procedural
concerns regarding the Commission’s
interpretation, neither ISO/RTO Council
nor any other commenter expresses
concern regarding the substance of the
Commission’s interpretation. Further,
the Commission previously has
determined—or interpreted—when a
violation of a Reliability Standard
would occur.24
2. Use of TLR Procedure Alone To
Mitigate an IROL Violation
37. In the NOPR, the Commission
proposed to approve the Reliability
Standard based on the interpretation
that using a TLR procedure alone to
mitigate an actual IROL violation is a
violation of the Reliability Standard.23
3. Use of Demand-Side Management To
Mitigate IROL Violations
41. In a joint concurrence to the
NOPR, then-Commissioner Wellinghoff
and Commissioner Kelly noted that
demand-side management is not
explicitly included in Requirement R1.1
of IRO–006–4 among the acceptable
tools to mitigate an IROL violation. The
concurrence noted that nothing in the
Reliability Standard precludes the use
of demand-side management that can
quickly respond to emergencies and
discussed available demand-side
management technologies currently
used that may be deployed as readily, if
not faster, than involuntary load
shedding. The joint concurrence
expressed a preference to expressly
include demand-side management
among the list of tools to mitigate IROL
violations, set forth in Requirement
R1.1.
a. Comments
38. ISO/RTO Council objects to the
Commission’s proposal to approve the
proposed Reliability Standard IRO–006–
4 based on the interpretation that using
a TLR alone to mitigate an IROL
violation is a violation of the Reliability
Standard. ISO/RTO Council expresses
concern that the ERO has procedures for
interpreting Reliability Standards and
those procedures may be eroded
through after-the-fact Commission
interpretation without the opportunity
for NERC stakeholder review. ISO/RTO
Council urges greater deference to
following the Commission-approved
NERC process for the interpretation of
Reliability Standards. Should that
process prove too time-consuming, ISO/
RTO Council suggests that the
Commission revisit the process itself
rather than undertaking de facto
amendments to it by interpreting the
Reliability Standard in ways not
addressed through the NERC
stakeholder process.
b. Commission Determination
39. This issue raised in the NOPR is
somewhat overtaken by the further
Commission inquiry in the Final Rule
regarding the appropriate tools for
mitigating an IROL violation and our
discussion immediately above on this
issue. As we state above, IRO–006–4,
Requirement R1.1, should be
‘‘implemented and enforced’’ based on
our understanding in this order of the
issue.
40. In any case, we adopt our NOPR
proposal and approve Reliability
Standard IRO–006–4 with the
understanding that using a TLR
procedure to mitigate an actual IROL
23 NOPR,
PO 00000
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a. Comments
42. NERC comments that it did not
intend the list of tools in Requirement
R1.1 for addressing IROL violations to
be an exhaustive list; effective demandside response could also be considered.
43. Alcoa comments that demand-side
management should be included in the
list of alternatives to the TLR procedure
in IRO–006–4. Alcoa claims that its
smelters have demonstrated an ability to
curb demand to assist in TLR efforts and
alleviate IROL violations. In addition,
Alcoa claims that in some instances
load may be able to respond to IROL
violations more quickly and effectively
than generation reserves. According to
Alcoa, flexible loads served at
transmission voltages are most effective
for immediate demand response to IROL
violations.
44. ISO/RTO Council comments that
IRO–006–4 does not preclude reliance
on demand-side management that can
respond quickly to emergencies. It
believes that the Reliability Standards
should be resource-neutral in their
24 N. Am. Elec. Reliability Corp., 119 FERC
¶ 61,321, at P 10 (2007) (‘‘A vegetation-related
transmission outage would result in a violation of
Requirement R1, R2 or both.’’).
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application. ISO/RTO Council states
that, consistent with Order No. 693, so
long as a resource can address system
conditions, it should be recognized in
the Reliability Standards as a tool upon
which the system operator can rely.
ISO/RTO Council also notes initiatives
by NERC and NAESB to develop rules
for classifying demand-side
management and identifying methods
for measurement and verification.
b. Commission Determination
45. It is clear from the comments of
the ERO, Alcoa, and ISO/RTO Council
that the Reliability Standard includes
effective demand-side management as a
tool to mitigate an IROL violation
pursuant to Requirement R1.1 of IRO–
006–4. In its September 11, 2008 filing,
the ERO states that there are four
acceptable options to respond to an
IROL violation: inter-area redispatch,
intra-area redispatch, reconfiguration of
the transmission system, and voluntary
or involuntary reductions in load. The
ERO further explains that the reference
in Requirement R1.1 to ‘‘load shedding’’
refers to voluntary or involuntary
reductions in load.25 Thus, as clarified
by NERC, Requirement R1.1 allows the
use of effective demand-side
management as one tool to mitigate an
IROL violation. The Commission will
implement and enforce this Reliability
Standard as clarified by NERC.
C. Violation Risk Factors
46. In the NOPR, the Commission
proposed to direct the ERO to modify
the violation risk factors assigned to
Requirements R1 through R4 by raising
them to ‘‘high.’’ This proposal was
based on the Commission’s guidelines
for evaluating validity of violation risk
factor assignments.26 In particular, the
Commission reasoned that a ‘‘high’’
violation risk factor assignment for
Requirements R1 through R4 is
consistent with findings of the Final
Blackout Report.27
25 NERC
September 11, 2008 Response at 4.
guidelines are: (1) Consistency with the
conclusions of the Blackout Report; (2) consistency
within a Reliability Standard; (3) consistency
among Reliability Standards; (4) consistency with
NERC’s definition of the violation risk factor level;
and (5) treatment of requirements that co-mingle
more than one obligation. The Commission also
explained that this list was not necessarily allinclusive and that it retains the flexibility to
consider additional guidelines in the future. A
detailed explanation is provided in North American
Electric Reliability Corp., 120 FERC ¶ 61,145, at P
8–13 (2007).
27 Recommendation 31 states, ‘‘Clarify that the
transmission loading relief (TLR) process should
not be used in situations involving an actual
violation or an Operation Security Limit.’’ Final
Blackout Report at 163.
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1. Comments
47. NERC, IESO, and ISO/RTO
Council urge the Commission to adopt
the violation risk factors proposed by
NERC. NERC contends that the
Commission’s reliance on the violation
risk factors for IRO–006–3,
Requirements R1 through R4, submitted
in 2007 is not appropriate.28 NERC
explains that the violation risk factors
submitted in the current proceeding for
IRO–006–4 received significant industry
review and scrutiny, which was not the
case with the 2007 submission.
a. Violation Risk Factors for
Requirement R1
48. NERC agrees with the Commission
that Requirements R1.1 through R1.3 are
explanatory text and that a violation risk
factor need not be assigned to each
subsection. However, NERC, ISO/RTO
Council, and IESO disagree with the
Commission’s proposal to direct the
ERO to raise the violation risk factor
from ‘‘medium’’ to ‘‘high.’’
49. Specifically, NERC and ISO/RTO
Council disagree with the Commission’s
statement that a ‘‘high’’ violation risk
factor assignment is consistent with the
findings of the Final Blackout Report.
According to NERC, the main thrust of
Recommendation 31 in the Final
Blackout Report (regarding the use of
TLR in response to actual violations)
has been addressed in Requirement R1.1
of the Reliability Standard and does not
warrant a ‘‘high’’ violation risk factor
designation. ISO/RTO Council contends
that the Final Blackout Report does not
identify and rank the associated risk of
not implementing each
recommendation. ISO/RTO Council
claims that the Final Blackout Report
Recommendation 31 simply focuses on
reliability coordinators using tools other
than TLRs for a real-time emergency.
50. Further, NERC contends that IRO–
006–4, Requirement R1 and its subrequirements are procedural in nature,
because they focus on how relief is
achieved rather than on whether relief
is achieved. NERC recognizes that ‘‘the
result of an ineffective application of
this requirement could impact the
electrical state of the grid.’’ 29 However,
NERC posits that IRO–005–1,
Requirement R5 is the principal source
of the reliability coordinator’s obligation
to relieve actual or potential IROL
28 See NOPR, FERC Stats. & Regs. ¶ 32,632 at P
51 (noting that the corresponding requirements in
the earlier Commission-approved version of the
Reliability Standard were assigned a ‘‘high’’
violation risk factor).
29 NERC Comments at 19. Unless otherwise
indicated, citations to parties’ comments refer to
comments filed after the NOPR, prior to the Final
Rule.
PO 00000
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12261
violations. For these reasons, NERC
believes Requirement R1 merits a
‘‘medium’’ violation risk factor.
51. IESO agrees with NERC’s
assessment that Requirement R1 is
administrative in nature. IESO states
that Requirement R1 provides the
initiating reliability coordinator options
from which to choose to relieve
transmission constraints, and it becomes
a reliability requirement only when a
reliability coordinator chooses an
interconnection-wide procedure as one
of the means to relieve transmission
constraints. IESO explains that if a
reliability coordinator chooses other
control actions but not an
interconnection-wide TLR procedure to
prevent or mitigate an IROL violation,
this Reliability Standard will not apply,
and the reliability coordinator will not
be subject to the requirements in the
standard. Further, IESO contends that if
a reliability coordinator chooses to
apply an interconnection-wide
procedure and the requirements
stipulated therein are not complied
with, there is a potential risk on the
control and operation of the system,
because non-compliance with the TLR
procedure may affect other actions that
are also being applied to prevent or
mitigate an IROL violation.
52. IESO and ISO/RTO Council
disagree with the Commission’s
statement that, if the reliability
coordinator chooses an unapproved and
ineffective procedure for relief or fails to
choose a procedure entirely, potential or
actual IROL violations will not be
mitigated as intended by the reliability
coordinator.30 According to IESO and
ISO/RTO Council, with or without the
interconnection-wide relief procedure,
reliability coordinators and
transmission operators are required by
other Reliability Standards such as
TOP–002, TOP–004, and IRO–005 to
apply local control actions and
procedures to prevent and mitigate SOL
and IROL violations.
53. ISO/RTO Council also favors a
‘‘medium’’ violation risk factor
assignment for Requirement R1, stating
that interconnection-wide procedures
are only one tool in the toolbox to
restore system integrity.
b. Violation Risk Factors for
Requirement R2
54. NERC does not believe that a
reliability coordinator could
successfully implement a local
procedure to which the particular
transmission operator is not a party. In
any event, NERC does not believe that
30 See
NOPR, FERC Stats. & Regs. ¶ 32,632 at P
52.
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the implementation of such a procedure
would in itself create a ‘‘high’’
reliability risk. NERC states that if the
reliability coordinator were able to
achieve the relief, then it would be
considered as having the lesser
infraction of using the wrong tools to
achieve the correct results. Further, it
states that if such a procedure did not
provide the required relief, the
reliability coordinator would be in
violation of IRO–005–1, Requirement
R5. NERC claims this requirement is
focused on ‘‘how’’ the relief is provided,
not ‘‘whether’’ the relief is provided. In
addition, NERC states that the use of a
local procedure is implemented at the
discretion of the reliability coordinator
and is not obligatory. Accordingly,
NERC believes that a violation risk
factor of ‘‘lower’’ is appropriate.
55. IESO argues the intent of
Requirement R2 is to ensure that a
reliability coordinator who initiates
actions to relieve transmission
constraints in a transmission operator’s
area applies the actions that are either
totally local to the transmission
operator’s area or which have been
developed by the transmission operator
jointly with other transmission
operators. IESO states that choosing
which procedures to relieve
transmission constraints is an
administrative requirement since the
reliability coordinator, having the
authority to ensure wide area reliability,
may apply any procedures that it deems
necessary to relieve transmission
constraints. IESO contends that in the
event the reliability coordinator applies
a relief procedure to which the
constrained transmission operator is not
a party, it should not be a presumption
that prevention or mitigation of an IROL
violation will not be achieved since the
reliability coordinator is obligated to
ensure operating reliability through
compliance with IRO–005–1. For these
reasons, IESO believes that Requirement
R2 is administrative and deserves a
‘‘lower’’ violation risk factor.
56. IESO disagrees with the
Commission assessment that
‘‘[v]iolation risk factors should not be
assigned differently for requirements in
separate Reliability Standards based on
compliance with another Reliability
Standard,’’ on the basis that ‘‘[t]wo
requirements either achieve separate
reliability goals and, therefore, violation
of them represents independent risks, or
two requirements share the same
reliability goal.’’ 31 IESO states that,
while the IRO–005–1 requirements and
the TLR requirements share the same
31 IESO Comments at 8 (quoting NOPR, FERC
Stats. & Regs. ¶ 32,632 at P 53).
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reliability goal, the latter is in fact
subordinate to the former. Thus, IESO
maintains that there should not be two
simultaneous ‘‘high’’ risk penalties
assessed for a reliability coordinator for
failing to comply with the TLR
procedure of Requirements R1 or R2
and for failing to prevent or mitigate an
IROL violation as required in IRO–005–
1.
c. Violation Risk Factors for
Requirement R3
57. NERC maintains that Requirement
R3 is focused on the procedural aspects
of the Reliability Standard, i.e., how the
relief is provided rather than whether
the relief was provided. NERC argues
that if the entity is able to achieve the
relief through other means that were not
pre-approved, then it would have
committed an administration violation
of using the wrong tools to achieve the
correct results. According to NERC, if
such a procedure did not provide the
required relief, the reliability
coordinator would be in violation of
IRO–005–1, Requirement R5. For
reasons similar to those provided for
Requirement R2, IESO agrees with
NERC that Requirement R3 is
administrative and deserves a ‘‘lower’’
violation risk factor.
d. Violation Risk Factors for
Requirement R4
58. NERC claims that a violation of
Requirement R4 is ‘‘a specific kind of
violation of the INT family of Reliability
Standards that is being caused by a
reliability coordinator’s inaction,
resulting in an imbalance in one or both
of the interconnections involved.’’ 32
NERC comments that Requirement R4
complements the INT group of
Reliability Standards in the same
fashion as Requirement R5, which the
Commission supported with a violation
risk factor of ‘‘medium.’’ IESO concurs
with NERC’s assignment of a ‘‘medium’’
violation risk factor to Requirement R4.
IESO reasons that complying with the
provisions of the interconnection-wide
procedure of the initiating reliability
coordinator is no more stringent than
complying with the request for relief
based on the TLR procedure within the
same interconnection, the latter being
the requirement in R1.
2. Commission Determination on
Violation Risk Factors
59. For the reasons stated in the
NOPR and as discussed below, the
Commission directs the ERO to modify
the violation risk factors of
Requirements R1 through R4 of IRO–
006–4 to ‘‘high.’’
60. The Commission disagrees with
NERC and others and finds that it is
appropriate to use the Final Blackout
Report as a basis for setting violation
risk factors of the proposed Reliability
Standard at ‘‘high’’ for several reasons.
The Final Blackout Report is the result
of the U.S-Canada Task Force’s
investigation of the August 14, 2003
blackout where the Task Force
identified contributing factors and
causes that put the Bulk-Power System
at risk for that event. Specifically, the
Final Blackout Report identified an
attempt to use the TLR process to
address transmission power flows
without recognizing that the imposition
of a TLR procedure would not solve the
problem as one contributing cause for
the initiation of the blackout of August
2003. Based on its findings, the Task
Force developed recommendations to
reduce the possibility of future outages
and to reduce the scope of future
blackouts that may nonetheless occur.33
Thus, the Task Force developed
Recommendation No. 31 to prevent the
initiation of a TLR procedure during an
actual violation of an SOL.34 Since the
Final Blackout Report was developed to
document the August 14, 2003
blackout’s contributing factors and
causes, which include specific
violations of then voluntary reliability
policies, guidelines, and standards, the
Commission believes it is appropriate to
use the findings of the Final Blackout
Report as one of the guidelines for the
determination of a requirement’s
violation risk factor. Specifically, the
Commission believes the findings of the
Final Blackout Report are particularly
relevant in the determination of
violation risk factors of then-voluntary
reliability policies, guidelines, and
standards identified as causes and
factors of the August 14, 2003 blackout
that the ERO proposes as mandatory
Reliability Standards, such as IRO–006–
4. The Commission also disagrees for
the same reasons with commenters that
argue the Final Blackout Report does
not identify and rank the associated risk
of not implementing each
recommendation.
61. While we agree that Requirement
R.1.1 discourages the use of a TLR to
mitigate a real-time IROL violation,
Requirement R1.1, is merely
explanatory text. It is Requirement R1
that establishes that the reliability
coordinator shall choose one or more of
the procedures, listed as subrequirements, to provide the appropriate
33 Final
32 NERC
PO 00000
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34 Id.
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transmission relief. The selection of a
procedure to provide relief to address a
potential or actual SOL or IROL
violation is directly relevant to Final
Blackout Report Recommendation No.
31. If an inappropriate procedure is
selected in an attempt to mitigate an
IROL, the Bulk-Power System is
vulnerable to cascading outages, as was
the case on August 14, 2003.
62. The Commission is not persuaded
by NERC’s argument relative to ‘‘using
the wrong tools to achieve the correct
results’’ in the assignment of a
requirement’s violation risk factor.
Contrary to this argument, the
Commission has recognized that there
may be some Reliability Standards
where the means, or the ‘‘how,’’ is
inextricably linked to the effectiveness
of the Reliability Standard.35 We find
that this is the case here. The
Commission has explained that the
inclusion of implementation practices
within requirements of such a standard
is to reduce uncertainty and further
objectives that foster reliability which, if
violated, would pose increased
reliability risk to the Bulk-Power
System.36
63. Similarly, NERC’s argument that,
if the reliability coordinator were able to
achieve the relief desired without
complying with Requirement R1, it
would be considered as having the
lesser infraction of using the wrong
tools to achieve the correct results is
also flawed. The purpose of the
violation risk factor is to accurately
portray the risk a violation poses to the
Bulk-Power System,37 notwithstanding
a violator’s avoidance of reliability
problems in a particular case by using
an unreliable operation. This
Commission determination is relevant
to arguments that a ‘‘high’’ violation risk
factor is not appropriate because the
subject requirement overlaps other
requirements, duplicates other
requirements, or could be implemented
by alternative means. The Commission
has previously determined that NERC
should address those issues through the
Reliability Standard development
process.38
64. The Commission also disagrees
with the characterization of
Requirements R1, R2, and R3 as
procedural choices without reliability35 Rules Concerning Certification of the Electric
Reliability Organization; and Procedures for the
Establishment, Approval, and Enforcement of
Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ¶ 31,204, at P 260; see also id., Order
No. 672–A, FERC Stats. & Regs. ¶ 31,212 (2006).
36 N. Am. Elec. Reliability Corp., 121 FERC
¶ 61,179, at P 15 (2007).
37 Id. P 16.
38 Id. P 39.
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related consequences. For example,
failure to implement Requirement R1,
i.e., failure to select one or more
procedures to provide transmission
relief, is not just a procedural or
administrative choice; it is a decision
that has the potential to place the BulkPower System at risk of cascading
outages. Although commenters argue
that a violation of Requirement R2 is
essentially administrative in nature and
that the prevention or mitigation of the
potential or actual SOL or IROL may be
achieved through compliance with
another Reliability Standard, which
would justify a ‘‘lower’’ violation risk
factor, the Commission disagrees.
Requirements R1 through R4 require
that a reliability coordinator choose and
follow the appropriate procedure to
provide relief. If the reliability
coordinator chooses an unapproved
and/or ineffective procedure for relief or
fails to choose a procedure entirely,
potential or actual IROL violations will
not be mitigated as intended by the
reliability coordinator. Therefore, the
Commission finds that violation of
Requirements R1 through R4 present a
high reliability risk to Bulk-Power
System. Assigning a ‘‘high’’ violation
risk factor to Requirements R1 through
R4 is consistent with the Final Blackout
Report.
65. A violation risk factor represents
the reliability risk a violation of that
requirement presents to the Bulk-Power
System. Violation risk factors should
not be assigned differently for
requirements in separate Reliability
Standards based on compliance with
another standard. This assessed
reliability risk is independent and not
contingent upon compliance with other
requirements of Reliability Standards.
While the Commission recognizes the
complementary nature of proposed
Reliability Standard IRO–006–4,
Requirement R1 and Reliability
Standard IRO–005–1, Requirement R5,
the fact that requirements may share the
same reliability objective as another
requirement does not justify lowering
one or more of the requirements’
violation risk factors. In fact, the
Commission expects the assignment of
violation risk factors corresponding to
requirements that address similar
reliability goals in different Reliability
Standards to be treated comparably.39
The Commission notes that Reliability
Standard IRO–005–1, Requirement R5,
is assigned a ‘‘high’’ violation risk
factor.
66. Further, the argument that a
‘‘lower’’ violation risk factor assigned to
39 N. Am. Elec. Reliability Corp., 119 FERC
¶ 61,145, at P 25 (2007).
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Requirement R1 is appropriate since
Requirement R1 is administrative in
nature (because it provides the initiating
reliability coordinator with options to
choose among available procedures and
only becomes a reliability requirement
when a reliability coordinator chooses
an interconnection-wide procedure) is
flawed. First, the fact that a requirement
provides ‘‘options’’ does not
automatically make that requirement
administrative. It is the potential
reliability risks the failure to take
options mandated by the requirement
presents to the Bulk-Power System that
determines that requirement’s violation
risk factor. Second, requirements
become mandatory and enforceable
reliability requirements only after
Commission approval and not after any
action, or inaction, by an applicable
entity.
67. For the same reasons explained
above, the Commission disagrees with
comments that Requirement R3 focuses
on procedural aspects of the Reliability
Standard founded on the arguments that
the requirement related to ‘‘how’’ the
relief is provided rather than ‘‘whether’’
the relief was provided, where the
‘‘wrong tools’’ were used to achieve the
‘‘correct results.’’ Even if an entity,
having violated a Reliability Standard,
achieves correct results, the entity’s
success should be attributed to a matter
of chance and may be more risky than
the operation set forth in the Reliability
Standard.
68. IESO’s comment that there should
not be two simultaneous ‘‘high’’ risk
penalties assessed to a reliability
coordinator who fails to comply with
the TLR procedure of Requirements R1
and R2 is outside the scope of this
proceeding. The determination of
monetary penalties for a violation of a
requirement is a compliance issue,
which is best addressed in the context
of a compliance proceeding.40
69. We do not agree that a violation
of Requirement R4 is a specific type of
violation of the INT Reliability
Standards as NERC and IESO suggest.
Requirement R4 requires a reliability
coordinator to comply with
interconnection-wide curtailment
procedures whereas Requirement R5
requires reliability coordinators and
balancing authorities to adhere to INT
standards that largely specify
interchange scheduling procedures.
Failure to implement curtailment
procedures poses a higher reliability
risk, since it may place the Bulk-Power
40 We note that section 3.10 of NERC’s Sanction
Guidelines addresses multiple violations related to
a single act or common incidence of
noncompliance.
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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations
System at risk of cascading outages,
than failure to implement scheduling
procedures; therefore, it should receive
a ‘‘high’’ violation risk factor.
mstockstill on PROD1PC66 with RULES
3. Commission Determination on
Violation Severity Levels
70. The ERO’s December 21, 2007
filing included proposed violation
severity levels corresponding to the
requirements of IRO–006–4. Violation
severity levels, which the ERO or the
Regional Entity will apply to establish
an initial base penalty range when
assessing a penalty for the violation of
a Reliability Standard, constitutes a
post-violation measurement of the
degree to which a requirement was
violated.41 The Commission accepts the
violation severity levels proposed by the
ERO that correspond to the
Requirements of Reliability Standard
IRO–006–4.
71. Further, in the Violation Severity
Levels Order, the Commission directed
the ERO to submit a compliance filing
certifying that it has reviewed each of
the violation severity level assignments
for consistency with certain guidelines
set forth in that order.42 The
Commission also directed that the ERO
either validate the existing violation
severity level designations or propose
revisions to specific approved violation
severity level assignments where the
ERO determines that such assignments
do not meet the specified guidelines.
Consistent with the Violation Severity
Levels Order, the Commission now
directs the ERO to review the violation
severity levels for IRO–006–4. The ERO
must include in the compliance filing
required by Ordering Paragraph (E) of
the Violation Severity Levels Order a
certification that it has reviewed each
violation severity level assignment
corresponding to the requirements of
IRO–006–4 for consistency with certain
guidelines (specifically, guidelines 2b,
3, and 4), validating the assignments
that meet the guidelines and proposing
revisions to those that fail to meet the
guidelines.
72. Accordingly, with respect to the
violation risk factors and severity levels,
we approve IRO–006–4 as mandatory
and enforceable. In addition, we direct
the ERO submit a compliance filing
within 60 days that revises violation
risk factors to ‘‘high’’ for Requirements
R1 through R4. The Commission
approves the proposed violation
severity levels and requires the ERO to
submit a compliance filing, as discussed
above.
III. Information Collection Statement
73. The Office of Management and
Budget (OMB) regulations require that
OMB approve certain reporting and
recordkeeping (collections of
information) imposed by an agency.43
The information contained here is also
subject to review under section 3507(d)
of the Paperwork Reduction Act of
1995.44 As stated above, the
Commission previously approved, in
Order No. 693, Reliability Standard
IRO–006, which is the subject of this
supplemental final rule. In the NOPR,
the Commission explained that the
modifications to the Reliability
Standard are minor; therefore, they do
not add to or increase entities’ reporting
burden. Thus, in the NOPR, the
Commission stated that the modified
Reliability Standard does not materially
affect the burden estimates relating to
the earlier version of Reliability
Standard IRO–006 presented in Order
No. 693.45
74. In response to the NOPR, the
Commission received no comments
concerning its estimate for the burden
and costs and therefore uses the same
estimate here.
Title: Modification of Interchange and
Transmission Loading Relief Reliability
Standards; and Electric Reliability
Organization Interpretation of Specific
Requirements of Four Reliability
Standards.
Action: Proposed Collection.
OMB Control No.: 1902–0244.
Respondents: Businesses or other forprofit institutions; not-for-profit
institutions.
Frequency of Responses: On
Occasion.
Necessity of the Information: This
Supplemental Final Rule approves one
modified Reliability Standard that
pertains to transmission loading relief
procedures. The Supplemental Final
Rule finds the Reliability Standard just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest.
75. Interested persons may obtain
information on the reporting
requirements by contacting: Federal
Energy Regulatory Commission, Attn:
Michael Miller, Office of the Executive
Director, 888 First Street, NE.,
Washington, DC 20426, Tel: (202) 502–
43 5
41 See
N. Am. Elec. Reliability Corp., 123 FERC
¶ 61,284, at P 3 (Violation Severity Levels Order),
order on reh’g, 125 FERC ¶ 61,212 (2008) (extending
compliance date).
42 See Violation Severity Level Order, 123 FERC
¶ 61,284 at P 41 and Ordering Paragraph (E).
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CFR 1320.11.
U.S.C. 3507(d).
45 See Order No. 693, FERC Stats. & Regs.
¶ 31,242 at P 1905–07. The NOPR, FERC Stats. &
Regs. ¶ 32,632 at P 76–78, provided a detailed
explanation why each modification has a negligible,
if any, effect on the reporting burden.
8415, Fax: (202) 273–0873, e-mail:
michael.miller@ferc.gov, or by
contacting: Office of Information and
Regulatory Affairs, Attn: Desk Officer
for the Federal Energy Regulatory
Commission (Re: OMB Control No.
1902–0244), Washington, DC 20503,
Tel: (202) 395–4650, Fax: (202) 395–
7285, e-mail:
oira_submission@omb.eop.gov.
IV. Environmental Analysis
76. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.46 The Commission has
categorically excluded certain actions
from this requirement as not having a
significant effect on the human
environment. Included in the exclusion
are rules that are clarifying, corrective,
or procedural or that do not
substantially change the effect of the
regulations being amended.47 The
actions proposed herein fall within this
categorical exclusion in the
Commission’s regulations.
V. Regulatory Flexibility Act
77. The Regulatory Flexibility Act of
1980 (RFA) 48 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities. The RFA mandates
consideration of regulatory alternatives
that accomplish the stated objectives of
a proposed rule and that minimize any
significant economic impact on a
substantial number of small entities.
The Small Business Administration’s
Office of Size Standards develops the
numerical definition of a small
business. (See 13 CFR 121.201.) For
electric utilities, a firm is small if,
including its affiliates, it is primarily
engaged in the transmission, generation
and/or distribution of electric energy for
sale and its total electric output for the
preceding twelve months did not exceed
four million megawatt hours. The RFA
is not implicated by this Final Rule
because the minor modifications and
interpretations discussed herein will not
have a significant economic impact on
a substantial number of small entities.
VI. Document Availability
78. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
44 44
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46 Regulations Implementing the National
Environmental Policy Act, Order No. 486, FERC
Stats. & Regs. ¶ 30,783 (1987).
47 18 CFR 380.4(a)(2)(ii).
48 5 U.S.C. 601–12.
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Federal Register / Vol. 74, No. 55 / Tuesday, March 24, 2009 / Rules and Regulations
view and/or print the contents of this
document via the Internet through
FERC’s Home Page (https://www.ferc.gov)
and in FERC’s Public Reference Room
during normal business hours (8:30 a.m.
to 5 p.m. Eastern time) at 888 First
Street, NE., Room 2A, Washington, DC
20426.
79. From FERC’s Home Page on the
Internet, this information is available on
eLibrary. The full text of this document
is available on eLibrary in PDF and
Microsoft Word format for viewing,
printing, and/or downloading. To access
this document in eLibrary, type the
docket number excluding the last three
digits of this document in the docket
number field.
80. User assistance is available for
eLibrary and the FERC’s Web site during
normal business hours from FERC
Online Support at (202) 502–6652 (toll
free at 1–866–208–3676) or e-mail at
ferconlinesupport@ferc.gov, or the
Public Reference Room at (202) 502–
8371, TTY (202) 502–8659. E-mail the
Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional
Notification
81. The Supplemental Final Rule is
effective April 23, 2009. The
Commission has determined, with the
concurrence of the Administrator of the
Office of Information and Regulatory
Affairs of OMB, that this rule is not a
‘‘major rule’’ as defined in section 351
of the Small Business Regulatory
Enforcement Fairness Act of 1996.
List of Subjects in 18 CFR Part 40
Electric power, Electric utilities,
Reporting and recordkeeping
requirements.
ISO/RTO Council
NRG
Southern
[FR Doc. E9–6416 Filed 3–23–09; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation
and Enforcement
30 CFR Part 938
[PA–152–FOR; Docket ID: OSM–2008–0019]
Pennsylvania Regulatory Program
AGENCY: Office of Surface Mining
Reclamation and Enforcement (OSM),
Interior.
ACTION: Final rule; required amendment.
SUMMARY: We are reinstating a
requirement for the Pennsylvania
regulatory program (the ‘‘Pennsylvania
program’’) under the Surface Mining
Control and Reclamation Act of 1977
(SMCRA or the Act). The requirement
deals with documentation for the
bonding provisions of the Pennsylvania
program.
DATES: Effective Date: March 24, 2009.
FOR FURTHER INFORMATION CONTACT:
George Rieger, Chief, Pittsburgh Field
Division, Telephone: (717) 782–4036,
e-mail: grieger@osmre.gov.
SUPPLEMENTARY INFORMATION:
I. Background on the Pennsylvania Program
II. The Modified Required Amendment
III. OSM’s Decision
IV. Procedural Determinations
Alcoa Inc. (Alcoa)*
Constellation Energy Commodities Group,
Inc. (Constellation)*
Independent Electricity System Operator of
Ontario (IESO)*
ISO/RTO Council*
ITCTransmission; Michigan Electric
Transmission Company, LLC; and ITC
Midwest LLC
Lafayette Utilities and the Louisiana Energy
and Power Authority (Lafayette and
LEPA)*
North American Electric Reliability Corp.
(NERC)*
NRG Companies (NRG)*
Southern Company Services, Inc. (Southern)
I. Background on the Pennsylvania
Program
Section 503(a) of the Act permits a
State to assume primacy for the
regulation of surface coal mining and
reclamation operations on non-Federal
and non-Indian lands within its borders
by demonstrating that its State program
includes, among other things, ‘‘a State
law which provides for the regulation of
surface coal mining and reclamation
operations in accordance with the
requirements of the Act * * *; and
rules and regulations consistent with
regulations issued by the Secretary
pursuant to the Act.’’ See 30 U.S.C.
1253(a)(1) and (7). On the basis of these
criteria, the Secretary of the Interior
conditionally approved the
Pennsylvania program on July 30, 1982.
You can find background information
49 An asterisk (*) indicates that the commenter
addressed Reliability Standard IRO–006–4.
50 M–S–R Public Power Agency filed a motion to
intervene without comments.
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
Appendix A—NOPR Commenters 49
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Appendix B—Comments in Response to
NERC’s September 11, 2008 Filing 50
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01:02 Mar 24, 2009
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Fmt 4700
Sfmt 4700
12265
on the Pennsylvania program, including
the Secretary’s findings, the disposition
of comments, and conditions of
approval in the July 30, 1982, Federal
Register notice (47 FR 33050). You can
also find later actions concerning
Pennsylvania’s program and program
amendments at 30 CFR 938.11, 938.12,
938.13, 938.15 and 938.16.
Pennsylvania’s Bonding Program
From 1982 until 2001, Pennsylvania’s
bonding program for surface coal mines,
coal refuse reprocessing operations and
coal preparation plants, was funded
under an Alternative Bonding System
(ABS), which included a central pool of
money (Surface Mining Conservation
and Reclamation Fund) used for
reclamation, to supplement site-specific
bonds posted by operators for each mine
site. This pool was funded by a per-acre
reclamation fee paid by operators of
permitted sites.
In 1991, our oversight activities
determined that Pennsylvania’s ABS
contained unfunded reclamation
liabilities for backfilling, grading, and
revegetation and we determined that the
ABS was financially incapable of
abating or treating pollutional
discharges from bond forfeiture sites
under its purview. As a result, on May
31, 1991, we imposed the required
amendment codified at 30 CFR
938.16(h), 56 FR 24687. That
amendment required Pennsylvania to
demonstrate that the revenues generated
by its collection of the reclamation fee
would assure that its Surface Mining
Conservation and Reclamation Fund
(Fund) could be operated in a manner
that would meet the ABS requirements
contained in 30 CFR 800.11(e). After a
decade of trying to address the problems
with the ABS, the Pennsylvania
Department of Environmental Protection
(PADEP) terminated the ABS in 2001
and began converting active surface coal
mining permits to a Conventional
Bonding System (CBS) or ‘‘full-cost’’
bonding program. This CBS requires a
permittee to post a site specific bond in
an amount sufficient to cover the
estimated costs to complete reclamation
in the event of bond forfeiture.
OSM published a final rule on
October 7, 2003, removing the required
amendment at 30 CFR 938.16(h) on the
basis that the conversion from an ABS
to a CBS rendered the requirement to
comply with 30 CFR 800.11(e) moot.
Subsequent to these OSM actions, a
lawsuit was filed in the U.S. District
Court for the Middle District Court of
Pennsylvania, Pennsylvania Federation
of Sportsmen’s Clubs Inc. (PFSC) et. al.
v. Norton No. 1:03–CV–2220. The
Plaintiffs claimed, in relevant part, that
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]]>Agencies
[Federal Register Volume 74, Number 55 (Tuesday, March 24, 2009)]
[Rules and Regulations]
[Pages 12256-12265]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6416]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket Nos. RM08-7-000 and RM08-7-001; Order No. 713-A]
Modification of Interchange and Transmission Loading Relief
Reliability Standards; and Electric Reliability Organization
Interpretation of Specific Requirements of Four Reliability Standards
Issued March 19, 2009.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the
Federal Energy Regulatory Commission (Commission) approves Reliability
Standard IRO-006-4, submitted to the Commission for approval by the
North American Electric Reliability Corporation (NERC). The Reliability
Standard addresses transmission loading relief requirements, which
provide a mechanism to manage and, if necessary, curtail interchange
transactions. In addition, pursuant to section 215(d)(5) of the FPA,
the Commission directs NERC to develop modifications to Reliability
Standard IRO-006-4 to address specific Commission concerns.
DATES: Effective Date: This rule will become effective April 23, 2009.
FOR FURTHER INFORMATION CONTACT:
Patrick Harwood (Technical Information), Office of Electric
Reliability, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-6125, patrick.harwood@ferc.gov.
Christopher Daignault (Legal Information), Office of the General
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8286, christopher.daignault@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Numbers
I. Background............................................... 2
A. Procedural Background................................ 2
B. Reliability Standard IRO-006-4....................... 6
II. Discussion.............................................. 11
A. Approval of Reliability Standard IRO-006-4........... 11
1. Transfer of Business-Related Requirements to 15
NAESB..............................................
2. Improvements to the TLR Procedure................ 18
B. Requirement R1....................................... 22
1. Use of TLR Procedure in Conjunction With Other 23
Procedures To Mitigate an IROL Violation...........
2. Use of TLR Procedure Alone To Mitigate an IROL 37
Violation..........................................
3. Use of Demand-Side Management To Mitigate IROL 41
Violations.........................................
C. Violation Risk Factors............................... 46
1. Comments......................................... 47
2. Commission Determination on Violation Risk 59
Factors............................................
3. Commission Determination on Violation Severity 70
Levels.............................................
III. Information Collection Statement....................... 73
IV. Environmental Analysis.................................. 76
V. Regulatory Flexibility Act............................... 77
VI. Document Availability................................... 78
VII. Effective Date and Congressional Notification.......... 81
1. Pursuant to section 215 of the Federal Power Act (FPA) \1\ the
Commission approves Reliability Standard IRO-006-4, submitted to the
Commission for approval by the North American Electric Reliability
Corporation (NERC). The Reliability Standard addresses transmission
loading relief requirements, which provide a mechanism to manage and,
if necessary, curtail interchange transactions. In addition, pursuant
to section 215(d)(5) of the FPA, the Commission directs NERC to develop
modifications to Reliability Standard IRO-006-4 to address specific
concerns identified by the Commission.
---------------------------------------------------------------------------
\1\ 16 U.S.C. 824o (2006).
---------------------------------------------------------------------------
I. Background
A. Procedural Background
2. On December 21, 2007, NERC, the Commission-certified electric
reliability
[[Page 12257]]
organization (ERO), submitted for Commission approval modifications to
Reliability Standard IRO-006-4 (Reliability Coordination--Transmission
Loading Relief), known as the transmission loading relief or ``TLR''
procedure.\2\
---------------------------------------------------------------------------
\2\ Reliability Standard IRO-006-4 is not codified in the
Commission's regulations and is not attached to this Supplemental
Final Rule. It is, however, available on the Commission's eLibrary
document retrieval system in Docket No. RM08-7-000 and also is
available on the ERO's Web site, https://www.nerc.com.
---------------------------------------------------------------------------
3. On April 21, 2008, as supplemented on May 16, 2008, the
Commission issued a Notice of Proposed Rulemaking (NOPR) that proposed
to approve three NERC filings, including Reliability Standard IRO-006-
4.\3\ In response, nine interested persons filed comments, six of which
address the TLR procedure at issue here.\4\ (The Commission
consolidated three ERO submissions in the RM08-7-000 rulemaking
proceeding. This Supplemental Final Rule only addresses the ERO's
December 21, 2007 filing pertaining to the TLR Reliability Standard.
The Commission addressed the other two ERO filings in Order No. 713,
i.e., the Final Rule in this proceeding.)
---------------------------------------------------------------------------
\3\ Modification of Interchange and Transmission Loading Relief
Reliability Standards; and Electric Reliability Organization
Interpretation of Specific Requirements of Four Reliability
Standards, Notice of Proposed Rulemaking, 73 FR 22856 (Apr. 28,
2008), FERC Stats. & Regs. ] 32,632, at P 48 (2008) (NOPR),
Supplemental Notice of Proposed Rulemaking, 73 FR 30326 (May 27,
2008), FERC Stats. & Regs. ] 32,635 (2008) (Supplemental NOPR).
\4\ Appendix A identifies the NOPR commenters.
---------------------------------------------------------------------------
4. On July 21, 2008, the Commission issued a Final Rule in this
proceeding, which approved five Reliability Standards and approved
NERC's interpretation of other Reliability Standards.\5\ The
Commission, however, did not make a determination in the Final Rule
regarding Reliability Standard IRO-006-4 and, instead, directed NERC to
submit a filing explaining one aspect of the TLR procedure.
---------------------------------------------------------------------------
\5\ Modification of Interchange and Transmission Loading Relief
Reliability Standards; and Electric Reliability Organization
Interpretation of Specific Requirements of Four Reliability
Standards, Order No. 713, 73 FR 43613 (July 28, 2008), 124 FERC ]
61,071 (2008) (Order No. 713 or Final Rule).
---------------------------------------------------------------------------
5. On September 11, 2008, NERC submitted a filing as directed in
the Final Rule. Notice of NERC's September 11, 2008 filing was
published in the Federal Register, 73 FR 75,429. Three interested
persons submitted comments.\6\
---------------------------------------------------------------------------
\6\ Appendix B identifies the commenters on NERC's September 11,
2008 filing. In addition, NERC filed reply comments.
---------------------------------------------------------------------------
B. Reliability Standard IRO-006-4
6. Reliability Standard IRO-006-4 applies to balancing authorities,
reliability coordinators, and transmission operators. Reliability
Standard IRO-006-4 modifies Reliability Standard IRO-006-3, which the
Commission approved in Order No. 693.\7\ In its December 2007 filing,
NERC explained that it modified the TLR procedure to ``extract''
commercial requirements and business practices.\8\ Further, the
modified Reliability Standard includes changes directed by the
Commission in Order No. 693 related to the appropriateness of using the
TLR procedure to mitigate a violation of an interconnection reliability
operating limit (IROL).\9\
---------------------------------------------------------------------------
\7\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order
No. 693-A, 120 FERC ] 61,053 (2007).
\8\ The commercial requirements were transferred to a North
American Energy Standards Board (NAESB) business practices document.
The Commission approved the NAESB TLR standard, WEQ-008, to coincide
with the effective date of Reliability Standard IRO-006-4. See
Standards for Business Practices and Communication Protocols for
Public Utilities, Order No. 676-C, 73 FR 43848 (July 29, 2008), FERC
Stats. & Regs. ] 31,274, at P 7 n.11, P 9, P 80 (2008); see also
Order No. 713, 124 FERC ] 61,071 at P 8.
\9\ An IROL is a system operating limit that, if violated, could
lead to instability, uncontrolled separation, or cascading outages
that adversely impact the reliability of the Bulk-Power System.
---------------------------------------------------------------------------
7. Reliability Standard IRO-006-4 contains five requirements.
Requirement R1 obligates a reliability coordinator experiencing a
potential or actual system operating limit (SOL) or IROL violation
within its reliability coordinator area to select one or more
procedures to mitigate potential or actual transmission overloads. The
requirement also identifies the regional TLR procedures in WECC and
ERCOT. Requirement R1 includes a warning that the TLR procedure alone
is an inappropriate and ineffective tool to mitigate an actual IROL
violation and provides alternatives.
8. Requirement R2 mandates that the reliability coordinator only
use local TLR or congestion management procedures to which the
transmission operator experiencing the potential or actual SOL or IROL
is a party.
9. Requirement R3 establishes that a reliability coordinator with a
TLR obligation from an interconnection-wide procedure follow the
curtailments as directed by the interconnection-wide procedure. It also
requires that a reliability coordinator desiring to use a local
procedure as a substitute for curtailments as directed by the
interconnection-wide procedure must obtain prior approval from the ERO.
10. Requirement R4 mandates that each reliability coordinator
comply with interconnection-wide procedures, once they are implemented,
to curtail transactions that cross interconnection boundaries.
Requirement R5 directs balancing authorities and reliability
coordinators to comply with applicable interchange-related Reliability
Standards during the implementation of TLR procedures.
II. Discussion
A. Approval of Reliability Standard IRO-006-4
11. In the NOPR, the Commission proposed to approve IRO-006-4 as
just, reasonable, not unduly discriminatory or preferential, and in the
public interest.\10\
---------------------------------------------------------------------------
\10\ NOPR, FERC Stats. & Regs. ] 32,632 at P 47.
---------------------------------------------------------------------------
12. NERC and IESO support approval of the Reliability Standard.
Lafayette and LEPA state that they support the Commission's effort to
reduce the use of TLRs; they support adoption of the Reliability
Standards as proposed by the Commission.
13. Pursuant to section 215(d) of the FPA, the Commission approves
Reliability Standard IRO-006-4 as mandatory and enforceable. The ERO's
proposal implements the Commission's directives in Order No. 693 to
include a warning that the TLR procedure is an inappropriate and
ineffective tool to mitigate actual IROL violations and identify
available alternatives to mitigate an IROL violation.\11\ Further, as
discussed below, the Commission believes that the separation of
business practices from the Reliability Standards will not compromise
Bulk-Power System reliability. Accordingly, the Commission approves
IRO-006-4 as just, reasonable, not unduly discriminatory or
preferential, and in the public interest, as discussed below.
---------------------------------------------------------------------------
\11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 577.
---------------------------------------------------------------------------
14. As a separate matter, pursuant to section 215(d)(5) of the FPA,
the Commission directs the ERO to develop, pursuant to its Reliability
Standards development procedure, modifications to IRO-006-4 to address
the Commission's specific concerns, as discussed below. Further, the
Commission approves the proposed violation risk factors and violation
severity levels and directs the ERO to submit a filing within 60 days
of the effective date of this Supplemental Final Rule revising
specified violation risk factors and violation severity levels.
[[Page 12258]]
1. Transfer of Business-Related Requirements to NAESB
15. The Commission, in the NOPR, sought comments on whether the
removal and transfer to NAESB of the business-related issues formerly
contained in Reliability Standard IRO-006-3 could compromise Bulk-Power
System reliability.\12\
---------------------------------------------------------------------------
\12\ NOPR, FERC Stats. & Regs. ] 32,632 at P 49.
---------------------------------------------------------------------------
a. Comments
16. NERC states that it has coordinated with NAESB and believes
there is no compromise in reliability as a result of the removal and
transfer to NAESB of the business-related issues formerly contained in
the earlier standard, IRO-006-3. NERC notes that there are minor
differences in terminology and language between the NERC and NAESB
documents. It states that, although these differences may be confusing
to industry, they do not affect the ability to successfully implement
the standards as written. Further, NERC indicates that it is working
with NAESB to develop more in-depth coordination procedures to ensure
that language is consistent.
b. Commission Determination
17. Based on the ERO's explanation, we are persuaded that the
separation of business practices from the Reliability Standards will
not compromise Bulk-Power System reliability. However, we are concerned
with respect to the ERO's acknowledgement that there are differences in
terminology and language used between the ERO Reliability Standard and
the NAESB standard that pertain to TLR procedures. The ERO indicates
that it is currently working with NAESB to develop more in-depth
coordination procedures to ensure that language is consistent. Thus, we
expect that the ERO, working with NAESB, will resolve the
inconsistencies in terminology between the Reliability Standard and
NAESB standard regarding TLR procedures as their agendas permit; we do
not find a need to direct changes at this time.
2. Improvements to the TLR Procedure
a. Comments
18. Several commenters raise concerns regarding needed improvements
to the TLR procedure. Lafayette and LEPA comment that they have often
``suffered'' from the curtailment of firm transmission service pursuant
to the TLR procedure and support efforts to reduce its use. NRG
comments that the excessive use of TLRs is reducing system reliability
in some non-organized markets and that the Commission should require
NERC to modify its TLR rules to limit the excessive use of TLRs. NRG
states that the Interchange Distribution Calculator (IDC) is critical
to the TLR process,\13\ since reliability coordinators rely on the
curtailments specified by the IDC. NRG identifies two significant
problems with the IDC that IRO-006-4 does not address: (1) The
generation and load data relied on by the IDC is static, with no
requirement that it be regularly updated or accurately reflect real-
time conditions; and (2) the IDC methodology does not curtail certain
schedules or determine native network load obligations accurately in
some cases, leading to a discriminatory assignment of reliability
obligations. NRG urges the Commission to direct NERC to modify the IDC
to base its curtailment decisions on accurate native load information
and to base them consistently on local load and generation amounts.
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\13\ The IDC is a mechanism used by the reliability coordinators
in the Eastern Interconnection to calculate the distribution of
interchange transactions over specific flowgates. It includes a
database of all interchange transactions and a matrix of the
distribution factors for the Eastern Interconnection.
---------------------------------------------------------------------------
19. Further, NRG states that there is a gap in the proposed TLR
procedures that allows certain non-firm transactions to escape
curtailment prior to the issuance of a Level 5 TLR (i.e., curtailment
of firm transactions and firm native load). NRG reiterates its concerns
in its comments on NERC's September 11, 2008 filing in this proceeding.
20. ISO/RTO Council suggests that the Commission clarify that,
although TLR should not be ruled out as a congestion management tool,
NERC should address the use of more sophisticated tools to respond to
the impacts that loop flow and the lack of transparency in non-RTO
regions can have on congestion management at the ``seams.''
b. Commission Determination
21. The above comments on suggested improvements to the TLR
procedure are beyond the scope of this proceeding, which pertains to
the separation of business practices from the ERO's TLR procedure and
implementation of the Commission's directives set forth in Order No.
693.\14\ We note, however, that the ERO indicated in its December 21,
2007 filing that it has a three-phase plan to improve the TLR
procedures, and the third phase will consist of ``a complete redrafting
to incorporate enhancement and changes beyond the separation of
reliability and business practice issues.'' \15\ Therefore, the phase
three proceeding would provide a proper forum for commenters to raise
their concerns. The Commission believes that NRG and other commenters
raise valid issues and urges the commenters to raise--and expects the
ERO to consider--these matters in an appropriate proceeding. We also
note that NERC states it is currently updating the IDC to more
accurately determine the impacts of native load and network
service.\16\
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\14\ NERC's comments in reply to NRG, as well as Constellation's
and, in their joint supplemental pleading, Lafayette and LEPA's
comments relating to the TLR procedure are likewise beyond the scope
of this proceeding.
\15\ NERC December 21, 2007 Filing at 7. Moreover, pursuant to
the ERO's Rules of Procedure, a commenter can submit a Standard
Authorization Request to the ERO to propose revisions to a
Reliability Standard.
\16\ See NERC September 11, 2008 Response at 10.
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B. Requirement R1
22. Requirement R1 of IRO-006-4 provides, in part:
R1. A Reliability Coordinator experiencing a potential or actual
SOL or IROL violation within its Reliability Coordinator Area shall,
with its authority and at its discretion, select one or more
procedures to provide transmission loading relief. These procedures
can be a ``local'' (regional, interregional, or sub-regional)
transmission loading relief procedure or one of the following
Interconnection-wide procedures:
R1.1 The Interconnection-wide Transmission Loading Relief (TLR)
procedure for use in the Eastern Interconnection is provided in
Attachment 1-IRO-006-4. The TLR procedure alone is an inappropriate
and ineffective tool to mitigate an IROL violation due to the time
required to implement the procedure. Other acceptable and more
effective procedures to mitigate actual IROL violations include:
Reconfiguration, redispatch, or load shedding.
Below, we address three concerns regarding Requirement R1: (1) Use
of the TLR procedure in conjunction with other procedures to mitigate
an IROL violation; (2) use of the TLR procedure to mitigate an actual
IROL violation is a violation of the Reliability Standard; and (3) use
of demand-side management as an effective procedure to mitigate IROL
violations.
1. Use of TLR Procedure in Conjunction With Other Procedures To
Mitigate an IROL Violation
a. Final Rule Discussion
23. In the Final Rule, the Commission did not approve or remand
IRO-006-4 but rather directed the ERO to submit a filing addressing the
Commission's concerns regarding Requirements R1 and R1.1 of the
Reliability Standard.\17\ Specifically, the Final Rule explained
[[Page 12259]]
that, consistent with the Final Blackout Report,\18\ Order No. 693
directed NERC to develop a modification to the TLR procedure that the
Commission accepted in IRO-006-3 that ``(1) includes a clear warning
that the TLR procedure is an inappropriate and ineffective tool to
mitigate actual IROL violations and (2) identifies in a Requirement the
available alternatives to mitigate an IROL violation other than use of
the TLR procedure.''\19\
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\17\ Order No. 713, 124 FERC ] 61,071 at P 46-50.
\18\ See U.S.-Canada Power System Outage Task Force, Final
Report on the August 14, 2003 Blackout in the United States and
Canada: Causes and Recommendations, at 163 (April 2004) (Final
Blackout Report), available at https://www.ferc.gov/industries/electric/indus-act/blackout.asp. Recommendation 31 of the report
provides that NERC should ``[c]larify that the [TLR] process should
not be used in situations involving an actual violation of an
Operation Security Limit.''
\19\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 577,
964.
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24. In its December 2007 filing, NERC stated that it modified the
Reliability Standard in response to the Order No. 693 directive. In
particular, the ERO modified Requirement R1.1 of IRO-006-4 to provide
that ``[t]he TLR procedure [for the Eastern Interconnection] alone is
an inappropriate and ineffective tool to mitigate an IROL violation due
to the time required to implement the procedure.'' (Emphasis added.)
25. In Order No. 713, the Commission queried whether the language
of Requirements R1 and R1.1 are adequate to satisfy the concern of the
Final Blackout Report and Order No. 693 that the TLR procedure not be
used in response to an actual IROL violation. The Commission explained:
An entity is not prevented from using the TLR procedure to avoid
a potential IROL violation before a violation occurs. If, while a
TLR procedure is in progress, an IROL violation occurs, it is not
necessary for the entity to terminate the TLR procedure. However,
the Commission believes that it is inappropriate and ineffective to
rely on the TLR procedure, even in conjunction with another tool, to
address an actual IROL violation.[\20\]
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\20\ Order No. 713, 124 FERC ] 61,071 at P 49.
Accordingly, the Commission directed the ERO to explain Requirements R1
and R1.1 of IRO-006-4 in light of this concern.
b. NERC Responsive Filing
26. NERC responds that the most immediate reliability goal is the
mitigation of the IROL violation. NERC states that there are four
acceptable options to respond to an IROL violation: inter-area
redispatch, intra-area redispatch, reconfiguration of the transmission
system, and voluntary or involuntary reductions in load. According to
NERC, Requirement R1.1 of IRO-006-4 identifies these options as
``reconfiguration, redispatch, or load shedding.''
27. Further, NERC believes that taking concurrent action, i.e.,
using TLR in conjunction with one of the above operation actions, ``can
result in positive outcomes.'' \21\ NERC agrees with the Commission
that the use of TLR prior to an actual IROL violation is an acceptable
practice. NERC also agrees that a TLR should not be terminated
following the occurrence of an IROL violation if the TLR procedure was
already in progress. However, NERC points out that it is impossible to
decouple the TLR actions of the previous hour from those of the current
hour. According to NERC, the progressive nature of TLR requires
constant management to ensure that reliability and open access are
maintained. NERC maintains that the Commission should endorse a
situation where, on a continuing basis, a TLR can be reissued for a
constrained facility in order to assist in providing relief, in
addition to the more immediate operator actions taken to alleviate the
actual overload. NERC disagrees that all interchange transactions
should be frozen at current levels while any new transactions are held,
because this could result in aggravation of the IROL violation from an
increase in native load and/or parallel flows. For similar reasons,
NERC also believes it is inappropriate to let the curtailments issued
for the current hour expire and not reissue the TLR, because this
practice also could aggravate the IROL violation, as the single-hour
established curtailments would expire and transactions would be
reloaded.
---------------------------------------------------------------------------
\21\ NERC September 11, 2008 Response at 4.
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28. NERC avers that the intent of the Commission's directive is
that, should an entity experience an actual IROL violation, that entity
should not invoke the TLR process with the belief that the IROL
violation will be mitigated by the TLR within an acceptable timeframe.
NERC contends, however, that any standard that would require a
reliability coordinator to explicitly not use TLR as one of the tools
it has in responding to an actual IROL violation could compromise
reliability, open access, or both. NERC states that it is appropriate
for an entity to use the TLR process in response to an actual IROL,
provided such use is a complementary action to other operator actions
employed to mitigate the IROL violation more expeditiously and, as
such, invoking TLR is not the only action taken.
29. NERC provides examples of use of TLR in conjunction with other
acceptable options to provide a more rapid and effective return from
emergency conditions. For example, NERC states that if an entity
redispatches generation and invokes a TLR at the same time in response
to an actual IROL violation, that entity may utilize the generation to
respond immediately to mitigate the violation and bring the flow below
the IROL, then reduce the generation once the TLR is able to
effectively and more equitably address the issue.
c. Comments on NERC Responsive Filing
30. Southern agrees with NERC's explanation regarding the ways in
which a reliability coordinator may use the TLR procedure. Southern
believes that the TLR procedure, when used in conjunction with
reconfiguration, redispatch, or load shedding, is an indispensable
means for providing relief for constrained facilities. Southern
comments that any revision to Reliability Standard IRO-006-4 should be
developed through the Reliability Standards development process.
31. ISO/RTO Council comments that it generally agrees with the
sequencing of TLR procedures as explained by NERC. While ISO/RTO
Council supports limiting the wide-scale use of TLR as a congestion
management tool, it believes that the Commission's interpretation may
draw too fine a line in ``hard wiring'' a particular sequence of the
use of TLRs. It agrees with NERC that ``it is impossible to decouple
the actions of the previous hour from those of the current hour,'' and
urges the Commission to avoid placing artificial barriers in the
sequencing of the use of the TLR procedure.
d. Commission Determination
32. The Commission is satisfied with the ERO's response. We agree
with the ERO that acceptable immediate actions to mitigate an IROL
violation may include one or more of the following: inter-area
redispatch, intra-area redispatch of generation, reconfiguration of the
transmission system, and voluntary or involuntary load reductions. When
an IROL violation occurs, the reliability coordinator should use the
above tools appropriate to the circumstance and duration of the actual
IROL violation for mitigation.
33. We understand from its explanation that the ERO agrees that use
of the TLR procedure is not one of the acceptable immediate actions to
mitigate an IROL violation. Rather, use
[[Page 12260]]
of the TLR procedure is complementary to, and may be used in
conjunction with, the identified tools to mitigate an IROL violation,
provided that the action to implement the TLR procedure does not
interfere with or delay an entity taking the immediate action required
to mitigate the IROL violation.\22\ The Commission understands this is
the intent of the language in Requirement R1.1 that ``[t]he TLR
procedure alone is an inappropriate and ineffective tool to mitigate an
IROL violation due to the time required to implement the procedure.''
---------------------------------------------------------------------------
\22\ The ERO states that ``it is appropriate for an entity to
use the TLR process in response to an actual IROL, provided that it
is a complementary action to other operator actions employed to
mitigate the IROL violation more expeditiously and, as such,
invoking TLR is not the only action taken.'' NERC September 11, 2008
Response at 5 (emphasis added).
---------------------------------------------------------------------------
34. The Commission reiterates that the use of a TLR is not required
to be terminated following the occurrence of an IROL violation if the
TLR procedure was already in progress prior to exceeding the IROL.
Thus, if an IROL is exceeded after a TLR procedure is in progress, the
reliability coordinator does not need to revoke the TLR. Moreover, in
the event that a potential IROL violation progresses to an actual IROL
violation near the top of the hour and a TLR is already in progress, it
is acceptable for the reliability coordinator to reissue the TLR to
prevent reloading or exacerbating interchange schedules, while more
immediate actions are taken to relieve the IROL violation.
35. During an actual IROL violation, the primary concern of the
reliability coordinator should be to mitigate the violation
immediately. Because the TLR procedure may take an extended time to
fully implement, it is not acceptable for a reliability coordinator to
invoke the TLR process with the belief that the IROL violation will be
mitigated by the TLR. Therefore, during an actual IROL violation, a
reliability coordinator should initiate more immediate actions to
relieve the IROL violation before initiating a TLR and at no point
should implementing a TLR divert operator resources or delay
implementation of more immediate IROL mitigation actions. In accord
with this understanding, we find Requirement R1.1 consistent with the
Final Blackout Report and Order No. 693.
36. As discussed above, based on the ERO's response we believe that
our understanding of Requirement R1.1 comports with that of the ERO.
While IRO-006-4, Requirement R1.1, should be implemented and enforced
with the above understanding, we believe that the term ``alone'' in the
provision could be improved to more precisely convey that it is a
violation of Requirement R1.1 to rely on the TLR procedure when an
entity is in the process of mitigating an IROL violation and the entity
has not taken more immediate and effective means to achieve relief.
Accordingly, pursuant to section 215(d)(5) of the FPA, the Commission
directs the ERO to develop a modification of Requirement R1.1 with
respect to the term ``alone,'' consistent with this discussion.
2. Use of TLR Procedure Alone To Mitigate an IROL Violation
37. In the NOPR, the Commission proposed to approve the Reliability
Standard based on the interpretation that using a TLR procedure alone
to mitigate an actual IROL violation is a violation of the Reliability
Standard.\23\
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\23\ NOPR, FERC Stats. & Regs. ] 32,632 at P 48.
---------------------------------------------------------------------------
a. Comments
38. ISO/RTO Council objects to the Commission's proposal to approve
the proposed Reliability Standard IRO-006-4 based on the interpretation
that using a TLR alone to mitigate an IROL violation is a violation of
the Reliability Standard. ISO/RTO Council expresses concern that the
ERO has procedures for interpreting Reliability Standards and those
procedures may be eroded through after-the-fact Commission
interpretation without the opportunity for NERC stakeholder review.
ISO/RTO Council urges greater deference to following the Commission-
approved NERC process for the interpretation of Reliability Standards.
Should that process prove too time-consuming, ISO/RTO Council suggests
that the Commission revisit the process itself rather than undertaking
de facto amendments to it by interpreting the Reliability Standard in
ways not addressed through the NERC stakeholder process.
b. Commission Determination
39. This issue raised in the NOPR is somewhat overtaken by the
further Commission inquiry in the Final Rule regarding the appropriate
tools for mitigating an IROL violation and our discussion immediately
above on this issue. As we state above, IRO-006-4, Requirement R1.1,
should be ``implemented and enforced'' based on our understanding in
this order of the issue.
40. In any case, we adopt our NOPR proposal and approve Reliability
Standard IRO-006-4 with the understanding that using a TLR procedure to
mitigate an actual IROL violation is a violation of the Requirement
R1.1 of the Reliability Standard, as discussed above. While ISO/RTO
Council raises procedural concerns regarding the Commission's
interpretation, neither ISO/RTO Council nor any other commenter
expresses concern regarding the substance of the Commission's
interpretation. Further, the Commission previously has determined--or
interpreted--when a violation of a Reliability Standard would
occur.\24\
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\24\ N. Am. Elec. Reliability Corp., 119 FERC ] 61,321, at P 10
(2007) (``A vegetation-related transmission outage would result in a
violation of Requirement R1, R2 or both.'').
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3. Use of Demand-Side Management To Mitigate IROL Violations
41. In a joint concurrence to the NOPR, then-Commissioner
Wellinghoff and Commissioner Kelly noted that demand-side management is
not explicitly included in Requirement R1.1 of IRO-006-4 among the
acceptable tools to mitigate an IROL violation. The concurrence noted
that nothing in the Reliability Standard precludes the use of demand-
side management that can quickly respond to emergencies and discussed
available demand-side management technologies currently used that may
be deployed as readily, if not faster, than involuntary load shedding.
The joint concurrence expressed a preference to expressly include
demand-side management among the list of tools to mitigate IROL
violations, set forth in Requirement R1.1.
a. Comments
42. NERC comments that it did not intend the list of tools in
Requirement R1.1 for addressing IROL violations to be an exhaustive
list; effective demand-side response could also be considered.
43. Alcoa comments that demand-side management should be included
in the list of alternatives to the TLR procedure in IRO-006-4. Alcoa
claims that its smelters have demonstrated an ability to curb demand to
assist in TLR efforts and alleviate IROL violations. In addition, Alcoa
claims that in some instances load may be able to respond to IROL
violations more quickly and effectively than generation reserves.
According to Alcoa, flexible loads served at transmission voltages are
most effective for immediate demand response to IROL violations.
44. ISO/RTO Council comments that IRO-006-4 does not preclude
reliance on demand-side management that can respond quickly to
emergencies. It believes that the Reliability Standards should be
resource-neutral in their
[[Page 12261]]
application. ISO/RTO Council states that, consistent with Order No.
693, so long as a resource can address system conditions, it should be
recognized in the Reliability Standards as a tool upon which the system
operator can rely. ISO/RTO Council also notes initiatives by NERC and
NAESB to develop rules for classifying demand-side management and
identifying methods for measurement and verification.
b. Commission Determination
45. It is clear from the comments of the ERO, Alcoa, and ISO/RTO
Council that the Reliability Standard includes effective demand-side
management as a tool to mitigate an IROL violation pursuant to
Requirement R1.1 of IRO-006-4. In its September 11, 2008 filing, the
ERO states that there are four acceptable options to respond to an IROL
violation: inter-area redispatch, intra-area redispatch,
reconfiguration of the transmission system, and voluntary or
involuntary reductions in load. The ERO further explains that the
reference in Requirement R1.1 to ``load shedding'' refers to voluntary
or involuntary reductions in load.\25\ Thus, as clarified by NERC,
Requirement R1.1 allows the use of effective demand-side management as
one tool to mitigate an IROL violation. The Commission will implement
and enforce this Reliability Standard as clarified by NERC.
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\25\ NERC September 11, 2008 Response at 4.
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C. Violation Risk Factors
46. In the NOPR, the Commission proposed to direct the ERO to
modify the violation risk factors assigned to Requirements R1 through
R4 by raising them to ``high.'' This proposal was based on the
Commission's guidelines for evaluating validity of violation risk
factor assignments.\26\ In particular, the Commission reasoned that a
``high'' violation risk factor assignment for Requirements R1 through
R4 is consistent with findings of the Final Blackout Report.\27\
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\26\ The guidelines are: (1) Consistency with the conclusions of
the Blackout Report; (2) consistency within a Reliability Standard;
(3) consistency among Reliability Standards; (4) consistency with
NERC's definition of the violation risk factor level; and (5)
treatment of requirements that co-mingle more than one obligation.
The Commission also explained that this list was not necessarily
all-inclusive and that it retains the flexibility to consider
additional guidelines in the future. A detailed explanation is
provided in North American Electric Reliability Corp., 120 FERC ]
61,145, at P 8-13 (2007).
\27\ Recommendation 31 states, ``Clarify that the transmission
loading relief (TLR) process should not be used in situations
involving an actual violation or an Operation Security Limit.''
Final Blackout Report at 163.
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1. Comments
47. NERC, IESO, and ISO/RTO Council urge the Commission to adopt
the violation risk factors proposed by NERC. NERC contends that the
Commission's reliance on the violation risk factors for IRO-006-3,
Requirements R1 through R4, submitted in 2007 is not appropriate.\28\
NERC explains that the violation risk factors submitted in the current
proceeding for IRO-006-4 received significant industry review and
scrutiny, which was not the case with the 2007 submission.
---------------------------------------------------------------------------
\28\ See NOPR, FERC Stats. & Regs. ] 32,632 at P 51 (noting that
the corresponding requirements in the earlier Commission-approved
version of the Reliability Standard were assigned a ``high''
violation risk factor).
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a. Violation Risk Factors for Requirement R1
48. NERC agrees with the Commission that Requirements R1.1 through
R1.3 are explanatory text and that a violation risk factor need not be
assigned to each subsection. However, NERC, ISO/RTO Council, and IESO
disagree with the Commission's proposal to direct the ERO to raise the
violation risk factor from ``medium'' to ``high.''
49. Specifically, NERC and ISO/RTO Council disagree with the
Commission's statement that a ``high'' violation risk factor assignment
is consistent with the findings of the Final Blackout Report. According
to NERC, the main thrust of Recommendation 31 in the Final Blackout
Report (regarding the use of TLR in response to actual violations) has
been addressed in Requirement R1.1 of the Reliability Standard and does
not warrant a ``high'' violation risk factor designation. ISO/RTO
Council contends that the Final Blackout Report does not identify and
rank the associated risk of not implementing each recommendation. ISO/
RTO Council claims that the Final Blackout Report Recommendation 31
simply focuses on reliability coordinators using tools other than TLRs
for a real-time emergency.
50. Further, NERC contends that IRO-006-4, Requirement R1 and its
sub-requirements are procedural in nature, because they focus on how
relief is achieved rather than on whether relief is achieved. NERC
recognizes that ``the result of an ineffective application of this
requirement could impact the electrical state of the grid.'' \29\
However, NERC posits that IRO-005-1, Requirement R5 is the principal
source of the reliability coordinator's obligation to relieve actual or
potential IROL violations. For these reasons, NERC believes Requirement
R1 merits a ``medium'' violation risk factor.
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\29\ NERC Comments at 19. Unless otherwise indicated, citations
to parties' comments refer to comments filed after the NOPR, prior
to the Final Rule.
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51. IESO agrees with NERC's assessment that Requirement R1 is
administrative in nature. IESO states that Requirement R1 provides the
initiating reliability coordinator options from which to choose to
relieve transmission constraints, and it becomes a reliability
requirement only when a reliability coordinator chooses an
interconnection-wide procedure as one of the means to relieve
transmission constraints. IESO explains that if a reliability
coordinator chooses other control actions but not an interconnection-
wide TLR procedure to prevent or mitigate an IROL violation, this
Reliability Standard will not apply, and the reliability coordinator
will not be subject to the requirements in the standard. Further, IESO
contends that if a reliability coordinator chooses to apply an
interconnection-wide procedure and the requirements stipulated therein
are not complied with, there is a potential risk on the control and
operation of the system, because non-compliance with the TLR procedure
may affect other actions that are also being applied to prevent or
mitigate an IROL violation.
52. IESO and ISO/RTO Council disagree with the Commission's
statement that, if the reliability coordinator chooses an unapproved
and ineffective procedure for relief or fails to choose a procedure
entirely, potential or actual IROL violations will not be mitigated as
intended by the reliability coordinator.\30\ According to IESO and ISO/
RTO Council, with or without the interconnection-wide relief procedure,
reliability coordinators and transmission operators are required by
other Reliability Standards such as TOP-002, TOP-004, and IRO-005 to
apply local control actions and procedures to prevent and mitigate SOL
and IROL violations.
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\30\ See NOPR, FERC Stats. & Regs. ] 32,632 at P 52.
---------------------------------------------------------------------------
53. ISO/RTO Council also favors a ``medium'' violation risk factor
assignment for Requirement R1, stating that interconnection-wide
procedures are only one tool in the toolbox to restore system
integrity.
b. Violation Risk Factors for Requirement R2
54. NERC does not believe that a reliability coordinator could
successfully implement a local procedure to which the particular
transmission operator is not a party. In any event, NERC does not
believe that
[[Page 12262]]
the implementation of such a procedure would in itself create a
``high'' reliability risk. NERC states that if the reliability
coordinator were able to achieve the relief, then it would be
considered as having the lesser infraction of using the wrong tools to
achieve the correct results. Further, it states that if such a
procedure did not provide the required relief, the reliability
coordinator would be in violation of IRO-005-1, Requirement R5. NERC
claims this requirement is focused on ``how'' the relief is provided,
not ``whether'' the relief is provided. In addition, NERC states that
the use of a local procedure is implemented at the discretion of the
reliability coordinator and is not obligatory. Accordingly, NERC
believes that a violation risk factor of ``lower'' is appropriate.
55. IESO argues the intent of Requirement R2 is to ensure that a
reliability coordinator who initiates actions to relieve transmission
constraints in a transmission operator's area applies the actions that
are either totally local to the transmission operator's area or which
have been developed by the transmission operator jointly with other
transmission operators. IESO states that choosing which procedures to
relieve transmission constraints is an administrative requirement since
the reliability coordinator, having the authority to ensure wide area
reliability, may apply any procedures that it deems necessary to
relieve transmission constraints. IESO contends that in the event the
reliability coordinator applies a relief procedure to which the
constrained transmission operator is not a party, it should not be a
presumption that prevention or mitigation of an IROL violation will not
be achieved since the reliability coordinator is obligated to ensure
operating reliability through compliance with IRO-005-1. For these
reasons, IESO believes that Requirement R2 is administrative and
deserves a ``lower'' violation risk factor.
56. IESO disagrees with the Commission assessment that
``[v]iolation risk factors should not be assigned differently for
requirements in separate Reliability Standards based on compliance with
another Reliability Standard,'' on the basis that ``[t]wo requirements
either achieve separate reliability goals and, therefore, violation of
them represents independent risks, or two requirements share the same
reliability goal.'' \31\ IESO states that, while the IRO-005-1
requirements and the TLR requirements share the same reliability goal,
the latter is in fact subordinate to the former. Thus, IESO maintains
that there should not be two simultaneous ``high'' risk penalties
assessed for a reliability coordinator for failing to comply with the
TLR procedure of Requirements R1 or R2 and for failing to prevent or
mitigate an IROL violation as required in IRO-005-1.
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\31\ IESO Comments at 8 (quoting NOPR, FERC Stats. & Regs. ]
32,632 at P 53).
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c. Violation Risk Factors for Requirement R3
57. NERC maintains that Requirement R3 is focused on the procedural
aspects of the Reliability Standard, i.e., how the relief is provided
rather than whether the relief was provided. NERC argues that if the
entity is able to achieve the relief through other means that were not
pre-approved, then it would have committed an administration violation
of using the wrong tools to achieve the correct results. According to
NERC, if such a procedure did not provide the required relief, the
reliability coordinator would be in violation of IRO-005-1, Requirement
R5. For reasons similar to those provided for Requirement R2, IESO
agrees with NERC that Requirement R3 is administrative and deserves a
``lower'' violation risk factor.
d. Violation Risk Factors for Requirement R4
58. NERC claims that a violation of Requirement R4 is ``a specific
kind of violation of the INT family of Reliability Standards that is
being caused by a reliability coordinator's inaction, resulting in an
imbalance in one or both of the interconnections involved.'' \32\ NERC
comments that Requirement R4 complements the INT group of Reliability
Standards in the same fashion as Requirement R5, which the Commission
supported with a violation risk factor of ``medium.'' IESO concurs with
NERC's assignment of a ``medium'' violation risk factor to Requirement
R4. IESO reasons that complying with the provisions of the
interconnection-wide procedure of the initiating reliability
coordinator is no more stringent than complying with the request for
relief based on the TLR procedure within the same interconnection, the
latter being the requirement in R1.
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\32\ NERC Comments at 21-22.
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2. Commission Determination on Violation Risk Factors
59. For the reasons stated in the NOPR and as discussed below, the
Commission directs the ERO to modify the violation risk factors of
Requirements R1 through R4 of IRO-006-4 to ``high.''
60. The Commission disagrees with NERC and others and finds that it
is appropriate to use the Final Blackout Report as a basis for setting
violation risk factors of the proposed Reliability Standard at ``high''
for several reasons. The Final Blackout Report is the result of the
U.S-Canada Task Force's investigation of the August 14, 2003 blackout
where the Task Force identified contributing factors and causes that
put the Bulk-Power System at risk for that event. Specifically, the
Final Blackout Report identified an attempt to use the TLR process to
address transmission power flows without recognizing that the
imposition of a TLR procedure would not solve the problem as one
contributing cause for the initiation of the blackout of August 2003.
Based on its findings, the Task Force developed recommendations to
reduce the possibility of future outages and to reduce the scope of
future blackouts that may nonetheless occur.\33\ Thus, the Task Force
developed Recommendation No. 31 to prevent the initiation of a TLR
procedure during an actual violation of an SOL.\34\ Since the Final
Blackout Report was developed to document the August 14, 2003
blackout's contributing factors and causes, which include specific
violations of then voluntary reliability policies, guidelines, and
standards, the Commission believes it is appropriate to use the
findings of the Final Blackout Report as one of the guidelines for the
determination of a requirement's violation risk factor. Specifically,
the Commission believes the findings of the Final Blackout Report are
particularly relevant in the determination of violation risk factors of
then-voluntary reliability policies, guidelines, and standards
identified as causes and factors of the August 14, 2003 blackout that
the ERO proposes as mandatory Reliability Standards, such as IRO-006-4.
The Commission also disagrees for the same reasons with commenters that
argue the Final Blackout Report does not identify and rank the
associated risk of not implementing each recommendation.
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\33\ Final Blackout Report at 20.
\34\ Id. at 163.
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61. While we agree that Requirement R.1.1 discourages the use of a
TLR to mitigate a real-time IROL violation, Requirement R1.1, is merely
explanatory text. It is Requirement R1 that establishes that the
reliability coordinator shall choose one or more of the procedures,
listed as sub-requirements, to provide the appropriate
[[Page 12263]]
transmission relief. The selection of a procedure to provide relief to
address a potential or actual SOL or IROL violation is directly
relevant to Final Blackout Report Recommendation No. 31. If an
inappropriate procedure is selected in an attempt to mitigate an IROL,
the Bulk-Power System is vulnerable to cascading outages, as was the
case on August 14, 2003.
62. The Commission is not persuaded by NERC's argument relative to
``using the wrong tools to achieve the correct results'' in the
assignment of a requirement's violation risk factor. Contrary to this
argument, the Commission has recognized that there may be some
Reliability Standards where the means, or the ``how,'' is inextricably
linked to the effectiveness of the Reliability Standard.\35\ We find
that this is the case here. The Commission has explained that the
inclusion of implementation practices within requirements of such a
standard is to reduce uncertainty and further objectives that foster
reliability which, if violated, would pose increased reliability risk
to the Bulk-Power System.\36\
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\35\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, at P 260; see also id., Order No. 672-A,
FERC Stats. & Regs. ] 31,212 (2006).
\36\ N. Am. Elec. Reliability Corp., 121 FERC ] 61,179, at P 15
(2007).
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63. Similarly, NERC's argument that, if the reliability coordinator
were able to achieve the relief desired without complying with
Requirement R1, it would be considered as having the lesser infraction
of using the wrong tools to achieve the correct results is also flawed.
The purpose of the violation risk factor is to accurately portray the
risk a violation poses to the Bulk-Power System,\37\ notwithstanding a
violator's avoidance of reliability problems in a particular case by
using an unreliable operation. This Commission determination is
relevant to arguments that a ``high'' violation risk factor is not
appropriate because the subject requirement overlaps other
requirements, duplicates other requirements, or could be implemented by
alternative means. The Commission has previously determined that NERC
should address those issues through the Reliability Standard
development process.\38\
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\37\ Id. P 16.
\38\ Id. P 39.
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64. The Commission also disagrees with the characterization of
Requirements R1, R2, and R3 as procedural choices without reliability-
related consequences. For example, failure to implement Requirement R1,
i.e., failure to select one or more procedures to provide transmission
relief, is not just a procedural or administrative choice; it is a
decision that has the potential to place the Bulk-Power System at risk
of cascading outages. Although commenters argue that a violation of
Requirement R2 is essentially administrative in nature and that the
prevention or mitigation of the potential or actual SOL or IROL may be
achieved through compliance with another Reliability Standard, which
would justify a ``lower'' violation risk factor, the Commission
disagrees. Requirements R1 through R4 require that a reliability
coordinator choose and follow the appropriate procedure to provide
relief. If the reliability coordinator chooses an unapproved and/or
ineffective procedure for relief or fails to choose a procedure
entirely, potential or actual IROL violations will not be mitigated as
intended by the reliability coordinator. Therefore, the Commission
finds that violation of Requirements R1 through R4 present a high
reliability risk to Bulk-Power System. Assigning a ``high'' violation
risk factor to Requirements R1 through R4 is consistent with the Final
Blackout Report.
65. A violation risk factor represents the reliability risk a
violation of that requirement presents to the Bulk-Power System.
Violation risk factors should not be assigned differently for
requirements in separate Reliability Standards based on compliance with
another standard. This assessed reliability risk is independent and not
contingent upon compliance with other requirements of Reliability
Standards. While the Commission recognizes the complementary nature of
proposed Reliability Standard IRO-006-4, Requirement R1 and Reliability
Standard IRO-005-1, Requirement R5, the fact that requirements may
share the same reliability objective as another requirement does not
justify lowering one or more of the requirements' violation risk
factors. In fact, the Commission expects the assignment of violation
risk factors corresponding to requirements that address similar
reliability goals in different Reliability Standards to be treated
comparably.\39\ The Commission notes that Reliability Standard IRO-005-
1, Requirement R5, is assigned a ``high'' violation risk factor.
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\39\ N. Am. Elec. Reliability Corp., 119 FERC ] 61,145, at P 25
(2007).
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66. Further, the argument that a ``lower'' violation risk factor
assigned to Requirement R1 is appropriate since Requirement R1 is
administrative in nature (because it provides the initiating
reliability coordinator with options to choose among available
procedures and only becomes a reliability requirement when a
reliability coordinator chooses an interconnection-wide procedure) is
flawed. First, the fact that a requirement provides ``options'' does
not automatically make that requirement administrative. It is the
potential reliability risks the failure to take options mandated by the
requirement presents to the Bulk-Power System that determines that
requirement's violation risk factor. Second, requirements become
mandatory and enforceable reliability requirements only after
Commission approval and not after any action, or inaction, by an
applicable entity.
67. For the same reasons explained above, the Commission disagrees
with comments that Requirement R3 focuses on procedural aspects of the
Reliability Standard founded on the arguments that the requirement
related to ``how'' the relief is provided rather than ``whether'' the
relief was provided, where the ``wrong tools'' were used to achieve the
``correct results.'' Even if an entity, having violated a Reliability
Standard, achieves correct results, the entity's success should be
attributed to a matter of chance and may be more risky than the
operation set forth in the Reliability Standard.
68. IESO's comment that there should not be two simultaneous
``high'' risk penalties assessed to a reliability coordinator who fails
to comply with the TLR procedure of Requirements R1 and R2 is outside
the scope of this proceeding. The determination of monetary penalties
for a violation of a requirement is a compliance issue, which is best
addressed in the context of a compliance proceeding.\40\
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\40\ We note that section 3.10 of NERC's Sanction Guidelines
addresses multiple violations related to a single act or common
incidence of noncompliance.
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69. We do not agree that a violation of Requirement R4 is a
specific type of violation of the INT Reliability Standards as NERC and
IESO suggest. Requirement R4 requires a reliability coordinator to
comply with interconnection-wide curtailment procedures whereas
Requirement R5 requires reliability coordinators and balancing
authorities to adhere to INT standards that largely specify interchange
scheduling procedures. Failure to implement curtailment procedures
poses a higher reliability risk, since it may place the Bulk-Power
[[Page 12264]]
System at risk of cascading outages, than failure to implement
scheduling procedures; therefore, it should receive a ``high''
violation risk factor.
3. Commission Determination on Violation Severity Levels
70. The ERO's December 21, 2007 filing included proposed violation
severity levels corresponding to the requirements of IRO-006-4.
Violation severity levels, which the ERO or the Regional Entity will
apply to establish an initial base penalty range when assessing a
penalty for the violation of a Reliability Standard, constitutes a
post-violation measurement of the degree to which a requirement was
violated.\41\ The Commission accepts the violation severity levels
proposed by the ERO that correspond to the Requirements of Reliability
Standard IRO-006-4.
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\41\ See N. Am. Elec. Reliability Corp., 123 FERC ] 61,284, at P
3 (Violation Severity Levels Order), order on reh'g, 125 FERC ]
61,212 (2008) (extending compliance date).
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71. Further, in the Violation Severity Levels Order, the Commission
directed the ERO to submit a compliance filing certifying that it has
reviewed each of the violation severity level assignments for
consistency with certain guidelines set forth in that order.\42\ The
Commission also directed that the ERO either validate the existing
violation severity level designations or propose revisions to specific
approved violation severity level assignments where the ERO determines
that such assignments do not meet the specified guidelines. Consistent
with the Violation Severity Levels Order, the Commission now directs
the ERO to review the violation severity levels for IRO-006-4. The ERO
must include in the compliance filing required by Ordering Paragraph
(E) of the Violation Severity Levels Order a certification that it has
reviewed each violation severity level assignment corresponding to the
requirements of IRO-006-4 for consistency with certain guidelines
(specifically, guidelines 2b, 3, and 4), validating the assignments
that meet the guidelines and proposing revisions to those that fail to
meet the guidelines.
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\42\ See Violation Severity Level Order, 123 FERC ] 61,284 at P
41 and Ordering Paragraph (E).
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72. Accordingly, with respect to the violation risk factors and
severity levels, we approve IRO-006-4 as mandatory and enforceable. In
addition, we direct the ERO submit a compliance filing within 60 days
that revises violation risk factors to ``high'' for Requirements R1
through R4. The Commissi
