Version One Regional Reliability Standard for Resource and Demand Balancing, 14103-14111 [2010-6477]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 75, Number 56 (Wednesday, March 24, 2010)]
[Proposed Rules]
[Pages 14103-14111]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-6477]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM09-15-000]


Version One Regional Reliability Standard for Resource and Demand 
Balancing

March 18, 2010.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the 
Commission proposes to remand a revised regional Reliability Standard 
developed by the Western Electricity Coordinating Council and approved 
by the North American Electric Reliability Corporation, which the 
Commission has certified as the Electric Reliability Organization 
responsible for developing and enforcing mandatory Reliability 
Standards. The revised regional Reliability Standard, designated by 
WECC as BAL-002-WECC-1, would set revised Contingency Reserve 
requirements meant to maintain scheduled frequency and avoid loss of 
firm load following transmission or generation contingencies.

DATES: Comments are due May 24, 2010.

ADDRESSES: Comments and reply comments may be filed electronically via 
the eFiling link on the Commission's Web site at https://www.ferc.gov. 
Documents created electronically using word processing software should 
be filed in the native application or print-to-PDF format and not in a 
scanned format. This will enhance document retrieval for both the 
Commission and the public. The Commission accepts most standard word 
processing formats and commenters may attach additional files with 
supporting information in certain other file formats. Attachments that 
exist only in paper form may be scanned. Commenters filing 
electronically should not make a paper filing. Service of rulemaking 
comments is not required. Commenters that are not able to file 
electronically must send an original and 14 copies of their comments 
to: Federal Energy Regulatory Commission, Office of the Secretary, 888 
First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT: 
Cory Lankford (Legal Information), Office of General Counsel, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426, (202) 502-6711.
Nick Henery (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8636.
Scott Sells (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6664.

SUPPLEMENTARY INFORMATION: 

Notice of Proposed Rulemaking

March 18, 2010.

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Commission proposes to remand a revised regional Reliability Standard 
developed by the Western Electricity Coordinating Council (WECC) and 
approved by the North American Electric Reliability Corporation (NERC), 
which the Commission has certified as the Electric Reliability 
Organization (ERO) responsible for developing and enforcing mandatory 
Reliability Standards.\2\ The revised regional Reliability Standard, 
designated by WECC as BAL-002-WECC-1 (Contingency Reserves),\3\ is 
meant to ensure that adequate generating capacity is available at all 
times to maintain scheduled frequency, and avoid loss of firm load 
following transmission or generation contingencies. As discussed below, 
the Commission believes that the proposed regional Reliability Standard 
does not meet the statutory criteria for

[[Page 14104]]

approval that it be just, reasonable, not unduly discriminatory or 
preferential, and in the public interest.\4\
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    \1\ 16 U.S.C. 824o (2006).
    \2\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
    \3\ NERC designates the version number of a Reliability Standard 
as the last digit of the Reliability Standard number. Therefore, 
original Reliability Standards end with ``-0'' and modified version 
one Reliability Standards end with ``-1.''
    \4\ 16 U.S.C. 824o(d)(2).
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    2. The Commission proposes to remand the proposed regional 
Reliability Standard based on concerns that it not only fails to 
support the adoption of less stringent requirements than those in the 
currently effective WECC regional standard that it would replace, but 
may also in some respects be less stringent than the corresponding NERC 
continent-wide Reliability Standard pertaining to contingency reserves. 
Of particular concern with respect to whether the proposed standard is 
less stringent than the continent-wide Reliability Standard is the 
provision of proposed BAL-002-WECC-1 that would permit a balancing 
authority, when an emergency is declared, to count ``Load, other than 
Interruptible Load'' as contingency reserve. This provision allows a 
balancing authority to activate load shedding when a single contingency 
occurs instead of procuring and utilizing generating or demand response 
resources held in reserve for contingencies to balance the Bulk-Power 
System. We believe that such operation, which is not permitted in 
either the current regional Reliability Standard or the NERC continent-
wide Reliability Standard, is detrimental to reliability.
    3. Further, we are concerned that proposed BAL-002-WECC-1, 
Requirement R1, reformulates the minimum contingency reserve 
requirement without providing adequate support that the new requirement 
is sufficiently stringent to meet the requirements of NERC's continent-
wide Disturbance Control Standard, BAL-002-0. While NERC in its 
transmittal letter provides several justifications for the proposed 
modification to the minimum contingency reserve requirement, it also 
states that WECC relied on just eight hours of operating data in its 
analysis to support its proposal to make a modest reduction in the 
amount of contingency reserve under the proposed Reliability Standard. 
We believe that NERC and WECC should provide additional data and 
analysis to support the proposed reformulation. Accordingly, we propose 
to remand WECC regional Reliability Standard BAL-002-WECC-1.

I. Background

A. Mandatory Reliability Standards

    4. Section 215 of the FPA requires a Commission-certified ERO to 
develop mandatory and enforceable Reliability Standards, which are 
subject to Commission review and approval. Once approved, the 
Reliability Standards may be enforced by the ERO, subject to Commission 
oversight, or by the Commission independently.\5\
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    \5\ 16 U.S.C. 824o(e)(3).
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    5. Reliability Standards that the ERO proposes to the Commission 
may include Reliability Standards that are proposed to the ERO by a 
Regional Entity.\6\ A Regional Entity is an entity that has been 
approved by the Commission to enforce Reliability Standards under 
delegated authority from the ERO.\7\ When the ERO reviews a regional 
Reliability Standard that would be applicable on an interconnection-
wide basis and that has been proposed by a Regional Entity organized on 
an interconnection-wide basis, the ERO must rebuttably presume that the 
regional Reliability Standard is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest.\8\ In turn, 
the Commission must give ``due weight'' to the technical expertise of 
the ERO and of a Regional Entity organized on an interconnection-wide 
basis.\9\
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    \6\ 16 U.S.C. 824o(e)(4).
    \7\ 16 U.S.C. 824o(a)(7) and (e)(4).
    \8\ 18 CFR 39.5 (2009).
    \9\ 16 U.S.C. 824o(d)(2).
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    6. In Order No. 672, the Commission urged uniformity of Reliability 
Standards, but recognized a potential need for regional 
differences.\10\ Accordingly, the Commission stated that:
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    \10\ Rules Concerning Certification of the Electric Reliability 
Organization; Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, 71 FR 
8662 (Feb. 17, 2006), FERC Stats. & Regs. ] 31,204, at P 290 (2006); 
order on reh'g, Order No. 672-A, 71 FR 19814 (Apr. 18, 2006), FERC 
Stats. & Regs. ] 31,212 (2006).

    As a general matter, we will accept the following two types of 
regional differences, provided they are otherwise just, reasonable, 
not unduly discriminatory or preferential and in the public 
interest, as required under the statute: (1) A regional difference 
that is more stringent than the continent-wide Reliability Standard, 
including a regional difference that addresses matters that the 
continent-wide Reliability Standard does not; and (2) a regional 
Reliability Standard that is necessitated by a physical difference 
in the Bulk-Power System.\11\
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    \11\ Id. P 291.
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B. Western Electricity Coordinating Council

    7. On April 19, 2007, the Commission accepted delegation agreements 
between NERC and each of eight Regional Entities.\12\ In its order, the 
Commission accepted WECC as a Regional Entity organized on an 
Interconnection-wide basis. As a Regional Entity, WECC oversees 
transmission system reliability in the Western Interconnection. The 
WECC region encompasses nearly 1.8 million square miles, including 14 
western U.S. states, the Canadian provinces of Alberta and British 
Columbia, and the northern portion of Baja California in Mexico.
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    \12\ North American Electric Reliability Corp., 119 FERC ] 
61,060, at P 432 (2007).
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    8. In June 2007, the Commission approved eight regional Reliability 
Standards for WECC including the currently effective regional 
Reliability Standard for operating reserves, WECC-BAL-STD-002-0.\13\ 
The Commission found that the current regional Reliability Standard was 
more stringent than the corresponding NERC Reliability Standard, BAL-
002-0, since WECC required a more stringent minimum reserve requirement 
than the continent-wide requirement.\14\ Moreover, the Commission found 
that WECC's requirement to restore contingency reserves within 60 
minutes was more stringent than the 90 minute restoration period as set 
forth in NERC's BAL-002-0.\15\
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    \13\ North American Electric Reliability Corp., 119 FERC ] 
61,260, at P 53 (2007).
    \14\ Id.
    \15\ Id.
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    9. The Commission directed WECC to develop certain minor 
modifications to WECC-BAL-STD-002-0, as identified by NERC in its 
filing letter for the current standard.\16\ For example, the Commission 
determined that: (1) Regional definitions should conform to definitions 
set forth in the NERC Glossary of Terms Used in Reliability Standards 
(NERC Glossary), unless a specific deviation has been justified; and, 
(2) documents that are referenced in the Reliability Standard should be 
attached to the Reliability Standard. The Commission also found that it 
is important that regional Reliability Standards and NERC Reliability 
Standards achieve a reasonable level of consistency in their structure 
so that there is a common understanding of the elements. The Commission 
also directed WECC to address stakeholder concerns regarding 
ambiguities in the terms ``load responsibility'' and ``firm 
transaction.'' \17\
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    \16\ Id. P 55.
    \17\ Id. P 56.
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II. WECC Regional Reliability Standard BAL-002-WECC-1

    10. On March 25, 2009, NERC submitted a petition (NERC Petition) to 
the Commission seeking approval of

[[Page 14105]]

BAL-002-WECC-1 \18\ and requesting the concurrent retirement of BAL-
STD-002-0.\19\ In that March petition, NERC states that the proposed 
regional Reliability Standard was approved by the NERC Board of 
Trustees at its October 29, 2008 meeting. NERC also requests an 
effective date for the proposed regional Reliability Standard of 90 
calendar days after receipt of applicable regulatory approval.
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    \18\ See 18 CFR 39.5(a) (requiring the ERO to submit regional 
Reliability Standards on behalf of a Regional Entity).
    \19\ The proposed regional Reliability Standard is not attached 
to the NOPR. It is, however, available on the Commission's eLibrary 
document retrieval system in Docket No. RM09-15-000 and is on the 
ERO's Web site, available at: https://www.nerc.com.
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    11. The proposed regional Reliability Standard contains three main 
provisions. Requirement R1 provides that each reserve sharing group 
\20\ or balancing authority must maintain a minimum contingency reserve 
that is the greater of (1) an amount of reserve equal to the loss of 
the most severe single contingency; or (2) an amount of reserve equal 
to the sum of three percent of the load and three percent of net 
generation. Requirement R2 states that each reserve sharing group or 
balancing authority must maintain at least half of the contingency 
reserve as spinning reserve. Requirement R3 identifies acceptable types 
of reserve to satisfy Requirement R1:
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    \20\ A ``reserve sharing group'' is a group whose members 
consist of two or more balancing authorities that collectively 
maintain, allocate, and supply operating reserves required for each 
balancing authority's use in recovering from contingencies within 
the group. See NERC Glossary, available at: https://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.

R3.1. Spinning Reserve;
R3.2. Interruptible Load;
R3.3. Interchange Transactions designated by the source Balancing 
Authority as non-spinning contingency reserve;
R3.4. Reserve held by the other entities by agreement that is 
deliverable on Firm Transmission Service;
R3.5. An amount of off-line generation which can be synchronized and 
generating; or
R.3.6. Load, other than Interruptible Load, once the Reliability 
Coordinator has declared a capacity or energy emergency.
    In addition, Measure M1 provides that a reserve sharing group or 
balancing authority must have documentation that it maintained 100 
percent of required contingency reserve levels ``except within the 
first 105 minutes (15 minute Disturbance Recovery Period, plus 90 
minute Contingency Reserve Restoration Period) following an event 
requiring the activation of Contingency Reserves.''

III. Discussion

    12. As discussed below, proposed regional Reliability Standard BAL-
002-WECC-1 does not appear to satisfy the statutory criteria for 
approval. The Commission therefore proposes to remand BAL-002-WECC-1 to 
the Regional Entity with instructions for development of suitable 
modifications. The Commission also discusses additional concerns with 
the proposed regional Reliability Standard, and proposes that the 
Regional Entity address these concerns on remand.

A. Calculation of Minimum Contingency Reserves

    13. NERC's Disturbance Control Standard, continent-wide Reliability 
Standard BAL-002-0, requires each balancing authority or reserve 
sharing group, at a minimum, to maintain at least enough contingency 
reserve to cover the most severe single contingency. Similarly, 
requirement WR1(a)(ii) of WECC's current WECC-BAL-STD-002-0 requires 
balancing authorities to maintain a contingency reserve of spinning and 
nonspinning reserves (at least half of which must be spinning), 
sufficient to meet the NERC Disturbance Control Standard, BAL-002-0, 
equal to the greater of: (1) the loss of generating capacity due to 
forced outages of generation or transmission equipment that would 
result from the most severe single contingency; or (2) the sum of five 
percent of load responsibility served by hydro generation and seven 
percent of the load responsibility served by thermal generation. In 
approving the regional BAL-STD-002-0 Reliability Standard, the 
Commission noted that the regional Reliability Standard is more 
stringent than the NERC Reliability Standard, BAL-002-0, because WECC 
requires a more stringent minimum reserve requirement than the 
continent-wide requirement.
WECC and NERC Proposal
    14. As proposed, Requirement R1 of BAL-002-WECC-1 would require 
each reserve sharing group or balancing authority that is not a member 
of a reserve sharing group to maintain a minimum contingency reserve. 
NERC contends that the proposed minimum contingency reserve amount is 
more stringent than that required by the continent-wide Reliability 
Standard.\21\ NERC explains that, whereas Requirement R3.1 of BAL-002-0 
requires that each balancing authority or reserve sharing group carry, 
at a minimum, at least enough contingency reserve to cover the most 
severe single contingency, proposed Requirement R1.1 of BAL-002-WECC-1 
requires that each balancing authority or reserve sharing group 
maintain, as a minimum, contingency reserves equal to the loss of the 
most severe single contingency or an amount of reserve equal to the sum 
of three percent of the load (generation minus station service minus 
net actual interchange) and three percent of net generation (generation 
minus station service).\22\
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    \21\ NERC Petition at 9.
    \22\ Id. at 14.
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    15. NERC states that the proposed requirements for minimum 
contingency reserves provide a comparable level of contingency reserves 
to those contained in the currently approved regional Reliability 
Standard. NERC explains that, based on operational experience, the 
requirements have been revised to remove what it considers to be 
ambiguous terms, such as ``load responsibility,'' and separate market 
transactions from the determination of required reserves that exist 
using the methodology in the current Reliability Standard.\23\ In 
support of the revised minimum contingency reserve calculations, NERC 
states that, based on technical studies covering a total eight hours 
from the four operating seasons (summer, fall, winter and spring, both 
on and off-peak), the drafting team determined that the sum of 3 
percent of load and 3 percent of net generation level was appropriate 
to approximate the same level of contingency reserves as the existing 
approved standard provides throughout the year.
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    \23\ Id. at 16.
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    16. NERC contends, however, that, due to ambiguities that exist 
using the current methodology, historical information necessary to 
calculate the required contingency reserve levels under the proposed 
methodology is not readily available from collected data. NERC explains 
that this situation exists because the calculations are based on the 
term ``load responsibility'' as it is used in the current regional 
Reliability Standard and not on load itself. Thus, NERC comments, WECC 
does not have additional data available in order to compare the 
contingency reserve levels required under the existing methodology with 
the prospective reserve levels under the proposed methodology. NERC 
states that requiring an additional survey of the applicable entities 
would place an undue burden on those entities to compile and submit the 
data, and on the drafting team to evaluate and verify the data, 
considering the amount of time that has passed since the proposed 
regional Reliability Standard was approved by the WECC Board of 
Directors.

[[Page 14106]]

    17. NERC acknowledges that even the data collected illustrates that 
the proposed methodology for calculating minimum contingency reserves 
results in a slight reduction in required total reserves in the 
interconnection for each of the eight hours assessed as compared to the 
total reserves required under the current methodology.\24\ In fact, the 
eight hours of data shows an overall decrease in required reserves 
under the proposed methodology of approximately 350 MWs (from 
approximately 10,850 MWs to 10,500 MWs) on high load days. NERC argues, 
however, that, under the currently effective regional Reliability 
Standard, the potential exists for the total reserves required in the 
Western Interconnection to be reduced if firm transactions are 
purchased from balancing authorities or from reserve sharing groups 
whose reserve requirements are determined by the most severe single 
contingency.\25\
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    \24\ Id. at 15.
    \25\ Id.
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    18. NERC also contends that industry will benefit from the improved 
clarity in the proposed regional Reliability Standard.\26\ NERC states 
that the ambiguity associated with the term ``load responsibility,'' as 
it is used in the current regional Reliability Standard, results in 
confusion regarding the location and amount of the reserves being 
carried in the interconnection. NERC explains that:
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    \26\ Id. at 15-16. In its order approving the current regional 
Reliability Standard, the Commission directed WECC, in preparing a 
revised regional Reliability Standard, to resolve concerns raised by 
stakeholders that certain terms, including ``load responsibility,'' 
were ambiguous. North American Electric Reliability Corp., 119 FERC 
] 61,260 at P 56.

[t]he identification of the entities responsible for providing 
reserves may be lost as purchases are bundled and remarketed. With 
regard to the ability to audit applicable entities for compliance to 
the existing BAL-STD-002-0 relative to the proposed BAL-002-WECC-1 
standard, WECC has been able to audit the current standard with a 
reasonable level of consistency; however, the industry would benefit 
from greater clarity. The interpretation of the term ``load 
responsibility,'' which is used to determine the amount of reserves 
required has been problematic for WECC, particularly because FERC 
Order No. 888 expanded the types of commercial products traded in 
the electric power industry. The influence of routine commercial 
transactions and terms in the existing regional Reliability Standard 
has introduced the possibility of varying interpretations for the 
term ``load responsibility'' and a degree of uncertainty as to the 
responsibility for reserves, resulting in challenges when evaluating 
compliance.\27\
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    \27\ NERC Petition at 16.

    19. In addition, NERC states that the existing regional Reliability 
Standard considers load served by hydro and thermal generation but does 
not explicitly require contingency reserves for other types of 
generation such as wind, solar or other renewable resources. NERC 
concludes that the proposed regional Reliability Standard adds clarity 
by explicitly requiring reserves for renewable resources.\28\ NERC 
argues further that even though the use of the proposed method for 
calculating minimum contingency reserves results in a reduction in 
total reserves required in the interconnection, such impact is 
negligible when compared to the uncertainty in the actual amount of 
reserves being carried in the interconnection under the existing 
regional Reliability Standard and the potential shortfall in reserves 
existing as a result of new technologies not currently addressed in the 
existing regional Reliability Standard.
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    \28\ NERC Petition at 16.
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NOPR Proposal
    20. The Commission proposes to find that the eight hours of data 
provided by WECC is insufficient to demonstrate that the proposed 
minimum contingency reserve requirements are sufficiently stringent to 
ensure that entities within the Western Interconnection will meet the 
requirements of NERC's continent-wide Disturbance Control Standard, 
BAL-002-0. In the regional Reliability Standard development process, 
several commenters raised similar concerns about the lack of technical 
justification for the proposed method for calculating minimum 
contingency reserve levels.\29\ The Commission believes that NERC did 
not adequately respond to these concerns.
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    \29\ See, e.g., NERC, Petition at Exhibit C (Record of 
Development of Proposed Reliability Standard), Avista, October 30, 
2007 Comments at 21; Alberta Electric System Operator, October 30, 
2007 Comments at 23; Bonneville Power Administration, October 30, 
2007 Comments at 28; Grant County PUD, October 30, 2007 Comments at 
16-17; PacifiCorp Commercial and Trading, October 30, 2007 Comments 
at 33-34; NorthWestern Energy, October 30, 2007 Comments at 36; 
Northwest Power Pool Reserve Sharing Group, October 30, 2007 
Comments at 8; PacifiCorp, October 30, 2007 Comments at 34; Pacific 
Gas & Electric, January 2, 2008 Comments at 4; Portland General 
Electric Merchant, October 30, 2007 Comments at 25.
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    21. In its March 2007 petition proposing the currently effective 
regional Reliability Standard, NERC explained that WECC-BAL-STD-002-0 
and the other seven regional Reliability Standards were WECC's 
translation of existing WECC criteria that the WECC Operating Committee 
and Western Interconnection Regional Advisory Body both concluded to be 
critical to maintaining reliability within the Western 
Interconnection.\30\ NERC stated that all of these regional Reliability 
Standards were ``well vetted, approved, tested, and proven effective in 
monitoring and enforcing critical reliability elements in the Western 
Interconnection'' \31\ and were developed in response to the 1996 
blackouts. NERC also stated that, in developing WECC-BAL-STD-002-0 and 
the other seven regional Reliability Standards, the ``WECC Operating 
Committee undertook a comprehensive review of all WECC criteria, 
policies, and guidelines in an effort to identify all unique * * * 
criteria it believed critical to the reliability of the Western 
Interconnection'' \32\ and concluded that these eight regional 
Reliability Standards were of the ``highest priority.'' \33\ These 
statements indicate that these eight regional Reliability Standards 
were necessary to maintain reliability in the Western Interconnection. 
Our review of the provisions relating to the calculation of minimum 
contingency reserve requirements in the proposed Reliability Standard 
indicates that they may be less stringent than the currently-effective 
regional Reliability Standard, WECC-BAL-STD-002-0, and may also be less 
stringent than the currently-effective continent-wide Reliability 
Standard. NERC and WECC have not provided an adequate explanation or 
supporting studies to resolve these concerns.
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    \30\ NERC, March 26, 2007 Petition Proposing Current Regional 
Reliability Standard, Docket No. RR07-11-000, at 4.
    \31\ Id.
    \32\ Id.
    \33\ Id.
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    22. NERC admits that the eight hours of data illustrates that the 
proposed methodology for calculating contingency reserves results in a 
reduction of total reserves required in the Western Interconnection for 
each of the eight hours assessed when compared with the methodology in 
the current regional Reliability Standard. Neither NERC nor WECC has 
provided sufficient evidence that the proposed regional Reliability 
Standard provides adequate requirements to ensure that entities within 
WECC will continue to satisfy the continent-wide disturbance control 
standard and will not cause frequency-related instability, uncontrolled 
separation or cascading outages. Moreover, the evidence provided is 
insufficient to demonstrate that the proposed regional Reliability 
Standard is more stringent than the

[[Page 14107]]

corresponding NERC Reliability Standard.
    23. Although the proposed Reliability Standard offers some added 
clarity by eliminating reference to the term ``load responsibility'' 
and including renewables in the calculation of contingency reserves, 
the Commission proposes to find that NERC and WECC have not provided 
sufficient technical justification to support the proposed revised 
method for calculating contingency reserves. Thus, we propose to remand 
BAL-002-WECC-1 so that WECC can develop additional support and make 
modifications as appropriate for a future proposal, consistent with the 
above discussion. In preparing its response, NERC could provide a 
variety of technical justifications. For example, NERC could provide 
statistically significant data, supported by a sampling representative 
of all balancing authorities and expected operating conditions (such as 
each season, peak periods, off-peak periods and reportable 
disturbances), to cover the range of operating conditions that must be 
addressed to ensure that the proposed amount of contingency reserve 
that are on-line and deliverable will exceed the performance under the 
NERC Reliability Standards, taking into account the specific electrical 
characteristics and topology of the Western Interconnection. 
Alternatively, NERC could provide model simulations demonstrating that 
the proposed amount of contingency reserves are on-line and deliverable 
for all expected operating conditions and will exceed the performance 
required under the NERC Reliability Standards, taking into account the 
specific electrical characteristics and topology of the Western 
Interconnection.
    24. The Commission recognizes that NERC has suggested that 
confusion exists with regard to the term ``load responsibility.'' 
However, the Commission believes that any confusion concerning the term 
``load responsibility'' has been addressed by WECC and therefore does 
not have a reliability impact. WECC has defined the term ``load 
responsibility'', although not in its regional Reliability 
Standard.\34\ Under WECC's definition for ``load responsibility'', a 
balancing authority's ``load responsibility'', for maintaining adequate 
contingency reserves, is determined by a balancing authority's firm 
load (net generation minus net actual interchange); minus loads 
contractually interruptible within 10 minutes; minus imports where the 
source balancing authority is responsible for contingency reserves; 
plus exports where the exporting balancing authority is responsible for 
contingency reserves. WECC's procedures for load responsibility require 
that the entities (purchasing selling entity or load serving entity) 
that are party to the import or export are required to identify the 
transaction to the balancing authority using the e-tagging 
prescheduling tool and identify the associated contingency reserves.
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    \34\ WECC's interpretation of ``Load Responsibility,'' which was 
approved by the WECC Board of Directors September 7, 2007, places 
the responsibility on the balancing authorities to determine the 
amount of and assure that adequate contingency reserves are 
provided. See WECC Interpretation of Load Responsibility (Sept. 7, 
2007), available at: https://www.wecc.biz/Standards/Interpretations/Interpretation%20of%20Load%20Responsibility.pdf. Likewise, the 
current regional Reliability Standard places the responsibility on 
the balancing authorities to determine the amount of and assure that 
adequate contingency reserves are provided.
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B. Use of Firm Load To Meet Contingency Reserve Requirement

    25. Requirement R1 of NERC's continent-wide Reliability Standard 
BAL-002-0, allows balancing authorities to supply their contingency 
reserves from generation, controllable load resources, or coordinated 
adjustments to interchange schedules.\35\ Similarly, WECC's current 
WECC-BAL-STD-002-0 identifies acceptable types of non-spinning reserve 
and, among those identified, ``interruptible load.'' \36\
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    \35\ Reliability Standard BAL-002-0, Requirement R1.
    \36\ WECC-BAL-STD-002-0, Requirement WR1(b).
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WECC Proposal
    26. Requirement R3 of BAL-002-WECC-1 requires that each reserve 
sharing group or balancing authority use certain types of reserves that 
must be fully deployable within ten minutes of notification to meet 
their contingency reserve requirement. Requirement R3.2 allows these 
entities to count ``Interruptible Load'' as contingency reserves.\37\ 
In addition, Requirement R3.6 allows entities to use ``Load, other than 
Interruptible Load, once the Reliability Coordinator has declared a 
capacity or energy emergency.'' \38\
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    \37\ BAL-002-WECC-1, Requirement R3.2.
    \38\ BAL-002-WECC-1, Requirement R3.6.
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    27. NERC contends that the changes made by the proposed regional 
Reliability Standard related to the treatment of firm load have reduced 
the number of occasions when an entity may use firm load as contingency 
reserves.\39\ NERC explains that, under the proposed regional 
Reliability Standard, balancing authorities or reserve sharing groups 
may only use firm load as contingency reserves once the reliability 
coordinator has declared a capacity or energy emergency. NERC also 
states that the proposed regional Reliability Standard continues to 
require that reserves must be deliverable to be included in the minimum 
calculations of contingency reserves.
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    \39\ NERC Petition at 19.
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NOPR Proposal
    28. The Commission does not agree with NERC that the proposed 
regional Reliability Standard reduces the occasions when an entity may 
use firm load as contingency reserves. The Commission proposes to find 
that Requirement R3.6 is not technically sound because it permits 
balancing authorities and reserve sharing groups within WECC to use 
firm load to meet their minimum contingency reserve requirement ``once 
the Reliability Coordinator has declared a capacity or energy 
emergency,'' thus creating the possibility that firm load could be shed 
due to the loss of a single element on the system.\40\
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    \40\ Order No. 672, FERC Stats. & Regs. ] 31,204, at P 324 
(identifying guidelines for what constitutes a just and reasonable 
Reliability Standard including the ``proposed Reliability Standard 
must be designed to achieve a specified reliability goal and must 
contain a technically sound means to achieve this goal'').
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    29. Although NERC states in its petition that the proposed regional 
Reliability Standard ``reduce[s] the number of occasions when an entity 
may use firm load as contingency reserves,'' the currently effective 
regional Reliability Standard does not allow the use of firm load to 
meet minimum contingency reserve levels. In fact, the current regional 
Reliability Standard does not mention ``firm load'' as an acceptable 
type of reserve.
    30. In the 2007 proceeding in which the Commission approved the 
currently effective WECC-BAL-STD-002-0, one commenter argued that the 
definition of ``interruptible'' is unclear and that firm transactions 
are potentially curtailable and thus interruptible under a ``very 
narrow interpretation.'' \41\ The Commission rejected the protest on 
this issue stating that ``the meaning of the term `interruptible' is 
generally well understood in the industry, i.e., transmission or 
generation subject to interruption at the provider's discretion.'' \42\ 
Thus, if entities within

[[Page 14108]]

WECC have interpreted the term ``interruptible load'' to include firm 
load, this is a mistake.
---------------------------------------------------------------------------

    \41\ North American Electric Reliability Corp., 119 FERC ] 
61,260 at P 50.
    \42\ Id. P 59. The NERC Glossary defines Interruptible Load as 
interruptible demand or the demand that the end-use customer makes 
available to its load-serving entity via contract or agreement for 
curtailment. See NERC Glossary, available at: https://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.
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    31. The Commission does not support a regional practice by 
balancing authorities or reserve sharing groups to count firm load 
towards their minimum contingency reserve requirements. Neither the 
corresponding NERC continent-wide Reliability Standard, BAL-002-0, nor 
the currently effective WECC regional Reliability Standard permit a 
balancing authority to consider firm load when satisfying minimum 
contingency reserve requirements. Accordingly, the Commission proposes 
to find that the proposed regional Reliability Standard is less 
stringent than the continent-wide Reliability Standard because it would 
allow entities to count firm load towards their minimum contingency 
reserve requirements.
    32. Moreover, we are concerned that the provision of the proposed 
WECC regional Reliability Standard that would allow a balancing 
authority to include firm load as contingency reserve when an emergency 
is declared is inappropriate because there are provisions of NERC 
continent-wide Reliability Standards that specifically address the 
actions entities must take in emergency situations. The proposed WECC 
regional Reliability Standard appears to be incongruent with these 
other provisions. Specifically, the requirements of Reliability 
Standard EOP-002-2.1 ensure that entities are prepared to handle 
capacity and energy emergency situations, and include minimum remedies 
required for mitigating capacity and energy emergencies to meet the 
Disturbance Control Standard and resolve the emergency conditions. 
Attachment 1 of EOP-002-2.1, Energy Emergency Alerts, describes three 
emergency alert levels, in order of severity. A reliability coordinator 
(either by its own initiative or at the request of a balancing 
authority or load serving entity) may initiate a level one energy 
emergency alert if a load-serving entity is, or expects to be, unable 
to provide customers' energy requirements or the load-serving entity 
cannot schedule resources due to, for example, available transfer 
capability or transmission loading relief limitations.\43\ A level two 
alert is more severe, addressing situations when an entity can no 
longer provide its customers' energy requirements. A level three alert 
is called when a firm load interruption is imminent or in progress.
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    \43\ An energy emergency level 1 can be declared either if an 
entity foresees or is experiencing in real-time, conditions where 
all available resources are committed to firm load, firm 
transactions, and reserve commitments are being met, but the entity 
is concerned about sustaining its required operating reserve. 
Reliability Standard EOP-002-2.1, Attachment 1.
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    33. As mentioned above, Requirement R3.6 of proposed BAL-002-WECC-
1, would allow an entity to include firm load to satisfy contingency 
reserve requirements once the reliability coordinator ``has declared a 
capacity or energy emergency'' and applies when any level alert is 
initiated without qualification. This is of concern to the Commission 
because, if an entity initiated energy emergency alert level 1, under 
BAL-002-WECC-1, that entity could count firm load as contingency 
reserve instead of taking other actions to remedy the situation as set 
forth in NERC Reliability Standard EOP-002-2.1 (e.g., public appeals, 
voltage reduction, firm or non-firm imports, emergency assistance from 
neighboring entities, and demand-side management). This practice is not 
allowed under the corresponding continent-wide Reliability Standard, 
BAL-002-0. Since the proposed regional Reliability Standard includes 
requirements that are less stringent than BAL-002-0, the Commission 
proposes to remand BAL-002-WECC-1 and direct WECC to modify the 
regional Reliability Standard to ensure consistency with the continent-
wide Reliability Standards.

C. Contingency Reserve Restoration Period

    34. NERC Reliability Standard BAL-002-0 provides that a balancing 
authority or reserve sharing group responding to a disturbance must 
fully restore its contingency reserves within 90 minutes following the 
disturbance recovery period, which is set at 15 minutes.\44\ Thus, 
under BAL-002-0, if there is a disturbance, a balancing authority or 
reserve sharing group has 105 minutes to fully restore its contingency 
reserves. The current WECC regional BAL Reliability Standard requires 
reserve sharing groups and balancing authorities to maintain 100 
percent of required operating reserve levels except within the first 60 
minutes following an event requiring the activation of operating 
reserves.\45\ Thus, currently, applicable entities in WECC have 60 
minutes to restore their operating reserves to 100 percent. In the 
March 2007 petition asking the Commission to approve the currently 
effective WECC-BAL-STD-002-0, NERC explained that the increased 
stringency was meant to address concerns arising out of the 1996 
blackouts in California and that, according to WECC, the regional 
requirements were critical to the reliability of the Western 
Interconnection.\46\
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    \44\ Reliability Standard BAL-002-0, Requirements R4 and R6.
    \45\ WECC regional Reliability Standard WECC-BAL-STD-002-0, 
Measure of Compliance WM1.
    \46\ NERC, March 26, 2007 Petition Proposing Current Regional 
Reliability Standard, Docket No. RR07-11-000, at 5.
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    35. In approving WECC-BAL-STD-002-0, the Commission found that 
WECC's requirement to restore contingency reserves within 60 minutes 
was more stringent than the 90 minute restoration period set forth in 
NERC's BAL-002-0.\47\
---------------------------------------------------------------------------

    \47\ North American Electric Reliability Corp., 119 FERC ] 
61,260 at P 53.
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WECC Proposal
    36. WECC proposes to replace the current 60 minute restoration 
period requirement with a new provision that would require the 
restoration of contingency reserves within 90 minutes from the end of 
the disturbance recovery period (15 minutes). NERC states that the 60 
minute restoration period required by the current regional Reliability 
Standard was developed and used under a manual interchange transaction 
structure among vertically integrated utilities. NERC states that, due 
to a substantial increase in the number of market participants and 
interchange transactions in the Western Interconnection, entities 
within the Western Interconnection have implemented an electronic 
tagging system (e-tagging). NERC states that the adoption of the e-
tagging system accommodates multiple market participants and the 
corresponding increased number of interchange transactions makes the 
current mid-hour reserve restoration period more cumbersome and makes 
the inappropriate rejection of reserve restoration transactions more 
likely because such transactions are outside the e-tagging cycle. Thus, 
NERC contends that eliminating the 60 minute reserve restoration 
requirement and adopting the proposed new requirements, which provide 
the same reserve restoration period as NERC's BAL-002-0, results in 
more efficient communication among balancing authorities because it 
aligns the restoration of contingency reserves with the e-tagging 
system approval cycle.
NOPR Proposal
    37. The Commission proposes to remand the regional Reliability 
Standard BAL-002-WECC-1 based on the lack of any technical 
justification or analysis of the potential increased risk

[[Page 14109]]

to the Western Interconnection resulting from the increase in the 
contingency reserve restoration period. Without sufficient data, the 
Commission is unable to determine whether the increase in contingency 
reserve restoration period is sufficient to maintain the reliable 
operation of the Bulk-Power System in the Western Interconnection. A 
requirement to restore contingency reserves following a disturbance 
improves reliability by ensuring an entity will be in position to 
respond to the next disturbance, thus preventing adverse reliability 
impacts. When a contingency has occurred and operating reserves, 
generation or interruptible load, have been deployed, the system 
typically has insufficient reserves to respond to another contingency 
until such reserves are replenished. During this time, the system is in 
a vulnerable position, an emergency state, in which the next 
contingency could lead to cascading outages. Exposure in such a state 
should be limited to the extent possible. The Commission notes that in 
the Western Interconnection a significant number of transmission paths 
are voltage or frequency stability limited, in contrast to other 
regions of the Bulk-Power System where transmission paths more often 
are thermally limited. Disturbances that result in a ``stability 
limited'' transmission path overload, generally, must be responded to 
in a shorter time frame than a disturbance that results in a 
``thermally limited'' transmission path overload. The Commission 
understands that this physical difference is one of the reasons for the 
need for certain provisions of regional Reliability Standards in the 
Western Interconnection.
    38. Proposed BAL-002-WECC-1 does not include a requirement that an 
entity restore either contingency reserves or operating reserves. 
Instead, proposed compliance measure M1 provides that an entity should 
have documentation to prove it maintained the required contingency 
reserve level except during the 105 minutes following a disturbance, 
which represents a 45 minute increase over the current requirement. As 
an initial matter, a Reliability Standard should set forth substantive 
compliance obligations in the ``Requirements'' section of the 
Reliability Standard, and not in the ``Compliance Measures'' section. 
Moreover, we believe that there is no need for a provision of regional 
Reliability Standard that simply restates the requirement of a 
corresponding continent-wide Reliability Standard. This is unnecessary, 
duplicative, and potentially confusing if the regional Reliability 
Standard is intended to create the same obligation as the continent-
wide Reliability Standard. Instead, the regional Reliability Standard 
should remain silent with regard to any such requirements, and possibly 
cross-reference the corresponding continent-wide Reliability Standard 
as appropriate.
    39. The only justification offered by NERC for the extension of the 
reserve restoration period to match the continent-wide Reliability 
Standard is the adoption of the e-tagging system by entities in the 
Western Interconnection. The e-tagging system is an efficient tool used 
for day-ahead and hour-ahead market accounting and as input for day-
ahead and hour-ahead transfer capability analysis of scheduled 
interchange transactions and development of day-ahead and hour-ahead 
capacity and energy resource schedules. Proposing to adapt reliability 
requirements to resolve problems extending from software to the extent 
it is intended to better enable economic transactions is not a 
technical justification since it does not address any change in the 
need for the reliability requirement. Extending the contingency reserve 
restoration period from 60 minutes to 105 minutes increases exposure to 
unstable operating conditions. Although adoption of the e-tagging 
system may result in more efficient communication among transmission 
operators and balancing authorities for day-ahead and hour-ahead 
scheduling, this fact alone does not appear sufficient to justify the 
extension of the reserve restoration period.
    40. Although NERC BAL-002-0 provides for a 90-minute contingency 
restoration period, WECC explained in 2007 that it needed a shortened 
contingency restoration period to ensure the reliability of the Bulk-
Power System in the Western Interconnection. In its March 2007 petition 
for approval of the currently effective WECC regional Reliability 
Standard, NERC presented arguments from WECC that its experience in the 
1996 blackouts led to an analysis of essential criteria to ensure the 
reliability of the Bulk-Power System in the Western Interconnection 
and, as a result, WECC developed more stringent requirements as it 
relates to this issue for the region.\48\ The proposal in the immediate 
proceeding, however, offers marketing or administrative reasons for 
increasing the contingency reserve restoration period. NERC does not 
provide a technical justification regarding how this proposed 
modification adequately ensures the reliability of the Bulk-Power 
System in the Western Interconnection. We encourage Regional Entities 
periodically to reevaluate their need for regional Reliability 
Standards. However, when a Regional Entity proposes to modify a 
regional Reliability Standard it previously claimed was necessary to 
maintain reliability in that region by adopting less stringent 
requirements, the Regional Entity must demonstrate that the modified 
requirements are sufficient to maintain reliability in the region.
---------------------------------------------------------------------------

    \48\ NERC, March 26, 2007 Petition Proposing Current Regional 
Reliability Standard, Docket No. RR07-11-000, at 4-5.
---------------------------------------------------------------------------

    41. It appears to the Commission that the proposed modification set 
forth in Measure M1 may weaken the reliability of the Bulk-Power System 
in the Western Interconnection. Accordingly, the Commission proposes to 
remand BAL-002-WECC-1 and to direct WECC to either: (1) Retain the 
current 60-minute rule; or (2) provide technical justification and 
supporting data demonstrating how WECC will maintain adequate 
reliability with the proposed 105-minute reserve restoration period. 
The regional entity could provide a variety of technical justifications 
to support this modification. For example, WECC could perform a 
statistically significant analysis of the level of risk associated with 
the conditions using the 60-minute reserve restoration period as 
compared to the projected level of risk associated with the proposed 
90-minute restoration period. The analysis must demonstrate that the 
proposed revisions do not expose entities within the Western 
Interconnection to a level of risk that is greater than the level of 
risk accepted by entities operating under the requirements of the 
continent-wide NERC Reliability Standard, taking into account the 
specific electrical characteristics and topology of the Western 
Interconnection. Alternatively, WECC could perform model simulations, 
representative of all operating conditions, showing how the system 
would deploy contingency reserves after a first contingency (n-1) and, 
prior to restoration of the reserves, apply a second contingency (n-1-
1) to determine if the system will stabilize. Based on comments made by 
the Reliability Standards drafting team, submitted as part of the 
development record in Exhibit C to the NERC petition, the Commission 
believes that NERC should be able to provide this

[[Page 14110]]

information without any undue burden.\49\
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    \49\ NERC Petition, Exhibit C at p. 24 (stating that ``the WECC 
Performance Work Group performed studies in 2005 that show little if 
any increase in risk to the system by changing the restoration 
period to the NERC time''). The referenced studies, however, are not 
part of the record in this proceeding.
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D. Including Demand-Side Management as a Resource

    42. In Order No. 693, the Commission directed the ERO to submit a 
modification to continent-wide Reliability Standard BAL-002-0 that 
includes a Requirement that explicitly allows that demand-side 
management be used as a resource for contingency reserves, and 
clarifies that demand-side management should be treated on a comparable 
basis and must meet similar technical requirements as other resources 
providing this service.\50\ The Commission directed the ERO to list the 
types of resources that can be used to meet contingency reserves to 
provide users, owners and operators of the Bulk-Power System a set of 
options to meet contingency reserves.\51\ The Commission clarified that 
the purpose of this directive was to ensure comparable treatment of 
demand-side management with conventional generation or any other 
technology and to allow demand-side management to be considered as a 
resource for contingency reserves on this basis without requiring the 
use of any particular contingency reserve option.\52\ The Commission 
further clarified that in order for demand-side management to 
participate, it must be technically capable of providing contingency 
reserve service, with the ERO determining the technical 
requirements.\53\
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    \50\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ] 
31,242, at P 330 (2007), order on reh'g, Order No. 693-A, 120 FERC ] 
61,053 (2007).
    \51\ Id. P 331, 335.
    \52\ Id. P 333.
    \53\ Id. P 334.
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1. BAL-002-WECC-1
WECC Proposal
    43. The proposed regional Reliability Standard does not explicitly 
address the use of demand side management as a resource for contingency 
reserves. NERC states that it raised this concern with WECC, and WECC 
responded that the drafting team wrote the regional Reliability 
Standard ``to permit load, Demand-Side Management, generation, or 
another resource technology that qualifies as Spinning Reserve or 
Contingency Reserve to be used as such.'' WECC further explained that 
demand-side management that is deployable within ten minutes is a 
subset of interruptible load, which is an acceptable type of reserve 
set forth in proposed Requirement R3.2.\54\
---------------------------------------------------------------------------

    \54\ NERC Petition at 40.
---------------------------------------------------------------------------

NOPR Proposal
    44. While WECC indicates that the phrase ``interruptible load'' is 
intended to include demand-side management as contingency reserve, we 
believe that the regional Reliability Standard should state this 
explicitly, consistent with Order No. 693. Accordingly, pursuant to 
section 215(d)(5) of the FPA, we propose to direct WECC to develop a 
modification to BAL-002-WECC-1 that explicitly provides that demand-
side management, that is technically capable of providing this service, 
may be used as a resource for contingency reserves. Consistent with the 
Commission's directive in Order No. 693, the modification should list 
the types of resources, including demand-side management, which can be 
used to meet contingency reserves. The modification should also ensure 
comparable treatment of demand-side management with conventional 
generation or any other technology and allow demand-side management to 
be considered as a resource for contingency reserves on this basis 
without requiring the use of any particular contingency reserve option.
    45. In addition, there appears to be a conflict related to the 
definition of Spinning Reserve as it is used in the proposed regional 
Reliability Standard. Requirement R3.1 provides that Spinning Reserves 
may be used to meet the minimum contingency reserve requirement. The 
NERC Glossary defines Spinning Reserves as ``[u]nloaded generation that 
is synchronized and ready to serve additional demand.'' This definition 
omits the use of demand-side management or other technologies that 
could be used as a resource because it limits acceptable Spinning 
Reserve resources to generation resources. An alternative definition of 
spinning reserves exists in the NERC Glossary as Operating Reserve--
Spinning, which includes as part of the definition of Operating 
Reserve, ``load fully removable from the system within the Disturbance 
Recovery Period following the contingency event.'' Thus, this second 
definition would capture the use of demand-side management as a 
resource in the calculation of spinning reserve because it allows 
entities to include reductions in load as spinning reserve resources. 
Furthermore, the definition of Operating Reserve-Spinning is consistent 
with our instruction on the continent-wide Reliability Standard as 
discussed in Order No. 693.\55\ Accordingly, we propose to direct the 
Regional Entity to develop a modification to the regional Reliability 
Standard that references this broader definition of spinning reserve to 
include demand-side management.
---------------------------------------------------------------------------

    \55\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 333 
(indicating that NERC's continent-wide Reliability Standard should 
provide for the inclusion of other technologies that may be able to 
provide contingency reserves, including demand-side management). The 
Commission understands that NERC is currently developing 
modifications to BAL-002-0 that will, inter alia, address relevant 
directives set forth in Order No. 693.
---------------------------------------------------------------------------

2. NERC Glossary
    46. As discussed above, the NERC Glossary offers two definitions of 
spinning reserve: Spinning Reserve and Operating Reserve-Spinning. The 
definition of Spinning Reserve does not include demand-side management 
as a resource, whereas the definition of Operating Reserve-Spinning 
does. Considering that the term Spinning Reserve is not used in any 
approved Reliability Standard other than the current regional 
Reliability Standard, WECC-BAL-STD-002-0, the Commission proposes to 
direct NERC to remove this term from the NERC Glossary upon retirement 
of the current regional Reliability Standard.
    47. Although the definitions of Operating Reserve-Spinning and 
Operating Reserve-Supplemental both include ``[l]oad fully removable 
from the system within the Disturbance Recovery Period following the 
contingency event,'' which is broad enough to include demand-side 
management, demand-side management should still be explicitly included. 
Consistent with Order No. 693, the proposed directive to remove the 
term Spinning Reserve from the NERC Glossary would promote comparable 
treatment of demand-side management with conventional generation or any 
other technology and to allow demand-side management to be considered 
as a resource for operating reserves on this basis without requiring 
the use of any particular operating reserve option.\56\ Moreover, in 
order for demand-side management or any other technology to be used as 
a spinning reserve resource, it must be technically capable of 
providing operating reserve service.\57\ Accordingly, the Commission 
proposes to direct the ERO to develop modifications to the definitions 
of Operating Reserve-Spinning and

[[Page 14111]]

Operating Reserve-Supplemental to provide for the inclusion of other 
technologies that could reliably contribute to operating reserves, 
including demand-side management.\58\
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    \56\ See id.
    \57\ See id. P 334.
    \58\ The Commission recognizes that there may be regional 
limitations on the amount of demand-side management, or other 
technically capable resources, that can be reliably employed. Any 
modifications proposed to the Commission must allow regional 
discretion to make this determination based on the technical issues 
inherent to those regions.
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IV. Information Collection Statement

    48. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping (collections of 
information) imposed by an agency.\59\ The information contained here 
is also subject to review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\60\ By remanding the proposed Reliability 
Standard the Commission is maintaining the status quo until future 
revisions to the Reliability Standard are approved by the Commission. 
Thus, the Commission's proposed action does not add to or increase 
entities' reporting burden.
---------------------------------------------------------------------------

    \59\ 5 CFR 1320.11.
    \60\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

V. Environmental Analysis

    49. 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.\61\ 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.\62\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
---------------------------------------------------------------------------

    \61\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \62\ 18 CFR 380.4(a)(2)(ii).
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VI. Regulatory Flexibility Act Certification

    50. The Regulatory Flexibility Act of 1980 (RFA) \63\ 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.\64\ For electric 
utilities, a firm is small if, including affiliates, it is primaril