Mandatory Reliability Standards for the Calculation of Available Transfer Capability, Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer Capability, and Existing Transmission Commitments and Mandatory Reliability Standards for the Bulk-Power System, 26057-26061 [2010-11089]

Download as PDF 26057 Rules and Regulations Federal Register Vol. 75, No. 90 Tuesday, May 11, 2010 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. Christopher Young (Technical Information), Office of Electric Reliability, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502–6403. SUPPLEMENTARY INFORMATION: The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, Philip D. Moeller, and John R. Norris. Order No. 729–A DEPARTMENT OF ENERGY Order on Clarification Federal Energy Regulatory Commission (Issued May 5, 2010) 18 CFR Part 40 [Docket No. RM08–19–002; Order No. 729– A] Mandatory Reliability Standards for the Calculation of Available Transfer Capability, Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer Capability, and Existing Transmission Commitments and Mandatory Reliability Standards for the Bulk-Power System Issued May 5, 2010. jlentini on DSKJ8SOYB1PROD with RULES AGENCY: Federal Energy Regulatory Commission. ACTION: Order on clarification. I. Background SUMMARY: In this order, the Commission grants several requests for clarification of Order No. 729, which approved and directed modification of six Modeling, Data, and Analysis Reliability Standards submitted to the Commission for approval by the North American Electric Reliability Corporation, the Commission-certified Electric Reliability Organization for the United States. As discussed below, the Commission clarifies the implementation timeline for these Reliability Standards as well as certain directed modifications. DATES: Effective Date: This rule will become effective June 10, 2010. FOR FURTHER INFORMATION CONTACT: Jonathan First (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502–8529. Cory Lankford (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502–6711. VerDate Mar<15>2010 16:26 May 10, 2010 Jkt 220001 1. In this order, the Commission grants several requests for clarification of Order No. 729,1 which approved and directed modification of six Modeling, Data, and Analysis (MOD) Reliability Standards submitted to the Commission for approval by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO) for the United States.2 As discussed below, the Commission clarifies the implementation timeline for these Reliability Standards as well as certain directed modifications. 2. On November 24, 2009, the Commission issued a Final Rule in this proceeding that approved the six MOD Reliability Standards submitted to the Commission by the ERO. The approved Reliability Standards pertain to methodologies for the consistent and transparent calculation of available transfer capability or available flowgate capability. Pursuant to section 215(d)(5) of the FPA 3 and section 39.5(f) of our regulations, the Commission directed the ERO to develop certain modifications to the MOD Reliability Standards. The Commission also directed NERC to retire the existing MOD Reliability Standards replaced by the versions approved in the Final Rule once the new versions became effective. 1 Mandatory Reliability Standards for the Calculation of Available Transfer Capability, Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer Capability, and Existing Transmission Commitments and Mandatory Reliability Standards for the Bulk-Power System, Order No. 729, 129 FERC ¶ 61,155 (2009). 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 (DC Cir. 2009). 3 16 U.S.C. 824o(d)(5) (2006). PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 3. On December 23, 2009, American Public Power Association (APPA) and Transmission Access Policy Study Group (TAPS), Duke Energy Carolinas, LLC (Duke), Edison Electric Institute (EEI), ISO New England (ISO–NE), and NERC filed timely requests for clarification. II. Discussion A. Implementation Schedule 4. In the Final Rule, the Commission directed that the Reliability Standards become effective according to the schedule proposed by the ERO.4 Thus, the Commission stated that the MOD Reliability Standards shall become effective on the first calendar quarter that is twelve months beyond the date that the Reliability Standards are approved by all applicable regulatory authorities. The Commission found that this implementation schedule struck a reasonable balance between the need for timely reform and the needs of transmission service providers and transmission operators to make adjustments to their calculations of available transfer capability, capacity benefit margin and transfer reserve margin. In response to comments on its notice of proposed rulemaking, the Commission clarified that, under this plan, the Reliability Standards shall become effective on the first day of the first quarter occurring 365 days after approval by all applicable regulatory authorities. Approval by the Commission would be effective 60 days after the date of publication of the Final Rule in the Federal Register.5 Requests for Clarification 5. Several petitioners requested clarification of the implementation schedule. If the Commission intended approval of the MOD Reliability Standards to be effective upon their approval of all regulatory authorities, including the applicable Canadian provinces, APPA and TAPS, along with ISO–NE, ask the Commission to clarify a process to keep the Commission and industry informed on the status of the required regulatory approval process. By contrast, EEI asks the Commission to clarify that the MOD Reliability Standards will become effective in the United States no earlier than the first 4 Order No. 729, 129 FERC ¶ 61,155 at P 95. 5 Id. E:\FR\FM\11MYR1.SGM 11MYR1 26058 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules and Regulations jlentini on DSKJ8SOYB1PROD with RULES day of the first quarter occurring 365 days after the Commission approves the MOD Reliability Standards. 6. NERC also requests clarification and provides some insight into its proposed implementation schedule. NERC explains that the term ‘‘all applicable regulatory authorities,’’ as it is used in the MOD Reliability Standards, includes the Commission and the relevant regulatory authorities in the Canadian provinces. NERC states that, when it developed the implementation schedule, all participants anticipated that the processes for approving the MOD Reliability Standards in all jurisdictions would result in approvals that occurred at roughly the same time. However, according to NERC, the processes for approval of Reliability Standards are in various stages of development in various jurisdictions. Accordingly, NERC requests that the Commission clarify that the MOD Reliability Standards shall become effective within the United States no earlier than the first day of the first quarter occurring 365 days after the publication of Order No. 729 in the Federal Register. Commission Determination 7. The Commission agrees that, without further clarification about regulatory approvals in the Canadian provinces, the approved implementation schedule is not determinative as to the effective date of the MOD Reliability Standards within the United States. Without a clear process for informing entities of the approval by all appropriate regulatory authorities, the implementation schedule presents some compliance risks. NERC has indicated that it would support implementation of the MOD Reliability Standards within the United States as of the first day of the first quarter occurring 365 days after the publication of Order No. 729 in the Federal Register. The Commission agrees that this implementation schedule is appropriate. Accordingly, the Commission clarifies that the MOD Reliability Standards shall become effective within the United States as of the first day of the first quarter occurring 365 days after the publication of Order No. 729 in the Federal Register, i.e., January 1, 2011. 8. Compliance with these MOD Reliability Standards requires an exchange of information and data among neighboring transmission service providers. In some instances, for example, a transmission service provider within the United States may need to exchange information and data with a neighboring transmission service VerDate Mar<15>2010 16:21 May 10, 2010 Jkt 220001 provider located in a jurisdiction where the Reliability Standard is not yet enforceable. In this situation, the transmission service provider within the United States shall share information with the transmission service provider located in another jurisdiction pursuant to the requirements of these MOD Reliability Standards. Nevertheless, the transmission service providers and transmission operators within the continental United States who must rely on information and data from utilities located in another country to comply with these Reliability Standards shall not be penalized solely for the failure of a utility located in another jurisdiction to provide such information and data, until such time that the MOD Reliability Standards become mandatory in that foreign jurisdiction. 9. So that the Commission is informed about international approval of these MOD Reliability Standards, we direct the ERO to file notices with the Commission when any other applicable regulatory authority approves any or all of the MOD Reliability Standards approved by the Commission in Order No. 729. The ERO also must post notice of such approval on its Web site. B. Audit Scope 10. In the Final Rule, the Commission directed the ERO to conduct an audit to measure compliance with the MOD Reliability Standards. In response to comments on its notice of proposed rulemaking, the Commission clarified that these audits are not intended to address the competitive effects of these MOD Reliability Standards.6 The Commission further stated that the audits should review each component of available transfer or flowgate capability, including the transmission service provider’s calculation of capacity benefit margin and transmission reliability margin, for transparency and verifiability to ensure compliance with the MOD Reliability Standards.7 The Commission explained that such an audit is consistent with Requirement R3.1 of Reliability Standard MOD–001– 1, which requires transmission service providers to include in their available transfer capability implementation documents information describing how the selected methodology (or methodologies) has been implemented. Under Requirement R3.1, transmission service providers are to provide enough detail for the Commission and others to validate the results of the calculation 6 Order No. 729, 129 FERC ¶ 61,155 at P 106. 7 Id. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 given the same information used by the transmission service provider. Request for Clarification 11. Duke contends that, although Requirement R3.1 of MOD–001–1 may be broad enough to permit the ERO to audit capacity benefit margin and transfer reliability margin calculation to determine if they can be validated, Reliability Standards MOD–004–1 and MOD–008–1 are not the source for such authority. Accordingly, Duke asks the Commission to clarify that the audits of MOD–004–1 and MOD–008–1 are to be limited to compliance with the explicit requirements of those Reliability Standards. Commission Determination 12. Reliability Standard MOD–001–1 establishes foundational requirements that oblige entities to select a methodology for calculating available transfer or flowgate capability and then make the appropriate calculations. Reliability Standards MOD–004–1 and MOD–008–1 establish the methodologies for calculating capacity benefit margin and transmission reliability margin, respectively. The NERC Glossary of Terms Used in Reliability Standards (NERC Glossary) defines available transfer capability as ‘‘Total Transfer Capability less Exiting Transmission Commitments (including retail customer service), less a Capacity Benefit Margin, less a Transmission Reliability Margin, plus Postbacks, plus counterflows.’’ 8 Thus, both capacity benefit margin and transmission reliability margin are integral components of any available transfer or flowgate calculation. 13. Under Requirement R3.1 of MOD– 001–1, a transmission service provider must include in its implementation documentation: ‘‘[i]nformation describing how the selected methodology (or methodologies) has been implemented, in such detail that, given the same information used by the Transmission Service Provider, the results of the [available transfer capability] or [available flowgate capability] calculations can be validated.9 Because capacity benefit margin and transfer reliability margin are integral components of any available transfer or flowgate capability calculation, we believe that, for an entity to validate the results of an available transfer or flowgate capability calculation, the calculations of capacity benefit margin and transfer reliability margin must also 8 See NERC Glossary, available at: https:// www.nerc.com/docs/standards/rs/ Glossary_2009April20.pdf. 9 Reliability Standard MOD–001–1, Requirement R3.1. E:\FR\FM\11MYR1.SGM 11MYR1 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules and Regulations be detailed in the implementation document with such detail that they can be validated. Thus, the Commission clarifies that the calculations of capacity benefit margin and transfer reliability margin, performed under MOD–004–1 and MOD–008–1 respectively, are properly audited under Requirement R3.1 of MOD–001–1. C. Benchmarking 14. In the Final Rule, the Commission directed the ERO to develop benchmarking and updating requirements for the MOD Reliability Standards to measure modeled available transfer and flowgate capability values against actual values.10 The Commission stated that such requirements should specify the frequency for benchmarking and updating the available transfer and flowgate capability values and should require transmission service providers to update their models after any incident that substantially alters system conditions, such as generation outages.11 Request for Clarification 15. Duke states that, in Order No. 693, the Commission directed the ERO to modify Reliability Standard MOD–014– 0 to include a requirement for validating models against actual system results. Duke states that the Commission reinforced this requirement in Order No. 890–A, holding that the models used by the transmission provider to calculate available transfer capability, and not actual available transfer capability values, must be benchmarked. Duke requests that the Commission clarify that its directive in Order No. 729 to develop benchmarking and updating requirements is the same as the directives in Order Nos. 693 and 890– A, and is not intended to require a different form of benchmarking. jlentini on DSKJ8SOYB1PROD with RULES Commission Determination 16. The Commission clarifies that the directive in Order No. 729 to develop benchmarking and updating requirements is related to the directives in Order Nos. 693, 890, and 890–A. In Order No. 693, the Commission directed modification of Reliability Standard MOD–014–0 to include a requirement that the models developed under the Reliability Standard be validated against actual system responses and that the maximum discrepancy between the model results and the actual system response should be specified in the 10 Order No. 729, 129 FERC ¶ 61,155 at P 162. 11 Id. VerDate Mar<15>2010 16:21 May 10, 2010 Jkt 220001 Reliability Standard.12 Similarly, in Order No. 890, the Commission directed public utilities, working through NERC, to modify certain MOD Reliability Standards to incorporate requirements for the periodic review and modification of certain models.13 In Order No. 890– A, the Commission clarified this directive by stating that the models used by the transmission provider to calculate available transfer capability, and not actual available transfer capability values, must be benchmarked.14 17. The Commission remains concerned about the accuracy of the models used to calculate available transfer capability. Accordingly, in Order No. 729, the Commission directed the ERO to develop benchmarking and updating requirements to measure the results of the available transfer and flowgate calculations against actual values. The Commission’s directive to develop benchmarking and updating requirements stems from the same concerns raised in Order Nos. 693, 890, and 890–A. The benchmarking and updating requirements directed in Order No. 729 are not intended to require a different form of benchmarking than required under those prior orders. D. Treatment of Network Resource Designations 18. In the Final Rule, the Commission found that Reliability Standards MOD– 028–1 and MOD–029–1 failed to address the directive in Order No. 693 to specify how transmission service providers should determine which generators should be modeled in service when calculating available transfer capability.15 Specifically, with regard to MOD–028–1, the Commission noted that Requirement R3.1.3, which addresses designated network resources, governs the calculation of total transfer capability, not existing transmission commitments. The Commission stated that the only information provided as to the effect of designating and undesignating a network resource on 12 Mandatory Reliability Standards for the BulkPower System, Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ¶ 31,242, at P 1210 (2007), order on reh’g, Order No. 693–A, 120 FERC ¶ 61,053 (2007). 13 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs. ¶ 31,241, at P 290 (2007), order on reh’g, Order No. 890–A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ¶ 31,261 (2007), order on reh’g, Order No. 890–B, 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890–C, 126 FERC ¶ 61,228 (2009). 14 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261 at P 99. 15 Order No. 729, 129 FERC ¶ 61,155 at P 171 (citing Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 119). PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 26059 existing transmission commitments is in Requirement R8, which merely states that ‘‘the firm capacity set aside for Network Integration Transmission Service’’ will be included. Accordingly, the Commission directed the ERO, pursuant to section 215(d)(5) of the FPA and section 39.5(f) of its regulations, to develop a modification to MOD–028–1 and MOD–029–1 to specify that base generation schedules used in the calculation available transfer capability will reflect the modeling of all designated network resources and other resources that are committed to or have the legal obligation to run, as they are expected to run, and to address the effect on available transfer capability of designating and undesignating a network resource. Request for Clarification 19. Duke contends that the Commission’s directive requiring additional specificity regarding the effect of designating and undesignating a network resource on existing transmission commitments is inappropriately focused on modifications to Requirement R8 of MOD–028–1. Duke states that which requirements need to be amended to include the desired additional specificity will be dependent on which components of available transfer capability are impacted by the base model and network resource designations and undesignations. According to Duke, the Commission erred in stating that existing transmission capacity includes firm capacity set aside for network integration transmission service. According to Duke, within MOD–028–1, the relationship between capacity set aside for network integration transmission service and existing transmission commitment is a narrower concept than the Commission presents in Order No. 729. Accordingly, Duke recommends that the Commission should not expect Requirement R8 of MOD–028–1 to be modified as a result of an effort to include the additional specificity and requests that the Commission clarify that the added specificity should be included in whichever Requirement(s) are relevant and appropriate. Commission Determination 20. In the Final Rule, the Commission did not intend to direct the ERO to necessarily develop a modification to Requirement R8 of MOD–028–1. The ERO may develop a modification to another appropriate requirement of MOD–028–1 to capture the additional specificity required regarding the effect E:\FR\FM\11MYR1.SGM 11MYR1 26060 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules and Regulations of designating and undesignating a network resource on existing transmission commitments or, as Duke notes, any other relevant component of available transmission capacity. Nevertheless, any modification developed to fulfill this requirement must specify how transmission providers should model base generation dispatch in a consistent manner that includes all designated network resources and other resources that are committed to or have the legal obligation to run, as they are expected to run.16 E. Updates To Dispatch Model Following Material Changes 21. In the Final Rule, the Commission determined that, to be useful, hourly, daily, and monthly available transfer and flowgate capability values must be calculated and posted in advance of the relevant time periods.17 The Commission found that Requirement R8 of MOD–001–1 and Requirement R10 of MOD–030–2 require that such posting will occur far enough in advance to meet this need. Nevertheless, in light of concerns raised by commenters, the Commission directed the ERO to develop modifications to MOD–001–1 and MOD–030–2 to clarify that material changes in system conditions will trigger an update whenever practical.18 Request for Clarification 22. Duke states that it agrees that material changes should trigger an update whenever practical, but admonishes that such a requirement is too vague to be enforceable, let alone auditable, by the ERO due to differing interpretations of the phrases ‘‘material changes’’ and ‘‘whenever practical.’’ Accordingly, Duke requests that the Commission provide further clarity to the ERO as to the desired modifications. jlentini on DSKJ8SOYB1PROD with RULES Commission Determination 23. The Commission agrees that it could be difficult in some instances to enforce a requirement that hinges upon such phrases as ‘‘material changes’’ and ‘‘whenever practical.’’ Nevertheless, we believe that such modifications would be useful to ensure timely updates of available transfer or flowgate capability values. If the ERO is unable to modify the requirements of MOD–001–1 and MOD–030–2 to incorporate such language in a manner that sets clear criteria or measures of whether an entity is in compliance with the relevant 16 See Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1041. 17 Order No. 729, 129 FERC ¶ 61,155 at P 179. 18 Id. VerDate Mar<15>2010 16:21 May 10, 2010 Jkt 220001 Reliability Standard or cannot otherwise identify specific changes in system conditions that require an update, the ERO must, at a minimum, include this language in its measures of compliance associated with those Reliability Standards. F. Managing the Use of Capacity Benefit Margins 24. In the Final Rule, the Commission determined that ISOs, RTOs, and other entities with a wide view of system reliability needs should be able to provide input into determining the total amount of capacity benefit margin required to preserve the reliability of the system.19 The Commission pointed out, though, that Requirements R1.3 and R7 of MOD–004–1 already make clear that determination of need for generation capability import requirement made by a load-serving entity or resource planner are not final. The Commission added that the third bullet of both Requirements R5 and R6 explicitly list reserve margin or resource adequacy requirements established by RTOs and ISOs among the factors to be considered in establishing capacity benefit margin values for available transfer capability paths or flowgates used in available transfer or flowgate capability calculations. To ensure that the Reliability Standard clearly identifies how the transmission service provider will manage situations where the requested use of capacity benefit margin exceeds the capacity benefit margin available, the Commission directed the ERO to develop a modification to MOD– 004–1 to clarify the term ‘‘manage’’ in Requirement R1.3.20 Request for Clarification 25. Duke states that it understands the Commission’s directive to require that the manner in which such a situation is managed should be transparent to all users in the relevant capacity benefit margin implementation document. Accordingly, Duke asks the Commission to clarify that it intended to direct the ERO to modify the Reliability Standard to require that transmission service providers explain in their capacity benefit margin implementation document their specific method for managing a situation where the requested use of capacity benefit margin exceeds the capacity benefit margin available, recognizing that each transmission service provider may have its own method. 19 Order No. 729, 129 FERC ¶ 61,155 at P 222. 20 Id. PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 Commission Determination 26. In Order Nos. 890 and 693, the Commission emphasized that each loadserving entity has the right to request that capacity benefit margin be set aside, and to use transmission capacity set aside for that purpose, to meet its verifiable generation reliability criteria requirement.21 The Commission is concerned that Reliability Standard MOD–004–1 could allow a transmission service provider to calculate, allocate, and use capacity benefit margin in a way that impairs the reliable operation of the Bulk-Power System. Under the Reliability Standard, the transmission service provider is to ‘‘reflect consideration’’ of studies provided by load-serving entities and resource planners demonstrating a need for capacity benefit margin and ‘‘manage’’ situations where the requested use of capacity benefit margin exceeds the capacity benefit margin available. Reliability Standard MOD–004–1 places no bounds on this ‘‘consideration’’ and ‘‘management’’ and, for example, would permit a transmission service provider to make decisions regarding the use of capacity benefit margin based solely on economic considerations notwithstanding a demonstration of need for capacity benefit margin by a load-serving entity or resource planner. 27. These concerns would be diminished if the transmission service provider’s capacity benefit margin implementation document were sufficiently transparent to allow others to validate the method of managing capacity benefit margin. Accordingly, the Commission upholds its decision to direct the ERO to develop a modification that would clarify the term ‘‘manage’’ in Requirement R1.3. The Commission clarifies, however, that the ERO, through its Reliability Standards development process, should determine the manner in which this clarification is made. III. Information Collection Statement 28. The Office of Management and Budget (OMB) regulations require that OMB approve certain information collection requirements imposed by an agency.22 The revisions to the information collection requirements for transmission service providers and transmission operators adopted in Order No. 729 were approved under OMB Control No. 1902–0244. This order clarifies these requirements in order to 21 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 1080; see also Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 259; Order No. 890–A, FERC Stats. & Regs. ¶ 31,261 at P 82. 22 5 CFR 1320. E:\FR\FM\11MYR1.SGM 11MYR1 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules and Regulations more clearly state the obligations imposed in Order No. 729, but does not substantively alter those requirements. OMB approval of this order is therefore unnecessary. However, the Commission will send a copy of this order to OMB for informational purposes only. DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9350] RIN 1545–BE24 IV. Document Availability 29. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC’s Home Page (https://www.ferc.gov) and in FERC’s Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426. 30. 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. 31. 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. AJCA Modifications To the Section 6011 Regulations; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendment. This document contains a correction to final regulations (TD 9350) which were published in the Federal Register on Friday, August 3, 2007 (72 FR 43146) that modify the rules relating to the disclosure of reportable transactions under section 6011. DATES: This correction is effective on May 11, 2010, and is applicable on August 3, 2007. FOR FURTHER INFORMATION CONTACT: Charles D. Wien or Michael H. Beker, (202) 622–3070 (not a toll-free number). SUPPLEMENTARY INFORMATION: SUMMARY: Background The final regulations (TD 9350) that are the subject of this document are under section 6011 of the Internal Revenue Code. Need for Correction As published, the final regulations (TD 9350) contain an error that may prove to be misleading and is in need of clarification. List of Subjects in 26 CFR Part 1 V. Effective Date and Congressional Notification Income taxes, Reporting and recordkeeping requirements. 32. Clarifications adopted in this Final Rule will become effective June 10, 2010. ■ List of Subjects in 18 CFR Part 40 Accordingly, 26 CFR part 1 is corrected by making the following correcting amendment: PART 1—INCOME TAXES By the Commission. Nathaniel J. Davis, Sr., Deputy Secretary. Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ [FR Doc. 2010–11089 Filed 5–10–10; 8:45 am] BILLING CODE 6717–01–P jlentini on DSKJ8SOYB1PROD with RULES Correction of Publication Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.6011–4 is amended by revising the fifth sentence of paragraph (e)(1) to read as follows: ■ § 1.6011–4 Requirement of statement disclosing participation in certain transactions by taxpayers. * * * * * (e) * * * (1) * * * In the case of a taxpayer that is a partnership, an S corporation, or a VerDate Mar<15>2010 16:21 May 10, 2010 Jkt 220001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 26061 trust, the disclosure statement for a reportable transaction must be attached to the partnership, S corporation, or trust’s tax return for each taxable year in which the partnership, S corporation, or trust participates in the transaction under the rules of paragraph (c)(3)(i) of this section. * * * * * * * * LaNita Van Dyke, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. 2010–11078 Filed 5–10–10; 8:45 am] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9350] RIN 1545–BE24 AJCA Modifications To the Section 6011 Regulations; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correction to final regulations. SUMMARY: This document contains a correction to final regulations (TD 9350) which were published in the Federal Register on Friday, August 3, 2007 (72 FR 43146) that modify the rules relating to the disclosure of reportable transactions under section 6011. DATES: This correction is effective on May 11, 2010, and is applicable on August 3, 2007. FOR FURTHER INFORMATION CONTACT: Charles D. Wien or Michael H. Beker, (202) 622–3070 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The final regulations (TD 9350) that are the subject of this document are under section 6011 of the Internal Revenue Code. Need for Correction As published, the final regulations (TD 9350) contain an error that may prove to be misleading and is in need of clarification. Correction of Publication Accordingly, the publication of the final regulations (TD 9350) which were the subject of FR Doc. 07–3786, is corrected as follows: On page 43146, column 2, in the preamble, under the caption heading FOR FURTHER INFORMATION CONTACT, the E:\FR\FM\11MYR1.SGM 11MYR1

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[Federal Register Volume 75, Number 90 (Tuesday, May 11, 2010)]
[Rules and Regulations]
[Pages 26057-26061]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11089]



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Rules and Regulations
                                                Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

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Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Rules 
and Regulations

[[Page 26057]]



DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-19-002; Order No. 729-A]


Mandatory Reliability Standards for the Calculation of Available 
Transfer Capability, Capacity Benefit Margins, Transmission Reliability 
Margins, Total Transfer Capability, and Existing Transmission 
Commitments and Mandatory Reliability Standards for the Bulk-Power 
System

Issued May 5, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Order on clarification.

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

SUMMARY: In this order, the Commission grants several requests for 
clarification of Order No. 729, which approved and directed 
modification of six Modeling, Data, and Analysis Reliability Standards 
submitted to the Commission for approval by the North American Electric 
Reliability Corporation, the Commission-certified Electric Reliability 
Organization for the United States. As discussed below, the Commission 
clarifies the implementation timeline for these Reliability Standards 
as well as certain directed modifications.

DATES: Effective Date: This rule will become effective June 10, 2010.

FOR FURTHER INFORMATION CONTACT: Jonathan First (Legal Information), 
Office of the General Counsel, Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426, (202) 502-8529.
    Cory Lankford (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6711.
    Christopher Young (Technical Information), Office of Electric 
Reliability, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-6403.

SUPPLEMENTARY INFORMATION: 

    Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, and John R. Norris.

Order No. 729-A

Order on Clarification

(Issued May 5, 2010)
    1. In this order, the Commission grants several requests for 
clarification of Order No. 729,\1\ which approved and directed 
modification of six Modeling, Data, and Analysis (MOD) Reliability 
Standards submitted to the Commission for approval by the North 
American Electric Reliability Corporation (NERC), the Commission-
certified Electric Reliability Organization (ERO) for the United 
States.\2\ As discussed below, the Commission clarifies the 
implementation timeline for these Reliability Standards as well as 
certain directed modifications.
---------------------------------------------------------------------------

    \1\ Mandatory Reliability Standards for the Calculation of 
Available Transfer Capability, Capacity Benefit Margins, 
Transmission Reliability Margins, Total Transfer Capability, and 
Existing Transmission Commitments and Mandatory Reliability 
Standards for the Bulk-Power System, Order No. 729, 129 FERC ] 
61,155 (2009).
    \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 (DC Cir. 2009).
---------------------------------------------------------------------------

I. Background

    2. On November 24, 2009, the Commission issued a Final Rule in this 
proceeding that approved the six MOD Reliability Standards submitted to 
the Commission by the ERO. The approved Reliability Standards pertain 
to methodologies for the consistent and transparent calculation of 
available transfer capability or available flowgate capability. 
Pursuant to section 215(d)(5) of the FPA \3\ and section 39.5(f) of our 
regulations, the Commission directed the ERO to develop certain 
modifications to the MOD Reliability Standards. The Commission also 
directed NERC to retire the existing MOD Reliability Standards replaced 
by the versions approved in the Final Rule once the new versions became 
effective.
---------------------------------------------------------------------------

    \3\ 16 U.S.C. 824o(d)(5) (2006).
---------------------------------------------------------------------------

    3. On December 23, 2009, American Public Power Association (APPA) 
and Transmission Access Policy Study Group (TAPS), Duke Energy 
Carolinas, LLC (Duke), Edison Electric Institute (EEI), ISO New England 
(ISO-NE), and NERC filed timely requests for clarification.

II. Discussion

A. Implementation Schedule

    4. In the Final Rule, the Commission directed that the Reliability 
Standards become effective according to the schedule proposed by the 
ERO.\4\ Thus, the Commission stated that the MOD Reliability Standards 
shall become effective on the first calendar quarter that is twelve 
months beyond the date that the Reliability Standards are approved by 
all applicable regulatory authorities. The Commission found that this 
implementation schedule struck a reasonable balance between the need 
for timely reform and the needs of transmission service providers and 
transmission operators to make adjustments to their calculations of 
available transfer capability, capacity benefit margin and transfer 
reserve margin. In response to comments on its notice of proposed 
rulemaking, the Commission clarified that, under this plan, the 
Reliability Standards shall become effective on the first day of the 
first quarter occurring 365 days after approval by all applicable 
regulatory authorities. Approval by the Commission would be effective 
60 days after the date of publication of the Final Rule in the Federal 
Register.\5\
---------------------------------------------------------------------------

    \4\ Order No. 729, 129 FERC ] 61,155 at P 95.
    \5\ Id.
---------------------------------------------------------------------------

Requests for Clarification
    5. Several petitioners requested clarification of the 
implementation schedule. If the Commission intended approval of the MOD 
Reliability Standards to be effective upon their approval of all 
regulatory authorities, including the applicable Canadian provinces, 
APPA and TAPS, along with ISO-NE, ask the Commission to clarify a 
process to keep the Commission and industry informed on the status of 
the required regulatory approval process. By contrast, EEI asks the 
Commission to clarify that the MOD Reliability Standards will become 
effective in the United States no earlier than the first

[[Page 26058]]

day of the first quarter occurring 365 days after the Commission 
approves the MOD Reliability Standards.
    6. NERC also requests clarification and provides some insight into 
its proposed implementation schedule. NERC explains that the term ``all 
applicable regulatory authorities,'' as it is used in the MOD 
Reliability Standards, includes the Commission and the relevant 
regulatory authorities in the Canadian provinces. NERC states that, 
when it developed the implementation schedule, all participants 
anticipated that the processes for approving the MOD Reliability 
Standards in all jurisdictions would result in approvals that occurred 
at roughly the same time. However, according to NERC, the processes for 
approval of Reliability Standards are in various stages of development 
in various jurisdictions. Accordingly, NERC requests that the 
Commission clarify that the MOD Reliability Standards shall become 
effective within the United States no earlier than the first day of the 
first quarter occurring 365 days after the publication of Order No. 729 
in the Federal Register.
Commission Determination
    7. The Commission agrees that, without further clarification about 
regulatory approvals in the Canadian provinces, the approved 
implementation schedule is not determinative as to the effective date 
of the MOD Reliability Standards within the United States. Without a 
clear process for informing entities of the approval by all appropriate 
regulatory authorities, the implementation schedule presents some 
compliance risks. NERC has indicated that it would support 
implementation of the MOD Reliability Standards within the United 
States as of the first day of the first quarter occurring 365 days 
after the publication of Order No. 729 in the Federal Register. The 
Commission agrees that this implementation schedule is appropriate. 
Accordingly, the Commission clarifies that the MOD Reliability 
Standards shall become effective within the United States as of the 
first day of the first quarter occurring 365 days after the publication 
of Order No. 729 in the Federal Register, i.e., January 1, 2011.
    8. Compliance with these MOD Reliability Standards requires an 
exchange of information and data among neighboring transmission service 
providers. In some instances, for example, a transmission service 
provider within the United States may need to exchange information and 
data with a neighboring transmission service provider located in a 
jurisdiction where the Reliability Standard is not yet enforceable. In 
this situation, the transmission service provider within the United 
States shall share information with the transmission service provider 
located in another jurisdiction pursuant to the requirements of these 
MOD Reliability Standards. Nevertheless, the transmission service 
providers and transmission operators within the continental United 
States who must rely on information and data from utilities located in 
another country to comply with these Reliability Standards shall not be 
penalized solely for the failure of a utility located in another 
jurisdiction to provide such information and data, until such time that 
the MOD Reliability Standards become mandatory in that foreign 
jurisdiction.
    9. So that the Commission is informed about international approval 
of these MOD Reliability Standards, we direct the ERO to file notices 
with the Commission when any other applicable regulatory authority 
approves any or all of the MOD Reliability Standards approved by the 
Commission in Order No. 729. The ERO also must post notice of such 
approval on its Web site.

B. Audit Scope

    10. In the Final Rule, the Commission directed the ERO to conduct 
an audit to measure compliance with the MOD Reliability Standards. In 
response to comments on its notice of proposed rulemaking, the 
Commission clarified that these audits are not intended to address the 
competitive effects of these MOD Reliability Standards.\6\ The 
Commission further stated that the audits should review each component 
of available transfer or flowgate capability, including the 
transmission service provider's calculation of capacity benefit margin 
and transmission reliability margin, for transparency and verifiability 
to ensure compliance with the MOD Reliability Standards.\7\ The 
Commission explained that such an audit is consistent with Requirement 
R3.1 of Reliability Standard MOD-001-1, which requires transmission 
service providers to include in their available transfer capability 
implementation documents information describing how the selected 
methodology (or methodologies) has been implemented. Under Requirement 
R3.1, transmission service providers are to provide enough detail for 
the Commission and others to validate the results of the calculation 
given the same information used by the transmission service provider.
---------------------------------------------------------------------------

    \6\ Order No. 729, 129 FERC ] 61,155 at P 106.
    \7\ Id.
---------------------------------------------------------------------------

Request for Clarification
    11. Duke contends that, although Requirement R3.1 of MOD-001-1 may 
be broad enough to permit the ERO to audit capacity benefit margin and 
transfer reliability margin calculation to determine if they can be 
validated, Reliability Standards MOD-004-1 and MOD-008-1 are not the 
source for such authority. Accordingly, Duke asks the Commission to 
clarify that the audits of MOD-004-1 and MOD-008-1 are to be limited to 
compliance with the explicit requirements of those Reliability 
Standards.
Commission Determination
    12. Reliability Standard MOD-001-1 establishes foundational 
requirements that oblige entities to select a methodology for 
calculating available transfer or flowgate capability and then make the 
appropriate calculations. Reliability Standards MOD-004-1 and MOD-008-1 
establish the methodologies for calculating capacity benefit margin and 
transmission reliability margin, respectively. The NERC Glossary of 
Terms Used in Reliability Standards (NERC Glossary) defines available 
transfer capability as ``Total Transfer Capability less Exiting 
Transmission Commitments (including retail customer service), less a 
Capacity Benefit Margin, less a Transmission Reliability Margin, plus 
Postbacks, plus counterflows.'' \8\ Thus, both capacity benefit margin 
and transmission reliability margin are integral components of any 
available transfer or flowgate calculation.
---------------------------------------------------------------------------

    \8\ See NERC Glossary, available at: https://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.
---------------------------------------------------------------------------

    13. Under Requirement R3.1 of MOD-001-1, a transmission service 
provider must include in its implementation documentation:

    ``[i]nformation describing how the selected methodology (or 
methodologies) has been implemented, in such detail that, given the 
same information used by the Transmission Service Provider, the 
results of the [available transfer capability] or [available 
flowgate capability] calculations can be validated.\9\

    \9\ Reliability Standard MOD-001-1, Requirement R3.1.
---------------------------------------------------------------------------

Because capacity benefit margin and transfer reliability margin are 
integral components of any available transfer or flowgate capability 
calculation, we believe that, for an entity to validate the results of 
an available transfer or flowgate capability calculation, the 
calculations of capacity benefit margin and transfer reliability margin 
must also

[[Page 26059]]

be detailed in the implementation document with such detail that they 
can be validated. Thus, the Commission clarifies that the calculations 
of capacity benefit margin and transfer reliability margin, performed 
under MOD-004-1 and MOD-008-1 respectively, are properly audited under 
Requirement R3.1 of MOD-001-1.

C. Benchmarking

    14. In the Final Rule, the Commission directed the ERO to develop 
benchmarking and updating requirements for the MOD Reliability 
Standards to measure modeled available transfer and flowgate capability 
values against actual values.\10\ The Commission stated that such 
requirements should specify the frequency for benchmarking and updating 
the available transfer and flowgate capability values and should 
require transmission service providers to update their models after any 
incident that substantially alters system conditions, such as 
generation outages.\11\
---------------------------------------------------------------------------

    \10\ Order No. 729, 129 FERC ] 61,155 at P 162.
    \11\ Id.
---------------------------------------------------------------------------

Request for Clarification
    15. Duke states that, in Order No. 693, the Commission directed the 
ERO to modify Reliability Standard MOD-014-0 to include a requirement 
for validating models against actual system results. Duke states that 
the Commission reinforced this requirement in Order No. 890-A, holding 
that the models used by the transmission provider to calculate 
available transfer capability, and not actual available transfer 
capability values, must be benchmarked. Duke requests that the 
Commission clarify that its directive in Order No. 729 to develop 
benchmarking and updating requirements is the same as the directives in 
Order Nos. 693 and 890-A, and is not intended to require a different 
form of benchmarking.
Commission Determination
    16. The Commission clarifies that the directive in Order No. 729 to 
develop benchmarking and updating requirements is related to the 
directives in Order Nos. 693, 890, and 890-A. In Order No. 693, the 
Commission directed modification of Reliability Standard MOD-014-0 to 
include a requirement that the models developed under the Reliability 
Standard be validated against actual system responses and that the 
maximum discrepancy between the model results and the actual system 
response should be specified in the Reliability Standard.\12\ 
Similarly, in Order No. 890, the Commission directed public utilities, 
working through NERC, to modify certain MOD Reliability Standards to 
incorporate requirements for the periodic review and modification of 
certain models.\13\ In Order No. 890-A, the Commission clarified this 
directive by stating that the models used by the transmission provider 
to calculate available transfer capability, and not actual available 
transfer capability values, must be benchmarked.\14\
---------------------------------------------------------------------------

    \12\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, 72 FR 16416 (Apr. 4, 2007), FERC Stats. & Regs. ] 
31,242, at P 1210 (2007), order on reh'g, Order No. 693-A, 120 FERC 
] 61,053 (2007).
    \13\ Preventing Undue Discrimination and Preference in 
Transmission Service, Order No. 890, 72 FR 12266 (Mar. 15, 2007), 
FERC Stats. & Regs. ] 31,241, at P 290 (2007), order on reh'g, Order 
No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ] 31,261 
(2007), order on reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008), 
order on reh'g, Order No. 890-C, 126 FERC ] 61,228 (2009).
    \14\ Order No. 890-A, FERC Stats. & Regs. ] 31,261 at P 99.
---------------------------------------------------------------------------

    17. The Commission remains concerned about the accuracy of the 
models used to calculate available transfer capability. Accordingly, in 
Order No. 729, the Commission directed the ERO to develop benchmarking 
and updating requirements to measure the results of the available 
transfer and flowgate calculations against actual values. The 
Commission's directive to develop benchmarking and updating 
requirements stems from the same concerns raised in Order Nos. 693, 
890, and 890-A. The benchmarking and updating requirements directed in 
Order No. 729 are not intended to require a different form of 
benchmarking than required under those prior orders.

D. Treatment of Network Resource Designations

    18. In the Final Rule, the Commission found that Reliability 
Standards MOD-028-1 and MOD-029-1 failed to address the directive in 
Order No. 693 to specify how transmission service providers should 
determine which generators should be modeled in service when 
calculating available transfer capability.\15\ Specifically, with 
regard to MOD-028-1, the Commission noted that Requirement R3.1.3, 
which addresses designated network resources, governs the calculation 
of total transfer capability, not existing transmission commitments. 
The Commission stated that the only information provided as to the 
effect of designating and undesignating a network resource on existing 
transmission commitments is in Requirement R8, which merely states that 
``the firm capacity set aside for Network Integration Transmission 
Service'' will be included. Accordingly, the Commission directed the 
ERO, pursuant to section 215(d)(5) of the FPA and section 39.5(f) of 
its regulations, to develop a modification to MOD-028-1 and MOD-029-1 
to specify that base generation schedules used in the calculation 
available transfer capability will reflect the modeling of all 
designated network resources and other resources that are committed to 
or have the legal obligation to run, as they are expected to run, and 
to address the effect on available transfer capability of designating 
and undesignating a network resource.
---------------------------------------------------------------------------

    \15\ Order No. 729, 129 FERC ] 61,155 at P 171 (citing Order No. 
693, FERC Stats. & Regs. ] 31,242 at P 119).
---------------------------------------------------------------------------

Request for Clarification
    19. Duke contends that the Commission's directive requiring 
additional specificity regarding the effect of designating and 
undesignating a network resource on existing transmission commitments 
is inappropriately focused on modifications to Requirement R8 of MOD-
028-1. Duke states that which requirements need to be amended to 
include the desired additional specificity will be dependent on which 
components of available transfer capability are impacted by the base 
model and network resource designations and undesignations. According 
to Duke, the Commission erred in stating that existing transmission 
capacity includes firm capacity set aside for network integration 
transmission service. According to Duke, within MOD-028-1, the 
relationship between capacity set aside for network integration 
transmission service and existing transmission commitment is a narrower 
concept than the Commission presents in Order No. 729. Accordingly, 
Duke recommends that the Commission should not expect Requirement R8 of 
MOD-028-1 to be modified as a result of an effort to include the 
additional specificity and requests that the Commission clarify that 
the added specificity should be included in whichever Requirement(s) 
are relevant and appropriate.
Commission Determination
    20. In the Final Rule, the Commission did not intend to direct the 
ERO to necessarily develop a modification to Requirement R8 of MOD-028-
1. The ERO may develop a modification to another appropriate 
requirement of MOD-028-1 to capture the additional specificity required 
regarding the effect

[[Page 26060]]

of designating and undesignating a network resource on existing 
transmission commitments or, as Duke notes, any other relevant 
component of available transmission capacity. Nevertheless, any 
modification developed to fulfill this requirement must specify how 
transmission providers should model base generation dispatch in a 
consistent manner that includes all designated network resources and 
other resources that are committed to or have the legal obligation to 
run, as they are expected to run.\16\
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    \16\ See Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1041.
---------------------------------------------------------------------------

E. Updates To Dispatch Model Following Material Changes

    21. In the Final Rule, the Commission determined that, to be 
useful, hourly, daily, and monthly available transfer and flowgate 
capability values must be calculated and posted in advance of the 
relevant time periods.\17\ The Commission found that Requirement R8 of 
MOD-001-1 and Requirement R10 of MOD-030-2 require that such posting 
will occur far enough in advance to meet this need. Nevertheless, in 
light of concerns raised by commenters, the Commission directed the ERO 
to develop modifications to MOD-001-1 and MOD-030-2 to clarify that 
material changes in system conditions will trigger an update whenever 
practical.\18\
---------------------------------------------------------------------------

    \17\ Order No. 729, 129 FERC ] 61,155 at P 179.
    \18\ Id.
---------------------------------------------------------------------------

Request for Clarification
    22. Duke states that it agrees that material changes should trigger 
an update whenever practical, but admonishes that such a requirement is 
too vague to be enforceable, let alone auditable, by the ERO due to 
differing interpretations of the phrases ``material changes'' and 
``whenever practical.'' Accordingly, Duke requests that the Commission 
provide further clarity to the ERO as to the desired modifications.
Commission Determination
    23. The Commission agrees that it could be difficult in some 
instances to enforce a requirement that hinges upon such phrases as 
``material changes'' and ``whenever practical.'' Nevertheless, we 
believe that such modifications would be useful to ensure timely 
updates of available transfer or flowgate capability values. If the ERO 
is unable to modify the requirements of MOD-001-1 and MOD-030-2 to 
incorporate such language in a manner that sets clear criteria or 
measures of whether an entity is in compliance with the relevant 
Reliability Standard or cannot otherwise identify specific changes in 
system conditions that require an update, the ERO must, at a minimum, 
include this language in its measures of compliance associated with 
those Reliability Standards.

F. Managing the Use of Capacity Benefit Margins

    24. In the Final Rule, the Commission determined that ISOs, RTOs, 
and other entities with a wide view of system reliability needs should 
be able to provide input into determining the total amount of capacity 
benefit margin required to preserve the reliability of the system.\19\ 
The Commission pointed out, though, that Requirements R1.3 and R7 of 
MOD-004-1 already make clear that determination of need for generation 
capability import requirement made by a load-serving entity or resource 
planner are not final. The Commission added that the third bullet of 
both Requirements R5 and R6 explicitly list reserve margin or resource 
adequacy requirements established by RTOs and ISOs among the factors to 
be considered in establishing capacity benefit margin values for 
available transfer capability paths or flowgates used in available 
transfer or flowgate capability calculations. To ensure that the 
Reliability Standard clearly identifies how the transmission service 
provider will manage situations where the requested use of capacity 
benefit margin exceeds the capacity benefit margin available, the 
Commission directed the ERO to develop a modification to MOD-004-1 to 
clarify the term ``manage'' in Requirement R1.3.\20\
---------------------------------------------------------------------------

    \19\ Order No. 729, 129 FERC ] 61,155 at P 222.
    \20\ Id.
---------------------------------------------------------------------------

Request for Clarification
    25. Duke states that it understands the Commission's directive to 
require that the manner in which such a situation is managed should be 
transparent to all users in the relevant capacity benefit margin 
implementation document. Accordingly, Duke asks the Commission to 
clarify that it intended to direct the ERO to modify the Reliability 
Standard to require that transmission service providers explain in 
their capacity benefit margin implementation document their specific 
method for managing a situation where the requested use of capacity 
benefit margin exceeds the capacity benefit margin available, 
recognizing that each transmission service provider may have its own 
method.
Commission Determination
    26. In Order Nos. 890 and 693, the Commission emphasized that each 
load-serving entity has the right to request that capacity benefit 
margin be set aside, and to use transmission capacity set aside for 
that purpose, to meet its verifiable generation reliability criteria 
requirement.\21\ The Commission is concerned that Reliability Standard 
MOD-004-1 could allow a transmission service provider to calculate, 
allocate, and use capacity benefit margin in a way that impairs the 
reliable operation of the Bulk-Power System. Under the Reliability 
Standard, the transmission service provider is to ``reflect 
consideration'' of studies provided by load-serving entities and 
resource planners demonstrating a need for capacity benefit margin and 
``manage'' situations where the requested use of capacity benefit 
margin exceeds the capacity benefit margin available. Reliability 
Standard MOD-004-1 places no bounds on this ``consideration'' and 
``management'' and, for example, would permit a transmission service 
provider to make decisions regarding the use of capacity benefit margin 
based solely on economic considerations notwithstanding a demonstration 
of need for capacity benefit margin by a load-serving entity or 
resource planner.
---------------------------------------------------------------------------

    \21\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1080; see 
also Order No. 890, FERC Stats. & Regs. ] 31,241 at P 259; Order No. 
890-A, FERC Stats. & Regs. ] 31,261 at P 82.
---------------------------------------------------------------------------

    27. These concerns would be diminished if the transmission service 
provider's capacity benefit margin implementation document were 
sufficiently transparent to allow others to validate the method of 
managing capacity benefit margin. Accordingly, the Commission upholds 
its decision to direct the ERO to develop a modification that would 
clarify the term ``manage'' in Requirement R1.3. The Commission 
clarifies, however, that the ERO, through its Reliability Standards 
development process, should determine the manner in which this 
clarification is made.

III. Information Collection Statement

    28. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain information collection requirements imposed by 
an agency.\22\ The revisions to the information collection requirements 
for transmission service providers and transmission operators adopted 
in Order No. 729 were approved under OMB Control No. 1902-0244. This 
order clarifies these requirements in order to

[[Page 26061]]

more clearly state the obligations imposed in Order No. 729, but does 
not substantively alter those requirements. OMB approval of this order 
is therefore unnecessary. However, the Commission will send a copy of 
this order to OMB for informational purposes only.
---------------------------------------------------------------------------

    \22\ 5 CFR 1320.
---------------------------------------------------------------------------

IV. Document Availability

    29. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (https://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    30. 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.
    31. 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.

V. Effective Date and Congressional Notification

    32. Clarifications adopted in this Final Rule will become effective 
June 10, 2010.

List of Subjects in 18 CFR Part 40

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2010-11089 Filed 5-10-10; 8:45 am]
BILLING CODE 6717-01-P
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