however, that requiring simulator training for smaller entities that do
not have operational control over facilities that manage SOLs and IROLs
would be an effective use of resources. APPA supports NERC's
investigating the benefits of simulator training but recommends that
any training requirements closely consider the costs and benefits of
simulator training.
    1387. SoCal Edison and MISO state that, although simulators are
valuable training tools, not all entities should be compelled to have
simulators. MISO comments that simulators will become even more
critical in the coming years as experienced operators, with first-hand
knowledge of their respective systems, retire. Recognizing that not
every company can or should build a simulator because of the resources
simulators require, MISO suggests that the Reliability Standards codify
a requirement for operators of companies that do not own a simulator to
have access to a training simulator. MISO states that while simulators
are valuable training resources, focusing emergency training solely on
full-scale simulators may lead to problems when unforeseen situations
arise. It reasons that generic, low-cost simulators that teach concepts
are a valuable training resource for developing skills transferable to
events that do not follow a script.
    1388. SDG&E states that simulators would enhance the overall
training experience but cautions that simulators that accurately model
individual systems are resource-consuming while less resource-
consuming, generic simulators may not mirror the trainee's actual
system. As such, it believes that the use of simulators should be
encouraged but not mandated. Similarly, International Transmission
contends that simulators are a useful tool in the training of operators
and support personnel. However it cautions that simulators are not the
only means to provide realistic simulation-based training. It argues
that because alternative simulation-based training means are available
and because dedicated training simulators are very expensive, the use
of dedicated training simulators should not be required under the
Reliability Standards.
    1389. Otter Tail states that full-scale simulators are effective
but costly to develop and labor intensive to maintain. It recommends
that full-scale simulators should be an option but not a requirement
for small entities. It proposes instead that the Commission allow small
entities to continue to use training aids such as generic operator
training simulators, EXCEL-based interactive training tools and table-
top training exercises. Likewise, Alcoa also does not believe that
simulators are necessary to provide operating personnel with training
for system emergencies. It supports alternative training methods, such
as table-top exercises or realistic simulated exercises that take into
account the physical and electrical characteristics of the trainee's
system. Further, it believes that costs associated with simulators
would not be justified by the impact on reliability.
    1390. Xcel states that to the extent that Reliability Standard PER-
002-0 is applicable to generator operators, the industry should be able
to develop its own ways of administering training instead of being
required to develop simulators.
(b) Commission Determination
    1391. Most commenters including NERC agree that hands-on training
using simulators can add significant value to training for emergencies.
Yet, we share the commenters' concerns regarding the high cost to
develop and maintain full-scale simulators and take these concerns into
consideration. The Commission finds that significant reliability
benefits may be derived from requiring simulator training for
reliability coordinators, transmission operators and balancing
authorities that have operational control over a significant portion of
load and generation.
    1392. This does not mean that these entities must develop and
maintain full-scale simulators but rather they should have access to
training on simulators. Further, because the cost is likely to outweigh
the reliability benefits for small entities, the Commission agrees with
Alcoa and Otter Tail that small entities should continue to use
training aids such as generic operator training simulators and
realistic table-top exercises. Accordingly, the Commission directs the
ERO to develop a requirement for the use of simulators dependent on the
entity's role and size, as discussed above.
viii. Summary of Commission Determination
    1393. The Commission notes that no commenters specifically
addressed the proposed modifications directing the ERO to expand the
Applicability section to include reliability coordinators, and to
identify the expectations of the training for each job function and
develop training programs tailored to each job function with
consideration of the individual training needs of the personnel.
However, in responding to the proposals to expand the applicability of
the Reliability Standard, many commenters acknowledged the need to have
clear training expectations and training programs tailored to specific
job functions. The Commission finds that these two modifications will
enhance the training by focusing on expectations and tailoring the
training to specific job functions; therefore, the Commission adopts
these modifications to the Reliability Standard.
    1394. Accordingly, the Commission approves Reliability Standard
PER-002-0. In addition, pursuant to section 215(d)(5) of the FPA and
Sec.  39.5(f) of our regulations, the Commission directs the ERO to
develop a modification to PER-002-0 through the Reliability Standards
development process that: (1) Identifies the expectations of the
training for each job function; (2) develops training programs tailored
to each job function with consideration of the individual training
needs of the personnel; (3) expands the Applicability section to
include (a) reliability coordinators, (b) local transmission control
center operator personnel (as specified in the above discussion), (c)
generator operators centrally-located at a generation control center
with a direct impact on the reliable operation of the Bulk-Power System
and (d) operations planning and operations support staff who carry out
outage planning and assessments and those who develop SOLs, IROLs or
operating nomograms for real-time operations; (4) uses the Systematic
Approach to Training (SAT) methodology in its development of new
training programs and (5) includes the use of simulators by reliability
coordinators, transmission operators and balancing authorities that
have operational control over a significant portion of load and
generation.
    1395. Further, the Commission directs the ERO to determine whether
it is feasible to develop meaningful performance metrics associated
with the effectiveness of a training program required by PER-002-0 and,
if so, develop such performance metrics. The Commission also directs
the ERO to consider through the Reliability Standards development
process, whether personnel that support EMS applications as discussed
above should be included in mandatory training pursuant to the
Reliability Standard.

c. Operating Personnel Credentials (PER-003-0)
    1396. PER-003-0 requires transmission operators, balancing
authorities and reliability coordinators to have NERC-certified staff
for all operating positions that have a primary responsibility for
real-time operations or are directly responsible for complying with the
Reliability Standards. NERC grants certification to operating personnel
through a separate program documented in the NERC System Operator
Certification Manual and administered by an independent personnel
certification governance committee.
    1397. In the NOPR, the Commission proposed to approve Reliability
Standard PER-003-0 as mandatory and enforceable. In addition, the
Commission proposed to direct NERC to submit a modification to PER-003-
0 that: (1) Includes generator operators as applicable entities; (2)
specifies the minimum competencies that must be demonstrated to become
and remain a certified operator; and (3) identifies the minimum
competencies operating personnel must demonstrate to be certified.
i. Comments
    1398. In addressing this Reliability Standard, many commenters made
the same arguments they made in connection with the operator training
Requirements set forth in Reliability Standard PER-002-0. Comments
specifically relevant to operator certification are reproduced here for
completeness.
    1399. EEI, FirstEnergy and PG&E agree that the Reliability Standard
should apply to generator operators. FirstEnergy believes that the
Functional Model and the Reliability Standards development process
should be used to clarify any confusion about which generator operator
and transmission operator functions are addressed under this
Reliability Standard. To further reduce confusion and the need for
potentially duplicative training, EEI and PG&E comment that operators
should not be required to maintain multiple certifications. SDG&E
states that new certification obligations for generator operators must
be tailored to the needs of the function and should reflect the limited
opportunities of generator operators to have an impact on system
reliability. Thus, it argues that generator operators should not be
subject to the same certification requirements as transmission
operators. MidAmerican echoes this point and adds that minimum
competencies are currently adequately demonstrated by the completion of
NERC-approved annual certification tests. MidAmerican believes that
applicable tests should be tailored to specific job duties to ensure
effectiveness and Reliability Standard compliance.
    1400. Dynegy, MISO, Reliant and Wisconsin Electric are concerned
about extension of this Reliability Standard to generator operators if
it results in every power plant control room being staffed by NERC-
certified operators. Dynegy supports a limited extension of the
Reliability Standard to real-time operational personnel located in a
centralized generation control center that interfaces with the plants
and the local RTO/ISO. Reliant believes that, under certain
circumstances, the dispatcher in the generator operator's local control
center should not be subject to NERC certification requirements. It
explains that, for example, in PJM the dispatcher in a generator
operator local control center is a PJM-certified generation dispatcher
and that, like the employees in plant operating positions, these
dispatchers do not take unilateral action but instead act only upon
PJM's instructions.
    1401. LPPC states that certification requirements for real-time
operations Reliability Standards should only be required for
transmission and generation personnel that are located in the
transmission control center (i.e., responsible for real-time Bulk-Power
System operations). It argues that transmission and generation
operation employees that are located in remote locations that are not
directly involved in the real-time scheduling of transactions or Bulk-
Power System monitoring and control do not need to be certified for
real-time operations Reliability Standards because they are not
involved in the type of functions in which regimented training in the
Reliability Standards would be useful. LPPC states that requiring
certification would be an inefficient result and would distract these
personnel from their own highly-specialized tasks.
    1402. Although APPA states that PER-003-0 is sufficient for
approval as a mandatory and enforceable Reliability Standard, it
opposes the proposed modification to make generator operators subject
to the Reliability Standard. Alcoa, Entergy, Northern Indiana and Xcel
also oppose subjecting generator operators to the Reliability Standard.
Given that there is no size limitation limiting applicability for
generator operators, APPA asks the Commission to reconsider the
proposed modification and, instead, allow the applicability of PER-003-
0 to generator operators to be considered through the Reliability
Standards development process. Alcoa disagrees with the proposed
modification because generator operators take direction from a NERC-
certified transmission operator, balancing authority or reliability
coordinator and do not operate independently of those entities.
Similarly, Xcel states generator operators have limited ability to take
independent action that affects Bulk-Power System reliability. It also
states that it is not clear whether ``generator operator'' means plant
operator or the transmission operator responsible for generation.
    1403. Northern Indiana and SoCal Edison oppose a certification
requirement for all real-time operating positions in a transmission
control center that performs switching operations via SCADA for the
Bulk-Power System, because these personnel are supervised by NERC-
certified operators. Northern Indiana states that the costs would far
outweigh the reliability benefits, if any, that would result from such
a certification requirement. SoCal Edison recommends that PER-003-0
apply to operators who have the authority and are empowered to exercise
independent judgment, and who take or direct actions to secure Bulk-
Power System reliability. It recommends that operators who switch Bulk-
Power System facilities when their actions are approved and overseen by
certified operators should be excluded.
    1404. APPA states that if it is required to send its employees for
NERC training and certification, it would risk losing those employees
to larger utilities that can afford to pay more, simply because those
employees would have acquired a desirable occupational credential. It
argues that given the substantial workforce issues facing public power
systems in the next few years, imposing unneeded certification
requirements could exacerbate an already challenging labor force
situation.
    1405. Northern Indiana adds that because some of these employees
are members of labor unions and subject to existing collective
bargaining agreements, it would have to renegotiate these agreements to
provide for the certification of these employees, and to provide for
the hiring of relief staff necessary to permit these employees to
maintain their certification.
    1406. PG&E states that, once the certification requirements are
developed by NERC and approved by the Commission, sufficient time must
be permitted for generator operators to attain the necessary
certification. It argues that time will be needed to

develop the process, create appropriate documentation and perform
training for appropriate personnel. PG&E contends that generator
operators should not be penalized for failing to achieve certification
if they do not have a reasonable period of time to implement the
training programs.
    1407. EEI believes that the ERO's Reliability Standards development
process should be used to sort out the applicability issues. It states
that using this process will allow for sufficient clarity to reduce the
risk of confusion and thus prevent the need for interpretations that
could change over time. EEI believes this is especially important with
this PER class of Reliability Standards because operators should have
unambiguous guidance on what they are expected to do. It states that
the Reliability Standards should be written so that operating personnel
clearly understand their roles and responsibilities, and whether or not
a specific certification is required. EEI also states that operators
should not be required to maintain multiple certifications.
ii. Commission Determination
    1408. Northern Indiana and APPA raise persuasive arguments
regarding labor relations and labor retention issues that may arise if
generator operators are required to be NERC-certified. The Commission
understands theses concerns and is persuaded not to require generator
operators or transmission operators at local control centers to be
NERC-certified at this time. In addition, the Commission understands
that there are some long tenured unionized transmission operators who
are very capable operators but who are unable to secure certification.
This is not a new problem and has been addressed in various collective
bargaining negotiations through grandfathering such capable operators
who are unable to become certified. However, the Commission directs
that if grandfathering is implemented, the entity must attest that the
operators are competent. The Commission directs the ERO to consider
grandfathering certification requirements for these personnel so that
the industry can retain the knowledge and skill of these long-tenured
operators. Personnel that are subject to such grandfathering still must
comply with applicable training requirements pursuant to PER-002-0.
    1409. No comments were received on the proposed modifications to
direct the ERO to modify the Reliability Standard to specify the
minimum competencies that must be demonstrated to become and remain a
certified operator and to identify the minimum competencies operating
personnel must demonstrate to be certified. The Commission finds that
these modifications improve the Reliability Standard by focusing on
necessary competencies. Accordingly, the Commission directs the ERO to
develop these modifications to the Reliability Standard.
    1410. We find that the Reliability Standard serves an important
reliability goal in requiring applicable entities to staff all
operating positions that have a primary responsibility for real-time
operations or are directly responsible for complying with the
Reliability Standards with NERC-certified staff. Accordingly, the
Commission approves Reliability Standard PER-003-0. In addition,
pursuant to section 215(d)(5) of the FPA and Sec.  39.5(f) of our
regulations, the Commission directs the ERO to develop a modification
to PER-003-0 through the Reliability Standards development process
that: (1) Specifies the minimum competencies that must be demonstrated
to become and remain a certified operator and (2) identifies the
minimum competencies operating personnel must demonstrate to be
certified. The Commission also directs the ERO to consider
grandfathering certification requirements for transmission operator
personnel in the Reliability Standards development process.
d. Reliability Coordination--Staffing (PER-004-1)
    1411. PER-004-1 ensures that reliability coordinator personnel are
adequately trained, NERC-certified and staffed 24-hours a day, seven
days a week, with properly trained and certified individuals.\377\
Further, reliability coordinator operating personnel must have a
comprehensive understanding of the area of the Bulk-Power System for
which they are responsible.
---------------------------------------------------------------------------

    \377\ In its November 15, 2006, filing, NERC submitted PER-004-
1, which supercedes the Version 0 Reliability Standard. PER-004-1
adds Measures and Levels of Non-Compliance to the Version 0
Reliability Standard. In this Final Rule, we review the November
version, PER-004-1.
---------------------------------------------------------------------------

    1412. In the NOPR, the Commission proposed to approve Reliability
Standard PER-004-0 as mandatory and enforceable. In addition, pursuant
to section 215(d)(5) of the FPA and Sec.  39.5(f) of our regulations,
the Commission proposed to direct NERC to submit a modification to PER-
004-0 that: (1) Includes formal training requirements for reliability
coordinators similar to those addressed under the personnel training
Reliability Standard PER-002-0; (2) includes requirements pertaining to
personnel credentials for reliability coordinators similar to those in
PER-003-0 and (3) includes Measures and Levels of Non-Compliance that
address staffing requirements and the requirement for five days of
emergency training.
i. Comments
    1413. APPA notes that the revised Reliability Standard PER-004-1
filed by NERC on November 15, 2006 partially fulfills the directive to
include Measures and Levels of Non-Compliance. It states that NERC
should be directed to include Measures and Levels of Non-Compliance
related to all Requirements.
    1414. FirstEnergy seeks revisions to the terms ``shall have a
comprehensive understanding'' and ``shall have extensive knowledge.''
It states that it will be difficult for entities to demonstrate
compliance with these terms. In addition, FirstEnergy suggests that the
reliability coordinator staffing requirements should be located in the
IRO Reliability Standards.
    1415. Xcel states that emergency training requirements should be
expressed in hour increments rather than days to allow for flexibility
in scheduling training and coordinating with rotating shift schedules.
ii. Commission Determination
    1416. No comments were received on the proposed modifications to
include formal training requirements for reliability coordinators
similar to those addressed under the personnel training Reliability
Standard PER-002-0 and to include requirements pertaining to personnel
credentials for reliability coordinators similar to those in PER-003-0.
The Commission finds that these modifications will improve the
Reliability Standard because they include training requirements for the
reliability coordinator who has the highest level of authority to
assure Reliable Operation of the Bulk-Power System. Accordingly, the
Commission directs the ERO to develop modifications to the Reliability
Standard that address these matters.
    1417. With regard to APPA's comments, consistent with our
discussion above regarding Measures and Levels of Non-Compliance, we
leave it to the discretion of the ERO whether it is necessary that each
Requirement of this Reliability Standard have a corresponding Measure.
    1418. We find that the Reliability Standard adequately addresses
reliability coordinator staffing. Accordingly, the Commission approves
Reliability Standard PER-004-1. In

addition, pursuant to section 215(d)(5) of the FPA and Sec.  39.5(f) of
our regulations, the Commission directs the ERO to develop a
modification through the Reliability Standards development process to
PER-004-1 that: (1) Includes formal training requirements for
reliability coordinators similar to those addressed under the personnel
training Reliability Standard PER-002-0 and (2) includes requirements
pertaining to personnel credentials for reliability coordinators
similar to those in PER-003-0. Further, we direct the ERO to consider
the suggestions of FirstEnergy and Xcel in the Reliability Standards
development process.
10. PRC: Protection and Control
    1419. Protection and Control systems (PRC) on Bulk-Power System
elements are an integral part of reliable grid operation. Protection
systems are designed to detect and isolate faulty elements on a system,
thereby limiting the severity and spread of system disturbances, and
preventing possible damage to protected elements. The function,
settings and limitations of a protection system are critical in
establishing SOLs and IROLs. The PRC Reliability Standards apply to
transmission operators, transmission owners, generator operators,
generator owners, distribution providers and regional reliability
organizations and cover a wide range of topics related to the
protection and control of power systems.
a. System Protection Coordination (PRC-001-1)
    1420. PRC-001-1 \378\ ensures that protection systems are
coordinated among operating entities by requiring transmission and
generator operators to notify appropriate entities of relay or
equipment failures that could affect system reliability. In addition,
transmission and generator operators must coordinate with appropriate
entities when new protection systems are installed, or when existing
protection systems are modified.
---------------------------------------------------------------------------

    \378\ In its November 15, 2006, filing, NERC submitted PRC-001-
1, which supercedes the Version 0 Reliability Standard. PRC-001-1
adds Measures and Levels of Non-Compliance to the Version 0
Reliability Standard. In this Final Rule, we review the November
version, PRC-001-1.
---------------------------------------------------------------------------

    1421. In the NOPR, the Commission proposed to approve PRC-001-0 as
mandatory and enforceable. In addition, the Commission proposed to
direct NERC to submit modifications to PRC-001-0 (proposed directives)
that included: (1) Measures and Levels of Non-Compliance; (2) a
requirement that transmission and generator operators be informed
immediately upon the detection of failures in relays or protection
system elements on the Bulk-Power System that would threaten reliable
operation, so that these entities could carry out appropriate
corrective control actions consistent with those used in mitigating
IROL violations and (3) clarifying that, after being informed of
failures in relays or protection system elements on the Bulk-Power
System, transmission operators or generator operators carry out
corrective control actions that return a system to a stable state as
soon as possible, but no longer than 30 minutes after receiving a
notice of failure.
i. Comments
    1422. While Constellation supports the Commission's proposed
directives because they represent additional steps to achieving
reliability of the Bulk-Power System and eliminating undue
discrimination, MISO questions the need for the Commission's proposals.
MISO notes that virtually all protection schemes have backups. MISO
asks whether the Commission wants facilities to be removed from service
if one of the redundant relaying packages has a problem, or whether
some other action should be taken besides such removal.
    1423. With regard to the NOPR's direction to the ERO to include
Measures and Levels of Non-Compliance, APPA states that the new
Measures only partially address the Requirements, and in some cases,
reference non-existent Requirements. For example, rather than
referencing Requirement R5.1, new Measure M1 incorrectly refers to non-
existent Requirement R8.1. Similarly, rather than referencing
Requirement R5.2, new Measure M2 incorrectly refers to non-existent
Requirement R8.2.
    1424. APPA states that while it agrees that PRC-001-1 is sufficient
for approval, since the new Measures only partially address the
Requirements, and in some cases refer to non-existent Requirements, no
penalties should be levied for violations of Requirements that have no
accompanying Measures.
    1425. WIRAB states that the Requirements, Measures and Levels of
Non-Compliance do not provide guidance for the length of time--
currently stated as ``as soon as possible''--permitted for corrective
actions.
    1426. APPA disagrees with the Commission's second and third
directives to NERC. APPA states that the BAL and IRO Reliability
Standards already have specific standards to notify affected entities
and provide directions for recovery time. APPA acknowledges that in the
NOPR, we stated that ``the Reliability Standards on mitigating IROL
violations are not specific enough and system operators or field
protection and control personnel would not be alerted about failures of
relays and protection systems on critical elements.'' APPA, however,
states that: ``If this is the Commission's view, then it should
instruct NERC to re-examine the interaction between these two sets of
standards [IROL and SOL and proposed PRCs] on remand, and to develop
the most efficient solution to this problem. The Commission should not
itself undertake to resolve this problem by issuing directives for
specific revisions to PRC-001-1, especially if the result might be to
have local level personnel countermanding the instruction of RC
personnel at a time when the system is unstable.'' APPA asserts that
the Commission should modify its proposed directives to allow NERC, as
technical expert, to address the problems in the Reliability Standard
that the Commission has identified.
    1427. Dynegy states that in many situations, depending on the
particular relay or protection system failure, an operator may not be
able to complete corrective control actions that return the system to a
stable state within 30 minutes, including troubleshooting of relays or
restoring any tripped facilities. Dynegy find that a 30-minute time
period may thus be overly rigid and punitive. Wisconsin Electric also
requests further clarification of the 30-minute time limit to carry out
corrective actions after a relay failure. It has additional concerns
about older relays (e.g., electromechanical relays) since it is
impossible to know when and whether these older relays have failed.
Wisconsin Electric also states that the NOPR is not clear about which
relays threaten reliable system operation.
    1428. Northern Indiana states that the NOPR appears to require
immediate corrective actions whenever failures on relays or protection
systems are detected, without regard to whether the specific failure
detected reduces system reliability. It seeks the Commission's
clarification that we do not intend to question a certified
transmission operator's expertise in assessing whether a particular
relay or protection system failure reduces system reliability.
    1429. California PUC contends that imposing a time restriction for
returning a system to a stable state may cause more harm than good
since additional information and options may be available as time
elapses. It repeats its suggestion from its earlier comments on

the Staff Preliminary Assessment and proposes the following alternative
language: ``Transmission or generation operators shall carry out
corrective control actions, i.e., returning the system to a stable
state that respects system requirements as soon as possible, and no
longer than 30 minutes, except where a longer response time is
feasible, or where a longer response is demonstrated to produce a
better ultimate solution without unacceptable interim risk.''
    1430. A number of commenters raise concerns that the proposal would
be unnecessarily burdensome on generator operators. For example,
Progress Electricity Committee asserts that the Commission's proposal
to require generator operators to return the system to a stable state
as soon as possible and within no longer than 30 minutes may be too
burdensome for non-energy company users with on-site generation.
California Cogeneration asserts that PRC-001-1 as a whole may impose
unreasonable burdens on generators with no material impact on the grid,
because most such generators will have no knowledge of the protection
systems on the grid.
    1431. Allegheny states that since generator operators do not have
the same resources as transmission operators for taking corrective
actions, the Commission's third proposed directive should be modified
to apply only to transmission operators. Allegheny states that while a
transmission operator can direct a generator operator to take specific
actions, the reverse is not the case.
    1432. FirstEnergy contends that Requirement R2.1 essentially
requires generator operators to report all protective relay or
equipment failures, since generator operators may not be able to tell
which failures will reduce system reliability. FirstEnergy suggests
that R2.1 should be revised to require generator operators to report
all equipment failures or outages. FirstEnergy further suggests that
PRC-001-1 be revised to provide that if a company performs reasonable
testing procedures, undiscoverable equipment failures will not be
violations of R2.1.
    1433. MidAmerican states that the term ``immediately'' in the
Commission's second directive is ambiguous and unenforceable. It
suggests a 30-minute time limit.
ii. Commission Determination
    1434. The Commission approves PRC-001-1 as mandatory and
enforceable. We also direct NERC to develop a modification to PRC-001-1
through the Reliability Standards development process, as discussed
below.
    1435. The Commission observes that, collectively, the comments
raise three general questions: (1) Whether relay or equipment failures
reduce system reliability and, if so, in what circumstances; (2) what
are ``corrective actions'' required to return a system to a secure
operating state and (3) when is returning a system to a secure
operating state ``as soon as possible.'' \379\ The Commission will
discuss each question in turn.
---------------------------------------------------------------------------

    \379\ PRC-001-1 Requirement R2.2 provides: ``If a protective
relay or equipment failure reduces system reliability, the
Transmission Operator shall notify its Reliability Coordinator and
affected Transmission Operators and Balancing Authorities. The
Transmission Operator shall take corrective action as soon as
possible.''
---------------------------------------------------------------------------

(a) Whether Relay or Equipment Failures Reduce System Reliability and,
if So, in What Circumstances?
    1436. Protection systems on Bulk-Power System elements are an
integral part of reliable operations. They are designed to detect and
isolate faulty elements on a power system, thereby limiting the
severity and spread of disturbances and preventing possible damage to
protected elements. If a protection system can no longer perform as
designed because of a failure of its relays, system reliability is
reduced or threatened. In deriving SOLs and IROLs, moreover, the
functions, settings, and limitations of protection systems are
recognized and integrated. Systems are only reliable when protection
systems perform as designed. This is what PRC-001-1 means in linking a
reduction in system reliability with a protection relay failure or
other equipment failure.
    1437. With respect to MISO's comment that virtually all protection
systems have backups and therefore the Commission's proposals are not
necessary, unless the backup protection has the same design goals and
capabilities as the primary protection, a relay failure in the primary
protection may still threaten system reliability. Further, we note that
while the PRC Reliability Standards do not specifically require
protection systems consisting of redundant and independent protection
groups for each critical element in the Bulk-Power System, such
requirements are included as one potential solution in the TPL
Reliability Standards.\380\
---------------------------------------------------------------------------

    \380\ If delayed clearing results in reliability criteria
violations, one solution can be the use of redundant relay systems.
TPL-002-0 Table 1, footnote e.
---------------------------------------------------------------------------

    1438. Finally, MISO's question seems to imply that if there are
redundant relaying packages providing redundant protection, and a
problem develops with only one of those redundant packages, system
reliability is not threatened, and therefore, there is no need to take
corrective control actions within 30 minutes. We agree with MISO's
conclusion for this scenario.
    1439. In the case, however, of a system element protected by a
single protection system with a failed relay that threatens system
reliability, that scenario would require the use of appropriate
operating solutions including removing a system element from service.
Another possible solution is to operate a system at a lower SOL or IROL
that recognizes the degraded protection performance.
(b) What Are Corrective Actions?
    1440. Corrective actions taken by transmission operators to return
a system to a secure operating state when a protective relay or
equipment failure reduces system reliability normally refer to
``operator control actions'', consisting of operator actions such as
removing the facility without protection from service, generation
redispatch, transmission re-configuration, etc. Corrective action must
be completed as soon as possible, but no longer than 30 minutes after a
notice of protection system failure. Failure to complete corrective
action within 30 minutes will be considered a violation of the relevant
IROL or TOP Reliability Standards. In contrast, troubleshooting or
replacing failed relays or equipment are performed by field maintenance
personnel and normally take hours or even days to complete. These
actions are not normally considered corrective actions in the context
of real-time operation of the Bulk-Power System.
    1441. We believe that ``[t]he transmission operator shall take
corrective action as soon as possible'' refers to transmission
operators taking operator control actions. It does not refer to
troubleshooting, repairing or replacing failed relays or equipment,
etc., since these time-consuming corrective actions would prolong the
risk of cascading failures to the Bulk-Power System.
    1442. Dynegy, Wisconsin Electric and Northern Indiana are concerned
that the time required to troubleshoot, repair or replace failed relays
and equipment would be substantially longer than the 30 minutes set
forth in the Commission's proposed directive. We believe we have
alleviated this concern in our discussion, above. In addition, in
response to Northern Indiana, we clarify that the responsibility for
assessing whether a particular relay or protective system failure
reduces system reliability remains with transmission operators. We
direct the ERO to clarify the term

``corrective action'' consistent with this discussion when it modifies
PRC-001-1 in the Reliability Standards development process.
    1443. We agree with Allegheny that generator operators do not have
the same ability as transmission operators to take corrective control
actions on the Bulk-Power System, and we will modify our third
directive as set forth below. We believe this also addresses Progress
Electricity Committee and California Cogeneration's similar concerns.
(c) When Is ``As Soon as Possible''?
    1444. As explained above, the requirement for system operators to
take corrective control action when protective relay or equipment
failure reduces system reliability should be treated the same as the
requirement for returning a system to a secure and reliable state after
an IROL violation, i.e., as soon as possible, but no longer than 30
minutes after a violation. A longer time limit would place an entity in
violation of relevant IROL or TOP Reliability Standards.
    1445. The Commission directs the ERO to consider FirstEnergy and
California PUC's comments about the maximum time for corrective action
in the ERO Reliability Standards development process.
    1446. In response to MidAmerican's request that we clarify the term
``immediately'' in our proposed second directive, we direct the ERO, in
the Reliability Standards development process, to determine the
appropriate amount of time after the detection of relay failures, in
which relevant transmission operators must be informed of such
failures.
    1447. We agree with APPA that the added Measures and Levels of Non-
Compliance incorrectly reference non-existent requirements. We direct
the ERO to revise the references accordingly.
    1448. We disagree with APPA that BAL and IRO Reliability Standards
already address matters contained in PRC-001-1, because BAL and IRO are
not related to relay and equipment failures, which are specifically
addressed in PRC-001-1.
    1449. We disagree with APPA's assertion that ``the Reliability
Standards on mitigating IROL violations are not specific enough and
system operators or field protection and control personnel would not be
alerted about failure of relays and protection systems on critical
elements.'' The time allowed for mitigating actual IROL violations is
very clear: as soon as possible and within 30 minutes. We clarify that
our concern is not about ``field protection and control personnel not
being alerted about failure of relays and protection systems on
critical elements.'' Our focus, rather, is that upon detection of
failure of relays and protection systems on critical elements, field
personnel must report the failures promptly to the transmission
operators so that corrective operator control actions can be taken as
soon as possible and within 30 minutes. Finally, with respect to APPA's
contention that our proposed directives would result in local-level
personnel undermining or not following the instructions of reliability
coordinator personnel at a time when the system is unstable, we do not
understand how local level personnel, who have no operating control of
a transmission operator's system or a reliability coordinator's system
could do so.
    1450. The Commission approves Reliability Standard PRC-001-1 as
mandatory and enforceable. In addition, the Commission directs the ERO
to develop modifications to PRC-001-1 through the Reliability Standards
development process that: (1) Correct the references for Requirements
and (2) include a requirement that upon the detection of failures in
relays or protection system elements on the Bulk-Power System that
threaten reliable operation, relevant transmission operators must be
informed promptly, but within a specified period of time that is
developed in the Reliability Standards development process, whereas
generator operators must also promptly inform their transmission
operators and (3) clarifies that, after being informed of failures in
relays or protection system elements that threaten reliability of the
Bulk-Power System, transmission operators must carry out corrective
control actions, i.e., return a system to a stable state that respects
system requirements as soon as possible and no longer than 30 minutes
after they receive notice of the failure.
b. Define Regional Disturbance Monitoring and Reporting Requirements
(PRC-002-1)
    1451. PRC-002-1 ensures that each regional reliability organization
establishes requirements to install Disturbance Monitoring Equipment
(DME) and report disturbance data to facilitate analyses of events and
verify system models.
    1452. In the NOPR, the Commission identified PRC-002-1 as a fill-
in-the-blank standard. The NOPR stated that because the regional
requirements for installing DME had not been submitted, the Commission
would not approve or remand PRC-002-1 until the ERO submitted the
additional information.
i. Comments
    1453. APPA agrees with the Commission's proposed course of action.
It states that there are significant and substantive differences
between regional procedures due to the characteristics of various
regional grids. Further it suggests that NERC and the Regional Entities
consider whether they can attain greater consistency on an
Interconnection-wide basis in addressing the completion of this
Reliability Standard.
    1454. Alcoa suggests that the ERO--instead of a Regional Entity--
should define the requirements for DME and the type of report it
generates. The requirements and equipment specifications should be
consistent throughout North America. In addition, Alcoa suggests that
the criteria for installation of such equipment should include the
necessary monitoring and recording that contribute to analysis and
enhance reliability.
    1455. Otter Tail suggests that PRC-002-1 should be developed on an
Interconnection-wide basis to ensure consistency and promote
reliability of the Bulk-Power System.
ii. Commission Determination
    1456. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-002-1.
    1457. We agree with APPA, Alcoa and Otter Tail that the ERO should
consider whether greater consistency can be achieved in this
Reliability Standard. In Order No. 672, the Commission also encouraged
greater uniformity in the development of Reliability Standards.\381\
Consistent with that goal, the Commission directs the ERO to consider
APPA, Alcoa and Otter Tail's suggestions in the Reliability Standards
development process as it modifies PRC-002-1 to provide missing
information needed for the Commission to act on this Reliability
Standard.
---------------------------------------------------------------------------

    \381\ Order No. 672 at P 292.
---------------------------------------------------------------------------

c. Regional Procedure for Analysis of Misoperations of Transmission and
Generation Protection Systems (PRC-003-1)
    1458. PRC-003-1 ensures that all transmission and generation
protection system misoperations are analyzed, and corrective action
plans are developed. Misoperations occur when a protection system
operates when it should not or does not operate when it should. This
Reliability Standard requires each regional reliability organization to
develop a procedure to monitor and review misoperations of protection

systems and to develop and document corrective actions.
    1459. In the NOPR, the Commission identified PRC-003-1 as a fill-
in-the-blank standard. The NOPR stated that because the regional
procedures had not been submitted, the Commission proposed not to
approve or remand PRC-003-1 until the ERO submitted the additional
information.
i. Comments
    1460. APPA agrees with the Commission's proposed course of action.
It states that there are significant and substantive differences
between regional procedures due to the characteristics of various
regional grids and industry structures. Further it suggests that NERC
and the Regional Entities consider whether they can attain greater
consistency on an Interconnection-wide basis in completing this
Reliability Standard.
ii. Commission Determination
    1461. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-003-1.
    1462. We agree with APPA that the ERO should consider whether
greater consistency can be achieved in this Reliability Standard. In
Order No. 672, the Commission also encouraged greater uniformity in the
development of Reliability Standards.\382\ Consistent with that goal,
the Commission directs the ERO to consider APPA's suggestions in the
Reliability Standards development process as it modifies PRC-003-1 to
provide missing information needed for the Commission to act on this
Reliability Standard.
---------------------------------------------------------------------------

    \382\ Id. at P 292.
---------------------------------------------------------------------------

d. Analysis and Reporting of Transmission Protection System
Misoperations (PRC-004-1)
    1463. PRC-004-1 ensures that all transmission and generation
protection system misoperations affecting the reliability of the Bulk-
Power System are analyzed and mitigated by requiring transmission
owners, generator owners and distribution providers that own a
transmission protection system to analyze and document protection
system misoperations. These entities must also develop corrective
action plans in accordance with the regional reliability organization's
procedures.
    1464. In the NOPR, the Commission proposed to approve PRC-004-1 as
mandatory and enforceable.
i. Comments
    1465. APPA agrees that PRC-004-1 is sufficient for approval as a
mandatory and enforceable Reliability Standard.
    1466. ISO-NE and ISO/RTO Council oppose the Commission's proposed
approval of PRC-004-1 because it relies on PRC-003-1, a fill-in-the-
blank standard, which the Commission does not propose to approve or
remand until the ERO submits additional information.
    1467. ISO-NE further requests the Commission to direct NERC to
modify PRC-004-1 to include LSEs and transmission operators in the
applicability section. It states that based on current practice in the
ISO-NE balancing area, transmission operators, transmission owners,
LSEs and distribution providers may individually or jointly own and
operate a protection system. It therefore suggests that transmission
operators and LSEs should also be included in the applicability
section. ISO-NE provides the same suggestion with regard to PRC-005-1,
PRC-008-0, PRC-011-0, PRC-015-0, PRC-016-0, PRC-017-0 and PRC-021-1.
 ii. Commission Determination
    1468. The Commission approves Reliability Standard PRC-004-1 as
mandatory and enforceable.
    1469. We are not persuaded by ISO-NE and ISO/RTO Council's
assertion that PRC-004-1 should not be approved because it refers to
PRC-003-1, which is a fill-in-the-blank standard. In part, we neither
approve nor remand PRC-003-1 because it applies to a regional
reliability organization, and we are not persuaded that a regional
reliability organization's compliance with a Reliability Standard can
be enforced as NERC proposes.\383\ This is not the case with PRC-004-1,
which applies to transmission owners, distribution providers, and
generator owners. Since PRC-004-1 is an existing Reliability Standard
that has been followed on a voluntary basis, transmission owners,
distribution providers and generator owners are on notice of
requirements related to misoperations of transmission and generation
protection systems. As stated in the Common Issues section, a reference
to an unapproved Reliability Standard may be considered in an
enforcement action, but is not a reason to delay approving and
enforcing this Reliability Standard.
---------------------------------------------------------------------------

    \383\ NOPR at P 56-57.
---------------------------------------------------------------------------

    1470. We direct the ERO to consider ISO-NE's suggestion that LSEs
and transmission operators should be included in the applicability
section, in the Reliability Standards development process as it
modifies PRC-004-1.\384\ Further, as the ERO reviews this Reliability
Standard in its five-year cycle of review, the Regional Entity, rather
the regional reliability organization, should develop the procedures
for corrective action plans.
---------------------------------------------------------------------------

    \384\ The same suggestion and therefore same Commission response
also applies to PRC-005-1, PRC-008-0, PRC-011-0, PRC-015-0, PRC-016-
0, PRC-017-0 and PRC-021-1.
---------------------------------------------------------------------------

e. Transmission and Generation Protection System Maintenance and
Testing (PRC-005-1)
    1471. PRC-005-1 ensures that all transmission and generation
protection systems affecting the reliability of the Bulk-Power System
are maintained and tested by requiring the transmission owners,
distribution providers, and generator owners to develop, document, and
implement a protection system maintenance program that may be reviewed
by the regional reliability organization.
    1472. In the NOPR, the Commission proposed to approve PRC-005-1 as
mandatory and enforceable. In addition, the Commission proposed to
direct NERC to submit a modification to PRC-005-1 that includes a
requirement that maintenance and testing of a protection system must be
carried out within a maximum allowable interval that is appropriate to
the type of the protection system and its impact on the reliability of
the Bulk-Power System.
i. Comments
    1473. FirstEnergy states that NERC should establish a maximum
maintenance interval for protection system equipment, and a national
limitation taking into account both relay type and functional versus
calibration testing. Entergy does not object to the development of
maximum allowable maintenance intervals provided that they are
developed in NERC's Reliability Standards development process.
    1474. FirstEnergy and ISO-NE suggest that PRC-005-1, PRC-008-0,
PRC-011-0 and PRC-017-0 should be combined into a single Reliability
Standard relating to the maintenance of protection and control
equipment.
ii. Commission Determination
    1475. For the reasons stated in the NOPR, the Commission approves
Reliability Standard PRC-005-1 as mandatory and enforceable.
    1476. In addition, for the reasons discussed in the NOPR, the
Commission directs the ERO to develop a modification to PRC-005-1
through the

Reliability Standards development process that includes a requirement
that maintenance and testing of a protection system must be carried out
within a maximum allowable interval that is appropriate to the type of
the protection system and its impact on the reliability of the Bulk-
Power System. We further direct the ERO to consider FirstEnergy's and
ISO-NE's suggestion to combine PRC-005-1, PRC-008-0, PRC-011-0 and PRC-
017-0 into a single Reliability Standard through the Reliability
Standards development process.
f. Development and Documentation of Regional UFLS Programs (PRC-006-0)
    1477. PRC-006-0 ensures the development of a regional UFLS \385\
program that will be used as a last resort to preserve the Bulk-Power
System during a major system failure that could cause system frequency
to collapse. PRC-006-0 requires the regional reliability organization
to develop, coordinate, document and assess UFLS program design and
effectiveness at least every five years.
---------------------------------------------------------------------------

    \385\ Underfrequency load shedding.
---------------------------------------------------------------------------

    1478. In the NOPR, the Commission identified PRC-006-0 as a fill-
in-the-blank standard. The NOPR stated that because the regional
procedures had not been submitted, the Commission would not propose to
approve or remand PRC-006-0 until the ERO submits the additional
information. The Commission commends the ERO and regions' initiative,
outlined in the Reliability Standards Work Plan, in adopting an
integrated and coordinated approach to protection for generators,
transmission lines and UFLS and UVLS \386\ programs as part of its work
on fill-in-the-blank Reliability Standards.\387\
---------------------------------------------------------------------------

    \386\ Undervoltage load shedding.
    \387\ NOPR at P 367.
---------------------------------------------------------------------------

i. Comments
    1479. APPA agrees with the Commission's proposed course of action.
It suggests that in completing this Reliability Standard, NERC should
strive for greater consistency on an Interconnection-wide basis through
the use of ``base procedures'' for each Interconnection.
ii. Commission Determination
    1480. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-006-0.
    1481. The Commission understands that UFLS, when properly
coordinated with the dynamic response of the Bulk-Power System, is one
of the safety nets that safeguards the system from cascading events,
assuming it is properly coordinated with the dynamic response of the
system. Until this Reliability Standard is submitted to the Commission
for approval, we do not expect any lapse in the compliance with this
Reliability Standard. As we stated in the NOPR, it is important that
the existing regional reliability organizations continue to fulfill
their current roles during this time of transition. The Commission
expects that this function will pass from the regional reliability
organization to the Regional Entity after they are approved.
g. Assuring Consistency With Regional UFLS Program Requirements (PRC-
007-0)
    1482. PRC-007-0 requires transmission owners, transmission
operators, LSEs and distribution providers to provide, and annually
update, their underfrequency data to facilitate the regional
reliability organization's maintenance of the UFLS program database.
    1483. In the NOPR, the Commission proposed to approve PRC-007-0 as
mandatory and enforceable.
i. Comments
    1484. APPA agrees that PRC-007-0 is sufficient for approval as a
mandatory and enforceable Reliability Standard. However, it states that
actual enforcement cannot take place until PRC-006-0 becomes effective.
ISO-NE and ISO/RTO Council state that PRC-007-0 should not be approved
because it refers to PRC-006-0, which we are not approving or remanding
at this time.
ii. Commission Determination
    1485. For the reasons stated in the NOPR, the Commission approves
Reliability Standard PRC-007-0 as mandatory and enforceable.
    1486. We are not persuaded by APPA, ISO/RTO Council and ISO-NE that
PRC-007-0 cannot be acted on because it relies on PRC-006-0. We
proposed to not approve or remand PRC-006-0 partly because it applies
to a regional reliability organization. The Commission was not
persuaded that a regional reliability organization's compliance with a
Reliability Standard can be enforced as NERC proposed.\388\ That is not
the case with PRC-007-0, which applies to transmission owners,
transmission operators, distribution providers and LSEs. Since PRC-007-
0 is an existing Reliability Standard that has been followed on a
voluntary basis, transmission owners, transmission operators,
distribution providers and LSEs are generally aware of its
requirements. As stated in the Common Issues section, a reference to an
unapproved Reliability Standard may be considered in an enforcement
action, but is not a reason to delay approving and enforcing this
Reliability Standard. The Commission expects that the data will be sent
to the Regional Entities (instead of the regional reliability
organizations) after they are approved.
---------------------------------------------------------------------------

    \388\ NOPR at P 56-57.
---------------------------------------------------------------------------

h. Underfrequency Load Shedding Equipment Maintenance Programs (PRC-
008-0)
    1487. PRC-008-0 requires transmission owners and distribution
providers to implement UFLS equipment maintenance and testing programs
and provide program results to the regional reliability organization.
    1488. In the NOPR, the Commission proposed to approve Reliability
Standard PRC-008-0 as mandatory and enforceable. In addition, the
Commission proposed to direct NERC to submit a modification to PRC-008-
0 that includes a requirement that maintenance and testing of UFLS
programs must be carried out within a maximum allowable interval
appropriate to the relay type and the potential impact on the Bulk-
Power System.
i. Comments
    1489. Entergy states that it does not object to NERC's development
of maximum allowable maintenance intervals for the purpose of
evaluating protection system and control programs provided that they
are developed in NERC's Reliability Standards development process.
FirstEnergy states that NERC should establish a maximum maintenance
interval for protection system equipment and a ``national limitation
taking into account both relay type and functional versus calibration
testing.''
    1490. ISO-NE and ISO/RTO Council contend that the Commission should
not approve PRC-008-0 until it approves PRC-006-0, which the Commission
has identified as a fill-in-the-blank standard. Similarly, APPA
contends that PRC-008-0 cannot be enforced until PRC-006-0 has become
effective and the required regional UFLS program documentation has been
submitted by the applicable Regional Entity. It also notes that the
applicability of PRC-008-0 is limited to transmission owners and
distribution providers who are required by their regional reliability
organization to have a UFLS program.

ii. Commission Determination
    1491. FirstEnergy and Entergy agree with the Commission's proposed
directive, whereas APPA suggests that the need for the proposal should
be established first via the Reliability Standards development process.
    1492. We disagree with ISO/RTO Council and others that approval or
enforcement of PRC-008-0 is linked to approval of PRC-006-0. PRC-008-0
requires that a ``transmission provider or distribution provider with a
UFLS program (as required by its Regional Reliability Organization)
shall have a UFLS equipment and maintenance testing program in place.''
\389\ PRC-006-0 requires each regional reliability organization to
develop, coordinate and document a UFLS program that includes specified
elements. Again, we proposed to neither approve nor remand PRC-006-0
because it applies to a regional reliability organization and the
Commission was not persuaded that a regional reliability organization's
compliance with a Reliability Standard can be enforced as proposed by
NERC.\390\ That is not the case with PRC-008-0, which applies to
transmission owners and distribution providers. Since PRC-008-0 is an
existing Reliability Standard that has been followed on a voluntary
basis, transmission owners and distribution providers are aware whether
they are required to have a UFLS program in place. We approve PRC-008-0
as mandatory and enforceable because it requires entities to have
equipment maintenance and testing of their UFLS programs. As stated in
the Common Issues section, a reference to an unapproved Reliability
Standard may be considered in an enforcement action, but is not a
reason to delay approving and enforcing this Reliability Standard. The
Commission expects that the program results will be sent to the
Regional Entities (instead of the regional reliability organizations)
after they are approved.
---------------------------------------------------------------------------

    \389\ See PRC-008-0, Requirement R1.
    \390\ NOPR at P 56-57.
---------------------------------------------------------------------------

    1493. The Commission approves Reliability Standard PRC-008-0 as
mandatory and enforceable. In addition, the Commission directs the ERO
to develop a modification to PRC-008-0 through the Reliability
Standards development process that includes a requirement that
maintenance and testing of a protection system must be carried out
within a maximum allowable interval that is appropriate to the type of
the protection system and its impact on the reliability of the Bulk-
Power System.
i. UFLS Performance Following an Underfrequency Event (PRC-009-0)
    1494. PRC-009-0 ensures that the performance of a UFLS system is
analyzed and documented following an underfrequency event by requiring
the transmission owner, transmission operator, LSE and distribution
provider to document the deployment of their UFLS systems in accordance
with the regional reliability organization's program.
    1495. In the NOPR, the Commission proposed to approve Reliability
Standard PRC-009-0 as mandatory and enforceable.
i. Comments
    1496. APPA agrees that PRC-009-0 is sufficient for approval as a
mandatory and enforceable Reliability Standard. However, it states that
actual enforcement cannot take place until pending PRC-006-0 becomes
effective and notes that the applicability of PRC-009-0 is limited to
entities that own or operate a UFLS program recognized by their
regional reliability organization.
    1497. ISO-NE and ISO/RTO Council contend that the Commission should
not approve PRC-009-0 until it approves PRC-006-0, which the Commission
has identified as a fill-in-the-blank standard.
ii. Commission Determination
    1498. For the reasons stated in the NOPR, the Commission approves
Reliability Standard PRC-009-0 as mandatory and enforceable.\391\
---------------------------------------------------------------------------

    \391\ NOPR at P 877-80.
---------------------------------------------------------------------------

    1499. We disagree with ISO/RTO Council and others that approval or
enforcement of PRC-009-0 is linked to approval of PRC-006-0. PRC-009-0
ensures that the performance of a UFLS system is analyzed and
documented following an underfrequency event by requiring the
transmission owner, transmission operator, LSE, and distribution
provider to document the deployment of their UFLS operations. PRC-006-0
requires each regional reliability organization to develop, coordinate
and document a UFLS program that includes specified elements. We
proposed to neither approve nor remand PRC-006-0 because it applies to
a regional reliability organization and the Commission was not
persuaded that a regional reliability organization's compliance with a
Reliability Standard can be enforced as NERC proposed.\392\ That is not
the case with PRC-009-0, which applies to transmission owners,
transmission operators, LSEs and distribution providers with UFLS
systems. Since PRC-009-0 is an existing Reliability Standard that has
been followed on a voluntary basis, entities are aware whether they are
required to have a UFLS program in place. Reporting on their UFLS
programs therefore should not be burdensome. As stated in the Common
Issues section, a reference to an unapproved Reliability Standard may
be considered in an enforcement action, but is not a reason to delay
approving and enforcing this Reliability Standard. The Commission
expects this documentation will be sent to the Regional Entities
(instead of the regional reliability organizations) after they are
approved.
---------------------------------------------------------------------------

    \392\ NOPR at P 56-57.
---------------------------------------------------------------------------

j. Assessment of the Design and Effectiveness of UVLS Program (PRC-010-
0)
    1500. PRC-010-0 requires transmission owners, transmission
operators, LSEs and distribution providers to periodically conduct and
document an assessment of the effectiveness of their UVLS program at
least every five years or as required by changes in system conditions.
The assessment must be conducted with the associated transmission
planner and planning authority.
    1501. In the NOPR, the Commission proposed to approve Reliability
Standard PRC-010-0 as mandatory and enforceable. In addition, the
Commission proposed to direct NERC to submit a modification to PRC-010-
0 that requires that an integrated and coordinated approach be included
in all protection systems on the Bulk-Power System, including
generators and transmission lines, generators' low voltage ride-through
capabilities and UFLS and UVLS programs.
    1502. The Commission commends the initiative and efforts that have
been taken by NERC and the industry in addressing UVLS requirements as
recommended by the Blackout Report.
i. Comments
    1503. APPA agrees that PRC-010-0 should be approved. While APPA
agrees and that NERC should re-examine this Reliability Standard to
determine whether a more integrated and coordinated approach should be
included in protection systems on the Bulk-Power System, it also asks
the Commission not to require a specific approach to UVLS and other
protection systems. According to APPA, NERC should strive for greater
consistency on an Interconnection-wide basis through

the use of a coordinated protection system for the Bulk-Power System in
each Interconnection.
    1504. ISO-NE generally supports approval of PRC-010-0, but opposes
the Commission's directive to modify the Reliability Standard to
include an integrated and coordinated approach in all protection
systems, particularly for UVLS and UFLS, programs, because such
integration cannot be technologically accomplished.
    1505. FirstEnergy indicates that UVLS is primarily designed to
address localized problems, and therefore requiring the universal
coordination of UVLS across the grid does not make sense. FirstEnergy
states that it is not clear what type of coordination would be useful
for a UVLS program.
ii. Commission Determination
    1506. We agree with APPA's comments and reiterate that the directed
modification should be developed in the Reliability Standards
development process. With regard to APPA's concerns, while we direct
the ERO to develop modifications that would require an integrated and
coordinated approach to protection systems, we do not direct a specific
approach to accomplish such integration and coordination. Rather, the
ERO should develop an appropriate approach utilizing the Reliability
Standards development process.
    1507. With regard to ISO-NE's disagreement on integration of
various system protections ``because such integration cannot be
technologically accomplished'', we note that the evidence collected in
the Blackout Report indicates that ``the relay protection settings for
the transmission lines, generators and underfrequency load shedding in
the northeast may not be entirely appropriate and are certainly not
coordinated and integrated to reduce the likelihood and consequence of
a cascade--nor were they intended to do so.'' In addition, the Blackout
Report stated that one of the common causes of major outages in North
America is a lack of coordination on system protection. The Commission
agrees with the protection experts who participated in the
investigation, formulated Blackout Recommendation No. 21 and
recommended that UVLS programs have an integrated approach.\393\
---------------------------------------------------------------------------

    \393\ ``Recommend that NERC determine the goal and principles
needed to establish an integrated approach to relay protection for
generators and transmission lines and the use of underfrequency and
undervoltage load shedding programs.'' Blackout Report at 159.
---------------------------------------------------------------------------

    1508. Regarding FirstEnergy's question of whether universal
coordination among UVLS programs that address local system problems
makes sense, we believe that PRC-010-0's objective in requiring an
integrated and coordinated approach is to address the possible adverse
interactions of these protection systems among themselves and to
determine whether they could aggravate or accelerate cascading events.
We do not believe this Reliability Standard is aimed at universal
coordination among UVLS programs that address local system problems.
    1509. As identified in the NOPR,\394\ NERC is continuing to develop
an integrated and coordinated approach to protection for generators,
transmission lines and UFLS and UVLS programs within its work on the
fill-in-the-blank proposed Reliability Standards.
---------------------------------------------------------------------------

    \394\ NOPR P 883.
---------------------------------------------------------------------------

    1510. We appreciate MEAG's feedback to our response in the NOPR.
For the reasons discussed in the NOPR,\395\ as well as our explanation
above, the Commission approves Reliability Standard PRC-010-0 as
mandatory and enforceable. In addition, the Commission directs the ERO
to develop a modification to PRC-010-0 through the Reliability
Standards development process that requires that an integrated and
coordinated approach be included in all protection systems on the Bulk-
Power System, including generators and transmission lines, generators'
low voltage ride-through capabilities, and UFLS and UVLS programs.
---------------------------------------------------------------------------

    \395\ Id. P 891-92.
---------------------------------------------------------------------------

 k. UVLS System Maintenance and Testing (PRC-011-0)
    1511. PRC-011-0 requires transmission owners and distribution
providers to implement their UVLS equipment maintenance and testing
programs and provide program results to regional reliability
organizations.
    1512. In the NOPR, the Commission proposed to approve PRC-011-0 as
mandatory and enforceable. In addition, the Commission proposed to
direct NERC to submit a modification to PRC-011-0 that includes a
requirement that maintenance and testing of UVLS programs must be
carried out within a maximum allowable interval appropriate to the
relay type and the potential impact on the Bulk-Power System.
i. Comments
    1513. APPA suggests that, instead of a Commission directive, NERC
should be directed to consider whether this standard is needed to
address the Commission's concern about periodic testing of UVLS
equipment.
    1514. FirstEnergy comments that NERC should establish a maximum
maintenance interval for protection system equipment, and a ``national
limitation taking into account both relay type and functional versus
calibration testing.'' Entergy states that it does not object to NERC's
development of maximum allowable maintenance intervals for the purpose
of evaluating protection system and control programs.
ii. Commission Determination
    1515. The Commission approves Reliability Standard PRC-011-0 as
mandatory and enforceable. In addition, we direct the ERO to develop
modifications to the Reliability Standard through the Reliability
Standards development process as discussed below.
    1516. The Commission disagrees with APPA that the decision whether
a modification is needed should be established first by the ERO in its
Reliability Standards development process. Our direction identifies an
appropriate goal necessary to assure the reliable operation of the
Bulk-Power System. The details should be developed through the
Reliability Standards development process.
    1517. The Commission believes that the proposal is presently part
of the process. The Commission approves Reliability Standard PRC-011-0
as mandatory and enforceable. In addition, the Commission directs the
ERO to submit a modification to PRC-011-0 through the Reliability
Standards development process that includes a requirement that
maintenance and testing of a protection system must be carried out
within a maximum allowable interval that is appropriate to the type of
the protection system and its impact on the reliability of the Bulk-
Power System.
l. Special Protection System Review Procedure (PRC-012-0)
    1518. PRC-012-0 requires regional reliability organizations to
ensure that all special protection systems \396\ are properly designed,
meet performance requirements and are coordinated with other protection
systems.
---------------------------------------------------------------------------

    \396\ A special protection system is designed to automatically
take corrective actions to protect a particular system under both
abnormal and predetermined conditions, excluding the coordinated
tripping of circuit breakers to isolate faulted components, which is
typically the purpose of other protection devices.
---------------------------------------------------------------------------

    In the NOPR, the Commission identified PRC-012-0 as a fill-in-the-
blank standard. The NOPR stated that

because the regional review procedures on special protection systems
have not been submitted, the Commission would not propose to approve or
remand PRC-012-0 until the ERO submits the additional information.
i. Comments
    1520. APPA agrees with the Commission's proposed course of action.
It further suggests that NERC, in completing PRC-012-0, should strive
for greater consistency on an Interconnection-wide basis through the
use of ``base procedures'' for each Interconnection.
ii. Commission Determination
    1521. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-012-0. The Commission urges the ERO should
consider APPA's suggestions in the Reliability Standards development
process.
m. Special Protection System Database (PRC-013-0)
    1522. PRC-013-0 ensures that all special protection systems are
properly designed, meet performance requirements and are coordinated
with other protection systems by requiring the regional reliability
organization to maintain a database of information on special
protection systems.
    1523. In the NOPR, the Commission identified PRC-013-0 as a fill-
in-the-blank standard. The NOPR stated that because the regional
procedures on maintaining special protection system databases have not
been submitted, the Commission would not approve or remand PRC-013-0
until the ERO submits the additional information.
i. Comments
    1524. APPA agrees with the Commission's proposed course of action.
It suggests further that in completing PRC-013-0, NERC should strive
for greater consistency on an Interconnection-wide basis through the
use of ``base procedures'' for each Interconnection.
ii. Commission Determination
    1525. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-013-0. The ERO should consider APPA's suggestions
in the Reliability Standards development process.
n. Special Protection System Assessment (PRC-014-0)
    1526. PRC-014-0 ensures that special protection systems are
properly designed, meet performance requirements and are coordinated
with other protection systems by requiring the regional reliability
organization to assess and document the operation, coordination and
compliance with NERC Reliability Standards and effectiveness of special
protection systems at least once every five years.
    1527. In the NOPR, the Commission identified PRC-014-0 as a fill-
in-the-blank Reliability Standard. The NOPR stated that because the
regional procedures on special protection system assessment had not
been submitted, the Commission would not propose to approve or remand
PRC-014-0 until the ERO submitted the additional information.
i. Comments
    1528. APPA agrees with the Commission's proposed course of action.
It suggests further that in completing PRC-014-0, NERC should strive
for greater consistency on an Interconnection-wide basis through the
use of ``base procedures'' for each Interconnection.
ii. Commission Determination
    1529. For the reasons stated in the NOPR, the Commission will not
approve or remand PRC-014-0. The ERO should consider APPA's suggestions
in the Reliability Standards development process.
o. Special Protection System Data and Documentation (PRC-015-0)
    1530. Proposed Reliability Standard PRC-015-0 requires transmission
owners, generator owners and distribution providers to maintain a
listing, retain evidence of review and provide documentation of
existing, new or functionally modified special protection systems.
    1531. In the NOPR, the Commission proposed to approve PRC-015-0 as
mandatory and enforceable.
i. Comments
    1532. APPA agrees that PRC-015-0 is sufficient for approval as a
mandatory Reliability Standard. However, it states that this
Reliability Standard cannot be enforced until two pending Reliability
Standards, PRC-012-0 and PRC-013-0, become effective. Similarly, ISO/
RTO Council and ISO-NE contend that the Commission should not approve
PRC-15-0 until it approves PRC-012-0 and PRC-013-0, identified by the
Commission as fill-in-the-blank standards.
ii. Commission Determination
    1533. We disagree with APPA, ISO/RTO Council and ISO-NE and
conclude that PRC-015-0 should be approved and made enforceable on the
effective date of this rulemaking. As mentioned above, PRC-012-0 and
PRC-013-0 apply solely to regional reliability organizations. PRC-012
is ``process'' oriented, as it requires the regional reliability
organization to develop a review procedure that identifies information
relevant to the regional reliability organization review of a special
protection system. PRC-013-0 requires the regional reliability
organization to maintain a database of information on special
protection systems. PRC-015-0 requires a transmission owner, generator
owner or distribution provider that owns a special protection system to
maintain a list and provide data for existing and planned special
protection systems as defined in PRC-013-0; and have evidence that the
entity reviewed new or functionally modified special protection systems
in accordance with the regional reliability organization procedures
identified in PRC-012-0. As stated in the Common Issues section, a
reference to an unapproved Reliability Standard may be considered in an
enforcement action, but is not a reason to delay approving and
enforcing this Reliability Standard. The Commission expects that the
data will be sent to the Regional Entities (instead of the regional
reliability organizations) after they are approved.
    1534. For the reasons discussed in the NOPR and above, the
Commission concludes that Reliability Standard PRC-015-0 is just,
reasonable, not unduly discriminatory or preferential and in the public
interest and approves it as mandatory and enforceable.
p. Special Protection System Misoperations (PRC-016-0)
    1535. PRC-016-0 requires transmission owners, generator owners and
distribution providers to provide the regional reliability organization
with documentation, analyses and corrective action plans for
misoperation of special protection systems.
    1536. In the NOPR, the Commission proposed to approve Reliability
Standard PRC-016-0 as mandatory and enforceable. In addition, the
Commission proposed to direct NERC to submit a modification to PRC-016-
0 that includes a requirement that maintenance and testing of these
special protection system programs be carried out within a maximum
allowable interval that is appropriate for the type of relays used and
the impact of these special system protection systems on the
reliability of the Bulk-Power System.

i. Comments
    1537. While APPA agrees that PRC-016-0 is sufficient for approval
as a mandatory Reliability Standard, APPA, ISO/RTO Council and ISO-NE
state that PRC-016-0 cannot be enforced until pending Reliability
Standard PRC-012-0 has become effective.
    1538. FirstEnergy suggests that NERC clarify and provide guidance
to transmission operators on the types of misoperations that have
Interconnection-wide impacts and the types of misoperations that need
reporting.
ii. Commission Determination
    1539. PRC-016-0 states that transmission owners, generator owners
and distribution providers that own a special protection system must
analyze the system operations and maintain a record of misoperations in
accordance with the review procedure specified in PRC-012-0. As we
explained above in the context of PRC-015-0, applicable entities are
expected to comply with PRC-015-0, and the procedures specified in PRC-
012-0 will continue to be maintained by the regional reliability
organizations pursuant to the ERO Rules of Procedure and the
Commission's reliability information provision. We disagree with APPA,
ISO/RTO Council and ISO-NE and conclude that PRC-016-0 is enforceable
as of the effective date of this rulemaking. As stated in the Common
Issues section, a reference to an unapproved Reliability Standard may
be considered in an enforcement action, but is not a reason to delay
approving and enforcing this Reliability Standard. The Commission
expects that the plans will be sent to the Regional Entities (instead
of the regional reliability organizations) after they are approved.
    1540. The Commission concludes that Reliability Standard PRC-016-0
is just, reasonable, not unduly discriminatory or preferential, and in
the public interest, and approves it as mandatory and enforceable. We
observe that a maximum allowable interval for maintenance and testing
of special protection systems is not relevant to PRC-016-0, where the
primary purpose is to analyze and report all misoperations of special
protection systems. The Commission, therefore, will not adopt the
proposal to require the ERO to modify PRC-016-0 to include a
requirement for a maximum allowable interval for maintenance and
testing.
    1541. The Commission concludes that Reliability Standard PRC-016-0
is just, reasonable, not unduly discriminatory or preferential and in
the public interest, and approves it as mandatory and enforceable.
q. Special Protection System Maintenance and Testing (PRC-017-0)
    1542. PRC-017-0 requires transmission owners, generator owners and
distribution providers to provide the regional reliability organization
with documentation of special protection system maintenance, testing
and implementation plans.
    1543. In the NOPR, the Commission proposed to approve PRC-017-0 as
mandatory and enforceable. In addition, the Commission proposed to
direct NERC to submit a modification to PRC-017-0 that: (1) Includes a
requirement that maintenance and testing of these special protection
system programs must be carried out within a maximum allowable interval
that is appropriate to the type of relaying used and (2) identifies the
impact of these special protection system programs on the reliability
of the Bulk-Power System.
i. Comments
    1544. APPA agrees that PRC-017-0 is sufficient for approval as a
mandatory and enforceable Reliability Standard. It also agrees that
NERC and the industry should consider adoption of maximum allowable
maintenance intervals. With respect to the Commission's second
directive, APPA points out that the documentation of the test results
will identify the impact of the special protection systems on the Bulk
Electric System.
    1545. FirstEnergy states that NERC should establish a maximum
maintenance interval for protective system equipment and a national
limitation, taking into account both relay type and functional versus
calibration testing. Entergy does not object to NERC's development of
maximum allowable maintenance intervals for the purpose of evaluating
protection system and control programs.
ii. Commission Determination
    1546. The commenters agree with the Commission's proposed directive
on a maximum allowable interval for maintenance and testing of
protection system equipment and we conclude that such a modification is
beneficial. However, we agree with APPA's view on our second proposed
directive assuming that the documentation is requested by either the
regional reliability organization or NERC. Therefore, we will modify
our direction to require that the documentation be routinely provided
to the ERO or Regional Entity and not only when it is requested.
    1547. The Commission approves Reliability Standard PRC-017-0 as
mandatory and enforceable. In addition, the Commission directs the ERO
to develop a modification to PRC-017-0 through the Reliability
Standards development process, that includes: (1) a requirement that
maintenance and testing of a protection system must be carried out
within a maximum allowable interval that is appropriate for the type of
the protection system and (2) a requirement that documentation
identified in Requirement R2 shall be routinely provided to the ERO or
Regional Entity.
r. Disturbance Monitoring Equipment Installation and Data Reporting
(PRC-018-1)
    1548. PRC-018-1 ensures that disturbance monitoring equipment is
installed and disturbance data is reported in accordance with
comprehensive requirements. PRC-018-1 contains several different
effective dates for specific requirements.
    1549. In the NOPR, the Commission proposed to approve PRC-018-1 as
mandatory and enforceable.
i. Comments
    1550. While APPA agrees that PRC-018-1 is sufficient for approval
as a mandatory Reliability Standard, it contends that enforcement is
not possible until PRC-002-0, a fill-in-the-blank standard, is
effective. For the same reason, ISO/RTO Council and ISO-NE state that
the Reliability Standard should not be approved or remanded at this
time.
 ii. Commission Determination
    1551. The portion of PRC-018-1 that NERC proposes will become
effective on the effective date of this Final Rule states that
transmission owners and generator owners that own a disturbance
monitoring system must assure that disturbance data is reported in
accordance with PRC-002-1 to facilitate analyses of events. Applicable
entities are expected to comply with PRC-018-1, and the procedures
specified in PRC-002-1 will be provided pursuant to the data gathering
provisions of the ERO's Rules of Procedure and the Commission's ability
to obtain information pursuant to section 215 of the FPA and Part 39 of
the Commission's regulations. Accordingly, we disagree with ISO/RTO
Council and ISO-NE and conclude that the effective portions of PRC-018-
1 are enforceable as of the effective date of this rulemaking. As
stated in the Common Issues section, a reference to an unapproved
Reliability Standard may be

considered in an enforcement action, but is not a reason to delay
approving and enforcing this Reliability Standard.
    1552. Accordingly, for reasons stated in the NOPR and above, the
Commission approves Reliability Standard PRC-018-1 as mandatory and
enforceable.
s. Undervoltage Load Shedding Program Database (PRC-020-1)
    1553. PRC-020-1 ensures that a regional database for UVLS programs
is available for Bulk-Power System studies by requiring regional
reliability organizations with any entities that have UVLS programs to
maintain and annually update a database.
    1554. In the NOPR, the Commission identified PRC-020-1 as a fill-
in-the-blank standard. The NOPR stated that because the regional
procedures on maintaining UVLS databases have not been submitted, the
Commission would not propose to approve or remand PRC-020-0 until the
ERO submits the additional information.
i. Comments
    1555. APPA disagrees that PRC-020-1 is a regional fill-in-the-blank
Reliability Standard because it does not require regional procedures.
However, APPA recognizes that PRC-020-1 requires the regional
reliability organization to establish a database.
ii. Commission Determination
    1556. APPA is correct that the reason for not approving or
remanding this Reliability Standard is because it applies solely to the
regional reliability organization, and not because it is a fill-in-the-
blank standard. For this reason, the Commission will not approve or
remand PRC-020-1.
t. Undervoltage Load Shedding Program Data (PRC-021-1)
    1557. PRC-021-1 ensures that data is supplied to support the
regional UVLS database by requiring the transmission owner and
distribution provider to supply data related to their systems and other
related protection schemes to their regional reliability organization's
database.
    1558. In the NOPR, the Commission proposed to approve PRC-021-1 as
mandatory and enforceable.
i. Comments
    1559. APPA agrees that PRC-021-1 should be approved as a mandatory
and enforceable Reliability Standard.
    1560. The ISO-NE and ISO/RTO Council contend that the Commission
should refrain from approving PRC-021-1 until it approves PRC-020-1
which the Commission has not approved or remanded.
ii. Commission Determination
    1561. For the reasons stated in the NOPR and above, the Commission
approves PRC-021-1 as mandatory and enforceable. The referenced
information will be provided pursuant to the data gathering provisions
of the ERO's rules of procedure and the Commission's ability to obtain
information pursuant to section 215 of the FPA and Part 39 of the
Commission's regulations. As stated in the Common Issues section, a
reference to an unapproved Reliability Standard may be considered in an
enforcement action, but is not a reason to delay approving and
enforcing this Reliability Standard.
u. Undervoltage Load Shedding Program Performance (PRC-022-1)
    1562. PRC-022-1 requires transmission operators, LSEs, and
distribution providers to provide analysis, documentation and
misoperation data on UVLS operations to the regional reliability
organization.
    1563. In the NOPR, the Commission proposed to approve PRC-022-1 as
mandatory and enforceable.
i. Comments
    1564. APPA agrees that PRC-022-1 should be approved as a mandatory
and enforceable Reliability Standard.
    1565. FirstEnergy comments that Requirement R1.3 requires ``a
simulation of the event, if deemed appropriate by the RRO'' and
believes that the applicable entities such as transmission operators
may not be able to simulate large system events. FirstEnergy suggests
that Requirement R1.3 be revised to state that ``a simulation of the
event, if deemed appropriate, and assisted by the [regional reliability
organization].''
ii. Commission Determination
    1566. For the reasons discussed in the NOPR, the Commission
concludes that Reliability Standard PRC-022-1 is just, reasonable, not
unduly discriminatory or preferential, and in the public interest and
approves it as mandatory and enforceable.
    1567. The Commission directs the ERO to consider FirstEnergy's
suggestion in the Reliability Standards development process.
11. TOP: Transmission Operations
    1568. The eight Transmission Operations (TOP) Reliability Standards
apply to transmission operators, generator operators and balancing
authorities. The goal of these Reliability Standards is to ensure that
the transmission system is operated within operating limits.
Specifically, these Reliability Standards cover the responsibilities
and decision-making authority for reliable operations, requirements for
operations planning, planned outage coordination, real-time operations,
provision of operating data, monitoring of system conditions, reporting
of operating limit violations and actions to mitigate such violations.
The Interconnection Reliability Operations and Coordination (IRO) group
of Reliability Standards complement these proposed TOP Reliability
Standards.
a. Reliability Responsibilities and Authorities (TOP-001-1)
    1569. The reliability goal of TOP-001-1 is to ensure that system
operators have the authority to take actions and direct others to take
action to maintain Bulk-Power System facilities within operating
limits. TOP-001-1 requires that: (a) Transmission operating personnel
must have the authority to direct actions in real-time; (b) the
transmission operator, balancing authority, and generator operator must
follow the directives of their reliability coordinator and (c) the
balancing authority and generator operator must follow the directives
of the transmission operator. In addition, the proposed Reliability
Standard requires the transmission operator, balancing authority,
generator operator, distribution provider and LSE to take emergency
actions when directed to do so in order to keep the transmission system
intact.
    1570. The Commission proposed in the NOPR to approve the
Reliability Standard as mandatory and enforceable and to direct NERC to
submit a modification to it that includes Measures and Levels of Non-
Compliance. On November 15, 2006, NERC submitted revisions to the
Reliability Standard to include Measures and Levels of Non-
Compliance.\397\
---------------------------------------------------------------------------

    \397\ In its November 15, 2006, filing, NERC submitted TOP-001-
1, which supercedes the Version 0 Reliability Standard. TOP-001-1
adds Measures and Levels of Non-Compliance to the Version 0
Reliability Standard. In this Final Rule, we review the November
version, TOP-001-1.
---------------------------------------------------------------------------

i. Comments
    1571. APPA notes that TOP-001-1, as revised to include Measures and
Levels of Non-Compliance, fulfills the proposed directive in the NOPR.
Accordingly, APPA agrees that the Commission should approve TOP-001-1
as mandatory and enforceable.

    1572. California PUC asserts that TOP-001 should not be adopted
unless the Commission provides for proper deference to existing
authorities. It states that the requirements contained in TOP-001 are
duplicative of what the CAISO already requires under its participating
generator agreements.
    1573. FirstEnergy contends that TOP-001-1 contains ``reliability
directives'' to be followed by various entities, but it has no clear
line of authority for specified directives. This could lead to a
generator receiving conflicting directions. FirstEnergy maintains that
TOP-001-1 should establish a clear line of authority for issuing and
complying with directives, but the reliability coordinator's
instructions should govern in all instances.
    1574. In a similar vein, MEAG Power is concerned that the scope of
``reliability directives'' contained in the Measures filed on November
15, 2006 is unclear. For example, Measure M4 states that ``[e]ach
Balancing Authority, Generator Operator, Distribution Provider and Load
Serving Entity shall have and provide upon request evidence that * * *
it complied with its Transmission Operator's reliability directives.''
While a directive by a transmission operator to a LSE to increase its
planning reserve margin from 15 percent to 20 percent or reconductor a
transmission line might be within the realm of possibilities, such
``reliability directives'' would be inappropriate. MEAG Power therefore
recommends an alternative definition of ``reliability directive'' that
it believes would specify an appropriate range of directives.
    1575. MEAG Power also recommends a modification to TOP-001-1
clarifying that an entity may be found non-compliant only if it fails
to comply with a reliability directive issued to it by its host
reliability coordinator. MEAG Power is concerned that the requirements
as currently written may apply to entities outside a reliability
coordinator's footprint.
    1576. FirstEnergy and California Cogeneration state that the
definition of ``emergency'' is vague and should be clarified.
FirstEnergy states TOP-001 does not specify who decides when there is
an emergency. California Cogeneration states that under emergency
conditions, it would be appropriate to require a QF to follow the
directives of a reliability coordinator.\398\ But California
Cogeneration argues that because of the broad definition of emergency,
reliability coordinators could issue directives on a regular basis.
California Cogeneration therefore proposes that the Reliability
Standard clearly address which entities are exempt from such directives
because they have no material impact on reliability.
---------------------------------------------------------------------------

    \398\ California Cogeneration notes that the curtailment of QFs
in an emergency is allowed by 18 CFR 292.307.
---------------------------------------------------------------------------

    1577. FirstEnergy states that the term ``safety'' in Requirement R4
should be clarified with respect to whether it means safety to the
system/equipment, public safety or both.
    1578. Requirement R6 of TOP-001-1 requires an applicable entity to
``render all available emergency assistance to others as requested.''
Regarding this provision, FirstEnergy maintains that NERC should
clarify that all instructions should be subject to the reliability
coordinator's direction and control to avoid causing unforeseen harm to
other systems. Any entity requesting assistance must implement its
emergency procedures before or in unison with assistance from other
entities. However, FirstEnergy asserts that it is not clear how a
responding entity will determine whether the requesting entity has
implemented its comparable emergency procedures before the responding
entity honors the request. FirstEnergy, therefore, states that TOP-001-
1 should require the requesting party to report on whether all of its
emergency procedures were implemented as part of its request for
emergency assistance.
    1579. Santa Clara states that, in some instances, notifying the
reliability coordinator that a transmission operator is removing
facilities from service may not be appropriate because the transmission
owner traditionally notifies the balancing authority. Santa Clara
therefore requests that Requirements R7.2 and R7.3 of the Reliability
Standard be revised to provide that the transmission operator may
notify the reliability coordinator or balancing authority.\399\
---------------------------------------------------------------------------

    \399\ Santa Clara makes a similar argument reagarding
Requirement R3 of TOP-008-1.
---------------------------------------------------------------------------

ii. Commission Determination
    1580. The Commission approves TOP-001-1 as mandatory and
enforceable. We address the concerns raised by commenters below.
    1581. While the Commission agrees with APPA that TOP-001-1 should
be approved, it does not agree that the new Measures and Levels of Non-
Compliance fully address the Commission's concerns stated in the NOPR.
The modified Reliability Standard does not contain Measures or Levels
of Non-Compliance corresponding to Requirement 8. This Requirement
deals with actions to restore real and reactive power balance. Given
the importance of these matters to reliable operations, the Commission
directs the ERO to provide Measures and Level of Non-Compliance for
this Requirement.
    1582. We disagree with California PUC's assertion that the
Commission should not adopt TOP-001-1 unless it commits to a policy of
``appropriate deference'' to existing authorities. Approval of a
continent-wide Reliability Standard should not be delayed because it
may overlap with a local or regional program. Rather, stakeholders
should raise related concerns in the ERO Reliability Standards
development process. Moreover, section 215(i)(3) of the FPA provides
that ``nothing in [section 215] shall be construed to preempt any
authority of any State to take action to ensure the safety, adequacy,
and reliability of electric service within that State, as long as such
action is not inconsistent with any reliability standard.'' In any
event, California PUC does not suggest how the Requirements in TOP-001-
1 and the provisions of CAISO's participating generator agreements will
lead to conflicting outcomes. To the extent a potential conflict
arises, we note that the CAISO's participating generator agreements are
subject to Commission jurisdiction, and Sec.  39.6 of the Commission's
regulations provides procedures for resolving conflicts between a
requirement in a Reliability Standard and a provision of an agreement
accepted for filing at the Commission.\400\
---------------------------------------------------------------------------

    \400\ See 18 CFR 39.6 (Conflict of a Reliability Standard with a
Commission Order).
---------------------------------------------------------------------------

    1583. We agree with FirstEnergy that TOP-001-1 should establish a
clear line of authority. Requirement R3 of Reliability Standard IRO-
001-0 clearly establishes the decision-making authority of the
reliability coordinator to act and to direct actions to be taken by
operating entities to preserve the integrity and reliability of the
Bulk-Power System. When an entity is faced with conflicting directives,
it must follow the reliability coordinator's directives because the
reliability coordinator is the highest authority in matters affecting
reliability of the Bulk-Power System. Therefore no changes are required
to the Reliability Standard in this connection.
    1584. We agree with MEAG Power that a reliability directive to an
LSE to increase its planning reserve to 15 percent or to reconductor
its transmission line is outside the scope of

a TOP reliability directive. Reliability directives in the TOP group of
Reliability Standards deal with operational directives and not planning
directives.
    1585. We disagree with MEAG Power that an entity may have to comply
with a reliability directive issued to it by a reliability coordinator
other than its host reliability coordinator. The operating hierarchy
embodied in the Reliability Standard gives the reliability coordinator
responsibility and authority to issue reliability directives to its own
transmission operators, balancing authorities and generator operators.
These entities must comply with these directives as stated in
Requirement R3 in TOP-001-1.\401\ An entity is only responsible for
following directives from its host reliability coordinator unless
authority is delegated to another reliability coordinator by the host
reliability coordinator.
---------------------------------------------------------------------------

    \401\ The Requirement states in part that ``[e]ach Transmission
Operator, Balancing Authority, and Generator Operator shall comply
with reliability directives issued by the Reliability Coordinator* *
*.''
---------------------------------------------------------------------------

    1586. We agree with FirstEnergy and California Cogeneration that
the definition of ``emergency'' could be further clarified. We discuss
this issue in this Final Rule in connection with Reliability Standard
EOP-001-0 and conclude that emergency states need to be defined and
that criteria for entering these states and authority for declaring
them need to be specified. We therefore direct the ERO to modify the
Reliability Standard accordingly. With respect to California
Cogeneration's argument regarding exemptions from the requirement to
respond to emergencies, the reliability coordinator must be in a
position to take all necessary actions in response to an emergency and
is in the best position to determine which entities should respond to
its directives.
    1587. In response to FirstEnergy's request for clarification of the
meaning of ``safety'' in the first sentence of Requirement R4, of TOP-
001-1 and whether it refers to safety to the system/equipment, public
safety or both, the Commission notes that each term in the series set
forth in this provision refers to a type of ``requirement.'' \402\ The
provision clearly differentiates between the safety of persons and
equipment requirements. Since equipment requirements are mentioned
separately, safety must be read as referring to requirements related to
safety of persons.
---------------------------------------------------------------------------

    \402\ Requirement R4 states: ``Each Distribution Provider * * *
shall comply with all reliability directives * * * unless such
actions would violate safety, equipment, regulatory or statutory
requirements.''
---------------------------------------------------------------------------

    1588. With regard to FirstEnergy's proposal that the entity
requesting emergency assistance be required to report that it has
implemented all of its own emergency procedures as part of its request
for emergency assistance, we believe that such reporting is not
appropriate during an emergency situation. Requirement R6 of the
Reliability Standard clearly specifies that entities must provide
available emergency assistance provided the requesting entity has
implemented its comparable emergency procedures. Given the nature of
emergency situations where time is of the essence, compliance with this
Requirement must be assessed after the fact as part of the compliance
audit, and not during an emergency.
    1589. With respect to Santa Clara's proposal that Requirements R7.2
and R7.3 be revised to provide that the transmission operator may
notify the reliability coordinator or the balancing authority that it
is removing facilities from service, the Commission directs the ERO to
consider Santa Clara's comments in the Reliability Standards
development process.
    1590. Accordingly, the Commission approves Reliability Standard
TOP-001-1. In addition, pursuant to section 215(d)(5) of the FPA and
Sec.  39.5(f) of our regulations, the Commission directs the ERO to
develop a modification to TOP-001-1 through the Reliability Standards
development process that: (1) Includes Measures and Levels of Non-
Compliance for Requirement R8 and (2) considers adding other Measures
and Levels of Non-Compliance in the Reliability Standard.
b. Normal Operations Planning (TOP-002-2)
    1591. Reliability Standard TOP-002-2 requires transmission
operators and balancing authorities to look ahead to the next hour, day
and season, and have operating plans ready to meet any unscheduled
changes in system configuration and generation dispatch. The
Reliability Standard addresses the following matters: (1) Procedures to
mitigate System Operating Limit (SOL) and Interconnection Reliability
Operating Limit (IROL) violations; (2) verification of real and
reactive reserve capabilities; (3) communications; (4) modeling; (5)
information exchange and (6) data confidentiality restrictions. The
goal of TOP-002-1 is to ensure that resources and operational plans are
in place to enable system operators to maintain the Bulk-Power System
in a reliable state.
    1592. In the NOPR, the Commission proposed to approve the
Reliability Standard as mandatory and enforceable. In addition, the
Commission proposed to direct that NERC submit a modification that: (1)
Includes Measures and Levels of Non-Compliance; (2) deletes references
to confidentiality agreements in Requirements R3 and R4, but addresses
the issue separately to ensure that necessary protections are in place
related to confidential information and (3) requires next-day analysis
for all IROLs to identify and communicate control actions to system
operators that can be implemented within 30 minutes following a
contingency to return the system to a reliable operating state and
prevent cascading outages.\403\
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    \403\ In its November 15, 2006, filing, NERC submitted TOP-002-
2, which supercedes the earlier Reliability Standard. TOP-002-2 adds
Measures and Levels of Non-Compliance to the Reliability Standard,
and includes a modified Requirement R14. In this Final Rule, we
review the November version, TOP-002-2.
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    1593. The Commission also proposed to interpret Requirement R7 of
the Reliability Standard as requiring that each balancing authority
plan to meet capacity and energy reserve requirements, including
deliverability/capability for any single contingency. Although the NERC
glossary defines ``contingency,'' \404\ the Commission expressed
concern in the NOPR that the phrase ``single contingency'' is open to
interpretation, and ``deliverability'' is not defined. The Commission
proposed in the NOPR to interpret contingency as discussed in
connection with the TPL Reliability Standards and to interpret
deliverability as the ability to deliver the output from generation
resources to firm load without any reliability criteria violations for
plausible generation dispatches.
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    \404\ NERC defines ``contingency'' as ``the unexpected failure
or outage of a system component, such as a generator, transmission
line, circuit breaker, switch or other electric element.'' NERC
Glossary at 3.
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i. Comments
    1594. APPA states that NERC has added Measures for many but not all
of the Requirements of TOP-002-2 and needs to develop Measures for
Requirements R2, R3, R4, R12 and R17.
    1595. Entergy and MidAmerican support the Commission's proposal to
delete references to confidentiality agreements from the requirements
and state that different approaches must be explored to preserve the
confidentiality of data. MidAmerican adds that NERC should adopt an
administrative approach to keep the confidential information from being
disclosed before the confidentiality provisions are

deleted from the requirements. LPPC asks the Commission to clarify that
CEII remains confidential and states that without such clarification
there is a danger that sensitive information related to the Bulk-Power
System will become public.
    1596. FirstEnergy and Entergy express concerns regarding
identifying all control actions in the next-day analysis for all IROLs
to identify and communicate control actions to system operators that
can be implemented within 30 minutes following a contingency. They
contend that system conditions can change significantly between day-
ahead analysis and real-time operations, rendering potential control
actions irrelevant. Therefore they state that operating entities should
be held harmless for not having listed in advance control actions taken
in the face of real-time contingencies resulting from unpredicted
changing system conditions. APPA states that such requirements are not
necessary given that system operators use state estimators and other
tools to identify effective control actions that produce more accurate
results than would be achieved through the proposed day-ahead analysis.
APPA and Entergy assert that it should be left to NERC, as the
technical expert charged with setting standards, to decide in the first
instance whether such day-ahead analysis would be of sufficient benefit
to justify requiring it.
    1597. MidAmerican is concerned that the Commission's proposal to
interpret the phrase ``single contingency'' as a contingency that
includes all multi-element pieces of the system that go out of service
together in response to a single event is too restrictive on system
operations. However, it also states that historically it has performed
the studies in accordance with the Commission's proposal and will
support that proposal in the interest of reliability. MidAmerican notes
that where a multiple-element single contingency traverses neighboring
systems, such contingencies must be coordinated with other systems.
Further, it contends that the Commission's directive to have operating
plans to meet any scheduled change in system configuration and
generation dispatch seems burdensome if not impossible and requests
clarification of the Commission's intent in this connection.
    1598. ISO-NE recommends that the reference to ``transmission
service provider'' in Requirement R12 of TOP-002-2 should be replaced
by ``transmission operator'' and/or ``transmission owner.'' \405\ It
claims that such a change would be consistent with the definition of
the term ``transmission service provider,'' which the NERC glossary
defines as: ``[t]he entity that administers the transmission tariff and
provides Transmission Service to Transmission Customers under
applicable transmission service agreements.'' In performing this
function, the transmission service provider provides a business service
that entails executing contractual agreements with its customers to
provide open access transmission service, whereas SOLs and IROLs are
technical in nature and do not translate into transmission service
provider functions. In contrast, transmission operators and
transmission owners perform planning and operations functions and will
need SOL and IROL data.
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    \405\ Requirement R12 provides: ``The Transmission Service
Provider shall include known SOLs and IROLs within its area and
neighboring areas in the determination of transfer capabilities, in
accordance with filed tariffs, and/or regional Total Transfer
Capability and Available Transfer Capability calculation
processes.''
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    1599. NRC states that it is not clear whether TOP-002-2 considers
the N-1 and the N-1-1 criteria consistent with TPL-002-0 and TPL-003-0,
respectively. NRC is concerned about verifying that the Bulk-Power
System will provide the necessary voltages to the auxiliary power
system busses after a nuclear power plant trip. It suggests that
knowledge and verification of significant generator characteristics are
essential to this end, especially verification of real and reactive
capabilities, automatic voltage regulator status and operating limits.
NRC also proposes various revisions to TOP-002-2.
ii. Commission Determination
    1600. The Commission approves Reliability Standard TOP-002-2 as
mandatory and enforceable. In addition, we direct the ERO to develop
modifications to the Reliability Standard through the Reliability
Standards development process as discussed below.
    1601. We are adopting our proposal regarding deletion of references
to confidentiality agreements from the Requirements. As we explained in
the NOPR, the effectiveness of a Reliability Standard should not be
predicated upon the existence of a confidentiality agreement.\406\ The
ERO should address the confidentiality provision separately to ensure
that confidentiality of data is not compromised and CEII information
remains confidential.
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    \406\ NOPR at P 976.
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    1602. As noted above, a number of commenters express concerns with
the Commission's proposal to require a next-day analysis for all IROLs
to identify and communicate control actions to system operators.
Identification and communication of control actions that can be
implemented within 30 minutes are required to ensure that system
operators are aware of and have options available to respond to system
conditions following the first contingency to restore the system to a
secure state so that it can withstand the next contingency. In
addition, the control actions identified in the next-day analysis may
quite often be relevant, and informing the system operators of the
control options earlier on would be helpful. While the operators may
take other actions to preserve the system, they need to have at least
one plan (control actions) that will preserve the system from
cascading. We believe this addresses FirstEnergy's concern regarding
whether compliance requires the use of only the control actions
identified in the day-ahead analysis. In response to APPA's comment on
the use of state estimators and other tools to identify effective
control actions, we note that this capability will help operators in
assessing system responses, but they will not identify the control
actions system operators will need to take in real-time. Further,
operators may not be aware of available control actions, or worse they
may not have any control actions, other than firm load-shedding,
available to adjust the system after a first contingency occurs.
Therefore, we direct the ERO to modify Reliability Standard TOP-002-2
to require the next-day analysis for all IROLs to identify and
communicate control actions to system operators that can be implemented
within 30 minutes following a contingency to return the system to a
reliable operating state and prevent cascading outages.
    1603. With respect to NRC's comments, system operators must operate
the system in front of them at all times to be capable of withstanding
a critical contingency (N-1) without resulting in instability,
uncontrolled separation or cascading failures. After this N-1
contingency the operators must adjust the system as soon as possible
and in no longer than 30 minutes so that the system can then withstand
a new N-1 contingency. Further discussion of how this applies in the
planning arena is presented in connection with the TPL group of
Reliability Standards.

    1604. The Commission agrees with NRC that the minimum voltages at
nuclear plant auxiliary power system buses should be assessed in next-
day analysis to ensure that adequate voltages can be maintained in
accordance with the nuclear plant minimum voltage requirements. If this
assessment projects that the minimum voltage requirements cannot be
met, the transmission operators or balancing authorities must notify
the nuclear power plant as soon as possible, but in no event later than
the commencement of the next day's real-time operations. If during
real-time operations the transmission operator cannot maintain the
minimum voltage, pre- or post-contingency, it must inform the nuclear
plant operator accordingly so that the appropriate corrective actions
can be carried out by both the nuclear plant operator and the
transmission operator. The Commission directs the ERO to modify
Reliability Standard TOP-002-2 to address these two issues.
    1605. The Commission proposed in the NOPR that simulations must be
consistent with the number of elements that will be removed from
service as a result of the failure of a single element.\407\
MidAmerican states that it operates consistent with this proposal, in
that it respects a single contingency as one that includes all multiple
pieces of the elements that go out of service together in response to a
single event. Even though MidAmerican states that the Commission's
proposal is too restrictive on system operation, it supports the
proposal in the interest of reliability. To do otherwise would not
represent what actually happens in real-time operations to the
detriment of Bulk-Power System reliability, which demonstrates the need
to approach the issue as we propose. We discuss this issue further in
connection with the TPL group of Reliability Standards, where we direct
the ERO to modify the TPL Reliability Standards to simulate what
actually happens in the physical system, including multiple element
failures.
---------------------------------------------------------------------------

    \407\ NOPR at P 979.
---------------------------------------------------------------------------

    1606. We note with regard to MidAmerican's comment on operating
plans to meet any scheduled change in system configuration and
generation dispatch that we have not directed any action in this
connection and therefore cannot provide any further clarification on
this point. With regard to MidAmerican's comment on coordinated efforts
with neighboring systems to deal with multiple element single
contingencies, we note that such coordination is already required by
IRO and TOP Reliability Standards.
    1607. Commenters did not take issue with the proposed
interpretation of the term ``deliverability'' as ``the ability to
deliver the output from generation resources to firm load without any
reliability criteria violations for plausible generation dispatches.''
\408\ The Commission adopts this proposed interpretation. In order to
ensure the necessary clarity, the term as used in Requirement R7 of
TOP-002-2 should be understood in this manner.
---------------------------------------------------------------------------

    \408\ Id. at P 974.
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    1608. With respect to the modifications to Requirement R12 of the
Reliability Standard recommended by ISO-NE and NRC's comments on
Measure M7 and a new Measure M11, the Commission directs the ERO to
consider these matters in the Reliability Standards development
process. In response to NRC's suggestion regarding periodic review of
generators' reactive capability, we note that Reliability Standard MOD-
025-1 already requires periodic review of generators' reactive
capability.
    1609. As we explained in the NOPR, TOP-002-2 serves an important
purpose in ensuring that resources and operational plans are in place
to enable system operators to maintain the Bulk-Power System in a
reliable state. Further, the requirements set forth in the Reliability
Standard are sufficiently clear and objective to provide guidance for
compliance. Accordingly, the Commission approves Reliability Standard
TOP-002-2. In addition, pursuant to section 215(d)(5) of the FPA and
Sec.  39.5(f) of our regulations, the Commission directs the ERO to
develop a modification to TOP-002-2 through the Reliability Standards
development process that: (1) Deletes references to confidentiality
agreements in Requirements R3 and R4, but addresses the issue
separately to ensure that necessary protections are in place related to
confidential information; (2) requires the next-day analysis for all
IROLs to identify and communicate control actions to system operators
that can be implemented within 30 minutes following a contingency to
return the system to a reliable operating state and prevent cascading
outages; (3) requires next-day analysis of minimum voltages at nuclear
power plants auxiliary power busses and (4) requires simulation
contingencies to match what will actually happen in the field.
c. Planned Outage Coordination (TOP-003-0)
    1610. Reliability Standard TOP-003-0 requires transmission
operators that operate facilities greater than 100 kV, generator
operators that operate facilities greater than 50 MW and balancing
authorities to coordinate transmission and generator maintenance
schedules. Where a conflict in maintenance schedule arises, the
reliability coordinator is authorized to resolve the conflict.
    1611. The Commission proposed in the NOPR to approve Reliability
Standard TOP-003-0 as mandatory and enforceable. The Commission also
proposed to direct NERC to submit a modification to TOP-003-0 that: (1)
Includes a requirement to communicate scheduled outages well in advance
to ensure reliability and accuracy of ATC calculation and (2) makes any
facility below the 100 kV or 50 MW thresholds that, in the opinion of
the transmission operator, balancing authority, or reliability
coordinator, will have a direct impact on the operation of Bulk-Power
System subject to Requirement R1 for planned outage coordination.
    1612. In addition, the Commission noted in the NOPR that outage
information is important to both reliable operation and to the
calculation of ATC. This information is also needed to assure
coordination of outages long before next day or current day operations.
The Commission proposed that applicable scheduled outages be
communicated to affected transmission operators and reliability
coordinators with sufficient lead time to coordinate outages. The
Commission then requested industry input on what constitutes sufficient
lead time for planned outages.
i. Comments
    1613. MRO, APPA and others raise concerns requiring the proposed
requirement to communicate scheduled outages ``well in advance.'' APPA
cautions that TOP-003-0 was generally designed to ensure that
transmission operators receive accurate and timely information about
transmission and generation outages affecting ``next-day operations,''
rather than the longer term outage planning information. MRO states
that requiring outage information well in advance reduces the entity's
flexibility for other contingencies and changes. MRO also contends that
the phrase ``well in advance'' is vague, not measurable, and may not be
enforced fairly and consistently. FirstEnergy states that NERC should
specify the meaning of ``well in advance'' through its Reliability
Standards development process with industry input. MRO recommends that
the time period for outage notification should be based on the size of
the generating facility and voltage level of the transmission line so

[[Continued on page 16565]]

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[[Continued from page 16564]]

that a larger facility has a longer lead time for outage notification.
    1614. While MISO agrees with the need for early notification of
planned outages, it is concerned that an arbitrary lead time will cause
entities to postpone needed maintenance to accommodate the timeline,