[Federal Register Volume 88, Number 47 (Friday, March 10, 2023)]
[Notices]
[Pages 14994-15011]
[FR Doc No: 2023-04875]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RD23-1-000]

North American Electric Reliability Corporation; Order Approving
Extreme Cold Weather Reliability Standards EOP-011-3 and EOP-012-1 and
Directing Modification of Reliability Standard EOP-012-1

    Before Commissioners: Willie L. Phillips, Acting Chairman; James P.
Danly, Allison Clements, and Mark C. Christie.
    1. On October 28, 2022, the North American Electric Reliability
Corporation (NERC), the Commission-certified Electric Reliability
Organization (ERO), submitted a petition seeking approval of proposed
Reliability Standards EOP-011-3 (Emergency Operations) and EOP-012-1
(Extreme Cold Weather Preparedness

and Operations).\1\ As discussed in this order, we approve proposed
Reliability Standards EOP-011-3 and EOP-012-1, their associated
violation risk factors and violation severity levels, and the newly
defined terms Generator Cold Weather Critical Component, Extreme Cold
Weather Temperature, and Generator Cold Weather Reliability Event.
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    \1\ The proposed Reliability Standards are not attached to this
order. The proposed Reliability Standards are available on the
Commission's eLibrary document retrieval system in Docket No. RD23-
1-000 and on the NERC website, www.nerc.com.
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    2. It is essential to the reliable operation of the Bulk-Power
System to ``ensure enough generating units will be available during the
next cold weather event.'' \2\ As the November 2021 Report found, the
Bulk-Power System ``cannot operate reliably without adequate
generation.'' When cold weather events such as Winter Storm Uri occur,
with ``massive numbers of generating units'' failing, grid operators
could have no other option than to shed firm customer load to prevent
uncontrolled load shedding and cascading outages. And as unfortunately
illustrated by Winter Storm Uri, ``[t]hese firm load shedding events .
. . have very real human consequences. Millions went without heat . . .
Hundreds died from hypothermia.'' \3\ Accordingly, we approve proposed
Reliability Standards EOP-011-3 and EOP-012-1 as just, reasonable, not
unduly discriminatory or preferential, and in the public interest.
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    \2\ FERC, NERC, and Regional Entity Staff, The February 2021
Cold Weather Outages in Texas and the South Central United States,
at 189 (Nov. 16, 2021), https://www.ferc.gov/media/february-2021-cold-weather-outages-texas-and-south-central-united-states-ferc-nerc-and (November 2021 Report).
    \3\ Id.
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    3. While NERC's proposed Reliability Standards may ``provide new
protections not currently found in any Reliability Standard,'' \4\ EOP-
012-1, in its current form, includes undefined terms, broad
limitations, exceptions and exemptions, and prolonged compliance
periods. Thus, we find that Reliability Standard EOP-012-1 requires
improvement to address concerns, as discussed further below. Therefore,
pursuant to section 215(d)(5) of the Federal Power Act (FPA),\5\ we
direct NERC to develop and submit modifications to Reliability Standard
EOP-012-1 as discussed herein.
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    \4\ NERC Petition at 7.
    \5\ 16 U.S.C. 824o(d)(5).
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    4. As an initial matter, we are concerned that use of the terms
``continuous run,'' ``commits or is obligated to serve'' and ``four
hours or more,'' as well as the enumerated exemptions, obfuscates the
extent of applicability of Reliability Standard EOP-012-1 to bulk
electric system \6\ facilities, and may not ensure that compliance is
required for all ``generating units that are being depended upon to
operate in cold weather and on which the reliability of the system
depends.'' \7\ We understand that the proposed applicability criteria
is meant to avoid ``undue burden on those generating units that are not
expected to operate in cold weather;'' \8\ however, we find that
excluded generating units should be the exception and not the rule.\9\
Therefore, we direct NERC, pursuant to FPA section 215(d)(5), to modify
Reliability Standard EOP-012-1 to ensure that it captures all bulk
electric system generation resources needed for reliable operation and
excludes only those generation resources not relied upon during
freezing conditions.\10\ As discussed further below, our directive to
NERC is to clarify the language of the applicability section to align
with NERC's explanation of the entities that should already be
preparing to comply with the Standard, and should not need additional
implementation time. Therefore, NERC should ensure the modified
applicability section of Reliability Standard EOP-012 is implemented as
of the effective date \11\ of Reliability Standard EOP-012-1.
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    \6\ NERC's Commission-approved bulk electric system definition
defines the scope of the Reliability Standards and the entities
subject to NERC compliance. Revisions to Electric Reliability
Organization Definition of Bulk Electric System and Rules of
Procedure, Order No. 773, 141 FERC ] 61,236 (2012), order on reh'g,
Order No. 773-A, 143 FERC ] 61,053 (2013) rev'd sub nom. People of
the State of New York v. FERC, 783 F.3d 946 (2d Cir. 2015); NERC
Glossary at 5-7.
    \7\ NERC Petition at 30.
    \8\ Id.
    \9\ As discussed below, we also find that, even as to the
limited set of excluded generating units, the obligation to have a
cold weather emergency preparedness plan(s) and training should
remain.
    \10\ 16 U.S.C. 824o(d)(5) (stating that the Commission, ``upon
its own motion or upon complaint, may order the Electric Reliability
Organization to submit to the Commission a proposed reliability
standard or a modification to a reliability standard that addresses
a specific matter if the Commission considers such a new or modified
reliability standard appropriate to carry out this section'').
    \11\ This order uses the term ``effective date'' to mean the
mandatory and enforceable date of the Standards, which, according to
NERC's implementation plan, is 18 months after regulatory approval.
NERC Petition at 50-51.
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    5. Further, as Reliability Standard EOP-011-2 requirements to
implement and maintain cold weather preparedness plan(s) and associated
training applies to all bulk electric system generating units, we defer
our decision on whether to approve or modify NERC's proposed
implementation date for Reliability Standard EOP-011-3 (and proposed
retirement of Reliability Standard EOP-011-2) until NERC submits its
revised applicability section for EOP-012. Allowing EOP-011-2
requirements to remain mandatory and enforceable until such time as the
revised applicability is effective for EOP-012 will ensure all bulk
electric system generating units are required to maintain cold weather
preparedness plans.
    6. In addition, we direct NERC to develop and submit modifications
to Reliability Standard EOP-012-1 Requirements R1 and R7 to address
concerns related to the ambiguity of generator-defined declarations of
technical, commercial, or operational constraints that exempt a
generator owner from implementing the appropriate freeze protection
measures. We direct NERC to include in the Standard: objective criteria
on permissible technical, commercial, and operational constraints, to
identify the appropriate entity that would receive the generator
owners' constraint declarations under EOP-012-1 Requirements R1 and R7,
to describe how that entity would confirm that the generator owners
comply with the objective criteria, and to describe the consequences of
providing a constraint declaration. We direct NERC to modify this
Standard to ensure that declarations cannot be used to opt out of
mandatory compliance with the Standard or obligations set forth in a
corrective action plan. We direct NERC to submit a revised Reliability
Standard that addresses these concerns no later than 12 months after
the date of issuance of this order.
    7. Under Requirement R1 of EOP-012-1, generator owners must
``[i]mplement freeze protection measures that provide capability to
operate for a period of not less than twelve (12) continuous hours at
the Extreme Cold Weather Temperature'' or ``[e]xplain in a declaration
any technical, commercial, or operational constraints . . . that
preclude the ability to implement appropriate freeze protection
measures to provide capability of operating at twelve (12) hours at the
documented Extreme Cold Weather Temperature.'' \12\ Yet, based on
comments and our reading of the plain text of the Standard, we are
concerned that the requirement as written is unclear whether new
intermittent units

will be considered by all generator owners as being capable of
operating for at least 12 continuous hours, and thus, must comply with
the Requirement. Therefore, we direct NERC to modify the Standard to
clarify Reliability Standard EOP-012-1 Requirement R1 to ensure that
generators that are technically incapable of operating for 12
continuous hours (e.g., solar facilities during winter months with less
than 12 hours of sunlight) are not excluded from complying with the
Standard. We direct NERC to submit the revised Reliability Standard no
later than 12 months after the date of issuance of this order.
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    \12\ Reliability Standard EOP-012-1, Requirement R1.
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    8. Under Requirement R2 of EOP-012-1, each generator owner is
required to ``ensure its generating unit(s) add new or modify existing
freeze protection measures as needed to provide the capability to
operate for a period of not less than one (1) hour at the unit(s)
Extreme Cold Weather Temperature.'' \13\ We find that the one-hour
continuous operations requirement in Reliability Standard EOP-012-1
Requirement R2 is too short of a period to adequately meet the purpose
of the Standard to ensure generating units ``mitigate the reliability
impacts of extreme cold weather.'' \14\ Thus, we direct NERC to modify
the one-hour continuous operations requirement of Reliability Standard
EOP-012-1 Requirement R2. We direct NERC to submit the revised
Reliability Standard no later than 12 months after the date of issuance
of this order.
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    \13\ Reliability Standard EOP-012-1, Requirement R2.
    \14\ NERC Petition at 29 (noting that freeze protection measures
of the Standard would advance the reliability of the Bulk-Power
System by helping to improve generator reliability in cold weather).
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    9. In addition, Reliability Standard EOP-012-1 does not require a
deadline for, or a maximum duration of, corrective action plan
implementation completion. We are concerned that the lack of a time
limit for implementation completion of corrective action plans could
allow identified issues to remain unresolved for a significant and
indefinite period. Therefore, we direct NERC pursuant to FPA section
215(d)(5), to modify Reliability Standard EOP-012-1 Requirements R7 to
include deadlines for implementation completion of corrective action
plans, as recommended in the November 2021 Report.\15\ We direct NERC
to submit the revised Reliability Standard no later than 12 months
after the date of issuance of this order.
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    \15\ See, e.g., November 2021 Report at 187 (discussing Key
Recommendation 1d, which, while recommending that the standards
drafting team have flexibility to determine the specific timing for
the corrective action plan to be developed and implemented after the
outage, derate or failure to start, also recommends that the
corrective action plan ``be developed as quickly as possible, and be
completed by no later than the beginning of the next winter
season.'').
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    10. Additionally, we are concerned that generator owners will not
have to implement freeze protection measures for existing generating
units to provide them with the capability to operate for the specified
durations at the Extreme Cold Weather Temperature under proposed EOP-
012-1 Requirement R2 until 60 months from regulatory approval. Thus, we
direct NERC to modify the EOP-012-1 60-month implementation plan for
existing generating units. Although we are giving NERC the discretion
to determine what the effective date should be shortened to, we also
emphasize that industry has been aware of and alerted to the need to
prepare their generating units for cold weather since at least
2011.\16\ This finding was repeated in the 2019 South Central Event
Report \17\ and the November 2021 Report.\18\ After the 2019 South
Central Event Report, it was found that one third of the generator
owners and operators surveyed ``still had no winterization provisions
after multiple recommendations on winter preparedness for generating
units.'' \19\ NERC should consider the amount of time that industry has
already had to implement freeze protection measures when determining
the appropriate implementation period. Further, we find that a phased
compliance within the implementation time for Reliability Standard EOP-
012-1 Requirement R2 will also reduce reliability risks. To address
these concerns, we direct NERC to modify the EOP-012-1 implementation
plan for Requirement R2 to require a staggered implementation for
existing unit(s) in a generator owner's fleet with an effective date of
less than 60 months from regulatory approval.\20\
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    \16\ See, e.g., FERC and NERC Staff, Report on Outages and
Curtailments During the Southwest Cold Weather Event of February 1-
5, 2011: Causes and Recommendations, at 208 (Aug. 2011), https://www.ferc.gov/sites/default/files/2020-07/OutagesandCurtailmentsDuringtheSouthwestColdWeatherEventofFebruary1-5-2011.pdf (recommending that each generator owner and operator
should take steps to ensure that winterization is in place before
the inter season and take preventative action in a timely manner).
    \17\ FERC and NERC Staff, The South Central United States Cold
Weather Bulk Electric System Event of January 17, 2018, at 80-81
(July 2019), https://www.ferc.gov/sites/default/files/legal/staff-reports/2019/07-18-19-ferc-nerc-report.pdf (finding that the event
was ``caused by failure to properly prepare or `winterize' the
generation facilities for cold temperatures'').
    \18\ November 2021 Report at 185 (finding that ``generation
freezing issues were the number one cause of the Event, and the same
frequently-seen frozen components reappear'').
    \19\ Id.
    \20\ See e.g., Generator Verification Reliability Standards,
Order No. 796, 146 FERC ] 61,213, at PP 1-2 (2014) (approving
Reliability Standard MOD-025-2 and its associated staggered
implementation plan, which required 40% of applicable facilities to
be verified in 2 years, 60% in 3 years, 80% in 4 years, and 100% in
5 years).
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    11. We also find it necessary that NERC ensure that Reliability
Standard EOP-012-1 adequately addresses the reliability concerns
related to generator owner constraint declarations, the adequacy of the
Extreme Cold Weather Temperature definition, and determine whether
future modification is needed, as discussed in more detail below. We
note that, under the proposed implementation plan, it will be five
years before certain requirements will be effective and a longer period
before experiential data will be available. Notwithstanding our
directives to shorten the implementation period for certain
Requirements, waiting to collect data until after implementation will
not provide timely information on the effectiveness of winterization
efforts. However, section 1600 of NERC's Rules of Procedure provides a
mechanism for data collections that could be used during the period
prior to full implementation. Therefore, we direct NERC, pursuant to
section 39.2(d) of the Commission's regulations,\21\ to work with
Commission staff to submit a plan no later than 12 months after the
date of issuance of this order explaining how it will collect and
assess data prior to and after the implementation of the following
elements of Reliability Standard EOP-012-1: (1) generator owner
declared constraints and explanations thereof; and (2) the adequacy of
the Extreme Cold Weather Temperature definition.
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    \21\ 18 CFR 39.2(d) (2021) (the ERO shall provide the Commission
such information as is necessary to implement section 215 of the
FPA).
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I. Background

A. Section 215 and Mandatory Reliability Standards

    12. Section 215 of the FPA provides that the Commission may certify
an ERO, the purpose of which is to develop mandatory and enforceable
Reliability Standards, subject to Commission review and approval.\22\
Reliability Standards may be enforced by the ERO, subject to Commission
oversight, or by the Commission independently.\23\ Pursuant to section
215 of the FPA, the Commission established a process to

select and certify an ERO,\24\ and subsequently certified NERC.\25\
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    \22\ 16 U.S.C. 824o(c).
    \23\ Id. Sec.  824o(e).
    \24\ Rules Concerning Certification of the Elec. Reliability
Org.; & Procs. for the Establishment, Approval, & Enforcement of
Elec. Reliability Standards, Order No. 672, 114 FERC ] 61,104, order
on reh'g, Order No. 672-A, 114 FERC ] 61,328 (2006).
    \25\ N. Am. Elec. Reliability Corp., 116 FERC ] 61,062, order on
reh'g and compliance, 117 FERC ] 61,126 (2006), aff'd sub nom.
Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
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B. The February 2021 Cold Weather Reliability Event

    13. On February 16, 2021, the Commission, NERC, and Regional Entity
staff initiated a joint inquiry into the circumstances surrounding a
February 2021 cold weather reliability event that affected Texas and
the South-Central United States that culminated in a report
identifying, among other things, recommendations for Reliability
Standard improvements.\26\ The November 2021 Report found that the
February 2021 cold weather reliability event was the largest controlled
firm load shed event in U.S. history; over 4.5 million people lost
power and at least 210 people lost their lives during the event.\27\
The November 2021 Report provided an assessment of the event as well as
recommendations including, inter alia, Reliability Standard
enhancements to improve extreme cold weather operations, preparedness,
and coordination.\28\
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    \26\ See November 2021 Report at 9.
    \27\ Id.
    \28\ Id. at 184-212 (sub-recommendations 1a through 1j).
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    14. After the February 2021 cold weather reliability event, but
before the November 2021 Report was issued, NERC filed a petition for
approval of cold weather Reliability Standards addressing
recommendations from a 2018 cold weather event report.\29\ In August
2021, the Commission approved NERC's modifications to Reliability
Standards EOP-011-2 (Emergency Preparedness and Operations), IRO-010-4
(Reliability Coordinator Data Specification and Collection), and TOP-
003-5 (Operational Reliability Data).\30\ Reliability Standards IRO-
010-4 and TOP-003-5 require that reliability coordinators, transmission
operators, and balancing authorities develop, maintain, and share
generator cold weather data.\31\ EOP-011-2 requires generator owners to
have generating unit cold weather preparedness plans and generator
owners and generator operators to provide training for implementing the
cold weather preparedness plans.\32\
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    \29\ 2019 South Central Event Report at 89.
    \30\ See generally Order Approving Cold Weather Reliability
Standards, 176 FERC ] 61,119 (2021) (noting that the standards
become enforceable on April 1, 2023).
    \31\ Id.
    \32\ Id.
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C. NERC's Petition and Proposed Reliability Standards EOP-011-3 and
EOP-012-1

    15. On October 28, 2022, NERC filed a petition seeking approval on
an expedited basis of Reliability Standards EOP-011-3 and EOP-012-1,
the Standards' associated violation risk factors and violation severity
levels, three newly-defined terms (Extreme Cold Weather Temperature,
Generator Cold Weather Critical Component, and Generator Cold Weather
Reliability Event), NERC's proposed implementation plan, and the
retirement of currently approved EOP-011-2.\33\ NERC explains that
Reliability Standards EOP-011-3 and EOP-012-1 build upon the 2021-
approved cold weather Reliability Standards by further strengthening
the reliability of the Bulk-Power System during extreme cold weather
conditions.\34\ NERC maintains that proposed Reliability Standards EOP-
011-3 and EOP-012-1 are consistent with key recommendations for
standards' improvement from the November 2021 Report.\35\ Specifically,
NERC states that the proposed Reliability Standards contain new and
revised requirements to advance the reliability of the Bulk-Power
System through the implementation of freeze protection measures,
enhanced weather preparedness plans, annual training, and the
coordination of manual and automatic load shed.\36\
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    \33\ NERC Petition at 1-2.
    \34\ Id.
    \35\ Id. at 23; see also November 2021 Report at 184-92, 208-10
(Key Recommendations 1b, 1d, 1e, 1f, and 1j).
    \36\ NERC Petition at 23.
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    16. NERC states that the purpose of proposed Reliability Standard
EOP-011-3 is to ensure that each transmission operator implements plans
to mitigate operating emergencies and that such plans are coordinated
within the reliability coordinator area. According to NERC, proposed
Reliability Standard EOP-011-3 addresses Key Recommendation 1j from the
November 2021 Report, which recommends that the circuits used for
manual load shed be separated from the circuits used for automatic load
shed or for critical loads.\37\
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    \37\ See id. at 20 (citing the November 2021 Report at 208-10
(recommending that transmission operators use automatic load shed as
a last resort)).
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    17. NERC proposes to modify approved Reliability Standard EOP-011-2
in multiple ways.\38\ First, NERC proposes to remove Requirements R7
and R8 (generator cold weather preparedness plans and associated
training) from EOP-011-2 and incorporate them into proposed Reliability
Standard EOP-012-1 as Requirements R3 and R5, respectively.\39\ Second,
the added Requirements R1 and R2 of EOP-011-3 require that transmission
operator emergency operating plans include provisions that minimize the
overlap of manual load shed circuits, circuits that serve critical
loads, and circuits that are used for underfrequency load shedding
(UFLS) or undervoltage load shedding (UVLS).\40\ Third, Requirement R1
requires the development of provisions that limit manual load shed of
UFLS or UVLS circuits to situations warranted by system conditions.\41\
Finally, Requirement R2 adds provisions for transmission operators to
implement the operator-controlled manual load shed in accordance with
Requirement R1. NERC also requests that the currently approved
Reliability Standard EOP-011-2, which will go into effect on April 1,
2023, be retired immediately prior to the effective date of Reliability
Standard EOP-011-3 and EOP-012-1, i.e., 18 months after regulatory
approval.\42\
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    \38\ Reliability Standard EOP-011-3, Requirements R3, R4, and R5
are unchanged from the approved version. See Order Approving Cold
Weather Reliability Standards, 176 FERC ] 61,119 (approving EOP-011-
2).
    \39\ Id.; NERC Petition at 45-46.
    \40\ NERC Petition at 46-49.
    \41\ Id. Ex. A-1, at 2-3.
    \42\ NERC Petition at 50.
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    18. NERC requests approval of a new Reliability Standard, EOP-012-
1, which it states is meant to apply to generator owners and operators
of generating units that are depended upon to operate during cold
weather and Blackstart Resources. The purpose of Reliability Standard
EOP-012-1 is to ensure that each generator owner develops and
implements plans to alleviate the reliability effects of extreme cold
weather on its generating units.\43\ According to NERC, this new
Reliability Standard addresses parts of Key Recommendation 1a as well
as 1d, 1e, and 1f of the November 2021 Report.\44\
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    \43\ Id. at 29.
    \44\ See id. at 17-18 (citing the November 2021 Report at 184-
89).
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    19. Proposed Reliability Standard EOP-012-1 has seven requirements,
five of which are new (Requirements R1, R2, R4, R6, and R7) and two of
which (Requirements R3 and R5) were moved and revised from approved
Reliability Standard EOP-011-2. Reliability

Standard EOP-012-1 Requirements R1 and R2 address a generator owner's
obligation to implement freeze protection measures on its applicable
units to provide them with the capability to operate at the Extreme
Cold Weather Temperature for the unit's location.\45\ Specifically,
Requirement R1 requires either new units to be capable of operating at
the Extreme Cold Weather Temperature for a continuous 12-hour period or
that the generator owner declares that technical, commercial, or
operational constraints prevent successful continuous operation.
Requirement R2 requires either that existing units be capable of
continuous operation for at least one hour at the Extreme Cold Weather
Temperature or the generator owner to develop a corrective action plan
to address the unit's inability to continuously operate
successfully.\46\
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    \45\ Id. at 33-37.
    \46\ NERC defines the term ``corrective action plan'' as a
``list of actions and an associated timetable for implementation to
remedy a specific problem.'' NERC, Glossary of Terms Used in NERC
Reliability Standards, 11 (Dec. 2022) (NERC Glossary), https://www.nerc.com/pa/Stand/GlossaryofTerms/Glossary_of_Terms.pdf. See
also Reliability Standard EOP-012-1, section 4.3.
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    20. Reliability Standard EOP-012-1 Requirements R3 and R5 require
generator owners to implement cold weather preparedness plans
(Requirement R3) and train their personnel on that plan annually
(Requirement R5).\47\ Requirement R3 also identifies the generator
owner as the entity responsible for identifying the Extreme Cold
Weather Temperature and Generator Cold Weather Critical Components for
its unit(s); the generator owner must document both in its cold weather
preparedness plan(s).
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    \47\ NERC Petition at 37-41 (stating that Requirements R3 and R5
were taken from Requirements R7 and R8 from Commission approved EOP-
011-2 with modifications to ensure that a generator owner's cold
weather preparedness plan includes the Extreme Cold Weather
Temperature, Generator Cold Weather Critical Components, and freeze
protection measures).
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    21. Reliability Standard EOP-012-1 Requirement R4 requires the
generator owner to review its Extreme Cold Weather Temperature
calculation, cold weather preparedness plan(s), and freeze protection
measures every five years to determine if changes or updates are
warranted.\48\ Requirement R6 mandates that each generator owner
experiencing an outage, failure to start, or derate due to freezing
conditions develop a corrective action plan to address the identified
causes. Lastly, Requirement R7 requires generator owners to implement
corrective action plans developed pursuant to Requirements R2, R4, or
R6, or explain in a declaration why they are not implementing
corrective actions due to technical, commercial, or operational
constraints.\49\
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    \48\ Id. at 39-40 (this periodic review may require the
generator owner to add or modify existing freeze protection measures
to continue reliable operation).
    \49\ Id. at 43-45 (noting that the generator owner defines these
constraints).
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    22. NERC requests the Commission approve the violation risk factors
and violation severity levels for Reliability Standards EOP-011-3 and
EOP-012-1. NERC states that the violation risk factors and violation
severity levels for Reliability Standard EOP-011-3 did not change from
approved Reliability Standard EOP-011-2. NERC also proposes violation
risk factors and violation severity levels for new Reliability Standard
EOP-012-1.\50\
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    \50\ Id. Ex. E at 7-20 (explaining NERC's justifications for
each violation risk factor and violation severity level associated
with Reliability Standard EOP-012-1).
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    23. NERC proposes an 18-month effective date for Reliability
Standards EOP-011-3 and EOP-012-1, beginning on the first day of the
first calendar quarter following regulatory approval.\51\ All the
requirements of Reliability Standard EOP-011-3 would be effective on
this date.
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    \51\ NERC Petition at 50-51.
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    24. Specific to the requirements of EOP-012-1, as of the effective
date, generator owners will be required to update their cold weather
preparedness plans to include the Extreme Cold Weather Temperature and
Generator Cold Weather Critical Components, and document freeze
protection measures for those components as required by EOP-012-1
Requirement R3 as well as provide unit-specific cold weather plan
training on an annual basis as required by Requirement R5. Within 150
days of the effective date, generator owners will be required to
develop corrective action plans, or declare constraints, as required by
proposed EOP-012-1 Requirements R6 and R7. NERC also proposes that
generator owners have an additional 42 months from the effective date
of proposed Reliability Standard EOP-012-1 (i.e., 60 months from the
regulatory approval date) to come into compliance with the new freeze
protection measures of EOP-012-1 Requirements R1 and R2 and an
additional 60 months from the effective date (i.e., 78 months from the
regulatory approval date) to perform the first re-evaluation of the
Extreme Cold Weather Temperature for their units and update cold
weather preparedness plans and unit freeze protection measures,
including developing any corrective action plans, as needed for
proposed EOP-012-1 Requirement R4.
    25. NERC explains that it considered these implementation
timeframes necessary for generator owners to calculate the Extreme Cold
Weather Temperature for each generating unit, to identify Generator
Cold Weather Critical Components, and to perform the necessary
engineering studies and analyses to identify and implement freeze
protection measures that would provide for the required performance
capability or to explain why such measures are precluded by technical,
commercial, or operational constraints. NERC also states that generator
owners need additional time to implement the freeze protection measures
of EOP-012-1 Requirements R1 and R2 because of the significant
engineering, design, analysis, and implementation efforts required to
complete such work.\52\
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    \52\ Id. at 52.
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    26. NERC explains that it adopted a two-phase standard development
project to develop, draft, and revise the extreme cold weather
Reliability Standards in accordance with the November 2021 Report due
to the extensive scope and demonstrated urgency of new and improved
cold weather Reliability Standards.\53\ NERC states that its October
28, 2022, petition represents phase one of its standard development
project and that the remaining November 2021 Report recommendations
will be addressed in the second phase of standards development. In
phase two, NERC states that its standard drafting team also plans to
consider industry concerns that arose in phase one.
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    \53\ Id. at 53 (noting that NERC anticipates completing
development and filing with the Commission new or revised
Reliability Standards by November 1, 2023).
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    27. Finally, NERC requests the Commission approve the proposed
Standards in an expedited manner. NERC explains that, among other
things, an expedited approval would provide regulatory certainty to
entities seeking to implement the Standards ahead of the mandatory and
enforceable dates.\54\
---------------------------------------------------------------------------

    \54\ Id. at 55.
---------------------------------------------------------------------------

II. Notice of Filing and Responsive Pleadings

    28. Notice of NERC's October 28, 2022, Petition was published in
the Federal Register, 87 FR 67464 (Nov. 8, 2022), with comments,
protests, and motions to intervene due on or before December 1, 2022.
    29. On November 17, 2022, the Electric Power Supply Association
(EPSA) filed a motion for an extension of time to submit comments. On

November 29, 2022, the Commission extended the comment period seven
days to and including December 8, 2022.
    30. The Commission received six sets of comments and five reply
comments. The LS Power Development, LLC; Calpine Corporation; EPSA; PJM
Power Providers Group (PJM Group); Transmission Access Policy Study
Group (TAPS); the National Rural Electric Cooperative Association
(NRECA); American Public Power Association (APPA); the Independent
System Operators and Regional Transmission Organization Council (ISO/
RTO Council); Edison Electric Institute (EEI); New England Power
Generators Association, Inc. (NEPGA); and Invenergy LLC (Invenergy)
filed timely motions to intervene. TAPS, the ISO/RTO Council, NEPGA,
Invenergy, EPSA/PJM Group jointly, and the Texas Competitive Power
Advocates (TCPA) filed timely comments. NERC filed reply comments out
of time. Invenergy filed a motion for leave to reply and reply comments
out of time. NEPGA/EPSA/PJM Group filed a joint out of time motion for
leave to answer and joint answer to the ISO/RTO Council's comments.
APPA/TAPS filed a joint out of time motion for leave to answer along
with a joint answer to EPSA's comments. The ISO/RTO Council also filed
an out of time motion for leave to answer along with an answer to the
NERC's reply comments and NEPGA/EPSA/PJM Group's answer.
    31. Commenters either did not address or were generally supportive
of NERC's proposed modifications to Reliability Standard EOP-011-3.\55\
Commenters raised concerns and requests for clarifications for NERC's
proposed Reliability Standard EOP-012-1. The commenters range in their
support for Reliability Standard EOP-012-1 from requesting that the
Commission approve the Standard as filed with minor clarifications \56\
to remanding the Standard to NERC with directives.\57\ The comments on
specific matters are summarized and addressed in the determinations
below.
---------------------------------------------------------------------------

    \55\ E.g., EPSA/PJM Group Comments at 3; NEPGA/EPSA/PJM Group
Answer at 1; ISO/RTO Council Comments at 1-2, TAPS Comments at 1.
    \56\ See APPA/TAPS Answer at 2-9; ISO/RTO Comments at 1-3; ISO/
RTO Answer at 1-2; TAPS Comments at 1.
    \57\ See EPSA/PJM Group Comments at 2-4; Invenergy Comments at
2, 13; NEPGA Comments at 2, 6-8; TCPA Comments at 2, 5-6.
---------------------------------------------------------------------------

III. Determination

A. Procedural Matters

    32. Pursuant to Rule 214 of the Commission's Rules of Practice and
Procedure, 18 CFR 385.214 (2021), the timely, unopposed motions to
intervene serve to make the entities that filed them parties to this
proceeding.
    33. Rule 213(a)(2) of the Commission's Rules of Practice and
Procedure, 18 CFR 385.213(a)(2) (2021), prohibits an answer to a
protest or answer unless otherwise ordered by the decisional authority.
Pursuant to Rule 214(d) of the Commission's Rules of Practice and
Procedure, 18 CFR 385.214(d), we grant NERC and Invenergy's leave to
file their late-filed reply comments given their interest in the
proceeding and the absence of undue prejudice or delay. We also grant
APPA/TAPS, NEPGA/EPSA/PJM Group, and the ISO/RTO Council's motions for
leave to file out of time answers and we accept their answers because
they have provided information that assisted us in our decision-making
process.

B. Substantive Matters

    34. Pursuant to section 215(d)(2) of the FPA, we approve
Reliability Standards EOP-011-3 and EOP-012-1 as just, reasonable, not
unduly discriminatory or preferential and in the public interest. As
discussed in this order, we approve proposed Reliability Standards EOP-
011-3 and EOP-012-1, their associated violation risk factors and
violation severity levels, the newly defined terms Generator Cold
Weather Critical Component, Extreme Cold Weather Temperature, and
Generator Cold Weather Reliability Event. We defer our decision on
whether to approve or modify NERC's proposed implementation date for
Reliability Standard EOP-011-3 (and proposed retirement of Reliability
Standard EOP-011-2) until NERC submits its revised applicability
section for EOP-012, as discussed in more detail below. Absent the
reforms adopted in Reliability Standards EOP-011-3 and EOP-012-1, the
existing defects and inefficiencies exhibited during extreme cold
weather conditions could be exacerbated and negatively affect
reliability.
    35. We find that Reliability Standard EOP-011-3 is an improvement
over the 2021-approved cold weather Reliability Standards and enhances
reliability by improving how transmission operators account for the
overlap of manual load shed and automatic load shed in their emergency
operating plans while also addressing the need to minimize the use of
manual load shed that could further exacerbate emergencies and threaten
system reliability. Commenters did not express concern with Reliability
Standard EOP-011-3. Accordingly, we approve Reliability Standard EOP-
011-3.
    36. We find that Reliability Standard EOP-012-1 represents an
improvement to the Reliability Standards and enhances the reliable
operation of the Bulk-Power System by requiring generator owners to
implement freeze protection measures, develop enhanced cold weather
preparedness plans, implement annual trainings, draft and implement
corrective action plans to address freezing issues, and provide certain
cold weather operating parameters to reliability coordinators,
transmission operators, and balancing authorities for use in their
analyses and planning. We believe that these measures begin to address
many of the issues identified as contributing to generating unit
failures during extreme cold weather conditions, as noted in the
November 2021 Report.\58\ We also appreciate that NERC completed the
modifications and development of Reliability Standards EOP-011-3 and
EOP-012-1 in a timely manner.
---------------------------------------------------------------------------

    \58\ See November 2021 Report at 184-210.
---------------------------------------------------------------------------

    37. Several commenters express concern regarding ambiguities in
Requirements R1 and R7 of Reliability Standard EOP-012-1 pertaining to
the generator owner declarations for ``technical, commercial, or
operational constraints'' and ask the Commission to remand the Standard
with direction to NERC for clarifications.\59\ As discussed below, we
agree that the provisions are ambiguous. However, we are not persuaded
that there is sufficient cause to remand Reliability Standard EOP-012-
1. Since we find that the Standard enhances the reliable operation of
the Bulk-Power System, we conclude that the better course is to approve
Reliability Standard EOP-012-1 so that it will take effect in a timely
manner. Nevertheless, pursuant to our authority under FPA section
215(d)(5), we also direct NERC to develop modifications to address the
concerns regarding Requirements R1 and R7, as well as other concerns we
have identified as to other aspects of Reliability Standard EOP-012-1,
without delaying the effective date of Reliability Standard EOP-012-1.
This approach is consistent with Commission precedent.\60\
---------------------------------------------------------------------------

    \59\ See e.g., EPSA/PJM Group Comments at 7-9; ISO/RTO Council
Comments at 10; NEPGA Comments at 7-8.
    \60\ See e.g., Mandatory Reliability Standards for the Bulk-
Power Sys., Order No. 693, 118 FERC ] 61,218, at P 10 (2007) (noting
that ``[w]here a Reliability Standard requires significant
improvement, but is otherwise enforceable, the Commission approves
the Reliability Standard'' and ``directs the ERO to modify'' such
Standards to address identified issues or concerns); Version 5
Critical Infrastructure Prot. Reliability Standards, Order No. 791,
145 FERC] 61,160, at PP 1-4 (2013), order on clarification and
reh'g, Order No. 791-A, 146 FERC ] 61,188 (2014).

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

    38. While we understand that the implementation plan for
Reliability Standard EOP-012-1 is designed to accommodate entities that
may need time to determine Extreme Cold Weather Temperature values,
identify cold weather critical components for applicable generating
units, develop corrective action plans for freeze issues, perform
various engineering analyses, provide the required training, and
develop the necessary capabilities to satisfy revised data
specifications, industry has been aware of and alerted to the need to
prepare their generating units for cold weather since at least 2011.
Therefore, we direct NERC to reduce the implementation time and to
include a staggered implementation for Requirement R2 to reduce
reliability risks. NERC should consider the amount of time that
industry has already been alerted to the need to implement freeze
protection measures when determining the appropriate implementation
period. We also strongly encourage entities that are capable of
complying with these Standards earlier than the mandatory and
enforceable date to do so.
    39. In addition to the directives to modify various aspects of
Reliability Standard EOP-012-1, we also have concerns regarding
generator owner constraint declarations and the adequacy of the Extreme
Cold Weather Temperature definition that may be addressed with
additional information. Therefore, pursuant to section 39.2(d) of the
Commission's regulations,\61\ NERC is hereby directed to work with
Commission staff to submit a plan no later than 12 months after the
date of issuance of this order on how it will collect and assess,
through annual and event-based data submittals, the following elements
of Reliability Standard EOP-012-1: (1) generator owner declared
constraints and explanations thereof; and (2) the adequacy of the
Extreme Cold Weather Temperature definition. NERC is hereby directed to
submit periodic reports to the Commission providing the results of the
assessments, as discussed in further detail below.
---------------------------------------------------------------------------

    \61\ 18 CFR 39.2(d).
---------------------------------------------------------------------------

    40. Below we address the following elements of Reliability Standard
EOP-012-1: (1) jurisdiction; (2) the applicability of Reliability
Standard EOP-012-1; (3) generator owner declarations for technical,
commercial, or operational constraints; (4) the Extreme Cold Weather
Temperature definition; (5) the absence of a deadline by which
generator owners must implement new or modified freeze protection
measures required by their corrective action plans; (6) cost recovery
mechanisms; (7) other technical matters; and (8) annual and event-based
data submittals.
1. Jurisdiction
a. Background
    41. Section 215(a)(3) of the FPA defines ``Reliability Standard''
as:

a requirement, approved by the Commission under this section, to
provide for reliable operation of the bulk-power system. The term
includes requirements for the operation of existing bulk-power
system facilities, including cybersecurity protection, and the
design of planned additions or modifications to such facilities to
the extent necessary to provide for reliable operation of the bulk-
power system, but the term does not include any requirement to
enlarge such facilities or to construct new transmission capacity or
generation capacity.\62\
---------------------------------------------------------------------------

    \62\ 16 U.S.C. 824o(a)(3).

    42. The term ``Reliable Operation'' is defined by the statute as
``operating the elements of the bulk-power system within equipment and
electric system thermal, voltage, and stability limits so that
instability, uncontrolled separation, or cascading failures of such
system will not occur as a result of a sudden disturbance . . . or
unanticipated failure of system elements.'' \63\
---------------------------------------------------------------------------

    \63\ Id. Sec.  824o(a)(4).
---------------------------------------------------------------------------

b. Comments
    43. EPSA/PJM Group and Invenergy assert that Requirements R1 and R2
of Reliability Standard EOP-012-1 would impose obligations on generator
owners that ``fall outside of the scope'' of section 215 of the
FPA.\64\ Both provisions of Reliability Standard EOP-012-1 require
generator owners to add new, or modify existing, freeze protection
measures, with Requirement R1 pertaining to generating units with an
operational date subsequent to the effective date of the Reliability
Standard, and Requirement R2 pertaining to existing generating units.
---------------------------------------------------------------------------

    \64\ See EPSA/PJM Group Comments at 5-7; Invenergy Comments at
13.
---------------------------------------------------------------------------

    44. EPSA/PJM Group argue that while the definition of Reliable
Operation allows NERC to require modifications to address sudden
disturbances and unanticipated failures, ``the language of the section
is very clear that a Reliability Standard may only cover `the
operation' of existing facilities, where such operation shall only be
`within' equipment limits exclusively for the purpose of mitigating
`sudden disturbances' and `unanticipated failures.' '' \65\ In other
words, according to EPSA/PJM Group, the statute authorizes the
modification of existing facilities to reliably operate within their
existing equipment limits but does not permit a Reliability Standard
that changes a resource's equipment limits.\66\ In the same vein,
Invenergy asserts that it is unclear whether NERC has the authority
under section 215 of the FPA to mandate retrofits on existing
generators because the statutory definition of Reliability Standard is
limited to requirements ``for the operation of existing bulk-power
system facilities.'' \67\ According to Invenergy, this language
suggests that NERC can only mandate modifications when changes to a
facility are already planned.\68\
---------------------------------------------------------------------------

    \65\ Id. (footnotes omitted).
    \66\ Id. at 6.
    \67\ Invenergy Comments at 13.
    \68\ Id.
---------------------------------------------------------------------------

    45. In its reply comments, NERC asserts that the requirements of
Reliability Standard EOP-012-1 that generator owners add freeze
protection measures is within the scope of its authority and that
commenters argue for an overly narrow interpretation of section 215 of
the FPA.\69\ According to NERC, EOP-012-1 satisfies a three-part
framework for analyzing whether a proposed Reliability Standard is
within the ERO's authority under the statute, namely that the Standard:
(1) applies to users, owners or operators of the Bulk-Power System; (2)
provides for the reliable operation of the Bulk-Power System; and (3)
may include operational or design requirements, but may not address
matters expressly excluded in the statute that were historically left
to the jurisdiction of the states. Focusing on the third prong, NERC
explains that Reliability Standard EOP-012-1 pertains to the operation
of existing facilities and the design of planned additions or
modifications to such facilities as needed to provide for the reliable
operation of the Bulk-Power System, which is explicitly included in the
statutory definition of Reliability Standard. NERC argues that, while
the statutory definition of Reliability Standard specifically excludes
``any requirement to enlarge [existing] facilities or to construct new
transmission capacity or generation capacity,'' EPSA/PJM Group's narrow
reading of the definition would write into the statute a new exclusion
that does not exist.
---------------------------------------------------------------------------

    \69\ NERC Reply Comments at 3-11.
---------------------------------------------------------------------------

c. Commission Determination
    46. We are not persuaded by EPSA/PJM Group and Invenergy's
arguments and conclude that Reliability Standard

EOP-012-1 Requirements R1 and R2 are within the statutory authority of
the ERO and the Commission. We agree with NERC that EPSA/PJM Group and
Invenergy narrowly interpret the terms ``Reliability Standard'' and
``Reliable Operation'' under section 215 of the FPA to reach an
inaccurate conclusion regarding the ERO and the Commission's statutory
authority.\70\
---------------------------------------------------------------------------

    \70\ Id.; see also 16 U.S.C. 824o(a)(3)-(4).
---------------------------------------------------------------------------

    47. First, Requirements R1 and R2 of EOP-012-1 comport with the
statutory definition of a Reliability Standard, which includes
modifications to facilities to the extent that they are necessary to
provide for the reliable operation of the Bulk-Power System.\71\
Reliability Standard EOP-012-1 Requirement R1 requires generating units
with a commercial operation date after the effective date of the
Standard to implement freeze protection measures so that the unit is
capable of continuous operation for at least 12 hours at the Extreme
Cold Weather Temperature or for the generator owner to submit a
declaration of a technical, commercial, or operational constraint that
preclude its ability to comply with the Standard. Requirement R2 of
EOP-012-1 requires existing generating units to either be capable of
continuous operation for at least one hour at the Extreme Cold Weather
Temperature or to develop a corrective action plan to resolve the
issue. Thus, Requirements R1 and R2's freeze protection provisions
serve an appropriate purpose, i.e., to provide the ``Reliable
Operation'' \72\ of the Bulk-Power System as set forth in the
definition of a ``Reliability Standard.'' \73\ Further, neither of
these requirements mandate the construction of new generation capacity
or an expansion of the unit's generating capacity, which are the only
relevant exclusions identified in the statutory definition of a
``Reliability Standard.'' \74\
---------------------------------------------------------------------------

    \71\ 16 U.S.C. 824o(a)(3).
    \72\ Id. section 824o(a)(4).
    \73\ Id. section 824o(a)(3).
    \74\ Id.
---------------------------------------------------------------------------

    48. Moreover, we reject EPSA/PJM Group's interpretation of the
statutory definition of ``Reliable Operation'' as imposing a limitation
or exclusion on an acceptable Reliability Standard. EPSA/PJM Group
recognizes that under the definition of ``Reliable Operation'' NERC may
require modifications to mitigate ``sudden disturbances'' and
``unanticipated failures'' of facilities to the extent necessary to
provide for reliable Bulk-Power System operations.\75\ Indeed, the
Commission has previously approved Reliability Standards that require
the implementation of physical modifications to improve
reliability.\76\ Rather, EPSA/PJM Group reads a limitation into the
statutory definition of Reliable Operation--specifically ``within
equipment . . . limits''--and argues that the proposed Reliability
Standard would constitute an impermissible change to such equipment
limits. However, we do not find this argument to be persuasive as the
statutory language is not as narrow as EPSA/PJM Group suggests. When
read in context, the definition of ``Reliable Operation'' contemplates
that Reliability Standards should be designed so that facility
equipment operates within specified limits to mitigate sudden
disturbances and prevent unanticipated failures of system elements.\77\
---------------------------------------------------------------------------

    \75\ EPSA/PJM Group Comments at 5 (citing to 16 U.S.C.
824(a)(4)).
    \76\ See, e.g., Order No. 693, 118 FERC ] 61,218 at PP 1547,
1550 (approving Reliability Standard PRC-018-1, which requires the
installation of disturbance monitoring equipment); Mandatory
Reliability Standards for Critical Infrastructure Protection, Order
No. 706, 122 FERC ] 61,040, at P 86 (2008) (providing entities with
a reasonable amount of time to purchase and install new software and
equipment for compliance); PacifiCorp, 141 FERC ] 61,140 P 1 (2014).
    \77\ 16 U.S.C. 824o(a)(4).
---------------------------------------------------------------------------

    49. EPSA/PJM Group seizes upon language from the ``Reliability
Standard'' definition stating that the term ``includes requirements for
the existing bulk-power system facilities. . . .'' \78\ However, other
than EPSA/PJM Group's assertion, there is no logical reason to tie
together the language from these two definitions to limit the statutory
scope for the requirements of a Reliability Standard. Rather, in
context, the ``requirements for operation of existing . . .
facilities'' passage continues ``. . . including . . . the design of
planned additions or modification to such facilities to the extent
necessary to provide for reliable operation of the bulk-power system.''
\79\ This exactly describes the purpose of the freeze protection
requirements in EOP-012-1, which are intended to reduce capacity that
is forced off-line due to freezing conditions and to help ensure that
such capacity is not forced off-line in newer units. Accordingly, we
reject the arguments of EPSA/PJM Group that the requirements of EOP-
012-1 are beyond our or NERC's authority.
---------------------------------------------------------------------------

    \78\ EPSA/PJM Group Comments at 5.
    \79\ 16 U.S.C. 824o(a)(3).
---------------------------------------------------------------------------

    50. For similar reasons, we reject Invenergy's argument that a
requirement to ``retrofit'' existing generators exceeds the statutory
definition of a Reliability Standard that is limited to requirements
``for the operation of existing bulk-power system facilities.'' \80\
Again, Invenergy would read in an exclusion beyond the one explicit
exclusion stated in the definition. Moreover, Invenergy's selected
quote ignores the language that follows which includes requirements for
``the operation of existing bulk-power system facilities . . . and the
design of planned additions or modifications to such facilities to the
extent necessary to provide for reliable operation of the bulk-power
system.'' \81\ As discussed above, Requirements R1 and R2's freeze
protection measures satisfy the latter provision, as the record shows
that these modifications are necessary to provide for the reliable
operation of the Bulk-Power System.
---------------------------------------------------------------------------

    \80\ See Invenergy Comments at 13. But see NERC Petition Ex. A-
2, at 3-8 (the term ``retrofit'' not appearing in proposed
Reliability Standard EOP-012-1).
    \81\ 16 U.S.C. 824o(a)(3).
---------------------------------------------------------------------------

2. Applicability of Reliability Standard EOP-012-1
    51. NERC's Rules of Procedure requires all Reliability Standards to
include an applicability section that identifies (1) the registered
functional entities required to comply with each Standard and (2) the
bulk electric system facilities to which the requirements apply.\82\
Reliability Standard EOP-012-1's applicability section applies to
registered generator owners and generator operators. Further, the
facilities subject to the requirements of the standard include bulk
electric system generating units that are Blackstart Resources and any
bulk electric system generating unit that:
---------------------------------------------------------------------------

    \82\ See NERC, Rules of Procedure, App. 3A (Standard Process
Manual), 5 (Mar. 2019), N. Am. Elec. Reliability Corp., 116 FERC ]
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006),
aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).

commits or is obligated to serve a Balancing Authority load pursuant
to a tariff obligation, state requirement as defined by the relevant
electric regulatory authority, or other contractual arrangement,
rule, or regulation, for a continuous run of four hours or more at
or below a temperature of 32 degrees Fahrenheit (zero degrees
Celsius) \83\
---------------------------------------------------------------------------

    \83\ Reliability Standard EOP-012-1, section <IP_ADDRESS>.

    52. NERC explains that the facilities section inclusions are
``carefully tailored to place the responsibility for cold weather
preparedness on those generating units that are being depended on to
operate in cold weather and on which the reliability of the system
depends'' and that the facilities section exclusions are meant to avoid
``undue burden on those generating

units that are not expected to operate in cold weather.'' \84\
---------------------------------------------------------------------------

    \84\ NERC Petition at 30.
---------------------------------------------------------------------------

a. Comments
    53. Invenergy questions which generator owner and generator
operators must comply with Reliability Standard EOP-012-1.
Specifically, Invenergy asserts that the applicability section of the
Standard is not clear and unambiguous as to which entities must comply.
Invenergy argues there are different types of generator owners that
vary widely in how they, with their generating units, participate in
electric markets, and requests that the Commission direct NERC to
modify proposed Reliability Standard EOP-012-1 to provide specific
criteria for which entities must comply.\85\
---------------------------------------------------------------------------

    \85\ Invenergy Comments at 4.
---------------------------------------------------------------------------

b. Commission Determination
    54. We agree with Invenergy that the applicability of Reliability
Standard EOP-012-1 is unclear and ambiguous. In its technical rationale
and justification, NERC explains that Reliability Standard EOP-012-1 is
not meant to require all generating units to provide capacity in
extreme cold weather. Instead, the Standard applies to those generating
resources that are ``obligated to serve Balancing Authority load during
periods at or below freezing due to commitments pursuant to tariff
obligations, state requirements defined by regulatory authorities, or
other contractual arrangements, rules, or regulations are subject to
the winterization requirements.'' \86\ Further, NERC explains that the
``[t]he [standard drafting team] chose the four-hour timeframe in
consideration of generators that typically do not commit during
freezing conditions but are running when conditions drop below freezing
for a short period of time . . . '' \87\ Lastly, NERC states that the
language is intended to act as a ``blanket inclusion of all [bulk
electric system] resources that serve Balancing Authority load for a
period of more than four hours in freezing conditions.'' \88\
---------------------------------------------------------------------------

    \86\ NERC Petition, Ex. C-2, Technical Rationale and
Justification for EOP-012-1 at 1.
    \87\ Id.
    \88\ Id. at 2.
---------------------------------------------------------------------------

    55. Despite this additional description regarding the standard
drafting team's intent, we are concerned that certain elements of the
applicability criteria remain unclear and ambiguous. For example, in
light of the multiple different approaches for participating in
electricity markets, it may not be clear under what circumstances a
generator owner is ``obligated to serve a Balancing Authority load.''
\89\ Similarly, while the intent appears to be to exclude units that do
not typically run during winter, it is unclear how the qualifier of
``for four hours or more'' is meant to be measured and applied in
practice.
---------------------------------------------------------------------------

    \89\ Id. at 1.
---------------------------------------------------------------------------

    56. We find that NERC has not sufficiently supported the
applicability criteria of EOP-012-1. Reliability Standard EOP-012-1
applies only to ``[a] Blackstart Resource'' or ``[a] Bulk Electric
System generating unit that commits or is obligated to serve . . .
pursuant to a tariff obligation, state requirement . . . , or other
contractual arrangement, rule, or regulation, for a continuous run of
four hours or more at or below a temperature of 32 degrees Fahrenheit
(zero degrees Celsius). . . .'' \90\ This applicability is further
limited by enumerated exemptions set forth in section 4.2.2. NERC
explains in its Petition that the Facilities section 4.2 of the
Reliability Standard, that limits applicability to an unidentified
subset of generating units, is meant to ``place the responsibility for
cold weather preparedness on those generating units that are being
depended on to operate in cold weather and on which the reliability of
the system depends, while avoiding undue burden on those generating
units that are not expected to operate in cold weather.'' \91\ But
based on commenter concerns and our reading of the plain text of the
Reliability Standard, the extent of Reliability Standard EOP-012-1's
applicability to bulk electric system facilities is unclear.
---------------------------------------------------------------------------

    \90\ Reliability Standard, EOP-012-1, section 4.2.
    \91\ NERC Petition at 30.
---------------------------------------------------------------------------

    57. For example, it is unclear how the term ``continuous run''
would apply to intermittent resources, which by their nature are
variable and, therefore, do not always run continuously. Ensuring clear
applicability to intermittent generators is critical to ensuring that
enough generating units are available during cold temperatures.
    58. Moreover, to the extent it is NERC's intent to exclude units
that do not typically run during winter from every requirement in the
Standard, we have concerns that this is not clearly articulated in
Reliability Standard EOP-012-1. In short, we are concerned that use of
the terms ``continuous run,'' ``commits or is obligated to serve'' and
``four hours or more,'' as well as the enumerated exemptions,
obfuscates the extent of applicability of Reliability Standard EOP-012-
1 and may not ensure that compliance is required for all ``generating
units that are being depended on to operate in cold weather and on
which the reliability of the system depends.'' \92\ Therefore, we
direct NERC, pursuant to FPA section 215(d)(5), to modify Reliability
Standard EOP-012-1 to ensure that it captures all bulk electric system
generation resources needed for reliable operation and excludes only
those generation resources not relied upon during freezing
conditions.\93\ As the directive is to clarify the language of the
applicability section to align with NERC's explanation of the entities
that should comply, there should be no need for additional
implementation time. Therefore, NERC should ensure the modified
applicability is implemented as of the effective date of Reliability
Standard EOP-012-1.
---------------------------------------------------------------------------

    \92\ Id. at 30.
    \93\ 16 U.S.C. 824o(d)(5) (stating that the Commission, ``upon
its own motion or upon complaint, may order the Electric Reliability
Organization to submit to the Commission a proposed reliability
standard or a modification to a reliability standard that addresses
a specific matter if the Commission considers such a new or modified
reliability standard appropriate to carry out this section'').
---------------------------------------------------------------------------

    59. Given the lack of clarity in the proposed applicability
criteria for EOP-012-1, we are concerned that the standard could apply
to significantly fewer generators than the existing Reliability
Standard EOP-011-2 Requirements R7 and R8. Thus, as Reliability
Standard EOP-011-2 requirements to implement and maintain cold weather
preparedness plan(s) and associated training applies to all bulk
electric system generating units, we defer our decision on whether to
approve or modify NERC's proposed implementation date for Reliability
Standard EOP-011-3 (and proposed retirement of Reliability Standard
EOP-011-2) until NERC submits its revised applicability section for
EOP-012. Allowing these requirements to remain mandatory and
enforceable will ensure all bulk electric system generating units are
required to maintain cold weather preparedness plans until such time as
the revised applicability criteria are effective for EOP-012.
    60. Furthermore, we are concerned that the proposed applicability
criteria for EOP-012-1 and retirement of EOP-011-2 Requirements R7 and
R8 will eliminate valuable information on cold weather preparedness of
generating units that typically do not operate during the winter. Under
EOP-011-2, all bulk electric system generating units must identify in
cold weather preparedness plan(s) ``[g]enerating unit(s) cold weather
data'' including ``[g]enerating unit(s) operating limitations in cold
weather'' and

``[g]enerating unit(s) minimum . . . design temperature . . .
historical operating temperature . . . or current cold weather
performance temperature determined by an engineering analysis.'' This
data is to be exchanged with the reliability coordinator, transmission
operator, and balancing authority for planning and operations. The
November 2021 Report stated that ``[t]he intent behind requiring
[generator owners] to identify and share with the [balancing
authorities] and [transmission operators] the expected limitations of
their generating units `during local forecasted cold weather,' is to
prevent grid operators from being surprised when large numbers of
generating units that had committed to run are unable to do so during
cold weather events.'' \94\ Once EOP-012-1 goes into effect, and EOP-
011-2 Requirements R7 and R8 are retired, we are concerned that
generating units that do not typically operate during the winter will
no longer provide this information to reliability coordinators,
transmission operators, and balancing authorities. The loss of this
information concerns us as the proposed applicability of EOP-012-1
recognizes that units that do not typically run during the winter may
be called upon during emergencies. We therefore direct NERC to modify
EOP-012-1 to ensure that this information remains available.
---------------------------------------------------------------------------

    \94\ November 2021 Report at 190-91.
---------------------------------------------------------------------------

3. The Allowance of Exceptions for Generator Owner-Defined Technical,
Commercial, or Operational Constraints
a. NERC Petition
    61. Requirement R1 of EOP-012-1 requires a generator owner to
either implement freeze protection measures on its existing units that
provide capability to operate for a period of not less than 12
continuous hours at the Extreme Cold Weather Temperature for the unit
or ``[e]xplain in a declaration any technical, commercial, or
operational constraints that preclude the ability'' to comply with the
requirement.\95\ Similarly, Requirement R7 mandates that a generator
owner implement each corrective action plan developed pursuant to
Requirements R2, R4, or R6 ``or explain in a declaration why corrective
actions are not being implemented due to any technical, commercial, or
operational constraint as defined by the Generator Owner.'' \96\
---------------------------------------------------------------------------

    \95\ NERC Petition Ex A-2, at 4.
    \96\ Id. at 4-6.
---------------------------------------------------------------------------

b. Comments
    62. Several commenters assert that the Requirements R1 and R7 in
Reliability Standard EOP-012-1 could benefit from increased clarity.
EPSA/PJM Group, NEPGA, and the ISO/RTO Council assert that the
generator owner declaration of constraints outlined in Requirement R1
and Requirement R7 are overly broad and that there is no explanation of
what technical, commercial, or operational constraints would be
permissible for generator owners to avoid both the implementation of
freeze protection measures and a corrective action plan.\97\
Specifically, EPSA/PJM Group contend that the broad discretion towards
generator owners to identify constraints in Requirements R1 and R7 may
lead to generator owners avoiding the implementation of freeze
protection measures (to lower their costs), thereby negatively
interfering with competition.\98\ The ISO/RTO Council states that this
generator owner discretion to determine what constraints are valid
without oversight could make enforcement difficult.\99\ Similarly,
Invenergy argues that this discretion could lead to uneven
implementation and enforcement.\100\ TCPA also requests that the
Commission clarify that a lack of cost recovery is a commercial
constraint to implementing Requirement R1 and R7.\101\ Finally,
commenters point out that there is no indication in the Standard of
which entity should receive the declaration of constraints from the
generator owner, if any.\102\
---------------------------------------------------------------------------

    \97\ EPSA/PJM Group Comments at 7-9; ISO/RTO Council Comments at
10; NEPGA Comments at 7-8.
    \98\ EPSA/PJM Group Comments at 7-9.
    \99\ ISO/RTO Council Comments at 10-11.
    \100\ Invenergy Comments at 8.
    \101\ TCPA Comments at 2-3, 7-8.
    \102\ E.g., ISO/RTO Council Comments at 10.
---------------------------------------------------------------------------

    63. NERC, in its reply comments, states that provisions criticized
by commenters including the ``constraints'' provision represents a
balancing of competing opinions raised in the standards development
process. NERC opines that the petition provides a sound technical basis
for approving the Standards as filed, and reiterates that during the
second phase project, ``NERC may propose further changes to enhance the
clarity or effectiveness of the EOP-012 standard.'' \103\
---------------------------------------------------------------------------

    \103\ NERC Reply Comments at 13.
---------------------------------------------------------------------------

c. Commission Determination
    64. We share commenters' concerns regarding the uncertainty created
by the proposed technical, commercial, or operational constraint
provisions in Requirements R1 and R7, and that without criteria to
guide the generator owners, or guardrails on what constitutes a
legitimate technical, commercial, or operational constraint, entities
may either benefit financially by avoiding the purpose of the Standard
altogether or have declarations without auditable elements.\104\
Indeed, instead of implementing freeze protection measures, Requirement
R1 allows an entity to explain in a declaration the constraints that
preclude the ability to comply. Requirement R7 allows an entity to
explain in a declaration any technical, commercial, or operational
constraints as defined by the generator owner that prevent its
implementation of corrective actions set forth in a corrective action
plan pursuant to Requirements R2, R4 and R6. We are also concerned that
a generator owner may make the determination without informing planning
and operational entities (i.e., the reliability coordinator or
balancing authority) that are expecting the reliable operation of the
generating unit to its Extreme Cold Weather Temperature.
---------------------------------------------------------------------------

    \104\ See, e.g., ISO/RTO Comments at 10 (cautioning that the
``broad undefined `commercial' exemption could lead to the exception
swallowing the rule'').
---------------------------------------------------------------------------

    65. The Commission has previously encountered similar concerns
regarding the vagueness and enforceability of Reliability Standards
language. For example, in Order No. 693 the Commission approved
Reliability Standards while also expressing concern that the term
``sabotage'' was too ambiguous.\105\ Similarly, in Order No. 791
(approving Version 5 of the CIP Standards), the Commission raised
concerns with vague language that required entities to ``identify,
assess, and correct'' deficiencies. The Commission determined that the
ambiguities resulted in an ``unacceptable amount of uncertainty'' and
directed NERC to remove the ambiguous language and develop
modifications within one year.\106\ In both Order No. 693 and Order No.
791, the Commission approved NERC's proposed Reliability Standards as
an improvement to reliability, while directing NERC to submit
modifications to the Standards addressing the Commission's concern
regarding vagueness of particular language. We conclude that a similar
approach is appropriate in the immediate proceeding, given the
improvements offered by Reliability Standard EOP-

012-1 in addressing Bulk-Power System reliability during extreme cold
weather events.
---------------------------------------------------------------------------

    \105\ Order No. 693, 118 FERC ] 61,218 at PP 1, 461.
    \106\ See Order No. 791, 145 FERC ] 61,160 at PP 49-53, 67, 69.
---------------------------------------------------------------------------

    66. Accordingly, we direct NERC, pursuant to section 215(d) of the
FPA, to develop and submit modifications to Reliability Standard EOP-
012-1 Requirements R1 and R7 to address concerns related to the
ambiguity of generator-defined declarations of technical, commercial,
or operational constraints that preclude a generator owner from
implementing the appropriate freeze protection measures and to ensure
that the constraint declarations may not be used to opt-out of
compliance with the Standard or obligations set forth in a corrective
action plan. Specifically, we direct NERC to include auditable criteria
on permissible constraints and to identify the appropriate entity that
would receive the generator owners' constraint declarations under EOP-
012-1 Requirements R1 and R7. We direct NERC to submit the revised
Reliability Standard no later than 12 months after the date of issuance
of this order.
    67. TCPA requests that the Commission clarify that a ``lack of cost
recovery'' is a commercial constraint to implementing Requirement R1
and R7.\107\ TCPA argues that the ability of transmission service
providers and others to receive regulated rates of return creates an
uneven playing field for independent generation.\108\ We decline to
grant TCPA's proposed clarification. Granting TCPA's requested
clarification would be tantamount to a blanket waiver for all
generators that do not currently recover their costs through cost-of-
service rates.\109\ We believe it would be inappropriate to allow
entities participating in competitive wholesale electric markets to
simply opt-out of reliability improvements offered by NERC's proposal
because they lack a dedicated cost recovery mechanism.
---------------------------------------------------------------------------

    \107\ TCPA Comments at 2-3, 7-8 (recommending that commercial
constraints be expanded to include economic issues).
    \108\ Id. at 2.
    \109\ This order discusses cost recovery mechanisms in more
detail in section 5.
---------------------------------------------------------------------------

    68. Additionally, to provide the Commission with an ongoing
assessment of the risk to the Bulk-Power System, we direct that NERC
assess the implementation of the declarations through annual
informational data submittals filed with the Commission, discussed in
more detail in section 8.
4. The Calculation of the Extreme Cold Weather Temperature at Which a
Generating Unit Must Be Capable of Performing
a. NERC Petition
    69. NERC proposes to define the term Extreme Cold Weather
Temperature as equal to the lowest 0.2 percentile of the hourly
temperatures measured in December, January, and February from January
1, 2000, through the date the temperature is calculated.\110\ According
to NERC, a statistical approach using modern weather data would advance
the reliability of the Bulk-Power System while also avoiding being
overly burdensome for those responsible for compliance.\111\
---------------------------------------------------------------------------

    \110\ Id. at 24.
    \111\ Id. at 25-27 (relying on the Modernization and Associated
Restructuring from the National Weather Service, which has higher
quality, more granular temperature data in more locations).
---------------------------------------------------------------------------

b. Comments
    70. Some commenters express concern with the Extreme Cold Weather
Temperature definition.\112\ The ISO/RTO Council argues that only
examining historical data from the year 2000 forward risks
unnecessarily limiting the range of possible cold weather scenarios
that the Standard is intended to address, and proposes an alternate
calculation method.\113\ NEPGA/EPSA/PJM Group counters that the ISO/RTO
Council's proposed revisions materially change Reliability Standard
EOP-012-1, and should the Commission adopt the ISO/RTO proposal, then
efforts to comply with EOP-012-1 ``as drafted'' could be potentially
futile.\114\ Invenergy asserts that the Extreme Cold Weather
Temperature definition is arbitrary because NERC did not measure the
definition against any objective standard to ensure reliable
operation.\115\ Invenergy adds that the Extreme Cold Weather
Temperature should be calculated by NERC and its Regional Entities to
prevent uneven implementation and enforcement.\116\ Invenergy also
argues that it is unreasonable that the proposed Extreme Cold Weather
Temperature ``will be heavily influenced by the colder nighttime
temperatures, when there is no solar generation.'' \117\
---------------------------------------------------------------------------

    \112\ NEPGA/EPSA/PJM Group Answer at 3-4; ISO/RTO Comments at 6.
    \113\ ISO/RTO Council Comments at 7-9.
    \114\ NEPGA/EPSA/PJM Group Answer at 3-8 (requesting that the
Commission not adopt the ISO/RTO Council's alternative Extreme Cold
Weather Temperature proposal).
    \115\ Invenergy Comments at 7-8.
    \116\ Id. at 8.
    \117\ Id. at 7-8.
---------------------------------------------------------------------------

c. Commission Determination
    71. As noted above, the Extreme Cold Weather Temperature is equal
to the lowest 0.2 percentile of the hourly temperatures measured in
December, January, and February from January 1, 2000, through the date
the temperature is calculated.\118\ This method of determining the
Extreme Cold Weather Temperature is a statistical approach, using the
cumulative distribution of historical temperatures to determine the 0.2
percentile historical temperature. NERC's petition explains it relied
on the Modernization and Associated Restructuring from the National
Weather Service, which has higher quality and more granular temperature
data in more locations, being completed in the year 2000 to justify the
elimination of all pre-2000 historical weather data from
consideration.\119\
---------------------------------------------------------------------------

    \118\ NERC Petition at 24.
    \119\ Id. at 25-27.
---------------------------------------------------------------------------

    72. We find that NERC's Extreme Cold Weather Temperature definition
represents a reasonable starting point for reducing the level of risk.
The use of the Extreme Cold Weather Temperature to establish a specific
level of required freeze protection for resources is also a significant
improvement over the current cold weather Reliability Standards, which
contain no minimum temperature operating requirements.\120\ With
respect to the 0.2 threshold, we believe that NERC reasonably balanced
a number of competing factors in setting the Extreme Cold Weather
Temperature.\121\ Similarly, while we agree with the ISO/RTO Council
that additional data sources may be available, we find that NERC's
consideration of data availability and its determination to rely on
meteorological data starting in the year 2000 is reasonable. Similarly,
as the Extreme Cold Weather Temperature definition is meant to apply
uniformly regardless of generation type, we do not find it unreasonable
that solar generators would need to meet an Extreme Cold Weather
Temperature based on 24-hour-temperature data.\122\
---------------------------------------------------------------------------

    \120\ See Order Approving Cold Weather Reliability Standards,
176 FERC ] 61,119, at P 1.
    \121\ NERC Petition at 130 (relying on this approach to ensure
that the Extreme Cold Weather Temperature does not result in an
overly conservative design or preclude the generator owner from
using historical operating data to show compliance).
    \122\ See Invenergy Comments at 7-8.
---------------------------------------------------------------------------

    73. Although we agree that NERC could have adopted other,
potentially more robust approaches to defining the Extreme Cold Weather
Temperature, we believe that other factors such as application,
inspection, and

maintenance of the freeze protection measures and the associated
training of generator owners or generator operators that perform these
actions (all of which are requirements in the proposed Standard) should
reasonably improve reliable operation of the Bulk-Power System.
Further, recognizing that extreme cold weather temperatures could drop
below the Extreme Cold Weather Temperature during future events, the
need for periodic Extreme Cold Weather Temperature review \123\ and
updates \124\ based on the new cold weather temperatures will help
mitigate freezing issues over time, which could lessen the risk of
freeze-related outages not being subject to corrective action plans.
---------------------------------------------------------------------------

    \123\ Reliability Standard EOP-012-1 already mandates a five-
year Extreme Cold Weather Temperature re-calculation and updates to
corrective actions where warranted.
    \124\ The proposed Standard requires updates regardless of the
Extreme Cold Weather Temperature methodology used.
---------------------------------------------------------------------------

    74. Accordingly, we are not persuaded by commenters that
modification to NERC's Extreme Cold Weather Temperature definition is
warranted at this time. Nevertheless, based on the concerns expressed
above, we direct that NERC assess the implementation of the definition
through event-based informational data submittals filed with the
Commission, discussed in more detail in section 8. Based on the results
of NERC's informational data submittals to the Commission, the
Commission will determine whether future modification to the Extreme
Cold Weather Temperature definition is warranted.
5. The Absence of a Deadline by Which Generator Owners Must Implement
the New or Modified Freeze Protection Measures Required by Their
Corrective Action Plans
a. NERC Petition
    75. Requirement R7 of EOP-012-1 mandates that a generator owner
implement each corrective action plan developed pursuant to
Requirements R2, R4, or R6, or ``explain in a declaration why
corrective actions are not being implemented due to any technical,
commercial, or operational constraint as defined by the Generator
Owner.'' \125\ Requirement R7 also requires that the generator owner
update each corrective action plan if the actions or timetables change,
until the corrective action plan implementation is completed. But
Reliability Standard EOP-012-1 does not include a deadline for the
implementation completion of such plans.
---------------------------------------------------------------------------

    \125\ NERC Petition at 43.
---------------------------------------------------------------------------

b. Comments
    76. Some commenters express concern with Requirement R7 and the
implementation timeline for generator owner-developed corrective action
plans.\126\ Specifically, the ISO/RTO Council requests modification
because Requirement R7 does not explain when the implementation of the
developed corrective action plans should occur.\127\ The ISO/RTO
Council also argues that it is unclear to which entity or entities the
generator owner is supposed to provide its corrective action plan.\128\
TCPA asserts that it is unclear from EOP-012-1 when the corrective
actions outlined in the developed corrective action plans should be
completed.\129\
---------------------------------------------------------------------------

    \126\ See, e.g., ISO/RTO Council Comments at 10-11; TCPA
Comments at 4, 6.
    \127\ ISO/RTO Council Comments at 11.
    \128\ Id. at 10.
    \129\ TCPA Comments at 6.
---------------------------------------------------------------------------

c. Commission Determination
    77. The NERC Glossary defines a ``corrective action plan'' as used
in EOP-012-1 as a ``list of actions and an associated timetable for
implementation to remedy a specific problem.'' \130\ As such, the
``corrective action plan[s]'' in EOP-012-1 are required to contain a
timetable for implementation completion and entities are required to
implement actions consistent with the timelines defined in the
corrective action plan under Requirement R7. While entities are
required to adhere to the timelines as defined in their corrective
action plans, some Reliability Standards establish a maximum time for
completion while others do not. For example, the Commission directed
NERC to add specific timelines for the completion of corrective action
plans to mitigate geomagnetic disturbances in Reliability Standard TPL-
007-1 (Transmission System Planned Performance for Geomagnetic
Disturbance Events).\131\ In contrast, the Commission has approved
other Reliability Standards requiring a corrective action plan that do
not require a specific deadline for the completion of the corrective
action plan.\132\
---------------------------------------------------------------------------

    \130\ NERC Petition at 1013.
    \131\ Reliability Standard for Transmission Sys. Planned
Performance for Geomagnetic Disturbance Events, Order No. 830, 156
FERC ] 61,215, at PP 101-04 (2016), reh'g denied, Order No. 830-A,
158 FERC ] 61,041 (2017) (directing NERC to modify TPL-007-1 to
include a two-year deadline after the development of a CAP to
complete the implementation of non-hardware mitigation and a four-
year deadline to complete hardware mitigation).
    \132\ See, e.g., PRC-004-6 (Protection System Misoperation
Identification and Correction), Requirement R5 (requiring each
transmission owner, generator owner, and distribution owner that
owns a protection system component that caused misoperation to
develop a corrective action plan or explain in declaration why
corrective actions are beyond the entity's control).
---------------------------------------------------------------------------

    78. In this instance, despite the lack of a deadline for
completion, we find it appropriate to approve the Standard while also
directing modification. We are persuaded that modifying the Standard to
include a maximum time for implementation completion is reasonable for
several reasons. First, having a requirement to implement a corrective
action plan by a date certain will provide a significant level of risk
reduction compared to the status quo. Second, the requirement to
implement a corrective action plan and to identify any temporary
operating limitations or effects to the cold weather preparedness plan
that would apply to entities until the execution of the corrective
actions by a date certain is an improvement to the Reliability
Standards.\133\ Finally, we do not find persuasive NERC's explanation
that competition for expert resources and supply chain challenges may
make setting a specific, uniform corrective action plan timeline for
all generating units difficult. The November 2021 Report recommends
that NERC's standard drafting team establish a maximum date that
corrective action plans must be completed.\134\ Otherwise, without a
maximum time for implementation, we are concerned that the time it
takes to complete the corrective action plans could allow identified
issues to remain unresolved for a significant period.
---------------------------------------------------------------------------

    \133\ Id. Ex. A-2 at 6-7.
    \134\ November 2021 Report at 187 (Key Recommendation 1d).
---------------------------------------------------------------------------

    79. Accordingly, we direct NERC pursuant to FPA section 215(d)(5)
to modify Reliability Standard EOP-012-1 to address concerns related to
the lack of an implementation timeframe for corrective action plans.
Specifically, we direct NERC to include in the Standard a deadline or
maximum period for the implementation completion of corrective action
plans under the Standard. We direct NERC to submit the revised
Reliability Standard no later than 12 months after the date of issuance
of this order.
6. Cost Recovery Mechanisms
a. NERC Petition
    80. Reliability Standard EOP-012-1 does not address cost recovery
mechanisms. However, NERC's petition

recognizes that generator owners can recover costs through markets or
cost recovery mechanisms approved by the state public utility
commissions.\135\
---------------------------------------------------------------------------

    \135\ NERC Petition at 44 (citing to November 2021 Report at
191-92).
---------------------------------------------------------------------------

b. Comments
    81. Some commenters assert that Reliability Standard EOP-012-1
should address cost recovery.\136\ TCPA asserts that the lack of a cost
recovery for competitive generators is a commercial constraint to
compliance with EOP-012-1 and requests that the Commission say so in
its order.\137\ The ISO/RTO Council asks the Commission to remove the
commercial constraint option from EOP-012-1 altogether.\138\ Invenergy
argues that the November 2021 Report recognized that generators should
be compensated for retrofits and that, while the NERC Reliability
Standards process may not be the appropriate forum to address cost
recovery, it is now incumbent on the Commission to address cost
recovery for generators required to comply with EOP-012-1.\139\ NEPGA
contends that a market change or other cost recovery mechanism must be
in place by the effective date of Reliability Standard EOP-012-1 and
asks the Commission to recognize the FPA's cost recovery
allowances.\140\ EPSA/PJM Group ask that the Commission begin a
proceeding under section 206 to address cost recovery for compliance
with Reliability Standards.\141\
---------------------------------------------------------------------------

    \136\ See, e.g., EPSA/PJM Group Comments at 10-13.
    \137\ TCPA Comments at 2.
    \138\ ISO/RTO Council Comments at 10.
    \139\ Invenergy Comments at 11-13.
    \140\ NEPGA Comments at 2, 4-6.
    \141\ EPSA/PJM Group Comments at 11, 13 (proffering that the
Commission could issue a show cause order pursuant to FPA section
206 to ensure that each ISO and RTO have cost recovery mechanisms in
place).
---------------------------------------------------------------------------

    82. NERC and APPA/TAPS assert that cost recovery is outside the
scope of what Reliability Standards can address.\142\ Specifically,
APPA/TAPS contend that the Commission should not act in this proceeding
to provide competitive generators with a mechanism to recover cold
weather Standard compliance costs because the FPA does not mandate
special cost recovery mechanisms for competitive generators' section
215 compliance costs.\143\ APPA/TAPS state that adopting a separate
cost recovery mechanism for competitive generators' reliability
compliance costs would be inconsistent with the Commission's market-
based framework and could risk undercutting competitive markets.\144\
---------------------------------------------------------------------------

    \142\ NERC Reply Comments at 10; APPA/TAPS Answer at 2-9.
    \143\ APPA/TAPS Answer at 2-8.
    \144\ Id. at 8-9.
---------------------------------------------------------------------------

c. Commission Determination
    83. We find that the question of whether existing market mechanisms
provide an opportunity to recover the prudently incurred costs of
compliance with the proposed Standard and the request to initiate a
proceeding under FPA 206 are outside the scope of the instant
proceeding.
7. Other Technical Matters
a. Comments
    84. Commenters raise other technical concerns touching on a variety
of elements of the Standard. For example, the ISO/RTO Council argues
that NERC's implementation plan may ``discourage earlier compliance''
and that the Commission should enact a shorter implementation plan
along with an exception process for generator owners that may
``legitimately need more time.'' \145\ The ISO/RTO Council recommends
revising the ``Generator Cold Weather Reliability Event'' definition to
account for generating units rated at or below 200 MW.\146\ The ISO/RTO
Council also expresses concern that corrective action plans under the
Standard only apply when the unit is unable to operate at or above the
Extreme Cold Weather Temperature.\147\ Additionally, the ISO/RTO
Council questions how EOP-012-1 interacts with tariff
requirements.\148\
---------------------------------------------------------------------------

    \145\ ISO/RTO Council Comments at 15-16.
    \146\ Id. at 16-17.
    \147\ Id. at 11-12.
    \148\ Id. at 13-15.
---------------------------------------------------------------------------

    85. EPSA/PJM Group requests that Requirements R1 and R2 be removed
from EOP-012-1 and be replaced with a requirement that balancing
authorities instead ensure weather-resilient generation.\149\ For
Reliability Standard EOP-012-1 Requirement R1, TAPS requests that
compliance with the phrase ``provide the capability to operate'' be
based on sound engineering judgment, meaning subsequent failures during
cold weather not automatically lead to a violation since cold weather
events cannot be simulated ahead of time.\150\
---------------------------------------------------------------------------

    \149\ EPSA/PJM Comments at 2.
    \150\ TAPS Comments at 5-6.
---------------------------------------------------------------------------

    86. TCPA requests clarification of when the five-year clock in
Requirement R4 begins and explanation how Requirement R7 requirement
for corrective action plans could be effective 18 months after
government approval when the standards for which the corrective action
plans would address (i.e., Requirements R2 and R4) are not effective
until 60 and 78 months after government approval.\151\ TCPA suggests
that generator owners only be required to provide annual compliance
progress reports.\152\ TCPA also raises issue with EOP-012-1's
violation severity level's lack of differentiation between single and
multiple facilities.\153\ Invenergy suggests revising NERC's
``Generator Cold Weather Reliability Event'' definition to align better
with the bulk electric system definition to ensure that corrective
action plans are only required when an actual Cold Weather Reliability
Event occurs.\154\ Invenergy and TCPA recommend eliminating the term
``continuous'' from EOP-012-1 Requirement R1 to reflect variable
generation and that solar and wind plants are unable to operate
continuously.\155\
---------------------------------------------------------------------------

    \151\ TCPA Comments at 6.
    \152\ Id.
    \153\ Id. at 7.
    \154\ Invenergy Comments at 2, 5-6.
    \155\ Id. at 2, 9-10; TCPA Comments at 5.
---------------------------------------------------------------------------

    87. NERC asserts that it is presently in phase two of its standard
development process and that its standard drafting team is presently
considering many of the issues raised in connection with this
proceeding.\156\ NERC encourages commenters in this proceeding to
continue participating in NERC's standard development process so that
their issues and concerns can be addressed.
---------------------------------------------------------------------------

    \156\ NERC Reply Comments at 13.
---------------------------------------------------------------------------

b. Commission Determination
    88. We share concerns with commenters regarding the implementation
period of Reliability Standard EOP-012-1, although we acknowledge
NERC's assertion that the time is necessary for generator owners to
calculate the Extreme Cold Weather Temperature for each generating
unit, to identify Generator Cold Weather Critical Components, and to
perform the necessary engineering studies and analyses to identify and
implement freeze protection measures that would provide for the
required performance capability or to explain why such measures are
precluded by technical, commercial, or operational constraints. To
address these concerns, we direct NERC to revise EOP-012 to require a
shorter implementation period and staggered implementation for unit(s)
in a generator owner's fleet.\157\ Such an approach will reduce
reliability risks more quickly. Although we are giving

NERC the discretion to determine what the effective date should be
shortened to, we also emphasize that industry has been aware of and
alerted to the need to prepare their generating units for cold weather
since at least 2011. NERC should consider the amount of time that
industry has already had to implement freeze protection measures when
determining the appropriate shorter implementation period. We direct
NERC to submit the revised implementation to Reliability Standard EOP-
012-1 no later than 12 months after the date of issuance of this order.
---------------------------------------------------------------------------

    \157\ See, e.g., 146 FERC ] 61,213 at PP 1-2 (approving
Reliability Standard MOD-025-2 and its associated staggered
implementation plan).
---------------------------------------------------------------------------

    89. For comments related to the ``continuous'' operation
requirements of EOP-012-1, the Reliability Standard is clear that it
requires generating units to be ``capable'' of operating continuously
for 12 hours, and not that the units must actually operate when they
would otherwise not be expected to operate. NERC states in its petition
that the 12-hour requirement is a minimum.\158\ However, we find the
phrase ``continuous operation'' to be confusing and subject to
conflicting interpretations. We also note that it creates confusion as
to whether certain generating units can ever be capable of compliance.
As Invenergy states, ``solar generators are not capable of operating in
a 12-hour period that extends beyond daylight hours, and, typically
when there are freezing temperatures, the sun does not even shine for
12 hours.'' \159\ And while Invenergy states that the ``Standard
Drafting Team indicated that the freeze protection measures must
provide the level of protection that would allow for 12 continuous
hours if the sun were to shine or the wind were to blow for the
period,'' \160\ the Reliability Standard Requirements in EOP-012-1 do
not specify that.\161\ Thus, we direct NERC to modify the Standard to
clarify Reliability Standard EOP-012-1 Requirement R1 to ensure that
generators that are technically incapable of operating for 12
continuous hours (e.g., solar facilities during winter months with less
than 12 hours of sunlight) are not excluded from complying with the
Standard. We direct NERC to submit the revised Reliability Standard no
later than 12 months after the date of issuance of this order.
---------------------------------------------------------------------------

    \158\ Reliability Standard EOP-012-1 does not restrict longer
duration commitments of generating units, whether based on tariff
commitments, emergencies, or other conditions. See NERC Petition Ex.
C-2 at 5 (explaining that the intent of Requirement R1 is to
implement freeze protection measures such that facilities are
capable of continuous operation for not less than 12 hours)
(emphasis added).
    \159\ Invenergy Comments at 9.
    \160\ Id.
    \161\ Order No. 693, 118 FERC ] 61,218 at P 253 (``The most
critical element of a Reliability Standard is the Requirements. As
NERC explains, `the Requirements within a standard define what an
entity must do to be compliant . . . [and] binds an entity to
certain obligations of performance under section 215 of the FPA.'
'').
---------------------------------------------------------------------------

    90. We also find that the one-hour continuous operations
requirement in Reliability Standard EOP-012-1 Requirement R2 is too
short of a period to adequately meet the purpose of the Standard to
ensure generating units ``mitigate the reliability impacts of extreme
cold weather.'' \162\ Thus, we direct NERC to modify the one-hour
continuous operations requirement of Reliability Standard EOP-012-1
Requirement R2 to better align with the stated purpose of the
Reliability Standard EOP-012-1. We direct NERC to submit the revised
Reliability Standard no later than 12 months after the date of issuance
of this order.
---------------------------------------------------------------------------

    \162\ NERC Petition at 29 (noting that freeze protection
measures of the Standard would advance the reliability of the Bulk-
Power System by helping to improve generator reliability in cold
weather).
---------------------------------------------------------------------------

    91. We find that it is premature to address TCPA's recommendation
that generator owners only submit annual progress reports on
compliance.\163\ Nothing in proposed Reliability Standard EOP-012-1
mandates the submission of compliance reports and we are already
directing NERC to address periodic data submittals in this order.
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    \163\ TCPA Comments at 5.
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    92. Finally, for suggested revisions to NERC's ``Generator Cold
Weather Reliability Event'' definition to align better with the bulk
electric system definition, and requests that Requirements R1 and R2 be
removed from EOP-012-1 and be replaced with a requirement that
balancing authorities instead ensure weather-resilient generation,\164\
we decline to direct such modifications at this time.
---------------------------------------------------------------------------

    \164\ EPSA/PJM Comments at 2.
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8. Annual and Event-Based Data Submittals
    93. NERC states that it plans to address data submittal
requirements in phase two of its standard development process.\165\ We
find that such data submittals are essential to assess the performance
of the Standards towards assuring the reliability of the Bulk-Power
System. Specifically, we find that additional data and analysis is
necessary to address the uncertainty created by the proposed technical,
commercial, or operational constraint provisions, as discussed above in
section 3. This data and analysis are essential to assess how the
generating units' freeze protection measures (implemented to provide
capability to operate at the Extreme Cold Weather Temperature) perform
in future extreme cold weather events, as discussed above in section 4.
---------------------------------------------------------------------------

    \165\ NERC Petition at 54-55.
---------------------------------------------------------------------------

    94. Accordingly, we direct that NERC, pursuant to section 39.2(d)
of the Commission's regulations, work with Commission staff to develop
and submit a plan within 12 months of the issuance of this order
explaining how it will gather data and submit an analysis that will
allow the Commission to understand the efficacy of, and monitor the
ongoing risk posed by: (1) proposed technical, commercial, or
operational constraint provisions in EOP-012-1, Requirements R1, R6,
and R7; and (2) actual performance of freeze protection measures during
future extreme cold weather events.
    95. Regarding the proposed technical, commercial, or operational
constraint provisions in EOP-012-1, Requirements R1, R6, and R7, NERC
should work with Commission staff on the details of timing and what to
include in its plan, which, at a minimum, should include collection of
the following data: (1) the generating units that have declared
constraints under EOP-012-1 and the megawatts of generation that they
represent, organized by fuel type; (2) the megawatts of generation for
which declarations have been made for each type of constraint
(technical, commercial, or operational), organized by fuel type; (3)
the rationale(s) for each declaration; (4) the megawatts of generation
within the generation owner/operator's fleet currently capable of
operating at each unit's Extreme Cold Weather Temperature; (5) the
projected megawatts for which the generator owner/operator expects to
complete corrective action plans for each year; (6) the projected
megawatts for which the generator owner/operator expects to implement
corrective action plans for each year; and (7) the megawatts of
generating units identified as ``similar equipment'' \166\ to which the
generator owner has determined that the cause(s) for the Generator Cold
Weather Reliability Event are also applicable, under R6.2, while also
identifying any similar equipment that will receive a declaration. To
provide the Commission with an ongoing assessment of the risk to the
Bulk-Power System, NERC's plan should include an annual informational
filing to the Commission beginning 12 months after the mandatory and
enforceable date of the Standard. The informational filing should
include data on the seven foregoing categories aggregated at an
appropriate level (e.g.,

Regional Entity, balancing authority, etc.), and an analysis of the
efficacy of the requirements of the Standard based on the data.
Depending on the results of NERC's data collection and analysis, the
Commission will determine whether further modifications are needed to
the Standard.
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    \166\ For example, wind or solar equipment.
---------------------------------------------------------------------------

    96. NERC's plan should also include how it will analyze the
performance of generating units' freeze protection measures
(implemented to provide capability to operate at the Extreme Cold
Weather Temperature) in future extreme cold weather events. Depending
on the results of NERC's data collection and analysis, the Commission
will determine whether further modifications are needed to the
definitions or the Standard.

IV. Information Collection Statement

    97. The information collection requirements contained in this Final
Rule are subject to review by the Office of Management and Budget (OMB)
under section 3507(d) of the Paperwork Reduction Act of 1995.\167\
OMB's regulations require approval of certain information collection
requirements imposed by agency rules.\168\ Upon approval of a
collection of information, OMB will assign an OMB control number and
expiration date. Comments on the collection of information are due
within 60 days of the date this order is published in the Federal
Register. Respondents subject to the filing requirements of this rule
will not be penalized for failing to respond to these collections of
information unless the collections of information display a valid OMB
control number. The Commission solicits comments on the Commission's
need for this information, whether the information will have practical
utility, the accuracy of the burden estimates, ways to enhance the
quality, utility, and clarity of the information to be collected or
retained, and any suggested methods for minimizing respondents' burden,
including the use of automated information techniques.
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    \167\ 44 U.S.C. 3507(d).
    \168\ 5 CFR 1320 (2021).
---------------------------------------------------------------------------

    98. The EOP Standards are currently located in the FERC-725S (OMB
Control No. 1902-0270) collection. The collection is currently approved
by OMB and contains Reliability Standards EOP-010-1, EOP-011-1, EOP-
004-4, EOP 005-3, EOP-006-3, EOP-008-2 (Table 1). In Docket No. RD23-1-
000, the Commission proposes to replace the current OMB approved
Reliability Standard EOP-011-1 \169\ with Reliability Standard EOP-011-
3 (Table 2) and add a new information collection line item for
Reliability Standard EOP-012-1 (Table 3).
---------------------------------------------------------------------------

    \169\ The currently OMB approved FERC-725S includes the burden
related to Reliability Standard EOP-011-1. Reliability Standard EOP-
011-1 was superseded by Reliability Standard EOP-011-2, which was
approved by the Commission in Docket No. RD21-5-000 (issued August
24, 2021). Reliability Standard EOP-011-3, as noted in Docket No.
RD23-1-000, will supersede Reliability Standard EOP-011-2; thus, the
burdens resulting from Reliability Standard EOP-011-3 will be
reflected in the FERC-725S information collection.
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    99. The number of respondents below is based on an estimate of the
NERC compliance registry for balancing authorities, transmission
operators, generator operators, generator owners, and reliability
coordinators. Reliability Standards EOP-011-3 and EOP-012-1 apply to
balancing authorities, transmission operators, generator operators, and
reliability coordinators. The Commission based its paperwork burden
estimates on the NERC compliance registry as of November 4, 2022.
According to the registry, there are 98 balancing authorities, 168
transmission operators, 981 generator operators, 1,107 generator
owners, and 12 reliability coordinators. The estimates in the tables
below are based on the change in burden from the current EOP
Reliability Standards to the Reliability Standards approved in this
order. The Commission based the burden estimates in the tables below on
staff experience, knowledge, and expertise.
    100. The estimates in the tables below are based, in combination,
on one-time (years 1 and 2) and ongoing execution (year 3) obligations
to follow the revised EOP Reliability Standards.
    101. The Reliability Standard EOP-011-3 modifications transfer
Requirements R7 and R8 to Reliability Standard EOP-012-1, as described
below. For Reliability Standard EOP-011-3, transmission operators and
to a much lesser extent, balancing authorities, still have a one-time
cost to modify existing operating plans based on revisions to
Reliability Standard EOP-011-3 (Requirements R1 and R2) and to mitigate
operating emergencies related to cold weather conditions. Additionally,
reliability coordinators will need to review the modified operating
plans of the transmission operators. In year three and ongoing, the
transmission operator and reliability coordinator estimates are lower
to reflect lower paperwork burden for upkeep and review of the
operating plans for emergencies based on the modified Reliability
Standard EOP-011-3 to ensure that the new requirements are in place and
that applicable entities are following those plans.
    102. The new Reliability Standard EOP-012-1, which is applicable to
1,107 generator owners and 981 generator operators, contains several
new requirements and two requirements from Reliability Standard EOP-
011-2 that have been moved to Reliability Standard EOP-012-1. In year
three and ongoing, the estimates are lower to reflect that the
implementation plan(s) to mitigate the reliability effects of extreme
cold weather conditions on generating units are in place and that
entities are familiar with the EOP-012-1 requirements.
    103. Burden Estimates: The Commission estimates the changes in the
annual public reporting burden and cost as indicated in the tables
below:

                                                               Table 1--Current Costs and Burden Related to FERC-725S (1902-0270)
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                                                           Annual number
  Reliability standard and  associated       Number of     of responses    Total number of       Average burden & cost per response      Total annual burden & total annual cost     Cost per
               requirement                  respondents   per respondent      responses                                                                                respondent ($)
                                                     (1)             (2)    (1) * (2) = (3)  (4)......................................  (3) * (4) = (5).........................       (5) / (1)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
EOP-010-1...............................             181               1                181  20 hrs.; $1,660..........................  3,620 hrs.; $300,460....................          $1,660
EOP-011-1...............................              12               1                 12  1,500 hrs.; $124,500.....................  18,000 hrs.; $1,494,000.................         124,500
EOP-004-4, EOP-005-3, EOP-006-3, EOP-008-            280               1                280  250.58 \170\ hrs.; $20,798...............  70,162.4 hrs.; $5,234,440...............          20,798
 2.
                                         -------------------------------------------------------------------------------------------------------------------------------------------------------
    Total EOP...........................             473  ..............  .................  .........................................  91,782 hrs.; $7,028,900.................  ..............
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                                          Table 2--Proposed Changes Due to Final Rule in Docket No. RD23-1-000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Number of
    Reliability standard &      Type\171\ and number      annual          Total number of        Average number of
          requirement                 of entity        responses per         responses           burden hours per             Total burden hours
                                                          entity                                  response \172\
                                (1).................             (2)  (1) * (2) = (3).......  (4)...................  (3) * (4) = (5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                FERC-725S--Proposed estimates due to RD23-1 for EOP-011-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       One Time Estimate--Years 1 and 2 EOP-011-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
EOP-011-3.....................  168 (TOP)...........               1  168...................  60 hrs. $3,893.40.....  10,080 hrs. $654,091.2.
EOP-011-3 \173\...............  98 (BA).............               1  98....................  6 hrs. $389.34........  588 hrs. $38,155.32.
EOP-011-3 \174\...............  12 (RC).............               1  12....................  28 hrs. $1,816.92.....  336 hrs. $21,803.04.
                                                     ---------------------------------------------------------------------------------------------------
    Sub-total of EOP-011-3      ....................  ..............  278...................  ......................  11,004 hrs. $714,049.56.
     (One time).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Ongoing Estimate--Year 3 ongoing EOP-011-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
EOP-011-3 \175\...............  168 (TOP)...........               1  168...................  10 hrs. $648.90.......  1,680 hrs. $109,015.20.
EOP-011-3 \176\...............  98 (BA).............               1  98....................  10 hrs. $648.90.......  980 hrs. $63,592.20.
EOP-011-3 \177\...............  12 (RC).............               1  12....................  14 hrs. $908.46.......  168 hrs. $10,901.52.
                                                     ---------------------------------------------------------------------------------------------------
    Sub-Total of EOP-011-3      ....................  ..............  278...................  ......................  2,828 $183,508.92.
     (ongoing).
                                                     ---------------------------------------------------------------------------------------------------
    Sub-Total of ongoing        ....................  ..............  92.67 (rounded).......  ......................  942.67 hrs. (rounded)
     burden averaged over                                                                                $61,169.64.
     three years.
                                                     ---------------------------------------------------------------------------------------------------
    Proposed Total Burden       ....................  ..............  370.67................  ......................  11,946.67 hrs.
     Estimate of EOP-011-3.                                                                                $775,219.42 (rounded).
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                   Table 3--Proposed Changes Due to Final Rule in Docket No. RD23-1-000 for EOP-012-1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Number of
    Reliability standard &       Type and number of       annual       Total number    Average number of burden
          requirement                  entity          responses per   of responses    hours per  response \178\            Total burden hours
                                                          entity
                                (1).................             (2)     (1) * (2) =  (4).......................  (3) * (4) = (5)
                                                                                (3)
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                                                                       FERC--725S
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       One Time Estimate--Years 1 and 2 EOP-012-1
--------------------------------------------------------------------------------------------------------------------------------------------------------
EOP-012-1 \179\...............  1,107 (GO)..........               1           1,107  150 hrs. $9,733.50........  166,050 hrs. $10,774,984.50.
EOP-012-1.....................  981 (GOP)...........               1             981  10 hrs. $648.90...........  9,810 hrs. $636,570.90.
                                                     ---------------------------------------------------------------------------------------------------
    Sub-Total for EOP-012-1     ....................  ..............           2,088  160 hrs. $10,382.40.......  175,860 hrs. $11,411,555.40.
     (one-time).
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                                                       Ongoing Estimate--Year 3 ongoing EOP-012-1
--------------------------------------------------------------------------------------------------------------------------------------------------------
EOP-012-1.....................  1,107 (GO)..........               1           1,107  40 hrs. $2,595.60.........  40,680 hrs. $2,639,725.20.
EOP-012-1.....................  981 (GOP)...........               1             981  10 hrs. $648.90...........  9,810 hrs. $636,570.90.
                                                     ---------------------------------------------------------------------------------------------------
    Sub-Total for EOP-012-1     ....................  ..............           2,088  50 hrs. $3,244.50.........  50,490 hrs. $3,276,296.10.
     (ongoing).
                                                     ---------------------------------------------------------------------------------------------------
    Sub-Total of ongoing        ....................  ..............             696  ..........................  16,830 hrs. $1,092,098.70.
     burden averaged over
     three years.
                                                     ---------------------------------------------------------------------------------------------------
    Proposed Total Burden       ....................  ..............           2,784  ..........................  192,690 hrs. $12,503,654.10.
     Estimate of EOP-012-1.