[Federal Register: December 3, 2009 (Volume 74, Number 231)]
[Rules and Regulations]
[Page 63288-63307]
[DOCID:fr03de09-4]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 38

[Docket No. RM05-5-013; Order No. 676-E]

Standards for Business Practices and Communication Protocols for
Public Utilities

Issued November 24, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
revising its regulations to incorporate by reference in its regulations
at 18 CFR 38.2 the latest version (Version 002.1) of certain business
practice standards adopted by the Wholesale Electric Quadrant of the
North American Energy Standards Board (NAESB). NAESB's Version 002.1
Standards include standards adopted by NAESB in response to Order Nos.
890, 890-A, and

890-B. The Version 002.1 Standards we are incorporating by reference in
this Final Rule modify NAESB's Commercial Timing Table (WEQ-004
Appendix D) and Transmission Loading Relief Standards (WEQ-008) to
provide clarity and align NAESB's business practice standards with the
reliability standards adopted by the North American Electric
Reliability Corporation, and amend certain ancillary services
definitions appearing in the Open Access Same-Time Information Systems
Standards (WEQ-001) relating to the inclusion of demand response
resources as potential providers of ancillary services. Incorporating
these revised standards by reference into the Commission's regulations
will provide customers with information that will enable them to obtain
transmission service on a non-discriminatory basis and will assist the
Commission in supporting needed infrastructure and the reliability of
the interstate transmission grid.

DATES: Effective Date: This Final Rule will become effective on January
4, 2010. Dates for implementation of the standards are provided in the
Final Rule. The Director of the Federal Register has approved the
incorporation by reference of the standards addressed in the Final Rule
effective January 4, 2010.

FOR FURTHER INFORMATION CONTACT:
Bruce McAllister (technical issues), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER>.
Valerie Roth (technical issues), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER>.
Ryan M. Irwin (technical issues), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER>.
Gary D. Cohen (legal issues), Office of the General Counsel, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Contents

                                                              Paragraph
                                                               numbers

I. Background..............................................            3
II. Discussion.............................................           10
    A. Overview............................................           10
    B. Issues Raised by Commenters.........................           18
        1. Available Transfer Capability-Related Standards.           18
        2. Conditional Firm Service Standards..............           57
        3. Other Issues....................................           83
III. Implementation Dates and Procedures...................          122
    A. Commission Determination............................          126
IV. Notice of Use of Voluntary Consensus Standards.........          131
V. Information Collection Statement........................          132
VI. Environmental Analysis.................................          142
VII. Regulatory Flexibility Act Certification..............          144
VIII. Document Availability................................          146
IX. Effective Date and Congressional Notification..........          149

    1. The Federal Energy Regulatory Commission (Commission) is
amending its regulations under the Federal Power Act (FPA) \1\ to
incorporate by reference the latest version (Version 002.1) of certain
business practice standards adopted by the Wholesale Electric Quadrant
(WEQ) of the North American Energy Standards Board (NAESB). These
revised standards update an earlier version of the standards that the
Commission previously incorporated by reference into its regulations at
18 CFR 38.2 in Order No. 676-C.\2\
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    \1\ 16 U.S.C. 791a, et seq.
    \2\ Standards for Business Practices and Communication Protocols
for Public Utilities, Order No. 676-C, FERC Stats. & Regs., ] 31,274
(2008), order on clarification and reh'g, Order No. 676-D, 124 FERC
] 61,317 (2008).
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    2. The new and revised standards that NAESB adopted in the Version
002.1 standards enable public utilities to implement requirements of
Order Nos. 890, 890-A, and 890-B.\3\ In addition, these standards
modify the Commercial Timing Table (WEQ-004 Appendix D) and
Transmission Loading Relief Standards (WEQ-008) to provide clarity and
align NAESB's business practice standards with the reliability
standards adopted by the North American Electric Reliability
Corporation (NERC), and amend certain ancillary services definitions
appearing in the Open Access Same-Time Information Systems (OASIS)
Standards (WEQ-001) relating to the inclusion of demand response
resources as potential providers of ancillary services.\4\
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    \3\ Preventing Undue Discrimination and Preference in
Transmission Service, Order No. 890, FERC Stats. & Regs. ] 31,241
(2007); order on reh'g, Order No. 890-A, FERC Stats. & Regs. ]
31,261 (2007); order on reh'g and clarification, Order No. 890-B,
123 FERC ] 61,299 (2008).
    \4\ The Version 002.1 Standards also revise the Manual Time
Error Correction Standards (WEQ-006) to maintain consistency with
revised NERC Standard BAL-004, but we are not incorporating this
standard by reference because the Commission's consideration of the
revised BAL-004 is still pending. Thus, the earlier version of WEQ-
006 will remain in force.
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I. Background

    3. NAESB is a non-profit standards development organization
established in January 2002 that serves as an industry forum for the
development of business practice standards that promote a seamless
marketplace for wholesale and retail natural gas and electricity.\5\
Since 1995, NAESB and its predecessor, the Gas Industry Standards
Board, have been accredited members of the American National Standards
Institute (ANSI), complying with ANSI's requirements that its standards
reflect a consensus of the affected industries.\6\
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    \5\ See Standards for Business Practices and Communication
Protocols for Public Utilities, Notice of Proposed Rulemaking, FERC
Stats. & Regs. ] 32,612, at P 3 (2007) (Version 2.1 NOPR).
    \6\ Id.
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    4. NAESB's standards include business practices that streamline the
transactional processes of the natural gas and electric industries, as
well as communication protocols and related standards designed to
improve the efficiency of communication within each industry. NAESB
supports all four quadrants of the gas and electric industries--
wholesale gas, wholesale electric, retail gas, and retail electric. All
participants in the gas and electric industries are eligible to join
NAESB

and participate in standards development.\7\
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    \7\ Id. P 4.
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    5. NAESB's procedures are designed to ensure that all industry
members can have input into the development of a standard, whether or
not they are members of NAESB, and each standard NAESB adopts is
supported by a consensus of the six industry segments: transmission,
generation, marketer/brokers, distribution/load serving entities, end
users, and independent grid operators/planners. Under the WEQ process,
for a standard to be approved, it must receive a super-majority vote of
67 percent of the members of the WEQ's Executive Committee with support
from at least 40 percent of each of the six industry segments.\8\ For
final approval, 67 percent of the WEQ's general membership must ratify
the standards.\9\
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    \8\ Under NAESB's procedures, interested persons may attend and
participate in NAESB committee meetings, and phone conferences, even
if they are not NAESB members.
    \9\ Version 2.1 NOPR, P 5.
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    6. On September 2, 2008, NAESB reported to the Commission that its
WEQ Executive Committee had approved Version 002.0 of its business
practice standards.\10\ NAESB states that its leadership responded to
Order Nos. 890, 890-A, and 890-B, by requesting that its Electronic
Scheduling Subcommittee/Information Technology Subcommittee (ESS/ITS)
and its Business Practice Subcommittee (BPS) coordinate efforts to
address the issues raised by those orders. NAESB states that the ESS/
ITS and BPS worked in close coordination with the pertinent NERC
committees to draft business practice standards on Order No. 890 issues
that complement the NERC reliability standards related to these issues,
so that the standards for both organizations would be consistent.\11\
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    \10\ See NAESB supplemental report dated Nov. 14, 2008.
    \11\ The Commission is addressing the associated reliability
standards adopted by NERC in a companion final rule being issued in
Docket No. RM08-19-000. Mandatory Reliability Standards for the
Calculation of Available Transfer Capability, Capacity Benefit
Margins, Transmission Reliability Margins, Total Transfer
Capability, and Existing Transmission Commitments and Mandatory
Reliability Standards for the Bulk-Power System, Final Rule, FERC
Stats. & Regs. 129 FERC ] 61,155 (ATC Final Rule).
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    7. On February 19, 2009, NAESB notified the Commission that the WEQ
Executive Committee had approved its Version 002.1 standards, which
include both new standards and modifications to existing Version 002.0
standards.\12\ The Version 002.1 standards include new standards
related to capacity benefit margin and rollover rights, and were
developed in response to Order Nos. 890, 890-A, and 676-C. Additional
modifications included in the Version 002.1 standards include: (1)
Modifications to existing standards pertaining to rollover rights; (2)
modifications to the Coordinate Interchange Timing Tables contained in
Appendix D of the Coordinate Interchange Standards (WEQ-004) to clarify
the differences in timing requirements for the Western Electricity
Coordinating Council and all other interconnections, complementary to
the NERC reliability standards; and (3) modifications to the
Transmission Loading Relief--Eastern Interconnection Standards (WEQ-
008) to add clarity and ensure that the business practice standards are
consistent with NERC reliability standard IRO-006. The Version 002.1
standards supersede and fully replace Version 002.0. To simplify our
discussion, unless otherwise stated, we will refer to the new standards
collectively as Version 002.1.
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    \12\ On March 12, 2009, NAESB submitted a report to the
Commission documenting its ratification of the Version 002.1
standards.
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    8. On March 19, 2009, the Commission issued a Notice of Proposed
Rulemaking (NOPR) proposing to incorporate by reference in its
regulations at 18 CFR 38.2 certain \13\ NAESB WEQ Version 002.1
Business Practice Standards.\14\ In response to this notice, thirteen
timely comments, and one late-filed reply comment were filed.\15\
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    \13\ See infra n.6.
    \14\ Standards for Business Practices and Communication
Protocols for Public Utilities, Notice of Proposed Rulemaking, 74 FR
16160 (Apr. 9, 2009), FERC Stats. & Regs. ] 32,640 (Mar. 19, 2009)
(WEQ Version 002.1 NOPR).
    \15\ The Commission will consider all the comments filed in
response to the WEQ Version 002.1 NOPR, including Arizona Public
Service Company's (APS) late-filed reply comment. The Commission
received comments from the following entities: American Wind Energy
Association (AWEA); APS; Bonneville Power Administration
(Bonneville); Duke Energy Corporation (Duke); Electric Power Supply
Association (EPSA); Entergy Services, Inc. (Entergy); ISO/RTO
Council (IRC); National Rural Electric Cooperative Association
(NRECA) and American Public Power Association (APPA) (collectively,
NRECA/APPA); New York Independent System Operator, Inc. (NYISO);
North Carolina Electric Membership Corporation (NCEMC); Open Access
Technology International, Inc. (OATI); TranServ International, Inc.
(TranServ); and Transmission Access Policy Study Group (TAPS).
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    9. On July 7, 2009, and October 9, 2009, NAESB filed reports with
the Commission stating that it made minor corrections to Standards WEQ-
001, WEQ-003, WEQ-004, and WEQ-008, and corrections to Standard WEQ-
008, which consisted of it deleting WEQ-008-1.4 and WEQ-008 Appendix D
from Standard WEQ-008. These corrections were ratified by NAESB's
members and unanimously adopted by WEQ's Executive Committee.

II. Discussion

A. Overview

    10. In this Final Rule, the Commission is amending its regulations
under the FPA to incorporate by reference the NAESB WEQ Version 002.1
standards that the Commission proposed to incorporate in the WEQ
Version 002.1 NOPR.\16\ Most of the changes included in the Version
002.1 standards were made to support the requirements that the
Commission established in Order Nos. 890, 890-A, and 890-B, in which
the Commission took action to prevent undue discrimination under the
pro forma open access transmission tariff (OATT).
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    \16\ Consistent with our proposal in the WEQ Version 002.1 NOPR,
we are not revising our regulations to incorporate by reference the
following standards: Standards of Conduct for Electric Transmission
Providers (WEQ-009); Contracts Related Standards (WEQ-010); and WEQ/
WGQ eTariff Related Standards (WEQ-014). We are not incorporating
WEQ-009 into the Commission's regulations because it contains no
substantive standards and merely serves as a placeholder for future
standards. We are not incorporating WEQ-010 into the Commission's
regulations because this standard contains an optional NAESB
contract regarding funds transfers and the Commission does not
require utilities to use such contracts. We are not incorporating
WEQ-014, eTariff Related Standards, into the Commission's
regulations, because the Commission already has adopted standards
and protocols for electronic tariff filing based on the NAESB
standards. See Electronic Tariff Filings, FERC Stats. & Regs. ]
31,276 (2008). We are not incorporating NAESB's interpretation of
its standards on Gas/Electric Coordination (WEQ-011) into the
Commission's regulations because, while interpretations may provide
useful guidance, they are not determinative and we will not require
utilities to comply with interpretations. Further, as discussed more
specifically below, we are incorporating by reference into the
Commission's regulations portions of WEQ-001, but are not
incorporating the entire standard. Finally, we are not at this time
incorporating by reference NAESB's Manual Time Error Correction
Standards (WEQ-006) because this standard was developed to maintain
consistency with NERC Standard BAL-004, and the Commission's review
of BAL-004 is still pending. Thus, the existing version of WEQ-006
will remain in force.
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    11. In Order No. 890, the Commission specifically requested that
NAESB seek to develop business practice standards governing the terms
and conditions of conditional firm service and the posting requirements
for available transfer capability, its calculation, and other values.
We recognize that NAESB was faced with a difficult task in seeking to
develop industry consensus for standards that establish a set of
business practice and communication standards to govern an entirely new
service (conditional firm service), as well as the other changes
envisioned by Order No. 890. For the most part, the industry has

reached a remarkable level of consensus on these standards. We
recognize that not every standard enjoys universal support, and that
standardization, by its very nature, requires the reconciliation of
different interests and needs. The Commission is satisfied that NAESB's
process was open and fair. We therefore find that deference to the
considered judgment of the consensus of the industry is both reasonable
and appropriate. Although we give great weight to the industry
consensus, we also have reviewed these standards alongside our Order
No. 890 requirements and find that they satisfy these requirements,
except in a small number of cases discussed below.
    12. In the NAESB WEQ Version 002.1 standards, NAESB has included
business practice and technical standards to support conditional firm
service, which will provide additional transmission and flexibility to
customers. Additionally, NAESB has developed standards that govern the
posting requirements for available transfer capability-related
information, including narratives explaining changes in available
transfer capability and total transfer capability, and explaining
underlying load forecast assumptions for available transfer capability
calculations and actual peak load. This will improve transparency for
customers and allows them to validate available transfer capability
calculations.
    13. As to the minor corrections that the NAESB Executive Committee
filed with the Commission on May 29, 2009 and October 9, 2009, the
Commission agrees with NAESB that these corrections are non-substantive
errata corrections, and we will incorporate these corrections by
reference to ensure the standards we adopt are as accurate and up-to-
date as possible.
    14. The specific NAESB standards that we are incorporating by
reference in this Final Rule are:
     Open Access Same-Time Information Systems (OASIS), Version
1.5 (WEQ-001, Version 002.1, March 11, 2009, with minor corrections
applied May 29, 2009 and September 8, 2009); \17\
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    \17\ With the exception of Standards 001-0.1, 001-0.9 through
001-0.13, 001-1.0, 001-9.7, 001-14.1.3, and 001-15.1.2. The Version
1.5 OASIS standards (WEQ-001, WEQ-002, WEQ-003, and WEQ-013) are
included in the NAESB WEQ Version 002.1 Standards. While they are
now developed by NAESB, the OASIS standards were initially developed
by an industry working group, and are therefore designated as both
Version 1.5 and Version 002.1. Version 1.5 references an update to
the designation applied by the original working group, and Version
002.1 references their inclusion in the NAESB WEQ Version 002.1
Standards.
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     Open Access Same-Time Information Systems (OASIS)
Standards & Communications Protocols, Version 1.5 (WEQ-002, Version
002.1, March 11, 2009, with minor corrections applied May 29, 2009 and
September 8, 2009);
     Open Access Same-Time Information Systems (OASIS) Data
Dictionary, Version 1.5 (WEQ-003, Version 002.1, March 11, 2009, with
minor corrections applied May 29, 2009 and September 8, 2009);
     Coordinate Interchange (WEQ-004, Version 002.1, March 11,
2009, with minor corrections applied May 29, 2009 and September 8,
2009);
     Area Control Error (ACE) Equation Special Cases (WEQ-005,
Version 002.1, March 11, 2009, with minor corrections applied May 29,
2009 and September 8, 2009);
     Inadvertent Interchange Payback (WEQ-007, Version 002.1,
March 11, 2009, with minor corrections applied May 29, 2009 and
September 8, 2009);
     Transmission Loading Relief--Eastern Interconnection (WEQ-
008, Version 002.1, March 11, 2009, with minor corrections applied May
29, 2009 and September 8, 2009);
     Gas/Electric Coordination (WEQ-011, Version 002.1, March
11, 2009, with minor corrections applied May 29, 2009 and September 8,
2009);
     Public Key Infrastructure (PKI) (WEQ-012, Version 002.1,
March 11, 2009, with minor corrections applied May 29, 2009 and
September 8, 2009); and
     Open Access Same-Time Information Systems (OASIS)
Implementation Guide, Version 1.5 (WEQ-013, Version 002.1, March 11,
2009, with minor corrections applied May 29, 2009 and September 8,
2009).
    15. The NAESB WEQ approved the Version 002.1 Standards under
NAESB's consensus procedures.\18\ As the Commission found in Order No.
587, adoption of consensus standards is appropriate because the
consensus process helps ensure the reasonableness of the standards by
requiring that the standards draw support from a broad spectrum of
industry participants representing all segments of the industry.
Moreover, since the industry itself has to conduct business under these
standards, the Commission's regulations should reflect those standards
that have the widest possible support. In section 12(d) of the National
Technology Transfer and Advancement Act of 1995 (NTT&AA), Congress
affirmatively requires federal agencies to use technical standards
developed by voluntary consensus standards organizations, like NAESB,
as means to carry out policy objectives or activities.\19\
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    \18\ This process first requires a super-majority vote of 17 out
of 25 members of the WEQ's Executive Committee with support from at
least 40 percent of each of the five industry segments. For final
approval, 67 percent of the WEQ's general membership voting must
ratify the standards.
    \19\ Public Law 104-113, section 12(d), 110 Stat. 775 (1996), 15
U.S.C. 272 note (1997).
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    16. The Commission will require public utilities to modify their
open access transmission tariffs (OATTs) to include the standards that
we are incorporating by reference in this Final Rule. In the past, to
reduce the filing burden, we allowed public utilities to postpone
making a separate tariff filing making this tariff modification and
allowed them to include this revision as part of an unrelated
subsequent tariff filing.\20\ In this case, however, as compliance with
the standards will not be required for more than a year from the
issuance of this rule, we will require the tariff filing to be made at
least 90 days before the compliance date (i.e., on or before the first
day of the first quarter occurring 365 days after approval of the NERC
Reliability Standards being addressed in Docket No. RM08-19-000 by all
applicable regulatory authorities). Public utilities may still, at
their option, combine this tariff filing with an unrelated separate
tariff filing, so long as the tariff filing is made at least 90 days
before the compliance date. As we did in Order No. 676,\21\ we clarify
that, to the extent a public utility's OASIS obligations are
administered by an independent system operator (ISO) or regional
transmission operator (RTO) and are not covered in the public utility's
OATT, the public utility will not need to modify its OATT to include
the OASIS standards.
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    \20\ See Order No. 676, FERC Stats. & Regs. ] 31,216, P 100
(2006). As discussed further below, in order to align the
implementation date for the NAESB WEQ Version 002.1 standards with
that of the related NERC reliability standards being addressed in
the proceeding in Docket No. RM08-19-000, we are not requiring
compliance with the standards we are incorporating by reference in
this Final Rule until the first day of the first quarter occurring
365 days after approval of the referenced Reliability Standards by
all applicable regulatory authorities. In making its required tariff
filing, each filing utility is to use the language specified later
in this order, see infra P 129.
    \21\ Standards for Business Practices and Communication
Protocols for Public Utilities, Final Rule, Order No. 676, FERC
Stats. & Regs. ] 31,216, P 20 (2006).
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    17. The following sections address the issues raised by the
commenters.\22\
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    \22\ In the discussion below, we will discuss the issues raised
by commenters. We are incorporating by reference without further
discussion those standards that were not the subject of any adverse
comments.

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B. Issues Raised by Commenters

1. Available Transfer Capability-Related Standards
    18. In Order No. 890, we directed public utilities, working through
NERC reliability standards and NAESB business practices development
processes, to produce workable solutions to complex and contentious
issues surrounding improving the consistency and transparency of
available transfer capability calculations.\23\ As described in the
NOPR, NAESB developed several standards related to available transfer
capability in response to Order No. 890. First, NAESB modified WEQ-001
to support the transparency reporting and related functions required by
Order No. 890. Second, in response to the available transfer capability
related posting requirements established by the Commission in Order No.
890, NAESB has developed business practice standards in WEQ-001
(including Standards 001-14, 001-15, 001-17, 001-18, 001-19, 001-20 and
Appendix D), WEQ-002, WEQ-003 and WEQ-013 (including Appendices A and
B).\24\ We address below the comments filed with respect to these
standards.
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    \23\ Order No. 890, P 196.
    \24\ Id. P 369 and 371.
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a. Standard 001-13.1.5 (ATC Information Link)
    19. NAESB developed Standard 001-13.1.5, which provides for an ATC
Information Link on OASIS, in close coordination with the NERC
available transfer capability drafting team. Standard 001-13.1.5
replaces NERC MOD-003, which NERC and NAESB determined were better
classified as business practice standards than reliability standards.
    20. In the WEQ Version 002.1 NOPR, the Commission proposed to
incorporate by reference Standard 001-13.1.5, which provides for an ATC
Information Link on OASIS and requires Transmission Providers to post
links to their Available Transfer Capability Implementation Document,
Capacity Benefit Margin Implementation Document, and Transmission
Reserve Margin Implementation Document (as specified in NERC
reliability standards MOD-001-1, MOD-004-1, and MOD-008-1,
respectively). Under NERC Standard MOD-001-1 R3.2, the Available
Transfer Capability Implementation Document must include a
``description of the manner in which the Transmission Service Provider
will account for counterflows.''
    21. In addition, the Commission made clear in the WEQ Version 002.1
NOPR that it expected that the provision in Standard 001-13.1.5
affording Transmission Providers the ability to redact sensitive
information would be implemented by Transmission Providers subject to
the OATT in a manner consistent with the Transmission Provider's
obligation to make that information available to those with a
legitimate need to access the information, subject to appropriate
confidentiality restrictions.
i. Comments
    22. Several commenters \25\ request that the implementation date
for posting the Available Transfer Capability Information Link required
by Standard 001-13.1.5 coincide with the effective implementation date
for implementing the NERC reliability standards relating to available
transfer capability currently before the Commission, as the documents
to which links must be provided under Standard 001-13.1.5 are described
in these NERC standards.
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    \25\ APS at 2-3, Duke at 4, and Entergy at 6-7.
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    23. TAPS \26\ supports the Commission's interpretation of the
proposed business practices, particularly Standard 001-13.1.5.\27\ TAPS
states that it is essential for customers to have timely access to
available transfer capability- and service request-related information.
This will allow customers to verify the amount of transmission that
appears to be available for purchase, thereby enhancing the
Commission's goals of transparency, reliability, and competition.
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    \26\ TAPS is an association of transmission-dependent utilities
in more than 30 states.
    \27\ TAPS at 3-4.
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    24. EPSA is critical of Standard 001-13.1.5. EPSA comments that the
standard affords transmission providers the ability to redact certain
information due to market, security or reliability sensitivity
concerns, but provides no definition or guidance as to what constitutes
such concerns, thereby allowing transmission providers the flexibility
to post whatever information they so choose.\28\ EPSA requests that the
Commission make explicit that nothing in these standards limits
customers' ability to specifically request available transfer
capability-related information subject to appropriate confidentiality
protections and Critical Energy Infrastructure Information (CEII)
requirements, as specified in Order No. 890-A.\29\
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    \28\ EPSA at 16.
    \29\ Order No. 890-A, P 148.
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    25. EPSA also argues that Standard 001-13.1.5 results in a ``fill-
in-the-blank'' standard governing the treatment of counterflows. EPSA
claims that the standard will result in different calculation
methodologies by different transmission providers. Because Standard
001-13.1.5 permits transmission providers to redact information due to
market, security, or reliability sensitivity concerns, EPSA also
contends that transmission providers will have unfettered discretion
with respect to their obligations to post the methodology that they use
to account for counterflows.\30\
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    \30\ EPSA at 17.
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    26. APS requests that the Commission clarify that the
Implementation Documents and Postback Methodology in the NAESB and NERC
standards fulfill the requirements and detail specified in Order No.
890 for Attachment C. If the Commission does not believe that the
Implementation Documents and Postback Methodology from the NERC and
NAESB standards meet the requirements of Order No. 890 for the purpose
of Attachment C, APS requests that the Commission clarify the
difference between the Order No. 890 requirements and the documentation
requirements found in the NERC and NAESB standards.
    27. Additionally, APS asks for clarification that the statement in
Order No. 890 that a ``revised Attachment C to [the] Open Access
Transmission Tariff (OATT) be made within 60 days of completion of the
NERC and NAESB process'' means that a revised Attachment C to the OATT
must be filed within 60 days of the later effective date of the NERC
standards or NAESB standards.\31\
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    \31\ APS at 3.
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ii. Commission Determination
    28. NAESB's Standard 001-13.1.5 represents a consensus approach
agreeable to all six segments of the industry, and is not inconsistent
with Commission policies. Therefore, we will incorporate the standard
by reference as proposed in the WEQ Version 002.1 NOPR.
    29. In response to EPSA's concerns relating to the redaction of
information under Standard 001-13.1.5, we reiterate the statement we
made in the WEQ Version 002.1 NOPR that we expect the provision for a
transmission provider to redact sensitive information from postings to
be implemented by a transmission provider subject to the OATT in a
manner consistent with its obligation to make that information
available to those with a legitimate need to access the information,
subject to appropriate confidentiality

restrictions.\32\ We also clarify that these standards do not limit
transmission customers' ability to request nor relieve transmission
providers of their obligation to provide, subject to appropriate
confidentiality protections and CEII requirements, data relating to the
calculation of available transfer capability, as required by the
Commission in Order Nos. 890 and 890-A.\33\ With these clarifications,
we will incorporate Standard 001-13.1.5 into our regulations as we
proposed in the WEQ Version 002.1 NOPR.
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    \32\ See Order No. 890, P 403-04 (requiring the development of
standard disclosure for timely disclosure of CEII information to
those with a legitimate need for it).
    \33\ See Order No. 890, P 348 and Order No. 890-A, P 148.
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    30. As to EPSA's argument that Standard 001-13.1.5 allows
transmission providers unfettered discretion with respect to their
obligations to post the methodology that they use to account for
counterflows, we again emphasize that we expect transmission providers
subject to the OATT to implement this standard in a manner consistent
with their obligation to make any redacted information available to
those with a legitimate need to access it, subject to appropriate
confidentiality restrictions. Moreover, Order No. 890 did not prescribe
the exact methodology to account for counterflows, nor did it find that
there could only be a single acceptable methodology for determining
this available transfer capability component. The NAESB standards
address the posting requirements for the document. Responsibility for
developing the methodology to account for counterflows rests with NERC,
and not NAESB.\34\
---------------------------------------------------------------------------

    \34\ See MOD-008-1.
---------------------------------------------------------------------------

    31. APS requests clarification that the Implementation Documents
and Postback Methodology required to be posted on OASIS by Standard
001-13.1.5 fulfill the requirements and detail specified in Order No.
890 for Attachment C. The information that the Commission requires
transmission providers to include in their Attachment C and the
information that transmission providers are required to include in
their Implementation Documents under NERC reliability standards MOD-
001-1, MOD-004-1, and MOD-008-1 and Postback Methodology under NAESB
Standard 001-18 (Postback Requirements) are not identical.
    32. For example, some of the required components of an Attachment C
include a detailed description of the specific mathematical algorithm
used to calculate firm and non-firm available transfer capability/
available flowgate capacity for the transmission provider's scheduling
horizon, operating horizon, and planning horizon; a process flow
diagram that illustrates the various steps through which available
transfer capability/available flowgate capacity is calculated; and a
detailed explanation of how each of the available transfer capability
components (including total transfer capability, existing transmission
commitments, capacity benefit margin, and transmission reserve margin)
is calculated for both the operating and planning horizons. In
contrast, some of the requirements of the Implementation Documents
include a description of how the available transfer capability/
available flowgate capacity calculation methodology is implemented; a
description of how the transmission provider will account for
counterflows; the other transmission providers and/or transmission
operators from which a given transmission provider receives data or to
which it supplies data; the procedure and assumptions that a
transmission provider uses to establish capacity benefit margin; the
process through which a load-serving entity can request to set aside or
use capacity benefit margin; and the components used to calculate
transmission reserve margin. Thus, we clarify here that the
Implementation Documents and Postback Methodology are not sufficient to
satisfy the requirements and detail specified in Order No. 890 for
Attachment C, as the information that they require to be posted is not
the same as the information that Commission requires to be included in
Attachment C.
    33. Moreover, the Commission has determined that it is necessary
for the information presented in Attachment C to be included in the
tariff, not simply to be posted on OASIS as is required of the
information included in the Implementation Documents and Postback
Methodology by the Standard 001-13.1.5. In Order No. 890, the
Commission rejected proposals to address the transparency of available
transfer capability methodology by merely referencing business
practices and reliability standards. Specifically, the Commission found
that because available transfer capability calculations have a direct
and tangible effect on the granting of open access transmission
service, ``an accurate and detailed statement of the methodology and
its components that defines how the transmission provider determines
available transfer capability belongs in the transmission provider's
OATT as the means of holding the transmission provider accountable for
following non-discriminatory procedures for granting service, not in
the business practices kept by the transmission provider.'' \35\ Thus,
we likewise clarify here that the Implementation Documents and Postback
Methodology that must be posted on OASIS under Standard 001-13.1.5 are
separate and distinct from the requirements and detail specified in
Order No. 890 for Attachment C, which must be included in the
transmission provider's OATT.\36\
---------------------------------------------------------------------------

    \35\ Order No. 890, P 325.
    \36\ We also note that in the companion rulemaking in Docket No.
RM08-19-000 the Commission found that the requirement to provide
this information is not overly burdensome. See ATC Final Rule at P
147.
---------------------------------------------------------------------------

    34. Lastly, we clarify that the NAESB Version 002.1 standards and
the related NERC reliability standards will have the same
implementation date.\37\ In addition, the revised Attachment C to the
OATT should be filed early enough so that it is approved and in place
by the time the NERC reliability standards become enforceable. This
being the case, we are directing public utilities to file a revised
Attachment C to the OATT on or before 275 days after approval of the
NERC Reliability Standards being addressed in Docket No. RM08-19-000 by
all applicable regulatory authorities. This will leave 90 days for
review and approval of these filings before the NERC reliability
standards become enforceable.
---------------------------------------------------------------------------

    \37\ See supra P 16 & n.20.
---------------------------------------------------------------------------

b. Standards 001-14 and 001-15 (Available Transfer Capability
Narratives)
    35. In the WEQ Version 002.1 NOPR, the Commission proposed to
incorporate by reference Standard 001-14, which was developed by NAESB
to meet the requirement in Order No. 890 for transmission providers to
post a narrative in instances when available transfer capability
remains unchanged at a value of zero for six months or longer. In
addition, the Commission also proposed to incorporate by reference
Standard 001-15, which requires transmission providers to post a brief
narrative that explains the reason for a change in monthly or yearly
available transfer capability values on a constrained path when a
monthly or yearly available transfer capability value changes as a
result of a 10 percent change in total transfer capability.
i. Comments
    36. Entergy requests that the Commission clarify that, where a
transmission provider is not required to convert available flowgate
capability

values to available transfer capability values for posting, the values
to be used to fulfill the posting requirements set forth in Standard
001-14 and 001-15 are the values calculated and posted by the
transmission provider, i.e., in Entergy's circumstance, available
flowgate capability values. Entergy submits that this interpretation is
supported not only by the Commission's statement in Order No. 890-B,
but also by the NERC reliability standards, the inclusion of ``Other''
as reasons for zero available transfer capability in Standard 001-14,
and the specific inclusion of total flowgate capacity as an underlying
assumption in Standard 001-15.\38\
---------------------------------------------------------------------------

    \38\ Entergy at 7-8.
---------------------------------------------------------------------------

    37. EPSA contends that Standard 001-15, while consistent with the
requirements of Order No. 890, does not reflect the underlying goals of
the Commission in Order No. 890.\39\ EPSA argues that the standard
allows transmission providers five business days to post a narrative,
provides no linkage between the duration of the contingency that has
caused the reduction in total transfer capability and the resulting
changes in available transfer capability/available flowgate capability,
and does not require a narrative posting by a transmission provider
when an outage on an adjacent system affects the original transmission
provider's available transfer capability. EPSA states that these
current requirements are insufficient to promote market transparency.
---------------------------------------------------------------------------

    \39\ EPSA at 13.
---------------------------------------------------------------------------

ii. Commission Determination
    38. In this Final Rule, we will incorporate by reference Standards
001-14 and 001-15, with the exception of Standards 001-14.1.3 and 001-
15.1.2. As explained further below, we decline to incorporate Standards
001-14.1.3 and 001-15.1.2 by reference, as they permit transmission
providers to post an available transfer capability change narrative
within five business days of meeting the criteria under which a
narrative is required to be posted, which is inconsistent with the
Commission's rejection in Order No. 890 of delays in posting data.\40\
---------------------------------------------------------------------------

    \40\ Order No. 890, P 370.
---------------------------------------------------------------------------

    39. In regards to Entergy's question of whether the transmission
provider's calculated and posted available flowgate capability values
should be used to fulfill the posting requirements set forth in
Standard 001-14 and 001-15 in instances where there is no requirement
to convert this calculation to available transfer capability values, we
agree with Entergy that this requirement can be met by the transmission
provider posting its available flowgate capability values. As to EPSA's
argument that Standard 001-15 falls short of the goals of Order No.
890, we find that, with the exception of Standard 001-15.1.2,
compliance with Standard 001-15 provides all of the information
required by Order No. 890. However, Standards 001-14.1.3 and 001-15.1.2
permit transmission providers to post an available transfer capability
change narrative within five business days of meeting the criteria
under which a narrative is required to be posted. In Order No. 890, the
Commission rejected calls for delays prior to posting data and required
posting as soon as possible.\41\ We do not find the NAESB standard
meets this criterion and therefore decline to incorporate Standards
001-14.1.3 and 001-15.1.2 by reference. Transmission providers must
post their narratives as soon as feasibly possible. Posting within one
day would appear in most cases to be reasonable.
---------------------------------------------------------------------------

    \41\ Id. P 370, where the Commission rejected calls for delays
prior to posting data, finding that commenters supporting delay had
``proffered no evidence to support the allegation of potential
harm.''
---------------------------------------------------------------------------

c. Standard 001-16.1 (Available Transfer Capability or Available
Flowgate Capability Methodology Questions)
    40. In the WEQ Version 002.1 NOPR, we proposed to incorporate by
reference Standard 001-16.1, which requires transmission providers to
respond to questions about the methodology for calculating available
transfer capability and available flowgate capability. In the NOPR, we
interpreted this standard as requiring the transmission provider to
provide data when necessary to respond to the methodology questions in
order to be consistent with the requirement in Order No. 890 that
transmission providers must, upon request, ``make available all data
used to calculate [available transfer capability] and [total transfer
capability] for any constrained paths and any system planning studies
or specific network impact studies performed for customers.'' \42\
---------------------------------------------------------------------------

    \42\ Id. P 348.
---------------------------------------------------------------------------

i. Comments
    41. TAPS supports the Commission's interpretation of the proposed
business practices for the disclosure of available transfer capability
and transmission service related data. It also supports the
Commission's pro-transparency interpretation of NAESB Standard 001-16.1
which requires transmission providers to provide data used to calculate
available transfer capability and total transfer capability for any
constrained path upon request. TAPS states that timely access to
available transfer capability and service request information and a
transparent and accurate available transfer capability calculation
process will encourage competition.
ii. Commission Determination
    42. Standard 001-16.1 represents a consensus approach agreeable to
all six segments of the industry, and, as we interpret the standard, is
not inconsistent with Commission policies. Therefore, as proposed in
the WEQ Version 002.1 NOPR, we will incorporate Standard 001-16.1 by
reference into our regulations. We reiterate our interpretation of this
standard, as described in the WEQ Version 002.1 NOPR. We expect that
transmission providers will implement this standard in a manner
consistent with the requirement in Order No. 890 that transmission
providers must, upon request, ``make available all data used to
calculate [available transfer capability] and [total transfer
capability] for any constrained paths and any system planning studies
or specific network impact studies performed for customers'' \43\ by
providing data when necessary to respond to methodology questions.
---------------------------------------------------------------------------

    \43\ Order No. 890, P 348.
---------------------------------------------------------------------------

d. Actual and Forecasted Load Posting
    43. Standard 001-17 is one of the standards that NAESB developed in
response to Order No. 890 and addresses the obligations of transmission
providers and ISOs and RTOs to post information concerning their actual
and forecasted peak load.\44\ Specifically, Standard 001-17.2.1 and
Standard 001-17.4.1 require transmission providers and ISOs and RTOs
respectively to post a single maximum hourly megawatt (MW) value for
peak load. Standard 001-17.6.5 requires transmission providers and ISOs
and RTOs to post on the available transfer capability Information Link
a descriptive statement of the current underlying load forecast
assumptions, which must include all weather variables used (e.g.,
temperature, humidity, wind speed, number of measuring points).
---------------------------------------------------------------------------

    \44\ Id. P 413.
---------------------------------------------------------------------------

i. Comments
    44. Several of EPSA's comments relate to the actual and forecasted
load posting requirements described in Standard 001-17. EPSA contends
that Standard 001-17.2.1, Standard 001-17.4.1, and

Standard 001-17.6.5 limit transparency in that they require the posting
of only a single number for peak loads, even where a transmission
provider's internal processes produce multiple (in many cases hourly)
peak forecasts.\45\ In addition, EPSA is concerned that transmission
providers may post the information required by Standard 001-17.2.1 at a
time subject to their discretion.\46\ With regard to Standard 001-
17.6.5, EPSA questions whether a document that includes the weather
variables used to forecast load without providing the assumed values
for each weather variable in a particular forecast adds any useful
information, and therefore any enhanced transparency, to the load
forecasting process.\47\
---------------------------------------------------------------------------

    \45\ EPSA at 9 and 14.
    \46\ Id. at 18.
    \47\ Id. at 9.
---------------------------------------------------------------------------

ii. Commission Determination
    45. Standard 001-17 represents a consensus approach agreeable to
all six segments of the industry. Contrary to EPSA's representations,
we find that this standard satisfies the requirement in Order No. 890
to post load forecasts and actual daily peak load.\48\
---------------------------------------------------------------------------

    \48\ See Order No. 890, P 416, Order No. 890-A, P 143, and Order
No. 890-B, P 34-35.
---------------------------------------------------------------------------

    46. In Order No. 890, the Commission required transmission
providers to post their load forecasts and actual daily peak load for
both system-wide load (including native load) and native load,\49\ not
the data concerning multiple peaks requested by EPSA. In Order No. 890-
B, the Commission clarified that it did not intend for transmission
providers to post all economic and other data that underlies each and
every daily load forecast, but rather the underlying factors used to
make load forecasts that have a significant impact on calculations,
such as temperature forecasts.\50\
---------------------------------------------------------------------------

    \49\ Order No. 890, P 416.
    \50\ Order No. 890-B, P 35.
---------------------------------------------------------------------------

    47. Therefore, we will incorporate Standard 001-17 by reference
into our regulations.
e. Grandfathered Agreements
    48. In response to Order No. 890,\51\ NAESB has developed posting
requirements for some of the components included in the amount of
transfer capability that a transmission provider can set aside for its
native load and other committed uses. As part of this package, Standard
001-19, establishes a mechanism for posting the grandfathered
agreements component of existing transmission commitments associated
with the available transfer capability value posted on OASIS. Under
Standard 001-19.1, transmission providers using available transfer
capability calculation methodologies other than the Flowgate
Methodology must post the aggregate MW value for the grandfathered
agreements. Such data must be posted so that it can be viewed and
queried using the system data template. Standard 1-19.1.2 does not
require transmission providers using the Flowgate Methodology to post
an aggregate MW value that can be viewed and queried using the system
data template. Instead, it requires that the transmission provider must
post a list of Grandfathered Agreements with MW values that are
expected to be scheduled or expected to flow.
---------------------------------------------------------------------------

    \51\ Order No. 890, P 244.
---------------------------------------------------------------------------

i. Comments
    49. TranServ recommends that all transmission providers should be
required to post a list of the grandfathered agreements that are
factored into their available transfer capability methodology, as is
required of transmission providers using the Flowgate Methodology under
Standard 001-19.1.2. TranServ argues that the requirement to post a
single aggregate MW value representing the impact of all grandfathered
agreements on available transfer capability has little additional
value, and that those transmission providers using Flowgate Methodology
may have difficulties identifying the specific impacts of grandfathered
agreements from the aggregate impacts of network and native load
service on their transmission system.
    50. EPSA contends that the requirement to post a single aggregate
MW value for all grandfathered agreements provides insufficient
transparency, particularly as grandfathered agreements represent
allocations of transmission capacity that pre-date the open access
environment and may include non-standard provisions. Thus, transmission
providers may need to make accommodations to incorporate these
commitments into the current structure of OASIS reservations and
available transfer capability calculations. To promote transparency,
EPSA argues that the standard should require information concerning the
duration, MW capacity and the associated point of receipt/point of
delivery and source/sink combinations, the resulting allocation of the
contract provisions to specific transmission interfaces, and the
resulting calculation of the available transfer capability/available
flowgate capability associated with each contract.\52\
---------------------------------------------------------------------------

    \52\ EPSA at 9-11.
---------------------------------------------------------------------------

ii. Commission Determination
    51. One of the Commission's objectives in Order No. 890 was to
reduce the potential for transmission providers to unduly discriminate
when they provide transmission service by limiting their discretion to
calculate available transfer capability using unknown assumptions and
methodologies.\53\ For this reason, the Commission found that ``all
[Available Transfer Capability] components (i.e., [total transfer
capability], [existing transmission commitments], [capacity benefit
margin], and [transmission reliability margin]) and certain data
inputs, data exchange, and assumptions be consistent and that the
number of industry-wide ATC calculation formulas be few in number,
transparent and produce equivalent results.'' \54\ In Order No. 890,
the Commission required that grandfathered transmission rights be
included as committed uses of the transmission system under the
definition of Existing Transmission Commitments.\55\
---------------------------------------------------------------------------

    \53\ The Commission reasoned that the potential for
discrimination is not primarily in the choice of an available
transfer capability calculation methodology, but rather in the
inconsistent application of its components. Order No. 890, P 208.
    \54\ Id. P 207.
    \55\ Id. P 244.
---------------------------------------------------------------------------

    52. As we pointed out in the NOPR, the NAESB standards adopt two
different methods of posting grandfathered agreements, depending on
whether the flowgate methodology is used. Because of the nature of the
flowgate methodology, the standards exempt it from the requirement to
post an aggregate MW value that can be viewed and queried using the
system data template. Instead, the standards require the transmission
provider to post a list of grandfathered agreements with MW values that
are expected to be scheduled or expected to flow. Transmission
providers using available transfer capability calculation methodologies
other than the flowgate methodology are required to make this data
accessible through the system data template.
    53. EPSA and TranServ argue that the complete data on grandfathered
agreements needs to be provided even for those systems that do not
utilize the flowgate methodology. Order No. 890 does not require the
posting of complete data for grandfathered agreements. It required only
that grandfathered agreements be included in the Existing

Transmission Commitments component of available transfer capability.
All six segments of the industry concluded that for transmission
providers not using the flowgate methodology, inclusion of the
aggregate information in the calculations is sufficient, and we find
reasonable the distinctions they have drawn and their determination
that inclusion of grandfathered agreements in the system data template
provides sufficient transparency. Moreover, as we discuss below,
transmission providers must, upon request, provide the basis upon which
they calculate available transfer capability should such information be
requested in a particular circumstance.\56\
---------------------------------------------------------------------------

    \56\ WEQ Standard 001-16.1. See also WEQ Standard 001-13.1.5.
---------------------------------------------------------------------------

f. Availability of Data Used in Available Transfer Capability
Calculations
    54. Standard 001-16.1 requires Transmission Providers to respond to
questions about the methodology for calculating available transfer
capability and available flowgate capability. In the WEQ Version 002.1
NOPR, we stated that we interpreted this standard as requiring the
Transmission Provider to provide data when necessary to respond to the
methodology questions in order to be consistent with the requirement in
Order No. 890 that transmission providers must, upon request, ``make
available all data used to calculate [available transfer capability]
and [total transfer capability] for any constrained paths and any
system planning studies or specific network impact studies performed
for customers.'' \57\
---------------------------------------------------------------------------

    \57\ WEQ Version 002.1 NOPR, P 21.
---------------------------------------------------------------------------

i. Comments
    55. EPSA is concerned that there is a lack of transparency for the
data items used in available transfer capability calculations, and
contends that this issue was not adequately addressed through the NAESB
process. Specifically, EPSA urges the Commission to require not only
that data be made available, but that all underlying data supporting
available transfer capability calculations be required to be posted.
ii. Commission Determination
    56. Standard 001-16.1 represents a consensus approach agreeable to
all six segments of the industry, and satisfies the requirement in
Order No. 890 to make data used in available transfer capability
calculations available. Therefore, as proposed in the WEQ Version 002.1
NOPR, we will incorporate Standard 001-16.1 by reference into our
regulations. As described above, we interpret Standard 001-16.1 as
requiring the Transmission Provider to provide data when necessary to
respond to the methodology questions in order to be consistent with the
requirement in Order No. 890 that transmission providers must, upon
request, ``make available all data used to calculate [available
transfer capability] and [total transfer capability] for any
constrained paths and any system planning studies or specific network
impact studies performed for customers.'' \58\ Since such data will be
available on request, we see no need to impose a more onerous ongoing
posting requirement as requested by EPSA.
---------------------------------------------------------------------------

    \58\ Order No. 890, P 348.
---------------------------------------------------------------------------

2. Conditional Firm Service Standards
    57. In the OASIS Standards, NAESB has included a number of
standards that support conditional firm service as envisioned by the
Commission in Order Nos. 890 and 890-A. NAESB has developed business
practice standards to facilitate the implementation of conditional firm
service, relying on the Commission's description of the attributes of
that service in Order No. 890.\59\ Specifically, NAESB developed
Standards 001-21 through 001-21.5.5 on the Conditional Curtailment
Option, the term that NAESB uses to describe conditional firm service.
These standards address: (1) The limitations and conditions under which
the Conditional Curtailment Option is offered; (2) the posting
requirements for information concerning a Conditional Curtailment
Option reservation and its curtailment criteria; (3) the process for
performing the biennial reassessment; (4) the curtailment of a
Conditional Curtailment Option reservation; and (5) the redirect,
transfer, and resale of a Conditional Curtailment Option reservation.
---------------------------------------------------------------------------

    \59\ Id. P 1043-47.
---------------------------------------------------------------------------

    58. Additionally, NAESB has developed other standards related to
conditional firm service in response to the Commission's requests for
the development of specific standards in Order Nos. 890 and 890-A.\60\
Specifically, NAESB has developed Standard 001-21.1.6, which requires
that transmission providers offer short-term firm service to
conditional firm customers as capacity (that would alleviate the
constraints associated with a Conditional Curtailment Option
reservation) becomes available. In response to Order No. 890-A, NAESB
has created and modified standards in WEQ-001, Appendix C to WEQ-001,
WEQ-002, WEQ-003, WEQ-008 and WEQ-013, to provide a consistent set of
tracking capabilities and business practices for tagging, as a means to
implement conditional firm service.
---------------------------------------------------------------------------

    \60\ Id. P 1078; Order No. 890-A, P 592.
---------------------------------------------------------------------------

    59. The following addresses the comments received on these
proposals.
a. Resales of Transmission Service
    60. Standard 001-11.3.2 governs the conditions under which multiple
transmission service reservations may be aggregated to support a resale
of transmission service. Under Standard 001-11.3.2, transmission
service reservations subject to the terms of a Conditional Curtailment
Option \61\ may not be aggregated to support a resale of transmission
service.
---------------------------------------------------------------------------

    \61\ ``Conditional Curtailment Option'' is the term that NAESB
uses to describe conditional firm service.
---------------------------------------------------------------------------

i. Comments
    61. In their comments, both AWEA and EPSA argue that there is no
basis for treating resales of conditional firm service differently from
resales of other long-term firm service.\62\ Therefore, AWEA and EPSA
request that the Commission direct NAESB to remove the restriction on
aggregating reservations subject to the Conditional Curtailment Option
to support a resale.
---------------------------------------------------------------------------

    \62\ AWEA at 5-6, EPSA at 20.
---------------------------------------------------------------------------

ii. Commission Determination
    62. We will incorporate by reference into our regulations NAESB's
revisions to Standard 001-11.3.2. NAESB's standard does not preclude
the resale of conditional firm service. Such service can be resold as
separate transactions. Unlike other types of long-term firm service,
the conditions imposed in a conditional firm reservation are specific
to the reservation, identified in the system impact study, and
documented in the service agreement. The service agreement is a
customer-specific, non-conforming agreement that must be filed with the
Commission for review and approval. Because the contract terms for
conditional firm service are likely to be different, we find reasonable
NAESB's determination not to create standards for the aggregation of
such transactions.
b. Standard 001-21.1.6
    63. NAESB has developed Standard 001-21.1.6 in response to Order
No. 890, in which the Commission directed transmission providers to
work through NAESB to develop appropriate communication protocols to
assign short-term firm service to conditional firm customers as the
service becomes

available.\63\ Standard 001-21.1.6 requires that transmission providers
offer any available short-term firm capability that would alleviate the
constraint(s) associated with a conditional firm reservation to the
conditional firm customer prior to offering such capability to other
customers.
---------------------------------------------------------------------------

    \63\ Order No. 890, P 1078.
---------------------------------------------------------------------------

i. Comments
    64. In its comments, AWEA is concerned about the ability to
interpret this standard in various ways, and suggests modifications to
the standard to ensure that short-term firm capability is not double
counted.\64\ Both EPSA and AWEA contend that firm available transfer
capability should be decremented when a conditional firm reservation is
provided with short-term firm transfer capability before any additional
short-term firm capability is offered to other transmission
customers.\65\ EPSA requests that the Commission indicate to NAESB that
Standard 001-21.1.6 should be modified to reflect their proposal.
---------------------------------------------------------------------------

    \64\ AWEA at 6-7.
    \65\ EPSA at 21.
---------------------------------------------------------------------------

    65. AWEA is also apprehensive that the proposed NAESB standard does
not address an important aspect of the Conditional Curtailment Option:
How new long-term available transfer capability will be allocated to
Conditional Curtailment Option customers when it becomes available.\66\
AWEA points out that there may be instances when long-term capacity
becomes available after a customer signs a conditional firm contract.
Since Order No. 890 states that conditional firm will be charged at the
same rate as long-term service, AWEA states that conditional firm
customers should have rights to long-term firm available transfer
capability when it becomes available. Accordingly, AWEA urges the
Commission to require clarification of the methodology for allocating
such available transfer capability in the conditional firm service
standard, as it believes this practice should not be left up to the
transmission provider's discretion and should instead be consistent
across the industry.
---------------------------------------------------------------------------

    \66\ AWEA at 7.
---------------------------------------------------------------------------

ii. Commission Determination
    66. Standard 001-21.1.6 is consistent with the Commission's
directive in Order No. 890 \67\ that transmission providers assign
short-term firm service to conditional firm customers as the service
becomes available and represents a consensus approach agreeable to all
six segments of the industry. Therefore, as proposed in the WEQ Version
002.1 NOPR, we will incorporate Standard 001-21.1.6 by reference into
our regulations.
---------------------------------------------------------------------------

    \67\ Order No. 890, P 1078.
---------------------------------------------------------------------------

    67. Both EPSA and AWEA are concerned that available transfer
capability will not be properly decremented to reflect the assignment
of short-term firm service to conditional firm customers. AWEA suggests
that the standard should be modified to ensure that double-counting
does not occur.\68\
---------------------------------------------------------------------------

    \68\ The issue of double-counting data inputs to available
transfer capability calculations affects the reliability of the Bulk
Power System, and is addressed in the companion ATC Final Rule at P
183. See n.11 supra.
---------------------------------------------------------------------------

    68. As to the concerns raised over how new long-term available
transfer capability will be allocated to conditional firm customers
when it becomes available, as AWEA recognizes, in Order No. 890, the
Commission established that conditional firm customers have priority
relative to short term firm capability, and did not provide such
priority with respect to long term firm capability. AWEA did not raise
this issue in the Order No. 890 proceeding, and if it seeks a change to
the priority order established in the rule, it should do so through an
appropriate filing with the Commission. Since NAESB's standard complies
with the requirement of Order No. 890, we are adopting it here.
c. Biennial Reassessment
    69. NAESB developed Standards 001-21 through 001-21.5.5 to
facilitate the implementation of conditional firm service, relying on
the Commission's description of the attributes of that service in Order
No. 890. In its discussion of conditional firm service, the Commission
specified that transmission providers shall have the right to perform a
biennial \69\ reassessment of their ability to continue to reliably
provide conditional firm service for those transmission customers
taking conditional firm service who are unwilling to commit to a
facilities study or the payment of network upgrade costs. When
conducting a biennial reassessment, the transmission provider
reassesses the conditions under which conditional firm service may be
curtailed for those conditional firm service reservations subject to
the system-conditions criteria or the maximum number of hours that
service can be curtailed for those reservations subject to the number-
of-hours criteria. The Commission also determined that a transmission
provider is permitted to waive or extend its right to reassess the
availability of conditional firm service,\70\ so that transmission
providers may offer conditional firm service for a period of longer
than two years without reassessment.
---------------------------------------------------------------------------

    \69\ Biennial is every two years, in contrast to biannual, which
is twice a year.
    \70\ Order No. 890, P 985.
---------------------------------------------------------------------------

i. Comments
    70. Bonneville raises objections to the incorporation by reference
of Standard 001-<IP_ADDRESS>, which allows a transmission provider to waive
its right to perform a biennial reassessment. Bonneville states that
Standard 001-<IP_ADDRESS> is inconsistent with the Commission's policy.
Bonneville argues that the standard should allow a Transmission
Provider the right to extend its reassessment of the conditions for
conditional firm service. Bonneville proposes to modify the NAESB
standard so that it permits transmission providers to extend their
right to perform the biennial reassessment as well as to waive such
right.
ii. Commission Determination
    71. Nothing in Standard 001-<IP_ADDRESS> prevents a Transmission
Provider from extending its right to reassess the availability of
conditional firm service. The standard states that a transmission
provider is permitted to waive its right to conduct a biennial
reassessment, not that a transmission provider is prohibited from
extending the assessment period. Thus, we do not find the requirements
of this standard inconsistent with the requirement in Order No. 890
that a transmission provider may extend its right to reassess the
availability of conditional firm service and, as proposed in the WEQ
Version 002.1 NOPR, will incorporate Standard 001-<IP_ADDRESS> by reference
into our regulations.
    72. However, we reiterate here the Commission's finding in Order
No. 890 that a transmission provider is permitted to extend its right
to reassess the availability of conditional firm service.\71\ Since the
Version 002.1 Standards do not specifically address this issue, we
would ask the industry, working through NAESB, to continue to look at
additional business practice standards facilitating a transmission
provider's extension of its right to perform a reassessment.
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

d. Posting System Conditions
    73. As part of the overall Version 002.1 Standards, the Commission
proposed to incorporate by reference

Standard 001-<IP_ADDRESS>, which is part of a set of standards detailing
the business practices for managing and curtailing transmission service
with a conditional curtailment option. Standard 001-<IP_ADDRESS> requires
transmission providers to post on OASIS the reduction in each impacted
conditional firm reservation prior to or coincident with any
curtailments of conditional firm service at the conditional curtailment
priority level. The conditional curtailment priority level is equal to
that of secondary network transmission service, and is applied when
conditional firm service is not firm in accordance with the terms of
the transmission service agreement. For a conditional firm service
reservation subject to the system conditions criteria, the conditional
curtailment priority level is applied to a conditional firm service
reservation under system conditions specified in the transmission
service agreement. For a conditional firm service reservation subject
to the number of hours criteria, it is applied due to reliability
concerns when the maximum number of hours that service can be curtailed
under the transmission service agreement has not yet been reached.
i. Comments
    74. Entergy seeks Commission clarification on whether this standard
requires the posting of any curtailment of conditional firm service
actually be made ``prior to or coincident with'' the implementation of
the curtailment, in light of the difficulty of making such postings
while managing the reliability of the transmission system in a
congested situation. Entergy urges the Commission to clarify that the
same posting requirements currently in the regulations at 18 CFR
37.6(e)(3) are appropriate for posting curtailments of conditional firm
service.\72\
---------------------------------------------------------------------------

    \72\ Entergy at 5-6. Entergy's comments refer to 18 CFR 33.6,
which is the regulation covering form of notice. We presume that
Entergy intends to refer to 18 CFR 37.6(e)(3). To the extent
Entergy's comments are aimed at 18 CFR 33.6, we see no merit in its
argument, because this regulation governs form of notice for
applications pursuant to section 203 of the Federal Power Act, which
appear to be inapplicable to this issue.
---------------------------------------------------------------------------

    75. Both AWEA and EPSA contend that the standards governing the
provision of conditional firm service lack adequate transparency due to
a deficiency of posting requirements regarding system conditions. Under
a conditional curtailment option subject to the systems-condition
criteria, conditional firm service can be curtailed based on pre-
identified system conditions. To inform their business decisions and to
evaluate the firmness of their reservation at any given time, AWEA and
EPSA argue that transmission customers taking conditional firm service
require the maximum amount of information practical as to the risk that
their service will be curtailed. Therefore, AWEA and EPSA claim that
transmission providers should be required to post information
pertaining to the system conditions in effect at any given time, even
if the event of a single condition alone will not reduce the priority
of the service to non-firm.\73\
---------------------------------------------------------------------------

    \73\ AWEA at 4-5, EPSA at 18-19.
---------------------------------------------------------------------------

ii. Commission Determination
    76. Standard 001-<IP_ADDRESS> represents a consensus approach agreeable
to all six segments of the industry, and is not inconsistent with
Commission policies. Therefore, as proposed in the WEQ Version 002.1
NOPR, we will incorporate Standard 001-<IP_ADDRESS> by reference into our
regulations. As to Entergy's contention that Standard 001-<IP_ADDRESS>
should allow postings consistent with 18 CFR 37.6(e)(3), we note that
18 CFR 37.6(e)(3) does not include any specific time requirements for
the posting. We believe that the timing of when information must be
posted is an important element in providing for transparency and
accountability surrounding the provision of conditional firm service.
Revising the standards to remove any requirement as to when information
must be posted would severely diminish the achievement of both of those
goals. Thus, we will require the posting to be made ``prior to or
coincident with'' as provided in the standard.
    77. As to the concern raised by AWEA and EPSA about the lack of
transparency regarding the conditions leading to curtailments, these
commenters failed to persuade a majority of NAESB members to adopt
their requests to impose posting obligations that exceed the
requirements of Order No. 890. The requested postings would appear to
impose a continuous burden on transmission providers which, in light of
the non-curtailment status of the system for most of the time
intervals, does not appear to be warranted. Given that the current
NAESB standard satisfies the Order No. 890 requirements, we will
incorporate the standard by reference.
e. Redirects of Conditional Firm Service
    78. NAESB developed and adopted Standard 001-<IP_ADDRESS> as part of
its response to the Commission's directive in Order No. 890 to
implement conditional firm service; it provides that redirects of
conditional firm service do not affect the conditions applicable to the
parent reservation.
i. Comments
    79. When the evaluation of a request for a redirect of conditional
firm service indicates that such redirected service can be provided
without conditions, Entergy requests clarification that under Standard
001-<IP_ADDRESS> ``such service may be granted without the application of
conditions so long as conditions are retained on the Parent
Reservation.'' \74\
---------------------------------------------------------------------------

    \74\ Entergy at 6.
---------------------------------------------------------------------------

ii. Commission Determination
    80. Standard 001-<IP_ADDRESS> represents a consensus approach agreeable
to all six segments of the industry, and is not inconsistent with
Commission policies. Therefore, as proposed in the WEQ Version 002.1
NOPR, we will incorporate Standard 001-<IP_ADDRESS> by reference into our
regulations, as we proposed in the WEQ Version 002.1 NOPR. As to
Entergy's request for clarification, we find no reason why the
condition should apply if the evaluation of a request for redirect of
conditional firm service shows that such redirected service can be
provided without conditions. We note, however, that under Standard 001-
<IP_ADDRESS>, the condition would remain on the parent reservation.
f. Accounting for Conditional Firm Service in Available Transfer
Capability Calculations
i. Comments
    81. EPSA contends that there is no standard governing the treatment
of conditional firm service in available transfer capability
calculations or requiring transmission providers to post the
methodology that they use to account for conditional firm service in
these calculations. Thus, EPSA argues that the Version 002.1 Standards
give the transmission provider too much discretion.\75\
---------------------------------------------------------------------------

    \75\ EPSA at 20-21.
---------------------------------------------------------------------------

ii. Commission Determination
    82. We agree with EPSA that the Version 002.1 standards do not
provide a uniform methodology for treating conditional firm service in
available transfer capability calculations. But Order No. 890 did not
request NAESB to develop the methodology for transfer capability
calculations. NERC has developed Standard MOD-001-1 which requires that
the Available Transfer Capability Implementation Document (required by
NAESB Standard 001-13.1.5 to be posted on OASIS) includes

information describing how the available transfer capability
methodology is implemented ``in such detail that, given the same
information used by the Transmission Service Provider, the results of
the [available transfer capability] or [available flowgate capacity]
calculations can be validated.'' \76\ Therefore, the methodology used
to calculate available transfer capability or available flowgate
capability as described in the Available Transfer Capability
Implementation Document will be posted on OASIS and should include the
treatment of conditional firm service if such calculations are to be
replicable. We also note that pursuant to the requirements of Order No.
890 and Standard 001-16.1, this information nevertheless must be
provided upon request. Because the methodology used to account for
conditional firm service in available transfer capability calculations
could affect the reliability of the Bulk-Power System, the appropriate
forum for addressing EPSA's concern relating to the lack of a standard
governing the treatment of conditional firm service in such
calculations is the NERC standards development process.
---------------------------------------------------------------------------

    \76\ NERC Standard MOD-001-1 R3.1.
---------------------------------------------------------------------------

3. Other Issues
a. Transmission Request Priority
    83. NAESB revised Standard 001-4.16 to complement the Commission's
policies regarding pre-confirmed transmission service requests,\77\ as
articulated in Order No. 890. As required by Order No. 890, NAESB
standards ``give priority only to pre-confirmed non-firm point-to-point
transmission service requests and short-term firm point-to-point
transmission service requests'' \78\ and provide that ``longer duration
requests for transmission service will continue to have priority over
shorter duration requests for transmission service, with pre-
confirmation serving as a tie-breaker for requests of equal duration.''
\79\ In addition, as requested by the Commission in Order No. 890,
NAESB has developed a consensus solution to the question of whether a
transmission customer should be prohibited from changing a request into
a pre-confirmed request.\80\
---------------------------------------------------------------------------

    \77\ Under the OATT, there are two types of transmission service
requests. One type of request involves three steps: (1) A
prospective shipper requesting service; (2) the transmission
operator processing that request and responding; and (3) the
prospective shipper ``confirming'' its request. The second type of
request has only two steps: (1) The prospective shipper ``pre-
confirms'' its request with the initial submission; and (2) if the
transmission operator unconditionally grants the request, it is
deemed confirmed without further contractual communications. Thus,
pre-confirmed transmission service requests are those requests for
which the transmission customer commits to purchasing the requested
transmission service if the transmission provider grants the full
amount of capability requested for the full duration requested.
    \78\ Order No. 890, P 1401.
    \79\ Id.
    \80\ Id. P 1392.
---------------------------------------------------------------------------

    84. The issue raised in the comments relates to whether daily
network service can preempt short-term firm service under Standard 001-
4.16. This standard includes Table 4-3, which illustrates the relative
queue priorities of competing transmission service requests and
reservations. In addition, the table describes the conditions under
which a subsequent request can preempt a previously queued request or
reservation, as well as the rules for offering a right-of-first-
refusal.
    85. Two previously adopted standards also address the queue
priority for non-firm transmission service requests, i.e., Standards
001-4.22 and 001-4.25. Standard 001-4.22 states that, once confirmed, a
non-firm point-to-point request may not be displaced by a subsequent
non-firm point-to-point request of equal duration and higher price.
After a transmission provider has offered to provide non-firm
transmission service to a transmission customer at a given price, the
transmission customer is afforded a prescribed time limit within which
to confirm the request. Standard 001-4.25 states that a transmission
provider may not pre-empt a customer's request in favor of a subsequent
request of the same Tier and equal duration at a higher price while the
customer considers whether to confirm its request during the Customer
Confirmation Time Limit, unless the subsequent request is submitted as
pre-confirmed.
i. Comments
    86. TranServ claims that, under Table 4-3, a request for
designation of a new network resource for a single day could
potentially preempt all confirmed (but conditional) short-term firm
point-to-point reservations, and that those transmission customers
whose reservations were displaced would be unable to retain their
service. TranServ suggests that designation of a new network resource
for terms less than 12 months should be considered for preemption on a
par with point-to-point services. At a minimum, it argues that requests
to designate a new network resource should be eligible to preempt only
those point-to-point reservations of equal or shorter duration. In
addition, TranServ requests Commission guidance as to whether longer
term point-to-point requests should have any rights to preempt a
shorter term network resource designation and whether a transmission
customer whose point-to-point reservation has been displaced by a
longer term request to designate a network resource has a right-of-
first-refusal to modify its request to match the requested longer
duration of the competing service request so it can retain its service
priority.\81\
---------------------------------------------------------------------------

    \81\ TranServ at 4-5.
---------------------------------------------------------------------------

    87. In its reply comments, APS opposes TranServ's proposal to allow
point-to-point services the same queue priority as network customers,
contending it diminishes the value of network service, which is a long
term service, to be on par with that of shorter term point-to-point
service requests.
    88. TranServ also notes that while confirmed but conditional short-
term firm reservations may be preempted based on price, confirmed non-
firm reservations and unconfirmed (but within the Customer Confirmation
Time Limit) non-firm requests in response to which the transmission
provider has offered service may not be preempted by subsequent
requests based on price, as described in Standards 001-4.22 and 001-
4.25. TranServ requests that the Commission advise the industry as to
whether this disparate treatment of firm and non-firm service with
regard to preemption based on price should be eliminated from the
standards. Specifically, TranServ asks if Table 4-3 should be revised
to include the preemption of non-firm reservations based on price and
if Standards 001-4.22 and 001-4.25 should be removed.\82\
---------------------------------------------------------------------------

    \82\ Id. at 5-6.
---------------------------------------------------------------------------

ii. Commission Determination
    89. TranServ's comments raise two separate arguments. First,
TranServ argues that daily network service should not displace short-
term firm reservations while those requests are still conditional.
Standard 001-4.16 and Table 4-3, which govern the queue priorities of
competing transmission service requests and reservations, reflects the
Commission's policies articulated in Order No. 890,\83\ and are
consistent with our determinations in that order. As specified in the
pro forma OATT, network service (regardless of contract duration) and
long-term firm service (over a year) have equal reservation priority
that is higher than any short-term firm service. Both network and long-
term firm service can preempt short-term firm service before

the conditional reservation deadlines have expired (i.e., one day
before the commencement of daily service, one week before the
commencement of weekly service, and one month before the commencement
of monthly service).\84\ In Order No. 890, the Commission clarified
that the minimum term for the designation of new network resources
should be the same as the minimum time period used for firm point-to-
point service (i.e., daily).\85\
---------------------------------------------------------------------------

    \83\ See Order No. 890, P 1505.
    \84\ Pro forma OATT, section 13.2.
    \85\ Order No. 890, P 1505.
---------------------------------------------------------------------------

    90. Because the priority of network service of any duration is
higher than that of short-term firm service, it will preempt short-term
firm service during the conditional reservation period even if the
short-term firm service is of longer duration. Therefore, the queue
priority described in Standard 001-4.16 and Table 4-3 is consistent
with the pro forma OATT, and we will incorporate by reference Standard
001-4.16 and Table 4-3 as proposed in the NOPR. Moreover, under the pro
forma OATT, a customer whose reservation has been preempted does not
have a right to modify its request to match the priority of the
competing service request.
    91. Second, TranServ contends that previously adopted standards
should be modified to allow non-firm reservations to be preempted based
on price. It argues that the same pricing rules that apply to firm
services, which permit preemption based on price during the conditional
reservation period, also should apply to non-firm service.
    92. We note that the standards in question, Standards 001-4.22 and
001-4.25 (governing the queue priority for non-firm transmission
service requests), were incorporated by reference in Order No. 676,\86\
issued in 2006. These standards are not revised in Version 002.0 or
002.1 of the standards. Thus, TransServ's contention is beyond the
scope of this proceeding.
---------------------------------------------------------------------------

    \86\ See Order No. 676, P 19.
---------------------------------------------------------------------------

    93. In addition, we note that these standards are consistent with
the pro forma OATT and prior Commission determinations. Under the pro
forma OATT, the conditional reservation period applies only to firm
requests for service, not to non-firm service.\87\ Therefore, the NAESB
standards are consistent with the Commission policies.
---------------------------------------------------------------------------

    \87\ Open Access Same-Time Information System and Standards of
Conduct, Final Rule, Order No. 638, FERC Stats. & Regs. ] 31,093, at
31,437 (2000).
---------------------------------------------------------------------------

b. Rollover Rights for Redirects
    94. In the WEQ Version 002.1 NOPR, the Commission proposed to
incorporate by reference new and modified standards that relate to
rollover rights. The Commission recognized that the filed NAESB
standards represented only the first part of a two part process through
which NAESB will fully develop standards that are consistent with the
Commission's policy on rollover rights as articulated in Order Nos.
676, 890, and 890-A. In the Version 002.1 Standards submitted to the
Commission as part of the first part of the aforementioned two part
process, NAESB included a new definition for Unexercised Rollover
Rights in WEQ-001, as well as other modifications to existing standards
in WEQ-001, WEQ-003, and WEQ-013. In its Version 002.1 filing letter of
February 19, 2009, NAESB stated that the second part of this process
would include modifications to Standard 001-9.7, as directed by Order
No. 890. NAESB also indicated that it anticipates that the results of
the second part of the process will be included in a new Version 002.2
set of business practice standards, which NAESB expects will be
published in the first quarter of 2010.
i. Comments
    95. Two commenters requested that the Commission not incorporate by
reference standards related to rollover rights for redirects.\88\ Duke
states that the standards developed in the first part of the process
were ratified by the NAESB membership with the understanding that they
would not be significantly modified during the second part of the
process. However, as Duke points out, certain standards were
substantially revised and a new definition for ``Unexercised Rollover
Rights'' was created and included in the recommendation posted for
formal comment by the Electronic Scheduling Subcommittee/Information
Technology Subcommittee of NAESB. Therefore, Duke requests that the
Commission defer action on these standards until the second installment
of the standards is submitted. IRC agrees.
---------------------------------------------------------------------------

    \88\ Duke at 5; ISO Council at 4-5.
---------------------------------------------------------------------------

ii. Commission Determination
    96. We recognize that the standards relating to rollover rights for
redirects included in the Version 002.1 Standards represent only the
first part of a two-part process. In addition, we understand that both
Duke and IRC are concerned that the standards currently before the
Commission have been substantially revised in the second part of the
two part process. However, neither Duke nor IRC has expressed any
substantive concerns with the standards currently before the
Commission, or offered any suggested alternative to the filed
standards. Given these circumstances and because we find no
inconsistency between the standards governing rollover rights for
redirects of transmission service in the Version 002.1 Standards and
Order No. 890 and the Commission's regulations, we will incorporate
these standards by reference. We expect that should Duke, IRC, or any
other party have concerns with the standards being developed during the
second part of the process that they will be able to raise these
concerns within the NAESB process and work to achieve a consensus
solution acceptable to all industry segments. We reserve judgment on
any phase two standards governing rollover rights for redirects of
transmission service until such time as these standards are developed
and filed with the Commission for review.
c. Standard 002-5.10
    97. Standard 002-5.10 requires that all template interactions with
OASIS be updated to reflect the Version 1.5 OASIS standards within six
months of the Version 002.1 Standards becoming effective.\89\ During
this six month implementation period, the standards require that OASIS
nodes must also continue to support the Version 1.4 templates. The WEQ
Version 002.1 NOPR did not propose a specific implementation date for
compliance with any standards incorporated by reference by the
Commission in a final rule.
---------------------------------------------------------------------------

    \89\ As explained above, see n.17 supra, the Version 1.5 OASIS
Standards form part of the Version 002.1 Business Practice Standards
package.
---------------------------------------------------------------------------

i. Comment
    98. Entergy requests clarification that Standard 002-5.10 is
applicable only to the actual implementation of updated templates and
not to the additional required OASIS functionalities proposed in the
Version 002.1 Standards, which may require modification to or
development of supporting software applications.\90\
---------------------------------------------------------------------------

    \90\ Entergy at 4-5.
---------------------------------------------------------------------------

ii. Commission Determination
    99. The Commission will grant the requested clarification. The
Commission finds that Standard 002-5.10 is applicable only to the
actual implementation of updated templates and not to the additional
required OASIS functionalities proposed in the Version 002.1 Standards,
which may require modification to or development of supporting software
applications. As discussed in the Implementation section

of this Final Rule,\91\ the Commission is not requiring compliance with
the OASIS requirements established in this rule before the first day of
the first quarter occurring 365 days after approval of the referenced
NERC Reliability Standards by all applicable regulatory authorities.
---------------------------------------------------------------------------

    \91\ See infra P 126.
---------------------------------------------------------------------------

d. Order No. 717 Issues
    100. In the WEQ Version 002.1 NOPR, the Commission recognized that
a specific standard, Standard 001-13.1.2, contained references to
Commission regulations regarding the posting of Standards of Conduct-
related information. These regulations were revised by Order No.
717.\92\ The Commission went on to acknowledge that the references in
the standard were no longer accurate and did not conform to the
Commission's current requirements, and therefore did not propose to
require public utilities to comply with any portion of the standard
that was inconsistent with Order No. 717.
---------------------------------------------------------------------------

    \92\ Standards of Conduct for Transmission Providers, Order No.
717, 73 FR 63796, FERC Stats. & Regs ] 31,280 (2008).
---------------------------------------------------------------------------

i. Comments
    101. Duke \93\ requests that the Commission not adopt NAESB
standards that conflict with Order No. 717, and instead adopt the
revised NAESB standards whenever they are filed with the
Commission.\94\ Or, in the alternative, Duke states the Commission
should provide greater clarity that transmission service providers do
not have to comply with any posting or other requirements in the
approved NAESB standards that have been revised by Order No. 717.\95\
Similarly, APS requests that the Commission decline to incorporate by
reference Standard 001-<IP_ADDRESS>.2 (which states that waivers of the
Biennial Reassessment be posted on OASIS as a discretionary action)
because such posting of discretionary actions is no longer required
under Order No. 717.\96\
---------------------------------------------------------------------------

    \93\ Duke at 3-4.
    \94\ Duke states that NAESB's Executive Committee approved
modifications to the business practices to make them consistent with
Order No. 717 on May 12, 2009, and they believe NAESB will ``file
these standards with the Commission soon.''
    \95\ For instance, Duke references standards WEQ 001-13.1.2, WEQ
001-<IP_ADDRESS>.2, WEQ 001-13.1, and WEQ 002-3.4b(ii) as examples of
standards containing posting requirements that are no longer
required by Order No. 717.
    \96\ APS at 4.
---------------------------------------------------------------------------

ii. Commission Determination
    102. We addressed this concern in the WEQ Version 002.1 NOPR, in
which we stated that ``we do not propose to require public utilities to
comply with any portion of the standard that requires information to be
posted in a manner inconsistent with Order No. 717.'' While this
statement related directly to Standard 001-13.1.2, we clarify here that
we will not require public utilities to comply with any portion of the
Version 002.1 standards that requires information to be posted in a
manner inconsistent with Order No. 717.
e. Coordination of Requests Across Multiple Transmission Systems
    103. In Order No. 890, the Commission directed transmission
providers, working through NAESB, ``to develop business practice
standards related to coordination of requests across multiple
transmission systems.'' \97\
---------------------------------------------------------------------------

    \97\ Order No. 890, P 1377.
---------------------------------------------------------------------------

i. Comments
    104. North Carolina Electric Membership Cooperative (NCEMC) urges
the Commission to monitor closely NAESB's progress on developing
standards for the coordination of transmission service requests across
multiple transmission systems, including requiring status reports as
appropriate. NCEMC argues that they have experienced difficulties when
trying to conduct transactions across two transmission providers'
systems. Because this issue was originally addressed by the Commission
in response to comments filed by TDU Systems almost three years ago,
NCEMC believes that it is necessary for the Commission to exert more
pressure on NAESB to develop this standard, as they have yet to begin
drafting it.
ii. Commission Determination
    105. We agree that insufficient progress has been made on this
issue. While we acknowledge that development of standards addressing
this issue is included in NAESB's 2009 WEQ Annual Plan,\98\ we
nevertheless urge NAESB to address this issue as soon as possible.
Accordingly, we request that NAESB provide the Commission with a status
report concerning its progress on this issue every six months, counting
from the date this final rule is published in the Federal Register,
until NAESB's adoption of the applicable standard(s).
---------------------------------------------------------------------------

    \98\ Item 2, (a), (iii), 1.
---------------------------------------------------------------------------

f. Waivers
    106. NYISO asks the Commission to take the opportunity to
reconsider its position regarding the process for filing waivers. NYISO
states that it currently is required to make a waiver filing every time
the Commission incorporates a revised NAESB standard. It asks the
Commission to revise this process so that recipients of waivers only
need to file requests to renew their waivers when NAESB adopts (and the
Commission incorporates by reference) new standards or revises existing
ones in a substantive way. NYISO argues that tracking, analyzing and
making frequent waiver filings are burdensome tasks and do not benefit
NYISO.
i. Commission Determination
    107. When the Commission adopts new requirements, it is incumbent
on a public utility that wishes to maintain an existing waiver to
making a showing to the Commission that, based on the particular facts
at issue, the waiver should continue. The determination of whether a
waiver from a prior requirement should apply to a revised requirement
is one that needs to be made on a case-by-case basis. We do not agree
that waivers should automatically be extended without Commission review
and approval. Accordingly, we deny NYISO's request.
g. Suggestion To Develop Revised Standards on Available Flowgate
Capability/Total Flowgate Capability Postings
    108. NERC Standard MOD-030-02 R11 provides definitions of Available
Flowgate Capacity and Total Flowgate Capability and a formula to
convert Available Flowgate Capacity to Available Transfer Capability.
In Order No. 890, the Commission directed public utilities, working
through NERC, to develop in the MOD-001 standard a rule to convert
available flowgate capacity into available transfer capability
values.\99\
---------------------------------------------------------------------------

    \99\ Order No. 890, P 211.
---------------------------------------------------------------------------

i. Comments
    109. TranServ comments they are not in support of posting of flow-
based Available Flowgate Capacity and the related transmission system
metrics used to convert Available Flowgate Capacity to an effective
Available Transfer Capability. It seeks clarification on how the
requirements of 18 CFR 37.6 to post Available Transfer Capability,
Total Transfer Capability, Capacity Benefit Margin and Transmission
Reliability Margin are to be addressed by a Transmission Provider
selecting to use the Flow-based Available Transfer Capability
Methodology as specified in NERC Standard MOD-030. It further states
there is no guidance on how the Transmission Provider is to convert a

Total Flowgate Capability to an effective path Total Transfer
Capability, nor how to convert flowgate Capacity Benefit Margin or
Transmission Reliability Margin into an equivalent path-based value.
TranServ also requests that the Commission direct either NAESB or NERC
to provide the necessary computational standards to meet the
Commission's posting requirements of 18 CFR 37.6.
ii. Commission Determination
    110. Responsibility for developing an acceptable formula to convert
available flowgate capacity to available transfer capability rests with
NERC, and not NAESB. Our focus in this rulemaking is to evaluate
NAESB's revised business practice standards, and the comments filed in
response to our NOPR, to determine whether we should incorporate
NAESB's revised standards by reference into our regulations. Thus, we
find that this issue is beyond the scope of this proceeding.
h. Incorporation by Reference
i. Comments
    111. While NRECA and APPA\100\ do not object to the substance of
the NAESB standards, they oppose the Commission's proposal to
incorporate by reference non-public standards into its regulations and
the OATTs of public utilities. NRECA and APPA claim that by
incorporating standards by reference, the Commission is depriving those
industry participants that are unable to participate in the time- and
resource-intensive NAESB standards development process of adequate
notice or a reasonable opportunity to comment on the standards before
they are enacted. They argue that the Commission's ordinary notice and
comment rulemaking process is more cost-effective for smaller
stakeholders, as they are provided with the opportunity to submit
comments before a neutral arbiter without incurring the costs involved
in the time- and resource-intensive private standards development
process. In addition, NRECA and APPA contend that, because these
standards are incorporated by reference, industry participants without
knowledge of, or practical access to, these rules may have to defend
themselves against enforcement action by the Commission based on
alleged noncompliance with the standards. Specifically, NRECA and APPA
cite the enhancement of the Commission's civil penalty authority in
EPAct 2005 and the possibility that such penalties could be enforced
against transmission customers for violations of the OATT.
---------------------------------------------------------------------------

    \100\ NCEMC supports the comments filed by NRECA and APPA.
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    112. Additionally, NRECA and APPA claim that the Commission has
taken the National Technology Transfer and Advancement Act of 1995
(NTT&AA) out of context, as it applies to practices regarding federal
procurement contracts and places no affirmative obligations on agencies
outside of that context.
    113. Therefore, they contend that the Commission can and should
reproduce the content of the standards in order to provide for greater
transparency and compliance.
    114. To address these issues, NRECA and APPA recommend that the
Commission ``(1) cease incorporating NAESB standards by reference into
the pro forma OATT and instead promulgate its standards by ordinary
notice and comment rulemaking; (2) provide substantially greater access
to those materials that are promulgated in regulations; (3) or, at a
minimum, clarify that FERC will not attempt to assess civil penalties
on transmission customers for violations of standards that have merely
been incorporated by reference into regulations and OATTs of public
utilities.'' \101\ To support their position for Commission publication
of the standards, NRECA and APPA claim that the United States Court of
Appeals for the Fifth Circuit clarified that the contents of privately
developed standards are not subject to copyright protections once
incorporated.\102\
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    \101\ NRECA and APPA at 7.
    \102\ NRECA and APPA at 9. These commenters cite Veeck v.
Southern Building Code Congress International, Inc., 293 F.3d 791
(5th Cir. 2002), cert. denied, 539 U.S. 969 (2003) (Veeck) for the
proposition that a model code incorporated into the law becomes part
of the ``public domain'' and, therefore, is not copyrightable. They
also cite John G. Danielson, Inc. v. Winchester-Conant Properties,
Inc., 322 F.3d 26, 39 (1st Cir. 2003) (Danielson) as supporting this
proposition.
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ii. Commission Determination
    115. When the Commission first began to establish technical
standards for communication protocols and business practices for the
gas and electric industries, the Commission sponsored technical
conferences and meetings at which all industry participants were
entitled to participate. For example, when the Commission sponsored the
process leading up to the OASIS standards adopted in Order No. 889, it
relied on two ad hoc committees comprised of volunteers who offered to
host and conduct their own meetings, open to participants from various
industry sectors and attended by staff observers, to seek consensus on
proposed OASIS standards. These committees had no formal structure or
voting rules.
    116. The NAESB process for both the gas and electric industries
resulted in streamlining the standards development process and making
it more efficient by creating regularized procedures and voting rules.
Under the NAESB approved ANSI consensus procedures, each industry
segment is represented and it is no longer necessary for all
participants to attend conferences at the Commission in order to ensure
their votes are heard. They can now participate either directly or
indirectly through their industry representatives at NAESB. From our
experience, the NAESB process is far more efficient and cost effective
method of developing technical standards for the industries involved
than the use of a notice and comment rulemaking process involving
numerous technical conferences in Washington that all believe they have
to attend.
    117. While the NAESB process includes numerous volunteers from the
industries, NAESB incurs administrative expenses which it must cover.
Membership dues and fees for obtaining standards provide a reasonable
means of obtaining the necessary revenue stream.\103\ When the
Commission weighed the advantages achieved by the NAESB standards
development process against the cost to the Commission and the industry
of developing these standards through notice and comment rulemaking, we
found, and continue to find, that the benefits of having a well-
established, consensus process outweigh whatever costs non-members may
incur in having to obtain copies of the standards.
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    \103\ American National Standards Institute, Why Charge for
Standards, http://www.ansi.org/help/charge_
standards.aspx?menuid=help. Without such a revenue source, the
Commission would have to consider imposing mandatory charges,
similar to the mandatory charges to support NERC. 18 CFR 39.4(e).
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    118. In choosing to take advantage of the efficiency of the NAESB
process, we followed the government regulations that require the use of
incorporation by reference. These rules appropriately balance the
interest of the standards organization and the expediency of
governmental use of privately developed standards. Under section 552(a)
of title 5, material may be incorporated by reference when such
material is reasonably available to the public. Under the regulations
adopted by the Federal Register, material incorporated by reference is
maintained at the Office of the Federal Register for public
viewing.\104\ As part of the

incorporation process, the material also must be available and
obtainable by the user.\105\ As we have pointed out in past orders, the
NAESB standards are easily and readily available from NAESB, as well as
being available at the Commission and the Office of the Federal
Register. For example, for those who want to view the standards in
order to make comments with the Commission, NAESB makes the standards
available for free for a three day period.\106\ Even for those non-
members seeking to purchase a copy, the standards are available for
$900, which we do not find prohibitive, given the costs of otherwise
participating in a notice and comment rulemaking proceeding, including
the hiring of legal counsel.\107\
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    \104\ 1 CFR 51.3.
    \105\ 1 CFR 51.9.
    \106\ http://www.naesb.org/misc/NAESB_Nonmember_Evaluation_
LockLizard.pdf.
    \107\ The cost of obtaining the standards likely would be no
higher than the legal cost to prepare the pleading at issue. http://
www.usdoj.gov/usao/dc/Divisions/Civil_Division/Laffey_Matrix_
3.html. ($180-$380/hour depending on experience under the Laffey
Matrix estimation procedure); http://www.altmanweil.com/index.cfm/
fa/r.resource_detail/oid/87716caa-56df-4ad9-b375-9e9366ba6d60/
resource/New_Survey_Provides_Snapshot_of_Law_Firm_Economics_
Across_US.cfm. (2007 median Washington DC legal rates of $455/hour
for partners and $295/hour for associates).
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    119. The Veeck case cited by the commenters dealt only with a
third-party reprinting of local law derived from incorporation of a
model building code. The case did not invalidate the copyrights held by
the organization over their standards, nor did it require, nor
authorize the government to provide copies of private sector standards
either prior to or after incorporation by reference.\108\
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    \108\ Veeck, 293 F.3d at 803 (case deals only with the
``relationship between non-federal government entities and copyright
holders''). The court also emphasized that it was not dealing with
extrinsic standards that government agencies incorporate by
reference as part of the technical requirements of a government
regulation, similar to our use of the NAESB standards as technical
implementation of the Commission's OASIS regulations. Veeck, 293
F.3d at 84; see CCC Info. Services v. Maclean Hunter Market Reports,
Inc., 44 F.3d 61 (2nd Cir. 1994); and Practice Management Info.
Corp. v. American Medical Ass'n, 121 F.3d 516 (9th Cir. 1997),
opinion amended by 133 F.3d 1140 (9th Cir. 1998). Unlike Veeck,
NAESB does not solicit incorporation by reference. Veeck, 293 F.3d
at 805. Likewise, in Danielson, the court found that architectural
drawings were not made into judicial decisions and statutes in the
public domain merely because they were referenced in a recorded
deed.
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    120. Indeed, OMB Circular A-119 requires government agencies
incorporating privately developed standards to ``observe and protect
the rights of the copyright holder and any other similar obligations.''
\109\ In addition to copyright, the Commission also is barred
contractually from reproducing the standards for distribution to third
parties.\110\
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    \109\ OMB Circular No. A-119 (Revised February 10, 1998), at 6J,
http://www.whitehouse.gov/omb/rewrite/circulars/a119/a119.html. See
28 U.S.C.Sec.  1498 (federal government may be liable for copyright
infringement). Other government agencies similarly have denied
requests to publish copies of privately developed standards. See
Updating OSHA Standards Based on National Consensus Standards, 74 FR
46350-46361 (September 9, 2009) (``OSHA notes that copyright laws
protect national consensus standards''); Airworthiness Directives;
Airbus Model A300 Airplanes, 72 FR 6923 (Feb. 14, 2007) (finding
that incorporated by reference materials ``do not lose their
copyright protection''). Taken to its logical extreme, NRECA and
APPA's argument would require that a school system's decision to
require children to acquire and read the novel ``Fahrenheit 451''
over summer vacation operates to vitiate the copyright and obligates
the system to reprint the text of the novel. See Veeck, 293 F.3d at
804-805 (copyrighted works do not ``become law'' merely because a
statute refers to them); CCC Info. Servs. 44 F.3d at 74 (``It
scarcely extends CCC's argument to require that all such assigned
books lose their copyright--as one cannot comply with the legal
requirements without using the copyrighted works'').
    \110\ Agreement Granting Permission to Copy Standards (August 9,
1996), http://www.naesb.org/pdf4/gisb_copy_permission_to_ferc_
080996.pdf.
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    121. Nor do we find that the need for public utilities to obtain
standards to comply with Commission regulations is a sufficient reason
to reconsider the Commission's reliance on the NAESB process. Public
utilities must incur numerous fees as a cost of doing business,
including the payment of Commission annual charges, the filing of
mandated reports and forms, and the costs incurred in having to
maintain those records. As to commenters' argument that the Commission
has misinterpreted section 12d of the NTT&AA, we find that the Act and
the accompanying regulations are not limited to procurement
specifications, as suggested in the comments, but include adoption of
standards ``as a means to carry out policy objectives or activities.''
\111\ In any event, as discussed above, we see benefits to the
continued role of NAESB in developing electronic communication and
business practice standards for public utilities, whether required by
NTT&AA or not.
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    \111\ Public Law 104-113, 12(d), 110 Stat. 775 (1996), 15 U.S.C.
272 note (1997). OMB Circular A-119 (agency ``must use voluntary
consensus standards, both domestic and international, in its
regulatory'' as well as procurement activities).
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III. Implementation Dates and Procedures

    122. OATI \112\ supports the Commission's proposed actions and has
no immediate concerns with any of the proposed standards. Both OATI and
TranServ suggest that the Commission should defer implementation of
WEQ-002, WEQ-003, and WEQ-013 for a minimum of six to nine months to
allow transmission providers sufficient time to modify their existing
OASIS systems and make necessary changes to their processes,
procedures, and other supporting software systems. Both also suggest
avoiding implementation during the summer or winter peak seasons.
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    \112\ Open Access Technology International, Inc. (OATI) is a
supplier of software for the electric industry, including OASIS and
back-office supporting systems.
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    123. APS argues that because the postings for the ATC Information
Link and Postback Requirements relate to the Implementation Documents
required by the NERC standards, there should not be an effective
requirement to post items related to these documents prior to the date
on which the underlying NERC rules take effect. Therefore, APS requests
that the requirements of Standards 001-18 through 001-18.2 have the
same effective date as the NERC available transfer capability related
standards.
    124. Entergy argues that because Standards 001-13.1.5, 001-14.1,
and 001-15.1 relate to, and potentially depend on, the NERC reliability
standards, the Commission should consider the need to coordinate the
effective dates of these two sets of standards.\113\
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    \113\ Entergy at 6-7.
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    125. While Entergy acknowledges the difficulty of developing a
single industry methodology for implementing Standard 001-21.1.6,
because Entergy believes that it does not provide significant guidance
as to how transmission providers should implement this standard,
Entergy argues that its implementation will require significant
software development. To address this issue, Entergy asks that the
Commission set the effective date of this provision to coincide with
the date at which the OASIS vendors will have developed the appropriate
software modifications necessary to implement this standard.\114\
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    \114\ Id. at 4-5.
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A. Commission Determination

    126. In light of the time needed to plan and complete the complex
tasks involved in implementing the standards we are adopting in this
Final Rule, as well as the desirability of aligning the implementation
of the requirements in these standards that relate to the NERC
standards being adopted in Docket No. RM08-19-000, we will make the
implementation date for compliance with the NAESB standards we are
incorporating by reference in this Final Rule coincident with the
implementation date applicable to the NERC reliability standards that
the

commission approved in an order being issued concurrently with this
order. Accordingly, public utilities subject to these requirements will
not be required to comply with these standards until the first day of
the first quarter occurring 365 days after approval of the referenced
Reliability Standards by all applicable regulatory authorities.
    127. However, as we stated above, a revised Attachment C to the
OATT must be filed on or before 275 days after approval of the NERC
Reliability Standards being addressed in Docket No. RM08-19-000 by all
applicable regulatory authorities.
    128. Consistent with our regulation at 18 CFR 35.28(c)(vi), each
electric utility must revise its OATT to include the Version 002.1 WEQ
standards that we are incorporating by reference herein. For standards
that do not require implementing tariff provisions, the Commission will
allow the utility to incorporate the WEQ standard by reference in its
OATT. Moreover, as we proposed in the WEQ Version 002.1 NOPR, to
lighten the burden associated with a stand-alone filing of a revised
tariff reflecting the standards incorporated by reference in this Final
Rule, we are giving public utilities the option of including these
changes as part of an unrelated tariff filing, provided that the
revised tariff is filed with the Commission at least ninety days before
the prescribed date for compliance with the revised standards (the
first day of the first quarter occurring 365 days after approval of the
referenced Reliability Standards by all applicable regulatory
authorities). In addition, consistent with our prior practice, if a
public utility fails to file the required tariff revisions prior to the
compliance date, it nonetheless must abide by these standards even
before it has updated its tariff to incorporate these changes.
    129. If adoption of these standards does not require any changes or
revisions to existing OATT provisions, public utilities may comply with
this rule by adding a provision to their OATTs that incorporates the
standards adopted in this rule by reference, including the standard
number and Version 002.1 to identify the standard. To incorporate these
standards into their OATTs, public utilities must use the following
language in their OATTs: \115\
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