[Federal Register Volume 76, Number 82 (Thursday, April 28, 2011)]
[Rules and Regulations]
[Pages 23690-23708]
[FR Doc No: 2011-10226]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM09-9-000; Order No. 751]

Version One Regional Reliability Standards for Facilities Design,
Connections, and Maintenance; Protection and Control; and Voltage and
Reactive

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final rule.

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SUMMARY: Under section 215 of the Federal Power Act, the Commission
hereby approves four revised regional Reliability Standards developed
by the Western Electricity Coordinating Council and approved by the
North American Electric Reliability Corporation, which the Commission
has certified as the Electric Reliability Organization responsible for
developing and enforcing mandatory Reliability Standards. These
regional Reliability Standards have been designated by the Western
Electricity Coordinating Council as FAC-501-WECC-1--Transmission
Maintenance, PRC-004-WECC-1--Protection System and Remedial Action
Scheme Misoperation, VAR-002-WECC-1--Automatic Voltage Regulators, and
VAR-501-WECC-1--Power System Stabilizer. Reliability Standard FAC-501-
WECC-1 addresses transmission maintenance for specified transmission
paths in the Western Interconnection. Reliability Standard PRC-004-
WECC-1 addresses the analysis of misoperations that occur on
transmission and generation protection systems and remedial action
schemes in the Western Interconnection. Reliability Standard VAR-002-
WECC-1 is meant to ensure that automatic voltage regulators remain in
service on synchronous generators and condensers in the Western
Interconnection. Reliability Standard VAR-501-WECC-1 is meant to ensure
that power system stabilizers remain in service on synchronous
generators in the Western Interconnection. In addition, the Commission
approves five new regional definitions applicable within the Western
Interconnection.

DATES: Effective Date: This rule will become effective June 27, 2011.

FOR FURTHER INFORMATION CONTACT:
Nick Henery (Technical Information), Office of Electric Reliability,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER>.
Scott Sells (Technical Information), Office of Electric Reliability,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER>.
A. Cory Lankford (Legal Information), 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...........................................               2
    A. Mandatory Reliability Standards..................               2
    B. Western Electricity Coordinating Council.........               5
    C. Proposed Regional Reliability Standards..........               7
II. Discussion..........................................              11
    A. FAC-501-WECC-1 Transmission Maintenance..........              14
        1. WECC Transfer Path Table.....................              19
        2. System Operating Limits......................              25
        3. Summary......................................              33
    B. PRC-004-WECC-1...................................              34
        1. WECC Transfer Path Table and WECC Remedial                 40
         Action Schemes Table...........................
        2. Summary......................................              51
    C. VAR-002-WECC-1...................................              52
        1. Automatic Voltage Regulator In-Service                     57
         Requirement....................................
        2. Exclusion of Synchronous Generators That                   68
         Operate Less Than Five Percent of All Hours
         During a Calendar Quarter......................
        3. Automatic Voltage Regulator Replacement......              73
        4. Automatic Voltage Regulator Performance......              78
        5. Summary......................................              85
    D. VAR-501-WECC-1...................................              86
        1. Power System Stabilizer In-Service                         88
         Requirement....................................
        2. Exclusion of Synchronous Generators That                   96
         Operate for Less Than Five Percent of All Hours
         During a Calendar Quarter......................
        3. Power System Stabilizer Replacement..........             100
        4. Power System Stabilizer Performance..........             105
        5. Reporting Burden.............................             112
        6. Summary......................................             117
    E. NERC VAR-002-1.1b................................             118
    F. Violation Risk Factors and Violation Severity                 122
     Levels.............................................

III. Information Collection Statement...................             134
IV. Environmental Analysis..............................             139
V. Regulatory Flexibility Act...........................             140
VI. Document Availability...............................             144
VII. Effective Date and Congressional Notification......             147

135 FERC ] 61,061

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

Issued April 21, 2011

    1. Under section 215 of the Federal Power Act (FPA),\1\ the
Commission hereby approves four revised regional Reliability Standards
developed by the Western Electricity Coordinating Council (WECC) and
approved by the North American Electric Reliability Corporation (NERC),
which the Commission has certified as the Electric Reliability
Organization (ERO) responsible for developing and enforcing mandatory
Reliability Standards. These regional Reliability Standards have been
designated by WECC as FAC-501-WECC-1--Transmission Maintenance, PRC-
004-WECC-1--Protection System and Remedial Action Scheme Misoperation,
VAR-002-WECC-1--Automatic Voltage Regulators, and VAR-501-WECC-1--Power
System Stabilizer. Reliability Standard FAC-501-WECC-1 addresses
transmission maintenance for specified transmission paths in the
Western Interconnection. Reliability Standard PRC-004-WECC-1 addresses
the analysis of misoperations that occur on transmission and generation
protection systems and remedial action schemes in the Western
Interconnection. Reliability Standard VAR-002-WECC-1 is meant to ensure
that automatic voltage regulators remain in service on synchronous
generators and condensers in the Western Interconnection. Reliability
Standard VAR-501-WECC-1 is meant to ensure that power system
stabilizers remain in service on synchronous generators in the Western
Interconnection. In addition, the Commission approves five new regional
definitions applicable within the Western Interconnection.
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    \1\ 16 U.S.C. 824o (2006).
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I. Background

A. Mandatory Reliability Standards

    2. Section 215 of the FPA requires a Commission-certified ERO to
develop mandatory and enforceable Reliability Standards, which are
subject to Commission review and approval. Once approved, the
Reliability Standards may be enforced by the ERO, subject to Commission
oversight, or by the Commission independently.\2\
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    \2\ 16 U.S.C. 824o(e)(3).
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    3. Reliability Standards that the ERO proposes to the Commission
may include Reliability Standards that are proposed to the ERO by a
Regional Entity to be effective in that region.\3\ A Regional Entity is
an entity that has been approved by the Commission to enforce
Reliability Standards under delegated authority from the ERO.\4\ When
the ERO reviews a regional Reliability Standard that would be
applicable on an Interconnection-wide basis and that has been proposed
by a Regional Entity organized on an Interconnection-wide basis, the
ERO must rebuttably presume that the regional Reliability Standard is
just, reasonable, not unduly discriminatory or preferential, and in the
public interest.\5\ In turn, the Commission must give ``due weight'' to
the technical expertise of the ERO and of a Regional Entity organized
on an Interconnection-wide basis.\6\
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    \3\ 16 U.S.C. 824o(e)(4).
    \4\ 16 U.S.C. 824o(a)(7) and (e)(4).
    \5\ 18 CFR 39.5 (2010).
    \6\ 16 U.S.C. 824o(d)(2).
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    4. In Order No. 672, the Commission urged uniformity of Reliability
Standards, but recognized a potential need for regional differences.\7\
Accordingly, the Commission stated that:
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    \7\ Rules Concerning Certification of the Electric Reliability
Organization; Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, Order No. 672, 71 FR
8662 (Feb. 17, 2006), FERC Stats. & Regs. ] 31,204, at P 290, order
on reh'g, Order No. 672-A, 71 FR 19814 (Apr. 18, 2006), FERC Stats.
& Regs. ] 31,212 (2006).

    As a general matter, we will accept the following two types of
regional differences, provided they are otherwise just, reasonable,
not unduly discriminatory or preferential and in the public
interest, as required under the statute: (1) a regional difference
that is more stringent than the continent-wide Reliability Standard,
including a regional difference that addresses matters that the
continent-wide Reliability Standard does not; and (2) a regional
Reliability Standard that is necessitated by a physical difference
in the Bulk-Power System.\8\
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    \8\ Id. P 291.
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B. Western Electricity Coordinating Council

    5. On April 19, 2007, the Commission accepted delegation agreements
between NERC and each of eight Regional Entities.\9\ In its order, the
Commission accepted WECC as a Regional Entity organized on an
Interconnection-wide basis. As a Regional Entity, WECC oversees
transmission system reliability in the Western Interconnection. The
WECC region encompasses nearly 1.8 million square miles, including 14
western U.S. states, the Canadian provinces of Alberta and British
Columbia, and the northern portion of Baja California in Mexico.
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    \9\ North American Electric Reliability Corp., 119 FERC ]
61,060, at P 432 (2007).
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    6. In June 2007, the Commission approved eight regional Reliability
Standards for WECC including the currently-effective WECC PRC-STD-001-
1, PRC-STD-003-1, PRC-STD-005-1, VAR-STD-002a-1 and VAR-STD-002b-1.\10\
The Commission directed WECC to develop certain modifications to WECC
PRC-STD-001-1, PRC-STD-003-1, PRC-STD-005-1, VAR-STD-002a-1 and VAR-
STD-002b-1, as identified by NERC in its filing letter for the current
standards.\11\ For example, the Commission determined that: (1)
Regional definitions should conform to definitions set forth in the
NERC Glossary of Terms Used in Reliability Standards (NERC Glossary),
unless a specific deviation has been justified; and, (2) documents that
are referenced in the Reliability Standard should be attached to the
Reliability Standard. The Commission also found that it is important
that regional Reliability Standards and NERC Reliability Standards
achieve a reasonable level of consistency in their structure so that
there is a common understanding of the elements.
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    \10\ North American Electric Reliability Corp., 119 FERC ]
61,260 (2007).
    \11\ Id.
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C. Proposed Regional Reliability Standards

    7. On March 25, 2009, NERC submitted a petition (NERC Petition) to
the Commission seeking approval of four WECC regional Reliability

Standards.\12\ The four proposed WECC regional Reliability Standards
are designated as FAC-501-WECC-1, PRC-004-WECC-1, VAR-002-WECC-1 and
VAR-501-WECC-1.\13\ In its petition, NERC explains that the four
proposed regional Reliability Standards are meant to replace certain
currently-effective regional Reliability Standards:
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    \12\ See 18 CFR 39.5(a) (requiring the ERO to submit regional
Reliability Standards on behalf of a Regional Entity).
    \13\ The proposed regional Reliability Standards are not
attached to the Final Rule. They are, however, available on the
Commission's eLibrary document retrieval system in Docket No. RM09-
9-000 and are posted on the ERO's Web site, available at: http://www.nerc.com.
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     FAC-501-WECC-1 is intended to replace the current approved
WECC PRC-STD-005-1;
     PRC-004-WECC-1 is intended to replace WECC PRC-STD-001-1
and WECC PRC-STD-003-1;
     VAR-002-WECC-1 is intended to replace WECC VAR-STD-002a-1;
and
     VAR-501-WECC-1 is intended to replace WECC VAR-STD-002b-1.
    NERC states that the NERC board of trustees approved the proposed
regional Reliability Standards on October 29, 2008, on the condition
that WECC address certain shortcomings raised during the comment
periods in the next revision of the Reliability Standards.
    8. NERC requests an effective date for FAC-501-WECC-1, VAR-002-
WECC-1 and VAR-501-WECC-1 of the first day of the first quarter after
Commission approval. For PRC-004-WECC-1, NERC requests an effective
date of the first day of the second quarter after approval by the
Commission.
    9. On December 17, 2010, the Commission issued a Notice of Proposal
Rulemaking (NOPR) in which it proposed to approve the four revised
regional Reliability Standards. In addition, under section 215(d)(5) of
the FPA, the Commission proposed to direct WECC, working through its
standards development process, to develop modifications to these
regional Reliability Standards.\14\
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    \14\ Version One Regional Reliability Standards for Facilities
Design, Connections, and Maintenance; Protection and Control; and
Voltage and Reactive, Notice of Proposed Rulemaking, 75 FR 80,397
(Dec. 22, 2010), FERC Stats. & Regs. ] 32,667 (2010).
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    10. As indicated in Appendix A, fourteen entities filed comments in
response to the NOPR.

II. Discussion

    11. As discussed below, we approve Reliability Standards FAC-501-
WECC-1, PRC-004-WECC-1, VAR-002-WECC-1, and VAR-501-WECC-1 as just,
reasonable, not unduly discriminatory or preferential, and in the
public interest. We find that the revised WECC Reliability Standards
are more stringent than the corresponding NERC Reliability Standards
either because they address issues not covered in the requirements of
the corresponding NERC Reliability Standards or because they offer more
detailed requirements than the corresponding NERC Reliability
Standards. For these same reasons, we find that the requirements of
these revised regional Reliability Standards are not redundant of the
requirements of the corresponding NERC Reliability Standards. Moreover,
we find that these revised WECC Reliability Standards are sufficient to
maintain the reliability of the Bulk-Power System in the Western
Interconnection.
    12. We also find that the revised regional Reliability Standards
offer several improvements over the currently-effective regional
Reliability Standards. Consistent with the Commission's directives in
its June 2008 order, the revised regional Reliability Standards replace
the former sanctions table with violation risk factors and violation
severity levels. The revised regional Reliability Standards also remove
compliance-related information and elements from the requirements.
    13. In addition, we direct WECC to address a concern pertaining to
the applicability of FAC-501-WECC-1 and PRC-004-WECC-1, which reference
tables of major transmission paths and remedial action schemes posted
on the WECC Web site. We also adopt our NOPR to direct NERC to remove
the WECC regional definition of Disturbance from the NERC Glossary to
ensure consistency between the regional and NERC defined terms.

A. FAC-501-WECC-1 Transmission Maintenance

NERC Petition
    14. In its petition, NERC explained that proposed FAC-501-WECC-1 is
intended to replace approved WECC PRC-STD-005-1. The proposed regional
Reliability Standard would apply to transmission owners that maintain
transmission paths listed in the table titled ``Major WECC Transfer
Paths in the Bulk Electric System'' (WECC Transfer Path Table), which
is no longer an attachment to the Reliability Standard but is
maintained on the WECC Web site. Proposed FAC-501-WECC-1 contains three
main provisions. Requirement R1 provides that each transmission owner
must have a transmission maintenance and inspection plan, and each
transmission owner must annually review and update as required its
transmission maintenance and inspection plan. Requirement R2 states
that each transmission owner must include specified maintenance
categories \15\ when developing its transmission maintenance and
inspection plan. Requirement R3 states that each transmission owner
must implement and follow its transmission maintenance and inspection
plan.
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    \15\ The maintenance categories to be included in the
transmission maintenance and inspection plan are included in
Attachment 1 of FAC-501-WECC-1--``Transmission Line and Station
Maintenance Details.''
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    15. In its petition, NERC recommended approval of FAC-501-WECC-1,
stating that the proposed regional Reliability Standard addresses
matters that the NERC Reliability Standard does not. Specifically,
according to NERC, FAC-501-WECC-1 requires, for specified transmission
paths, a highly detailed maintenance and inspection plan for all
transmission and substation equipment components, beyond the relay and
communication system maintenance and testing required by the
corresponding NERC Reliability Standard.\16\
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    \16\ NERC Petition at 11, 14.
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NOPR Proposal
    16. In the NOPR, the Commission proposed to approve FAC-501-WECC-1
as just, reasonable, not unduly discriminatory or preferential, and in
the public interest. The Commission stated that, as explained by NERC,
proposed FAC-501-WECC-1 appears to be more stringent, by virtue of its
requirement for a highly detailed maintenance and inspection plan,
compared to the corresponding NERC Reliability Standard.
    17. The Commission pointed out that, in approving the currently-
effective WECC PRC-STD-005-1, the Commission directed WECC to make
certain modifications to the regional Reliability Standard. The
Commission stated that the proposed regional Reliability Standard
appeared to address these directives by no longer referencing any WECC
forms, and removing text regarding the Compliance Monitoring Period.
The Commission also pointed out that the proposed regional Reliability
Standard no longer refers to a regional definition of Disturbance,
which conflicted with the definition of Disturbance in the NERC
Glossary. Since the term is not included in any of the proposed
regional Reliability Standards, the Commission proposed to direct NERC
to remove this regional definition from the NERC Glossary of Terms upon
Commission approval of

FAC-501-WECC-1. The proposed regional Reliability Standard also removes
the sanctions table and includes violation risk factors, violation
severity levels, measures and time horizons, as directed by the
Commission. The Commission proposed to find that the proposed removal
of the sanctions table and inclusion of violation risk factors,
violation severity levels, measures and time horizons, appeared
generally consistent with the Commission's directives, and signify
meaningful improvement. Accordingly, the Commission proposed to approve
FAC-501-WECC-1 and NERC's petition to retire currently-effective WECC
PRC-STD-005-1.
    18. The Commission also sought comment on two issues regarding FAC-
501-WECC-1: (1) The use of the WECC Transfer Path Table and (2) the use
of the term ``system operating limit,'' as discussed below.
1. WECC Transfer Path Table
    19. Regional Reliability Standard FAC-501-WECC-1 applies to
transmission owners that maintain transmission paths listed in the most
current WECC Transfer Path Table provided on WECC's Web site. The table
currently posted on WECC's Web site identifies the same 40 major paths
as the table attached to the currently-effective regional Reliability
Standard, WECC PRC-STD-005-1.
NOPR Proposal
    20. In the NOPR, the Commission expressed concern that, by
referencing the WECC Transfer Path Table posted on the WECC Web site,
the applicability of FAC-501-WECC-1 could change without review and
approval by NERC and the Commission. The Commission explained that the
possibility for the applicability of the Reliability Standard to change
at any time could create confusion for entities that need to comply as
well as any compliance or enforcement staff trying to determine which
entities are responsible for complying with the Reliability Standard.
Accordingly, the Commission proposed to direct WECC to develop a
modification to FAC-501-WECC-1 to address this concern.
    21. The Commission offered examples of how WECC might address the
Commission's concern. First, the Commission suggested that WECC could
include its criterion for identifying and modifying major transmission
paths listed in the WECC Transfer Path Table and make an informational
filing each time it makes a modification to the table. A second option
the Commission proposed was that WECC file its criterion with the
Commission and post revised transfer path tables and associated
catalogs on its Web site before they become effective with concurrent
notification to NERC and the Commission. Alternatively, the Commission
suggested that the Regional Entity could include the WECC Transfer Path
Table as an attachment to the modified Reliability Standard. In this
way, the Commission would be able to verify that the Regional Entity is
applying the requirements of FAC-501-WECC-1 in a just and reasonable
manner.
Comments
    22. WECC, as well as Bonneville, PacifiCorp, and SDG&E, support the
Commission's proposal to require WECC to provide greater certainty
regarding the applicability of FAC-501-WECC-1 based on the WECC
Transfer Path Table. WECC supports the Commission's second approach and
suggests that the Commission direct WECC to file its criterion for
identifying and modifying major transmission paths listed in the
tables. Moreover, WECC commits to publicly post any revisions to the
table on the WECC Web site with concurrent notification to the
Commission, NERC, and industry. WECC explains that posting the WECC
Transfer Path Table to the Web site is preferred because the current
WECC Regional Reliability Standards development process and subsequent
NERC and FERC approval processes do not result in timely updates to the
table.
    23. Likewise, Bonneville, PacifiCorp, and SDG&E support the
Commission's proposal to require WECC to develop and file criterion to
clarify how major transmission paths are included in or excluded from
the WECC Transfer Path Table. Bonneville believes that filing such
criterion would provide transparency for transmission owners that are
affected by changes to the table. PacifiCorp comments that WECC should
not be required to include the criterion or the WECC Transfer Path
Table as an attachment to the Reliability Standard because it would
require a modification to the standard and, thus, added delay, every
time WECC proposed a change to the criteria or the table. By contrast,
the Bureau of Reclamation recommends that the Commission approve the
proposed Reliability Standard and direct WECC to append the current
WECC Transfer Path Table.
Commission Determination
    24. Consistent with our NOPR proposal and WECC's comments the
Commission directs WECC to file, within 60 days from the issuance of
this Final Rule, its criterion for identifying and modifying major
transmission paths listed in the WECC Transfer Path Table. Moreover,
the Commission accepts WECC's commitment to publicly post any revisions
to the WECC Transfer Path Table on the WECC Web site with concurrent
notification to the Commission, NERC, and industry. We believe that
this process balances the interests of WECC in developing timely
revisions to the WECC Transfer Path Table with the need for adequate
transparency for transmission owners that are affected by changes to
the WECC Transfer Path Table.
2. System Operating Limits
    25. WECC proposes to replace references to Operating Transfer
Capability limits in WECC PRC-STD-001-1 with System Operating Limits in
FAC-501-WECC-1. Currently, WECC determines transfer capability based on
a ``rated system path'' methodology and the WECC Transfer Path Table
and associated catalog identify the facilities that make up each rated
system path. Unlike a System Operating Limit, WECC's definition of
Operating Transfer Capability limits is restricted to direct or
parallel transmission elements between or within specific transmission
operators. Moreover, the rating of a System Operating Limit, which is
based on an operating criterion that is either thermally (based on
facility ratings) or stability-based (based on transient stability,
voltage stability, or system voltage limits), is the first element to
calculate in order to determine the Operating Transfer Capability limit
rating.
NOPR Proposal
    26. In the NOPR, the Commission expressed concern that the terms
Operating Transfer Capability limit and System Operating Limit were not
interchangeable. Specifically, the Commission expressed concern that
the introduction of the NERC Glossary definition of System Operating
Limit in Requirement R1 of the proposed regional Reliability Standard
could create confusion regarding which transmission owners are required
to maintain a transmission maintenance and inspection plan. The
Commission expressed further concern that, by using the term System
Operating Limit, Requirement R1 could apply to more transmission
facilities than identified in the WECC Transfer Path Table and
associated catalog.
Comments
    27. WECC, supported by SDG&E, urges the Commission to approve FAC-

501-WECC-1 as filed. NERC and several other commenters support the
Commission's proposal to approve FAC-501-WECC-1.\17\ WECC agrees that
there are slight differences between the definitions of Operating
Transfer Capability limits and System Operating Limits but contends
that the intent and the effect is the same and the applicability is
clear. WECC explains that both limits are calculated using the same
methodologies and result in the same values. WECC further explains that
it made this change to address the Commission's concerns related to the
proliferation of regional terms. Moreover, WECC states that, beginning
with the 2008-2009 winter System Operating Limit seasonal study report
and continuing to the present, WECC has defined the limits calculated
as System Operating Limits. WECC states that it uses these seasonal
studies to formulate the correct System Operating Limits for
transmission paths in the West.
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    \17\ E.g. Bonneville, Reclamation, PacifiCorp.
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    28. SDG&E and TANC support the use of System Operating Limits
instead of Operating Transfer Capability limits. SDG&E comments that
the methodology for determining System Operating Limits is the same as
for Operating Transfer Capability limits and that there is no confusion
related to the use of System Operating Limit in Requirement R1. TANC
comments that an interpretation of Requirement R1 that requires
transmission owners of major paths to be responsible for maintaining
and inspecting transmission facilities owned by other entities whose
facilities may be necessary to maintain System Operating Limits
associated with the major path would be infeasible, overly burdensome
on the individual owners of the major paths and inconsistent with the
spirit of the proposed regional Reliability Standard as written. TANC
suggests that using the term Operating Transfer Capability limit as a
substitute for System Operating Limit may resolve any confusion, as
could a modification clarifying that each major path transmission
owner's responsibility is to inspect and maintain its own facilities.
    29. Bonneville and PacifiCorp also support the use of the term
System Operating Limit instead of the term Operating Transfer
Capability because both terms result in the same requirement that
maintenance be performed to ensure that each path is capable of
operating up to the path's limit. Nevertheless, Bonneville and
PacifiCorp comment that Requirement R1 is unclear as to which
facilities are covered and who is responsible for the maintenance of
those facilities. Bonneville contends that the transmission owner
should be responsible only for the facilities it owns, and the standard
should make this clear. PacifiCorp suggests that Requirement R1 should
be modified to reflect that transmission owners should have a
transmission maintenance and inspection plan detailing their
requirements ``that apply to all transmission facilities identified by
the Transmission Operator of the transmission path as necessary'' for
System Operating Limits associated with each of the transmission paths
identified in the WECC Transfer Path Table.
    30. By contrast, in light of the concerns raised by the Commission
in the NOPR, CDWR asks the Commission to consider maintaining current
Reliability Standard PRC-STD-005-1.
Commission Determination
    31. The Commission finds that the Regional Entity has adequately
explained its intended use of System Operating Limits as a replacement
for Operating Transfer Capability limits. As WECC and others have
described, transmission owners within the Western Interconnection will
continue to identify capability limits associated with their own paths
listed in the WECC Transfer Path Table using the same methodology as
they have used under the currently-effective WECC PRC-STD-001-1. We
accept the substitution of terms based on WECC's explanation that all
it has done is to replace references to Operating Transfer Capability
limits with System Operating Limits in order to address the
Commission's concern regarding the proliferation of regional terms.
    32. In response to our concern that use of the term System
Operating Limit could expand the applicability of FAC-501-WECC-1 to
transmission facilities that are not listed in the WECC Transfer Path
Table, we accept WECC's explanation that the applicability of the
Reliability Standard is clear. Consistent with comments filed by
Bonneville and PacifiCorp, we find that it would be unreasonable to
interpret FAC-501-WECC-1 as requiring transmission owners to be
responsible for maintaining and inspecting transmission facilities
related to System Operating Limits on paths that they do not own.
Nevertheless, we believe that this could be clearer in the language of
Requirement R1. Accordingly, we recommend that WECC consider the
comments of Bonneville, PacifiCorp and TANC when it develops future
modifications to FAC-501-WECC-1.
3. Summary
    33. We adopt our NOPR proposal and approve FAC-501-WECC-1 as just,
reasonable, not unduly discriminatory or preferential and in the public
interest. We find that the revised regional Reliability Standard is
more stringent than the corresponding NERC Reliability Standard, PRC-
005-1, by virtue of its requirement for a highly detailed maintenance
and inspection plan for all transmission and substation equipment
components associated with transmission paths identified in the WECC
Transfer Path Table.

B. PRC-004-WECC-1

NERC Petition
    34. Regional Reliability Standard PRC-004-WECC-1 is intended to
replace two currently-effective WECC Reliability Standards, PRC-STD-
001-1 and PRC-STD-003-1. In its petition, NERC explained that PRC-004-
WECC-1 is more stringent than the currently-effective corresponding
NERC Reliability Standards because the former requires that all
transmission and generation protection system and remedial action
scheme misoperations on major WECC transfer paths be analyzed and
mitigated within a specific timeframe. In contrast, corresponding NERC
Reliability Standard PRC-003-1 requires Regional Entities to establish
procedures for review, analysis, reporting, and mitigation of
transmission and generation protection system misoperations, but it
does not specifically address the owners of the transmission and
generation facilities. NERC also explained that NERC Reliability
Standard PRC-004-1 has requirements for protection system
misoperations, but does not provide for the additional requirements
included in PRC-004-WECC-1.\18\
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    \18\ See NERC Petition at 11, 19-20. In Order No. 693, the
Commission found that PRC-003-1 was a fill-in-the-blank Reliability
Standard in part because its requirements apply to the Regional
Reliability Organizations, now called Regional Entities, which the
Commission was not persuaded NERC can enforce a Regional Entity's
compliance with a Reliability Standard. Mandatory Reliability
Standards for the Bulk-Power System, Order No. 693, FERC Stats. &
Regs., Regulations Preambles 2006-2007 ] 31,242, at P 1460-1461,
order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
---------------------------------------------------------------------------

    35. Regional Reliability Standard PRC-004-WECC-1 contains three
provisions. Requirement R1 provides that ``System Operators and System
Protection Personnel'' of transmission owners and generator owners must
analyze all protection system and remedial action scheme operations.
Requirements R1.1 and R1.2 identify time limits for the review and
analysis

of transmission element tripping, remedial action scheme operations and
protection systems. Requirement R2 identifies actions required by
transmission owners and generator owners for each protection system or
remedial action scheme misoperation, including identifying timelines
for removing the equipment that failed from service. Requirement R3
states that transmission owners and generator owners must submit an
incident report for each misoperation or repair of equipment that
misoperated.
    36. Both the currently-effective and proposed regional Reliability
Standards apply to transmission owners and transmission operators.
However, PRC-004-WECC-1 also applies to generator owners that own
facilities listed in the the table titled ``Major WECC Remedial Action
Schemes'' (WECC Remedial Action Schemes Table), which is available on
WECC's Web site.\19\ In addition, WECC proposes four new regional
definitions for Functionally Equivalent Protection System, Functionally
Equivalent Remedial Action Scheme, Security-Based Misoperation and
Dependability Based Misoperation.
---------------------------------------------------------------------------

    \19\ See proposed regional Reliability Standard PRC-004-WECC-1,
Section 4 (Applicability).
---------------------------------------------------------------------------

NOPR Proposal
    37. The Commission proposed to approve PRC-004-WECC-1 as just,
reasonable, not unduly discriminatory or preferential, and in the
public interest.\20\ The Commission also proposed to approve NERC's
petition to withdraw currently-effective WECC PRC-STD-001-1 and WECC
PRC-STD-003-1. The Commission explained that PRC-004-WECC-1 appears
more stringent than the corresponding NERC PRC-004-1. Moreover, PRC-
004-WECC-1 addresses Commission directives to develop modifications to
the currently-effective regional Reliability Standards.
---------------------------------------------------------------------------

    \20\ NOPR, FERC Stats. & Regs. ] 32,667 at P 32.
---------------------------------------------------------------------------

    38. The Commission noted that, in approving the currently-effective
WECC PRC-STD-001-1 and WECC PRC-STD-003-1, the Commission directed WECC
to make certain modifications in developing replacement Reliability
Standards. To address these directives, WECC no longer references any
WECC forms and the text regarding the compliance monitoring period has
been removed from the proposed Standard. In addition, the revised
regional Reliability Standard does not reference the regional
definition of Disturbance, which did not match the NERC definition of
Disturbance in the NERC Glossary. The revised regional Reliability
Standard also removes the definition of Business Day. Since these terms
are not included in any of the existing or proposed regional
Reliability Standards, the Commission proposed to direct NERC to remove
these regional definitions from the NERC Glossary upon approval of PRC-
004-WECC-1. The revised regional Reliability Standard also removes the
sanctions table and includes violation risk factors, violation severity
levels, measures and time horizons. The Commission commended WECC for
addressing these directives.
    39. The Commission sought comment on two issues concerning PRC-004-
WECC-1: (1) The use of the WECC Transfer Path Table and the WECC
Remedial Action Schemes Table to define applicability and (2) the need
for the four new regional definitions to be added to the NERC Glossary
of Terms.
1. WECC Transfer Path Table and WECC Remedial Action Schemes Table
    40. Similar to regional Reliability Standard FAC-501-WECC-1,
discussed above, the applicability of Reliability Standard PRC-004-
WECC-1 is dependent upon references to the WECC Transfer Path Table and
the WECC Remedial Action Schemes Table, which WECC posts on its Web
site. The NOPR raised the same applicability concerns as discussed
above in the context of FAC-501-WECC-1. In turn, WECC offered to file
the criteria for identifying paths and remedial action schemes
associated with these tables.
Commission Determination
    41. Consistent with our NOPR proposal and WECC's comments the
Commission directs WECC to file, within 60 days from the issuance of
this Final Rule, its criteria for identifying and modifying major
transmission paths listed in the WECC Transfer Path Table and major
remedial actions schemes listed in the WECC Remedial Action Schemes
Table. Moreover, the Commission accepts WECC's commitment to publicly
post any revisions to the WECC Transfer Path Table, WECC Remedial
Action Schemes Table, and the associated catalogs on the WECC Web site
with concurrent notification to the Commission, NERC, and industry. We
believe that this process balances the interests of WECC in developing
timely revisions to the WECC Transfer Path Table with the need for
adequate transparency for transmission owners that are affected by
changes to the WECC Transfer Path Table and the WECC Remedial Action
Schemes Table. Regional Definitions Associated With PRC-004-WECC-1
NERC Petition
    42. The revised regional Reliability Standard includes four new
regional definitions meant to apply only in WECC. Two of the proposed
definitions (Functionally Equivalent Protection System and Functionally
Equivalent Remedial Action Scheme) have added ``functionally
equivalent'' to terms that already exist in the NERC Glossary.\21\ In
addition, WECC has developed two regional definitions for the term
Misoperation, as it is defined in the NERC Glossary. NERC explains that
the terms Security-Based Misoperations and Dependability-Based
Misoperations are meant to address: (1) Incorrect operation of a
protection system (Security-Based Misoperation); and (2) absence of a
protection system to operate (Dependability-Based Misoperation).
---------------------------------------------------------------------------

    \21\ See NERC Glossary definitions for Protection System and
Remedial Action Scheme.
---------------------------------------------------------------------------

NOPR Proposal
    43. In the NOPR, the Commission expressed concern about the
unnecessary proliferation of glossary terms and whether the proposed
WECC definitions were unnecessary variations of terms already defined
in the NERC Glossary.\22\ With regard to the definitions of
Functionally Equivalent Protection System and Functionally Equivalent
Remedial Action Scheme, the Commission expressed concern that the new
definitions do not add any further clarity to the NERC Glossary terms.
Accordingly, we sought an explanation from WECC and other interested
commenters regarding whether these new terms are more inclusive than
the corresponding NERC Glossary definitions and, if so, how.
---------------------------------------------------------------------------

    \22\ NERC Glossary of Terms used in Reliability Standards,
available at: http://www.nerc.com/files/GlossaryofTerms2011Mar15.pdf.
---------------------------------------------------------------------------

    44. The Commission also noted that WECC proposes to define
Functionally Equivalent Protection System as ``[a] Protection System
that provides performance as follows: Each Protection System can detect
the same faults within the zone of protection * * *'' \23\ The
Commission expressed concern that the meaning of the phrase ``detect
the same faults'' was unclear in this definition. Accordingly, we
sought comment on the meaning of the phrase ``the same faults'' within
the definition.
---------------------------------------------------------------------------

    \23\ See Proposed Reliability Standard PRC-004-WECC-1, proposed
definition of Functionally Equivalent Protection System.
---------------------------------------------------------------------------

    45. With regard to the bifurcation of the term Misoperation, the
Commission expressed concern that the two new regional definitions may
be confusing because at least some of the requirements for each type of

misoperation appear to overlap. Accordingly, we sought an explanation
from WECC and other interested commenters regarding why these two new
regional terms are necessary or desirable within the context of the
proposed regional Reliability Standard, and how they will enhance
reliability.
Comments
    46. WECC, supported by SDG&E, contends that the addition of the
terms Functionally Equivalent Protection System and Functionally
Equivalent Remedial Action Scheme adds clarity because they apply only
to a subset of protection systems and remedial action schemes and are
thus less inclusive than the corresponding NERC Glossary definition.
WECC explains that a Functionally Equivalent Protection System or
Functionally Equivalent Remedial Action Scheme is a protection system
or remedial action scheme that provides redundancy to the specific
protection system or remedial action scheme that failed. WECC further
explains that a Functionally Equivalent Protection System or Remedial
Action Scheme is not identical to the one that misoperated but rather
provides redundancy over the same part of the Interconnection as the
remedial action scheme or protection system that misoperated. Finally,
WECC explains that the phrase ``detect the same faults'' is intended to
take on its plain meaning, i.e., that both protection systems (the
primary and the functionally equivalent protection system) can detect
and protect against the same problem on the system.\24\
---------------------------------------------------------------------------

    \24\ See WECC Comments at page 11.
---------------------------------------------------------------------------

    47. Bonneville and PacifiCorp generally agree that the terms
Functionally Equivalent Protection System and Functionally Equivalent
Remedial Action Scheme are useful because they describe a protection
system or remedial action scheme that is able to provide the necessary
functionality of a protection system or remedial action scheme without
the loss of any necessary dependability for the system. PacifiCorp
further suggests that the Commission direct NERC to consider the
development of a continent-wide definition of Functionally Equivalent
Protection System and Functionally Equivalent Remedial Action Scheme.
    48. WECC, supported by SDG&E, Bonneville, and PacifiCorp, contends
that definitions of Security-Based Misoperation and Dependability-Based
Misoperation should be retained because they provide clarity in the
implementation of PRC-004-WECC-1. WECC states that these two
definitions were developed recognizing that misoperations can be
grouped into two types, incorrect operation and failure to operate.
WECC explains that a Dependability-Based Misoperation occurs during a
system fault, and its impact to the bulk electric system is minimal if
other functionally equivalent redundancies exist to eliminate, or at
least minimize, any impact from any single misoperation. By contrast, a
Security-Based Misoperation isolates an element from the bulk electric
system unnecessarily either when another protection system is already
responding to contingency conditions or when noise in a communication
system trips an element even though no fault occurred. WECC comments
that PRC-004-WECC-1 therefore requires different actions based on which
category of misoperation has occurred.
Commission Determination
    49. In view of the comments supporting these regional definitions,
the Commission accepts the four new defined terms to be applicable only
in the Western Interconnection. However, similar to our policy set
forth in Order No. 672 that favors the development of uniform
Reliability Standards,\25\ the Commission believes NERC, as a rule,
should develop definitions that apply uniformly across the different
Interconnections and strive to minimize the use of regional definitions
and terminology.
---------------------------------------------------------------------------

    \25\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290 (``The
Commission believes that uniformity of Reliability Standards should
be the goal and the practice, the rule rather than the exception.
Greater uniformity will encourage best practices, thereby enhancing
reliability and benefiting consumers and the economy'').
---------------------------------------------------------------------------

    50. We will not direct NERC to consider PacifiCorp's suggestion
that the Commission direct NERC to consider the development of a
continent-wide definition of functionally equivalent protection system
and functionally equivalent remedial action scheme. We note that NERC
has an ongoing project that could address this issue.\26\ We encourage
NERC to consider the comments of PacifiCorp in this proceeding during
the development of Project 2009-07 and encourage PacifiCorp to
participate in this NERC project.
---------------------------------------------------------------------------

    \26\ NERC Project 2009-07 Reliability of Protection Systems,
available at: http://www.nerc.com/filez/standards/Project2009-07_Reliability_of_Protection_Systems.html.
---------------------------------------------------------------------------

2. Summary
    51. The Commission adopts its NOPR proposal to approve PRC-004-
WECC-1 as just, reasonable, not unduly discriminatory or preferential,
and in the public interest. As discussed above, we direct WECC to file
its criteria for identifying and modifying major transmission paths
listed in the WECC Transfer Path Table and major remedial action
schemes listed in the WECC Remedial Action Schemes Table. We also
accept WECC's explanation regarding its need for the four new regional
definitions to be added to the NERC Glossary of Terms.

C. VAR-002-WECC-1

    52. Regional Reliability Standard VAR-002-WECC-1 applies to
generator operators and transmission operators that operate synchronous
condensers. Requirement R1 provides that each generator operator and
transmission operator shall have automatic voltage regulators in
service and in automatic voltage control mode for synchronous
generators and synchronous condensers during 98 percent of all
operating hours unless exempted by the transmission operator. Sub-
requirements R1.1 through R1.10 detail the type of exemptions that the
transmission operator may grant to the generator operator to excuse the
generator from operating the automatic voltage regulator in automatic
voltage control mode. Requirement R2 states that each generator
operator and transmission operator must have documentation identifying
the number of hours excluded for each sub-requirement R1.1 through
R1.10.
    53. Consistent with the Commission directives, the revised regional
Reliability Standard replaces the former sanctions table with violation
risk factors, violation severity levels, measures and time
horizons.\27\ WECC also proposes a new glossary term, Commercial
Operation, applicable only in the Western Interconnection.
---------------------------------------------------------------------------

    \27\ See North America Electric Reliability Corp., 119 FERC ]
61,260 at P 117.
---------------------------------------------------------------------------

NERC Petition
    54. The NERC Petition requested Commission approval of VAR-002-
WECC-1. In addition, the Petition explained that, during the standards
development process, NERC expressed concern regarding two aspects of
the regional Reliability Standard, and that WECC responded in writing
to NERC's concerns. First, with regard to Requirement R1 of VAR-002-
WECC-1, WECC explained that the requirement to keep automatic voltage
regulators in service and in automatic voltage control mode during 98
percent of all operating hours is a translation of the limits set in
the levels of non-compliance associated

with the current regional Reliability Standard.\28\ In addition, WECC
explained that the two percent allowance provides more time to start up
generating facilities when the automatic voltage regulators are not yet
in voltage control mode and allows for evaluation when a generator
operator responds to an unforeseen event.\29\
---------------------------------------------------------------------------

    \28\ The levels of non-compliance assigned to the currently-
effective regional Reliability Standard specify that there shall be
a level 1 non-compliance if automatic voltage regulators are in
service less than 98 percent but at least 96 percent or more of all
hours during which the synchronous generating unit is on line for
each calendar quarter.
    \29\ NERC Petition at 34-35.
---------------------------------------------------------------------------

    55. Second, NERC expressed concern regarding sub-requirement R1.1,
which includes an exemption for units operating less than five percent
of all hours during a calendar quarter, because the provision
``excludes the hours attributed to the synchronous generator or
condenser that operates for less than five percent of all hours during
any calendar quarter.'' \30\ WECC responded by explaining that (1) this
exemption is a carryover from the currently effective regional
Reliability Standard and (2) the five percent exclusion permits the
continued practice of allowing the operation of peaking units without
penalty for having an out-of-service automatic voltage regulator per
the manufacturer's recommendations.\31\
---------------------------------------------------------------------------

    \30\ Id. at 34-35.
    \31\ Id. at 35.
---------------------------------------------------------------------------

NOPR Proposal
    56. The Commission proposed to approve VAR-002-WECC-1 as just,
reasonable, not unduly discriminatory or preferential, and in the
public interest. Further, the Commission proposed the concurrent
retirement of currently-effective WECC VAR-STD-002a-1. The Commission
proposed to find that VAR-002-WECC-1 is more stringent than the
corresponding NERC Reliability Standard. In addition, the Commission
sought comment on several issues concerning VAR-002-WECC-1 including:
(1) The automatic voltage regulator in-service requirement, (2) the
exclusion of synchronous generators that operate less than five percent
of all hours during a calendar quarter, (3) the replacement period for
automatic voltage regulators, and (4) automatic voltage regulator
performance.
1. Automatic Voltage Regulator In-Service Requirement
    57. Requirement R1 of regional Reliability Standard VAR-002-WECC-1
provides that ``Generator Operators and Transmission Operators shall
have [automatic voltage regulators] in service and in automatic voltage
control mode 98 [percent] of all operating hours for synchronous
generators or synchronous condensers.'' \32\ Requirement R1 then
identifies ten circumstances in which a generator operator or
transmission operator is excused from this requirement.
---------------------------------------------------------------------------

    \32\ Regional Reliability Standard VAR-002-WECC-1, Requirement
R1.
---------------------------------------------------------------------------

NOPR Proposal
    58. In the NOPR, the Commission proposed to find that, by
specifying the circumstances in which a generator operator or
transmission operator is excused from operating with automatic voltage
regulator in-service and in automatic voltage control mode, Requirement
R1 is more stringent than the requirement in NERC VAR-002-1.1b.
Nevertheless, the Commission expressed its concern that, where
installed, automatic voltage regulators should be in-service at all
times except in circumstances when the generator is operating at an
output level that is not within the design parameters of the automatic
voltage regulator or when operations of the automatic voltage regulator
would result in instability. Accordingly, we sought comment on whether
the Commission should direct WECC to develop a modification to the
proposed regional Reliability Standard to address our concern. The
Commission offered, for example, that WECC could develop a modification
replacing the blanket two percent exemption with a list of specific
exemptions that would accommodate generating units that are starting up
or responding to unforeseen events and are operating outside of
applicable facility ratings.
Comments
    59. WECC, supported by CDWR, urges the Commission to approve VAR-
002-WECC-1 with its exemption from using automatic voltage regulators
during two percent of all operating hours. WECC contends that this
exemption is not new and is included in WECC VAR-STD-002a-1, which
addresses automatic voltage regulators. WECC explains that the current
regional Reliability Standards includes levels of non-compliance that
assess no penalty for generator operators that operate with their
automatic voltage regulators in service at least 98 percent of the
time. WECC contends that moving this exemption from the levels of non-
compliance to the revised requirement was necessary to meet the
Commission's violation severity level guideline 3, which states that
violation severity levels ``should not appear to redefine or undermine
the requirement.'' \33\
---------------------------------------------------------------------------

    \33\ WECC Comments at 15, citing North American Electric
Reliability Corp., 123 FERC ] 61,284, at P 32 (2008) (Violation
Severity Level Order).
---------------------------------------------------------------------------

    60. WECC further contends that a directive reducing the two percent
exemption will not increase the reliable performance of the Western
Interconnection. WECC explains that the exemption is reasonable and a
best business practice developed to enhance and protect reliability.
WECC further explains that generator operators need the flexibility to
take their automatic voltage regulator out of service when an operator
is not comfortable with the performance of the automatic voltage
regulator. WECC contends that requiring automatic voltage regulators to
be in service 100 percent of all operating hours would be an onerous
requirement that may, in fact, create a perverse incentive for
generator operators to take their generation off-line rather than risk
non-compliance with a more stringent requirement. Furthermore, WECC
contends that the Commission's suggestion that WECC develop a list of
specific exemptions is untenable. WECC explains that it is difficult to
define all of the reasons why it may be necessary to take an automatic
voltage regulator out of service unless the exclusions were written
more broadly. WECC also contends that when a generator operator is
responding to alarms, it may not have sufficient time to determine if
the situation complies with a list of exemptions.
    61. Although EPSA states that it supports the requirement that
equipment such as automatic voltage regulators and power system
stabilizers be available for a high percentage of the time a generator
is in-service, EPSA urges the Commission to not mandate 100 percent
availability for such ancillary equipment. EPSA contends that requiring
equipment on generators to be available 100 percent of the time would
not improve the reliability of the bulk electric system and would
remove valuable generation from the grid, possibly due to what might be
merely a minor problem associated with the ancillary equipment.
    62. The Bureau of Reclamation comments that the NOPR and revised
regional Reliability Standard do not use consistent terminology when
referring to the operation of the automatic voltage regulator. The
Bureau of Reclamation explains that the use of the terms ``[automatic
voltage regulator] in service'' and ``[automatic voltage regulator] in
automatic voltage control mode'' is misleading making it hard to

determine the basis for compliance. The Bureau of Reclamation states
that, in discussing this issue with members of the drafting team, the
intent was to capture the hours the excitation system was in automatic
voltage regulator mode but the language of the standard is unclear. The
Bureau of Reclamation suggests that Requirement R1 of VAR-002-WECC-1
should state: ``Generator Operators and Transmission Operators shall
have the excitation system in [automatic voltage regulator] mode 98% of
all operating hours for synchronous generators or synchronous
condensers.''
    63. Mariner comments that there is an inadequacy in VAR-002-WECC-1.
Mariner states that a voltage schedule is needed to appropriately
program the automatic voltage regulator to operate in automatic voltage
control mode. However, the continent-wide Reliability Standard VAR-001-
1 allows transmission owners to provide either a voltage schedule or a
reactive power schedule to the generator operators. Mariner comments
that a reactive power schedule does not provide a generator operator
with enough information to appropriately program the automatic voltage
regulator to operate in automatic voltage control mode as required,
such that the reactive power output must continuously be monitored and
manually adjusted throughout the day, thereby defeating the purpose of
the ``automatic'' voltage regulator. Mariner further states that
operating with these continuous manual adjustments to maintain a
constant reactive power output could actually harm the reliability of
the system. Accordingly, Mariner recommends that the Commission remand
regional Reliability Standard VAR-002-WECC-1.
Commission Determination
    64. We recognize that the stated exemption from operating automatic
voltage regulators during two percent of all operating hours is
included in the levels of non-compliance associated with the currently-
effective WECC VAR-STD-002a-1. We find that, by moving the exemption
from the levels of non-compliance to the revised requirement, the
revision is consistent with the Commission's guidelines on violation
severity levels.\34\ We also accept that requiring an exhaustive list
of exemptions could result in overly broad exemptions that could allow
generator operators to operate without automatic voltage regulators for
more than two percent of all operating hours. If this were to occur,
reliability could be diminished.
---------------------------------------------------------------------------

    \34\ See Violation Severity Level Order, 123 FERC ] 61,284 at P
32; see also North American Electric Reliability Corp., 119 FERC ]
61,260 at P 109 (directing that a substantive compliance
responsibility be set forth in the Requirement of a Reliability
Standard); Order No. 693, FERC Stats. & Regs., Regulations Preambles
2006-2007 ] 31,242 at P 253 (stating ``while Measures and Levels of
Non-Compliance provide useful guidance to the industry, compliance
will in all cases be measured by determining whether a party met or
failed to meet the Requirement given the specific facts and
circumstances of its use, ownership or operation of the Bulk-Power
System'').
---------------------------------------------------------------------------

    65. The Commission understands that the purpose of the two percent
exemption is to allow the generator operator to remove the automatic
voltage regulator from service when the generator operator determines
that automatic voltage regulator operation would jeopardize the
generator or reliability of the Bulk-Power System. All hours included
in the two percent exemption must be consistent with the purpose of the
revised Regional Reliability Standard, which is to ensure the
reliability of the Bulk-Power System within the Western Interconnection
by ensuring that automatic voltage regulators on synchronous generators
and condensers are kept in service and controlling voltage.\35\ We will
not direct WECC to modify the two percent exemption for automatic
voltage regulator operation.
---------------------------------------------------------------------------

    \35\ NERC states that WECC explained ``the two percent allowance
provides for time to start up generating facilities * * * It also
allows for evaluation when the Generator Operators respond to
unforeseen events.'' NERC Petition at 34. In addition, WECC states
``Generator Operators need the flexibility to take either their
[automatic voltage regulator] or [power system stabilizer] out of
service when an operator is not comfortable with the performance of
the [automatic voltage regulator] or [power system stabilizer]. * *
* Furthermore, when a Generator Operator is responding to alarms,
there is not sufficient time to determine if the situation complies
with the Standard's exclusions. Giving the Generator Operator the
time to evaluate the situation impacting the performance of an
[automatic voltage regulator] or [power system stabilizer], rather
than taking the generator out of service, provides for situational
awareness and enhances reliability.'' WECC Comments at 15-16.
---------------------------------------------------------------------------

    66. In response to the comments filed by the Bureau of Reclamation,
we agree that there is a difference between the automatic voltage
regulator being ``in service'' and the automatic voltage regulator
being ``in automatic voltage control mode.'' As the Bureau of
Reclamation explained, modern excitation systems can include several
control function modes, one of which is automatic voltage regulator
mode. If the excitation controller is operating in automatic voltage
regulator mode, then the generator is operating in automatic voltage
control mode. If the excitation controller is operating in another
mode, the generator is not operating in automatic voltage control mode.
Accordingly, we believe that VAR-002-WECC-1 makes this distinction
clear by requiring synchronous generators and synchronous condensers to
have the automatic voltage regulator in service and in automatic
voltage control mode.
    67. With regard to Mariner's concern, we note that WECC has an
ongoing project to address this issue.\36\ We encourage WECC to
consider the comments of Mariner in this proceeding during the
development of its Project WECC-0046 and encourage Mariner to
participate.
---------------------------------------------------------------------------

    \36\ WECC Project WECC-0046--VAR-001-WECC-1 Voltage and Reactive
Control can be followed at: http://www.wecc.biz/Standards/Development/Pages/default.aspx.
---------------------------------------------------------------------------

2. Exclusion of Synchronous Generators That Operate Less Than Five
Percent of All Hours During a Calendar Quarter
    68. Requirement R1.1 of regional Reliability Standard VAR-002-WECC-
1 allows exclusion of any synchronous generator or synchronous
condenser that ``operates for less than five percent of all hours
during any calendar quarter'' from operating with automatic voltage
regulator in service and in automatic voltage control mode. During the
Reliability Standard development process of the revised regional
Reliability Standard, NERC expressed concern regarding the exclusion of
these hours.\37\ WECC explained that the ``exclusion below the five
percent threshold during a calendar quarter permits the continued
practice of allowing the operation of peaking units without penalty for
having an out-of-service [automatic voltage regulator] per the
manufacturer recommendations'' since ``[p]eaking units often operate,
for short periods, at low megawatt levels (below where manufacture[r]s
recommend placing the [automatic voltage regulators] in-service).''\38\
---------------------------------------------------------------------------

    \37\ NERC Petition at 34-35.
    \38\ Id. at 35.
---------------------------------------------------------------------------

NOPR Proposal
    69. In the NOPR, the Commission observed that it appears that WECC
developed the five percent threshold provision to account for out-of-
service automatic voltage regulators per the manufacturer
recommendations regarding automatic voltage regulator design
limitations. The Commission expressed concern, however, that the
provision is written more broadly than necessary. The Commission stated
that it appears inefficient to allow an exemption for any synchronous
generator or synchronous condenser that ``operates for less than five
percent of all hours during any calendar quarter'' in order to address
concerns about operation limits based on manufacture

recommendations, and that such an exemption could potentially exempt
other generator operators and transmission operators. Thus, the
Commission sought comment on whether it should direct WECC to develop a
modification through its Reliability Standards development process that
addresses this concern. The Commission suggested that one reasonable
solution would be to develop a replacement requirement that directly
addresses the need for an exemption for peaking units operating
automatic voltage regulators when necessary to satisfy manufacturer
recommendations regarding the operation of an automatic voltage
regulator.
Comments
    70. WECC, supported by SDG&E, comments that the five percent
exemption is not new and is included in the applicability sections of
WECC VAR-STD-002a-1 and VAR-STD-002b-1. WECC contends that the
retention of this exclusion in VAR-002-WECC-1 will not diminish the
reliability of the bulk electric system in the Western Interconnection.
WECC further contends that it would not be cost-effective for some
older generators that are used for short periods to replace, repair, or
upgrade their automatic voltage regulator. WECC contends that it is
more likely that these generators would be retired rather than make
such repairs and, thus, they would no longer be available during peak
periods. Thus, WECC argues, removing the five percent exemption could
have a negative impact on reliability.
    71. EPSA supports an exemption from requiring ancillary equipment
such as automatic voltage regulators on facilities that are online five
percent or less of the time each year if the unit is not required to
meet system operating limits or interconnection reliability operating
limits.
Commission Determination
    72. The Commission recognizes that an exclusion for synchronous
generators or synchronous condensers that operate for less than five
percent of all hours during a calendar quarter from compliance with the
requirement to have an automatic voltage regulator in service and in
automatic voltage control mode exists as part of the ``applicability''
provision of currently-effective WECC VAR-STD-002a-1. We also
understand that it may not be cost-effective for some older generators
that are used only for short periods of time to replace, repair, or
upgrade their automatic voltage regulator.
    The Commission, therefore, accepts this exclusion on the basis of
WECC's explanation that the retention of this exclusion will not
diminish the reliability of the bulk electric system in the Western
Interconnection. Even with the additional stringency of the regional
Reliability Standard, generator operators must still comply with the
requirements of NERC VAR-002-1.1b, which requires generators with
automatic voltage regulators to operate each generator in the automatic
voltage control mode unless the generator operator has notified the
transmission operator.
3. Automatic Voltage Regulator Replacement
    73. Sub-requirement R1.6 of VAR-002-WECC-1 lengthens the automatic
voltage regulator replacement timeline due to component failure from 15
months to 24 months ``to accommodate design and procurement especially
for nuclear units.'' \39\ NERC supported the extension of the outage
time frame for the automatic voltage regulators.
---------------------------------------------------------------------------

    \39\ NERC Petition at Exhibit C, ``Consideration of Comments for
VAR-002-WECC-1--Automatic Voltage Regulator Comments were due
January 2, 2008.''
---------------------------------------------------------------------------

NOPR Proposal
    74. The Commission, giving due weight to WECC and NERC, proposed to
accept the Reliability Standard with this revision. Nevertheless, the
Commission expressed concern that allowing an additional nine months of
non-operation of an automatic voltage regulator is not necessary for
many, if not most, units. The Commission commented that the additional
replacement time could lead to a decrease in generation that can react
in automatic voltage regulator mode. In the event of a contingency,
this decrease in generation could have an impact on bulk electric
system reliability. The Commission suggested that it may be appropriate
for the Commission to direct WECC to develop a modification to this
provision to address our concern. As an example, the Commission
suggested that WECC could allow fifteen months for replacement with an
opportunity to seek an extension up to nine months where justified.
Alternatively, WECC could retain a fifteen month replacement period for
non-nuclear generator units, and a twenty-four month replacement period
for nuclear generator units. The Commission sought comment regarding
the historical replacement period for nuclear and non-nuclear units,
and the appropriateness of the Commission proposal.
Comments
    75. WECC comments that it has gained considerable knowledge on this
subject since its previous standard was approved by the Commission.
WECC states that drafting team members reviewed replacement experiences
for a number of different types of generators and concluded that a 15-
month replacement requirement was extremely tight. In addition, WECC
states that because many automatic voltage regulators date back to the
early 1970s or earlier, extensive refinements must be made to the
design of the automatic voltage regulator and the excitation system to
integrate an old analog system with a new digital system. WECC also
points out that strict procurement regulations, contracting
requirements, the limited number of suppliers, delivery, and
installation time all make a 15-month deadline infeasible. WECC further
contends that the number of units that are operating without an
automatic voltage regulator in service at the same time due to
component failure is typically very limited. Thus, WECC argues, the
additional time allowed for replacement would have very little to no
impact on the overall reliability of the bulk electric system.
    76. EPSA also contends that 15 months is an insufficient period in
which to require a generator to replace an automatic voltage regulator
because of the length of the procurement period and the importance of
fulfilling compliance requirements with respect to the replacement
equipment. Accordingly, EPSA contends that the 24-month period
represents an improvement that should be adopted by the Commission.
SDG&E agrees that the replacement period should be extended to 24
months based on industry experience with these generator components.
Commission Determination
    77. We recognize, as WECC points out, that replacing an old
automatic voltage regulator may require significant refinements to the
design of the automatic voltage regulator and the excitation system to
integrate a new digital system with an existing analog system, thereby
requiring additional time. We also recognize that, as WECC and EPSA
explain, procurement periods for new automatic voltage regulators might
require more than 15 months. Although we did not receive any specific
details regarding historical automatic voltage regulator replacement
timeframes, WECC states that the drafting team members reviewed
replacement experiences for a number

of different types of generators and concluded the 15-month replacement
requirement was ``extremely tight.'' \40\ Based on these explanations,
we approve the regional Reliability Standard with the modified
provision, Requirement R1.6, which allows up to 24 months for replacing
an excitation system due to component failure.
---------------------------------------------------------------------------

    \40\ WECC Comments at 18.
---------------------------------------------------------------------------

4. Automatic Voltage Regulator Performance
    78. The current regional Reliability Standard provides that ``[a]ll
synchronous generators with automatic voltage control equipment shall
normally be operated in voltage control mode and set to respond
effectively to voltage deviations.'' The revised Reliability Standard
VAR-002-WECC-1 removes this requirement.
NOPR Proposal
    79. The Commission noted that the NERC Petition does not provide
any explanation for, or potential impact of, removing the provision.
Accordingly, the Commission sought further comment on the impact of
removing this provision from the currently-effective WECC regional
Reliability Standard. The Commission expressed concern that, by
removing the requirement for automatic voltage regulators to respond
effectively to voltage deviations, the proposed regional Reliability
Standard would not require entities to assess the performance of the
automatic voltage regulators to ensure they are appropriately
responding to voltage deviations to support reliability of the Bulk-
Power System.
Comments
    80. WECC comments that it removed the requirement for generators
with automatic control equipment to operate in automatic voltage
control mode because NERC Reliability Standard VAR-002-1.1b already
requires generator operators to operate each generator connected to the
interconnected transmission system in the automatic voltage control
mode unless the generator operator has notified the transmission
operator. Thus, WECC contends, exclusion of this requirement from VAR-
002-WECC-1 will have no impact on the reliability of the bulk electric
system because generators must still comply with the requirements of
NERC Reliability Standard VAR-002-1.1b. WECC further contends that
including this requirement in the revised regional Reliability Standard
would unnecessarily expose entities in the West to the possibility of
non-compliance with the same requirement in two different Reliability
Standards.
    81. The Bureau of Reclamation also contends that it is unnecessary
to maintain a requirement for automatic voltage regulators to respond
to voltage deviations. The Bureau of Reclamation explains that the
requirement to ensure proper tuning and performance of automatic
voltage regulators is covered under the MOD series of Reliability
Standards, specifically MOD-012-1 and MOD-013-1.
Commission Determination
    82. As WECC points out, Requirement R1 of NERC Reliability Standard
VAR-002-1.1b requires generator operators to ``operate each generator
connected to the interconnected transmission system in the automatic
voltage control mode (automatic voltage regulator in service and
controlling voltage).'' WECC explains that it understood the currently-
effective regional requirement for all synchronous generators with
automatic voltage control equipment to be normally operating in voltage
control mode and set to respond effectively to voltage deviations to be
duplicative of Requirement R1 of NERC Reliability Standard VAR-002-
1.1b. The Commission believes that, if a generator operator with an
installed automatic voltage regulator complies with the NERC
requirement to have the generator in automatic voltage control mode,
generators should be set to respond effectively to voltage deviations.
Thus, we find that there will be no impact to the reliability of the
bulk electric system if this provision is removed from the regional
Reliability Standard because the requirement remains enforceable under
NERC Reliability Standard VAR-002-1.1.b.
    83. The Commission disagrees with the Bureau of Reclamation's
comment that NERC Reliability Standards MOD-012-0 and MOD-013-1 address
requirements for ensuring proper tuning and performance of automatic
voltage regulators.\41\ The Commission agrees that the requirements in
MOD-012-0 require entities to provide dynamic system modeling and
simulation data, including data regarding ``excitation systems, voltage
regulators, turbine-governor systems, power system stabilizers, and
other associated generation equipment'' to the Regional Entities and
NERC for use in reliability analysis of the interconnected transmission
system.\42\ These Reliability Standards do not require proper
performance and tuning of an automatic voltage regulator, but the data
required by NERC Reliability Standard MOD-012-0 could help identify
improper performance of an automatic voltage regulator when employed in
certain reliability analyses.
---------------------------------------------------------------------------

    \41\ Order No. 693 approved Reliability Standard MOD-012-0 as
mandatory and enforceable. However, Order No. 693 deemed MOD-013-0
as a fill-in-the-blank Reliability Standard in part because its
requirements apply to the Regional Reliability Organizations, now
called Regional Entities, which the Commission was not persuaded
NERC can enforce a Regional Entity's compliance with a Reliability
Standard. See Order No. 693, FERC Stats. & Regs., Pregulations
Preambles ] 31,242 at P 301.
    \42\ Reliability Standard MOD-013-1, Requirement R1.2.
---------------------------------------------------------------------------

    84. Accordingly, in view of WECC's comments that NERC Reliability
Standard VAR-002-1.1b subjects WECC generators to the requirement for
generators to be normally operated ``in voltage control mode and set to
respond effectively to voltage deviations,'' and that a similar
regional Reliability Standard requirement would be duplicative, we will
not direct any modifications to VAR-002-WECC-1.
5. Summary
    85. For the reasons discussed above, the Commission adopts its NOPR
proposal to approve VAR-002-WECC-1 as just, reasonable, not unduly
discriminatory or preferential, and in the public interest. The
Commission also approves NERC's petition to retire currently-effective
WECC-VAR-STD-002a-1. Based on the comments received from WECC and other
entities, we will not, at this time, direct any modifications to
Reliability Standard VAR-002-WECC-1.

D. VAR-501-WECC-1

    86. Regional Reliability Standard VAR-501-WECC-1 contains two
requirements that are intended to ensure that power system stabilizers
on synchronous generators are kept in service. Requirement R1 provides
that each generator operator with a synchronous generator equipped with
a power system stabilizer must have the power system stabilizer in
service during 98 percent of all operating hours. NERC explains that a
power system stabilizer is part of the excitation control system of a
generator used to increase power transfer levels by improving power
system dynamic performance. Sub-requirements R1.1 through R1.12 set
forth exceptions to the operating requirement in Requirement R1.
Requirement R2 states that each generator operator must have
documentation identifying the number of hours excluded for each sub-
requirement R1.1 through R1.12.

NOPR Proposal
    87. In the NOPR, the Commission proposed to approve VAR-501-WECC-1
as just, reasonable, not unduly discriminatory or preferential, and in
the public interest. The Commission also proposed to approve NERC's
proposed retirement of currently-effective WECC VAR-STD-002b-1.
Nevertheless, the Commission sought comment on certain provisions of
VAR-501-WECC-1 including: (1) The power system stabilizer in-service
requirement, (2) the exclusion of synchronous generators that operate
for less than five percent of all hours during a calendar quarter, (3)
the replacement period for power system stabilizers, and (4) power
system stabilizer performance.
1. Power System Stabilizer In-Service Requirement
    88. Requirement R1 of VAR-501-WECC-1 provides that ``Generator
Operators shall have [power system stabilizers] in service 98 [percent]
of all operating hours for synchronous generators equipped with [power
system stabilizers].'' \43\ Requirement R1 also sets forth twelve
circumstances in which a generator operator is excused from this
requirement.
---------------------------------------------------------------------------

    \43\ Proposed regional Reliability Standard VAR-501-WECC-1,
Requirement R1.
---------------------------------------------------------------------------

NOPR Proposal
    89. In the NOPR, the Commission observed that by specifying the
circumstances in which a generator operator is excused from keeping its
power system stabilizer in service, the proposed requirement appears to
be more stringent than the currently-effective requirement in NERC
Reliability Standard VAR-002-1.1b, which requires only that a generator
operator notify its transmission operator when there is a change in
status of its power system stabilizer. Nevertheless, the Commission
commented that, where installed, power system stabilizers should be in-
service at all times, equipment and facility ratings permitting, unless
exempted by the transmission operator.
    90. Similar to its concerns with automatic voltage regulators
addressed in VAR-002-WECC-1, the Commission stated that an exemption to
an in-service requirement might be appropriate to accommodate
generating facilities when they are starting up or operating outside of
their facility ratings. The Commission expressed concern, however, that
the proposed regional Reliability Standard provides no limitation as to
when generating units may use the two percent exemption. Accordingly,
we sought comment on whether the Commission should direct WECC to
develop a modification to the proposed regional Reliability Standard
that would address our concern. The Commission suggested, as an
example, that WECC could develop a modification to replace the blanket
two percent exemption with a more specific list of exemptions that
would accommodate generating units that are starting up or are
operating outside of applicable facility ratings.
Comments
    91. WECC, supported by CDWR, urges the Commission to approve VAR-
501-WECC-1 with its exemption for using power system stabilizers two
percent of all operating hours. WECC comments that VAR-501-WECC-1
addresses an issue that is not covered by any NERC Reliability
Standard. In addition, WECC contends that this exemption is not new and
is included in WECC VAR-STD-002b-1, which addresses power system
stabilizer operation. WECC explains that the current regional
Reliability Standard includes levels of non-compliance that assess no
penalty for generator operators that operate with their power system
stabilizers in service at least 98 percent of the time. WECC contends
that moving this exemption from the levels of non-compliance to the
revised requirement was necessary to meet the Commission's violation
severity level guideline 3, which states that violation severity levels
``should not appear to redefine or undermine the requirement.'' \44\
---------------------------------------------------------------------------

    \44\ WECC Comments at 15, citing Violation Severity Level Order,
123 FERC ] 61,284 at P 32.
---------------------------------------------------------------------------

    92. WECC further contends that a directive reducing the two percent
exemption will not increase the reliable performance of the Western
Interconnection. WECC explains that the exemption is reasonable and a
best business practice developed to enhance and protect reliability.
WECC further explains that generator operators need the flexibility to
take their power system stabilizers out of service when an operator is
not comfortable with the performance of the power system stabilizer.
WECC contends that requiring power system stabilizers to be in service
100 percent of all operating hours would be an onerous requirement that
may, in fact, create a perverse incentive for generator operators to
take their generation off-line rather than risk non-compliance with a
more stringent requirement. Furthermore, WECC contends that the
Commission's suggestion that WECC develop a list of specific exemptions
is untenable. WECC explains that it is difficult to define all of the
reasons where it may be necessary to take a power system stabilizer out
of service. WECC also contends that when a generator operator is
responding to alarms, it may not have sufficient time to determine if
the situation complies with a list of exemptions.
    93. The Bureau of Reclamation points out that three of the twelve
exceptions for the in-service requirement concern the power output
level of the generator: Requirement R1.4 concerns when the unit is
operating in synchronous condenser mode; Requirement R1.5 concerns when
the unit is generating less power than the design limit for effective
power system stabilizer operation; and Requirement R1.6 concerns when
the unit is passing through a range of output that is a known ``rough
zone.'' The Bureau of Reclamation comments that for most hydro
generators the power system stabilizer is always in-service but control
of power system stabilizers is performed by the power system stabilizer
controller, automatically engaging or bypassing the power system
stabilizer when output reaches a certain level. The Bureau of
Reclamation contends that, as hydro generators are commonly used for
regulation and peaking, these generators could be passing through the
power system stabilizer pre-programmed levels several times a day. The
Bureau of Reclamation recommends that the Commission remand VAR-501-
WECC-1.
Commission Determination
    94. We accept the explanation of WECC and other supporting comments
on this matter. We recognize that the stated exemption from operating
power system stabilizers two percent of all operating hours is included
in the levels of non-compliance associated with the currently-effective
WECC VAR-STD-002b-1. Further, we find that, by moving the stated
exemption from the levels of non-compliance measures to the revised
requirement, the revision is consistent with the Commission's
guidelines on violation severity levels and with our determinations in
Order No. 693.\45\ We also accept that requiring an exhaustive list of
exemptions could

result in overly broad exemptions that could allow generator operators
to operate without power system stabilizers for more than two percent
of all operating hours. If this were to occur, reliability could be
diminished.
---------------------------------------------------------------------------

    \45\ See Violation Severity Level Order, 123 FERC ] 61,284 at P
32; see also North American Electric Reliability Corp., 119 FERC ]
61,260 at 109 (directing that a substantive compliance
responsibility be set forth in the Requirement of a Reliability
Standard); Order No. 693, FERC Stats. & Regs., Regulations Preambles
2006-2007 ] 31,242 at P 253 (stating ``while Measures and Levels of
Non-Compliance provide useful guidance to the industry, compliance
will in all cases be measured by determining whether a party met or
failed to meet the Requirement given the specific facts and
circumstances of its use, ownership or operation of the Bulk-Power
System'').
---------------------------------------------------------------------------

    95. The Commission understands that the purpose of the two percent
exemption is to allow the generator operator with an installed power
system stabilizer to remove the power system stabilizer from service
when the generator operator determines that power system stabilizer
operation would jeopardize the generator or reliability of the Bulk-
Power System. All hours included in the two percent exemption must be
consistent with the purpose of the revised regional Reliability
Standard, which is to ensure the reliability of the Bulk-Power System
within the Western Interconnection by ensuring that power system
stabilizers on synchronous generators are kept in service and
controlling voltage.\46\ We will not direct WECC to modify the two
percent exemption for power system stabilizer operation.
---------------------------------------------------------------------------

    \46\ See supra note 35.
---------------------------------------------------------------------------

2. Exclusion of Synchronous Generators That Operate for Less Than Five
Percent of All Hours During a Calendar Quarter
    96. Requirement R1.1 of regional Reliability Standard VAR-501-WECC-
1 allows exclusion of any synchronous generator that operates for less
than five percent of all hours during any calendar quarter from the
requirement that it operate with power system stabilizers in service.
In its petition, NERC explained that, during the Reliability Standard
development process of the regional Reliability Standard, NERC
expressed concern regarding the exclusion of these hours.\47\ WECC
responded by explaining that the ``exclusion below the five percent
threshold during a calendar quarter permits the continued practice of
allowing the operation of peaking units without penalty for having an
out-of-service power system stabilizer per the manufacturer
recommendations'' since ``[p]eaking units often operate, for short
periods, at low megawatt levels (below where manufacture[r]s recommend
placing the [power system stabilizer] in-service).'' \48\
---------------------------------------------------------------------------

    \47\ NERC Petition at 40.
    \48\ Id.
---------------------------------------------------------------------------

NOPR Proposal
    97. In the NOPR, the Commission noted that it appears that WECC
developed the five percent threshold to account for out-of-service
power system stabilizer per manufacturer recommendations. We sought
comment on whether the proposed provision is written more broadly than
necessary. Based on the comments received, the Commission stated that
it might propose to direct WECC to develop a modification through its
Reliability Standards development process that addresses this concern.
The Commission suggested that one reasonable solution would be to
develop a replacement requirement that directly addresses the need for
an exemption for peaking units that may not operate with power system
stabilizers to satisfy manufacturer recommendations.
Comments
    98. WECC, supported by SDG&E and EPSA, comments that the five
percent exemption is not new and is included in the applicability
sections of WECC VAR-STD-002a-1 and VAR-STD-002b-1. WECC contends that
the retention of this exclusion in the VAR-501-WECC-1 will not diminish
the reliability of the bulk electric system in the Western
Interconnection. WECC further contends that it would not be cost-
effective for some older generators that are used for short periods to
replace, repair, or upgrade their power system stabilizers. WECC
contends that it is more likely that these generators would be retired
rather than make such repairs and, thus, they would no longer be
available during peak periods. Thus, WECC contends, removing the five
percent exemption could have a negative impact on reliability.
Commission Determination
    99. We recognize that a stated exclusion for synchronous generators
that operate for less than five percent of all hours during a calendar
quarter from compliance with the requirement to have a power system
stabilizer in service exists in the applicability section of the
currently-effective WECC VAR-STD-002b-1. We also understand that it may
not be cost-effective for some older generators that are used only for
short periods of time to replace, repair, or upgrade their power system
stabilizers. We, therefore, agree that this exclusion will not diminish
the reliability of the bulk electric system in the Western
Interconnection. We believe that the requirement is acceptable because
there is no corresponding NERC requirement for power system stabilizers
and, thus, the revised standard is more stringent than the requirements
of the NERC Reliability Standards. Accordingly, we are satisfied with
WECC's explanation on this matter.
3. Power System Stabilizer Replacement
    100. Proposed sub-requirement R1.10 lengthens the power system
stabilizer replacement timeline due to component failure from 15 months
to 24 months ``to accommodate design and procurement especially for
nuclear units.'' \49\
---------------------------------------------------------------------------

    \49\ NERC Petition at Exhibit C, ``Consideration of Comments for
VAR-501-WECC-1--Power System Stabilizer Comments were due January 2,
2008.''
---------------------------------------------------------------------------

NOPR Proposal
    101. The Commission proposed to accept this requirement even though
WECC provided limited evidence in the record to support the extension
of the outage time frame for power system stabilizers from 15 months to
24 months. However, since the rationale provided for the increased
replacement period is based on the needs of nuclear power generators,
the Commission expressed concern whether the additional nine months are
necessary for many, if not most, units. The Commission explained that
the additional replacement time could lead to a decrease in generation
units operating with power system stabilizers. The Commission commented
that, in the event of a contingency, such a decrease could have an
impact on bulk electric system reliability. Accordingly, the Commission
sought comment regarding the historical replacement period for nuclear
and non-nuclear units, and the appropriateness of the Commission
proposal.
Comments
    102. WECC comments that it has gained considerable knowledge on
this subject since the Commission approved the currently-effective
regional Reliability Standard in 2007. WECC states that drafting team
members reviewed replacement experiences for a number of different
types of generators and concluded that a 15 month replacement
requirement was extremely tight. In addition, WECC states that because
many power system stabilizers date back to the early 1970s or earlier,
extensive refinements must be made to the design of the power system
stabilizer and the excitation system to integrate an old analog system
with a new digital system. WECC also points out that strict procurement
regulations, contracting requirements, the limited number of suppliers,
delivery, and installation time all make a 15 month deadline
infeasible. WECC further contends that the number of units that are
operating without a power system stabilizer in service at the same time
due to component failure is typically very limited. Thus, WECC argues,
there

would be very little, if any, impact on bulk electric system
reliability that would result from an increase in the outage time frame
to 24 months.
    103. EPSA comments that 15 months is an insufficient period in
which to require a generator to replace a power system stabilizer
because of the length of the procurement period and the importance of
fulfilling compliance requirements with respect to the replacement
equipment. Accordingly, EPSA advocates that the 24-month period
represents an improvement that should be adopted by the Commission.
SDG&E agrees that the replacement period should be extended to 24
months based on industry experience with these generator components.
Commission Determination
    104. We recognize, as WECC points out, that replacing an old power
system stabilizer may require significant refinements to the design of
the power system stabilizer and the excitation system to integrate a
new digital system with an existing analog system, thereby requiring
additional time. We also recognize that, as WECC and EPSA explain,
procurement periods for new power system stabilizers might require more
than 15 months. Although we did not receive any specific details
regarding historical power system stabilizer replacement timeframes,
WECC states that the drafting team members reviewed replacement
experiences for a number of different types of generators and concluded
the 15-month replacement requirement was ``extremely tight.'' \50\
Based on these explanations, we approve the regional Reliability
Standard with the modified provision, Requirement R1.6, which allows up
to 24 months for replacing a power system stabilizer and excitation
system due to component failure.
---------------------------------------------------------------------------

    \50\ WECC Comments at 18.
---------------------------------------------------------------------------

4. Power System Stabilizer Performance
    105. The current regional Reliability Standard requires all
generators with power system stabilizers to be properly tuned in
accordance with the WECC requirements.\51\ The proposed regional
Reliability Standard removes the tuning requirement without explanation
or analysis of the potential impact of removing the provision.
---------------------------------------------------------------------------

    \51\ Id. Requirement WR1 of the currently-effective regional
Reliability Standard provides: ``Power System Stabilizers on
generators shall be kept in service at all times, unless one of the
exemptions listed in Section C (Measures) applies, and shall be
properly tuned in accordance with WECC requirements.''
---------------------------------------------------------------------------

NOPR Proposal
    106. In the NOPR, the Commission expressed its belief that, if a
power system stabilizer is in-service, it must be properly tuned to
enhance system damping and maintain system stability. The Commission,
therefore, sought further explanation from WECC and NERC, and public
comment, on the impact of removing the tuning requirement.
Comments
    107. WECC states that the Commission is correct that a properly-
tuned power system stabilizer is necessary to enhance system damping.
WECC contends, however, that a power system stabilizer tuning
requirement is not necessary because, in order for a generator operator
to meet the in-service requirements of VAR-501-WECC-1 without
experiencing inappropriate system oscillations, that generator operator
typically must have a properly tuned power system stabilizer. WECC adds
that VAR-501-WECC-1 is a performance, not a tuning standard, which is
why WECC's standards development drafting team excluded this
requirement from the revised regional Reliability Standard.
    108. Moreover, WECC contends that power system stabilizer tuning
should not be added to VAR-501-WECC-1 because tuning is highly site and
unit specific, making it difficult to enforce a ``proper tuning''
requirement. WECC further contends that identifying whether or not a
power system stabilizer or excitation system is properly tuned is very
dependent upon the professional opinion of the expert performing the
tuning. WECC also points out that older analog power system stabilizers
are being replaced with newer digital versions, which do not require
any further adjustments unless changes are made to the system
configuration. Moreover, WECC contends that because the new digital
power system stabilizers, unlike the older analog versions, do not
drift, the periodic testing requirement which sought to address drift
by requiring a five-year tuning power system stabilizer testing program
is no longer necessary.
    109. EPSA comments that a generator operator can purchase, install
and tune power system stabilizer equipment but regional entities may
have the tools to measure proper tuning. EPSA contends that an out-of-
tune power system stabilizer could be identified faster using analyses
performed by the transmission operator or regional entity than the
owner of the power system stabilizer could identify by routinely
checking power system stabilizer tuning parameters. Moreover, EPSA
comments, new power system stabilizers are digital, so less component
drift takes place than in older power system stabilizers that would
need to be checked periodically. EPSA predicts that it may not be long
before new power system stabilizers are self-learning and self-tuning.
    110. In contrast, PacifiCorp suggests modifying the proposed
regional Reliability Standard to include language that the power system
stabilizer shall be tuned in accordance with WECC requirements, without
prescribing any intervals. PacifiCorp further suggests that carrying
over this requirement from the current standard would ensure any power
system stabilizer will be properly tuned.
Commission Determination
    111. Although a properly-tuned power system stabilizer is necessary
to enhance system damping, we accept the exclusion of the current
tuning requirement based on WECC's explanation that, in order for a
generator operator with an installed power system stabilizer to meet
the in-service requirements of VAR-501-WECC-1, the power system
stabilizer must be properly tuned to prevent experiencing inappropriate
system oscillations. A tuning requirement would require removal of the
power system stabilizer from service, which may cause the generator
operator to be non-compliant with the performance requirements of VAR-
501-WECC-1. Accordingly, we will not direct any modifications to VAR-
501-WECC-1 regarding a power system stabilizer tuning requirement. If,
in the future, WECC develops a requirement for power system stabilizer
tuning, we urge WECC to consider the comments submitted by PacifiCorp
to include such a tuning requirement.
5. Reporting Burden
NOPR Proposal
    112. In the NOPR, the Commission noted that the revised WECC
Reliability Standards do not modify or otherwise affect the burdens
related to the collection of information already in place. Thus, the
Commission preliminarily concluded that the revised WECC Reliability
Standards will neither increase the reporting burden nor impose any
additional information collection requirements.
Comments
    113. Melissa Kurtz, USACE NWW, USACE Portland, USACE Seattle
contend that, contrary to the Commission's burden estimate in the NOPR,
compliance with VAR-501-

WECC-1 will impose an additional burden on entities that must now track
when a power system stabilizer is off. These commenters state that the
power system stabilizer is largely handled by the generator exciter,
which is programmed to activate and deactivate the power system
stabilizer depending on generator loading conditions. They explain that
the exciter automatically turns the power system stabilizer off when
the unit is passing through a rough zone, when the unit is generating
less power than its design limit for effective power system stabilizer
operation, or when the unit is condensing. They contend that VAR-501-
WECC-1 will require tracking the status of the power system stabilizer
that is turning on and off automatically along with the reason it is
turned off. They also explain that a power system stabilizer is a piece
of remote equipment that sits on the powerhouse floor and is not
conveniently located for observation. Thus, they argue that the
required tracking is not reasonable and will not add to system
reliability because it uses scarce resources to track the information.
Further, commenters state that tracking this information would require
hardware and software modifications by staff. They suggest that
evidence of compliance through system settings is more beneficial than
micromanaging the results of a machine.
    114. The Bureau of Reclamation states that it has no process to
track the minutes that the power system stabilizer is in a bypass
condition and to develop such a process, as would be required under
Requirement R2 of VAR-501-WECC-1, would be very burdensome. The Bureau
of Reclamation further comments that tracking such a transient
condition does not add to the reliability of the bulk electric system.
Finally, the Bureau of Reclamation points out that the current regional
Reliability Standard does not include a requirement to track and
document the time the power system stabilizer controller places the
power system stabilizer in bypass condition.
Commission Determination
    115. The Commission finds that VAR-501-WECC-1 does not impose any
new reporting requirements. Under Requirement R3.1 of NERC Reliability
Standard VAR-002-1.1b a generator operator must notify its transmission
operator as soon as practical but no later than 30 minutes after a
``status or capability change on any generator Reactive Power resource,
including the status of each automatic voltage regulator and power
system stabilizer and the expected duration of the change in status or
capability.'' \52\ Thus, generator operators already must monitor and
report changes in status of their power system stabilizers.
---------------------------------------------------------------------------

    \52\ NERC Reliability Standard VAR-002-1.1b, Requirement R3.1.
---------------------------------------------------------------------------

    116. We believe that the documentation requirement for exempt
outages of power system stabilizers under Requirement R2 of VAR-501-
WECC-1 is consistent with the existing reporting requirement under
Requirement R3.1 of NERC VAR-002-1.1b. If a generator operator must
already notify its transmission operator of a change in status of each
power system stabilizer, it should not create an added burden to
document those changes. Thus, we do not expect implementation of VAR-
501-WECC-1 to result in an increased reporting burden to generator
operators. If, however, generator operators in the Western
Interconnection continue to be concerned about their compliance with
either of these Reliability Standards, we believe that such a concern
is best addressed through the compliance programs at either WECC or
NERC.
6. Summary
    117. The Commission adopts its NOPR proposal to approve VAR-501-
WECC-1 as just, reasonable, not unduly discriminatory or preferential,
and in the public interest. We accept WECC's explanations for the
issues raised in the NOPR. Accordingly, we will not, at this time,
direct WECC to develop any modifications to VAR-501-WECC-1. We also
dismiss arguments raised by Melissa Kurtz, USACE NWW, USACE Portland,
and USACE Seattle that the revised regional Reliability Standard
creates an undue reporting burden.

E. NERC VAR-002-1.1b

    118. In the NOPR, the Commission sought comment as to whether it
should direct NERC to develop a modification to VAR-002-1.1b to clarify
that, if a generator has an automatic voltage regulator or power system
stabilizer installed, it must be in-service at all times, equipment and
facility ratings permitting, unless exempted by the transmission
operator.
    119. The Commission noted that NERC Reliability Standard does not
address power system stabilizer tuning. The Commission stated that a
properly tuned power system stabilizer is necessary to enhance system
damping. If a power system stabilizer is installed, periodic review of
the power system stabilizer tuning is a significant component of
maintaining system stability to ensure that system changes have not
impacted the performance of the power system stabilizer in supporting
system stability. Accordingly, the Commission sought comment on whether
it should propose to direct NERC to develop a continent-wide
Reliability Standard to address this concern. The Commission added that
any resulting proposal to direct the development of modifications to
the NERC Reliability Standards would be addressed in a separate
proceeding.
Comments
    120. NERC comments that it has not performed the technical analysis
necessary to determine whether it is necessary for Bulk-Power System
reliability to develop a tuning requirement for power system
stabilizers. If the Commission receives comments that would compel it
to direct NERC to develop such a requirement, NERC asks that the
Commission allow NERC enough flexibility so that it can appropriately
prioritize the directive.
Commission Determination
    121. The Commission will not, at this time, commence a new
proceeding to propose a directive to NERC to develop a requirement on
power system stabilizer tuning. We recognize that the need for a
requirement on power system stabilizer tuning is reduced as generator
operators install new digital power system stabilizers, which are less
prone to drifting and should not require adjustment unless changes are
made to system configurations. Nevertheless, we may revisit this
proposal as more practical experience with the new digital technology
progresses.

F. Violation Risk Factors and Violation Severity Levels

    122. In the event of a violation of a Reliability Standard,
consistent with NERC practices, WECC establishes the initial value
range for the corresponding base penalty amount. To do so, WECC assigns
a violation risk factor for each requirement of a Reliability Standard
that relates to the expected or potential impact of a violation of the
requirement on the reliability of the Bulk-Power System. In addition,
WECC defines up to four violation severity levels--Lower, Moderate,
High, and Severe--as measurements for the degree to which the
requirement was violated in a specific circumstance.
    123. Violation risk factors and violation severity levels are not
part of the Reliability Standard and, thus, are appropriately treated
as an appendix to

NERC's Rules of Procedure.\53\ Revisions of violation severity levels
do not modify the Reliability Standard. Accordingly, NERC and the
regional entities are not required to comport with the Reliability
Standards development provisions of section 215 of the FPA when
revising a violation risk factor or violation severity level
assignment.\54\
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    \53\ Violation Severity Level Order, 123 FERC ] 61,284 at P 15.
    \54\ See North American Electric Reliability Corporation, 120
FERC ] 61,145 at P 16.
---------------------------------------------------------------------------

    124. In Order No. 705, the Commission approved 63 of NERC's 72
proposed violation risk factors for the version one FAC Reliability
Standards and directed NERC to file violation severity level
assignments before the version one FAC Reliability Standards become
effective.\55\ Subsequently, NERC developed violation severity levels
for each requirement of the Commission-approved FAC Reliability
Standards, as measurements for the degree to which the requirement was
violated in a specific circumstance.
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    \55\ Facilities Design, Connections and Maintenance Reliability
Standards, Order No. 705, 121 FERC ] 61,296, at P 137 (2007).
---------------------------------------------------------------------------

    125. On June 19, 2008, the Commission issued its Violation Severity
Level Order approving the violation severity level assignments filed by
NERC for the 83 Reliability Standards approved in Order No. 693.\56\ In
that order, the Commission offered four guidelines for evaluating the
validity of violation severity levels, and ordered a number of reports
and further compliance filing to bring the remainder of NERC's
violation severity levels into conformance with the Commission's
guidelines. The four guidelines are: (1) Violation severity level
assignments should not have the unintended consequence of lowering the
current level of compliance; (2) violation severity level assignments
should ensure uniformity and consistency among all approved Reliability
Standards in the determination of penalties; \57\ (3) violation
severity level assignments should be consistent with the corresponding
requirement; and (4) violation severity level assignments should be
based on a single violation, not a cumulative number of violations.\58\
The Commission found that these guidelines will provide a consistent
and objective means for assessing, inter alia, the consistency,
fairness and potential consequences of violation severity level
assignments. The Commission noted that these guidelines were not
intended to replace NERC's own guidance classifications but, rather, to
provide an additional level of analysis to determine the validity of
violation severity level assignments.
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    \56\ Violation Severity Level Order, 123 FERC ] 61,284.
    \57\ Guideline 2 contains two sub-parts: (a) The single
violation severity level assignment category for binary requirements
should be consistent and (b) violation severity levels assignments
should not contain ambiguous language.
    \58\ Violation Severity Level Order, 123 FERC ] 61,284 at P 17.
---------------------------------------------------------------------------

    126. On August 10, 2009, NERC submitted an informational filing
setting forth a summary of revised guidelines that NERC intends to use
in determining the assignment of violation risk factors and violation
severity levels for Reliability Standards. NERC states that these
revised guidelines were consistent with Commission's guidelines. On May
5, 2010, NERC submitted an informational filing as a supplement to its
pending March 5, 2010 Violation Severity Level Order compliance
filing.\59\ In that May 5, 2010 filing, NERC proposes to assign a
violation severity level only to each main requirement. Thus, a
violation of any number of sub-requirements would trigger only a single
violation of the main requirement. This proposed ``roll-up''
methodology is currently pending before the Commission in Docket No.
RR08-4-005.
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    \59\ North American Reliability Corporation, Filing of the North
American Electric Reliability Corporation regarding the Assignment
of Violation Risk Factors and Violation Severity Levels, Docket No.
RR08-4-005 (filed May 5, 2010).
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WECC Proposal
    127. As discussed above, WECC has developed violation risk factors
and violation severity levels for each of these revised regional
Reliability Standards. WECC states that it developed these violation
risk factors and violation severity levels in response to comments from
NERC and the Commission that it should replace its existing sanctions
tables. In addition, NERC states in its petition that WECC has agreed
to conform the format of the violation severity levels to that of the
NERC Reliability Standards in revisions to the four regional
Reliability Standards.
Commission Determination
    128. The Commission approves the violation risk factors and
violation severity levels assigned to FAC-501-WECC-1, PRC-004-WECC-1,
VAR-002-WECC-1, and VAR-501-WECC-1. We note, however, that there appear
to be some missing violation risk factors and severity levels. Even
with these potential gaps, however, the requirements of the WECC
Reliability Standards approved in this Final Rule shall be enforceable
upon their implementation.
    129. In FAC-501-WECC-1, the Lower violation severity level applies
when the transmission maintenance and inspection plan does not include
facilities for one of the paths in the WECC Transfer Path Table, but
the transmission owners are performing maintenance and inspection for
those facilities. The Moderate violation severity level applies when
the transmission maintenance and inspection plan does not include
facilities for two of the paths in the WECC Transfer Path Table, and
the transmission owners are not performing maintenance and inspection
for those facilities. Based on these two violation severity level
assignments, it is ambiguous which violation severity level would apply
if the transmission maintenance and inspection plan does not include
facilities for one of the paths in the WECC Transfer Path Table, and
the transmission owners are not performing maintenance and inspection
for those facilities.
    130. In PRC-004-WECC-1, the violation severity levels for
Requirement R2.3 do not define any potential violations for the
transmission owner even though both Requirement 2.3 and sub-Requirement
2.3.1 apply to the transmission owner, a situation that could be viewed
as violating violation severity level guideline 3. Also in PRC-004-
WECC-1, violation risk factors have not been assigned for Requirements
R2, R2.4 and R2.4.1. If WECC believes that it would be inappropriate to
assign violation risk factors to these requirements, it should submit
an explanation.
    131. In VAR-002-WECC-1, Requirement R1 requires the automatic
voltage regulators to be ``in service and in automatic voltage control
mode'' but the violation severity levels for Requirement R1 specify
only that the automatic voltage regulator must be ``in service,'' which
could be viewed as violating violation severity level guideline 3.
Also, the violation severity levels for VAR-002-WECC-1, Requirement R1
lower the level of compliance from the levels of non-compliance
associated with the currently-effective VAR-STD-002a-1. VAR-STD-002a-1
includes four levels of non-compliance (Level 1, Level 2, Level 3, and
Level 4) which have been translated into the four violation severity
levels (Lower, Moderate, High, and Severe). The four levels of non-
compliance are defined by the automatic voltage regulator in service
hours being: (Level 1) less than 98 percent but at least 96 percent;
(Level 2)

less than 96 percent but at least 94 percent; (Level 3) less than 94
percent but at least 92 percent; and (Level 4) less than 92 percent.
The violation severity levels assigned to Requirement R1 of VAR-002-
WECC-1 are defined by the automatic voltage regulator in service hours
being: (Lower) less than 98 percent but at least 90 percent; (Moderate)
less than 90 percent but at least 80 percent; (Higher) less than 80
percent but at least 70 percent; and (Severe) less than 70 percent.
This change appears to violate violation severity level guideline 1. In
addition, WECC has determined that High and Severe violation severity
levels are not applicable to Requirement R2 of VAR-002-WECC-1.
    132. In VAR-501-WECC-1, the violation severity levels for
Requirement R1 lower the level of compliance from the levels of non-
compliance associated with the currently-effective VAR-STD-002a-1. VAR-
STD-002b-1 includes four levels of non-compliance (Level 1, Level 2,
Level 3, and Level 4) which have been translated into the four
violation severity levels (Lower, Moderate, High, and Severe). The four
levels of non-compliance are defined by the power system stabilizer in
service hours being: (Level 1) less than 98 percent but at least 96
percent; (Level 2) less than 96 percent but at least 94 percent; (Level
3) less than 94 percent but at least 92 percent; and (Level 4) less
than 92 percent. The proposed violation severity levels are defined by
the power system stabilizer in service hours being: (Lower) less than
98 percent but at least 90 percent; (Moderate) less than 90 percent but
at least 80 percent; (Higher) less than 80 percent but at least 70
percent; and (Severe) less than 70 percent. This change appears to
violate violation severity level guideline 1. For Requirement R2, only
lower and moderate violation severity levels were defined.
    133. Consistent with our concerns outlined above, we direct WECC to
consider modifications to the violation risk factors and violation
severity levels assigned to these four regional Reliability Standards.
Accordingly, we direct WECC to submit revisions to or explanations
justifying these violation risk factors and violation severity levels
within 60 days from the issuance of this order. Consistent with NERC
practice, these violation risk factors and violation severity levels
should be in table format. Interested parties will have an opportunity
to comment on this filing. In addition, the Commission supports WECC's
agreement to conform the violation severity levels format to that of
the NERC Reliability Standards related to FAC-501-WECC-1, VAR-002-WECC-
1 and VAR-501-WECC-1 in future revisions to the regional Reliability
Standards.\60\ Accordingly, we expect WECC to make future revisions to
these and other violation risk factors and violation severity level
assignments consistent with any changes in NERC and Commission
guidelines.
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    \60\ NERC Petition at 18, 35 and 40.
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III. Information Collection Statement

    134. The information collection requirements in this Final Rule are
identified under the Commission data collection FERC-725E, ``Mandatory
Reliability Standards for the Western Electricity Coordinating
Council.'' The information collection requirements are being submitted
to the Office of Management and Budget (OMB) for review under section
3507(d) of the Paperwork Reduction Act of 1995.\61\ OMB's regulations
to approve certain information collection requirements imposed by
agency rule.\62\
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    \61\ 44 U.S.C. 3507(d).
    \62\ 5 CFR 1320.11
---------------------------------------------------------------------------

    135. The four new regional Reliability Standards (FAC-501-WECC-1,
PRC-004-WECC-1, VAR-002-WECC-1, and VAR-501-WECC-1) replace existing
regional Reliability Standards PRC-STD-001-1, PRC-STD-003-1, PRC-STD-
005-1, VAR-STD-002a-1, and VAR-STD-002b-1, which were approved by the
Commission in its June 2007 Order.\63\ In addition, the new regional
Reliability Standards introduce five new regional definitions for the
NERC Glossary: Functionally Equivalent Protection System, Functionally
Equivalent Remedial Action Scheme, Security-Based Misoperations,
Dependability-Based Misoperations, and Commercial Operation. We find
that the requirements of these revised regional Reliability Standards
may result in minor changes in burden to applicable entities but,
overall, these requirements will not substantially add to or increase
burden to entities that must already comply with the existing regional
Reliability Standards and the corresponding NERC Reliability Standards.
---------------------------------------------------------------------------

    \63\ North American Electric Reliability Corp. 119 FERC ]
61,260.
---------------------------------------------------------------------------

    136. There are, however, two differences with respect to the
applicability of the new versus the existing regional Reliability
Standards. First, existing regional Reliability Standard WECC PRC-STD-
005-1 is applicable to transmission owners or operators that maintain
transmission paths indicated in the WECC Transfer Path Table. By
contrast, new Reliability Standard FAC-501-WECC-1 is applicable only to
transmission owners that maintain transmission paths indicated in the
WECC Transfer Path Table. Thus, transmission operators no longer must
comply with these regional requirements. Second, existing regional