[Federal Register: June 18, 2007 (Volume 72, Number 116)]
[Notices]
[Page 33462-33476]
[DOCID:fr18jn07-46]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RR07-11-000]

North American Electric Reliability Corporation; Order Approving
Regional Reliability Standards for the Western Interconnection and
Directing Modifications

Issued June 8, 2007.
    Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.
    1. On March 26, 2007, the North American Electric Reliability
Corporation (NERC) submitted for approval eight proposed regional
Reliability Standards for the Western Electricity Coordinating Council
(WECC). The proposed regional Reliability Standards would apply in the
Western Interconnection in addition to the 83 mandatory Reliability
Standards developed by NERC that will take effect on a nationwide basis
beginning in June 2007.\1\ The proposed regional Reliability Standards
would allow the continuation of certain reliability practices that are
currently in effect in the Western Interconnection. As discussed below,
pursuant to section 215(d)(2) of the Federal Power Act (FPA), the
Commission approves the proposed regional Reliability Standards. As a
separate action, pursuant to section 215(d)(5) of the FPA, the
Commission directs WECC to develop several specific modifications to
the regional Reliability Standards when WECC develops, through its
Reliability Standards development process, permanent, replacement
Reliability Standards.
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    \1\ See Mandatory Reliability Standards for the Bulk-Power
System, Order No. 693, 118 FERC ] 61,218 (March 16, 2007), 72 FR
16,416 (April 4, 2007), reh'g pending.
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I. Background

A. EPAct 2005 and Mandatory Reliability Standards

    2. In August 2005, the Electricity Modernization Act of 2005, which
is Title XII, Subtitle A, of the Energy Policy Act of 2005 (EPAct
2005), was enacted into law.\2\ EPAct 2005 adds a new section 215 to
the FPA, which requires a Commission-certified Electric Reliability
Organization (ERO) to develop mandatory and enforceable Reliability
Standards.\3\ Before a Reliability Standard may take effect, the ERO
must submit the standard to the Commission and obtain the Commission's
approval.\4\ Once approved, the Reliability Standard can be enforced by
the ERO subject to Commission oversight, or the Commission can
independently enforce the Reliability Standard.\5\
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    \2\ Energy Policy Act of 2005, Pub. L. No. 109-58, Title XII,
Subtitle A, 119 Stat. 594, 941 (2005), to be codified at 16 U.S.C.
824o.
    \3\ 16 U.S.C. 824o(c)-(e).
    \4\ 16 U.S.C. 824o(d).
    \5\ 16 U.S.C. 824o(e)(3).
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    3. On February 3, 2006, the Commission issued Order No. 672,
implementing section 215 of the FPA.\6\ Pursuant to Order No. 672, the
Commission certified one organization, NERC, as the ERO.\7\ Reliability
Standards that the ERO proposes to the Commission may include
Reliability Standards that are proposed to the ERO by a Regional
Entity.\8\ A Regional Entity is an entity that has been approved by the
Commission to enforce Reliability Standards under delegated authority
from the ERO.\9\ When the ERO reviews a regional Reliability Standard
that would be applicable on an Interconnnection-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.\10\
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    \6\ Rules Concerning Certification of the Electric Reliability
Organization; Procedures for the Establishment, Approval and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204 (2006), order on reh'g, Order No. 672-A,
FERC Stats. & Regs. ] 31,212 (2006).
    \7\ See North American Electric Reliability Corp., 116 FERC ]
61,062 (ERO Certification Order), order on reh'g and compliance, 117
FERC ] 61,126 (2006).
    \8\ 16 U.S.C. 824o(e)(4).
    \9\ 16 U.S.C. 824o(a)(7) and (e)(4).
    \10\ 16 U.S.C. 824o(d)(3); 18 CFR 39.5(b).
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    4. When the ERO submits a proposed Reliability Standard to the
Commission, the ERO must: (1) Describe the basis and purpose of the
Reliability Standard; (2) summarize the development and review
proceedings that led to the Reliability Standard; and (3) demonstrate
that the Reliability Standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest.\11\
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    \11\ 18 CFR 39.5(a).
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    5. In reviewing the ERO's submission, the Commission will give due
weight to the ERO's technical expertise, except concerning the effect
of a proposed Reliability Standard on competition.\12\ The Commission
will also give due weight to the technical expertise of a Regional
Entity organized on an Interconnection-wide basis with respect to a
proposed Reliability Standard to be applicable within that
Interconnection.\13\ Moreover, the Commission may give ``due
deference'' to the advice of a Regional Advisory Body that is organized
on an Interconnection-wide basis.\14\
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    \12\ 16 U.S.C. 824o(d)(2).
    \13\ Id.
    \14\ 16 U.S.C. 824o(j). A Regional Advisory Body is an entity
established upon petition to the Commission that is organized to
advise the ERO, a Regional Entity or the Commission regarding
certain matters including whether a Reliability Standard proposed to
apply within the region is just, reasonable, not unduly
discriminatory or preferential, and in the public interest. 18 CFR
39.13(c) (2006).
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    6. The Commission may approve a proposed Reliability Standard if
the Commission finds it is just, reasonable, not unduly discriminatory
or preferential, and in the public interest.\15\ In addition, the
Commission explained in Order No. 672 that ``uniformity of Reliability
Standards should be the goal and the practice, the rule rather than the
exception.'' \16\ Yet, the Commission recognized that ``the goal of
greater uniformity does not, however, mean that regional differences
cannot exist.\17\ The Commission then provided the following guidance:
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    \15\ 16 U.S.C. 824o(d)(2).
    \16\ Order No. 672 at P 290.
    \17\ Id. at 291.

    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 by 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.\18\
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    \18\ Id.
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B. WECC

    7. WECC is responsible for overseeing transmission system
reliability in the Western Interconnection since 2002, when WECC was
formed from predecessor reliability organizations. 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. WECC developed a
Reliability Management System (RMS) pursuant to which transmission
operators in the Western Interconnection agreed by contract to be bound
by the WECC reliability criteria and sanctions for non-compliance.
According to WECC, the criteria are recognized by all WECC members but
are contractually binding only on members that signed an RMS
Agreement.\19\
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    \19\ See WECC April 17, 2007 Comments at 16.
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    8. In an April 19, 2007 order, the Commission accepted delegation
agreements between NERC and each of eight Regional Entities.\20\ In the
April 19 Order, the Commission accepted WECC as a Regional Entity
organized on an Interconnection-wide basis. In addition, the Commission
accepted WECC's Standards Development Manual which sets forth WECC's
Reliability Standards development process.\21\ The Commission also
directed WECC to make certain clarifications to its Standards
Development Manual in a filing to be submitted within 180 days of the
order.
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    \20\ North American Electric Reliability Corp., 119 FERC ]
61,060 at P 432 (2007) (April 19 Order).
    \21\ Id. at PP 469-470.
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C. The Eight Proposed Regional Reliability Standards

    9. NERC has submitted for the Commission's approval the following
eight regional Reliability Standards that were proposed to NERC by WECC
to apply in the Western Interconnection:

WECC-BAL-STD-002-0 (Operating Reserves)
WECC-IRO-STD-006-0 (Qualified Path Unscheduled Flow Relief)
WECC-PRC-STD-001-1 (Certification of Protective Relay Applications and
Settings)
WECC-PRC-STD-003-1 (Protective Relay and Remedial Action Scheme
Misoperation)
WECC-PRC-STD-005-1 (Transmission Maintenance)
WECC-TOP-STD-007-0 (Operating Transfer Capability)
WECC-VAR-STD-002a-1 (Automatic Voltage Regulators)
WECC-VAR-STD-002b-1 (Power System Stabilizers)

    10. In its March 26, 2007 filing (NERC Filing), NERC states that
the proposed regional Reliability Standards are translations of
existing reliability criteria under WECC's RMS program. According to
NERC, WECC developed most of the criteria in the late 1990s in response
to a series of black-outs in the Western Interconnection.\22\ The
proposed regional Reliability Standards would make eight of those RMS
criteria binding on the applicable subset of users, owners and
operators of the Bulk-Power System in the United States portion of the
Western Interconnection, as identified in each proposed standard. The
regional Reliability Standards would supplement rather than replace the
Commission-approved Reliability Standards developed by the ERO that
will take effect in June 2007.
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    \22\ NERC Filing at 5-6.
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    11. In translating WECC's existing practices to proposed regional
Reliability Standards, WECC proceeded as follows.\23\ In 2006, a WECC
task force identified criteria in the RMS Agreement that, in the task
force's view, should be binding on all users, owners and operators of
the regional Bulk-Power System. The task force chose eight of the
identified criteria that have the highest priority and that can be
implemented in the near term. WECC then used expedited procedures to
develop the eight regional Reliability Standards. WECC's rules provide
that, when WECC develops a Reliability Standard under expedited
procedures, WECC must later develop a permanent, replacement standard
using more extensive procedures.
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    \23\ See id., Ex. C (Record of Development, Comments and
Correspondence).
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    12. On October 5, 2006, using its expedited procedures, WECC
solicited comment on whether the eight regional Reliability Standards
accurately reflect practices under the RMS Agreement. Commenters raised
concerns that sanctions under the eight regional Reliability Standards
are inconsistent with NERC Reliability Standards, do not provide clear
guidance for measuring compliance, and might be applied in an anti-
competitive manner.\24\ The task force responded that the regional
Reliability Standards would remain in effect for at most one year and
that WECC would consider the commenters' concerns when developing
permanent, replacement standards.\25\ WECC's Board of Directors
approved the eight regional Reliability Standards on January 5, 2007.
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    \24\ Id., Ex. C, Attachment 1.
    \25\ Id., Ex. A at 1 and Ex. C, Attachment 2 at 8.
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    13. On December 22, 2006, in anticipation of approval by its board,
WECC submitted the proposed regional Reliability Standards to NERC. On
January 9, 2007, NERC responded with detailed comments. According to
NERC, its primary concern was that the sanctions in the proposed
regional Reliability Standards were inconsistent with NERC Sanction
Guidelines.\26\ NERC's January 9 report also identified NERC's
preferred nomenclature for Reliability Standards, identified NERC's
preferred format for submission, and identified language in the
proposed regional Reliability Standards that NERC found ambiguous or
incorrect.\27\ By letter dated February 28, 2007, WECC responded by
committing to address the shortcomings that NERC had identified when
WECC develops permanent, replacement standards.\28\
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    \26\ Id. at 3-4. See also ERO Certification Order at P 299.
    \27\ Id., Ex. C, Attachment 3.
    \28\ Id., Ex. C, Attachment 4.
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    14. Also in response to WECC's submission, NERC initiated a 45-day
comment period. NERC received six sets of comments. NERC found that
WECC had addressed the commenters' concerns by committing to correct
shortcomings in the proposed regional Reliability Standards within one
year of Commission approval. NERC generally applied a rebuttable
presumption that the proposed regional Reliability Standards meet
applicable requirements. However, because each of the proposed regional
Reliability Standards contains a sanction table that is inconsistent
with the NERC Sanction Guidelines, the NERC board concluded that the
rebuttable presumption was overcome with respect to this one component
of the proposed standards.\29\ Finally, NERC found that the proposed
one-year term was inconsistent with the Commission's prior invalidation
of automatic expiration dates for Reliability Standards.\30\
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    \29\ NERC Filing at 9.
    \30\ Id. at 2-4, 8-9 (citing North American Electric Reliability
Corp., 118 FERC 61,030 at P 30 (2007)).
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    15. On February 8, 2007, the Western Interconnection Regional
Advisory Body (WIRAB) advised NERC that it should approve the proposed
regional Reliability Standards as necessary for Reliable Operation of
the Western Interconnection and as meeting the legal

standard for approval set forth in section 215 of the FPA.\31\
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    \31\ Id. at 8-9. In Governors of Arizona, California, Colorado,
Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming,
116 FERC ] 61,061 at P 27 (2006), the Commission established WIRAB
as a Regional Reliability body pursuant to section 215(j) of the
FPA.
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    16. On March 2007, NERC approved the proposed regional Reliability
Standards on the conditions that WECC: (1) Remove the one-year term
limitation; (2) address the shortcomings \32\ in the standards within
one year of approval by the Commission, including removing the
sanctions table that conflicts with the NERC Sanction Guidelines; (3)
until the WECC sanction table is removed, follow the NERC Sanction
Guidelines to the maximum extent possible within the limits of the WECC
sanction table; and (4) monitor and enforce the standards under a
delegation agreement between NERC and WECC, once that agreement is
approved.\33\
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    \32\ The shortcomings in the regional Reliability Standards were
identified by NERC in a January 9, 2007 letter to WECC. See NERC
Filing, Ex. C at 128-139.
    \33\ Id. at 8-9.
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    17. NERC submitted its present request for the Commission's
approval on March 26, 2007. In April 2007, the Commission approved 83
ERO Reliability Standards that apply nation-wide, except for Alaska and
Hawaii. NERC and WECC request that the proposed regional Reliability
Standards take effect as soon as practical and, if possible, on the
same day as the nation-wide Reliability Standards.

D. Notice of Filing and Responsive Pleadings

    18. Notice of the NERC Filing was published in the Federal
Register, 72 Fed. Reg. 17,544 (April 9, 2007), with interventions,
comments and protests due on or before April 17, 2007. Motions to
intervene were filed by Modesto Irrigation District, New York
Transmission Owners, Southern California Edison Company, and
Transmission Agency of Northern California. Motions to intervene and
comment or protest were filed by PacifiCorp, WECC, Xcel Energy
Services, Inc. (Xcel), PPL EnergyPlus, LLC and PPL Montana, LLC (PPL),
and Cogeneration Association of California and Energy Producers and
Users Coalition (California Cogeneration). WIRAB submitted timely
advice to the Commission regarding the NERC Filing. An untimely motion
to intervene was filed by Pacific Gas and Electric Company (PG&E).
1. Comments in Support
    19. WECC states that the proposed regional Reliability Standards,
which are exact translations of existing regional criteria, either
address matters not addressed in the Commission-approved ERO
Reliability Standards or contain more stringent requirements than the
ERO standards.\34\ WECC states that, with the exception of WECC-IRO-
STD-006-0, the WECC regional Reliability Standard that implements the
West's unique approach to mitigation of unscheduled flow, which the
Commission approved as superior to the ERO Reliability Standard,\35\
none of the regional Reliability Standards in any way displace the ERO
requirements approved by the Commission. Rather, users, owners and
operators in the Western Interconnection will still be required to
comply with all of the requirements of the approved ERO Reliability
Standards.
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    \34\ Our discussion below of each regional Reliability Standard
includes WECC's explanation of how it is more stringent than the
relevant ERO Reliability Standard.
    \35\ WECC Comments at 14 (citing Order No. 693 at P 964).
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    20. WECC contends that the eight regional Reliability Standards
satisfy the relevant statutory and regulatory criteria for approval. It
states that only a few commenters raised substantive concerns in the
WECC standard development process regarding several potentially
ambiguous terms such as ``load responsibility,'' ``firm transactions,''
and ``Receiver;'' and that WECC has committed to address these issues
in developing permanent regional Reliability Standards.
    21. WECC acknowledges that the sanctions tables in the proposed
regional Reliability Standards differ from the NERC Sanction
Guidelines. WECC states that it plans to propose replacement standards
that incorporate the NERC Sanction Guidelines and address other
concerns of NERC and stakeholders. WECC also explains that the regional
sanctions would apply only when an offense was not covered by a
sanction under the ERO Reliability Standards and that the regional
Reliability Standards preclude the possibility of being sanctioned
under both the WECC and ERO Reliability Standards for the same non-
compliance occurrence.
    22. WIRAB advises that the proposed regional Reliability Standards
are necessary for the Reliable Operation of the Western Interconnection
and should take effect on the effective date of the 83 ERO Reliability
Standards. WIRAB also advises reinstatement of the one-year term
limitation, noting that WECC approved the regional Reliability
Standards only as interim standards. WIRAB suggests that it is unclear
that NERC has authority to eliminate the one-year term limitation.
Finally, WIRAB expresses concern that NERC effectively disregarded the
statutory rebuttable presumption without sufficient legal analysis.\36\
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    \36\ WIRAB at 8-9 (citing NERC Request, Appendix B at 4-5).
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    23. PacifiCorp states that, given the unique nature of the Western
transmission system, it supports the eight regional Reliability
Standards as necessary for addressing reliability concerns of the
Western Interconnection.
2. Protests
    24. Xcel, PPL and California Cogeneration filed protests or
comments in opposition to one or more of the proposed regional
Reliability Standards. California Cogeneration objects to proposed
regional Reliability Standard WECC-BAL-STD-002-0 (Operating Reserves),
which, in relevant part, requires balancing authorities to maintain
operating reserves equal to a stated percentage of ``load
responsibility.'' According to California Cogeneration, ``load
responsibility'' should not include behind-the-meter load that a
cogenerator serves at its industrial or commercial host. It asserts
that a balancing authority is not obligated to serve that load in the
case of an outage on the Bulk-Power System and therefore should not be
required to maintain associated reserves.\37\
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    \37\ California Cogeneration Comments at 6 (citing California
Independent System Operator Corp., 96 FERC ] 63,015 (2001)).
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    25. PPL, which owns and operates electrical facilities and markets
electricity in the Western Interconnection, objects to WECC-IRO-STD-
006-0, addressing the mitigation of unscheduled flows. According to
PPL, WECC has not justified the need for this regional Reliability
Standard, which imposes requirements on ``receivers'' that are not
identified as an applicable entity, and improperly imposes mitigation
obligations on load-serving entities (LSEs) and marketers that lack
authority or ability to comply with those obligations.
    26. Xcel, which owns generation and transmission facilities and
serves electricity customers in the Western Interconnection, argues
that the Commission lacks authority to review the proposed regional
Reliability Standards because WECC was not a Regional Entity at the
time it submitted the proposed regional Reliability

Standards to NERC. Xcel asserts that the WECC Reliability Standards
development process used to develop these eight regional Reliability
Standards would be invalid to the extent that the Commission directs
changes to that process. Xcel contends that NERC, in eliminating the
one-year interim status of the regional Reliability Standards, has
effectively approved the regional Reliability Standards on a permanent
instead of interim basis. Further, Xcel raises substantive objections
that are discussed below in the context of the relevant regional
Reliability Standard.

II. Discussion

A. Procedural Matters

    27. Pursuant to Rule 214 of the Commission's Rules of Practice and
Procedure, 18 CFR 385.214 (2006), the timely, unopposed motions to
intervene serve to make the entities that filed them parties to this
proceeding. We will grant PG&E's late motion to intervene, given the
early stage of this proceeding and the absence of undue delay,
prejudice or burden to the parties.

B. General and Procedural Objections to the Regional Reliability
Standards

1. WECC Reliability Standards Development Process
    28. As discussed above, Xcel argues that the Commission only has
the authority to consider Reliability Standards proposed by the ERO or
a Regional Entity. On April 19, 2007, subsequent to Xcel's protest, the
Commission accepted the proposed Regional Delegation Agreements, and
accepted WECC as a Regional Entity organized on an Interconnection-wide
basis.\38\ Thus, we consider this objection by Xcel to be moot.
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    \38\ April 19 Order at P 432.
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    29. Xcel also contends that ``to the extent the Commission directs
changes to WECC's standards development process that differ from the
process used to develop these WECC Standards, those standards will have
been developed pursuant to processes that were inconsistent with WECC's
own rules.'' \39\ The Commission, in the April 19 Order, accepted
WECC's Standards Development Manual,\40\ and WECC's eight proposed
regional Reliability Standards were developed using the process set
forth in this manual. The Commission also directed WECC to develop
several changes to the manual.\41\ However, the record of WECC's
development of the proposed regional Reliability Standards indicates
that Xcel had full opportunity to participate and raise its concerns in
the (what is now a Commission-approved) stakeholders process, as well
in the NERC posting of the WECC regional Reliability Standards for
comment.\42\ Accordingly, we deny Xcel's protest on this issue.
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    \39\ Xcel Comments at 8.
    \40\ April 19 Order at P 469.
    \41\ Id. at P 470.
    \42\ See, e.g., Ex. C at Attachment 2 at 5, Attachment 4 at 23-
27.
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2. Term Limitation
    30. As discussed above, WECC had proposed that the regional
Reliability Standards would be interim standards that would remain in
effect for a maximum of one year after Commission approval.
Specifically, each regional Reliability Standard includes a statement
that it will remain in effect ``for one year from the date of
Commission approval or until a North American Standard or a revised
[WECC] Regional Reliability Standard goes into place, whichever occurs
first.'' During the interim, WECC would develop permanent standards
that, upon Commission approval, would replace the interim standards.
    31. NERC, however, accepted the regional Reliability Standards on
the condition that ``the standards shall remain mandatory and
enforceable until they are revised, replaced or withdrawn in a
subsequent standards action, including approval of the revision,
replacement, or withdrawal by the Commission.'' \43\ NERC explained
that it imposed this condition to be consistent with a Commission order
which provided that, with regard to a similar provision in NERC's
standards development procedure, once a Reliability Standard is made
effective under section 215 of the FPA, it can only be revised,
replaced or withdrawn by a further action that requires Commission
approval.
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    \43\ NERC Filing at 10-11. See also id. at Ex. B at 6-7 (March
12, 2007, NERC Board of Trustees Decision on WECC Reliability
Standards).
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    32. WECC, WIRAB and Xcel object to NERC's elimination of the one-
year expiration date. WECC and WIRAB state that the entities that voted
in favor of the regional Reliability Standards did so with the
understanding that they were voting for temporary standards, not
standards that would continue indefinitely until replaced.\44\ WIRAB
states that, while it agrees with the policy that urgent action
standards should not have sunset dates, it is concerned that imposing
the rule with respect to the eight WECC regional Reliability Standards
will abridge the due process of WECC members that approved them.
Likewise, Xcel remarks that WECC postponed substantive responses to
stakeholders' comments based on the rationale that it was proposing the
standards on an interim basis.
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    \44\ See WECC Comments at 7.
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    33. We affirm NERC's decision to eliminate the one-year term
limitation. NERC's decision is consistent with our precedent. In the
ERO Certification Order, the Commission directed NERC to establish a
process for adopting an interim Reliability Standard on an expedited
basis, where the standard might be adopted later on a permanent basis,
without any possibility that the interim standard would expire in the
interim.\45\ NERC subsequently revised its ``urgent action'' procedures
to remove the automatic one year expiration provision. In accepting
this revision, the Commission explained that ``It is sufficient * * *
to allow the interim Reliability Standard to remain in effect until it
is made permanent or replaced by a permanent Reliability Standard, or
possibly even its withdrawal as a Reliability Standard so long as it is
understood that these actions are all subject to Commission approval.''
\46\ WECC developed the eight regional Reliability Standards pursuant
to its Expedited Process for Urgent Action Interim Standards (Expedited
Process).\47\ Thus, our concerns regarding NERC's urgent action
procedures apply equally to WECC's Expedited Process.
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    \45\ ERO Certification Order, 116 FERC ] 61,062 at P 253.
    \46\ North American Electric Reliability Corp., 118 FERC ]
61,030 at P 30 (2007).
    \47\ WECC Comments at 5.
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    34. The commenters, however, are mistaken that the elimination of
the one-year expiration date necessarily converts these from interim to
permanent regional Reliability Standards. WECC is still committed
pursuant to its Expedited Process to completing the development of
permanent replacement standards.\48\ Moreover, as another condition of
approval, NERC required WECC to ``meet its commitment to address the
shortcomings identified in the standards * * * over the course of the
next year.'' \49\ Thus, we disagree with the commenters that NERC, in
eliminating the one-year expiration date, has made the regional
Reliability Standards permanent or thwarted due process. NERC's
decision will assure that, if WECC is unable to develop permanent,
replacement regional Reliability

Standards within one year, the interim standards that WECC represents
are crucial for reliability within the Western Interconnection will not
automatically expire.
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    \48\ Id. WECC represents that it expects to complete permanent,
replacement standards within one year for most of the interim
standards. See id. at 7.
    \49\ NERC Filing, Ex. B at 7.
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3. NERC's Application of the Rebuttable Presumption
    35. Section 215(d)(3) of the FPA provides that, when a Reliability
Standard is submitted to the ERO by an Interconnection-wide Regional
Entity, the ERO must rebuttably presume that the standard meets
statutory criteria for approval.\50\ In Order No. 672, the Commission
explained that the rebuttable presumption refers to the burden of proof
before the ERO.\51\ Thus, a party that objects to a proposed
Reliability Standard before the ERO must demonstrate that it does not
meet criteria for approval. If the ERO finds that the presumption is
not adequately rebutted, it must accept the proposed Reliability
Standard from a Regional Entity organized on an Interconnection-wide
basis.\52\
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    \50\ 16 U.S.C. 842o(d)(3); 18 CFR 39.5(b).
    \51\ Order No. 672 at P 301.
    \52\ Id.
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    36. Here, NERC correctly applied the rebuttable presumption to WECC
as a Regional Entity organized on an Interconnection-wide basis.
However, the NERC Board found that ``[b]ecause each of the proposed
standards contains a sanctions table that is inconsistent with the NERC
Sanctions Guidelines, the proposed standards have lost the rebuttable
presumption that such standards would otherwise have.'' \53\ NERC then
approved the proposed regional Reliability Standards with the condition
that WECC conform the sanctions table to NERC's Sanction Guidelines and
that, in the interim, WECC follow the NERC guidelines to the maximum
extent possible.
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    \53\ NERC Filing, Ex. B at 4-5.
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    37. WIRAB disagrees with the manner in which NERC dismissed the
statutory presumption. It asserts that NERC failed to provide an
adequate analysis regarding the reasonableness, potential
discriminatory impacts, or the broader public interest at stake to
support a finding that rebuts the presumption.
    38. In the first instance, WIRAB's concern is only hypothetical
since NERC, after determining that the rebuttable presumption should
not apply, determined that the regional Reliability Standards met the
statutory criteria for approval. Moreover, it appears that WIRAB
interprets NERC as having completely disregarded the rebuttable
presumption. The Commission believes that the better understanding,
supported by NERC's filing, is that NERC determined that the rebuttable
presumption was overcome ``with respect to this component of the
proposed standards,'' i.e., the sanctions table.\54\ NERC supported
this determination by explaining that NERC staff and industry
stakeholders identified a number of shortcomings, the most significant
of which is the sanction table that is inconsistent with the NERC
Sanction Guidelines.\55\ Although NERC's explanation is succinct, the
Commission concludes that NERC has articulated a sufficient rationale
for finding that the rebuttable presumption with regard to this one
component was overcome. In general, however, NERC should provide a
robust discussion of its reasoning for finding that the rebuttable
presumption has been overcome.
---------------------------------------------------------------------------

    \54\ Id. at 9.
    \55\ Id. at 10.
---------------------------------------------------------------------------

4. Potential for Dual Penalties
    39. Xcel protests that the proposed WECC regional Reliability
Standards impose an unfair burden because, according to Xcel, the
proposed standards are duplicative of Commission-approved NERC
Reliability Standards. Thus, Xcel contends that the regional
Reliability Standards present the risk of dual penalties for the same
offense.
    40. We reject Xcel's protest on this issue. Each of the proposed
regional Reliability Standards provides that ``[a]t no time shall this
regional Standard be enforced in addition to a similar North American
Standard.'' \56\ WECC, in its comments, makes clear that the intent of
this language is to ensure that there would not be dual sanctions for
the same offense.\57\ Thus, we conclude that the regional Reliability
Standards will not result in duplicative penalties resulting from the
same non-compliance event.
---------------------------------------------------------------------------

    \56\ See, e.g., WECC-BAL-STD-002-0 Sec.  A5.
    \57\ See WECC Comments at 2, n.1.
---------------------------------------------------------------------------

5. Need for the Proposed Standards
    41. In reviewing a proposed Reliability Standard, we consider, in
relevant part, whether it would address a reliability goal.\58\ Here,
WECC, WIRAB and NERC each represent that the proposed regional
Reliability Standards would enhance regional reliability by making
binding, throughout the United States portion of the Western
Interconnection, reliability practices that are currently implemented
in the Western Interconnection on a voluntary basis. As noted above,
those practices are currently legally binding only on signatories to
the RMS Agreement. WECC and NERC explain that Commission approval would
extend the compliance obligations of the regional Reliability Standards
beyond the RMS signatories to all applicable users, owners and
operators in the Western Interconnection. According to NERC, having the
regional Reliability Standards approved as mandatory under section 215
of the FPA provides significant additional authority for compliance and
enforcement.
---------------------------------------------------------------------------

    \58\ Order No. 672 at P 324.
---------------------------------------------------------------------------

    42. Xcel, on the other hand, asserts that the proposed standards
are unnecessary, reasoning that the RMS Agreement will remain in effect
and is sufficient to protect reliability.
    43. We agree with WECC, WIRAB and NERC that approval of the
proposed regional Reliability Standards under section 215 would enhance
reliability in the Western Interconnection by making WECC's current
practices binding on all relevant entities in the region and by
strengthening WECC's compliance and enforcement authority. WECC's
current practices were developed in response to concrete and
significant reliability problems in the Western Interconnection in the
mid-1990s. According to WECC, reliability in the region has improved
since the practices have been in effect. When we first approved the
practices in 1999, we lacked full jurisdiction over reliability and
therefore could not impose the practices on a mandatory basis. While we
laud WECC members for their voluntary compliance by contract, we
believe that statutorily-based and mandatory Reliability Standards will
better ensure the reliability of the Bulk-Power System.

C. Discussion of WECC's Regional Reliability Standards

1. WECC-BAL-STD-002-0 (Operating Reserves)
    44. Regional Reliability Standard WECC-BAL-STD-002-0 requires that
adequate generating capacity be available at all times to maintain
scheduled frequency and avoid loss of firm load following transmission
or generation contingencies. The regional Reliability Standard applies
to balancing authorities and reserve sharing groups (RSGs) with
provision for agents to provide administrative duties. A balancing
authority or reserve sharing group must maintain minimum operating
reserves, defined as the sum of: (1) Regulating reserves; (2)
contingency reserves; (3) additional reserve for interruptible imports;
and (4) additional reserve for on-demand

obligations. WECC requires balancing authorities to maintain an amount
of contingency reserves:

Sufficient to meet the NERC Disturbance Control Standard BAL-002-0,
equal to the greater of: (a) The loss of generating capacity due to
forced outages of generation or transmission equipment that would
result from the most severe single contingency; or (b) The sum of
five percent of the load responsibility served by hydro generation
and seven percent of the load responsibility served by thermal
generation.

    Further, the contingency reserve must be composed of at least 50
percent spinning reserves, which must be capable of ramping and being
fully deployed within ten minutes.
    45. WECC's regional Reliability Standard corresponds to NERC's
Reliability Standard BAL-002-0 (Disturbance Control Performance), which
requires a balancing authority (either directly or by participating in
a reserve sharing group) to use its contingency reserves to balance
resources and demand and return Interconnection frequency to within
defined limits following a reportable disturbance. Requirement 3 of
NERC's BAL-002-0 requires each balancing authority or reserve sharing
group to ``carry at least enough Contingency Reserve to cover the most
severe contingency.''
    46. As with all eight regional Reliability Standards, NERC approved
WECC-BAL-STD-002-0 with the condition that WECC meet its commitment to
address the shortcomings identified by NERC in a January 9, 2007 letter
to WECC.\59\ With regard to WECC-BAL-STD-002-0, NERC identified various
formatting concerns including the need to specify individual
Requirements and corresponding Measures, consistent with the format of
the NERC Reliability Standards. NERC also stated that WECC's regional
Reliability Standard defines the terms ``automatic generation
control,'' ``disturbance,'' ``frequency bias,'' and ``non-spinning
reserve'' differently from NERC's Glossary of Terms Used in Reliability
Standards (NERC glossary).\60\ NERC also identifies a number of
shortcomings that apply generally to all of the WECC regional
Reliability Standards including the sanction tables that conflict with
the NERC Sanction Guidelines, failure to include Violation Severity
Levels (levels of non-compliance) and Violation Risk Factors, an
``excuse of performance'' provision \61\ that is not included in NERC's
Reliability Standards template, and additional substantive and
formatting concerns.
---------------------------------------------------------------------------

    \59\ See NERC Filing, Ex. C, Attachment 3 at 5-7.
    \60\ In Order No. 693 at P 1893-98, the Commission approved
NERC's glossary and directed certain modifications.
    \61\ Each proposed regional Reliability Standard includes an
``excuse of performance'' provision stating that ``non-compliance
with any of the reliability criteria contained in this Standard
shall be excused and no sanction applied if such non-compliance
results directly from one or more of the [specified] actions or
events,'' including governmental order, order of reliability
coordinator, protection of facilities and extraordinary contingency
(such as act of war, insurrection, flood or earthquake).
---------------------------------------------------------------------------

Comments

    47. WECC explains that NERC Reliability Standard BAL-002-0 requires
an applicable entity to have the ability to supply reserves equal to
the most severe single contingency. According to WECC, while applicable
users, owners and operators in the Western Interconnection must comply
with BAL-002-0, the corresponding regional Reliability Standard goes
further and requires each balancing authority in the West to provide a
minimum reserve of five percent of the loads served by hydro generation
and seven percent of the loads served by thermal generation. WECC
states that this regional minimum reserve requirement was developed to
assure that there would be sufficient generation to sustain acceptable
power system performance for various contingencies. Further, WECC
explains that WECC-BAL-STD-002-0 is more stringent because NERC's BAL-
002-0 requires contingency reserves to be restored within 90 minutes
following a disturbance while WECC requires restoration within 60
minutes.
    48. As noted above, WECC requires balancing authorities to maintain
contingency reserves equal to the greater of the loss of generating
capacity resulting from the most severe single contingency or the sum
of five percent of load responsibility served by hydro generation and
seven percent of the load responsibility served by thermal generation.
Both Xcel and California Cogeneration protest that the term ``load
responsibility'' as used by the WECC is ambiguous and could lead to
inconsistent interpretations of the regional Reliability Standard.
California Cogeneration states that Commission Opinion No. 464
determined that a qualifying facility's (QF) net load is the only
relevant load for the purposes of calculating the operating reserve
responsibility of the QF.\62\ It expresses concern that the term load
responsibility could be interpreted to include gross load in conflict
with Opinion No. 464 and, thus, asks the Commission to remand the
regional Reliability Standard so that it can be modified to include a
definition of load responsibility consistent with Opinion No. 464.
---------------------------------------------------------------------------

    \62\ Citing California Independent System Operator Corp.,
Opinion No. 464, 104 FERC ] 61,196 at P 40 (2003).
---------------------------------------------------------------------------

    49. Xcel also argues that the term load responsibility is overly
vague. It quotes a WECC document that defines load responsibility as
``[a] control area's firm load demand plus those firm sales minus those
firm purchases for which reserve capacity is provided by the
supplier.'' \63\ According to Xcel, WECC has not adequately defined the
term ``firm'' embedded in its definition of load responsibility and,
likewise, has not adequately defined the related term
``interruptible.''
---------------------------------------------------------------------------

    \63\ Xcel Comments at 12, citing NERC/WECC Planning Standards
and Minimum Operating Reliability Criteria, Definitions, Revised
August 9, 2002. The California Independent System Operator
Corporation tariff also uses this definition of load responsibility.
See Opinion No. 464, 96 FERC ] 63,015 at 13.
---------------------------------------------------------------------------

    50. Xcel notes that WECC-BAL-STD-002-0 requires the purchaser of
interruptible power to carry additional reserves to replace
interruptible imports. Xcel posits that, while the definition of
``interruptible'' is unclear, application of a narrow interpretation of
the term could have adverse impacts on competition and reliability.
Specifically, it claims that to avoid application of the ``adder'' some
entities avoid purchasing ``economy power,'' or interruptible power,
thereby impeding competition. Xcel also claims that this practice may
result in entities utilizing local units that are subject to failure or
curtailment, resulting in less reliable operations. Xcel further argues
that certain entities may try to claim that most ``firm'' transactions,
as interpreted by the Commission in Order No. 890, are potentially
curtailable and thus ``interruptible'' under a ``very narrow
interpretation.'' Xcel adds that there is no evidence to show that
``economy transactions'' are less reliable thus warranting the need for
extra reserves.
    51. Xcel also opposes the 60-minute restoration period that would
be required under BAL-STD-002-0. Xcel asserts that BAL-STD-002-0 would
require restoration of contingency reserves within 60 minutes rather
than the 90 minutes permissible under the corresponding NERC standard.
According to Xcel, in adopting 60 minutes of restoration time, WECC and
NERC disregarded Requirement R6.2 of BAL-002-0 that established a
default contingency reserve restoration period of 90 minutes and allows
adjustment of

this period ``to better suit the reliability targets of the
Interconnection based on analysis approved by the NERC Operating
Committee.'' Xcel contends that WECC failed to obtain approval of the
NERC Operating Committee. Xcel also claims that WECC's proposed 60-
minute restoration period will have a dampening effect on competition
because the shortened restoration period will provide little time for
market participants to procure alternative resources outside of the
host balancing authority.
    52. Further, Xcel argues that WECC has not justified the
requirements of the regional Reliability Standard and thus the
technical expertise of WECC should not be given any weight in the
Commission's evaluation of the regional Reliability Standard.

Commission Determination

    53. The Commission approves regional Reliability Standard WECC-BAL-
STD-002-0 as mandatory and enforceable in the Western Interconnection.
The Commission finds that the proposed regional Reliability Standard is
more stringent than the corresponding NERC Reliability Standard, BAL-
002-0, because WECC requires a more stringent minimum reserve
requirement than the nation-wide requirement.\64\ Further, WECC's
requirement to restore contingency reserves within 60 minutes is more
stringent than the 90 minute restoration period set forth in NERC's
BAL-002-0. While we agree with Xcel that NERC's filing did not
adequately explain the need for WECC-BAL-STD-002-0 or why it was more
stringent than the corresponding NERC Reliability Standards, WECC
provides an adequate explanation in its comments for the Commission to
make a reasoned determination.\65\
---------------------------------------------------------------------------

    \64\ While approving the WECC regional Reliability Standard, the
Commission reiterates its directive in Order No. 693 that the ERO
develop a continent-wide reserve policy that is ``based on the
reliability risk of not meeting load associated with a particular
balancing authority's generation mix and topology.'' See Order No.
693 at P 340. Our approval of WECC-BAL-STD-002-0 does not affect
this directive to the ERO.
    \65\ Section 39.5(a) of the Commission's regulations, 18 CFR
39.5(a) (2006), provides that the ERO's submission of a new or
modified Reliability Standard must include (1) A concise statement
of the basis and purpose of the proposed Reliability Standard, (2) a
summary of the Reliability Standard development proceedings, and (3)
a demonstration that the proposal is just, reasonable, not unduly
discriminatory or preferential, and in the public interest. Future
Reliability Standard filings may be subject to a deficiency letter
if they fail to satisfy the filing requirements set forth in our
regulations.
---------------------------------------------------------------------------

    54. The Commission agrees with the shortcomings identified by NERC
regarding WECC-BAL-STD-002-0 and expects WECC in developing a
permanent, replacement standard to address these shortcomings as it has
committed to do. For example, for each of the proposed regional
Reliability Standards, (1) Regional definitions should conform to the
definitions set forth in the 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.
Likewise, with respect to this and each of the proposed regional
Reliability Standards, we agree with NERC that WECC must remove the
sanctions table that is inconsistent with NERC's Sanction Guidelines
and develop Violation Risk Factors (levels of non-compliance) and
Violation Severity Levels that conform to corresponding NERC standards.
In approving NERC's Sanction Guidelines, the Commission emphasized the
need to achieve consistency in the assessment of penalties across the
regions. Elimination of the WECC sanctions table will further this
goal.\66\
---------------------------------------------------------------------------

    \66\ ERO Certification Order at P 254, 350.
---------------------------------------------------------------------------

    55. Further, it is important that regional Reliability Standards
and NERC Reliability Standards achieve a reasonable level of
consistency in the structure of a Reliability Standard so that there is
a common understanding of the elements. In particular, we agree with
NERC that WECC should eliminate the ``excuse of performance'' provision
of the regional Reliability Standards, which is inconsistent with
NERC's format. While the factors identified in the excuse of
performance provision may be legitimate mitigating factors for WECC to
consider when assessing a penalty on a case-by-case basis, the
Commission disagrees that a Reliability Standard should contain a
blanket waiver or excuse for non-compliance.\67\ We expect WECC, in
developing a permanent, replacement standard, to address these concerns
of both NERC and the Commission. In general, with respect to both the
eight proposed Reliability Standards as well as other standards that
are being developed by WECC, it is essential that WECC employ a higher
level of precision and consistency.
---------------------------------------------------------------------------

    \67\ April 19 Order at P 133.
---------------------------------------------------------------------------

    56. In Order No. 672, the Commission, in discussing the factors it
would consider in determining whether a proposed Reliability Standard
met the statutory standard for approval, explained that a proposed
Reliability Standard should be clear and unambiguous regarding what is
required and who is required to comply.\68\ Xcel and California
Cogeneration contend that the Commission should remand WECC-BAL-STD-
002-0 because of ambiguities in the terms ``load responsibility'' and
``firm transaction.'' As discussed above, the Commission believes that
the regional Reliability Standard is sound, as it provides greater
stringency than NERC's reserve requirements and meets a need of the
Western Interconnection. While commenters identify potential
ambiguities, we do not believe that these potential uncertainties
demonstrate a degree of ambiguity within the regional Reliability
Standard that requires us to remand it.\69\ Rather, as WECC indicated
in its response to stakeholders in the regional Reliability Standards
development process, WECC will provide an opportunity to address these
concerns when developing a permanent, replacement standard. The
Commission agrees that this is a reasonable approach and will expect
WECC's submission of a replacement standard to adequately address these
stakeholder concerns.
---------------------------------------------------------------------------

    \68\ Order No. 672 at P 325.
    \69\ The Commission notes that WECC has defined the term load
responsibility, although not in its regional Reliability Standard.
The definition can be found at WECC's Web site at: http://wecc.biz/documents/library/procedures/WECC_Reliability_Criteria_definitions_8-02.pdf
.

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

    57. California Cogeneration raised concerns that the term load
responsibility must be defined consistent with the Commission's Opinion
No. 464, which issued in a proceeding under section 205 of the FPA that
addressed treatment of QFs under the CAISO open access transmission
tariff. The Commission agrees that a QF's load responsibility should be
interpreted consistent with Opinion No. 464, which provided in relevant
part that:

    We affirm the judge's finding that the long-standing practice in
the CAISO control area of scheduling, metering and procuring
reserves on a net load basis should be permitted to continue, so
long as a QF has contracted for standby service with a UDC [Utility
Distribution Company], i.e., a contract that provides for the
immediate replacement of energy in case of the QF's forced outage.
The record indicates * * * that by contract with a QF, a UDC will
provide standby service and operating reserves if there is a forced
QF outage.\70\
---------------------------------------------------------------------------

    \70\ Opinion No. 464, 104 FERC ] 61,196 at P 40.

    58. Thus, from an economic perspective under section 205, the UDC
must pay for the reserves associated with the backup power provided by
the UDC by contract. While operating reserves may be required for
behind the

meter load in a Regional Reliability Standard for reliability reasons,
a QF is not required to buy operating reserve for the load that has
standby service. It remains the responsibility of the host utility that
provides the QF's normal stand-by or back-up power to supply those
reserves. We believe this explanation addresses California
Cogeneration's concern.
    59. In regard to Xcel's concern about the definition of
interruptible imports, while it is possible that the term may require
refinement by WECC to address specific contexts, the meaning of the
term ``interruptible'' is generally well understood in the industry,
i.e., transmission or generation subject to interruption at the
provider's discretion. Xcel's claims that the provision, under a narrow
interpretation, could have adverse impacts on competition and
reliability are highly speculative.
    60. The Commission rejects Xcel's protest regarding the 60-minute
contingency reserve restoration period. This is useful stringency that
benefits reliability in the Western Interconnection by shortening the
time after a disturbance that the balancing authority might not have
sufficient reserves to meet its reliable obligations in the
Interconnection. Xcel's concern that this provision harms competition
is speculative. Moreover, the Commission notes that NERC Reliability
Standard EOP-001, Requirement R1 requires entities to have pre-existing
arrangements. Balancing authorities should not use the reserve
restoration period to shop for better prices but to be concerned about
restoring the reserves so the Bulk-Power System remains reliable.
    61. Finally, while Xcel may be technically correct that the current
NERC BAL-002-2 requires approval of the NERC Operating Committee to
change the restoration period, we do not believe this is a sufficient
reason to remand WECC's proposal. First, in Order No. 693, the
Commission directed NERC to modify this Requirement to replace ``NERC
Operating Committee'' with ``ERO.'' \71\ NERC board approval of WECC-
BAL-STD-002-0 suffices. Second, WECC did not increase but, rather,
decreased the restoration period, making the WECC standard include a
more stringent requirement than NERC's comparable requirement.
---------------------------------------------------------------------------

    \71\ Order No. 693 at P 356.
---------------------------------------------------------------------------

2. WECC-IRO-STD-006-0 (Qualified Path Unscheduled Flow Relief)
    62. Regional Reliability Standard WECC-IRO-STD-006-0 applies to
transmission operators, balancing authorities, and load serving
entities within the Western Interconnection. Under WECC's plan for
congestion management, responsible entities must comply with requests
from operators of qualified transmission paths to reduce unscheduled
flow on the path. The regional Reliability Standard identifies when an
operator shall request curtailments, states that responsible entities
shall comply in a timely manner with a request for curtailments, and
establishes procedures for reducing flows. In particular, it requires
that:

Upon receipt of a curtailment request, Contributing Schedules which
are subject to curtailments will be reduced (or equivalent
alternative schedule adjustments will be effected) in accordance
with the following procedures:

    (i) Receivers of Contributing Schedules will initiate the
requested schedule reductions * * *. \[72]\
---------------------------------------------------------------------------

    \72\ WECC-IRO-STD-006-0, Requirement WR1, Plan Attachment 1,
Section 9.h.

    63. NERC's Reliability Standard IRO-006-3 (Transmission Loading
Relief), which the Commission approved in Order No. 693 subject to
certain modifications,\73\ requires a reliability coordinator
experiencing potential or actual System Operating Limit (SOL) or
Interconnection Reliability Operating Limit (IROL) violations to take
appropriate actions pursuant to established procedures to relieve
transmission loading. For the Eastern Interconnection, balancing
authorities must follow the established transmission loading relief
(TLR) procedures to take appropriate actions pursuant to established
procedures to relieve transmission loading. Requirement R2.2 of IRO-
006-3 identifies ``the equivalent Interconnection-wide transmission
loading relief procedure for use in the Western Interconnection is the
`WSCC Unscheduled Flow Mitigation Plan.' ''
---------------------------------------------------------------------------

    \73\ Order No. 693 at P 960-64.
---------------------------------------------------------------------------

    64. NERC approved WECC-IRO-STD-006-0 on the condition that WECC
meet its commitment to address specified shortcomings concerning
formatting, use of standard terms, and the need for greater specificity
in the actions that a responsible entity must take. In addition, NERC
noted that the requirements should be part of the regional Reliability
Standard rather than being embedded in a filing.

Comments

    65. According to WECC, WECC-IRO-STD-006-0 is essential because it
is the only source of a mandatory process for mitigating overloads due
to unscheduled line flows in the Western Interconnection. WECC notes
that, in developing the regional Reliability Standard, stakeholders
commented that the term ``receiver'' as defined in the standard should
more closely match the NERC Functional Model and should not include
market entities. WECC states that it intends to address these issues in
developing a permanent, replacement standard.\74\
---------------------------------------------------------------------------

    \74\ See WECC Comments at 10.
---------------------------------------------------------------------------

    66. PPL protests the applicability of WECC-IRO-STD-006-0, noting
that NERC Reliability Standard IRO-006-3 applies to reliability
coordinators, transmission operators and balancing authorities. PPL
contends that WECC has, without explanation, significantly broadened
the scope of the regional Reliability Standard by requiring compliance
by LSEs. According to PPL, market entities such as LSEs may be unable
to meet the requirements of WECC-IRO-STD-006-0. Second, PPL protests
that certain requirements apply to ``receivers,'' which are not
identified in the applicability section of the regional Reliability
Standard. PPL contends that receivers (1) May lack the authority or
ability to comply with a directive to reduce flows and (2) may include
functional entities beyond LSEs such as ``purchasing selling entities''
that are not identified in the applicability section of the regional
Reliability Standard.
    67. PPL recommends that the Commission limit applicability to those
entities identified in NERC Reliability Standard IRO-006-3 and clarify
that the assessment of penalties is limited to the entities to which
the regional Reliability Standard is applicable. PPL asks that, if the
Commission decides that it is appropriate to include load-serving
entities, the applicability should be limited to LSEs as defined by
NERC \75\ and to LSEs that meet NERC's compliance registry criteria.
---------------------------------------------------------------------------

    \75\ PPL at 10. See August 2, 2006, NERC Glossary of Terms Used
in Reliability Standards at 10, which defines load-serving entity as
an entity that ``secures energy and transmission service (and
related Interconnected Operations Services) to serve the electric
demand and energy requirements of its end-use customers.''
---------------------------------------------------------------------------

    68. Xcel protests that no justification has been provided for the
WECC regional Reliability Standard. Xcel recognizes that one benefit of
the WECC unscheduled flow mitigation procedures is the coordinated use
of phase shifters to provide some relief on an overburdened
transmission path without the economic impact of schedule curtailments.
Xcel suggests that, as an alternative, the WECC procedures could be
modeled after the

TLR procedures, while retaining this initial step.

Commission Determination

    69. We approve WECC-IRO-STD-006-0 as mandatory and enforceable for
the Western Interconnection. The regional Reliability Standard provides
that practices under WECC's Unscheduled Flow Mitigation Plan--including
directions thereunder to reduce flows--are enforceable against all
Transmission Operators, Balancing Authorities and Load-Serving Entities
in the Western Interconnection. In Order No. 693, we found that the
WECC's Unscheduled Flow Mitigation Plan (which relies on phase angle
regulators, series capacitors and back-to-back DC lines to mitigate
contingencies without curtailing transactions) is superior to the
national Reliability Standard.\76\ Accordingly, the Commission finds
that WECC-IRO-STD-006-0 is adequately justified. In developing a
permanent, replacement regional Reliability Standard, WECC may consider
Xcel's suggestion to model the WECC procedures after the TLR
procedures, however, we will not mandate such an approach.
---------------------------------------------------------------------------

    \76\ See Order No. 693 at P 964.
---------------------------------------------------------------------------

    70. The Commission shares PPL's concern that, while the
applicability of the regional Reliability Standard identifies LSEs, the
requirements refer to receivers. As indicated by PPL, the term
``receiver'' may refer to LSEs as well as other market participants.
While WECC states that WECC-IRO-STD-006 is an exact translation of
existing WECC RMS criteria, an entity cannot be subject to a compliance
action if it has not been clearly identified in the applicability
section of the Reliability Standard.\77\ Thus, in approving the
regional Reliability Standard, we expect a continuation of the existing
practices for transmission line relief in the Western Interconnection.
However, an entity that is not clearly identified in the applicability
provision of a regional Reliability Standard may not be subject to
penalties for non-compliance. Moreover, pursuant to section 215(d)(5)
of the FPA and section 39.5(f) of the Commission's regulations,\78\ we
direct that WECC in developing a permanent, replacement Reliability
Standard, clarify the term ``receiver'' and the applicability of the
standard.
---------------------------------------------------------------------------

    \77\ See Order No. 693 at P 39 (each Reliability Standard must
clearly identify the subset of users, owners and operators of the
Bulk-Power System to which the Reliability Standard applies).
    \78\ 18 CFR 39.5(f) (2006).
---------------------------------------------------------------------------

    71. We also share PPL's concerns regarding the identification of
LSEs as applicable entities. While the expansion of the WECC regional
Reliability Standard beyond the applicability of the corresponding NERC
Reliability Standard is not in itself problematic, we are concerned
regarding PPL's contention that LSEs may not be able to meet the
Requirements of the regional Reliability Standard. While we are
approving WECC-IRO-STD-006 as mandatory and enforceable, we direct WECC
to address PPL's concerns in developing a permanent, replacement
regional Reliability Standard.
    72. We also expect that WECC, in developing a permanent,
replacement regional Reliability Standard, will address the
shortcomings identified by NERC.

3. WECC-PRC-STD-001-1 (Certification of Protective Relay Applications
and Settings)

    73. Regional Reliability Standard WECC-PRC-STD-001-1 applies to
transmission operators or transmission owners of 40 specified
transmission paths.\79\ The regional Reliability Standard requires
these entities to certify to WECC that all (1) Protective relay
applications and (2) protective relay settings and logic are
appropriate for the specified transmission paths. It also requires
these entities to certify that ``relay operations since the last
certification or during the last three-year period have been analyzed
for correctness and appropriate corrective action taken. * * *''
---------------------------------------------------------------------------

    \79\ Some of the specified transmission paths are located
completely or partially outside the United States. The Commission
addresses the regional Reliability Standard only as it applies to
those paths or portions of paths that are within the United States.
---------------------------------------------------------------------------

    74. NERC Reliability Standard PRC-001-1 (System Protection
Coordination), which addresses protection systems, requires
transmission operators and generator operators to notify appropriate
entities of relay or equipment failures and to coordinate when
installing new or modified protection systems.\80\
---------------------------------------------------------------------------

    \80\ In Order No. 693, at P 1433-49, the Commission approved
NERC Reliability Standard PRC-001-1 and, as a separate action,
directed NERC to develop certain modifications to the standard.
---------------------------------------------------------------------------

    75. NERC approved WECC-PRC-STD-001-1 with the condition that WECC
meet its commitment to address the shortcomings identified by NERC in a
January 9, 2007 letter to WECC, including several formatting concerns.

Comments

    76. WECC states that applicable users, owners and operators in the
Western Interconnection must comply with the Requirements of the
corresponding NERC Reliability Standard. The WECC regional Reliability
Standard requires, in addition, that transmission owners and
transmission operators analyze and certify all relay settings and
operations on specified paths to determine whether operations were
correct, and that current information on relays is provided to the
transmission operators. WECC explains that these requirements were
developed to address root causes of a July 1996 system disturbance in
which undesirable relay operations due to incorrect settings and
undetected relay problems resulted in cascading outages in the Western
Interconnection.
    77. Xcel argues that no justification for WECC's certification
requirement has been provided. According to Xcel, regional differences
are intended to provide reliability protection in situations where
physical differences in the Bulk-Power System justify additional
stringency. It claims that WECC-PRC-STD-001-1 appears to be driven by a
desire for an attestation, not an actual physical difference in the
Western Interconnection and that, to the extent the attestation is
needed, it is appropriate for the NERC Reliability Standards rather
than a regional difference. Xcel further argues that the proposed
regional Reliability Standard does not create any additional
reliability benefit but, rather, needlessly compounds the requirements
of the NERC Reliability Standards.

Commission Determination

    78. The Commission approves WECC-PRC-STD-001-1 as mandatory and
enforceable in the Western Interconnection. The Commission expects
WECC, in developing replacement standards, to address the shortcomings
identified by NERC.
    79. The Commission disagrees with Xcel's contentions that the need
for the regional Reliability Standard has not been justified and that
it does not create any additional reliability benefits. While the NERC
filing did not elaborate on the reliability benefit of WECC-PRC-STD-
001-1, WECC explains that it goes beyond the related NERC Reliability
Standard by requiring certification that all relay settings and
operations on specified transmission paths are appropriate for the
Bulk-Power System. The certification requirement provides an additional
level of assurance that protection systems will operate as they should
to provide for Bulk-Power System reliability. It is appropriate to give
due weight to WECC's technical expertise in its representation that the
requirements of this regional Reliability Standard will address the
problems identified as a root cause of prior

cascading outages in the Western Interconnection.\81\
---------------------------------------------------------------------------

    \81\ 18 CFR 39.5(c)(2).
---------------------------------------------------------------------------

    80. Further, Xcel incorrectly characterizes the Commission's
previous statements regarding when a regional difference may be
justified. The Commission has identified two types of regional
differences that it will accept, provided they otherwise satisfy the
statutory requirements for approval: (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.\82\ Xcel incorrectly combines the two appropriate types of
regional differences as a single standard category where a regional
difference sets forth a stringency needed to address a physical
difference in the Bulk-Power System. Thus, we reject Xcel's argument
that WECC-PRC-STD-001-1 should not be approved because it is not based
on an actual physical difference in the Western Interconnection.
---------------------------------------------------------------------------

    \82\ Order No. 672 at P 291. See also ERO Certification Order,
116 FERC ] 61,062 at P 274.
---------------------------------------------------------------------------

4. WECC-PRC-STD-003-1 (Protective Relay and Remedial Action Scheme
Misoperation)

    81. Regional Reliability Standard WECC-PRC-STD-003-1 has the
purpose of ensuring that protection system misoperations are analyzed
and mitigated.\83\ This regional Reliability Standard applies to the
owners and operators of 40 specific transmission paths that are
identified in Attachment A of the standard. The regional Reliability
Standard requires the removal and repair of protection systems after a
misoperation within specified time frames.
---------------------------------------------------------------------------

    \83\ Protection systems are designed to detect and isolate
faulty elements on a system, thereby limiting the severity and
spread of system disturbances, and preventing possible damage to
protected elements. See Order No. 693 at P 1418. Protection systems
include protective relays, remedial action schemes (RAS), and
special protection schemes.
---------------------------------------------------------------------------

    82. The WECC regional Reliability Standard corresponds to NERC's
Reliability Standard PRC-003-1, which also relates to protective system
misoperations.\84\ Requirement 1 of NERC's PRC-003-1 provides that each
regional reliability organization, i.e., Regional Entity, must
establish procedures for review, analysis, reporting and mitigation of
protection system misoperations. WECC-PRC-STD-003-1 states that it
meets Requirement 1 of NERC Reliability Standard PRC-003-1.
---------------------------------------------------------------------------

    \84\ In Order No. 693 at P 1460, the Commission explained that,
because NERC's PRC-003-1 requires the regions to establish
procedures regarding misoperations, and those regional procedures
had not been submitted, the Commission neither approved nor remanded
the Reliability Standard.
---------------------------------------------------------------------------

    83. As with all eight regional Reliability Standards, NERC approved
WECC-PRC-STD-003-1 with the condition that WECC meet its commitment to
address the shortcomings identified by NERC in a January 9, 2007 letter
to WECC. With regard to WECC-PRC-STD-003-1, NERC noted, inter alia,
that the WECC definition of ``disturbance'' is not identical to the
NERC glossary definition. It also identified a WECC Measure that refers
to the filing of a form for reporting misoperations, without a
corresponding requirement.

Comments

    84. In its comments, WECC explains that the corresponding NERC
Reliability Standard PRC-003-1 requires the analysis of misoperations
within 90 days and the submission of corrective action plans. WECC
states that the applicable users, owners and operators of the Bulk-
Power System in the West must comply with the requirement of NERC's
PRC-003-1. In addition, the WECC regional Reliability Standard goes
further and requires the applicable entities in the West: (1) To remove
equipment that has misoperated within 22 hours; and (2) to repair or
replace equipment that has misoperated within 20 business days for the
specific transmission paths identified in the WECC regional Reliability
Standard. WECC explains that these requirements were developed as a
result of a 345 kV line relay misoperation in July 1996 when virtually
the same outage occurred the next day because the faulty equipment had
not been isolated.
    85. Xcel points out that, in Order No. 693, the Commission stated
that it would neither approve nor remand NERC Reliability Standard PRC-
003-1 until NERC submits additional information regarding regional
procedures on misoperations.\85\ The Commission also directed NERC to
consider whether greater consistency can be achieved as NERC modifies
PRC-003-1 to provide the missing information. Xcel asserts that
Commission approval of WECC-PRC-STD-003-1 would allow WECC to side-step
the process directed by the Commission to achieve greater uniformity
with regard to NERC's PRC-003-1.\86\ Xcel also contends that WECC has
not explained the physical differences in the Western Interconnection
necessitating the regional difference and, thus, WECC's technical
expertise should be given no weight in evaluating the WECC regional
Reliability Standard.
---------------------------------------------------------------------------

    \85\ Id. at P 1460-61.
    \86\ Id.
---------------------------------------------------------------------------

Commission Determination

    86. The Commission approves WECC-PRC-STD-003-1 as mandatory and
enforceable in the Western Interconnection. The Commission agrees with
WECC that the proposed regional Reliability Standard goes beyond the
corresponding NERC standards because no current NERC Reliability
Standard includes the equipment removal and repair requirements set
forth in this regional Reliability Standard. Moreover, while we agree
with Xcel that NERC's filing did not adequately explain the need for
WECC-PRC-STD-003-1 or why it is more stringent than the corresponding
NERC Reliability Standards, WECC has provided an adequate explanation
in its comments, as discussed above.
    87. We note that upon failure of protective relays, NERC
Reliability Standard PRC-001-1 requires transmission operators and
generator operators to take corrective actions as soon as possible
(within thirty minutes as directed by Order No. 693).\87\ Order No. 693
clarifies that ``corrective actions'' do not refer to the repair of
protective relays, but instead to actions that ensure the reliability
of the system, such as lowering IROLs and SOLs. The proposed regional
Reliability Standard does not relieve compliance with this requirement
but, rather, adds more stringency by defining a maximum timeframe for
removal and repair of protective equipment.
---------------------------------------------------------------------------

    \87\ See Order No. 693 at P 1443-49.
---------------------------------------------------------------------------

    88. The Commission disagrees with Xcel's assertion that approval of
WECC-PRC-STD-003-1 would sidestep the Commission's directive that NERC
consider whether greater consistency can be achieved as NERC modifies
PRC-003-1. Approval of the WECC regional Reliability Standard does not
preclude the development of an appropriate level of uniformity on a
nationwide basis. The Commission expects that all of the regions,
including WECC, will work together to develop greater uniformity with
regard to reporting procedures for misoperation of relays and remedial
action schemes.
    89. The Commission agrees with the shortcomings identified by NERC
regarding WECC-PRC-STD-003-1 and

expects WECC in developing a permanent, replacement standard to address
these shortcomings as it has committed to do. In particular, we believe
that regional definitions should conform to the definitions set forth
in the NERC glossary unless a specific deviation has been justified.
Likewise, each Requirement should have a corresponding Measure and, in
this case, vice versa.
5. WECC-PRC-STD-005-1 (Transmission Maintenance)
    90. Regional Reliability Standard WECC-PRC-STD-005-1 requires each
transmission owner and transmission operator of specified transmission
paths to perform maintenance and inspection on those paths as described
by its Transmission Maintenance and Inspection Plan (TMIP). The
regional Reliability Standard identifies specific contents that each
applicable transmission owner and transmission operator must include in
its TMIP. For example, a TMIP must include the scheduled interval for
time-based maintenance, describe maintenance and inspection methods,
provide relevant checklists or forms and provide criteria for assessing
the condition of a facility. Each applicable entity must retain all
pertinent maintenance and inspection records for at least five years.
Further, each applicable entity must annually certify to WECC staff
that it has developed, documented and implemented a TMIP.
    91. WECC's regional Reliability Standard corresponds to NERC
Reliability Standard PRC-005-1 (Transmission and Generation Protection
System Maintenance and Testing), which requires transmission owners,
generator owners and distribution providers that own transmission
protection systems to have a protection system maintenance and testing
program for protection systems that affect the reliability of the bulk
electric system.
    92. NERC approved WECC-PRC-STD-005-1 with the condition that WECC
meet its commitment to address identified shortcomings. With regard to
WECC-PRC-STD-005-1, NERC identified various formatting concerns
including the need to specify individual requirements instead of one
formal requirement with multiple subparts (including statements and
comments that do not read as requirements).

Comments

    93. WECC states that the corresponding NERC Reliability Standard,
PRC-005-1, requires a maintenance and inspection plan limited to
relays, monitoring equipment, and special protection systems. WECC
explains that relevant users, owners and operators must comply with the
requirements of the NERC Reliability Standard. According to WECC, the
proposed regional Reliability Standard goes further by requiring, for
specified transmission paths, a highly detailed TMIP for all
transmission and substation equipment components, including circuit
breakers, relays, transformers, reactive devices, and transmission
lines. It also requires applicable entities to maintain five years of
maintenance records to verify compliance.
    94. Xcel argues that WECC has failed to justify the need for this
regional Reliability Standard based on physical differences in the bulk
power system.

Commission Determination

    95. The Commission approves regional Reliability Standard WECC-PRC-
STD-005-1 as mandatory and enforceable in the Western Interconnection.
As explained by WECC, the applicable users, owner and operators in the
Western Interconnection must comply with NERC's PRC-003-1 and, in
addition, the regional Reliability Standard. Accordingly, the
Commission finds that the regional Reliability Standard satisfies the
statutory standard for approval because it is more stringent than the
corresponding NERC Reliability Standard by requiring, for specified
transmission paths, a highly detailed maintenance and inspection plan
for all transmission and substation equipment components. WECC-PRC-STD-
005-1 imposes requirements well beyond the NERC Reliability Standards
and improves reliability because disciplined maintenance on equipment
such as transmission lines, circuit breakers, power transformers and
regulators will help prevent failures during operation.
    96. Moreover, WECC in its comments provided a persuasive need for
the regional Reliability Standard as well as a demonstration that the
regional Reliability Standard is more stringent than the corresponding
NERC standard. Thus, we reject Xcel's protest on this issue.
    97. Requirement WR1.b(i)(a)(2) of the regional Reliability Standard
requires the TMIP to describe the maintenance practices for station
equipment including remedial action scheme (RAS) systems, which are
also referred to as ``special protection systems.'' \88\ This regional
Requirement corresponds more closely to NERC Reliability Standard PRC-
017-0 (Special Protection System Maintenance and Testing). It appears
that the NERC Reliability Standard includes slightly more specificity
in that it requires a special protection system maintenance program to
include, among other things, batteries and instrument transformers,
which are not specified in WECC-PRC-STD-005-1. Because WECC's regional
Reliability Standards are in addition to the NERC Reliability
Standards, we would expect the maintenance plans of applicable entities
in the West to include these details identified in NERC Reliability
Standard PRC-017-0.
---------------------------------------------------------------------------

    \88\ See NERC glossary at 16 (defining both terms as ``an
automatic protection system to detect abnormal or predetermined
system conditions, and take corrective actions * * *'').
---------------------------------------------------------------------------

    98. The Commission agrees with NERC's concerns regarding the format
and content of WECC-PRC-STD-005-1 and expects WECC, in developing a
permanent, replacement standard, to address these concerns, including
but not limited to inclusion of all relevant documents.
6. WECC-TOP-STD-007-0 (Operating Transfer Capability)
    99. Regional Reliability Standard WECC-TOP-STD-007-0 applies to
transmission operators of 40 specified transmission paths. The goal of
this regional Reliability Standard is to ensure that the operating
transfer capability limits requirements of the Western Interconnection
are not exceeded.\89\ It includes a Measure that provides ``actual
power flow on all transmission paths shall at no time exceed the
[operating transfer capability] for more than 20 minutes for paths that
are stability limited, or for more than 30 minutes for paths that are
thermally limited.''
---------------------------------------------------------------------------

    \89\ Requirement WR1 of WECC-TOP-STD-007-0 defines ``capability
limits requirements'' as the maximum amount of actual power that can
be transferred over direct or parallel transmission elements
comprising: An interconnection from one transmission operator area
to another, or a transmission path within a transmission operator
area.
---------------------------------------------------------------------------

    100. The corresponding NERC Reliability Standard, TOP-007-0,
requires that violations of SOL and IROL be promptly reported to the
reliability coordinator so that it can direct corrective action and
inform other affected systems. It also requires a transmission operator
to mitigate an IROL violation as soon as possible but no longer than 30
minutes. In Order No. 693, the Commission approved TOP-007-0 as
mandatory and enforceable.\90\
---------------------------------------------------------------------------

    \90\ Order No. 693 at P 1674.
---------------------------------------------------------------------------

    101. NERC approved WECC-TOP-STD-007-0 with the condition that

WECC meet its commitment to address identified shortcomings, including
formatting concerns and inconsistency between the NERC and WECC
definition of the term ``disturbance.''

Comments

    102. WECC comments that NERC Reliability Standard TOP-007-0
requires transmission operators to return the system to within IROL
limits for each incident in which an IROL is exceeded. While
transmission operators in the Western Interconnection must comply with
the NERC requirement, WECC-TOP-STD-007-0 ``goes further in limiting the
time period of an Operational Transfer Capability (which is more
conservative than an IROL) exceedance to no more than 20 minutes when
the limit is based on potential voltage or transient stability.'' \91\
WECC explains that the 20-minute limit was developed after two major
disturbances in 1996 that caused the system to break up rapidly. WECC
also states that the regional Reliability Standard applies to 40
clearly defined transmission paths, many of which would not be defined
by NERC as having IROL requirements.
---------------------------------------------------------------------------

    \91\ WECC Comments at 12.
---------------------------------------------------------------------------

    103. Xcel protests that no technical justification has been
provided for WECC-TOP-STD-007-0.

Commission Determination

    104. The Commission approves WECC-TOP-STD-007-0 as mandatory and
enforceable in the Western Interconnection. WECC has provided an
adequate explanation of the need for this regional Reliability Standard
and also adequately explained how the Requirements are more stringent
than the Requirements of the corresponding NERC Reliability Standard.
In particular, the imposition of a 20-minute limit is more restrictive
than NERC's TOP-007-0 and is a prudent means of limiting the risk of
blackouts, consistent with sound engineering principles. Thus, we
disagree with Xcel that WECC-TOP-STD-007-0 has not been adequately
justified.
    105. The Commission is concerned regarding a possible inconsistency
within WECC-TOP-STD-007-0. As background, NERC Reliability Standard
IRO-005-1 (Reliability Coordination--Current Day Operations) provides,
inter alia, that ``if a potential or actual IROL violation cannot be
avoided through proactive intervention, the Reliability Coordinator
shall initiate control actions or emergency procedures to relieve the
violation without delay, and no longer than 30 minutes.'' In Order No.
693, the Commission expressed concern that IRO-005-1 could be
interpreted as allowing a system operator to respect IROLs in one of
two ways: (1) Allowing IROL to be exceeded during normal operations,
i.e., prior to a contingency, provided that corrective actions are
taken within 30 minutes; or (2) allowing IROL to be exceeded only after
a contingency and subsequently returning the system to a secure
condition as soon as possible, but no longer than 30 minutes.\92\ The
Commission explained that the system could be one contingency away from
potential cascading failure if operated under the first interpretation
and two contingencies away from cascading failure under the second
interpretation. The Commission directed NERC to conduct a survey on
IROL practices and actual operating experiences of managing within
IROL. The survey results will provide guidance on the frequency,
duration and magnitude of IROL violations and whether these IROL
violations occur during normal or contingency conditions.
---------------------------------------------------------------------------

    \92\ See Order No. 693 at P 945-51 and n.303.
---------------------------------------------------------------------------

    106. With regard to WECC-TOP-STD-007-0, Requirement WR1.b. provides
that ``[t]he interconnected power system shall remain stable upon loss
of any one single element without system cascading that could result in
the successive loss of additional elements.'' This Requirement suggests
that WECC expects that IROLs will be addressed in such a manner that
the system is two contingencies away from a cascading failure, which is
consistent with the more conservative interpretation of the NERC
Reliability Standard IRO-005-1.\93\
---------------------------------------------------------------------------

    \93\ In addition to requiring the system to be operated to
withstand the loss of a single element, WECC-TOP-STD-007-0 requires
operators to take into consideration single events that might cause
the loss of multiple elements. See NERC Filing, WECC-TOP-STD-007-0
Sec.  B(b). In Order No. 693, we addressed element- versus event-
based contingencies. See Order No. 693 at P 1604, 1715-1719.
---------------------------------------------------------------------------

    107. However, Measure WM1 of WECC-TOP-STD-007-0 may not be
consistent with Requirement WR1.b since it states ``[a]ctual power flow
on all transmission paths shall at no time exceed the OTC for more than
20 minutes for paths that are stability limited, or more than 30
minutes for paths that are thermally limited.'' This Measure is more
consistent with the first interpretation of NERC Reliability Standard
IRO-005-1. Simply put, it could be interpreted that WECC Requirement
WR1.b results in the power system being operated two contingencies away
from a cascading outage while WECC Measure WM1 results in the power
system being operated one contingency away from a cascading outage.
    108. Thus, it is possible to understand the WECC Measure as less
stringent than NERC's IRO-005-1, if the latter is interpreted
conservatively. While the Commission has stated that a Requirement of a
Reliability Standard sets forth the obligations of the applicable
users, owners and operators,\94\ the Commission is concerned regarding
the circumstances under which WECC-TOP-STD-007-0 would be implemented
and the amount of time an entity is allowed to be in violation of an
IROL without the possibility of being found in non-compliance.
Accordingly, the Commission directs NERC to submit a filing within 30
days of the date of this order explaining whether Requirement WR1.b is
consistent with the second interpretation of IRO-005-1 (two
contingencies away from cascading failure).\95\
---------------------------------------------------------------------------

    \94\ Id. at P 1929.
    \95\ If WECC construes Requirement WR1.b as consistent with the
first interpretation of IRO-005-1, we will consider whether
modifications are necessary to protect the reliability of the Bulk
Power System upon consideration of the survey results noted above.
---------------------------------------------------------------------------

    109. Moreover, Measure WM1 of WECC-TOP-STD-007-0, which sets forth
the 20 and 30 minutes time limits for exceeding operating transfer
capability, states responsibilities of applicable entities and, thus,
is more appropriately a requirement than a Measure. Accordingly,
pursuant to section 215(d)(5) of the FPA and section 39.5(f) of the
Commission's regulations, we direct that WECC in developing a
permanent, replacement regional Reliability Standard: (1) Clarify any
inconsistency between the Requirement WR1.b and corresponding Measure
WM1; and (2) ensure that the requirements currently set forth in
Measures WM1 are set forth in the Requirements and that corresponding
Measures simply quantify the frequency, duration and magnitude of the
violations as determined by the Requirements.
    110. In addition, we expect that WECC will address the shortcomings
identified by NERC in developing a permanent, replacement regional
Reliability Standard.
7. WECC-VAR-STD-002a-1 (Automatic Voltage Regulators)
    111. Regional Reliability Standard WECC-VAR-STD-002a-1 applies to
generator operators of synchronous generating units equipped with
Automatic Voltage Regulators in the

Western Interconnection.\96\ The stated purpose of the regional
Reliability Standard is to ensure that automatic voltage control
equipment on synchronous generators shall be kept in service at all
times, except in specified circumstances, and that outages of such
equipment must be coordinated. It requires that generator operators
must normally operate automatic voltage control equipment in voltage
control mode and set to respond effectively to voltage deviations.
---------------------------------------------------------------------------

    \96\ An ``automatic voltage regulator'' is a device that
continuously monitors the generator terminal voltage and changes the
reactive power output as required to maintain (or regulate) the
voltage within a pre-determined voltage range. For example, if a
load increase causes a decline in system voltages and thereby the
terminal voltage of a generator, the automatic voltage regulator
will increase the generator's reactive output to raise the terminal
voltage.
---------------------------------------------------------------------------

    112. Related NERC Reliability Standard VAR-002-1 (Generator
Operation for Maintaining Network Voltage Schedules) requires generator
operators to operate each generator connected to the interconnected
transmission grid in the automatic voltage control mode unless the
generator operator has notified the transmission operator.\97\ Unless
exempted by the transmission operator, the generator operator must
maintain voltage or reactive power output as directed by the
transmission operator.
---------------------------------------------------------------------------

    \97\ In Order No. 693 at P 1884, the Commission approved VAR-
002-1.
---------------------------------------------------------------------------

    113. NERC approved WECC-VAR-STD-002a-1 with the condition that WECC
meet its commitment to address identified format-related shortcomings.

Comments

    114. WECC comments that, in addition to compliance with the related
NERC Reliability Standard, the WECC regional Reliability Standard
requires automatic voltage regulators to be in service and in voltage
control mode with very limited exceptions. WECC explains that it
instituted this requirement after a 1996 disturbance, which was caused
by insufficient supply of reactive power from generators, including
automatic voltage regulators that were not operating in voltage control
mode. As a result of this experience, WECC determined that there should
be only very limited circumstances where a generator should remove its
unit from AVR operation.
    115. Xcel asserts that WECC has not provided any technical
justification for the regional Reliability Standard.

Commission Determination

    116. The Commission approves Reliability Standard WECC-VAR-STD-
002a-1 as mandatory and enforceable in the Western Interconnection. The
Commission agrees with WECC that this regional Reliability Standard is
more stringent than the related NERC Reliability Standard. WECC-VAR-
STD-002a-1 requires all synchronous generators to have their voltage
regulator in service at all times with only exceptions for specified
circumstances. The related NERC Reliability Standard, VAR-002-1,
permits a generator to remove its automatic voltage regulator from
service for additional reasons. The regional standard is appropriate to
avoid the root causes of prior disturbances in the Western
Interconnection. We reject Xcel's protest as WECC has adequately
justified the need for this regional Reliability Standard.
    117. As with the other regional Reliability Standards, we expect
that WECC, in developing a permanent, replacement standard, will
address the shortcomings identified by NERC regarding WECC-VAR-STD-
002a-1.
8. WECC-VAR-STD-002b-1 (Power System Stabilizers)
    118. Regional Reliability Standard WECC-VAR-STD-002b-1 applies to
generator operators with generators equipped with power system
stabilizers. 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. It requires that power
system stabilizers on generators must be kept in service at all times,
except in specified circumstances, and that the power system
stabilizers must be ``properly tuned'' in accordance with WECC
requirements. This standard does not have a corresponding NERC
Reliability Standard.
    119. NERC approved WECC-VAR-STD-002b-1 and identified several
format-related shortcomings for WECC to address.

Comments

    120. WECC states that WECC-VAR-STD-002b-1 requires generator
operators to always have power system stabilizers in service with very
limited exceptions. It explains that this requirement was developed
after the August 1996 disturbance in the Western Interconnection in
which oscillations that could possibly have been attenuated by power
system stabilizers were a factor.
    121. Xcel states the proposed standard is deficient because it does
not define ``power system stabilizers'' and because WECC has not
provided a technical justification for the standard.

Commission Determination

    122. The Commission approves WECC-VAR-STD-002b-1 as mandatory and
enforceable in the Western Interconnection. The regional Reliability
Standard is justified as it addresses matters that are not addressed by
a NERC Reliability Standard. Moreover, WECC explains that the regional
Reliability Standard is justified as a means to avoid oscillations that
contributed to previous disturbances in the Western Interconnection.
    123. We reject Xcel's protest since the term ``power system
stabilizer'' is generally understood as described above, and Xcel has
not provided any explanation why the regional Reliability Standard is
deficient without a formal definition. Finally, as with the other
regional standards, we expect WECC to address the shortcomings
identified by NERC when developing a permanent, replacement standard.

D. Effective Date

    124. As requested by NERC and WECC, the proposed regional
Reliability Standards shall take effect on June 18, 2007 to coincide
with the effective date of the Reliability Standards that were approved
in Order No. 693.

E. Information Collection Statement

    125. The Office of Management and Budget (OMB) regulations require
approval of certain information collection requirements imposed by
agency rules.\98\ Upon approval of a collection(s) of information, OMB
will assign an OMB control number and an expiration date. Respondents
subject to the filing requirements of an agency rule will not be
penalized for failing to respond to these collections of information
unless the collections of information display a valid OMB control
number. The Paperwork Reduction Act (PRA) \99\ requires each federal
agency to seek and obtain OMB approval before undertaking a collection
of information directed to ten or more persons, or continuing a
collection for which OMB approval and validity of the control number
are about to expire.\100\
---------------------------------------------------------------------------

    \98\ 5 CFR 1320.8 (2005).
    \99\ 44 U.S.C. 3501-3520.
    \100\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
---------------------------------------------------------------------------

    126. This order approves eight regional Reliability Standards that
were submitted by NERC as the ERO. Section 215 of the FPA authorizes
the ERO to submit Reliability Standards to provide for the Reliable
Operation of the Bulk-Power System. Pursuant to the statute, the ERO
must submit each Reliability Standard that it proposes to be made

effective to the Commission for approval.\101\
---------------------------------------------------------------------------

    \101\ See 16 U.S.C. 824(d).
---------------------------------------------------------------------------

    127. The eight proposed Reliability Standards do not require
responsible entities to file information with the Commission. However,
the standards do require responsible entities to file periodic reports
with WECC and to develop and maintain certain information for a
specified period of time, subject to inspection by WECC. WECC-BAL-STD-
002-0 requires balancing authorities and reserve sharing groups to
submit to WECC quarterly reports on operating reserves as well as
reports after any instance of non-compliance. WECC-IRO-STD-006-0
requires transmission operators, balancing authorities and load-serving
entities to document and report to WECC actions taken in response to
direction to mitigate unscheduled flow. The standard also requires
transmission operators to document required actions that are and are
not taken by responsible entities. WECC-PRC-STD-001 requires certain
transmission operators to submit to WECC annual certifications of
protective equipment. WECC-PRC-STD-003-1 requires certain transmission
operators to report to WECC any misoperation of relays and remedial
action schemes. WECC-PRC-STD-005-1 requires certain transmission
operators to maintain, in stated form, maintenance and inspection
records pertaining to their transmission facilities. The standard also
requires operators to certify to WECC that the operator is maintaining
the required records. WECC-TOP-STD-007-0 requires certain transmission
operators to submit to WECC quarterly reports on transfer capability
data and compliance as well as reports after an instance of non-
compliance. WECC-VAR-STD-002a-1 and WECC-VAR-STD-002b-1 require certain
generators to submit quarterly reports to WECC on automatic voltage
control and power system stabilizers. All of the foregoing regional
Reliability Standards require the reporting entity to retain relevant
data in electronic form for one year or for a longer period if the data
is relevant to a dispute or potential penalty, except that WECC-PRC-
STD-005-1 requires retention of maintenance and inspection records for
five years and retention of other data for four years.
    128. We do not believe our approval of the WECC Regional
Reliability Standards will result in a significant increase in
reporting burdens as compared to current practices in WECC. As NERC and
WECC explain, the eight Regional Reliability Standards are translations
of existing WECC criteria pursuant to its RMS program. The eight
proposed standards: (1) Reflect practices that are currently in place
on a contractual or voluntary basis; (2) represent discrete differences
from nation-wide, mandatory Reliability Standards that will take effect
on June 18, 2007; and (3) will be replaced by permanent standards
developed by WECC. Moreover, with only limited exceptions, the
reporting requirements in the regional Reliability Standards apply to
large entities that have been complying with those standards for
several years. The only possible exception is WECC-IRO-STD-006-0, which
requires applicable entities to comply with transmission operators'
directions to reduce unscheduled flows. Our approval of this regional
Reliability Standard might result in reporting requirements for load-
serving entities that did not previously comply with WECC practices in
this regard. We do not believe that the associated reporting
requirement is significant. Under WECC-IRO-STD-006-0, applicable
entities must document and report to WECC actions that those entities
take in response to direction to reduce unscheduled flow. We do not
expect that the number of occurrences or nature of the documentation
will result in significant reporting burdens.
    129. The Commission is submitting these reporting requirements to
OMB for its review and approval under section 3507(d) of the Paperwork
Reduction Act. Comments are solicited on the Commission's need for this
information, whether the information will have practical utility, the
accuracy of provided burden estimates, ways to enhance the quality,
utility, and clarity of the information to be collected, and any
suggested methods for minimizing the respondent's burden, including the
use of automated information techniques.
    130. Our Estimates below are based on the total reporting burdens
that arise under the approved standards, including reporting burdens
that were already in place under WECC practices. Thus, the Estimates
exceed the incremental burdens that result from our approval of the
standards. The Estimates are based on the NERC compliance registry as
of April 2007. For the Western Interconnection that is overseen by
WECC, NERC and WECC have identified approximately 30 balancing
authorities, 146 generator operators, 104 load-serving entities, 41
transmission operators, and 66 transmission owners * * * While NERC has
registered 104 load-serving entities in the U.S. portion of WECC, we
believe that only 50 load-serving entities will be affected by the
reporting requirements that apply to load-serving entities (under WECC-
IRO-STD-006-0) because those requirements apply only in relation to
``qualified transfer paths'' and because the number of such paths are
limited. Similarly, although NERC has registered 41 transmission
operators and 66 transmission owners in the U.S. portion of WECC, we
believe only the 14 transmission operators and owners that operate 40
designated paths will be affected by reporting requirements under this
order. We note that some transmission operators operate up to seven
paths. This has been taken into account in our estimate in the line
``Transmission Operators/Owners'' in the table below.
    131. NERC's compliance registry indicates that there is a
significant amount of overlap among the entities that perform these
functions. In some instances, a single entity may be registered under
all four of these functions. Thus, the Commission estimates that the
total number of entities required to comply with the information
``reporting'' or development requirements of the proposed Reliability
Standards is approximately 180-200 entities.
    Burden Estimate: The Public Reporting burden for the requirements
in the present order is as follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of       Number of       Hours per     Total annual
                 Data collection                    respondents      responses       response          hours
----------------------------------------------------------------------------------------------------------------
FERC-XXX:
    Balancing Authorities.......................              30               1              20             600
    Generator Operators.........................             146               1              10            1460
    Load-Serving Entities.......................              50               1              10             500
    Transmission Operators/Owners...............              14        1-7 each              40            1600
                                                                   (total of 40)

Recordkeeping:
    Balancing Authorities.......................  ..............  ..............              60              60
    Generator Operators.........................  ..............  ..............             146             146
    Load-Serving Entities.......................  ..............  ..............              50              50
    Transmission Operators/Owners...............  ..............  ..............             160             160
                                                 ---------------------------------------------------------------
        Totals..................................  ..............  ..............  ..............             416
----------------------------------------------------------------------------------------------------------------

(FTE = Full Time Equivalent or 2,080 hours)

    Total Annual Hours for Collection: 4,160 reporting + 416
recordkeeping = 4,576 hours.
    Information Collection Costs: The Commission seeks comments on the
costs to comply with these requirements. It has projected the average
annualized cost to be $515,840 as shown below:
    Total Costs = Reporting ($499,200) + Recordkeeping ($16,640) =
$515,840.
    Title: FERC-725E Regional Reliability Standards (WECC).
    Action: Proposed Collection of Information.
    OMB Control No.: To be determined.
    Respondents: Business or other for profit, and/or not for profit
institutions.
    Frequency of Responses: Periodic and intermittent.
    Necessity of the Information: The eight Reliability Standards would
implement the Congressional mandate of the Energy Policy Act of 2005 to
develop mandatory and enforceable Reliability Standards to better
ensure the reliability of the nation's Bulk-Power System.
    Internal Review: The Commission has reviewed the requirements
pertaining to mandatory Reliability Standards for the Bulk-Power System
and determined the proposed requirements are necessary to meet the
statutory provisions of the Energy Policy Act of 2005. These
requirements conform to the Commission's plan for efficient information
collection, communication and management within the energy industry.
The Commission has assured itself, by means of internal review, that
there is specific, objective support for the burden estimates
associated with the information requirements.
    132. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426 [Attention: Michael Miller,
Office of the Executive Director, Phone:<PHONE_NUMBER>, fax: (202)
273-0873, e-mail<EMAIL_ADDRESS>Comments on the
requirements of this order may also be sent to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission], e-mail<EMAIL_ADDRESS>
F. Regulatory Flexibility Act Certification

    133. The Regulatory Flexibility Act of 1980 (RFA) \102\ generally
requires a description and analysis of rules that will have significant
economic impact on a substantial number of small entities. As indicated
above, based on available information regarding NERC's compliance
registry, approximately 180-200 entities will be responsible for
compliance with the eight regional Reliability Standards. Most of those
entities, i.e., balancing authorities, generator operators,
transmission owners and operators, do not fall within the definition of
small entities.\103\ About one-fifth of the approximately 50 load-
serving entities that are subject to the approved standards might
qualify as small entities.
---------------------------------------------------------------------------

    \102\ 5 U.S.C. 601-612.
    \103\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. See
15 U.S.C. 632 (2000). According to the SBA, a small electric utility
is defined as one that has a total electric output of less than four
million MWh in the preceding year.
---------------------------------------------------------------------------

    134. Based on this understanding, the Commission certifies that the
approved standards will not have a significant economic impact on a
substantial number of small entities. Accordingly, no regulatory
flexibility analysis is required.
    The Commission orders:
    (A) The proposed regional Reliability Standards are hereby
approved, as discussed in the body of this order.
    (B) NERC is directed to submit a compliance filing within 30 days
of this order, as discussed in the body of this order.
    (C) WECC is directed to develop, for each of its regional
Reliability Standards, sanctions that follow NERC guidelines as
discussed in the body of this order.
    (D) WECC is directed to develop modifications to regional
Reliability Standards WECC-IRO-STD-006-0 and WECC-TOP-STD-007-0 through
its Reliability Standards development process when developing
permanent, replacement standards.

    By the Commission.
Kimberly D. Bose,
Secretary.
 [FR Doc. E7-11685 Filed 6-15-07; 8:45 am]

BILLING CODE 6717-01-P