[Federal Register Volume 76, Number 32 (Wednesday, February 16, 2011)]
[Proposed Rules]
[Pages 8940-8942]
[FR Doc No: 2011-3492]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Chapters I, II, III

23 CFR Chapters I, II, III

46 CFR Chapter II

48 CFR Chapter 12

49 CFR Chapters I, II, III and V, VI, VII, VIII, X, XI

[Docket No. DOT-OST-2011-0025]

Regulatory Review of Existing DOT Regulations

AGENCY: Office of the Secretary of Transportation (OST), DOT.

ACTION: Notice and request for comments.

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SUMMARY: In accordance with Executive Order 13563, ``Improving
Regulation and Regulatory Review,'' the Department of Transportation
(Department or DOT) is conducting a review of its existing regulations
to evaluate their continued validity and determine whether they are
crafted effectively to solve current problems. As part of this review,
the Department invites the public to participate in a comment process
designed to help the Department ensure that it has a plan for
periodically analyzing existing significant rules to determine whether
they should be modified, streamlined, expanded, or repealed and
identify specific rules that may be outmoded, ineffective,
insufficient, or excessively burdensome. The Department also will hold
a public meeting to discuss and consider comments from members of the
public.

DATES: Comments should be received on or before April 1, 2011. Late-
filed comments will be considered to the extent practicable. In
addition, the Department will hold a public meeting beginning at 9:30
a.m. ET on March 14, 2011, at the DOT headquarters, to discuss the
regulatory review and take public comments. Commenters wishing to have
time allocated to them at the public meeting should submit initial
comments by March 3, 2011, and clearly indicate their desire to have
time allocated at the public meeting.

ADDRESSES: You may submit comments to Docket DOT-OST-2011-0025 by any
of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the instructions for sending your
comments electronically.
     Mail: Docket Management Facility; U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590-0001.
If you submit comments by mail and would like to know that they reached
the facility, please enclose a stamped, self-addressed envelope or
postcard.
     Hand Delivery or Courier: West Building, Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC between 9
a.m. and 5 p.m. ET., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    To avoid duplication, please use only one of these four methods.
All comments received will be posted without change to http://www.regulations.gov and will include any personal information you
provide.
    Docket: To read background documents or comments received, go to
http://www.regulations.gov and click on the ``read comments'' box in
the upper right hand side of the screen. Then, in the ``Keyword'' box
insert ``OST-2011-0025'' and click ``Search.'' Next, click the ``Open
Docket Folder'' in the ``Actions'' column. Finally, in the ``Title''
column, click on the document you would like to review. If you do not
have access to the Internet, you may view the docket online by visiting
the Docket Management Facility in Room W12-140 on the ground floor of
the Department of Transportation West Building, 1200 New Jersey Avenue,
SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Neil R. Eisner, Assistant General
Counsel for Regulation and Enforcement, Department of Transportation,
1200 New Jersey Avenue, SE., Washington, DC 20590;<PHONE_NUMBER>. E-
mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Executive Order 13563

    On January 18, 2011, President Obama issued Executive Order 13563,
which outlined a plan to improve regulation and regulatory review (76
FR 3821, 1/21/11). Executive Order 13563 reaffirms and builds upon
governing principles of contemporary regulatory review, including
Executive Order 12866, ``Regulatory Planning and Review,'' (58 FR
51735, 10/4/1993), by requiring Federal agencies to design cost-
effective, evidence-based regulations that are compatible with economic
growth, job creation, and competitiveness. The President's plan
recognizes that these principles should not only guide the Federal
government's approach to new regulation, but to existing ones as well.
To that end, Executive Order 13563 requires agencies to review existing
significant rules to determine if they are outmoded, ineffective,
insufficient, or excessively burdensome.
    To facilitate this review, Executive Order 13563 requires each
agency to develop and submit to the Office of Management and Budget's
Office of Information and Regulatory Affairs a preliminary plan for
retrospectively analyzing existing rules. Specifically, the Department
must provide a plan for periodically reviewing existing significant
regulations to determine whether any such regulations should be
modified, streamlined, expanded, or repealed so as to make the
Department's regulatory program more effective or less burdensome in
achieving the Department's regulatory objectives.
    As Executive Order 13563 reaffirms, the regulatory process must be
transparent and provide opportunities for public participation. The
Department particularly believes, given its broad regulatory
responsibility, this participation should extend to the Department's
obligations under the Executive Order to conduct a retrospective review
of existing regulations. This review will be more meaningful if it
involves input from those affected by the Department's regulations.

DOT's Regulatory Responsibility

    The mission of the Department is to serve the United States by
ensuring a safe, fast, efficient, accessible, and convenient
transportation system that meets our vital national interests and
enhances the quality of life of the American people, today and into the
future. The Department carries out its mission through the Office of
the Secretary (OST) and the following operating administrations (OAs):
Federal Aviation Administration (FAA); Federal Highway Administration
(FHWA); Federal Motor Carrier Safety Administration (FMCSA); Federal
Railroad Administration (FRA); Federal Transit Administration (FTA);
Maritime Administration (MARAD); National Highway Traffic Safety
Administration (NHTSA); Pipeline and Hazardous Materials Safety
Administration

(PHMSA); Research and Innovative Technology Administration (RITA); and
St. Lawrence Seaway Development Corporation (SLSDC). Although the
Surface Transportation Board (STB) is a component of DOT, it is
organizationally independent and, as a result, the Department does not
have responsibility for the STB's regulatory agenda.
    DOT has statutory responsibility for a wide range of regulations.
For example, DOT regulates safety in the aviation, motor carrier,
railroad, motor vehicle, commercial space, and pipeline transportation
areas. DOT regulates aviation consumer and economic issues, and
provides financial assistance and writes the necessary implementing
rules for programs involving highways, airports, mass transit, the
maritime industry, railroads, and motor transportation and vehicle
safety. It writes regulations carrying out such disparate statutes as
the Americans with Disabilities Act and the Uniform Time Act. Finally,
DOT has responsibility for developing policies that implement a wide
range of regulations that govern programs such as acquisition and
grants management, access for people with disabilities, environmental
protection, energy conservation, information technology, occupational
safety and health, property asset management, seismic safety, security,
and the use of aircraft and vehicles.

DOT's Existing Process for Reviewing Rules

    The Department has long recognized that there should be no more
regulations than necessary and those that are issued should be simple,
comprehensible, and impose as little burden as necessary. Likewise, the
Department understands that review and revision of existing regulations
is essential to ensure that they continue to meet the needs for which
they originally were designed and remain cost-effective and cost-
justified. The Department regularly makes a conscientious effort to
review its rules in accordance with the Department's 1979 Regulatory
Policies and Procedures (44 FR 11034, 2/26/1979), Executive Order
12866, and section 610 of the Regulatory Flexibility Act.
    The Department follows a repeating 10-year plan for the review of
our existing regulations, which is set forth in our semi-annual
Regulatory Agenda published in the Federal Register (see Appendix D to
``Department Regulatory Agenda; Semiannual Summary'' published on
December 20, 2010 (75 FR 79812)). The reviews conducted under this plan
comply with section 610 of the Regulatory Flexibility Act. OST and most
OAs have also elected to use this repeating 10-year plan to comply with
the review requirements of the Department's Regulatory Policies and
Procedures and Executive Order 12866. Generally, the agencies have
divided their rules into 10 different groups and analyze one group each
year, then start over again. We regularly invite public participation
in those reviews and seek general suggestions on rules that should be
revised or revoked. In the fall Regulatory Agenda, we publish
information on the results of the examinations completed during the
previous year. We are now engaged in our second 10-year review.
    The FAA, in addition to following a 10-year review plan in
accordance with section 610 of the Regulatory Flexibility Act, has
established a triennial process to comply with other review
requirements. The FAA's latest notice was published November 15, 2007
(72 FR 64170). NHTSA conducts an evaluation of both the costs and
benefits of each of its significant rules approximately 4 years after
the effective date on which 100 percent of the annual production of all
types of vehicles subject to the rule must comply with the rule. This
interval is necessary to ensure that sufficient crash data are
available for the agency to determine whether a statistically
significant reduction in crashes, injuries, and fatalities has
occurred. Other OAs also conduct periodic public reviews to focus on
specific issues or to obtain comments on rulemaking priorities.
Moreover, under 49 CFR part 5, anyone may petition the Department for
rulemaking or for an amendment or exemption to a rule.
    As part of implementing Executive Order 13563, we will assess our
current processes for reviewing rules and examine whether our approach
should be modified going forward. While the Department may use these
existing processes as significant inputs into its preliminary plan, the
Department strongly encourages all parties affected by DOT regulations
to comment on opportunities to improve our current review processes in
a manner that best addresses the principles outlined in Executive Order
13563.

Public Participation and Request for Comments

    DOT is an active regulatory agency with broad regulatory
responsibilities. A robust regulatory program being essential to our
mission, it is all the more important that we maintain a consistent
culture of retrospective review and analysis. Thus, to implement
Executive Order 13563, the Department solicits the views of the public
on the following matters.
    The public is first asked to comment on how the Department should
devise a preliminary plan, with a defined method and schedule, for
identifying certain significant rules that may be obsolete,
unnecessary, unjustified, excessively burdensome, or counterproductive.
Comments might address how best to evaluate and analyze regulations in
order to expand on those that work and to modify, improve, or rescind
those that do not. Comments might usefully address how the Department
can best obtain and consider accurate, objective information and data
about the costs, burdens, and benefits of existing regulations and
whether there are existing sources of data that the Department can use
to evaluate the post-promulgation effects of regulations over time. The
Department is particularly interested in the public's views about how
well its current processes for reviewing regulations function and how
those processes might be expanded or otherwise adapted to meet the
objectives of Executive Order 13563. The Department is further
interested in comments about factors that the Department should
consider in setting priorities and selecting rules for review. Our
initial selection criteria for these rules are currently based on the
factors listed below, on which we seek public comment.
    The Department intends for its preliminary plan to include an
initial list of candidate rules for review. The Department solicits
suggestions for specific rules that should be on that list. In
nominating candidate rules for this list, commenters might usefully
address, among other things, opportunities to use the Department's
review process to achieve the following objectives: (1) Promote
economic growth, innovation, competitiveness, and job creation; (2)
eliminate outdated regulations; (3) lessen the burdens imposed on those
directly or indirectly affected by our regulations, increase the
benefits provided to the public by our regulations, and improve the
cost-benefit balance of our regulations; (4) lessen burdens imposed on
small entities; (5) eliminate duplicative or overlapping regulations;
(6) reduce paperwork by eliminating duplication, lessening frequency,
allowing electronic submission, standardizing forms, exempting small
entities, or other means; (7) eliminate conflicts and inconsistencies
in the Department's regulations and those of its own agencies or other
Federal agencies or state, local, or tribal governmental

bodies; (8) simplify or clarify language in regulations; (9) revise
regulations to address changes in technology, economic conditions, or
other factors; (10) determine if matters in an existing regulation
could be better handled fully by the states without Federal
regulations; (11) reduce burdens by incorporating international or
industry consensus standards into regulations; (12) reconsider
regulations that were based on scientific or other information that has
been discredited or superseded; and (13) expand regulations that are
insufficient to address their intended objectives or to obtain
additional benefits.
    Comments should focus on regulations that have demonstrated
deficiencies. Comments that rehash debates over recently issued rules
will be less useful. Particularly where comments relate to a rule's
costs or benefits, comments will be most useful if there are data and
experience under the rule available to ascertain the rule's actual
impact. For that reason, we encourage the public to emphasize those
rules that have been in effect for a sufficient amount of time to
warrant a fair evaluation. Furthermore, the public should focus on rule
changes that will achieve a broad public impact, rather than an
individual personal or corporate benefit. Where feasible, comments
should reference a specific regulation, by Code of Federal Regulations
(CFR) cite, and provide the Department information on what needs fixing
and why. Comments do not necessarily need to address how to fix the
perceived problem, though such comments are welcome. Lastly, we also
want to stress that this review is for existing rules; the public
should not use this process to submit comments on proposed rules.
    The public meeting will begin with a discussion of and taking
comments on the Department's preliminary plan for regulatory review
required by Executive Order 13563. After that, we plan to allow for
comments on candidate rules for review. The Department's General
Counsel will preside over the meeting. Other senior officials from the
Department and its OAs will also attend. It is our intent that the
public meeting will provide an opportunity for these officials to
interact with individuals or stakeholder representatives. To enable
them to effectively participate in the public meeting, they will need
some information in advance. As a result, we are establishing the
following process.
    1. Suggestions for Discussion at Public Meeting:
    a. By March 3, 2011, the Department requests that commenters submit
their suggestions for discussion at the public meeting and indicate
whether they want time allocated to them at the public meeting.
Commenters are welcome to indicate how much time they would like to be
allocated, but the Department reserves the right to allocate time as
necessary to ensure that as many commenters as possible may participate
in the public meeting in a meaningful manner.
    b. The initial comments from those intending to participate in the
public meeting should contain enough details to permit DOT officials to
sufficiently prepare and ask questions.
    c. The initial comments may be augmented anytime before the end of
the full comment period.
    d. Anyone who needs auxiliary aids and services, such as sign
language interpreters, to effectively participate in the meeting should
contact the Department via the ``FOR FURTHER INFORMATION CONTACT''
information provided above.
    2. Public Meeting:
    a. After receiving this initial round of public comment, the
Department will organize those suggestions by topic and OA for
discussion during the public meeting.
    b. By having the public meeting after receiving initial public
comment and by organizing the discussion around topics and OAs, the
Department will be better positioned to discuss issues regarding a
particular rule, broad category of rules, or affected group or
industry, rather than merely recording public comment for later review.
    c. The Department will hold its public meeting beginning at 9:30
a.m. ET on March 14, 2011 at the Department of Transportation, West
Building, Ground Floor, DOT Conference Center, Oklahoma Room, 1200 New
Jersey Avenue, SE., Washington, DC. We will make a meeting outline
available on http://regs.dot.gov in advance of the meeting.
Furthermore, we are exploring the use of technology to enable remote
participation in the meeting. We will update http://regs.dot.gov with
information about opportunities for the public to participate remotely.
    3. Other Written Comments:
    The Department will continue to accept written comments through
April 1, 2011. Those who do not wish to attend the public meeting may,
of course, submit comments at any time during the comment period.
    4. Follow-up Action by DOT:
    a. We will place a transcript or summary of the public meeting in
our public docket (http://www.regulations.gov) as soon as possible
after the end of the meeting. We note that because the docket is
Internet accessible, it should allow those with Internet access to
review those proceedings as well as other comments. We hope this will
further improve the interchange of ideas.
    b. This review will provide meaningful and significant input to the
Secretary, the General Counsel, OA Administrators, and other DOT senior
officials. As soon as possible, depending on the number of comments we
receive and the issues raised, the Department will publish a report
providing at least a brief response to the comments we have received,
including a description of any further action we intend to take.

Regulatory Notices

    Privacy Act: Anyone may search the electronic form of comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.) You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (65 FR 19477-78) or you may visit http://www.gpoaccess.gov/fr/browse.html and browse under 2000 for April 11,
looking under Department of Transportation.

    Authority: 5 U.S.C. 610; E.O. 13563, 76 FR 3821, Jan. 21 2011;
E.O. 12866, 58 FR 51735, Oct. 4, 1993.

    Issued on February 10, 2011, in Washington, DC.
Robert S. Rivkin,
General Counsel.
[FR Doc. 2011-3492 Filed 2-11-11; 8:45 am]
BILLING CODE 4910-9X-P


[Federal Register Volume 82, Number 194 (Tuesday, October 10, 2017)]
[Proposed Rules]
[Pages 46940-46948]
[FR Doc No: 2017-21396]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM18-1-000]

Grid Resiliency Pricing Rule

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to the Department of Energy Organization Act (DOE
Act), the Secretary of Energy (Secretary) is proposing a rule for final
action by the Federal Energy Regulatory Commission (Commission or
FERC). The Secretary is proposing the Commission exercise its authority
under the Federal Power Act (FPA) to establish just and reasonable
rates for wholesale electricity sales. Under the proposal, the
Commission will impose rules on Commission-approved independent system
operators

(ISOs) and regional transmission organizations (RTOs) to ensure that
certain reliability and resilience attributes of electric generation
resources are fully valued. The Secretary is directing the Commission
to take final action on this proposal within 60 days of publication of
this proposed rule in the Federal Register or, in the alternative, to
issue the rule as an interim final rule immediately, with provision for
later modifications after consideration of public comments. The
Secretary further directs that any final rule adopting this proposal
take effect within 30 days of publication of such final rule in the
Federal Register and proposes that each ISO and RTO subject to the rule
shall submit a compliance filing within 15 days of the effective date
of such final rule.

DATES: The Commission is directed either to take final action by
December 11, 2017 or to issue the proposed rule as an interim final
rule. Public comment is due either November 24, 2017 or according to a
schedule to be published by the Commission.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Email: Electronic Filing through http://www.ferc.gov.
Documents created electronically using word processing software should
be filed in native applications or print-to-PDF format and not in a
scanned format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT: Ronald (R.J.) Colwell, U.S. Department
of Energy, Office of the Assistant General Counsel for Electricity and
Fossil Energy (GC-76), Forrestal Building, Room 6D-033, 1000
Independence Avenue SW., Washington, DC 20585;<PHONE_NUMBER>; email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Statutory Background
II. Discussion of Proposed Rule
    A. Affordable, Reliable and Resilient Electricity Is Vital to
the Economic and National Security of the United States and Its
People
    B. There Have Been Significant Retirements of Fuel-Secure
Generation
    C. The 2014 Polar Vortex Exposed Problems With the Resiliency of
the Electric Grid
    D. Regulated Wholesale Power Markets Are Not Adequately Pricing
Resiliency Attributes of Fuel-Secure Power
    E. The Preservation of Generation Diversity Will Benefit
Consumers
    F. NERC Warns That Premature Retirements of Fuel-Secure
Generation Threaten the Reliability and Resiliency of the Bulk Power
System
    G. The DOE Staff Report Made Clear the Challenges to the Grid
and That Resiliency Must Be Addressed
    H. Congress Is Concerned About the Potential Loss of Valuable
Generation Resources
    I. The FERC Is Cognizant of the Problem and Has the Necessary
Information on Which To Act Expeditiously
III. Proposal
IV. Procedures for Completion of Final Action
    A. Deadlines
    B. Comment Procedures
    C. Compliance Filings
V. Statutory and Regulatory Review
VI. Information Collection Statement
VII. Environmental Analysis
VIII. Regulatory Flexibility Act
IX. Executive Order 12866
X. Document Availability
XI. Approval of the Office of the Secretary

I. Statutory Background

    Section 403 of the DOE Act authorizes the Secretary of Energy to
propose rules for Commission action regarding certain Commission
functions, including its electricity rate-related functions under
sections 205 and 206 of the Federal Power Act, and to set reasonable
time limits for Commission completion of the proposed action. Section
403(a) provides for the initiation of rulemaking proceedings by either
the Secretary or the Commission. In the exercise of this authority, the
Commission proposes rules by publishing Notices of Proposed Rulemaking
(NOPR) in the Federal Register. The Secretary has likewise exercised
his section 403 authority by publishing NOPRs in the Federal Register.
This authority was first exercised by the Secretary in 1979 by
publication of a NOPR (``Transportation Certificates for Natural Gas,''
44 FR 17644, March 22, 1979). The Secretary has subsequently acted
under section 403 on several occasions by publication of a NOPR in the
Federal Register. By proposing a rule in this manner, the Secretary
enables the Commission to proceed directly to the consideration of, and
final action on, the proposal and eliminates the need for the
Commission to order or publish its own separate rulemaking proposal.
    Independent of the Secretary's action under section 403(a), FERC
has full authority to establish the rule set forth in this proposed
rule. Specifically, FERC has authority to establish just and reasonable
rates, terms, and conditions for wholesale electricity sales under
sections 205 and 206 of the Federal Power Act, and FERC has discretion
to do so by means of a rulemaking pursuant to section 403(c), which
authorizes FERC to use rulemaking procedures to conduct its Federal
Power Act functions relating to rates and charges. Transmission Access
Policy Study Group v. F.E.R.C., 225 F.3d 667, 688 (D.C. Cir. 2000),
aff'd 535 U.S. 1 (2002). FERC has on numerous occasions imposed market
rules on ISOs and RTOs. See 18 CFR part 35.
    Furthermore, section 403(b) requires that FERC ``shall consider and
take final action on any proposal made by the Secretary [under
subsection (a)] in an expeditious manner in accordance with such
reasonable time limits as may be set by the Secretary for the
completion of action by the Commission on any such proposal.'' The
Secretary is therefore authorized to direct the Commission to consider
and take final action within the reasonable time limits the Secretary
establishes in this proposed rule. Given the extensive record the
Commission has already developed on the subject matter of this proposed
rule, the time limit for final action provided herein allows adequate
time for the Commission to receive and consider public comments.

II. Discussion of the Proposed Rule

    The resiliency of the nation's electric grid is threatened by the
premature retirements of power plants that can withstand major fuel
supply disruptions caused by natural or man-made disasters and, in
those critical times, continue to provide electric energy, capacity,
and essential grid reliability services. These fuel-secure resources
are indispensable for the reliability and resiliency of our electric
grid--and therefore indispensable for our economic and national
security. It is time for the Commission to issue rules to protect the
American people from energy outages expected to result from the loss of
this fuel-secure generation capacity.

A. Affordable, Reliable and Resilient Electricity Is Vital to the
Economic and National Security of the United States and Its People

    Ensuring that American families and businesses have access to
reliable, resilient and affordable electricity is vital to the economy,
national security, and quality of life. From heating homes in the
winter to cooling them in the summer, providing lighted streets so

people can walk safely at night, powering machines and technology that
create jobs, and connecting us through smart phones and the internet--
electricity is a key driver of America's economic prosperity and the
basic necessities of life. The American economy, government and
national defense all depend on electricity. Therefore, ensuring a
reliable and resilient electric supply and corresponding supply chain
are also vital to national security.
    The sheer size and impact of the electricity market on our economy
cannot be overstated. According to the Department of Energy's January
2017 Quadrennial Energy Review (January 2017 QER): In the United
States, there are around 7,700 operating power plants that generate
electricity from a variety of primary energy sources; 707,000 miles of
high-voltage transmission lines; more than 1 million rooftop solar
installations; 55,800 substations; 6.5 million miles of local
distribution lines; and 3,354 distribution utilities delivering
electricity to 148.6 million customers. The total amount of money paid
by end users for electricity in 2015 was about $400 billion. This
drives an $18.6 trillion U.S. gross domestic product and significantly
influences global economic activity totaling roughly $80 trillion.\1\
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    \1\ Transforming the Nation's Electricity System: The Second
Installment of the Quadrennial Energy Review, January 6, 2017
(January 2017 QER).
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B. There Have Been Significant Retirements of Fuel-Secure Generation

    Market changes are resulting in a significant loss of fuel-secure
generation. According to the January 2017 QER: Currently, the changing
electricity sector is causing the closure of many coal and nuclear
plants in a shift from recent trends. From 2000 through 2009, power
plant retirements were dominated by natural gas steam turbines. Over
the past 6 years (2010-2015), power plant retirements were dominated by
coal plants (37 GW), which accounted for over 52 percent of recently
retired power plant capacity. Over the next 5 years (between 2016 and
2020), 34.4 GW of summer capacity is planned to be retired, and 79
percent of this planned retirement capacity are coal and natural gas
plants (49 percent and 30 percent, respectively). The next largest set
of planned retirements are nuclear plants (15 percent).\2\
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    \2\ January 2017 QER at 3-73.
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    The ``Staff Report to the Secretary on Electricity Markets and
Reliability'' (``DOE Staff Report'') \3\ also discusses the large
number of fuel-secure plants that have retired or are scheduled to
retire:
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    \3\ U.S. Department of Energy, Staff Report to the Secretary on
Electricity Markets and Reliability, August 2017 (DOE Staff Report).
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     Between 2002 and 2016, 531 coal generating units
representing approximately 59,000 MW of generation capacity retired
from the U.S. generation fleet.\4\
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    \4\ DOE Staff Report at 22.
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     EIA reported that coal-fired power plants made up more
than 80 percent of the 18,000 MW of electric generating capacity that
retired in 2015.\5\
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    \5\ DOE Staff Report at 22, citing U.S. Energy Information
Administration, Today in Energy, March 8, 2016. More recent EIA data
shows an overall larger amount of 2015 generation capacity
retirements (25,400 MW), of which coal-fired power plants made up
72%. EIA Monthly Update to the Annual Electric Generator Report,
Form EIA-860m, March 2017.
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     It is anticipated that approximately 12,700 MW of coal
generation will retire through 2020.\6\
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    \6\ U.S. Energy Information Administration (EIA), Monthly Update
to the Annual Electric Generator Report, Form EIA-860m, June 2017,
https://www.eia.gov/electricity/data/eia860m/.
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     Between 2002 and 2016, 4,666 MW of nuclear generating
capacity was announced for retirement, or approximately 4.7 percent of
the U.S. total.\7\
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    \7\ DOE Staff Report at 29.
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     Eight reactors representing 7,167 MW of nuclear capacity
(7.2 percent of U.S. nuclear capacity and 0.6 percent of total U.S.
generating capacity) have announced retirement plans since 2016. This
does not include seven reactors that averted early retirement through
state action.\8\
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    \8\ DOE Staff Report at 30.
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C. The 2014 Polar Vortex Exposed Problems With the Resiliency of the
Electric Grid

    In early 2014, the Polar Vortex (a band of very cold weather spread
across much of the eastern and central United States) created record-
high winter peak electric demand for heating and equally high demand
for natural gas for residential heating. During the Polar Vortex, PJM
Interconnection (PJM) \9\ struggled to meet demand for electricity
because a significant amount of generation was not available to run.
According to the DOE Staff Report, the loss of generation capacity
could have been catastrophic, but a number of fuel-secure plants that
were scheduled for retirement were called upon to meet the need for
electricity: American Electric Power reported that it deployed 89
percent of its coal units scheduled for retirement in 2014 to meet
demand during the Polar Vortex, and Southern Company reported using 75
percent of its coal units scheduled for closure. Using these retiring
units enabled utilities to meet customer demand during a period when
already limited natural gas resources were diverted from electricity
production to meet residential heating needs. Once retired, however,
these units will not be available for the next unseasonably cold
winter.\10\
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    \9\ PJM Interconnection is the regional transmission
organization (``RTO'') serving thirteen states and the District of
Columbia.
    \10\ DOE Staff Report, at 98 (internal citations omitted).
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    Likewise, the DOE Staff Report notes that, overall, nuclear
generators performed extremely well during the Polar Vortex, with an
average capacity factor of 95 percent.\11\
---------------------------------------------------------------------------

    \11\ DOE Staff Report, at 95 (internal citations omitted).
---------------------------------------------------------------------------

    Sixty-five million people within the PJM footprint could have been
affected if these units were not available. The 2014 Polar Vortex was a
warning that the current and scheduled retirements of fuel-secure
plants could threaten the reliability and resiliency of the electric
grid.\12\
---------------------------------------------------------------------------

    \12\ DOE Staff Report, at 98-99, 118.
---------------------------------------------------------------------------

D. Regulated Wholesale Power Markets Are Not Adequately Pricing
Resiliency Attributes of Fuel-Secure Power

    There is a growing recognition that organized markets do not
necessarily pay generators for all the attributes that they provide to
the grid, including resiliency. Because wholesale pricing in those
markets does not adequately consider or accurately value those
benefits, fuel-secure generation resources are often not compensated
for those benefits.
    The January 2017 QER summarizes the problem of how regulated
wholesale markets are not adequately pricing resiliency attributes of
fuel-secure generation: Reliability investments are typically
incorporated into ratemaking processes for all electric utilities.
Supplementary investments for recovery from outage events also are
handled through established ratemaking processes. Resilience
requirements tend to be valued as contributions to reliability and
incorporated as part of ratemaking processes. These processes are more
easily executed in structures that are traditional end-to-end,
vertically integrated electricity delivery services; other market
structures complicate reliability and resilience investment decision-
making. Short-run markets may not provide adequate price signals to
ensure long-term investments

in appropriately configured capacity. Also, resource valuations tend
not to incorporate superordinate network and/or social values such as
enhancing resilience into resource or . . . investment decision making.
The increased importance of system resilience to overall grid
reliability may require adjustments to market mechanisms that enable
better valuation.\13\
---------------------------------------------------------------------------

    \13\ January 2017 QER, at 4-41 (emphasis added).
---------------------------------------------------------------------------

    A recent study by IHS Markit amplifies the same point: ``the
increasing cost of ensuring power system resilience is exposing the
problem that some current wholesale market price formation rules do not
fully compensate generating resources for providing the desired power
system supply resiliency.'' \14\
---------------------------------------------------------------------------

    \14\ IHS Markit, ``Ensuring Resilient and Efficient Electricity
Generation: The Value of the current diverse US power supply
portfolio'' at 8.
---------------------------------------------------------------------------

E. The Preservation of Generation Diversity Will Benefit Consumers

    The IHS Markit study also concludes that preservation of generation
diversity provided by fuel-secure resources benefits consumers: ``The
current diversified US electric supply portfolio lowers the cost of
electricity production by about $114 billion per year and lowers the
average retail price of electricity by 27%'' compared with a ``less
efficient diversity case'' involving ``no meaningful contributions from
coal or nuclear resources.'' \15\
---------------------------------------------------------------------------

    \15\ Id. at 4-5.
---------------------------------------------------------------------------

F. NERC Warns That Premature Retirements of Fuel-Secure Generation
Threaten the Reliability and Resiliency of the Bulk Power System

    The North American Electric Reliability Corporation (NERC) (the
FERC-designated Electric Reliability Organization), whose mission is to
assure the reliability and security of the bulk power system in North
America, states: The North American electric power system is undergoing
a rapid and significant transformation with ongoing retirements of
fossil-fired and nuclear capacity, as well as growth in natural gas,
wind, and solar resources. This shift is caused by several drivers,
such as federal, state, and provincial policies, low natural gas
prices, electricity market forces, and integration of both distributed
and utility-scale renewable resources. The changing resource mix is
altering the operating characteristics of the bulk power system (BPS).
These changing characteristics must be well understood and properly
managed in order to assure continued reliability and ensure
resiliency.\16\
---------------------------------------------------------------------------

    \16\ NERC Letter to Secretary of Energy Rick Perry, May 9, 2017,
Attachment ``Synopsis of NERC Reliability Assessments'' (Synopsis)
at 1.
---------------------------------------------------------------------------

    Specifically, according to NERC, ``Coal-fired and nuclear
generation have the added benefits of high availability rate, low
forced outages, and secured on-site fuel. Many months of on-site fuel
allow these units to be operated in a manner independent of supply
chain disruptions.'' \17\
---------------------------------------------------------------------------

    \17\ NERC, Synopsis at 2.
---------------------------------------------------------------------------

    As a consequence, NERC warns, ``Premature retirements of fuel
secure baseload generating stations reduces resilience to fuel supply
disruptions.'' \18\
---------------------------------------------------------------------------

    \18\ NERC, Synopsis at 3.
---------------------------------------------------------------------------

G. The DOE Staff Report Made Clear the Challenges to the Grid and That
Resiliency Must Be Addressed

    The DOE Staff Report confirms these observations and exposes the
potential challenges and threats to the reliability and resiliency of
the electric grid, as well as the economic hardship faced by some of
the most resilient types of generation. Among other things, the DOE
Staff Report warns that premature retirements of fuel-secure resources
impose serious risks: Ultimately, the continued closure of traditional
baseload power plants calls for a comprehensive strategy for long-term
reliability and resilience. States and regions are accepting increased
risks that could affect the future reliability and resilience of
electricity delivery for consumers in their regions. Hydropower,
nuclear, coal, and natural gas power plants provide ERS [(``essential
reliability services'')] and fuel assurance critical to system
resilience. A continual comprehensive regional and national review is
needed to determine how a portfolio of domestic energy resources can be
developed to ensure grid reliability and resilience.\19\
---------------------------------------------------------------------------

    \19\ ``Staff Report to the Secretary on Electricity Markets and
Reliability,'' U.S. Department of Energy, August 2017 at 14
(emphasis added).
---------------------------------------------------------------------------

    The DOE Staff Report also recognizes that ``system fuel supply
chain disruptions can impact many generators during a single widespread
fuel shortage event,'' and that ``[n]uclear and coal plants typically
have advantages associated with onsite fuel storage[.]'' \20\ In light
of these facts, the DOE Staff Report calls for prompt action: Markets
need further study and reform to address future services essential to
grid reliability and resilience. System operators are working toward
recognizing, defining, and compensating for resource attributes that
enhance reliability and resilience (on both the supply and demand
side). However, further efforts should reflect the urgent need for
clear definitions of reliability- and resilience-enhancing attributes
and should quickly establish the market means to value or the
regulatory means to provide them.\21\
---------------------------------------------------------------------------

    \20\ DOE Staff Report, at 91. For example, ``coal plants . . .
maintain onsite coal stockpiles to accommodate both normal variance
in deliveries and the possibility of a major supply disruption. Coal
stockpiles have recently been slightly smaller than historical
averages, while days of burn have increased slightly relative to
historic averages from the 70-80 range to the 85-100-day range.''
Id., at 95.
    \21\ Id., at 10 (emphasis added).
---------------------------------------------------------------------------

    The DOE Staff Report's first recommendation for protecting the
resiliency of the electric grid is to correct distortions in price
formation in the organized markets: FERC should expedite its efforts
with states, RTO/ISOs, and other stakeholders to improve energy price
formation in centrally-organized wholesale electricity markets. After
several years of fact finding and technical conferences, the record now
supports energy price formation reform, such as the proposals laid out
by PJM and others.\22\
---------------------------------------------------------------------------

    \22\ Id., at 126 (internal citations omitted).
---------------------------------------------------------------------------

H. Congress Is Concerned About the Potential Loss of Valuable
Generation Resources

    In July 2015, the chairmen of the Senate Committee on Energy and
Natural Resources, the House Committee on Energy and Commerce, and the
House Subcommittee on Energy and Power, sent correspondence to the
Commission about challenges in the Commission-approved organized
electricity markets.\23\ The chairmen expressed their concern that
``[v]aluable baseload power plants in these markets, including reliable
nuclear and coal-[fired] plants, are facing premature retirement.''
\24\
---------------------------------------------------------------------------

    \23\ Letter from Fred Upton, Lisa Murkowski, and Ed Whitfield,
U.S. Congress, to Norman Bay, Chairman, FERC (July 8, 2015).
    \24\ Id.
---------------------------------------------------------------------------

    More specifically, the Chairmen's letter stated: ``There are
growing indications that owners and operators of major baseload power
plants are facing imminent decisions regarding their continued economic
viability'' \25\ and ``broad scale premature retirements of otherwise
performing baseload units because of market rules--rather than market
forces--would represent failure of regulation.'' \26\ The letter made
clear that electricity market prices for energy and capacity should
reflect the ``true marginal cost of supply, promote

necessary investment, and produce meaningful price signals that clearly
indicate where new supply and investment are needed.\27\
---------------------------------------------------------------------------

    \25\ Id.
    \26\ Id.
    \27\ Id.
---------------------------------------------------------------------------

I. The FERC Is Cognizant of the Problem and Has the Necessary
Information on Which To Act Expeditiously

    Over the past several years, the Commission has developed an
extensive record on price formation in the Commission-approved ISOs and
RTOs. The Commission has recognized that there are deficiencies in the
way the regulated wholesale power markets price power (i.e., energy,
capacity, and ancillary services) and that these deficiencies are
undermining reliability and resiliency.
    Beginning in June 2013, the Commission recognized the changing mix
of generation resources, determined that existing capacity markets were
not providing a sufficiently reliable supply of electricity, predicted
the loss of fuel-secure generation, and sought input from the public
through proceedings on price formation in the organized markets. In a
2013 technical conference, FERC explained: The purpose of the technical
conference is to consider how current centralized capacity market rules
and structures are supporting the procurement and retention of
resources necessary to meet future reliability and operational needs.
Since their establishment, centralized capacity markets have continued
to evolve. Meanwhile, the mix of resources is also evolving in response
to changing market conditions, including low natural gas prices, state
and federal policies encouraging the entry of renewable resources and
other specific technologies, and the retirement of aging generation
resources. This changing resource mix may result in future reliability
and operational needs that are different than those of the past.\28\
---------------------------------------------------------------------------

    \28\ FERC, Centralized Capacity Markets in Regional Transmission
Organizations and Independent System Operators, Docket No. AD13-7-
000, p. 1.
---------------------------------------------------------------------------

    In December 2014, PJM requested that the Commission issue an order
approving PJM's revisions to its capacity market rules to require
resources participating in the capacity market to honor contractual
commitments to deliver electricity at any time of the year.\29\ The
Commission determined that the existing capacity market was not
providing a sufficiently reliable supply of electricity and, to remedy
this urgent shortfall, accepted PJM's proposed market rule changes.
FERC's order was recently upheld by the D.C. Circuit in Advanced Energy
Management Alliance v. FERC, D.C. Cir. (June 30, 2017).
---------------------------------------------------------------------------

    \29\ 151 FERC ] 61,208, PJM Interconnection, L.L.C., Order on
Proposed Tariff Revisions (2015); rehearing denied, PJM
Interconnection, L.L.C., Order on Rehearing and Compliance, 155 FERC
] 61,157 (2016).
---------------------------------------------------------------------------

    A year after its initial 2013 proceeding, the Commission initiated
a proceeding in June 2014, entitled ``Price Formation in Energy and
Ancillary Services Markets in Regional Transmission Organizations and
Independent System Operators'' (Price Formation Proceeding) to evaluate
issues regarding price formation in the energy and ancillary services
markets operated by RTOs and ISOs.\30\ In a December 2014 staff
analysis for this proceeding, the FERC Staff observes that ``[a]ll RTOs
and ISOs have identified a class of reliability and operational issues
that are incorporated into the day-ahead and real-time market processes
but which are not reflected in day-ahead and real-time energy and
ancillary services prices.'' \31\
---------------------------------------------------------------------------

    \30\ Price Formation in Energy and Ancillary Services Markets in
Regional Transmission Organizations and Independent System
Operators, Docket No. AD14-14-000, June 2014.
    \31\ Staff Analysis of Operator[hyphen]Initiated Commitments in
RTO and ISO Markets, Price Formation in Organized Wholesale
Electricity Markets, [Docket No. AD14-14-000], December 2014 at 5.
---------------------------------------------------------------------------

    The Price Formation Proceeding resulted in a number of additional
proceedings and rulemakings, some of which are described below:
     In November 2016, under Order No. 825, Settlement
Intervals and Shortage Pricing in Markets Operated by Regional
Transmission Organizations and Independent System Operators, the
Commission directed reforms to settlement intervals and shortage
pricing to more accurately compensate resources based on the value they
provide the system.\32\
---------------------------------------------------------------------------

    \32\ 155 FERC ] 61,276; 18 CFR part 35 [Docket No. RM15-24-000,
Order No. 825] Settlement Intervals and Shortage Pricing in Markets
Operated by Regional Transmission Organizations and Independent
System Operators (Issued June 16, 2016).
---------------------------------------------------------------------------

     In November 2016, pursuant to a NOPR entitled Essential
Reliability Services and the Evolving Bulk-Power System--Primary
Frequency Response, the Commission proposed a rule to require all newly
interconnecting large and small generating facilities, both synchronous
and non-synchronous, to install and enable primary frequency response
capability as a condition of interconnection.\33\
---------------------------------------------------------------------------

    \33\ 157 FERC ] 61,122, Essential Reliability Services and the
Evolving Bulk-Power System--Primary Frequency Response, Notice of
Proposed Rulemaking (November 17, 2016).
---------------------------------------------------------------------------

     In December 2016, under Order 831, Offer Caps in Markets
Operated by Regional Transmission Organizations and Independent System
Operators, the Commission raised existing caps on energy market offers
and allowed those higher-price offers to set market clearing
prices.\34\
---------------------------------------------------------------------------

    \34\ 157 FERC ] 61,115, 18 CFR part 35 [Docket No. RM16-5-000;
Order No. 831] Offer Caps in Markets Operated by Regional
Transmission Organizations and Independent System Operators
(November 17, 2016).
---------------------------------------------------------------------------

     In December 2016, pursuant to a NOPR entitled Fast-Start
Pricing in Markets Operated by Regional Transmission Organizations and
Independent System Operators, the Commission proposed revising its
regulations to require RTOs and ISOs to incorporate market rules that
properly price fast-start resources.\35\ As stated in the NOPR, the
proposed Fast-Start Pricing ``should lead to prices that more
transparently reflect the marginal cost of serving load, which will
reduce uplift costs and thereby improve price signals to support
efficient investments.'' \36\
---------------------------------------------------------------------------

    \35\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016).
    \36\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016),
at 1.
---------------------------------------------------------------------------

     In January 2017, the Commission issued a NOPR entitled
Uplift Cost Allocation and Transparency in Markets Operated by Regional
Transmission Organizations and Independent System Operators.\37\ Among
other things, this proposed rule would require that ``each regional
transmission organization (RTO) and independent system operator (ISO)
that currently allocates the costs of real-time uplift due to
deviations should allocate such real-time uplift costs only to those
market participants whose transactions are reasonably expected to have
caused the real-time uplift costs.'' \38\ This NOPR establishes that
the goals of the price formation in the proceeding are to:
---------------------------------------------------------------------------

    \37\ 158 FERC ] 61,047 Federal Energy Regulatory Commission, 18
CFR part 35 [Docket No. RM17-2-000] Uplift Cost Allocation and
Transparency in Markets Operated by Regional Transmission
Organizations and Independent System Operators (January 19, 2017).
    \38\ Id. at 1.
---------------------------------------------------------------------------

    (1) Maximize market surplus for consumers and suppliers;
    (2) Provide correct incentives for market participants to follow
commitment and dispatch instructions, make efficient investments in
facilities and equipment, and maintain reliability;

    (3) Provide transparency so that market participants understand how
prices reflect the actual marginal cost of serving load and the
operational constraints of reliably operating the system; and
    (4) Ensure that all suppliers have an opportunity to recover their
costs.\39\
---------------------------------------------------------------------------

    \39\ 158 FERC ] 61,047 Federal Energy Regulatory Commission, 18
CFR part 35 [Docket No. RM17-2-000] Uplift Cost Allocation and
Transparency in Markets Operated by Regional Transmission
Organizations and Independent System Operators (January 19, 2017) at
5, para 6.
---------------------------------------------------------------------------

    Through these proceedings, the Commission has developed an
extensive record on price formation in the Commission approved ISOs and
RTOs. Nevertheless, the fundamental challenge of maintaining a
resilient electric grid has not been sufficiently addressed by the
Commission or the ISOs and RTOs. The continued loss of fuel-secure
generation must be stopped. These generation resources are necessary to
maintain the resiliency of the electric grid. FERC must adopt rules
requiring the Commission-approved ISOs and RTOs to reduce the chronic
distortion of the markets that is threatening the resilience of the
Nation's electricity system.

III. Proposal

    In light of these threats to grid reliability and resilience, it is
the Commission's immediate responsibility to take action to ensure that
the reliability and resiliency attributes of generation with on-site
fuel supplies are fully valued and in particular to exercise its
authority to develop new market rules that will achieve this urgent
objective.
    The recent Polar Vortex, as well as the devastation from Superstorm
Sandy and Hurricanes Harvey, Irma, and Maria, reinforces the urgency
that the Commission must act now. Moreover, the Commission should take
action before the winter heating season begins so as to prevent the
potential failure of the grid from the loss of fuel-secure generation--
as almost happened during the 2014 Polar Vortex.
    As outlined, the Commission has developed a vast record of
comments, hearings, and technical conferences on price formation
matters, but has not done enough to address the crisis at hand.
Immediate action is necessary to ensure fair compensation in order to
stop the imminent loss of generators with on-site fuel supplies, and
thereby preserve the benefits of generation diversity and avoid the
severe consequences that additional shut-downs would have on the
electric grid.
    Over the past few years, the Commission has been considering
various aspects of accurate price formation within Commission-approved
organized markets in its ongoing price formation docket. Throughout
these proceedings the Commission has declared that a key goal of price
formation is to ``ensure that all suppliers have an opportunity to
recover their costs.'' \40\ The Commission has conducted technical
conferences, sought and received significant stakeholder and public
input, and issued and approved several market rule changes to
accomplish these goals.
---------------------------------------------------------------------------

    \40\ FERC's Price Formation in Energy and Ancillary Services
Markets Operated by Regional Transmission Organizations and
Independent System Operators; Docket No. AD14-14-000; Notice
Inviting Post-Technical Workshop Comments (January 16, 2015), Post-
Technical Conference Questions for Comment at 1.
---------------------------------------------------------------------------

    Pursuant to the Secretary's authority under section 403 of the
Department of Energy Organization Act (42 U.S.C. 7173), the Secretary
is directing the Commission to exercise its authority under sections
205 and 206 of the Federal Power Act to issue a final rule requiring
its organized markets to develop and implement market rules that
accurately price generation resources necessary to maintain the
reliability and resiliency of our Nation's bulk power system.
    The proposed rule allows for the recovery of costs of fuel-secure
generation units frequently relied upon to make our grid reliable and
resilient. Such resources provide reliable capacity, resilient
generation, frequency and voltage support, on-site fuel inventory--in
addition to providing power for our basic needs, quality of life, and
robust economy. The rule allows the full recovery of costs of certain
eligible units physically located within the Commission-approved
organized markets. Eligible units must also be able to provide
essential energy and ancillary reliability services and have a 90-day
fuel supply on site in the event of supply disruptions caused by
emergencies, extreme weather, or natural or man-made disasters. These
resources must be compliant with all applicable environmental
regulations and are not subject to cost-of-service rate regulation by
any State or local authority. The rule requires the organized markets
to establish just and reasonable rate tariffs for the recovery of costs
and a fair rate of return.

IV. Procedures for Completion of Final Action

A. Deadlines

    Pursuant to section 403(b) of the DOE Act, the Secretary is
requiring the Commission to consider and take final action on the
proposed rule herein within 60 days from the date of the publication of
this NOPR in the Federal Register. As an alternative, the Secretary
urges the Commission to issue the rule proposed herein as an interim
final rule, effective immediately, with provision for later
modifications after consideration of public comments. The Secretary
further directs that any final rule adopting this proposal take effect
within 30 days of publication of such final rule in the Federal
Register.

B. Comment Procedures

    To ensure that the Commission completes final action on this
proposed rule within the deadline provided, it will be necessary to
provide for the solicitation and review of public comments prior to the
Commission's final action. To facilitate such comment process, the
Commission is invited to issue a notice providing for such process
within two business days of the publication of this proposed rule in
the Federal Register. If the Commission does not do so, the following
comment process will take effect:
    Interested persons are invited to submit comments on the matters
and issues proposed in this NOPR to be adopted. Comments are due
November 24, 2017. Comments must refer to Commission Docket No. RM18-1-
000, and must include the commenter's name, the organization they
represent, if applicable, and their address in their comments.
    It is encouraged that comments be filed electronically via the
eFiling link on the Commission's Web site at http://www.ferc.gov. The
Commission accepts most standard word processing formats. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format. Commenters filing electronically do not need to make a paper
filing.
    Commenters that are not able to file comments electronically must
send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    All comments will be placed in the Commission's public files and
may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to

serve copies of their comments on other commenters.

C. Compliance Filings

    The Secretary further proposes that any final rule issued by the
Commission pursuant to this NOPR shall provide that each Commission-
approved RTO and ISO shall submit a compliance filing, including a
revised tariff pursuant to section 205 of the Federal Power Act, within
15 days of the effective date of the final rule to demonstrate that it
meets the proposed requirements set forth in any Final Rule. This
compliance deadline is for each RTO and ISO to submit proposed tariff
changes or otherwise demonstrate compliance with any Final Rule.
Implementing the reforms required by any Final Rule in this proceeding
may be a complex endeavor. However, implementation of these reforms is
important to ensure rates remain just and reasonable. Therefore, it is
proposed that tariff changes filed in response to a Final Rule in this
proceeding must become effective no more than 15 days after compliance
filings are due.
    To the extent that any RTO or ISO believes that it already complies
with the reforms proposed in this NOPR, the RTO or ISO would be
required to demonstrate how it complies in the compliance filing
required 15 days after the effective date of any Final Rule in this
proceeding. To the extent that any RTO or ISO seeks to argue on
compliance that its existing market rules are consistent with or
superior to the reforms adopted in any Final Rule, the Commission has
the ability entertain such arguments at that time.\41\
---------------------------------------------------------------------------

    \41\ See, e.g., Order No. 825, FERC Stats. & Regs. ] 31,384 at P
72; Demand Response Compensation in Organized Wholesale Energy
Markets, Order No. 745, FERC Stats. & Regs. ] 31,322, at P 4 & n.7,
order on reh'g and clarification, Order No. 745-A, 137 FERC ] 61,215
(2011), reh'g denied, Order No. 745-B, 138 FERC ] 61,148 (2012),
vacated sub nom. Elec. Power Supply Ass'n v. FERC, 753 F.3d 216
(D.C. Cir. 2014), rev'd & remanded sub nom. FERC v. Elec. Power
Supply Ass'n, 136 S. Ct. 760 (2016).
---------------------------------------------------------------------------

V. Statutory and Regulatory Review

    Section 403(a) of the DOE Act authorizes the Secretary of Energy to
propose rules with respect to any function within the jurisdiction of
the Commission. Section 403(b) of that Act provides that the Commission
shall have exclusive jurisdiction over such proposals. Accordingly,
although the proposal is that of the Secretary of Energy, the
Commission is the agency which will take final action on this proposed
rulemaking. Therefore, the Commission is the appropriate agency to
comply with the statutory, regulatory or Executive Order requirements
which arise in connection with this rulemaking. To the extent a
statute, regulation, or Executive Order requires action before the
issuance of a final rule, the Commission should take such action in
sufficient time to permit adoption of a final rule within the deadline
for final action set forth above.
    To the extent that a NOPR--in the event the Commission were to
issue one--would include certain information, included below are the
following:

VI. Information Collection Statement

    The Paperwork Reduction Act (PRA) \42\ requires each federal agency
to seek and obtain Office of Management and Budget (OMB) approval
before undertaking a collection of information directed to ten or more
persons or contained in a rule of general applicability. OMB
regulations \43\ require approval of certain information collection
requirements imposed by agency rules. Upon approval of a collection 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 the collection of
information unless the collection of information displays a valid OMB
control number.
---------------------------------------------------------------------------

    \42\ 44 U.S.C. 3507(d).
    \43\ 5 CFR 1320.
---------------------------------------------------------------------------

    Similar to other recently issued rules in its price formation
docket, the reforms proposed in this NOPR would amend the Commission's
regulations to improve the operation of organized wholesale electric
power markets operated by RTOs and ISOs. The reforms proposed in this
NOPR would require each RTO and ISO to implement market rules that meet
certain requirements for pricing resiliency resources. The reforms
proposed in this NOPR would require one-time filings of tariffs with
the Commission and potential software upgrades to implement the reforms
proposed in this NOPR. DOE anticipates the reforms proposed in this
NOPR, once implemented, would not significantly change currently
existing burdens on an ongoing basis. With regard to those RTOs and
ISOs that believe that they already comply with the reforms proposed in
this NOPR, they could demonstrate their compliance in the compliance
filing required 15 days after the effective date of any Final Rule in
this proceeding. The Commission will submit the proposed reporting
requirements to OMB for its review and approval under section 3507(d)
of the Paperwork Reduction Act.\44\
---------------------------------------------------------------------------

    \44\ 44 U.S.C. 3507(d) (2012).
---------------------------------------------------------------------------

    While the DOE expects the adoption of the reforms proposed in this
NOPR to provide significant benefits, the DOE understands
implementation can be a complex endeavor. Comments are sought on the
accuracy of provided burden and cost estimates and any suggested
methods for minimizing the respondents' burdens, including the use of
automated information techniques. Specifically, detailed comments are
sought on the potential cost and time necessary to implement aspects of
the reforms proposed in this NOPR, including (1) hardware, software,
and business processes changes; and (2) processes for RTOs/ISOs to vet
proposed changes amongst their stakeholders.
    Burden Estimate: \45\ The DOE believes that the burden estimates
below are representative of the average burden on respondents,
including necessary communications with stakeholders. The estimated
burden and cost for the requirements contained in this NOPR follow.\46\
---------------------------------------------------------------------------

    \45\ Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, disclose, or
provide information to or for a federal agency, including: ``. . .
(ii) Developing, acquiring, installing, and utilizing technology and
systems for the purpose of collecting, validating, and verifying
information; (iii) Developing, acquiring, installing, and utilizing
technology and systems for the purpose of processing and maintaining
information; (iv) Developing, acquiring, installing, and utilizing
technology and systems for the purpose of disclosing and providing
information . . . .'' 5 CFR 1320.3(b)(1) (2016). The time, effort,
and financial resources necessary to comply with a collection of
information that would be incurred by persons in the normal course
of their activities (e.g., in compiling and maintaining business
records) will be excluded from the ``burden'' if the agency
demonstrates that the reporting, recordkeeping, or disclosure
activities needed to comply are usual and customary.
    \46\ This estimate is based on the Commission's estimate used by
the Commission in 157 FERC ] 61,213, 18 CFR part 35 [Docket No.
RM18-1-000] Fast-Start Pricing in Markets Operated by Regional
Transmission Organizations and Independent System Operators
(December 15, 2016)]. For this information collection, the
Commission staff estimates that industry is similarly situated in
terms of hourly cost (wages plus benefits). Based on the
Commission's average cost (wages plus benefits) for 2016, the
Commission is using $74.50/hour.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Annual  number                                              Total annual burden       Cost per
                                          Number of     of  responses   Total number   Average burden hours and  hours and total  annual    respondent
                                         respondents   per respondent   of responses      cost per  response               cost                 ($)
                                                  (1)             (2)     (1) * (2) =  (4).....................  (3) * (4) = (5)........       (5) / (1)
                                                                                (3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tariff filing costs..................               6               1               6  80 hours, $5,920........  480 hours, $35,520.....  ..............
Implementation costs.................               6               1               6  3,853 hours, $285,122...  23,118 hours,            ..............
                                                                                $1,710,732.
                                      ------------------------------------------------------------------------------------------------------------------
    Total (one-time in Year 1).......  ..............  ..............  ..............  3,933 hours, $291,042...  23,598 hours,                   291,042
                                                                                $1,746,252.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Cost to Comply: The DOE has projected the total cost of compliance,
all within six months of a Final Rule plus initial implementation, to
be $1,746,252. After Year 1, the reforms proposed in this NOPR, once
implemented, would not significantly change existing burdens on an
ongoing basis.
    Title: PRA approval for this collection of information will be
obtained by FERC.
    Action: Proposed revisions to an information collection.
    OMB Control No.: [TBD].
    Respondents for this Rulemaking: RTOs and ISOs.
    Frequency of Information: One-time during year one.
    Necessity of Information: The DOE proposes this rule to improve
competitive wholesale electric markets in the RTO and ISO regions.
    Internal Review: The DOE has reviewed the proposed changes and has
determined that the changes are necessary. These requirements conform
to the Commission's need for efficient information collection,
communication, and management within the energy industry. This estimate
is based on the Commission's estimate in the NOPR for ``Fast-Start
Pricing in Markets Operated by Regional Transmission Organizations and
Independent System Operators'' \47\ and DOE believes that the NOPR is
similar and would impose similar burden associated with the information
collection requirements.
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    \47\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000],
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016).
---------------------------------------------------------------------------

    Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426, Attention:
Office of the Executive Director, email<EMAIL_ADDRESS>Phone:
(202) 502-6608, fax:<PHONE_NUMBER>. Comments on the collection of
information and the associated burden estimate in the proposed rule
should be sent to the Commission in this docket and may also be sent to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th Street NW., Washington, DC 20503 [Attention: Desk
Officer for the Federal Energy Regulatory Commission], at the following
email address<EMAIL_ADDRESS>Please refer to Docket No.:
RM18-1-000 in your submission.

VII. Environmental Analysis

    Though the Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment,\48\ the
Commission has previously concluded \49\ that neither an Environmental
Assessment nor an Environmental Impact Statement is required for a NOPR
under section 380.4(a)(15) of the Commission's regulations, which
provides a categorical exemption for approval of actions under sections
205 and 206 of the FPA relating to the filing of schedules containing
all rates and charges for the transmission or sale of electric energy
subject to the Commission's jurisdiction, plus the classification,
practices, contracts and regulations that affect rates, charges,
classifications, and services.\50\ This NOPR would require an exercise
of the Commission's authority under sections 205 and 206 of the FPA.
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    \48\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \49\ 157 FERC ] 61,213, 18 CFR part 35 [Docket No. RM18-1-000]
Fast-Start Pricing in Markets Operated by Regional Transmission
Organizations and Independent System Operators (December 15, 2016)]
at para. 73.
    \50\ 18 CFR 380.4(a)(15).
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VIII. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) \51\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA does not mandate any particular outcome in a rulemaking. It
only requires consideration of alternatives that are less burdensome to
small entities and an agency explanation of why alternatives were
rejected. The Small Business Administration's (SBA) Office of Size
Standards develops the numerical definition of a small business.\52\
These standards are provided on the SBA Web site.\53\
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    \51\ 5 U.S.C. 601-12.
    \52\ 13 CFR 121.101.
    \53\ U.S. Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes (effective Feb. 26, 2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    The SBA classifies an entity as an electric utility if it is
primarily engaged in the transmission, generation and/or distribution
of electric energy for sale. Under this definition, the six RTOs/ISOs
are considered electric utilities, specifically focused on electric
bulk power and control. The size criterion for a small electric utility
is 500 or fewer employees.\54\ Since every RTO/ISO has more than 500
employees, none are considered small entities. Furthermore, because of
their pivotal roles in wholesale electric power markets in their
regions, none of the RTOs/ISOs meet the last criterion of the two-part
RFA definition of a small entity: ``not dominant in its field of
operation.'' \55\ As a result, we certify that the reforms required by
this NOPR would not have a significant economic impact on a substantial
number of small entities.
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    \54\ 13 CFR 121.201 (Sector 22, Utilities).
    \55\ 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. The
Small Business Administration's regulations at 13 CFR 121.201 define
the threshold for a small Electric Bulk Power Transmission and
Control entity (NAICS code 221121) to be 500 employees. See 5 U.S.C.
601(3) (citing to section 3 of the Small Business Act, 15 U.S.C.
632).
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IX. Executive Order 12866

    This proposed rule has been determined not to be a significant
regulatory action for purposes of

Executive Order 12866. As a result this rule was not reviewed by the
Office of Management and Budget.

X. Document Availability

    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington, DC 20426.
    From the Commission's Home Page on the Internet, this information
is available on eLibrary. The full text of this document is available
on eLibrary in PDF and Microsoft Word format for viewing, printing,
and/or downloading. To access this document in eLibrary, type the
docket number excluding the last three digits of this document in the
docket number field.
    83. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at<PHONE_NUMBER> (toll free at 1-866-208-3676) or email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. Email the Public Reference Room at
<EMAIL_ADDRESS>
XI. Approval of the Office of the Secretary

    The Secretary of Energy has approved the publication of this
proposed rule.

List of Subjects in 10 CFR Part 35

    Electric power rates, electric utilities, reporting and
recordkeeping requirements.

    Issued in Washington, DC, on September 29, 2017.
Rick Perry,
Secretary of Energy.

    For the reasons stated in the preamble, DOE proposes that FERC
amend part 35, chapter I of title 18, subchapter B, Code of Federal
Regulations as set forth below:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 35 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

0
2. Section 35.28 is amended by adding paragraph (g)(10) to read as
follows:

Sec.  35.28  Non-discriminatory open access transmission tariff.

* * * * *
    (g) * * *
    (10) Pricing eligible grid reliability and resiliency resources.
    (i) Definition of eligible grid reliability and resiliency
resources. An eligible grid reliability and resiliency resource is any
resource that:
    (A) Is an electric generation resource physically located within a
Commission-approved independent system operator or regional
transmission organization;
    (B) Is able to provide essential energy and ancillary reliability
services, including but not limited to voltage support, frequency
services, operating reserves, and reactive power;
    (C) Has a 90-day fuel supply on site enabling it to operate during
an emergency, extreme weather conditions, or a natural or man-made
disaster;
    (D) Is compliant with all applicable federal, state, and local
environmental laws, rules, and regulations; and
    (E) Is not subject to cost of service rate regulation by any state
or local regulatory authority.
    (ii) Scope of application. The requirements of this rule shall
apply to Commission-approved independent system operators or regional
transmission organizations with energy and capacity markets and a
tariff that contains a day-ahead and a real-time market or the
functional equivalent. The application of this rule must be consistent
between the day-ahead and real-time markets.
    (iii) Reliability and resiliency rate. (A) Each Commission-approved
independent system operator or regional transmission organization shall
establish a tariff that provides a just and reasonable rate for the--
    (1) Purchase of electric energy from an eligible reliability and
resiliency resource; and
    (2) recovery of costs and a return on equity for such resource
dispatched during grid operations.
    (B) The just and reasonable rate shall include pricing to ensure
that each eligible resource is fully compensated for the benefits and
services it provides to grid operations, including reliability,
resiliency and on-site fuel-assurance, and that each eligible resource
recovers its fully allocated costs and a fair return on equity.
    (iv) Reliability and resiliency costs. Compensable costs shall
include, but not be limited to, operating and fuel expenses, costs of
capital and debt, and a fair return on equity and investment.

[FR Doc. 2017-21396 Filed 10-6-17; 8:45 am]
 BILLING CODE 6717-01-P