corresponding database as specified in the proposed Reliability
Standard.
    909. We agree with National Grid that the database should be
maintained on a regional basis. However, Regional Entities have not
undergone an approval process under section 215. Therefore, we cannot
yet enforce this requirement.
    910. Because the regional procedures have not been submitted to the
Commission, it is not possible to determine at this time whether PRC-
013-0 satisfies the statutory requirement that a proposed Reliability
Standard be ``just, reasonable, not unduly discriminatory or
preferential, and in the public interest.'' Accordingly, the Commission
will not propose to accept or remand this Reliability Standard until
the ERO submits additional information. In the interim, compliance with
PRC-013-0 should continue on its current basis, and the Commission
considers compliance with the Reliability Standard to be a matter of
good utility practice.

o. Special Protection System Assessment (PRC-014-0)
i. NERC Proposal
    911. Proposed Reliability Standard PRC-014-0 ensures that special
protection systems are properly designed, meet performance
requirements, and are coordinated with other protection systems by
requiring the regional reliability organization to assess and document
the operation, coordination, compliance with NERC Reliability
Standards, as well as the effectiveness of special protection systems,
at least once every five years.
ii. Staff Preliminary Assessment
    912. Similar to its discussion of PRC-002-1, staff noted that this
Reliability Standard designates a regional reliability organization as
the sole applicable entity.
    913. The Staff Preliminary Assessment noted that the maximum
allowable interval of at least once every five years as a Requirement
for assessing the effectiveness of the special protection systems is a
good example of a maximum allowable interval without specific
justification.
iii. Comments
    914. A number of commenters discussed how the Commission should
address PRC-012-0 and other fill-in-the-blank standards in the PRC
group that require compliance by regional reliability organizations.
iv. Commission Proposal
    915. Because the regional procedures have not been submitted to the
Commission, it is not possible to determine at this time whether PRC-
014-0 satisfies the statutory requirement that a proposed Reliability
Standard be ``just, reasonable, not unduly discriminatory or
preferential, and in the public interest.'' Accordingly, the Commission
will not propose to accept or remand this Reliability Standard until
the ERO submits the regional procedures or a single continent-wide
procedure. In the interim, compliance with PRC-014-0 should continue on
its current basis, and the Commission considers compliance with the
Reliability Standard to be a matter of good utility practice.
p. Special Protection System Data and Documentation (PRC-015-0)
i. NERC Proposal
    916. Proposed Reliability Standard PRC-015-0 requires transmission
owners, generator owners, and distribution providers to maintain a
listing, retain evidence of review, and provide documentation for
existing, new, or functionally modified special protection systems.
ii. Staff Preliminary Assessment
    917. No substantive issues were identified for the proposed
Reliability Standard.
iii. Comments
    918. The ISO/RTO Council believes that the time period used for
assessing compliance is not clear in this Reliability Standard.
iv. Commission Proposal
    919. The Commission believes that there are no substantive issues
identified for this proposed Reliability Standard.
    920. We disagree with ISO/RTO Council's view that the compliance
time period is not clear. Requirement 3 of this Reliability Standard
requires documentation to be provided within 30 days for compliance
requirements.
    921. Accordingly, the Commission proposes to approve PRC-015-0 as
mandatory and enforceable. We believe that the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest.
q. Special Protection System Misoperations (PRC-016-0)
i. NERC Proposal
    922. Proposed Reliability Standard PRC-016-0 requires transmission
owners, generator owners and distribution providers to provide the
regional reliability organization with documentation, analyses and
corrective action plans for misoperation of special protection systems.
ii. Staff Preliminary Assessment
    923. No substantive issues were identified for the proposed
Reliability Standard.
iii. Comments
    924. ISO/RTO Council is concerned that this Reliability Standard
fails to identify the analysis sufficient for reviewing special
protection system operations and the type of corrective action that
must be taken to avoid misoperations. It also believes that reports on
special protection system misoperations should be routinely provided to
the regional reliability organization and NERC.
iv. Commission Proposal
    925. We disagree with ISO/RTO Council that PRC-016-0 does not
identify the analysis sufficient for reviewing special protection
systems and the type of corrective actions required to avoid
misoperations. However, we agree that reports on special protection
system misoperations should be routinely provided to the regional
reliability organization and NERC and propose to require NERC to
provide that routine reporting be limited to misoperations of special
protection systems that have Interconnection-wide reliable impact and
routine submission of the corrective action plans upon implementation
instead of the current requirement of 90 days upon request.
    926. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard PRC-016-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to PRC-016-0 that
includes a requirement that maintenance and testing of these special
protection system programs must be carried out within a maximum
allowable interval that is appropriate for the type of relaying used
and the impact of these special system protection programs on the
reliability of the Bulk-Power System.
r. Special Protection System Maintenance and Testing (PRC-017-0)
i. NERC Proposal
    927. Proposed Reliability Standard PRC-017-0 requires transmission
owners, generator owners, and distribution providers to provide the
regional reliability organization with documentation on special
protection system maintenance, testing and implementation plans.
ii. Staff Preliminary Assessment
    928. Staff expressed concern that this Reliability Standard does
not specify the criteria to determine the appropriate maintenance
intervals or maximum allowable intervals for protection systems to
ensure effectiveness.
iii. Comments
    929. The comments provided by ISO/RTO Council and NERC regarding
maximum allowable intervals in carrying out maintenance and testing
programs in the PRC Reliability Standards have been presented in detail
in PRC-005-1.

iv. Commission Proposal
    930. PRC-017-0 does not specify the criteria to determine the
appropriate maintenance intervals, nor does it specify maximum
allowable maintenance intervals for the protections systems. The
Commission proposes to require NERC to include a requirement that
maintenance and testing of these special protection system programs
must be carried out within a maximum allowable interval that is
appropriate to the type of relaying used and the impact of these
special protection system programs on the reliability of the Bulk-Power
System.
    931. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard PRC-017-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to PRC-017-0 that:
(1) Includes a requirement that maintenance and testing of these
special protection system programs must be carried out within a maximum
allowable interval that is appropriate to the type of relaying used;
and (2) identifies the impact of these special protection system
programs on the reliability of the Bulk-Power System.
s. Disturbance Monitoring Equipment Installation and Data Reporting
(PRC-018-1)
i. NERC Proposal
    932. Proposed Reliability Standard PRC-018-1 ensures that
disturbance monitoring equipment is installed and disturbance data is
reported in accordance with comprehensive requirements for installing
disturbance monitoring equipment.
ii. Staff Preliminary Assessment
    933. This is a new Reliability Standard and it was not assessed in
the Staff Preliminary Assessment.
iii. Comments
    934. Because this Reliability Standard was not discussed in the
Staff Preliminary Assessment, no comments have been filed.
iv. Commission Proposal
    935. The Commission notes that the proposed Reliability Standard
addressed Blackout Report Recommendation No. 28 by requiring the
transmission owner and generator owner to install disturbance
monitoring equipment and report disturbance data. The Commission
commends the initiative and efforts taken by NERC and industry in
addressing this recommendation.
    936. Accordingly, the Commission proposes to approve PRC-018-1 as
mandatory and enforceable. We believe that the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest.
t. Under-Voltage Load Shedding Program Database (PRC-020-1)
i. NERC Proposal
    937. Proposed Reliability Standard PRC-020-1 ensures that a
regional database for UVLS programs is available for Bulk-Power System
studies by requiring regional reliability organizations with any
entities that have UVLS programs to maintain and annually update a
database.
ii. Staff Preliminary Assessment
    938. Staff noted that this version 1 Reliability Standard was
recently approved by the NERC Board of Trustees, effective May 1, 2006,
and does not address the applicability concerns articulated in the
Staff Preliminary Assessment.
    939. In addition, similar to its discussion of PRC-002-1, staff
noted that this Reliability Standard designates a regional reliability
organization as the sole applicable entity. Staff was concerned about
the feasibility of a regional reliability organization serving as the
applicable entity and the enforceability of the proposed Reliability
Standard in the mandatory Reliability Standards structure.
iii. Comments
    940. A number of commenters discussed how the Commission should
address PRC-020-0 and other fill-in-the-blank standards in the PRC
group that require compliance by regional reliability organizations.
iv. Commission Proposal
    941. Because the regional procedures have not been submitted to the
Commission, it is not possible to determine at this time whether PRC-
020-1 satisfies the statutory requirement that a proposed Reliability
Standard be ``just, reasonable, not unduly discriminatory or
preferential, and in the public interest.'' Accordingly, the Commission
will not propose to accept or remand this Reliability Standard until
the ERO submits additional information. In the interim, compliance with
PRC-020-1 should continue on its current basis, and the Commission
considers compliance with the Reliability Standard to be a matter of
good utility practice.
u. Under-Voltage Load Shedding Program Data (PRC-021-1)
i. NERC Proposal
    942. Proposed Reliability Standard PRC-021-1 ensures that data is
supplied to support the regional UVLS database by requiring the
transmission owner and distribution provider to supply data related to
its system and other related protection schemes to its regional
reliability organization's data base.
ii. Staff Preliminary Assessment
    943. No substantive issues were identified for the proposed
Reliability Standard PRC-021-1.
iii. Comments
    944. CenterPoint seems to promote eliminating this Reliability
Standard as stated previously in PRC-010-0.
iv. Commission Proposal
    945. The Commission believes that Reliability Standards for UVLS
are required in the same manner as Reliability Standards for line and
generation protection, UFLS or special protection systems since all of
them are required to ensure reliable system operations. Therefore, we
disagree with CenterPoint's view that UVLS Reliability Standards are
not needed.
    946. The Commission proposes to approve, as mandatory and
enforceable, Reliability Standard PRC-021-1 as just, reasonable, not
unduly discriminatory or preferential, and in the public interest.
v. Under-Voltage Load Shedding Program Performance (PRC-022-1)
i. NERC Proposal
    947. Proposed Reliability Standard PRC-022-1 requires transmission
operators, load-serving entities, and distribution providers to provide
analysis, documentation on UVLS operations and misoperations to the
regional reliability organization.
ii. Staff Preliminary Assessment
    948. No substantive issues were identified regarding Reliability
Standard PRC-022-1.
iii. Comments
    949. No comments were filed.
iv. Commission Proposal
    950. The Commission believes that there are no substantive issues
for this

proposed Reliability Standard. Therefore, the Commission proposes to
approve, as mandatory and enforceable, Reliability Standard PRC-022-1
as just, reasonable, not unduly discriminatory or preferential, and in
the public interest.
11. TOP: Transmission Operations
a. Overview
    951. The eight proposed Transmission Operations (TOP) Reliability
Standards apply to transmission operators, generator operators and
balancing authorities. The goal of these Reliability Standards is to
ensure that the transmission system is operated within operating
limits. Specifically, these Reliability Standards cover the
responsibilities and decision-making authority for reliable operations,
requirements for operations planning, planned outage coordination,
real-time operations, provision of operating data, monitoring of system
conditions, reporting of operating limit violations and actions to
mitigate such violations. The Interconnection Reliability Operations
and Coordination (IRO) group of Reliability Standards complement these
proposed TOP Reliability Standards.
b. Reliability Responsibilities and Authorities (TOP-001-0)
i. NERC Proposal
    952. TOP-001-0 requires that: (a) The transmission operating
personnel must have the authority to direct actions in real-time; (b)
the transmission operator, balancing authority, and generator operator
must follow the directives of their reliability coordinator; and (c)
the balancing authority and generator operator must follow the
directives of the transmission operator. In addition, the proposed
Reliability Standard requires the transmission operator, balancing
authority, generator operator, distribution provider and load-serving
entity to take emergency actions when directed to do so in order to
keep the transmission system intact. The reliability goal of TOP-001-1
is to: (1) Ensure that system operators have the authority to take
actions and direct others to take action to maintain Bulk-Power System
facilities within limits; (2) protect transmission, generation,
distribution, and customer equipment; and (3) prevent cascading
failures of the interconnected grid. Further, NERC indicates that it
plans to modify TOP-001-0 to address the lack of Measures and Levels of
Non-Compliance.
ii. Staff Preliminary Assessment
    953. The Staff Preliminary Assessment did not identify any
substantive issues regarding TOP-001-0, other than noting that it does
not contain Measures or Levels of Non-Compliance.
iii. Comments
    954. MEAG states that, under Requirement R2 a transmission operator
must take immediate actions to shed load to alleviate an emergency, and
Requirement R4 obligates distribution providers and load-serving
entities to do the same. MEAG contends that Requirement R4 should be
eliminated because, to the extent that a transmission owner relies on a
distribution provider or load serving entity to respond to a system
emergency, including load shedding, this should be done through a
formal agreement with specific protocols that all parties have agreed
to follow. MEAG states that, as long as Requirement R4 is included in
the Reliability Standard, an entity may make faulty assumptions about
the emergency response of another entity.
    955. MRO states that Requirements 7.1, 7.2, and 7.3, which relate
to coordination when a generation or transmission facility is removed
from service, appear to be instructions rather than requirements. It
asks the Commission to revise or remove these Requirements.
iv. Commission Proposal
    956. The Commission proposes to approve TOP-001-0 as mandatory and
enforceable. In addition, we propose to direct that NERC develop
modifications to the Reliability Standard, as discussed below.
    957. Requirement R1 of TOP-001-0 states that a transmission
operator must have the responsibility and clear decision-making
authority ``to take whatever actions are needed to ensure the
reliability of its area.'' Neither the Reliability Standard nor the
NERC glossary explains what is meant by a transmission operator's
``area.'' We interpret the term to mean the area in which the
transmission facilities under the transmission operator's control are
located.\297\
---------------------------------------------------------------------------

    \297\ We note that NERC's reliability functional model (Function
Definitions and Responsible Entities, version 2, approved by the
Board of Trustees Feb. 10, 2004) defines Reliability Authority Area,
Balancing Authority Area, Transmission Planning Area, and Planning
Authority Area, but does not define Transmission Operator Area.
---------------------------------------------------------------------------

    958. We are not persuaded by MEAG's suggestion to eliminate
Requirement R4 and utilize a formal agreement to determine the response
of a distribution provider or load serving entity to a system
emergency. As set forth in Requirement R1, each transmission operator
must have the responsibility and corresponding decision-making
authority to take ``whatever actions are needed'' to ensure reliability
in an emergency. This includes the curtailment of transmission service
and load shedding. Eliminating the general obligation set forth in
Requirement R4 that a distribution provider or load serving entity must
``comply with all reliability directives of the transmission operator *
* * unless such action would violate safety, equipment, regulatory or
statutory requirements,'' and replacing it with formal agreements would
result not only in regional differences but differences in the ability
of a transmission operator to respond to an emergency on a system-by-
system and contract-by-contract basis. Rather than enhancing
reliability, we believe that such latitude could result in the
deterioration of Bulk-Power System reliability.
    959. MRO claims that Requirements R7.1, R7.2, and R7.3 appear to be
instructions rather than requirements. Requirement R7 provides that
each transmission operator and generator operator shall not remove
facilities from service if removing those facilities would burden a
neighboring system unless certain events occur that are delineated in
Requirements R7.1, R7.2 and R7.3. While MRO does not explain what it
considers to be the difference between an instruction and a
requirement, we interpret that, read together as a whole Requirement R7
articulates binding obligations on a transmission operator and is
properly characterized as a requirement.
    960. As mentioned above, TOP-001-0 does not contain Measures or
Levels of Non-Compliance. However, we believe that the Requirements set
forth in TOP-001-0 are sufficiently clear and objective to provide
guidance for compliance. Moreover, TOP-001-0 serves the vital purpose
of ensuring that transmission operators and others have clear decision-
making authority to take appropriate actions or direct the actions of
others to return the transmission system to normal conditions during an
emergency.
    961. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to

approve Reliability Standard TOP-001-0 as mandatory and enforceable. In
addition, pursuant to section 215(d)(5) of the FPA and Sec.  39.5(f) of
our regulations, the Commission proposes to direct that NERC submit a
modification to TOP-001-0 that includes Measures and Levels of Non-
Compliance.
c. Normal Operations Planning (TOP-002-1)
i. NERC Proposal
    962. TOP-002-1 requires transmission operators and balancing
authorities to look ahead to the next hour, day and season, and have
operating plans ready to meet any unscheduled changes in system
configuration and generation dispatch. The proposed Reliability
Standard covers a broad array of matters, including: (1) Procedures to
mitigate System Operating Limit (SOL) and Interconnection Reliability
Operating Limit (IROL) violations; (2) verification of real and
reactive reserve capabilities; (3) communications; (4) modeling; (5)
information exchange; and (6) data confidentiality restrictions. The
goal of TOP-002-1 is to ensure that resources and operational plans are
in place to enable system operators to maintain the Bulk-Power System
in a reliable state. Further, NERC indicates that it plans to modify
the Reliability Standard to address the lack of Measures and Levels of
Non-Compliance.
    963. Two Requirements of particular note are R7 and R14.
Requirement R7 of TOP-002-1 provides that each balancing authority
shall plan to meet capacity and energy reserve requirements, including
being able to deliver power in the case of any single contingency.
Requirement R14 directs each generator operator to notify its balancing
authority and transmission operator of changes in: (1) real and
reactive power output capabilities.\298\
---------------------------------------------------------------------------

    \298\ On August 28, 2006, NERC submitted TOP-002-1 for approval,
which replaces TOP-002-0. TOP-002-1 simply deletes the Requirement
R14.2, which required automatic voltage regulators. According to
NERC, the deleted requirement is now included in the recently
revised VAR-001-1 and is therefore unnecessary in TOP-002-1.
---------------------------------------------------------------------------

ii. Staff Preliminary Assessment
    964. The Staff Preliminary Assessment noted that Requirement R7
specifies that capacity and energy reserves must be deliverable to
local areas in case of a single contingency.\299\ Other Reliability
Standards require that the system operate in a manner that allows it to
be returned to a stable state within 30 minutes after a contingency
occurs with the capacity to withstand another contingency without
cascading.\300\ In contrast, the Reliability Standard does not require
the next-day planning analysis to identify control actions that are
needed to bring the system back to a stable state within 30 minutes
after a contingency occurs with the capacity to withstand another
contingency without cascading.\301\ The Staff Preliminary Assessment
noted that this may present a potential vulnerability as operators may
not be aware of available control actions or may not have control
actions, other than firm load shedding, available to adjust the system
after a first contingency occurs.
---------------------------------------------------------------------------

    \299\ Although the Staff Preliminary Assessment addresses
concerns regarding the TOP-002-0, many of these same concerns apply
to TOP-002-1 as well.
    \300\ See proposed Reliability Standard IRO-005-1.
    \301\ System operators should operate the Bulk-Power System such
that firm load will continue to be supplied after a contingency. The
operations planning function should provide the system operators
with information (control actions) concerning what actions may be
needed to avoid cascading after the worst contingency has occurred.
---------------------------------------------------------------------------

    965. The Staff Preliminary Assessment also pointed out a potential
gap in the analysis of and planning for contingencies. This Reliability
Standard refers to a ``single contingency'' and is defined as the loss
of a transformer, transmission circuit, single DC pole or generator,
but does not include the assessment of outages of multiple elements
that would be removed from service as a result of a single component
failure.\302\ Thus, the loss of a single relay, breaker, control system
component or transmission tower may affect multiple system elements.
However, these circumstances are not required to be considered in the
analysis of, and planning for, contingencies.
---------------------------------------------------------------------------

    \302\ Failure of an electrical component includes relay and
control system failures, which may remove more than one element.
---------------------------------------------------------------------------

    966. Finally, the Staff Preliminary Assessment stated that,
although Requirement R14 of the Reliability Standard recognizes the
need to communicate changes in generator ``real and reactive capability
as well as the status of automatic voltage regulators,'' it does not
include a similar requirement to communicate changes in the status of
power system stabilizers.
iii. Comments
    967. NERC states that, contrary to the Staff Preliminary
Assessment, Requirement R11 of the Reliability Standard does require
next-day studies. NERC further states that next-day analysis should not
have to identify control actions. Rather, it is intended to provide a
look into the next day so that the transmission operator can then
develop operating strategies. Appropriate real-time control actions may
diverge from those identified by a transmission operator's previous-day
studies, and therefore, according to NERC, the Reliability Standard
does not identify control actions to be followed by the operators.
Similarly, NERC states that it is impractical to identify and study all
possibilities in next-day analysis.
    968. Regarding staff's concern regarding the lack of analysis of
multiple system elements, NERC responds that Requirement R6 instructs
each balancing authority and transmission operator to meet NERC,
regional reliability organization, subregional and local reliability
requirements. Thus, the Reliability Standard recognizes that some
situations require operating in a manner that provides protection
against the failure of multiple system elements. However, NERC adds
that it will review Requirement R7 to ensure that reserves can be
deployed to meet the requirements of the disturbance control
Reliability Standard, BAL-002-0.
    969. MidAmerican and MRO point out that the availability for the
sale of short-term firm transmission service is based on calculations
taking into account single element events. Any effort to define single
contingencies in terms of multiple elements will result in a
significant decrease in available transmission capability; resulting in
a negative impact on competition in the wholesale market. MRO also
maintains that technology does not allow for comprehensive assessment
of outages of multiple elements due to a single component failure.
    970. Regarding the Staff Preliminary Assessment's statement that
the status of power system stabilizers should be communicated in TOP-
002-0, NERC notes that this is covered by a separate Reliability
Standard, VAR-001-0, under Requirements R4 and R9.
    971. Requirements R3 and R4 provide that each load serving entity
and generator operator shall coordinate its operations with its
balancing authority and transmission service provider, ``where
confidentiality agreements allow.'' Alcoa objects to this phrase,
contending that a load serving entity or generator operator may evade
these coordination requirements by simply not executing a
confidentiality agreement.
iv. Commission Proposal
    972. The Commission proposes to approve TOP-002-1 as mandatory and
enforceable. In addition, we propose to direct that NERC develop
modifications

to the Reliability Standard, as discussed below.
    973. While Requirement R11 requires next day studies, as mentioned
above, TOP-002-1 does not require the next-day planning analysis to
identify control actions that are needed to bring the system back to a
stable state within 30 minutes after a contingency occurs with the
capacity to withstand another contingency without cascading. Operators
should have at their disposal and be aware of control actions to adjust
the Bulk-Power System within 30 minutes to avoid cascading after the
worst contingency has occurred. Such control actions include
reconfiguring the transmission system, recalling facilities from
planned outages, and ensuring availability of generation and reactive
power resources. These control actions should be determined as part of
day ahead operations planning. While NERC suggests that it would be
impractical to study every possibility to identify control actions, we
believe that in fact only a limited number of critical facilities
associated with IROLs would require analysis to identify control
actions aimed at avoiding cascading outages. Accordingly, we propose
directing that NERC modify TOP-002-1 to include identification of
control actions that can be implemented within 30 minutes as a part of
the next-day analysis and communication of these control actions to
system operators.
    974. NERC's glossary defines ``contingency'' as ``the unexpected
failure or outage of a system component, such as a generator,
transmission line, circuit breaker, switch or other electric element.''
\303\ Requirement R7 of TOP-002-1 requires that each balancing
authority plan to meet capacity and energy reserve requirements,
including deliverability/capability for any single contingency.\304\
Although the NERC glossary defines ``contingency,'' we are concerned
that the phrase ``single contingency'' is open to interpretation and
that deliverability is not defined. The Commission proposes to
interpret contingency as discussed in the transmission planning chapter
and to interpret deliverability as the ability to deliver the output
from generation resources to firm load without any reliability criteria
violations for plausible generation dispatches.
---------------------------------------------------------------------------

    \303\ NERC glossary at 3.
    \304\ See R7 of TOP-002-0.
---------------------------------------------------------------------------

    975. The Staff Preliminary Assessment suggested that TOP-002-0
should include a requirement to communicate a change in the status of
power system stabilizers. In response, NERC comments that this is
addressed in VAR-001-0, which requires that each generator operator
provide information to its transmission operator on the status of
generation reactive power resources including the status of power
system stabilizers. We agree with NERC and do not propose any changes
in this regard.
    976. We share Alcoa's concern regarding the possible interference
with the coordination demanded in Requirements R3 and R4 if that
coordination is dependent upon the execution of a confidentiality
agreement. Generally, the effectiveness of a Reliability Standard
should not be predicated upon the existence of a confidentiality
agreement or any other private agreement. If some Reliability Standards
require a confidentiality agreement, the Commission believes that the
matter should be addressed separately and globally so that it applies
to all Reliability Standards rather than designating that a specific
requirement is subject to existence of a confidentiality agreement.
Accordingly, we propose to direct that NERC modify Requirements R3 and
R4 by deleting references to confidentiality agreements. Rather, NERC
should address the issue separately to ensure that necessary
protections are in place related to confidential information.
    977. While we have identified concerns with regard to TOP-002-1, we
believe that the proposed Reliability Standard serves an important
purpose in ensuring that resources and operational plans are in place
to enable system operators to maintain the Bulk-Power System in a
reliable state. As mentioned above, TOP-002-1 does not contain Measures
or Levels of Non-Compliance. The Commission believes that it is
important for NERC to provide Measures and Levels of Non-Compliance.
Nonetheless, the Requirements set forth in TOP-002-1 are sufficiently
clear and objective to provide guidance for compliance.
    978. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TOP-002-1 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TOP-002-1 that:
(1) Includes Measures and Levels of Non-compliance; (2) deletes
references to confidentiality agreements in Requirements R3 and R4, but
addresses the issue separately to ensure that necessary protections are
in place related to confidential information; and (3) requires the
next-day analysis for all IROLs to identify and communicate control
actions to system operators that can be implemented within 30 minutes
following a contingency to return the system to a reliable operating
state and prevent cascading outages.
    979. Regarding outages of multiple elements caused by the failure
of single element, NERC comments that it will review the Requirement R7
to ensure that reserves can be deployed to meet its disturbance control
Reliability Standard, BAL-002-0. However, MidAmerican and MRO assert
that any effort to define single contingencies in terms of multiple
elements will result in a significant decrease in available
transmission capability (ATC) and will, therefore, have a negative
impact on competition in the wholesale market. As discussed in the TPL
Chapter, the simulations used for either planning or calculating
available transmission capability must be consistent with the number of
elements that will be removed from service in the physical system.
d. Planned Outage Coordination (TOP-003-0)
i. NERC Proposal
    980. TOP-003-0 requires transmission operators, generator operators
and balancing authorities to coordinate transmission and generator
maintenance schedules. Where a conflict in maintenance schedule arises,
the reliability coordinator is authorized to resolve the conflict.
ii. Staff Preliminary Assessment
    981. TOP-003-0 requires that each transmission provider must
provide outage information on transmission lines and transformers
greater than 100 kV and each generator operator must provide outage
information for generators greater than 50 MW. The Staff Preliminary
Assessment observed that these Requirements assume that only systems
greater than 100 kV or generators above 50 MW will affect the
reliability of interconnected operations. Staff stated that, although
this assumption may be true in most instances, a justification should
be provided for the threshold of 100 kV for transmission and 50 MW for
generation outages. Staff further stated that the loss of transmission
lines or transformers less than 100 kV and generators less than 50 MW
may affect system stability in load pockets or remote sections of the
grid depending upon system conditions.

    982. The Staff Preliminary Assessment noted that, while a related
Reliability Standard, TOP-002-0, requires the coordination of planned
outages on a current-day, next-day and seasonal basis for normal
operations planning, TOP-003-0 only requires next-day reporting for
planned outages and does not include longer range planning. The Staff
Preliminary Assessment expressed the concern that this gap may affect
reliability because proper assessment of the system and coordination
between generation and transmission outages may not occur. Moreover,
the lack of information may also have an impact on TTC/ATC
calculations. Staff also noted that the Levels of Non-Compliance are
based on designating a process for providing information, but they do
not contain requirements for the actual provision of that information
iii. Comments
    983. NERC comments that the 100 kV and 50 MW thresholds may need to
be reviewed over time. However, NERC believes that the Commission
should approve TOP-003-0 as proposed because transmission operators,
balancing authorities and reliability coordinators should decide which
facilities to include in their operations planning assessments.
    984. Allegheny agrees that the 100 kV and 50 MW thresholds may not
be appropriate in all situations. However, Allegheny points out that
transmission operators and reliability coordinators typically
coordinate all planned outages that may have a significant impact on
interconnected operations. Rather than lowering the thresholds to
include all facilities, Allegheny suggests that transmission operators
and reliability coordinators identify significant facilities through
system studies. MidAmerican and MRO recommend that the thresholds
should not be lowered because this will slow down the coordination of
outages for higher voltage facilities and larger generators.
    985. ISO/RTO Council believes that any size or voltage threshold
must be justified based on its potential impact to reliability. In
addressing lower voltage levels, ReliabilityFirst comments that system
operators typically evaluate and monitor lower voltages levels to
ensure they do not impact the reliability of the Bulk Electric System.
However, ReliabilityFirst believes that the assessment and monitoring
of these lower voltage levels should be included in the Reliability
Standard for uniformity and consistency.
iv. Commission Proposal
    986. The Commission notes that outage information is important to
both reliable operation and to the calculation of available transfer
capability. This information is also needed to assure coordination of
outages long before next day or current day operations. The Commission
proposed that applicable scheduled outages be communicated to impacted
transmission operators and reliability coordinators with sufficient
lead time to coordinate outages. The Commission requests industry input
on what constitutes sufficient lead time for planned outages.
    987. NERC, Allegheny, ISO/RTO Council, and ReliabilityFirst agree
with the Staff Preliminary Assessment that the thresholds for providing
outage information should be reviewed. While we agree with commenters
that lowering the threshold might slow down the coordination process,
we are also concerned that the thresholds of 100 kV and 50 MW may not
include all facilities that have a significant impact on the operation
of Bulk-Power System. For example, emergency operations would require,
at a minimum, that there are adequate blackstart resources available if
needed. Thus, while in the longer-term a review of the existing
thresholds is appropriate, at this time, we propose directing NERC to
modify TOP-003-0, Requirement R1 to provide that a generator operator
or transmission operator must provide planned outage information for
any facility above 100 kV and 50 MW and any other facility below these
thresholds that, in the opinion of the transmission operator, balancing
authority, or reliability coordinator, would have a direct impact on
the operation of Bulk-Power System.
    988. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TOP-003-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TOP-003-0 that:
(1) Includes a requirement to communicate scheduled outages well in
advance to ensure reliability and accuracy of ATC calculation; and (2)
makes any facility below the thresholds that, in the opinion of the
transmission operator, balancing authority, or reliability coordinator,
will have a direct impact on the operation of Bulk-Power System subject
to Requirement R1 for planned outage coordination.
e. Transmission Operations (TOP-004-0)
i. NERC Proposal
    989. TOP-004-0 requires transmission operators to operate the
transmission system within SOL and IROL. The ``N-1'' operating
criterion for the transmission system is also established in this
Reliability Standard. It provides that operating configurations for
which limits have not yet been determined should be treated as
emergencies. The reliability goal of TOP-004-0 is to maintain Bulk-
Power System facilities within limits, thereby protecting transmission,
generation, distribution and customer equipment and preventing
cascading failures of the interconnected grid. Further, NERC indicates
that it plans to modify TOP-004-0 to address the lack of Measures and
Levels of Non-Compliance.
ii. Staff Preliminary Assessment
    990. The Staff Preliminary Assessment noted that a regional review
of the potential impact of multiple outages in day-ahead operations
planning is included in Requirement R3 for TOP-004-0. However, staff
observed that the conditions under which multiple outages can occur
remain undefined.
    991. The proposed Reliability Standard requires the operation of
the system within IROL and SOL. When the system enters an unknown state
(i.e., any state for which operating limits have not been determined),
Requirement R4 instructs the operator to ``restore operations to
respect proven reliable power system limits within 30 minutes.'' Staff
cautioned that the phrase ``within 30 minutes'' could be interpreted as
a grace period. However, such an interpretation may not be consistent
with the intent that, while 30 minutes has been adopted by the industry
as a reasonable time period, it is expected that corrective actions
will be taken as soon as possible and without delay.
iii. Comments
    992. NERC responds to the Staff Preliminary Assessment, stating
that the specification of 30 minutes is not meant to suggest that
system operators should take as long as 30 minutes. Rather, it is meant
to provide system operators with the flexibility to respond to
emergencies in the manner they determine is best, even if it is not the
fastest alternative. In addition, NERC asserts that: (1) 30 minutes is
based on decades of system

operations experience; (2) system operators do not treat ``within 30
minutes'' as a grace period and it has not come across situations when
system operators waited for 29 minutes before taking an appropriate
action; and (3) although a system is not allowed to drift in and out of
a secure state, sometimes it enters an unknown state that was not
studied and it is appropriate to allow the system operators a
reasonable amount of time to bring the system back to the normal state.
    993. MidAmerican comments that, if IROL cannot be exceeded even for
one minute, operators will need to maintain a margin at significant
cost and there will be a resulting negative impact on competition.
iv. Commission Proposal
    994. The Commission proposes to approve TOP-004-0 as mandatory and
enforceable. In addition, we propose to direct that NERC develop
modifications to the Reliability Standard as discussed below.
    995. Requirement R4 of TOP-004-0 provides that, if a transmission
operator enters an unknown state, i.e., any state for which valid
operating limits have not been determined, operations should be
restored to respect proven reliable power system limits within 30
minutes. We agree with NERC that 30 minutes is a reasonable period
within which operators should return the system to a reliable operating
state. However, as stated in the Staff Preliminary Assessment it may be
interpreted as a grace period to the detriment of reliability and
therefore the Commission proposes that Requirement R4 be modified to
state that the system should be restored to respect proven reliable
power system limits as soon as possible and no longer than 30 minutes.
    996. With respect to NERC's comment that the system is not allowed
to drift in and out of a reliable state, the Commission is concerned
that neither TOP-004-0 nor the IRO Reliability Standards address this
issue and that some entities may be engaging in this practice to the
detriment of reliability. The Commission proposes to require that NERC
survey and report the operating practices and actual experiences
surrounding drifting into and out of IROL limits.\305\
---------------------------------------------------------------------------

    \305\ The issue of drifting in and out of IROL limits is
discussed in the IRO chapter and provides specifics of proposed
survey in greater detail. See discussion for IRO-005-1.
---------------------------------------------------------------------------

    997. The Staff Preliminary Assessment noted that while Requirement
R3 states that, when practical, the system must be operated to respect
multiple outages as specified by the regional reliability organization
policy it does not define conditions under which such multiple outages
must be considered. We interpret such conditions to include high risk
conditions such as hurricanes, ice storms or periods of high solar
magnetic disturbances during which the probability of a multiple outage
approaches that of single element outage. The Commission proposes that
Requirement R3 be modified to define conditions under which the system
must be operated to respect multiple outages.
    998. The Commission notes that TOP-004-0 does not contain Measures
or Levels of Non-Compliance. TOP-004-0 serves an important reliability
goal of ensuring that the Bulk-Power System facilities are operated
within safe limits, thereby protecting transmission, generation,
distribution and customer equipment and preventing cascading failures.
The Commission believes that it is important for NERC to provide
Measures and Levels of Non-Compliance elements for this proposed
Reliability Standard. Nonetheless, the proposed Requirements set forth
in TOP-004-0 are sufficiently clear and objective to provide guidance
for compliance.
    999. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TOP-004-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TOP-004-0 that
(1) includes Measures and Levels of Non-Compliance; (2) clarifies that
the 30 minute response time is not a grace period; and (3) defines in
Requirement R3, high risk conditions under which the system must be
operated to respect multiple outages. In addition, we propose to direct
that the ERO perform a survey of the prevailing operating practices and
actual operating experiences surrounding drifting in and out of IROL
limits. As part of the survey, we would require all reliability
coordinators to report any violations of IROLs, their causes, the date
and time of the violation, and the duration in which actual operations
exceeded IROL to the ERO on a monthly basis for one year beginning two
months after the effective date of the final rule.
f. Operational Reliability Information (TOP-005-1)
i. NERC Proposal
    1000. TOP-005-1 ensures that reliability information is shared
among reliability coordinators, transmission operators and balancing
authorities.\306\ It requires the transmission operator and the
balancing authority to provide operating data to each other and to the
reliability coordinator and provides a list of typical operating data
that must be provided. TOP-005-1 also provides that, as a condition of
receiving data from the NERC's Interregional Security Network,\307\
each data recipient must execute a confidentiality agreement.
---------------------------------------------------------------------------

    \306\ NERC states that, effective November 1, 2006, proposed
Reliability Standard TOP-005-1 will replace existing Reliability
Standard, TOP-005-0.
    \307\ Interregional Security Network is a data exchange system
that facilitates the exchange of real-time and other operational
data among reliability coordinators, balancing authorities, and
transmission operators to help ensure reliable electric power system
operations.
---------------------------------------------------------------------------

ii. Staff Preliminary Assessment
    1001. Staff noted that Attachment 1 of TOP-005-1 entitled,
``Electric System Reliability Data,'' which specifies the types of
operating data that reliability coordinators, balancing authorities and
transmission operators are expected to share, does not include the
operational status of special protection systems and power system
stabilizers. The Staff Preliminary Assessment raised the concern that
the absence of this information could lead to an erroneous assessment
of system capability.
iii. Comments
    1002. NERC agrees with Commission Staff that Attachment 1 of TOP-
005-1 should be modified to include special protection systems and
power system stabilizers.
    1003. ReliabilityFirst states that information pertaining to the
special protection systems is included in Attachment 1, section 2.6,
which refers to ``new or degraded special protection systems.''
    1004. ISO/RTO Council argues that the Commission should direct NERC
to eliminate the requirement that each data recipient sign a
confidentiality agreement. It claims that the requirement to sign a
confidentiality agreement is an administrative matter, not a
reliability issue.
iv. Commission Proposal
    1005. ReliabilityFirst points out that the operational information
pertaining to the ``new or degraded special protection systems'' is
included in Attachment 1. However, a special

protection system may be turned on or off and not be degraded.
Awareness of the operational state is different from knowing that
degradation has occurred. In addition, Attachment 1 does not contain
information about power system stabilizers. While Attachment 1 contains
a large amount of data pertaining to Bulk-Power System reliability,
inclusion of information about the operation status of special
protection systems will provide a more comprehensive list. We agree
with NERC and propose that Attachment 1 be modified to include the
status of special protection systems and power system stabilizers.
    1006. We agree with ISO/RTO Council that the reference to execution
of confidentiality agreement should be deleted from the Reliability
Standard and NERC should address the issue separately and globally as
we indicate above in our discussion of TOP-002-1.
    1007. TOP-005-1 furthers an important reliability goal of ensuring
that reliability entities have the operating data needed to monitor
system conditions within their area. Further, the Requirements set
forth in TOP-005-1 are sufficiently clear and objective to provide
guidance for compliance. Accordingly, giving due weight to the
technical expertise of the ERO and with the expectation that the
Reliability Standard will accomplish the purpose represented to the
Commission by the ERO and that it will improve the reliability of the
nation's Bulk-Power System, the Commission proposes to approve
Reliability Standard TOP-005-1 as mandatory and enforceable. In
addition, pursuant to section 215(d)(5) of the FPA and Sec.  39.5(f) of
our regulations, the Commission proposes to direct that NERC submit a
modification to TOP-005-1 that: (1) Includes information about the
operational status of special protection systems and power system
stabilizers in Attachment 1; and (2) deletes references to
confidentiality agreements, but addresses the issue separately to
ensure that necessary protections are in place related to confidential
information.
g. Monitoring System Conditions (TOP-006-0)
i. NERC Proposal
    1008. TOP-006-0 requires that operating personnel continuously
monitor essential Bulk-Power System parameters such as line flows,
circuit breaker status, generator resources, relays, weather forecasts
and frequency to ensure that the facilities do not exceed their
operating limits. NERC indicates that it plans to modify TOP-006-0 to
address the lack of Measures and Levels of Non-Compliance.
ii. Staff Preliminary Assessment
    1009. The Staff Preliminary Assessment noted that, while TOP-006-0
identifies data requirements it does not identify any minimum
acceptable tools and capabilities to turn the data into information to
aid in situational awareness. Staff explained that reliability
coordinators, transmission operators and balancing authorities must be
aware of the status of their respective systems, and such situational
awareness cannot be obtained by viewing massive amounts of raw data.
iii. Comments
    1010. NERC agrees with the Staff Preliminary Assessment that
situational awareness is ``key'' to operating an interconnected
electric system reliably and that data collection is only one component
of a successful situational awareness strategy. NERC, however, states
that whether a Reliability Standard should specify how data should be
analyzed and presented to the system operator or reliability
coordinator requires further discussion, including discussions with
vendors who supply situational awareness and visualization tools.
    1011. ReliabilityFirst comments that due to the variety of
equipment used to manage the Bulk-Electric System, it is impractical to
specify the type of software and processes acceptable for monitoring.
    1012. MRO states that Requirement R3, which requires an applicable
entity to provide ``appropriate technical information'' concerning
protective relays, should be revised to clarify the phrase,
``appropriate technical information.''
iv. Commission Proposal
    1013. The Commission proposes to approve TOP-006-0 as mandatory and
enforceable. In addition, we propose to direct that NERC develop
modifications to the Reliability Standard, as discussed below.
    1014. The Blackout Report states that ``a principal cause of the
blackout was a lack of situational awareness, which was in turn a
result of inadequate tools and back-up capabilities.'' \308\ In
addition, in reviewing common factors between the August 2003 blackout
and other major outages the Blackout Report states ``power system data
may be available but not be presented to operators or coordinators as
information they can use in making appropriate decisions.'' \309\ While
TOP-006-0 requires that a significant amount of data be provided to
operating personnel, we agree with NERC that this is only one component
of a successful situational awareness strategy. The data must be
converted into information that operators can use to assess the state
of the system and its vulnerability, should a contingency occur, and
take appropriate actions to maintain a reliable system. We note that
the Requirement R7 of Reliability Standard IRO-002-0 requires that
reliability coordinators have adequate tools such as state estimation,
pre and post contingency analysis capabilities and wide area overview
displays. We believe that similar tools should be made available to
transmission providers and balancing authorities and propose that the
ERO add a new Requirement in this Reliability Standard to provide
adequate tools to transmission operators and balancing authorities,
which will provide them situational awareness.
---------------------------------------------------------------------------

    \308\ See Blackout Report at 159.
    \309\ Id. at 108.
---------------------------------------------------------------------------

    1015. Although we agree with NERC that further discussions may be
needed with vendors who supply situational awareness and visualization
tools, modification of TOP-006-0 should not have to wait for those
discussions to occur. A variety of off-the-shelf tools are currently
available from vendors and in use across the industry. At a Commission
sponsored technical conference on July 14, 2004, staff presented its
views on minimum requirements and best practices for reliability tools
for the purpose of initiating discussions on what these minimum
reliability capabilities ought to be. We believe that identification of
the types of tools and what they should minimally accomplish would
improve the proposed Reliability Standard. Entities that must comply
with TOP-006-0 could choose among the available software tools that
accomplish the desired goal or meet the Requirement set forth in the
Reliability Standard. Accordingly, we propose to direct NERC to modify
TOP-006-0 to include a requirement for a minimum set of tools for
transmission operators and balancing authorities that will aid in
situational awareness.
    1016. We agree with MRO that the phrase ``appropriate technical
information'' is open to interpretation and propose to direct that NERC
modify TOP-006-0, Requirement R3, to identify the specific type of
technical information concerning protective relays that should be
provided.
    1017. TOP-006-0 serves an important reliability goal of requiring
monitoring

of essential Bulk-Power System parameters such as the status of power
system elements, real and reactive power flows, voltages and frequency
to ensure that the system and its equipment are operated in a reliable
and safe manner. The Commission believes that it is important for NERC
to provide Measures and Levels of Non-compliance for this proposed
Reliability Standard. Nonetheless, the proposed Requirements set forth
in TOP-006-0 are sufficiently clear and objective to provide guidance
for compliance.
    1018. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO, and
that it will improve the reliability of the nation's Bulk-Power System
the Commission proposes to approve Reliability Standard TOP-006-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TOP-006-0 that:
(1) Includes Measures and Levels of Non-compliance elements; (2)
includes a new requirement related to the provision of a minimum set of
analysis tools that will aid in situational awareness; and (3)
clarifies the meaning of ``appropriate technical information''
concerning protective relays.
h. Reporting SOL and IROL Violations (TOP-007-0)
i. NERC Proposal
    1019. TOP-007-0 requires that violations of SOL and IROL are
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. A transmission operator must take ``all
appropriate actions up to and including shedding firm load'' to return
its system to a stable state within IROL. Finally, it requires that the
reliability coordinator take action to mitigate an SOL or IROL
violation if the transmission operator's actions are not effective.
ii. Staff Preliminary Assessment
    1020. As indicated above, TOP-007-0 requires that, ``[f]ollowing a
[c]ontingency or other event that results in an IROL violation, the
transmission operator shall return its transmission system to within
IROL as soon as possible, but not longer than 30 minutes.''\310\ The
Staff Preliminary Assessment explained that the phrase ``or other
event'' in this Requirement is open to interpretation. One
interpretation is that it allows IROLs to be exceeded under normal pre-
contingency conditions, provided the system can be returned to a secure
state within 30 minutes. Another, more conservative, interpretation is
that the Requirement does not allow IROLs to be exceeded under normal
pre-contingency conditions, and that after a contingency occurs the
system must be returned to a secure condition as soon as possible and
no later than 30 minutes. The Staff Preliminary Assessment cautioned
that, if the system is operated in a less conservative manner during
the period where IROL is exceeded, even a single system contingency
could cause instability, uncontrolled separation, and even a cascading
blackout.
---------------------------------------------------------------------------

    \310\ Reliability Standard TOP-007-0, Requirement R2.
---------------------------------------------------------------------------

iii. Comments
    1021. NERC states that SOL and IROL need better definition, also
noting that SOL and IROL are operating states that system operators
must move away from as quickly as possible. It will consider revising
the standard to clarify that a contingency is not required to violate
the SOL and IROL limits. NERC notes that it has commissioned an
Operating Limit Definition Task Force to work on this matter and the
Task Force is expected to submit its recommendation by the end of 2006.
    1022. Also seeking more definition and detail on SOL and IROL,
ReliabilityFirst urges the acceleration of standards now being
developed to clarify SOL and IROL. However, it adds that it would be
impractical to identify and study all possibilities for alleviating SOL
and IROL.
    1023. ISO/RTO Council agrees with the Staff Preliminary Assessment
that this Reliability Standard is open to interpretation. However, ISO/
RTO Council states that it is appropriate to give system operators
discretion in making real-time system operating decisions. It comments
that a more prescriptive standard would unduly restrict system
operators and the nature of real-time operations requires giving these
entities some leeway. Thus, the ISO/RTO Council recommends that the
Commission approve TOP-007-0 in its present form.
    1024. MRO recommends that an IROL violation exceeding 30 minutes be
reported to NERC within 48 hours rather than the 72 hours allowed under
the compliance section of this Reliability Standard.
iv. Commission Proposal
    1025. As noted in our discussion in IRO-005 and TOP-004, the
Commission is concerned about systems drifting in and out of SOL and
IROL violations. One source of justification for that practice is the
term ``other event.'' We agree with NERC that SOL and IROL need better
definitions and TOP-007-0 could be improved by making the requirements
clearer. Our proposal for a survey in IRO-005 and TOP-004 to collect
data will give us more information about the extent of the problem with
regard to drifting in and out of SOL and IROL violations.
    1026. Regarding MRO's recommendation that IROL violations exceeding
30 minutes be reported to NERC within 48 hours, we will leave this
determination to NERC because we consider this to be a matter of
administrative convenience.
    1027. TOP-007-0 serves an important reliability goal of ensuring
that when critical limits are violated, the violations are reported and
appropriate actions taken to avoid any cascading outages. The
Commission believes that it is important that NERC address the
ambiguity regarding IROL violations, discussed above. Nonetheless, the
proposed Requirements set forth in TOP-007-0 are sufficiently clear and
objective to provide guidance for compliance.
    1028. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission believes that Reliability Standard TOP-007-0 is just,
reasonable, not unduly discriminatory or preferential, and in the
public interest; and proposes to approve it as mandatory and
enforceable.
    1029. The Commission solicits comment on potentially overlapping
matters addressed in Reliability Standards TOP-007-0 and TOP-008-0. The
title and the purpose of TOP-007-0 state that it ensures that SOL and
IROL violations are being reported, but we believe that only
Requirement R1 relates to reporting. The remaining requirements in TOP-
007-0, R2, R3 and R4, go beyond reporting of violations and provide
that the transmission operator will take actions on its own or as
directed by the reliability coordinator. We observe that proposed
Reliability Standard TOP-008-0 addresses the same subject. In fact,

Requirement R1 of TOP-008-0 is similar to Requirement R3 of TOP-007-0.
It appears that both Reliability Standards deal with the same subject,
but more emphasis is placed on reporting in TOP-007-0. If two separate
Reliability Standards address similar topics, the purpose statement
should succinctly capture the intent of each Reliability Standard.
i. Response to Transmission Limit Violations (TOP-008-0)
i. NERC Proposal
    1030. TOP-008-0 requires a transmission owner to take immediate
steps to mitigate SOL and IROL violations. NERC indicates that it plans
to modify TOP-008-0 to address the lack of Measures and Levels of Non-
Compliance.
ii. Staff Preliminary Assessment
    1031. The Staff Preliminary Assessment did not identify any
substantive issues in TOP-008-0, other than noting that it does not
contain Measures or Levels of Non-Compliance.
iii. Comments
    1032. No comments were submitted regarding TOP-008-0.
iv. Commission Proposal
    1033. We observe that proposed Reliability Standard TOP-007-0
addresses the same subject.
    1034. Requirements R1 through R4 provide that the transmission
operator shall take certain actions to mitigate the effects of SOL and
IROL violations. No role is specified for the reliability coordinator.
A reliability coordinator plays a key role in the reliability of the
Bulk-Power Systems and should be involved in the decision-making
process of bringing the system back within operating limits as soon as
possible. A parallel Reliability Standard covering this subject, TOP-
007-0, identifies a role for the reliability coordinator. The
Commission proposes to require NERC to modify TOP-008-0 to apply to
reliability coordinators.
    1035. TOP-008-0 serves an important reliability goal of ensuring
that when critical limits are violated, appropriate actions are taken
to avoid any cascading outages. The Commission believes that it is
important for NERC to provide Measures and Levels of non-compliance
elements for this proposed Reliability Standard. Nonetheless, the
proposed Requirements set forth in TOP-008-0 are sufficiently clear and
objective to provide guidance for compliance.
    1036. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TOP-008-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TOP-008-0 that:
(1) includes Measures and Levels of Non-compliance elements; and (2)
includes reliability coordinators in the Applicability section.
12. TPL: Transmission Planning
a. Overview
    1037. The Transmission Planning (TPL) group of Reliability
Standards consists of six Reliability Standards that are applicable to
transmission planners, planning authorities and regional reliability
organizations. These Reliability Standards are intended to ensure that
the transmission system is planned and designed to meet an appropriate
and specific set of reliability criteria. Transmission planning is a
process that involves a number of stages including developing a model
of the Bulk-Power System, using this model to assess the performance of
the system for a range of operating conditions and contingencies,
determining those operating conditions and contingencies that have an
undesirable reliability impact, identifying the nature and the need for
transmission upgrades, developing and evaluating a range of
transmission reinforcement and upgrade options and selecting the
preferred option, taking into account the time needed to place the
facilities in service. The proposed TPL Reliability Standards address:
(1) the types of simulations and assessments that must be performed to
ensure that reliable systems are developed to meet present and future
system needs \311\ and (2) the information required to assess regional
compliance with planning criteria and for self-assessment of regional
reliability.\312\ The differing definitions of the Bulk-Power System
and bulk electric system discussed above is central to the concerns
raised by this group of Reliability Standards.\313\ That issue has
important implications for the range of contingencies that must be
evaluated and facilities to be simulated in the transmission planning
process.
---------------------------------------------------------------------------

    \311\ See TPL-001-0, TPL-002-0, TPL-003-0, and TPL-004-0.
    \312\ See TPL-005-0 and TPL-006-0.
    \313\ See discussion of Bulk Power System v. bulk electric
system in section III.D.5 above.
---------------------------------------------------------------------------

    1038. The TPL group of Reliability Standards contains a table
designated Table 1 (Transmission System Standards--Normal and Emergency
Conditions), which is a key part of this group of Reliability
Standards. It lays out the system performance requirements for a range
of contingencies grouped according to the number of elements forced out
of service as a result of the contingency. For example: Category A
applies to the normal system with no contingencies; Category B applies
to contingencies resulting in the loss of a single element defined as a
generator, transmission circuit, transformer, single DC pole with or
without a fault; Category C applies to a contingency resulting in loss
of two or more elements, such as any two circuits on a multiple circuit
tower line or both poles of a bi-polar DC line; while Category D
applies to extreme contingencies resulting in loss of multiple
elements, such as a substation or all lines on a right-of-way. The
system performance expectations for Category C contingencies are lower
than those for Category B contingencies, in that they allow unspecified
amounts of planned or controlled loss of demand.
b. General Issues
    1039. Both the Staff Preliminary Assessment and commenters raise a
number of issues that apply generally to Reliability Standards TPL-001-
0 through TPL-004-0. We address these issues here and, in addition,
apply our general discussion when addressing each individual
Reliability Standard.
i. Staff Preliminary Assessment
    1040. Staff stated that, in general, the TPL Reliability Standards
raise issues regarding requirements that are ambiguous, and ``limited
sets of contingencies,'' i.e, they do not address outages of multiple-
elements resulting from some probable single events and critical system
conditions.\314\
---------------------------------------------------------------------------

    \314\ Staff Preliminary Assessment at 108.
---------------------------------------------------------------------------

    1041. NERC responds that, while the proposed Reliability Standards
need review and incremental improvement, staff's criticisms of the TPL
group of Reliability Standards are overstated. Likewise, EEI believes
that the TPL group of proposed Reliability Standards is technically
sound and sufficiently detailed. NERC contends that the purpose of
Reliability Standards is not to make the Bulk-Power System failure-
proof, but to ensure it is able to meet specific performance
requirements under normal conditions and following

single contingencies and certain credible multiple-contingencies. The
TPL standards require assessment of multiple-contingency and extreme
contingency events but do not require that the system be able to
withstand such events without loss of firm load and, according to NERC,
requiring this would be impractical and extremely costly.
    1042. The Commission agrees with NERC that the Reliability
Standards are not intended to make the Bulk-Power System failure-proof.
Nor do we propose to modify the TPL Reliability Standards to require
that the system be able to withstand all multiple-contingency and
extreme contingency events without loss of load. Nonetheless, we
believe that the planning-related Reliability Standards could be
improved to better take into account probable contingencies when
planning studies are conducted. Much of our proposal is consistent with
the possible means of improvement recognized by NERC in its comments
responding to the Staff Preliminary Assessment. Further, we note that a
number of regions currently utilize superior planning practices that
may be characterized as ``best practices'' and are more stringent than
the proposed TPL Reliability Standards.\315\ Accordingly, we propose
that the ERO submit to the Commission such regional differences in
transmission planning criteria that are more stringent than those
specified in the TPL group of Reliability Standards.
    ii. Stressing the System During Simulations
---------------------------------------------------------------------------

    \315\ Examples include practices cited in NERC's ``Examples of
Excellence'' found in its Readiness Audits, filings for
jurisdictional utilities in Part 4 of FERC Form No. 715,
Transmission Planning Reliability Criteria. Regional Reliability
Organizations also specify requirements that exceed NERC Reliability
Standards, such as WECC's Minimum Operating Requirement Criteria and
the NPCC Document A-02--Basic Criteria for Design and Operation of
Interconnected Power Systems.
---------------------------------------------------------------------------

    1043. Staff stated that, when carrying out power systems
simulations it is important to ensure that the system under study is
sufficiently stressed so that any underlying weaknesses or deficiencies
can be identified and to test the performance of the system under study
for a wide variety of probable scenarios. It suggested that such
simulations ``would determine the most onerous sets of system
conditions * * *'' \316\ Staff stated that system conditions are as
important as contingencies in evaluating the performance of present and
future systems, but that the Reliability Standards do not require that
sensitivity studies be carried out or specify the rationale for
determining critical system conditions and study years.
---------------------------------------------------------------------------

    \316\ Staff Preliminary Assessment at 109.
---------------------------------------------------------------------------

    1044. A number of commenters reacted strongly to staff's suggestion
regarding the use of simulations to determine ``the most onerous sets
of system conditions.'' CenterPoint states that planning for the most
onerous set of conditions would have an unreasonable impact on
transmission rates and the need for new transmission lines.
    1045. MRO and MidAmerican support clarifying ambiguities but prefer
that Reliability Standards not become overly prescriptive in a way that
would restrict engineering judgment. For example, MRO comments that
sensitivity studies should be performed as part of the planning
process, but it recommends that the planning entity develop the system
conditions, planning years, and other aspects of the sensitivity
scenarios. ReliabilityFirst adds that defining a checklist for planning
would encourage planners to rely on the checklist to the exclusion of
good engineering judgment.
    1046. The TPL Reliability Standards require Transmission Planners
and Planning Authorities to conduct system performance assessments.
Such assessments must address specific topics, including ``critical
system conditions and study years as deemed appropriate by the entity
performing the study.'' \317\ As noted by staff and commenters,\318\
system conditions are as important as contingencies in evaluating the
performance of present and future systems. The Commission is concerned
that this Requirement allows complete discretion to the entity
performing the study and does not provide any parameters or criteria
for such an entity to determine critical system conditions and study
years in a rational and consistent manner.
---------------------------------------------------------------------------

    \317\ E.g., Reliability Standard TPL-001-0, Requirement R1.3.
    \318\ See Staff Preliminary Assessment at 109. See also
CenterPoint, MidAmerican and MRO comments.
---------------------------------------------------------------------------

    1047. With regard to CenterPoint's comment, we agree that it is not
realistic to expect the ERO to develop a Reliability Standard that
anticipates every conceivable critical operating condition applicable
to unknown future configurations for regions with various
configurations and operating characteristics. The practical solution
that has been implemented by many in the industry is to perform
sensitivity studies that define and provide documentation of the impact
on the system. For that reason, we believe that it would be appropriate
for planning entities to conduct sensitivity studies to ``bracket'' the
range of probable outcomes. Thus, without having to anticipate ``every
conceivable critical operating condition,'' planning entities will have
a means to identify an appropriate range of critical operating
conditions. While Requirement R1.3 identifies firm transfers, selected
demand levels, existing and planned facilities, reactive power
resources, and control devices, a sensitivity study to determine
critical system conditions should consider such additional matters as
the range of load power factors, generation retirements, generation
dispatch and transaction patterns, controllable loads and DSM at
specific locations, and transmission outages, including outages of
reactive power devices. The Commission is not precluding other
approaches to define and document critical system conditions that have
been proven to be effective.\319\ We propose that the ERO modify the
relevant TPL Reliability Standards accordingly. Further we propose that
the results of these studies be documented to support the selection of
critical system conditions used in assessing system performance.
---------------------------------------------------------------------------

    \319\ While contingencies have been defined in Table I, the
Commission does not believe systems conditions lend themselves to a
table or a simple list.
---------------------------------------------------------------------------

iii. Element-Based vs. Event-Based Contingencies
    1048. As explained in the TPL overview above, Table 1 of the TPL
Standards lays out the system performance requirements for a range of
contingencies grouped according to the number of elements forced out of
service as a result of the contingency. The Staff Preliminary
Assessment explained that the single unanticipated failure of some
elements in the Bulk-Power System can result in the loss of multiple
elements. Because of the resulting impact on reliability, some regions
base their groupings according to the event irrespective of the number
of elements forced out of service (as opposed to categorizing
contingencies according to elements forced out of service). For such a
region, a single event that results in the loss of multiple elements,
e.g., a lightning strike, that simultaneously forces out of service
both circuits of a double circuit tower line, is considered a single
contingency similar to the loss of a single element such as a
generator. What is acceptable in one region may not be acceptable in
another region because of historical adoption of reliability criteria
rather than physical differences in systems.

    1049. Most commenters that address this topic oppose an event-based
contingency planning approach on the grounds that it is difficult to
perform, too conservative, too costly to the public, too rigid, or not
based on the probabilities of outages occurring in the real
system.\320\ National Grid, on the other hand, supports event-based
contingency planning on the contention that it provides a more robust
analysis. The Commission believes that planning standards must
influence system design and not the other way around. To achieve this
objective, planning standards should promote system designs that result
in the minimum set of elements being removed from service for
``unanticipated failures of system elements.'' \321\ The Commission
notes that entities with planning responsibility for approximately half
of the load in the nation analyze contingencies based on the actual
number of elements that would be removed from service in the actual
power system for an unanticipated failure of system elements, rather
than simulating only the outages identified in Table 1. Simply put, the
Commission believes that the simulations should faithfully duplicate
what will happen in the actual power system and not a generic listing
of outages.
---------------------------------------------------------------------------

    \320\ See, e.g., CenterPoint, EEIm Mid American, New York
Commission and ReliabilityFirst.
    \321\ Section 215(a) of the FPA defines ``Reliable Operation''
as ``means'' operating the elements of the Bulk-Power System within
equipment and electric system thermal, voltage, and stability limits
so that instability, uncontrolled separation, or cascading failures
of such system will not occur as a result of sudden disturbance,
including a Cybersecurity Incident, or unanticipated fialure of
system elements'' (emphasis added).
---------------------------------------------------------------------------

    1050. In addition, the Bulk-Power System must be operated and
planned to be operated within a number of conditions after a
contingency or cyber event. The Contingency can be a sudden disturbance
or unanticipated failure of any system element. If a specific portion
of the system has been designed such that the response to a failure
results in multiple lines, transformers, generators, circuit breakers,
etc., being removed from service, then the Commission proposes that
this is what should be simulated.
    1051. Planning for Cybersecurity incidents have not been part of
the traditional planning study process. One approach is to identify
specific vulnerabilities based on the designs at specific locations and
then study the impact of those vulnerabilities. The Commission is
interested in comments from industry on this subject such as whether
planning for cybersecurity events should be addressed in the planning
standards or in the CIP standards.
c. System Performance Under Normal (No Contingency) Conditions (TPL-
001-0)
i. NERC Proposal
    1052. Proposed Reliability Standard TPL-001-0 deals with planning
relevant to system performance under normal conditions, i.e., a
situation where no system contingency or no unexpected failure or
outage of a system component has occurred.\322\ NERC states in its
application that the proposed Reliability Standard ensures that the
Bulk-Power System is planned to meet the system performance
requirements under these normal conditions by requiring the
transmission planner and the planning authority to evaluate their
transmission system annually and document the ability of that system to
meet the performance requirements established in the Reliability
Standard under conditions where no system contingencies are
present.\323\ Meeting these requirements means two things. First, when
all system facilities are in service and normal operating procedures
are in effect, the system can be operated to supply projected customer
demands and projected firm (non-recallable reserved) transmission
services at all demand levels over the range of forecast system
demands. Secondly, the system remains stable and within the applicable
ratings for thermal and voltage limits, no loss of demand or curtailed
firm transfers occurs, and no cascading outages occur. TPL-001-0
applies both to near-term and longer-term planning horizons.
---------------------------------------------------------------------------

    \322\ The NERC glossay defines a ``contingency'' as ``[t]he
unexpected failure or outage of a system component, such as a
generator, transmission line, circuit breaker, switch or other
electrical element.'' NERC glossary at 3.
    \323\ The performance requirements are set forth in Category A
of Table I of the standard.
---------------------------------------------------------------------------

    1053. The Requirements of TPL-001-0 specify that the planning
authority and transmission planner must demonstrate through a valid
assessment that the Reliability Standard's system performance
requirements can be met. The assessment must be supported by a current
or past study and/or system simulation testing that addresses various
categories of conditions to be simulated as set forth in the
Reliability Standard to verify system performance under normal
conditions. When system simulations indicate that the system cannot
meet the performance requirements stipulated in the Reliability
Standard, a documented plan to achieve system performance requirements
must be prepared. The specific study elements selected from each of the
categories for assessments are subject to approval by the associated
regional reliability organization.
ii. Staff Preliminary Assessment
    1054. The Staff Preliminary Assessment explained that TPL-001-0
does not require the consideration of planned outages, which are a
common occurrence, in assessing system performance. Staff also stated
that the Reliability Standard does not require sensitivity studies to
define critical conditions and that footnote (a) to Table 1--which
states in part that ``Applicable Ratings may include Emergency Ratings
applicable for short durations as required to permit operating steps
necessary to maintain system control'' and therefore only pertains to
contingency conditions--should be clarified that it is only applicable
to Categories B, C, and D, i.e., situations involving system
contingencies or failures of system components.
    1055. Staff noted that the purpose statement for this Reliability
Standard is identical to those for TPL-002, TPL-003 and TPL-004
although the goal and requirements are different. The transmission
planning Reliability Standards TPL-001-0 through TPL-004-0 define
various categories of conditions to be simulated. Staff noted that
Requirement R1.3 in each of these Reliability Standards allows fewer
than the specific study elements identified in Table 1 to be selected
from each of the categories for assessments with the approval by the
associated regional reliability organization, even though selection of
fewer elements may impact neighboring systems.
iii. Comments
    1056. MRO comments that the Requirements of TPL-001-0 need
clarification because it is not clear as to what is required. In
addition, it asserts that staff appears to indicate that Order No. 2003
and TPL-001-0 have separate requirements which must be followed. To
avoid the creation of dual Reliability Standards, MRO maintains that
the Commission should explain how the Requirements of this Reliability
Standard relate to the requirements of Order No. 2003 and clarify that
entities will only be required to comply with a single set of
reliability requirements.
    1057. ReliabilityFirst disagrees that footnote (a) to Table 1 is
ambiguous. It states that emergency ratings are not applicable when all
facilities are in service.
    1058. ISO/RTO Council comments that Requirement 1 of TPL-001-0
should define more clearly which entity

is classified as a ``planning authority.'' It also recommends that
because the planning authority only has authority to plan for system
expansion, the word ``consider'' used in Requirement R2 in connection
with lead times necessary for implementation should be changed to
``estimate.''
iv. Commission Proposal
    1059. The Commission proposes to approve TPL-001-0 as a mandatory
and enforceable Reliability Standard. In addition, we propose to direct
that NERC develop modifications to the Reliability Standard, as
discussed below.
    1060. Transmission Planning requires information on forecasted
loads and probable generation plans to supply those loads. While
information on forecasted loads, energy, interruptible loads and direct
control load management over the next ten years are required to be made
available by the MOD Reliability Standards, there is no requirement to
inform transmission planners and planning authorities of new or
retiring generation resources. We seek comments on whether transmission
planners and planning authorities are currently able to obtain and
validate resource information on new generation and retirements for
assessments over the ten year planning horizon. If transmission
planners and planning authorities currently experience difficulty
obtaining this information, how should this potential information gap
be addressed?
    1061. In assessing system performance, TPL-001-0 requires entities
to cover ``critical system conditions and study years,'' as deemed
appropriate by the entity performing the study. As discussed above
regarding Stressing the System During Simulations, the Reliability
Standard does not specify the rationale for determining critical system
conditions and study years. Consistent with our discussion of this
issue above, the Commission proposes that the ERO modify TPL-001-0 to
require that critical system conditions be determined by conducting
sensitivity studies covering such factors as load power factors,
different likely generation expansion scenarios including generation
retirements, alternative generation dispatch and transaction patterns,
controllable loads and DSM at specific locations, and transmission
outages, including outages of reactive power devices. The Commission
would expect that the results of these studies would be used to
document the selection of critical system conditions and study years
used in assessing system performance.\324\
---------------------------------------------------------------------------

    \324\ The Commission expects that the results of the sensitivity
studies taken together would form the basis for evaluating adherence
to criteria, i.e., adhering to system performance expectations
following contingencies specified in Table 1. Failure of one
sensitivity study of a very low probability simulation would not, by
itself, warrant the need for mitigation plans. However, if the
simulations, taken as a whole, show miltiple areas of weaknesses or
criteria violations, then mitigation plans would be required.
---------------------------------------------------------------------------

    1062. The Commission notes that load models used in system studies
have a significant impact on system performance, particularly as they
relate to the dynamic performance of the system. The Commission
proposes that the Reliability Standard be modified to require
documentation of load models used in system studies and supporting
rationale for their use.
    1063. Requirement R1.3 of TPL-001-0 provides that the Planning
Authority and Transmission Planner must provide studies and system
simulations to support its planning assessment, and that the ``specific
elements selected [for the study] shall be acceptable to the associated
Regional Reliability Organization(s).'' As we have discussed elsewhere,
the Commission believes that the regional reliability organization
should not have such a role in the context of mandatory Reliability
Standards. Rather, the ERO or the appropriate Regional Entity(s) should
provide this oversight. Also, given that neighboring systems may be
adversely impacted, the Commission proposes that the neighboring
systems be involved in the determination and review of system
conditions and contingencies to be assessed.
    1064. As mentioned above, staff noted that TPL-001-0 does not
require the consideration of planned outages. While Reliability First
agrees with staff, CenterPoint disagrees because operators schedule
planned outages at times when the reliability risk is minimized.
Planned outages are an every day occurrence that, if excluded, would
not provide an accurate assessment of system conditions. Accordingly,
the Commission proposes to direct that NERC modify TPL-001-0 to require
consideration of planned outages of critical equipment. We note that
TPL-002-0 through TPL-004-0 require consideration of planned outages.
    1065. NERC and other commenters agree with staff that footnote (a)
to Table 1 requires clarification. The NERC Transmission Issues
Subcommittee (TIS) \325\ recommended that footnote (a) be modified to
state explicitly that emergency ratings apply to Category B and C
(contingency conditions) and not to Category A (system intact). The
Commission proposes that footnote (a) be modified in the revised
Reliability Standard as recommended by TIS and that the normal facility
rating be in accordance with Reliability Standard FAC-008-1 and normal
voltages be in accordance with Reliability Standard VAR-001-1.
---------------------------------------------------------------------------

    \325\ NERC Transmission Issues Subcommittee, Evaluation of
Criteria, Methods, and Practices Used for System Design, Planning
and Analysis in Response to NERC Blackout Recommendation 13c (Nov.
28, 2005) (NERC TIS Report) at 15.
---------------------------------------------------------------------------

    1066. While the Commission has identified a number of concerns with
regard to TPL-001-0, this proposed Reliability Standard serves an
important purpose by ensuring the Bulk-Power System is planned to meet
the system performance requirements under normal conditions. Further,
the Requirements set forth in TPL-001-0 are sufficiently clear and
objective to provide guidance for compliance.
    1067. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TPL-001-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TPL-001-0 that:
(1) Requires that critical system conditions be determined by
conducting sensitivity studies; (2) requires that system conditions and
contingencies assessed be reviewed by neighboring systems; (3) modifies
Requirement R1.3 to substitute the reference to regional reliability
organization with Regional Entity; (4) requires consideration of
planned outages of critical equipment; and (5) modifies footnote (a) as
discussed above.
d. System Performance Following Loss of a Single Element (TPL-002-0)
i. NERC Proposal
    1068. Proposed Reliability Standard TPL-002-0 concerns planning
system relevant to performance under contingency conditions involving
the failure of a single element with or without a fault, i.e., the
occurrence of an event such as a short circuit, a broken wire or an
intermittent connection. NERC states that the Reliability Standard
ensures that the future Bulk-Power System is planned to meet the system
performance requirements of a

system, with the loss of one element, by requiring that the
transmission planner and planning authority annually evaluate and
document the ability of the transmission system to meet the performance
requirements where an event results in the loss of a single
element.\326\ Meeting these requirements means two things. First, the
system can be operated following the event to supply projected firm
customer demands and projected firm (non-recallable reserved)
transmission services at all demand levels over the range of forecast
system demands. Second, the system remains stable and within the
applicable ratings for thermal and voltage limits, no loss of demand or
curtailed firm transfers occurs, and no cascading outages occur. The
Reliability Standard applies both to near-term and longer-term planning
horizons.
---------------------------------------------------------------------------

    \326\ The performance requirements are set forth in Category B
of Table I of the Reliability Standard.
---------------------------------------------------------------------------

    1069. TPL-002-0 specifies that the planning authority and
transmission planner must demonstrate through a valid assessment that
the standard's system performance requirements can be met. The
assessment must be supported by a current or past study and/or system
simulation testing that addresses various categories of conditions to
be simulated, as set forth in the Reliability Standard, to verify
system performance under contingency conditions involving the failure
of a single element with or without a fault. The Reliability Standard
requires that planned outages of transmission equipment be considered
for those demand levels for which planned outages are performed. When
system simulations indicate that the system cannot meet the performance
requirements stipulated in the standard, a documented plan to achieve
system performance requirements must be prepared. The specific study
elements selected from each of the categories for assessments are
subject to approval by the associated regional reliability
organization.
ii. Staff Preliminary Assessment
    1070. Staff stated that its general concerns regarding stressing
the system during simulations and event-based contingencies apply to
TPL-002-0. In other words, TPL-002-0 does not require sensitivity
studies to define critical conditions and does not address the
unanticipated failure of some single elements in the Bulk-Power System
that result in subsequent loss of multiple elements. Staff also stated
that footnotes associated with Table 1, which are meant to aid the
interpretation of the performance requirements, are ambiguous and need
to be clarified so that they are applied appropriately and consistently
by all the entities to whom they apply. In particular staff noted that
for TPL-002-0 footnote (b) to the Reliability Standard is sufficiently
ambiguous to allow differing interpretations.\327\
---------------------------------------------------------------------------

    \327\ Footnote (b) reads states ``Planned or controlled
interruption of electric supply to radial customers or some local
Network customers, connected to or supplied by the Faulted element
or by the affected area, may occur in certain areas without
impacting the overall reliability of the interconnected transmission
systems. To prepare for the next contingency, system adjustments are
permitted, including curtailments of contracted Firm (non-recallable
reserved) electric power transfers.''
---------------------------------------------------------------------------

    1071. Staff further noted that while the Reliability Standard
defines various categories of conditions to be simulated, the specific
study elements selected from each of the categories for assessments are
subject to approval by the associated regional reliability
organization, even though they may impact neighboring utilities and
reliability coordinators.
iii. Comments
    1072. NERC states that the reliability Standards do not consider
load shedding acceptable for single contingency events. As such,
footnote (b) provides a limited exception to the general rule against
serving load from a radial transmission line.
    1073. In addition to its comments regarding stressing the system
discussed above, NERC comments that it intends to pursue the following
improvements: (1) Expand the list of Category B contingencies, and
differentiate between an element (i.e., circuit) and a system of
elements (i.e., multi-circuit line or DC bi-pole); (2) review Category
B and C contingencies based not only on probability, but also on
reliability risk and consider including risk quantification methodology
in the Reliability Standards; and (3) clarify footnote (b) of Table 1
to address staff's concern.
    1074. CenterPoint disagrees with staff that planners should
specifically plan for planned outages plus unplanned outages. According
to CenterPoint, it suffices that operators currently schedule planned
outages at times when reliability risk is minimized. Further, it
contends that planning for one planned outage in addition to outages
prescribed in the TPL Reliability Standards would make an N-1
requirement effectively an N-2 requirement. Based on that premise, it
argues that no utility has software to exhaustively test every
conceivable combination of outages or that it would be worthwhile to do
so.
    1075. ReliabilityFirst and TAPS also agree that footnote (b) needs
clarification. However, ReliabilityFirst comments that the wording
simply reflects how the system is actually built rather than indicating
a lower level of performance.
    1076. The ISO/RTO Council comments that the process for determining
load levels for purposes of Requirement 1 of TPL-002-0 needs to be
standardized, and local area networks and system adjustments should be
specifically defined.
    1077. MRO finds an inconsistency in Table 1. Under the ``Loss of
Demand or Curtailed Firm Transfers'' column for category B the entries
are all ``No.'' However, footnote (b) indicates that curtailments of
contracted firm transfers are permitted. MRO states that the ``no''
response in this column may need to be revised to ``Planned/
Controlled'' as it is used for other categories of disturbances.
iv. Commission Proposal
    1078. The Commission proposes to approve TPL-002-0 as a mandatory
and enforceable Reliability Standard. In addition, we propose to direct
that NERC develop modifications to the Reliability Standard, as
discussed below.
    1079. The Commission notes that, like TPL-001-0, TPL-002-0 requires
an entity assessing system performance to cover ``critical system
conditions and study years'' as deemed appropriate by the entity
performing the study, but does not specify the rationale for
determining critical system conditions and study years. The Commission
therefore proposes to direct NERC to modify TPL-002-0 to require that
critical system conditions be determined in the same manner as we
propose with regard to TPL-001-0. The Commission also proposes that the
results of these studies be documented to support the selection of
critical system conditions and study years used in assessing system
performance. We also note that load models used in system studies have
a significant impact on system performance, particularly as they relate
to the dynamic performance of the system. The Commission proposes that
the documentation of system studies include a description of the load
models used including supporting rationale for their use. The
Commission expects the ERO to provide consistency and quality control
in these interpretations and that over time one or more performance
metrics would be

developed to assess the rigor of these evaluations.
    1080. The Commission commends NERC's initiative on improving the
TPL standards and proposes that NERC modify the Reliability Standard to
expand category B to achieve consistency in continent-wide Reliability
Standards.
    1081. With regard to CenterPoint's concerns, we disagree that
planned outages would be considered the same as an unexpected
contingency that would effectively turn an N-1 scenario into an N-2
scenario. Further, the studies/assessments should recognize that
planned outages are not scheduled for peak periods and when required
the system is adjusted to accommodate the planned outage. However, we
do not believe that fact justifies ignoring planned outages altogether,
as suggested by CenterPoint. While TPL-002-0 requires consideration of
planned outages at those demand levels for which planned outages are
performed, it does not address situations in which critical equipment,
such as a transformer or phase angle regulator, may be unavailable for
a prolonged period. Including such a requirement would ensure the
coordination of contingency plans, including the entity's spare
equipment strategy, to return facilities to service in a timely manner
as required for reliability. Therefore, the Commission proposes that
the ERO modify the Reliability Standard by developing a new requirement
that would include the reliability impact of an entity's existing spare
equipment strategy, address the unavailability of long lead time
critical facilities. Critical facilities are those facilities that
impact IROLs and deliverability of generation to firm load.
    1082. Order No. 661 requires all wind generators to remain online
during voltage disturbances for specified time periods and associated
voltage levels. Category B and some Category C events capture these
disturbances for planning study purposes.\328\ We understand that the
TPL Reliability Standards implicitly require all generators to ride
through these same types of voltage disturbances and remain in service
after the fault is cleared. The Commission proposes to direct NERC to
modify TPL-002-0 to explicitly state this requirement.
---------------------------------------------------------------------------

    \328\ Interconnection for Wind Energy, Order No. 661, 70 FR
34993 (June 16, 2005), FERC Stats. & Regs. ] 31,186 (2005), order on
reh'g, Order No. 661-A, 70 FR 75,005 (Dec. 19, 2005), FERC Stats. &
Regs. ] 31,198 (2005).
---------------------------------------------------------------------------

    1083. Several commenters agree with staff that a number of
footnotes of Table 1 could be enhanced. We agree with TIS with respect
to footnote (a), which is applicable to TPL-002-0. This states, in
part, ``[a]pplicable ratings may include Emergency Ratings applicable
for short durations as required to permit operating steps necessary to
maintain system control.'' \329\ TIS states that on the basis of its
review of criteria, methods and practices used for system design,
planning and analysis across the NERC reliability regions, the footnote
is intended to provide flexibility to the responsible planning entity
to decide the appropriate planning response. That response could be to
plan for a facility addition or enhancement, or to develop and document
an operating guide or procedure that can be reliably implemented to
achieve the required system performance for the event in question. In
the latter case, the operating action must be completed in sufficient
time to return the system to a secure operating state with no
additional loss of firm load. The Commission proposes to require that
the phrase ``permit operating steps necessary to maintain system
control'' be clarified to state that the operating steps required to
relieve emergency loadings and return the system to a normal state do
not include firm load shedding. The Commission also proposes that these
required operating steps be identified and be capable of returning the
system to the normal secure state within the 30 minute allowable
period.
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    \329\ NERC TIS Report at 15.
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    1084. Footnote (b) to Table 1 raises three issues that need to be
addressed. Two relate to the use of planned or controlled load
interruptions under certain circumstances, and the third relates to the
use of system adjustments including curtailment of firm transfers to
prepare for the next contingency. NERC and TAPS agree with the Staff
Preliminary Assessment that footnote (b) of Table 1 could be enhanced
with regard to its intended interpretation for contingencies associated
with transmission lines used to serve or supply load. NERC states that
it does not consider shedding load acceptable for single contingency
events. The Commission agrees and thus proposes to require NERC to
modify footnote (b) to state that load shedding for a single
contingency is not permitted except in very special circumstances where
such interruption is limited to the firm load associated with the
failure (consequential load loss).\330\ For purposes of clarity, the
Commission proposes to require that the phrase ``to prepare for the
next contingency, system adjustments are permitted, including
curtailments of contracted Firm (non-recallable reserved) electric
power transfers'' be deleted from footnote (b). This statement is more
appropriate for Category C events and is already captured by footnote
(c) to Table 1, which is applicable to Category C events.
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    \330\ Load associated with the failure could be radial load
supplied by the transmission element that is assumed to be removed
from service, load supplied from separate transmission elements that
are both removed from service due to a single failure, or load that
is tapped onto a single transmission element.
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    1085. While all commenters agree with staff on the need to clarify
footnote (b), the Commission has proposed above that footnote (b) be
clarified to allow no firm load or firm transactions to be interrupted
except consequential load loss. NERC identifies another concern with
its example, specifically, the acceptable magnitude and duration of
consequential load loss. The Commission believes that the Reliability
Standard should provide some limits on the magnitude and duration of
consequential load loss. While the Commission does not propose to
require any specific maximum consequential load loss level or maximum
load loss duration at this time, we do propose to require that those
values be documented by all users of the Bulk-Power System.
    1086. MRO points to the same ambiguity in Table 1 that staff
identified in the Staff Preliminary Assessment. The Commission
interprets Table 1 to specify no permitted loss of demand or
curtailment of firm transfers for Category B contingencies. If the
Reliability Standard intended to use Planned/Controlled demand loss, it
would have stated such, as they do in other portions of the same table.
It is footnote (b) that introduces the ambiguity, and the Commission
proposes that the footnote be viewed as identifying rare exceptions,
such as radial customers.
    1087. The Commission proposes to require that the purpose statement
of TPL-002-0 be modified to reflect the specific goal of the
Reliability Standard.
    1088. While the Commission has identified a number of concerns with
regard to TPL-002-0, this proposed Reliability Standard serves an
important purpose by ensuring that the future Bulk-Power System is
planned to meet the system performance requirements of a system, with
the loss of one element. Further, the Requirements set forth in TPL-
002-0 are sufficiently clear and objective to provide guidance for
compliance.
    1089. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission

by the ERO and that it will improve the reliability of the nation's
Bulk-Power System, the Commission proposes to approve Reliability
Standard TPL-002-0 as mandatory and enforceable. In addition, pursuant
to section 215(d)(5) of the FPA and Sec.  39.5(f) of our regulations,
the Commission proposes to direct that NERC submit a modification to
TPL-002-0 that: (1) Requires that critical system conditions be
determined in the same manner as we propose to require for TPL-001-0;
(2) requires the inclusion of the reliability impact of the entities'
existing spare equipment strategy; (3) explicitly requires all
generators to ride through the same set of Category B and C
contingencies as required for wind generators in Order No. 661; (4)
requires documentation of load models used in system studies and
supporting rationale for their use; (5) clarifies the phrase ``permit
operating steps necessary to maintain system control;'' and (6)
clarifies footnote (b), as discussed above.
e. System Performance Following Loss of Two or More Elements (TPL-003-
0)
i. NERC Proposal
    1090. NERC states that proposed Reliability Standard TPL-003-0
ensures that the future Bulk-Power System is planned to meet the system
performance requirements of a system with the loss of multiple
elements. It does this by requiring that the transmission planner and
the planning authority annually evaluate and document the ability of
its transmission system to meet the performance requirements of
Category C contingencies specified in Table 1 (i.e., events resulting
in the loss of two or more elements) for both the near-term and the
longer-term planning horizons. TPL-003-0 requires the preparation of a
documented plan to achieve the necessary performance requirements if
the system is unable to meet the Category C performance criteria.
    1091. TPL-003-0 applies to each planning authority and transmission
planner. They must demonstrate annually through valid assessments that
their portion of the interconnected transmission system is planned to
meet the performance requirements of Category C with all transmission
facilities in service over a planning horizon that takes into account
lead times for corrective plans. The Reliability Standard also requires
the applicable entities to consider planned outages of transmission
equipment for those demand levels for which they perform such outages.
The Reliability Standard defines various categories of conditions to be
simulated. The specific study elements selected from each of the
categories for assessments, including the subset of Category C
contingencies to be evaluated, require approval by the associated
regional reliability organization.
ii. Staff Preliminary Assessment
    1092. Commission staff stated in its Staff Preliminary Assessment
that TPL-003-0 does not require sensitivity studies to define critical
conditions and study years, does not base its contingencies on probable
events, and as a result has contingencies included that would be more
appropriate in Category B contingencies treated under TPL-002-0. Staff
also stated that footnotes associated with TPL-003-0 in Table 1, which
are meant to aid the interpretation of the performance requirements,
are ambiguous and require clarification to permit appropriate and
consist application.
    1093. Staff noted that the purpose statement for TPL-003-0 is
identical to those for TPL-001, TPL-003 and TPL-004, although the
Reliability Standard has a different goal and different requirements.
Staff further noted that while the Reliability Standard defines various
categories of conditions to be simulated, the specific study elements
selected from each of the categories for assessments are subject to
approval by the associated regional reliability organization, even
though they may impact neighboring utilities and reliability
coordinators.
iii. Comments
    1094. ISO/RTO Council comments that Requirement 2 of TPL-003-0 does
not clearly define ``simulation'' and does not define ``inability to
respond.'' In addition, several commenters note that the footnotes in
Table 1 of the TPL group of Reliability Standards could be enhanced,
including footnote (c) of Table 1.
iv. Commission Proposal
    1095. The Commission proposes to approve proposed Reliability
Standard TPL-003-0 as a mandatory and enforceable Reliability Standard.
In addition, we propose to direct that NERC develop modifications to
the Reliability Standard, as discussed below.
    1096. The Commission notes that, like TPL-001-0 and TPL-002-0, in
assessing system performance, TPL-003-0 requires entities to cover
``critical system conditions and study years'' as deemed appropriate by
the entity performing the study, but does not specify the rationale for
determining critical system conditions and study years. The Commission
therefore proposes that NERC modify TPL-003-0 to require that critical
system conditions be determined in the same manner discussed above with
regard to TPL-001-0. The Commission also proposes that the results of
these studies be documented to support the selection of critical system
conditions and study years used in assessing system performance. Also
the Commission notes that load models used in system studies have a
significant impact on system performance, particularly as they relate
to the dynamic performance of the system. The Commission proposes that
the documentation of system studies include a description of the load
models used including supporting rationale for their use.
    1097. Several commenters agree with Commission staff that a number
of footnotes in Table 1 to the Reliability Standard could be enhanced.
The reference to ``controlled interruption'' of load in regard to
footnote (c), which is applicable to TPL-003-0, suggests the
possibility of automatic load shedding through the use of Special
Protection Systems or safety nets such as Under Voltage Load Shedding
Schemes. Alternatively, a defined manual load interruption could be
used to deal with short-time emergency thermal overloads. The
Commission proposes to require that the ERO modify footnote (c) to
provide specificity regarding the use of the term ``controlled
interruption'' of load. Further, the Commission proposes that, in
modifying TPL-003-0, the ERO require documentation and identification
of the firm load that is subject to the controlled interruption. To
avoid any undue negative impact on competition, third-party impact
studies would be permitted to implement the same or less controlled
load interruption as used by the transmission owner.
    1098. The performance requirements for Category C events stipulate
``no cascading outages.'' The NERC Transmission Issues Subcommittee
identified a concern regarding the determination of whether cascading
outages result in the evaluation of Category C events.\331\ This
concern relates to the use of thermal overload or low voltage proxies
to judge the likelihood of subsequent line or generator trips. The
Commission proposes to require NERC to modify the Reliability Standard
to require the applicable entities to define and document the proxies
necessary to simulate cascading outages and to

[[Continued on page 64869]]

]

[[pp. 64869-64879]] Mandatory Reliability Standards for the Bulk-Power System

[[Continued from page 64868]]

require that the ERO approve the proxies.
    1099. Category C3 of TPL-003-0 involves a situation in which two
single contingencies occur, with manual system adjustments permitted
after the first contingency to prepare for the next one. Proposed
Reliability Standard IRO-005-0 requires that the manual system
adjustments be implemented as soon as possible and no later than 30
minutes after the first contingency has occurred. Should the second
contingency occur before the manual system adjustments can be
completed, the local area and potentially the system would be exposed
to risk of cascading outages. Recognizing this risk and its potential
consequences, some entities plan and operate their systems so that they
are able to withstand the simultaneous occurrence of the two
contingencies for major load pockets.\332\ The Commission solicits
comments on the value and appropriateness of including such a
requirement in TPL-003-0.
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    \331\ See NERC TIS Report.
    \332\ Two entities are Consolidated Edison Company of New York
and Public Service Electric and Gas.
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    1100. The Commission also notes that TPL-003-0 would be enhanced if
its purpose statement were tailored to reflect the specific goal of the
Reliability Standard and that each requirement should correspond with
one or more Measures and each Measure should correspond to a Level of
Non-Compliance.
    1101. While the Commission has identified a number of concerns with
regard to TPL-003-0, this proposed Reliability Standard serves an
important purpose by ensuring that the future Bulk-Power System is
planned to meet the system performance requirements of a system with
the loss of multiple elements. Further, the Requirements set forth in
TPL-003-0 are sufficiently clear and objective to provide guidance for
compliance.
    1102. Accordingly, giving due weight to the technical expertise of
the ERO and with the expectation that the Reliability Standard will
accomplish the purpose represented to the Commission by the ERO and
that it will improve the reliability of the nation's Bulk-Power System,
the Commission proposes to approve Reliability Standard TPL-003-0 as
mandatory and enforceable. In addition, pursuant to section 215(d)(5)
of the FPA and Sec.  39.5(f) of our regulations, the Commission
proposes to direct that NERC submit a modification to TPL-003-0 that:
(1) Requires that critical system conditions be determined by
conducting sensitivity studies (as elaborated in our discussion of TPL-
001-0); (2) clarifies footnote (c) as discussed above; (3) requires the
applicable entities to define and document the proxies necessary to
simulate cascading outages; and (4) tailors the purpose statement to
reflect the specific goal of the Reliability, as discussed above.
f. System Performance Following Extreme Events (TPL-004-0)
i. NERC Proposal
    1103. NERC states the proposed Reliability Standard TPL-004-0
ensures that the future Bulk-Power System is evaluated to assess the
risks and consequences of an extreme event involving the loss of
multiple elements. It does this by requiring that the transmission
planner and the planning authority to evaluate and document annually
the risks and consequences of Category D contingencies (i.e., extreme
events resulting in loss of two or more elements or cascading) for the
near-term (five-year) planning horizon.
    1104. TPL-004-0 applies to each planning authority and transmission
planner. Each must demonstrate annually through valid assessments that
its portion of the interconnected transmission system is evaluated for
the risks and consequences of a number of each of the extreme
contingencies of Category D with all transmission facilities in service
over a planning horizon that takes into account lead times for
corrective plans. TPL-004-0 also requires that planned outages of
transmission equipment be considered for those demand levels for which
planned outages are performed. It defines various categories of
conditions to be simulated. The associated regional reliability
organization must approve the specific study elements selected from
each of the categories for assessment, including the subset of Category
D contingencies to be evaluated.
ii. Staff Preliminary Assessment
    1105. ``Extreme events'' are low probability but high impact
events. Staff noted that while the Reliability Standards require
assessments of extreme events, documentation of the results and
submission to the regional reliability organization, they do not
require that consideration be given either to reducing the probability
of the loss of multiple elements or mitigating the impact.
    1106. Staff also stated that this proposed Reliability Standard
does not require that assessment results be shared with impacted
entities or communicated to operations planning staff and control room
operators. Staff noted that TPL-004-0 does not address scenarios that
are equal to or more severe than actual weather events, such as
hurricanes that affect the Southern United States and ice storms in the
north.
iii. Comments
    1107. ISO/RTO Council believes that Requirement R1 of TPL-004-0
needs to be revised to provide better definition of terms and
obligations and requires review to determine whether it is too
prescriptive in specifying responses to extreme contingencies. ISO/RTO
Council also believes that before Requirement R2 can be enforced,
regional seasonal assessments should be provided to the regional
reliability organizations.
    1108. MRO does not believe that it is practical to develop
deterministic criteria for extreme events. MRO and the New York
Commission state that Reliability Standards should not require