[Federal Register Volume 79, Number 59 (Thursday, March 27, 2014)]
[Rules and Regulations]
[Pages 17011-17023]
[FR Doc No: 2014-06725]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM13-16-000; Order No. 796]

Generator Verification Reliability Standards

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the Federal
Energy Regulatory Commission (Commission) approves the following
Reliability Standards that were submitted to the Commission for
approval by the North American Electric Reliability Corporation, the
Commission-certified Electric Reliability Organization: MOD-025-2
(Verification and Data Reporting of Generator Real and Reactive Power
Capability and Synchronous Condenser Reactive Power Capability), MOD-
026-1 (Verification of Models and Data for Generator Excitation Control
System or Plant Volt/Var Control Functions), MOD-027-1(Verification of
Models and Data for Turbine/Governor and Load Control or Active Power/
Frequency Control Functions), PRC-019-1 (Coordination of Generating
Unit or Plant Capabilities, Voltage Regulating Controls, and
Protection), and PRC-024-1 (Generator Frequency and Voltage Protective
Relay Settings). The generator verification Reliability Standards help
ensure that verified data is available for power system planning and
operational studies by requiring the verification of generator
equipment and capability needed to support Bulk-Power System
reliability and promoting the coordination of important protection
system settings.

DATES: Effective Date: This rule will become effective May 27, 2014.

FOR FURTHER INFORMATION CONTACT:

Syed Ahmad (Technical Information), Office of Electric Reliability,
Federal

Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426,<PHONE_NUMBER><EMAIL_ADDRESS>Mark Bennett (Legal Information), Office of General Counsel, Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Before Commissioners: Cheryl A. LaFleur, Acting Chairman; Philip D.
Moeller, John R. Norris, and Tony Clark.

(Issued March 20, 2014)
    1. Under section 215 of the Federal Power Act (FPA),\1\ the
Commission approves five Reliability Standards that were submitted to
the Commission for approval by the North American Electric Reliability
Corporation (NERC), the Commission-certified Electric Reliability
Organization (ERO): MOD-025-2 (Verification and Data Reporting of
Generator Real and Reactive Power Capability and Synchronous Condenser
Reactive Power Capability), MOD-026-1 (Verification of Models and Data
for Generator Excitation Control System or Plant Volt/Var Control
Functions), MOD-027-1 (Verification of Models and Data for Turbine/
Governor and Load Control or Active Power/Frequency Control Functions),
PRC-019-1 (Coordination of Generating Unit or Plant Capabilities,
Voltage Regulating Controls, and Protection), and PRC-024-1 (Generator
Frequency and Voltage Protective Relay Settings).
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    \1\ 16 U.S.C. 824o.
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    2. The Commission approves the associated implementation plan,
violation risk factors and, with one modification, the violation
severity levels. The Commission also approves the retirement of
Reliability Standards MOD-024-1 and MOD-025-1 immediately prior to the
effective date of MOD-025-2.
    3. The generator verification Reliability Standards will help
ensure that generators remain in operation during specified voltage and
frequency excursions; properly coordinate protective relays and
generator voltage regulator controls; and enhance the ability of
generator models to accurately reflect the generator's capabilities and
equipment performance. Reliability Standards MOD-026-1, MOD-027-1, PRC-
019-1 and PRC-024-1 are new, whereas Reliability Standard MOD-025-2
consolidates two existing Reliability Standards, MOD-024-1
(Verification of Generator Gross and Net Real Power Capability) and
MOD-025-1 (Verification of Generator Gross and Net Reactive Power
Capability), into one new Reliability Standard. Portions of Reliability
Standards MOD-025-2 and PRC-024-1 respond to directives contained in
Order No. 693.\2\
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    \2\ See Mandatory Reliability Standards for the Bulk-Power
System, Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g,
Order No. 693-A, 120 FERC ] 61,053 (2007).
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    4. The generator verification Reliability Standards improve the
accuracy of model verifications needed to support reliability and
enhance the coordination of generator protection systems and voltage
regulating system controls. Such improvements should help reduce the
risk of generator trips and provide more accurate models for
transmission planners and planning coordinators to develop system
models and simulations. We also determine that the generator
verification Reliability Standards adequately address the Commission's
directives regarding Reliability Standard MOD-025-2 and PRC-024-1.
Therefore, pursuant to section 215(d) of the FPA, we approve
Reliability Standards MOD-025-2, MOD-026-1, MOD-027-1, PRC-019-1 and
PRC-024-1.

I. Background

    5. Section 215 of the FPA requires a Commission-certified ERO to
develop mandatory and enforceable Reliability Standards, subject to
Commission review and approval. Specifically, the Commission may
approve, by rule or order, a proposed Reliability Standard or
modification to a Reliability Standard if it determines that the
Reliability Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest.\3\ Once approved, Reliability
Standards may be enforced by the ERO, subject to Commission oversight,
or by the Commission independently.\4\
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    \3\ 16 U.S.C. 824o(d)(2).
    \4\ Id. 824o(e)(3).
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    6. Pursuant to section 215 of the FPA, the Commission established a
process to select and certify an ERO,\5\ and subsequently certified
NERC.\6\ On March 16, 2007, the Commission issued Order No. 693,
approving 83 of the 107 Reliability Standards filed by NERC. Because
MOD-024-1 and MOD-025-1, which NERC had included in its filing,
involved regional procedures that had not been submitted, the
Commission postponed either approving or remanding these standards
until NERC submitted additional information. However, the Commission
issued three directives in Order No. 693 with respect to MOD-024-1 and
MOD-025-1.
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    \5\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
    \6\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006),
aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
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    7. Reliability Standards MOD-024-1 and MOD-025-1 are ``fill-in-the-
blank'' Reliability Standards that would require regional reliability
organizations to develop procedures to verify generator real and
reactive power capability, respectively. Regarding MOD-024-1, the
Commission directed NERC to clearly define the test conditions and
methodologies contained in the Reliability Standard, and also to
clarify the time period within which regional reliability organizations
must provide generator real power capability verification.\7\ For MOD-
025-1, the Commission directed NERC to clarify that MVAR capability
verifications should be made at multiple points over a generator unit's
operating range and also directed NERC to clarify the time period
within which reactive power capability verifications are to be
provided.\8\ These directives are addressed in Reliability Standard
MOD-025-2.
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    \7\ Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 1310-1311.
    \8\ Id. PP 1321-1323.
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    8. Order No. 693 contained two directives pertaining to Reliability
Standard PRC-024-1. First, the Commission stated that NERC should use
the Nuclear Regulatory Commission's (NRC) voltage ride through
requirements when implementing Reliability Standards to ``assure that
there is consistency between the Reliability Standards and the NRC
requirement that the system is accurately modeled.'' \9\ Second, the
Commission directed NERC to explicitly require generators to be
``capable of riding through the same set of Category B and C
contingencies, as required by wind generators in Order No. 661, or that
those generators that cannot ride through be simulated as tripping.''
\10\ These directives are addressed in Reliability Standard PRC-024-1.
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    \9\ Id. P 1787.
    \10\ Id.
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II. NERC Petition and Proposed Reliability Standards

A. NERC Petition

    9. On May 30, 2013, NERC filed its petition seeking approval of
Reliability Standards MOD-025-2, MOD-026-1, MOD-027-1, PRC-019-1 and
PRC-024-1. NERC states that four of the five

Reliability Standards are new, while existing Reliability Standards
MOD-024-1 and MOD-025-1 were merged into proposed Reliability Standard
MOD-025-2. NERC also seeks approval of the associated implementation
plans, violation risk factors and violation severity levels, and
retirement of current Reliability Standards MOD-024-1 and MOD-025-1 at
midnight of the day immediately prior to the effective date of MOD-025-
2. NERC proposes to phase in effective dates in stages over periods
ranging from five years (for MOD-025-2, PRC-019-1 and PRC-024-1) to ten
years (for MOD-026-1 and MOD-027-1).\11\ NERC states that ``these five
proposed Reliability Standards address generator verifications needed
to support Bulk-Power System reliability and will ensure that accurate
data is verified and made available for planning simulations.'' \12\
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    \11\ NERC Petition, Exhibit B (Implementation Plan for
Reliability Standards Submitted for Approval).
    \12\ NERC Petition at 2.
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    10. NERC explains that Bulk-Power System reliability benefits from
``good quality simulation models of power system equipment'' and that
``model validation ensures the proper performance of the control
systems and validates the computer models used for stability
analysis.'' \13\ NERC further states that the proposed Reliability
Standards will enhance reliability because the tests performed to
obtain model data may reveal latent defects that could cause
``inappropriate unit response during system disturbances.'' \14\ NERC
also states that simulating the response of synchronous machines and
related control systems in sufficient detail is essential for effective
power system planning and operational studies.\15\ For accurate
simulations reflecting actual equipment performance covering a range of
disturbances, NERC states that models must not only contain adequate
information, they must also correspond to actual field values.\16\
Finally, NERC asserts that Reliability Standards MOD-025-2 and PRC-024-
1 address the directives in Order No. 693 mentioned above.
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    \13\ Id.
    \14\ Id. 2-3.
    \15\ Id. 3.
    \16\ Id.
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B. Reliability Standards and NERC Explanation of Provisions

1. Reliability Standard MOD-025-2
    11. Reliability Standard MOD-025-2 merges two existing Reliability
Standards, MOD-024-1 and MOD-25-1, and has the stated purpose of
ensuring the accuracy of generator information related to gross and net
real and reactive power capability and synchronous condenser reactive
power capability that is available for planning models and bulk
electric system reliability assessments.\17\ The Reliability Standard
applies to generator owners and transmission owners that own
synchronous condensers and has three requirements and two Attachments.
Attachment 1, incorporated into Requirements R1.1, R2.1 and R3.1,
specifies the periodicity for performing real and reactive power
capability verification and the verification specifications for
applicable facilities. Attachment 2, which generator owners and
transmission owners will use to report to their transmission planners
the information described in Attachment 1, is incorporated into
Requirements R1.2, R2.2 and R3.2.
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    \17\ Reliability Standard MOD-025-2, Section A.3 (Purpose).
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    12. NERC states that Reliability Standard MOD-025-2 addresses the
directives in Order No. 693. Specifically, NERC states: (1) Requirement
R1, Part 1.2 specifies that a generator owner must submit Attachment 2
or another form containing the same information to its transmission
planner within 90 calendar days of either the date the data are
recorded for a staged test or the date the data are selected for
verification using historical operational data; (2) Requirement R1,
Part 1.1 requires a generator owner to verify the real power capability
of its generating units as set forth in Attachment 1, including the
consideration of ambient conditions during the verification period; and
(3) Attachment 1, Sections 2.1 through 2.4, requires reactive power
capability verification at multiple points across a unit's operating
range.\18\
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    \18\ NERC Petition at 10-12.
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2. Reliability Standard MOD-026-1
    13. Reliability Standard MOD-026-1, applicable to generator owners
and transmission planners, is a new Reliability Standard and has six
requirements and an Attachment describing the periodicity for
excitation control system or plant volt/var function model
verification. NERC explains that the purpose of MOD-026-1 is to ensure
that detailed modeling of generator excitation systems, essential for
valid simulations in power system stability studies, will be conducted
and that those models accurately represent generator excitation control
system or plant volt/var control function behavior for bulk electric
system reliability assessments.\19\ Requirement R1 requires
transmission planners to provide generator owners with specified
information within 90 days of a written request, including instructions
on how to obtain models, block diagrams and/or data sheets and model
data for any of the generator owner's existing applicable unit specific
excitation control system or plant volt/var control function contained
in the transmission planner's dynamic database from the current (in-
use) models. NERC explains that Requirement R1 ensures that the
transmission planner provides necessary information to the generator
owners so that they can provide a useable model in an acceptable
format. This procedure further supports generator owner compliance with
Requirement R2 by providing relevant information to transmission
planners.\20\
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    \19\ Id. 14-16.
    \20\ Id. 15.
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    14. Requirement R2 requires each generator owner to provide its
transmission planner with a verified generator excitation control
system or plant volt/var control function model that includes the data
and documentation specified in Requirement R2, Part 2.1. The
periodicity for this requirement is set forth in Attachment 1. The
purpose of Requirement R2 is to verify that the generator excitation
control system or plant volt/var control function model and the model
parameters used in dynamic simulations performed by the transmission
planner accurately represent the generator excitation control system or
plant volt/var control function behavior when assessing bulk electric
system reliability.\21\ Requirement R3 requires generator owners to
provide written responses to transmission planner requests within 90
days regarding unusable models, technical concerns and transmission
planner determinations that simulated excitation control system or
plant volt/var control function model responses do not match a recorded
response to a transmission system event. NERC explains that Requirement
R3 of Reliability Standard MOD-026-1 ``provides response requirements
for a Generator Owner when it receives certain requests from the
Transmission Planner. This communication ensures that Generator Owners
have an obligation to respond in a timely fashion when there are
demonstrated problems with a model that was provided by the Generator
Owner in accordance with

Requirement R2.'' \22\ Under Requirement R4, generator owners are
required to determine whether changes to applicable units affect models
provided pursuant to Requirement R2 and, when consistent with this
determination, to provide the transmission planner with revised model
data or plans to perform model verification.
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    \21\ Id. 16.
    \22\ Id. 17.
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    15. Requirement R5 requires a generator owner to respond within 90
days to a ``technically justified unit request'' from its transmission
planner to perform a model review of a unit or plant, including details
for model verification or corrected model data. A footnote to
Requirement R5 states that ``Technical justification is achieved by the
Transmission Planner demonstrating that the simulated unit or plant
response does not match the measured unit or plant response.'' Also,
Applicability section 4.2.4 in MOD-026-1 states that facilities to
which the standard applies include ``For all Interconnections: A
technically justified unit that meets NERC registry criteria but is not
otherwise included in the above Applicability sections 4.2.1, 4.2.2, or
4.2.3 and is requested by the Transmission Planner.''
    16. NERC explains that Requirement R5 allows transmission planners
to request that generator owners who otherwise are not covered by the
Applicability section (i.e., whose MVA ratings are lower than the
applicability thresholds specified in Section 4 of Reliability Standard
MOD-026-1 but meet or exceed the Registry Criteria) provide model
verifications or correct model data.\23\ Requirement R6 requires
transmission planners to provide written responses to generator owners
within 90 days of receiving a verified excitation control system or
plant volt/var control function model information whether the model is
usable or not in accordance with Requirement R2. If it determines the
model to be unusable, the transmission planner must explain the
technical basis for that decision.
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    \23\ Id. 18.
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3. Reliability Standard MOD-027-1
    17. Reliability Standard MOD-027-1 is a new Reliability Standard
and contains five requirements and an Attachment (Turbine/Governor and
Load Control or Active Power Frequency Control Model Periodicity). Its
purpose is to verify that the turbine/governor and load control or
active power/frequency control model and the model parameters, used in
dynamic simulations that assess bulk electric system reliability,
accurately represent generator unit real power response to system
frequency variations.\24\ Requirement R1 requires transmission planners
to provide generator owners with guidance that will enable generator
owners to provide the information required in Requirements R2 and R4
within 90 days of a written request. Requirement R2 requires generator
owners to provide transmission planners with a verified turbine/
governor and load control or active power/frequency control model for
each applicable unit, including documentation and data in accordance
with the periodicity specified in MOD-027-1, Attachment 1. Attachment 1
also contains a table listing verification conditions and related
actions required of generator owners.\25\
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    \24\ Reliability Standard MOD-027-1, Section A.3 (Purpose).
    \25\ NERC Petition at 20.
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    18. Requirement R3 establishes communication requirements to ensure
that generator owners respond to transmission planner determinations
that a generator owner's model is not ``usable,'' or where there is a
difference between the model and three or more actual transmission
system events.\26\ Requirement R3 requires generator owners to provide
a written response within 90 days.\27\ Requirement R4 requires
generator owners to provide transmission planners with updates when
changes occur to the turbine/governor and load control or active power/
frequency control system that alter equipment response
characteristics.\28\ Requirement R5 requires transmission planners to
inform generator owners within 90 days of receiving model information
(in accordance with Requirement R2) whether the model is usable or not.
If a model is unusable, the transmission planner shall provide the
generator owner with an explanation of the technical basis for that
decision. Also, Requirement R3 requires generator owners to provide a
written response to this explanation within 90 days.
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    \26\ Id. 21.
    \27\ Id.
    \28\ Id. 22.
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4. Reliability Standard PRC-019-1
    19. Reliability Standard PRC-019-1 is a new Reliability Standard
and contains two requirements intended to ensure that both generator
owners and transmission owners verify coordination of generating unit
facility or synchronous condenser voltage regulating controls, limit
functions, equipment capabilities and protection system settings.\29\
Requirement R1 requires generator owners and transmission owners to
coordinate the voltage regulating system controls with the equipment
capabilities and settings of the applicable protection system devices
and functions.\30\ Requirement R2 requires generator owners and
transmission owners to perform the coordination described in
Requirement R1 to address equipment or setting changes.\31\ The
coordination required in Reliability Standard PRC-019-1 must be
performed at least every five years.
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    \29\ Reliability Standard PRC-019-1, Section A.3 (Purpose).
    \30\ NERC Petition at 23.
    \31\ Id. 24.
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5. Reliability Standard PRC-024-1
    20. Reliability Standard PRC-024-1 is a new Reliability Standard
and consists of four requirements and two Attachments. The stated
purpose of PRC-024-1 is to ensure that generator owners set their
generator protective relays such that generating units remain connected
during defined frequency and voltage excursions.\32\ Requirement R1
requires generator owners having generator frequency protective
relaying activated to trip their generating units to set their
protective relaying to prevent their generating units from tripping
within the ``no trip zone'' of PRC-024-1 Attachment 1 (unless one of
three specified exceptions applies). NERC explains that Attachment 1
contains tables with curve data points for each Interconnection
indicating the amount of time a generator needs to remain connected at
specific defined frequency excursions.\33\ Requirement R2 addresses
voltage excursions and requires, subject to four exceptions, generator
owners to ensure that their voltage protective relaying settings
prevent their generating units from tripping within the ``no trip
zone'' described in PRC-024-1, Attachment 2.
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    \32\ Reliability Standard PRC-024-1, Section A.3 (Purpose).
    \33\ NERC Petition at 25.
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    21. NERC states that the standard drafting team believes the
voltage profile contained in Attachment 2 includes excursions that
would be expected under Category B and C contingencies.\34\ Therefore,
NERC asserts that by ensuring that generator units remain connected to
the grid during voltage excursions, Requirement R2 and Attachment 2
satisfy the directive in Order No. 693 to ``explicitly

require either that all generators are capable of riding through the
same set of Category B and C contingencies, as required by wind
generators in Order No. 661, or that those generators that cannot ride
through be simulated as tripping.'' \35\
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    \34\ See Reliability Standard TPL-002-0b, System Performance
Following Loss of a Single Bulk Electric System Element (Category B)
and Reliability Standard TPL-003-0b, System Performance Following
Loss of Two or More Bulk Electric System Elements (Category C).
    \35\ Id. 29 (citing Order No. 693, FERC Stats. & Regs. ] 31,242
at P 1787).
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    22. Requirement R3 of Reliability Standard PRC-024-1 requires
generator owners to document regulatory or equipment limitations that
would prevent them from satisfying the relay setting criteria in
Requirements R1 and R2. Generator owners must inform their planning
coordinator and transmission planner of any such limitation within 30
calendar days after identifying it. NERC explains that the standard
drafting team believes that ``regulatory limitations'' include NRC
requirements and, therefore, Requirement R3 satisfies the Commission's
guidance that ``NRC requirements should be used when implementing the
Reliability Standards.'' \36\
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    \36\ Id. 27-28 (citing Order No. 693, FERC Stats. & Regs. ]
31,242 at P 1787).
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    23. Requirement R4 requires generator owners to provide their
planning coordinator or transmission planner with generator protection
trip settings associated with Requirements R1 and R2 within 60 days of
either a written request or a change to previously requested trip
settings.\37\
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    \37\ Id. 31.
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III. Notice of Proposed Rulemaking

    24. On September 19, 2013, the Commission issued a Notice of
Proposed Rulemaking (NOPR) proposing to approve Reliability Standards
MOD-025-2, MOD-026-1, MOD-027-1, PRC-019-1 and PRC-024-1.\38\ The
Commission also proposed to approve the associated implementation
plans, violation risk factors and violation severity levels, with one
modification, and the retirement of existing Reliability Standards MOD-
024-1 and MOD-025-1 prior to the effective date of MOD-025-2.
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    \38\ Generator Verification Reliability Standards, Notice of
Proposed Rulemaking, 78 FR 58,492 (September 24, 2013), 144 FERC ]
61,205 (2013) (NOPR).
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    25. While the Commission proposed to approve all five generator
verification Reliability Standards, the Commission raised issues
regarding certain provisions of Reliability Standards MOD-026-1 and
MOD-027-1. In the NOPR, the Commission sought comments on the following
issues: (1) Whether the higher applicability thresholds for MOD-026-1
and MOD-027-1 could limit their effectiveness, especially in areas with
a high concentration of generators falling below the thresholds, or
impede transmission planners' ability to address reliability risk; and
(2) whether the provision in Reliability Standard MOD-026-1 allowing
transmission planners to compel a generator owner below the
applicability threshold with a ``technically justified'' unit to comply
with the Reliability Standard's requirements is ``sufficiently clear
and workable.'' The Commission also sought comment on whether this
provision should be included in Reliability Standard MOD-027-1.
    26. In response to the NOPR, the Commission received comments from:
NERC, Idaho Power Company (Idaho Power), Electricity Consumers Resource
Council (ELCON), ISO New England (ISO-NE), Arizona Public Service
Company (APS), International Transmission Company (ITC), Edison
Electric Institute (EEI), and G&T Cooperatives.\39\
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    \39\ G&T Cooperatives consists of Associated Electric
Cooperative, Inc., Basin Electric Power Cooperative, and Tri-State
Generation and Transmission Association, Inc.
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IV. Discussion

    27. Pursuant to section 215(d) of the FPA, the Commission approves
Reliability Standards MOD-025-2, MOD-026-1, MOD-027-1, PRC-019-1 and
PRC-024-1 as just, reasonable, not unduly discriminatory or
preferential, and in the public interest. The Commission determines
that these Reliability Standards will help ensure that verified data is
available for power system planning and operational studies by
requiring the verification of generator equipment needed to support
Bulk-Power System reliability and enhancing the coordination of
important protection system settings. Also, Reliability Standards MOD-
025-2 and PRC-024-1 satisfy relevant outstanding directives set forth
in Order No. 693.\40\ Further, we approve the retirement of Reliability
Standards MOD-024-1 and MOD-025-1 prior to the effective date of MOD-
025-2. We also approve the associated implementation plan and, with one
exception, the proposed violation risk factors and violations severity
levels.
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    \40\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1787.
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    28. We discuss below the following issues: (A) The Megavolt Amperes
(MVA) applicability thresholds for Reliability Standards MOD-026-1 and
MOD-027-1; (B) the process for determining when it is ``technically
justified'' for a transmission planner to require a generator owner to
provide model reviews under MOD-026-1; (C) why the ``technically
justified'' provision is not also included in MOD-027-1; (D) whether
MOD-025-2 should include more flexibility to verify unit reactive power
capability; and (E) assignment of violation severity levels.

A. Higher MVA Applicability Threshold in MOD-026-1 and MOD-027-1 NERC
Petition

    29. The applicability thresholds in Reliability Standards MOD-026-1
and MOD-027-1 are higher than for Reliability Standards MOD-025-2, PRC-
019-1 and PRC-024-1, and could exclude approximately 20 percent of bulk
electric system installed MVA from compliance.\41\ In contrast to the
greater than 20 MVA applicability thresholds set forth in the other
three Reliability Standards in NERC's petition,\42\ MOD-026-1 and MOD-
027-1 would exclude units rated below 100 MVA (Eastern and Quebec
Interconnections), 75 MVA (Western Interconnection) and 50 MVA (ERCOT
Interconnection).\43\
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    \41\ See NERC Petition, Exhibit E (Summary of the Reliability
Standard Development Proceeding and Complete Record of Development
of Proposed Reliability Standard) section entitled ``Consideration
of Comments on Draft Standard'' at 91 (indicating that the threshold
in the proposed standard would limit applicability of the standard
to 80 percent of installed MVA on an Interconnection basis).
    \42\ Reliability Standard MOD-025-2, Section 4.2 (Facilities);
Reliability Standard PRC-019-1, Section 4.2 (Facilities); and
Reliability Standard PRC-024-1, Section 4 (Applicability).
    \43\ Reliability Standard MOD-026-1, Section 4.2 (Facilities);
Reliability Standard MOD-027-1, Section 4.2 (Facilities).
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    30. During the standard development process, several industry
stakeholders commented that the standard drafting team should ensure
that the applicability thresholds of MOD-026-1 and MOD-027-1 be aligned
with the other three proposed Reliability Standards. In response, the
standard drafting team stated that ``verification of excitation system
is expensive both from a monetary and human resource viewpoint.
Therefore, the [standard drafting team] believes that these
applicability thresholds will result in substantial accuracy
improvements to the excitation models and associated Reliability
Standards, while not unduly mandating costly and time-consuming
verification efforts.'' \44\
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    \44\ NERC Petition, Exhibit E (Summary of the Reliability
Standard Development Proceeding and Complete Record of Development
of Proposed Reliability Standard) section entitled ``Consideration
of Comments on Draft Standard'' at 91.
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NOPR
    31. In the NOPR, the Commission sought comment on whether the
higher applicability thresholds of MOD-026-1

and MOD-027-1, especially in areas with a high concentration of
generators falling below the thresholds, would: (a) limit the
effectiveness of proposed Reliability Standards MOD-026-1 and MOD-027-
1; or (b) adversely impact transmission planners' ability to reduce
risk to Bulk-Power System reliability.\45\
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    \45\ NOPR, 144 FERC ] 61,205 at P 27-28.
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Comments
    32. NERC maintains that the standard drafting team determined that
the applicability thresholds for Reliability Standards MOD-026-1 and
MOD-027-1 are appropriate. NERC states that the standard drafting team
determined, based on its expertise, that there is little, if any,
reliability benefit to requiring every generator to comply with MOD-
026-1 and MOD-027-1. NERC explains that ``the standard drafting team
believes that these applicability thresholds will result in substantial
accuracy improvements to the excitation models and associated
reliability-based limits determined by dynamic simulations, while
balancing concerns regarding the resources it [sic] requires to
implement verification efforts.'' \46\ NERC notes that the resources
required to implement verification efforts can be extensive: ``many
entities will require the use of consultants to perform the needed
tests and model validations due to the expertise required. For example,
it was observed in the SERC field trial that using consultants for MOD-
026-1 cost roughly $20,000 to $30,000 for one unit.'' \47\ NERC further
states that Section 4.2.4 of MOD-026-1, allowing transmission planners
to request information from all generators when ``technically
justified,'' confirms that the higher applicability threshold ``will
not limit the effectiveness of'' Reliability Standards MOD-026-1 and
MOD-027-1.\48\
---------------------------------------------------------------------------

    \46\ NERC Comments at 4-5.
    \47\ Id. 5, n.7 (citing SERC Engineering Committee Generation
Standards Field Test Report at 3 (June 15, 2007) (included in
Exhibit E to the NERC Petition)).
    \48\ Id. 5.
---------------------------------------------------------------------------

    33. ELCON, EEI, and APS state that excluding approximately 20
percent of MVA from the applicability of MOD-026-1 and MOD-027-1 will
not limit the effectiveness of these Reliability Standards. ELCON
states that the higher thresholds would not undermine the effectiveness
of MOD-026-1 and MOD-027-1 or hamper ``transmission planners' ability
to reduce risk to the Bulk-Power System.'' \49\ EEI states that it
``does not view the higher thresholds utilized in the two proposed
standards as inappropriate nor do we believe it will diminish
reliability or adversely impact transmission planners' ability to
reduce risk to the [Bulk- Power System].'' \50\ Rather, EEI asserts
that the thresholds ``would be expected to enhance reliability by
focusing the limited expertise available for model verification at the
units which make the most impact to the dynamic performance of the
power system.'' \51\ APS supports the higher thresholds for Reliability
Standards MOD-026-1 and MOD-027-1 because there is limited benefit to
reliability to require every generator, regardless of size, to comply,
and ``the owners of the smaller units are still expected to provide
correct estimated model data for use in simulation.'' \52\ APS asserts
that the cost of performing the required model verification for a
generation unit is significant and does not vary considerably based on
the size of the unit. ``Currently, there are a limited number of
individuals with the expertise necessary to perform this model
verification, and the costs to hire an expert range between $10,000 and
$20,000 for each generator unit tested.'' \53\
---------------------------------------------------------------------------

    \49\ ELCON Comments at 2.
    \50\ EEI Comments at 5.
    \51\ Id.
    \52\ APS Comments at 4.
    \53\ Id. 3-4.
---------------------------------------------------------------------------

    34. Idaho Power and ISO-NE state that excluding approximately 20
percent of MVA from the applicability of MOD-026-1 and MOD-027-1 would
limit the effectiveness of the Reliability Standards. Idaho Power
maintains that many registered generator owners will not be required to
comply with the data verification standards, which will ultimately
reduce the overall effectiveness of Reliability Standards MOD-026-1 and
MOD-027-1.\54\ Idaho Power bases its comments largely upon its
experience with the WECC Modeling and Validation Workgroup (WECC
Workgroup), which concluded that the higher thresholds would undermine
modeling and simulation accuracy for the WECC region because
``[e]xcluding approximately 20 percent of generators based upon
different thresholds can lead to very different interpretations of
system reliability.'' \55\ Idaho Power notes that the current WECC
policy requiring validation at an aggregate unit threshold of 20 MVA
has ``greatly improved the accuracy of system models for dynamic
simulation [and] a safer and more reliable operation of the WECC
Interconnection.'' \56\ Further, Idaho Power states that generation
resources subject to Reliability Standards MOD-026-1 and MOD-027-1 are
not spread evenly throughout the interconnection-wide model of the
Western Interconnection, which will result in some areas being
represented with a lower percentage of validated generation models.\57\
Idaho Power asserts that the higher thresholds limit the overall
effectiveness of the Reliability Standards and believes the Commission
should adopt a 10 MVA single unit and 20 MVA aggregate thresholds for
the Western Interconnection.\58\
---------------------------------------------------------------------------

    \54\ Idaho Power Comments at 2.
    \55\ Id. 3.
    \56\ Id.
    \57\ Id.
    \58\ Id. 4.
---------------------------------------------------------------------------

    35. ISO-NE states that ``[t]he 100 MVA threshold is too high [and]
would limit the effectiveness of these standards and would adversely
impact ISO-NE's ability to reduce risk to Bulk Power System reliability
by excluding too many generating units in New England.'' \59\ ISO-NE
believes the use of the 20 MVA threshold is supported by NERC's
registration requirements and the Commission's determination that
``generating units with a capacity as low as 20 MVA can have a
significant enough impact that they must comply with the Reliability
Standards.'' \60\ ISO-NE asserts that inaccurate information for a
single generating unit below 100 MVA could impact area studies, and
units below 100 MVA may collectively impact system operating limits.
Finally, ISO-NE raises a concern that exempting generating units under
100 MVA is inconsistent with the high importance placed by NERC and the
Commission on Reliability Standard TPL-001-4 Requirement R1.\61\ ISO-NE
also maintains that the application of the ``capacity factor
exemption'' in MOD-026-1, Attachment 1 is unclear. ISO-NE states that,
``If large units with low capacity factors are also exempted from
verification, then overall system reliability will be further
reduced.'' \62\
---------------------------------------------------------------------------

    \59\ ISO-NE Comments at 2-3.
    \60\ Id. 3.
    \61\ Id. 3-4 (citing Transmission Planning Reliability
Standards, Order No. 786, 145 FERC ] 61,051, at P 3 (2013)
(directing NERC to change the VRF for Requirement R1 from medium to
high)). TPL-001-4, Requirement R1 requires transmission planners and
planning coordinators to maintain system models that represent
projected system conditions.
    \62\ Id. 5.
---------------------------------------------------------------------------

    36. Like Idaho Power and ISO-NE., ITC states that it is concerned
about the aggregate effect that excluding generators will have on the
accuracy of transmission system stability studies, particularly for
areas of the transmission system where excluded generating units are
more highly concentrated.\63\ However, ITC maintains that its concern

is ameliorated by the provision in MOD-026-1 allowing transmission
planners to compel generators deemed to have ``technically justified''
units below the specified threshold to provide such information in
order to more accurately assess system stability.
---------------------------------------------------------------------------

    \63\ ITC Comments at 5-6.
---------------------------------------------------------------------------

Commission Determination
    37. The Commission is persuaded by the comments submitted by NERC
and others that the higher applicability thresholds of Reliability
Standards MOD-026-1 and MOD-027-1 are appropriate for a continent-wide
standard. Moreover, as NERC and ITC point out, Section 4.2.4 of
Reliability Standard MOD-026-1 allows transmission planners to request
a model review and related verification information in accordance with
Requirement R5 from generators below the applicability threshold when
``technically justified'' (where the simulated unit or plant response
does not match the measured unit or plant response). In addition, as
APS observed, the higher applicability threshold does not excuse
generator owners with small units from the expectation that estimated
model data they provide to transmission planners for use in simulations
will be accurate. In response to commenters that expressed concerns, in
areas where there is a large concentration of small generators, the
Commission notes that Regional Entities could develop more stringent
requirements, such as a regional standard or regional criteria or
process, to assure greater modeling accuracy.\64\
---------------------------------------------------------------------------

    \64\ For example, the WECC Modeling and Validation Workgroup
concluded that WECC should develop a regional Reliability Standard
based upon WECC's existing policy that establishes thresholds of 10
MVA and 20 MVA for single unit and aggregate unit validation
respectively.
---------------------------------------------------------------------------

    38. We reject ISO-NE's argument that the applicability threshold is
somehow inconsistent with the directive to NERC in Order No. 786 to
raise the violation severity level from ``medium'' to ``high'' for
Reliability Standard TPL-001-4, Requirement R1, which requires
transmission planners and planning coordinators to maintain system
models.\65\ We are not persuaded that the violation severity level for
Reliability Standard TPL-001-4, Requirement R1 is relevant to the
applicability threshold for Reliability Standards MOD-026-1 and MOD-
027-1 or how it substantiates ISO-NE's claim that the applicability
threshold reduces overall reliability.\66\
---------------------------------------------------------------------------

    \65\ Transmission Planning Reliability Standards, Order No. 786,
145 FERC ] 61,051, at P 3 (2013).
    \66\ We likewise reject ISO-NE's comments regarding application
of the capacity factor exemption in Attachment 1 because ISO-NE
fails to substantiate the alleged risk of applying the capacity
factor exemption to large units.
---------------------------------------------------------------------------

B. Process for Identifying ``Technically Justified'' Generating Units
in MOD-026-1

NERC Petition
    39. Reliability Standard MOD-026-1 applies to generating units that
are connected to the bulk electric system when ``technically
justified.'' Specifically, Applicability Section 4.2.4 allows a
transmission planner to compel a generator owner to provide model
reviews and related information in accordance with Requirement R5 if
the transmission planner demonstrates ``that the simulated unit or
plant response does not match the measured unit or plant response.''
\67\ Under such circumstances, generator owners with one or more
``technically justified'' units must comply with Reliability Standard
MOD-026-1, even though each such unit's MVA rating is below the stated
MVA threshold for applicability.
---------------------------------------------------------------------------

    \67\ Reliability Standard MOD-026-1, Applicability section
4.2.4, n.2 defining ``technical justification.''
---------------------------------------------------------------------------

NOPR
    40. In the NOPR, the Commission stated that while it agrees with
the intent of this section, the way transmission planners would become
aware of discrepancies between simulated units and measured units
(i.e., the basis for ``technically justified'' determinations) is
unclear. The NOPR stated that the technical justification, or
discrepancies between simulated units and measured units, suggests that
there should be some benchmark available in the process by which
transmission planners identify generator owners for compliance with
MOD-026-1. The NOPR observed that the Final Blackout Report on the
August 2003 blackout stated that ``the regional councils are to
establish and begin implementing criteria and procedures for validating
data used in power flow models and dynamic simulations by benchmarking
model data with actual system performance.'' \68\ The Commission sought
comment as to whether the means or process for transmission planners to
determine whether a generator owner's unit is ``technically justified''
is sufficiently clear and workable. The Commission also requested
comment as to whether additional details regarding how the process will
be implemented should be included in an attachment to Reliability
Standard MOD-026-1.\69\
---------------------------------------------------------------------------

    \68\ U.S.-Canada Power System Outage Task Force (Task Force),
Final Report on the August 14, 2003 Blackout in the United States
and Canada: Causes and Recommendations (April 2004) (Final Blackout
Report), Recommendation 24, available at http://www.ferc.gov/industries/electric/indus-act/blackout.asp.
    \69\ NOPR, 144 FERC ] 61,205 at PP 29-30.
---------------------------------------------------------------------------

Comments
    41. NERC maintains that the process for transmission planners to
determine whether a generator owner's unit is ``technically justified''
is clear and workable. NERC states that the ``technically justified''
provision in Reliability Standard MOD-026-1 expands the applicability
of the standard, when necessary, i.e., where the simulated unit or
plant response does not match the measured unit or plant response. NERC
further states that the ``standard drafting team determined that it is
readily apparent when measured data does not match simulations and that
such situations will be sufficiently clear and workable.'' \70\
---------------------------------------------------------------------------

    \70\ NERC Comments at 5.
---------------------------------------------------------------------------

    42. ELCON, APS, and EEI believe that the process for transmission
planners to determine whether a generator owner's unit is ``technically
justified'' is clear and workable. ELCON maintains that MOD-026-1 is
``written with sufficient clarity regarding whether a generator owner's
unit is `technically justified.' '' \71\ APS supports the ``technical
justification'' provision as written, and believes that the provision
``allows transmission planners and planning coordinators the
opportunity to address discrepancies between unit simulations and
measured unit data,'' which APS asserts will be ``evident and clear.''
\72\ EEI believes that the standard as written is ``sufficiently clear
and enforceable,'' because ``[a]lthough specific unit performance
levels can deviate from a model's predicted response, we do not find
this to be problematic; rather, planners need latitude to make
judgments based on their knowledge of their regions and what's
necessary to assess bulk electric system reliability in their area.''
\73\ EEI states that the standard drafting team ``struck a reasonable
balance between providing necessary tools for planners without making
[an] unnecessary prescriptive determination as to how to ensure those
tools would be applied.'' \74\ EEI cautions against adding details that
``might unintentionally limit or otherwise undermine the regional
knowledge and judgment of transmission planners.'' \75\ Rather, EEI
requests that any changes to MOD-026-

1 be postponed until industry experience confirms they are needed.
---------------------------------------------------------------------------

    \71\ ELCON Comments at 2.
    \72\ APS Comments at 5.
    \73\ EEI Comments at 5.
    \74\ Id. 6.
    \75\ Id.
---------------------------------------------------------------------------

    43. Idaho Power and ISO-NE state that the process for transmission
planners to determine whether a generator owner's unit is ``technically
justified'' is unclear, and both assert that the best fix involves
lowering the applicability threshold. Idaho Power states that MOD-026-1
does not clearly define what a ``match'' is or how to evaluate whether
a match exists to satisfy the technically justified definition. Idaho
Power believes that the Commission should add a provision in MOD-026-1
to include ``technically justified'' units that meet the NERC registry
requirements. Idaho Power seeks additional guidance on when a match
between simulated and measured unit or plant responses occurs and the
process a transmission planner should undertake to demonstrate such a
match.\76\ ISO-NE states that it is concerned that the test described
in MOD-026-1, Applicability Section 4.2.4 would require a disturbance
to occur before a transmission planner could determine that a
generating unit under 100 MVA is ``technically justified.'' ISO-NE
asserts that ``[i]n order for the Transmission Planner to be able to
demonstrate that a plant response does not match measured unit or plant
response, an event must first occur.'' \77\ ISO-NE believes that
reducing the threshold from 100 MVA to 20 MVA would ``eliminate the
need for this test, or at least reduce its significance.'' \78\
---------------------------------------------------------------------------

    \76\ Idaho Power Comments at 4.
    \77\ ISO-NE Comments at 5.
    \78\ Id. 5.
---------------------------------------------------------------------------

Commission Determination
    44. The Commission is persuaded that the basis and associated
process for a transmission planner to demonstrate that it is
``technically justified'' for a generator owner below the applicability
threshold to comply with Requirement R5 of Reliability Standard MOD-
026-1 under Section 4.2.4 is sufficiently clear and workable. We agree
with EEI that a more prescriptive, ``one size fits all'' approach could
``unintentionally limit or otherwise undermine the regional knowledge
and judgment of transmission planners.'' \79\ Further, in the standard
drafting team's technical judgment, discrepancies between simulations
and measured data will be ``readily apparent.'' \80\ APS concurs,
stating that such discrepancies will be ``evident and clear.'' \81\
---------------------------------------------------------------------------

    \79\ EEI Comments at 6.
    \80\ NERC Comments at 5.
    \81\ APS Comments at 5.
---------------------------------------------------------------------------

    45. Further, the Commission is not persuaded that a change to the
applicability thresholds for the Eastern Interconnection, or to the
technical justification provision for sub-100 MVA generators, is
justified based on ISO-NE's concern that a disturbance would have to
occur before a transmission planner could determine that a generating
unit is technically justified under Section 4.2.4 of MOD-026-1. ISO-NE
is correct that the ``demonstration'' required by the technical
justification provision for sub-100 MVA generators anticipates a system
event that would indicate a discrepancy between actual and measured
unit response. However, local events that occur in the normal course of
operations could provide adequate information for a transmission
planner to demonstrate the need to invoke the technically justified
provision of Reliability Standard MOD-026-1. While the Commission is
satisfied that NERC has proposed a Reliability Standard that improves
the reliability of the Bulk-Power System on a continent-wide basis,
ISO-NE may seek to develop a more stringent regional approach to
address its particular concerns, either through the Northeast Power
Coordinating Council's regional Reliability Standards process, an ISO-
NE policy, or other means. Considering the strong technical support for
Section 4.2.4 as written, we believe the soundest approach is to give
the industry time to evaluate the effectiveness of the technically
justified provision.

C. Should Proposed Reliability Standard MOD-027-1 Include the
``Technically Justified'' Provision

NERC Petition
    46. Reliability Standard MOD-027-1 does not contain a provision
analogous to Applicability Section 4.2.4 of MOD-026-1, which allows a
transmission planner to determine whether technical justification
exists to subject a generator owner with units falling below the stated
applicability threshold to that Reliability Standard. MOD-027-1 and
MOD-026-1 have the same applicability thresholds (100 MVA for the
Eastern and Quebec Interconnections, 75 MVA for the Western
Interconnection, and 50 and 75 MVA for individual and aggregate
nameplate ratings, respectively, in ERCOT). However, these Reliability
Standards verify models and data of different functions: MOD-026-1
applies to generator excitation control systems and plant volt/var
control functions; MOD-027-1 applies to turbine/governor and load
control or active power/frequency control functions.
NOPR
    47. In the NOPR, the Commission sought comment as to whether the
technical justification provision should also be included in
Reliability Standard MOD-027-1 to provide an opportunity for
transmission planners to address discrepancies between unit simulations
and generator owners' measured unit data.
Comments
    48. NERC states that this issue was considered and rejected by the
standard drafting team. NERC states that the standard drafting team
determined that, in contrast to MOD-026-1, the data required by
Reliability Standard MOD-027-1 are more subjective and difficult to
verify because the verification of governor response models is not
consistent from one event to another. NERC further states that
Reliability Standard MOD-026-1 ``addresses the verification of
excitation control system dynamic models--whose modeled behavior in the
simulation of system events is a large factor in the determination of
local stability limits. In contrast, proposed Reliability Standard MOD-
027-1 addresses the verification of turbine/governor and load control
models--and this equipment rarely, if ever, contributes to a local
stability limit.'' \82\
---------------------------------------------------------------------------

    \82\ NERC Comments at 6.
---------------------------------------------------------------------------

    49. EEI, APS and ELCON believe that it is not necessary to include
the technical justification provision in MOD-027-1. EEI states that it
is unlikely that turbine/governor controls ``will materially contribute
to a stability limit, while unit governor response has been shown to be
inconsistent from one frequency event to the next thereby making such a
provision unworkable and of little value.'' \83\ APS agrees, stating
that turbine/governor data verified under MOD-027-1 is not consistent
across events, and is more difficult to verify than excitation control
system data verified under MOD-026-1. Further, APS states that a
discrepancy between a modeled response and a measured response ``does
not necessarily mean that the model is incorrect. The subjective nature
of this determination makes it unsuitable as a standard requirement.''
\84\
---------------------------------------------------------------------------

    \83\ EEI Comments at 6-7.
    \84\ APS Comments at 5.
---------------------------------------------------------------------------

    50. Idaho Power and ITC believe that the technical justification
provision in MOD-026-1 should be included in Reliability Standard MOD-
027-1. Idaho

Power asserts that the ``[e]xclusion of the technical justification
provision in this standard could lead to unverified modeling data. For
Idaho Power, this would include entire regions of generation connected
to the Bulk Electric System that would have unverified modeling data.''
\85\ Idaho Power notes that transmission planners perform dynamic
simulation studies that require accurate turbine/governor models,
including blackstart and under-frequency load shedding simulations.
Idaho Power states that blackstart generators may fall below the
threshold for compliance with Reliability Standard MOD-027-1 but meet
NERC registry requirements.\86\ ITC states that the turbine/governor,
load control, and active power/frequency control data required by MOD-
027-1 is just as necessary for accurate system modeling as the
excitation control system and plant volt/var function data required by
MOD-026-1. ITC asserts that to deprive a transmission planner of MOD-
027-1 models and data from technically justified units ``is just as
deleterious to the transmission planner's ability to accurately assess
system stability as it would be if the (sic) such problems occurred
with respect to MOD-026-1 data.'' \87\ ITC further asserts that failing
to equip transmission planners with the technically justified
provision, particularly for transmission systems that have high
concentrations of generator owners below the applicability threshold,
``will significantly degrade the accuracy of system models, and by
extension, the overall reliability of the Bulk Electric System.'' \88\
---------------------------------------------------------------------------

    \85\ Idaho Power Comments at 5.
    \86\ Id. (noting that Reliability Standard EOP-005-2 Requirement
R6 requires transmission operators to verify the dynamic performance
of blackstart generators).
    \87\ ITC Comments at 6.
    \88\ Id.
---------------------------------------------------------------------------

Commission Determination
    51. The Commission is persuaded that the technical justification
provision is not workable in MOD-027-1 because there is more
subjectivity involved in verifying the data pertaining to turbine/
governors, the equipment subject to the modeling verification
requirements of MOD-027-1. As NERC explains, the modeling data for
excitation control systems under MOD-026-1 is objective and consistent,
while turbine/governor response model verification under MOD-027-1 is
not consistent from one event to another. The Commission agrees with
APS that determining whether the difference between a model response
and a measured response reflects a model defect is subjective and,
therefore, the technical justification provision is inappropriate for
MOD-027-1. While commenters supporting the inclusion of the technical
justification provision in MOD-027-1 assert that verified data for both
excitation control systems and turbine/governor response are necessary
for accurate system modeling, they do not adequately address the
implementation issues resulting from the subjective and inconsistent
nature of turbine/governor response data. Therefore, we agree with
commenters that the difference in the equipment being verified makes
including the technical justification provision in Reliability Standard
MOD-027-1 inappropriate.

D. Whether Generators Need More Flexibility in Verifying Unit Reactive
Capability Under MOD-025-2

NERC Petition
    52. Reliability Standard MOD-025-2 consists of three requirements
and two Attachments that are incorporated into each of the
requirements. Attachment 1 contains time tables for conducting
verifications and specifications for applicable facilities. Attachment
2 contains forms intended to be used to report the information
identified in Attachment 1. Requirements R1 and R2 require generator
owners to verify Real Power capability and Reactive Power capability,
respectively, and Requirement R3 requires transmission owners to verify
Reactive Power capability in accordance with Attachment 1. For each
Requirement, Attachment 2 establishes a 90 calendar day period within
which generator owners and transmission owners must submit information
of ``either: (i) The date the data is recorded for a staged test; or
(ii) the date the data is selected for verification using historical
operational data.''
Comments
    53. While not addressed in the NOPR, G&T Cooperatives, EEI and
ELCON express concern about what they believe is a lack of flexibility
in the reactive power verification requirements in Reliability Standard
MOD-025-2. G&T cooperatives assert that ``MOD-025-2 would establish a
needlessly prescriptive approach to verifying unit reactive
capability.'' Therefore, while they support the Commission's approval
of MOD-025-2, G&T Cooperatives request that the Commission ``direct
NERC to develop a revised version of MOD-025-2 that permits Generator
Owners the flexibility to verify unit reactive capability using the
method that best meets the individual needs of that Generator Owner
provided it can demonstrate that the method is effective.'' \89\
---------------------------------------------------------------------------

    \89\ G&T Cooperatives Comments at 2.
---------------------------------------------------------------------------

    54. ELCON views MOD-025-2 as ``needlessly prescriptive'' and
asserts that ``at many of the industrial facilities of ELCON members
with `behind the meter' generation, its implementation would raise
significant economic and safety concerns and be technically and
economically infeasible.'' \90\ While believing that Reliability
Standard MOD-025-2 ``may inhibit companies from making use of modeling
tools,'' EEI states that ``rather than remand the MOD-025-2 standard
proposed for approval, EEI envisions that the standard can serve as an
initial basis for now.'' \91\
---------------------------------------------------------------------------

    \90\ ELCON Comments at 2.
    \91\ EEI Comments at 2.
---------------------------------------------------------------------------

Commission Determination
    55. The Commission is not persuaded that Reliability Standard MOD-
025-2 provides insufficient flexibility for generator owners and
transmission owners to verify reactive power capability, or that it is
overly prescriptive. Therefore, the Commission will not direct
modification of the Reliability Standard. The process for verifying
reactive capability under MOD-025-2, Requirement 2.2, requires an
entity to submit information to its transmission planner (either
through Attachment 2 to MOD-025-2 or a form containing the same
information) within 90 calendar days of either: (i) The date the data
are recorded for a staged test; or (ii) the date the data are selected
for verification using historical operational data. This requirement
affords a generator owner or transmission owner with the flexibility to
perform verification using either staged test or historical operating
data. Further, the standard drafting team rejected the G&T
Cooperatives' view that new analytical software tools and engineering
studies alone can adequately model unit reactive capability.\92\
---------------------------------------------------------------------------

    \92\ See, e.g., NERC Petition, Exhibit E (Summary of the
Reliability Standard Development Proceeding and Complete Record of
Development of Proposed Reliability Standard) section entitled
``Consideration of Comments on Draft Standard'' at 75.
---------------------------------------------------------------------------

    56. Rather, the Commission agrees with EEI's suggestion that during
the implementation of Reliability Standard MOD-025-2, NERC, in
consultation with EEI and other industry representatives, should
consider potential modifications to MOD-025-2 ``that would better
reflect rapidly evolving modeling technology, as well

as successful methods and processes already in use by some companies.''
\93\
---------------------------------------------------------------------------

    \93\ EEI Comments at 3.
---------------------------------------------------------------------------

E. Assignment of Violation Severity Levels

1. Violation Severity Level for MOD-026-1, Requirement R6 and MOD-027-
1, Requirement R5
NOPR
    57. In the NOPR, the Commission expressed concern regarding the
proposed violation severity level for Requirement R6 of MOD-026-1 and
Requirement R5 of MOD-027-1. For those requirements, NERC proposed a
``severe'' violation severity level when a transmission planner's
written response that a generation owner's verified model is useable
``omitted confirmation for all specified model criteria'' in the
requirement. NERC did not propose any violation severity level for a
violation of the last sentence of these requirements: ``If the model is
not useable, the [transmission planner] shall provide a technical
description of why the model is not useable.'' The Commission noted
that compliance with this obligation is no less important than
compliance with the other obligations of these requirements. The
Commission further stated that the lack of a violation severity level
for this type of violation is inconsistent with the Commission's
Violation Severity Level Guideline 3, because the proposed violation
severity level does not address all of the obligations in these
requirements. Therefore, the Commission proposed to direct NERC to
submit a violation severity level that addresses a violation of the
last sentence of Requirement R6 of MOD-026-1 and Requirement R5 of MOD-
027-1.
Commission Determination
    58. No entity submitted comments on this matter. Accordingly, as
proposed in the NOPR, we direct NERC to submit a violation severity
level that addresses a transmission planner's obligation to provide a
technical description of why a model submitted by a generation owner is
not usable for Requirement R6 of MOD-026-1 and Requirement R5 of MOD-
027-1.
2. Violation Severity Level for PRC-024-1, Requirements R1 and R2
NOPR
    59. In the NOPR, the Commission addressed NERC's proposal to assign
a ``severe'' violation severity level for a violation of Requirements
R1 and R2 of PRC-024-1 when a generator owner fails to set its
generator frequency or voltage protective relays so that they do not
trip within the criteria listed within Requirements R1 and R2 unless
there is a documented and communicated regulatory or equipment
limitation under Requirement R3. We observed that Requirements R1 and
R2 of PRC-024-1 include three and four bulleted exceptions,
respectively, to the requirement that the generator frequency or
voltage protective relays not trip applicable generating unit(s) within
the ``no-trip zone'' of Attachment 1or 2 to that standard. For
Requirements R1 and R2, only the third and fourth exception,
respectively, relate to a regulatory or equipment limitation in
accordance with Requirement R3. Therefore, the Commission noted that
the wording of the violation severity level for Requirements R1 and R2
could be read to mean that a generator owner that set generator
frequency or voltage protective relaying to trip within the ``no-trip
zone'' based on either the first or second exception in Requirement R1
and either the first, second or third exception in R2, violated that
Requirement with a severe violation severity level. To avoid such an
interpretation, the Commission asked NERC to confirm in its comments
that a generator owner will not violate Requirement R1 or R2 if it sets
generator frequency or voltage protective relaying to trip within the
``no-trip zone'' based upon the exceptions for Requirements R1 and R2.
Commission Determination
    60. In its comments, NERC responded to the Commission's request by
stating that ``[c]onsistent with the NOPR, NERC confirms this
statement.'' \94\ Accordingly, with that clarification, the Commission
approves the violation severity level for Requirements R1 and R2 of
PRC-024-1.
---------------------------------------------------------------------------

    \94\ NERC Comments at 7.
---------------------------------------------------------------------------

V. Information Collection Statement

    61. The following collections of information contained in the Final
Rule are subject to review by the Office of Management and Budget (OMB)
under section 3507(d) of the Paperwork Reduction Act of 1995 (PRA).\95\
OMB's regulations require that OMB approve certain reporting and
recordkeeping requirements (collections of information) imposed by an
agency.\96\ Upon approval of a collection of information, OMB will
assign an OMB control number and expiration date. Respondents subject
to the filing or recordkeeping requirements of this rule will not be
penalized for failing to respond to these collections of information
unless the collections of information display a valid OMB control
number.
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    \95\ 44 U.S.C. 3507(d) (2006).
    \96\ 5 CFR 1320.11 (2013).
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    62. The Commission will submit these reporting and recordkeeping
requirements to OMB for its review and approval under section 3507(d)
of the PRA. The Commission received comments on specific requirements
in the Reliability Standards approved in this Final Rule. However, the
Commission received no comments on the Commission's need for this
information, whether the information will have practical utility, the
accuracy of the provided burden estimate, ways to enhance the quality,
utility, and clarity of the information to be collected, and any
suggested methods for minimizing the respondents' burden, including the
use of automated information techniques.
    63. This Final Rule approves five Reliability Standards: MOD-025-2,
MOD-026-1, MOD-027-1, PRC-019-1 and PRC-024-1. Reliability Standard
MOD-025-2 would replace Reliability Standards MOD-024-1 and MOD-025-1.
In Order No. 693, the Commission did not approve or remand MOD-024-1
and MOD-025-1, as they were identified as ``fill-in-the-blank''
Reliability Standards for which NERC had not submitted regional
procedures.
    64. Public Reporting Burden: The burden and cost estimates below
are based on the increase in the reporting and recordkeeping burden
imposed by the approved Reliability Standards. Our estimate of the
number of respondents affected is based on the NERC Compliance Registry
as of July 30, 2013.\97\ According to the Compliance Registry, NERC has
registered 901 generator owners and 187 transmission planners within
the United States. Currently, synchronous condensers are not included
in the NERC Compliance Registry, and the standard drafting team stated
that the number of transmission owners who own synchronous condensers
is extremely low.
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    \97\ NERC Compliance Registry (July 30, 2013), available at
http://www.nerc.com/pa/comp/Registration%20and%20Certification%20DL/NERC_Compliance_Registry_Matrix_Summary20130730.pdf.
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    65. The burden estimates reflect the standards and the number of
affected entities (e.g., the generator owner's one-time burden to
develop testing procedures, verification process, and process for
collection of data).

----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of        Average
            FERC-725G               respondents    responses per   burden hours    Total annual    Total annual
                                       \98\         respondent     per response    burden hours      cost \99\
                                             (1)             (2)             (3)     (1) x (2) x  ..............
                                                                                (3)
----------------------------------------------------------------------------------------------------------------
 PRC-019-1 (Coordination of Generating Unit or Plant Capabilities, Voltage Regulating Controls, and Protection)
----------------------------------------------------------------------------------------------------------------
Develop coordination and relay               738               1               8           5,904        $307,008
 settings procedures............              GO                                        one-time        one-time
                                                                                ($52/hr)
Relay Settings..................             738               1               8           5,904        $413,280
                                              GO                                                        ($70/hr)
Evidence Retention..............             738               1               1             738         $20,664
                                              GO                                                        ($28/hr)
                                                 ---------------------------------------------------------------
    Total.......................  ..............  ..............  ..............          12,546        $740,952
----------------------------------------------------------------------------------------------------------------
                      PRC-024-1 (Generator Frequency and Voltage Protective Relay Settings)
----------------------------------------------------------------------------------------------------------------
Develop coordination and relay               738               1               8           5,904        $307,008
 settings procedures............              GO                                        one-time        one-time
                                                                                ($52/hr)
Relay Settings..................             738               1               8           5,904        $413,280
                                              GO                                                        ($70/hr)
Evidence Retention..............             738               1               1             738         $20,664
                                              GO                                                        ($28/hr)
                                                 ---------------------------------------------------------------
    Total.......................  ..............  ..............  ..............          12,546        $740,952
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                                     Number of       Number of        Average
            FERC-725L               respondents    responses per   burden hours    Total annual    Total annual
                                       \98\         respondent     per response    burden hours      cost \99\
                                             (1)             (2)             (3)     (1) x (2) x  ..............
                                                                                (3)
----------------------------------------------------------------------------------------------------------------
   MOD-025-2 (Verification and Data Reporting of Generator Real and Reactive Power Capability and Synchronous
                                      Condenser Reactive Power Capability)
----------------------------------------------------------------------------------------------------------------
Develop testing procedures,                  738               1               8           5,904        $307,008
 verification process, and                    GO                                        one-time        one-time
 process for collection of data.                                                                        ($52/hr)
Attachment 2....................             738               1               6           4,428        $309,960
                                              GO                                                        ($70/hr)
Evidence Retention..............             738               1               1             738         $20,664
                                              GO                                                        ($28/hr)
                                                 ---------------------------------------------------------------
    Total.......................  ..............  ..............  ..............          11,070        $637,632
----------------------------------------------------------------------------------------------------------------
  MOD-026-1 (Verification of Models and Data for Generator Excitation Control System or Plant Volt/Var Control
                                                   Functions)
----------------------------------------------------------------------------------------------------------------
Develop testing procedures,                  356               1               8  2,848 one-time        $148,096
 verification process, and                    GO                                                        one-time
 process for collection of data.                                                                        ($52/hr)
Instructions for obtaining                   187               1               8           1,496        $104,720
 excitation control system or                 TP                                        one-time        one-time
 plant voltage/variance control                                                                         ($70/hr)
 function model.................
Documentation on generator                   356               1               8           2,848        $199,360
 verification...................              GO                                                        ($70/hr)
Evidence Retention..............             543               1               1             543         $15,204
                                       GO and TP                                                        ($28/hr)
                                                 ---------------------------------------------------------------
    Total.......................  ..............  ..............  ..............           7,735        $467,380
----------------------------------------------------------------------------------------------------------------
   MOD-027-1 (Verification of Models and Data for Turbine/Governor and Load Control or Active Power/Frequency
                                               Control Functions)
----------------------------------------------------------------------------------------------------------------
Develop testing procedures,                  356               1               8           2,848        $148,096
 verification process, and                    GO                                        one-time        one-time
 process for collection of data.                                                                        ($52/hr)
Instructions for obtaining                   187               1               8           1,496        $104,720
 turbine/governor and load                    TP                                        one-time        one-time
 control or active power/                                                                               ($70/hr)
 frequency control model........

Documentation on generator                   356               1               8           2,848        $199,360
 verification...................              GO                                                        ($70/hr)
Evidence Retention..............             543               1               1             543         $15,204
                                       GO and TP                                                        ($28/hr)
                                                 ---------------------------------------------------------------
    Total.......................  ..............  ..............  ..............           7,735        $467,380
                                                 ===============================================================
        Total for RM13-16.......  ..............  ..............  ..............  ..............      $3,054,296
                                                                                ($1,627,640
                                                                                without
                                                                                one-time
                                                                                costs)
----------------------------------------------------------------------------------------------------------------

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    \98\ GO = Generator Owner, TP = Transmission Planner.
    Assuming 10 generators per generator owner, using EIA-860 2012
generator data (http://www.eia.gov/electricity/data/eia860/) total
number of units > 20 MW are 7,379, which results in 738 generator
owners. Note that the number of generator owner respondents used to
calculate the public reporting burden for MOD-026-1 and MOD-027-1 is
356, due to the higher applicability threshold for those Reliability
Standards.
    \99\ The estimates for cost per hour are derived as follows:
    $52/hour, the average of the salary plus benefits for an
engineer, from Bureau of Labor and Statistics at http://bls.gov/oes/current/naics3_221000.htm andhttp://www.bls.gov/news.release/ecec.nr0.htm
    $70/hour, the average of the salary plus benefits for a manager
and an engineer, from Bureau of Labor and Statistics at http://bls.gov/oes/current/naics3_221000.htm and http://www.bls.gov/news.release/ecec.nr0.htm.
    $28/hour, based on a Commission staff study of record retention
burden cost.
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    Title: Mandatory Reliability Standards for the Bulk-Power System.
    Action: Revisions to FERC-725G and FERC-725L.
    OMB Control Nos: 1902-0252 and 1902-0261.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: One-time, every five years, and every ten
years.
    Necessity of the Information: The proposed approval of the five
Reliability Standards noted above implements the Congressional mandate
of the Energy Policy Act of 2005 to develop mandatory and enforceable
Reliability Standards to better ensure the reliability of the nation's
Bulk-Power System.
    Internal Review: The Commission has reviewed the proposed approval
to the Reliability Standards and made a determination that its action
is necessary to implement section 215 of the FPA. The Commission has
assured itself, by means of its internal review, that there is
specific, objective support for the burden estimate associated with the
information requirements.
    66. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426 [Attention:
Ellen Brown, Office of the Executive Director, email:
<EMAIL_ADDRESS>phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>].
    67. For submitting comments concerning the collection of
information and the associated burden estimates, please send your
comments to the Commission, and to the Office of Management and Budget,
Office of Information and Regulatory Affairs, Washington, DC 20503
[Attention: Desk Officer for the Federal Energy Regulatory Commission,
phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>]. For security reasons,
comments to OMB should be submitted by email to<EMAIL_ADDRESS>Comments submitted to OMB should include Docket
Number RM13-16-000 and OMB Control Number 1902-0252 and 1902-0261.

VI. Regulatory Flexibility Act Certification

    68. The Regulatory Flexibility Act of 1980 (RFA) \100\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a proposed rule and that minimize
any significant economic impact on a substantial number of small
entities. The Small Business Administration's (SBA's) Office of Size
Standards develops the numerical definition of a small business.\101\
Since the issuance of the Proposed Rule, the SBA has revised its size
standard for electric utilities from an output based standard (megawatt
hours) to number of employees (including affiliates). Under SBA's new
size standards, Generator Owners and Transmission Planners likely come
under one of four categories and associated size thresholds: \102\
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    \100\ 5 U.S.C. 601-612 (2006).
    \101\ 13 CFR 121.101 (2013).
    \102\ 13 CFR 121.201, Sector 22, Utilities.
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     Hydroelectric power generation at 500 employees.
     Fossil fuel electric power generation at 750 employees.
     Other electric power generation (e.g. solar, wind,
geothermal, and others) at 250 employees.
     Electric bulk power transmission and control at 500
employees
    69. According to US economic census data,\103\ over half of the
firms in the categories above are small. However, currently FERC does
not have information on how the economic census data compares with
entities registered with NERC and is unable to estimate the number of
small generator owners and transmission planners based on the new SBA
definition. Regardless, FERC recognizes that the rule will impact small
GOs and TPs and estimates the economic impact on each type of entity
below.
---------------------------------------------------------------------------

    \103\ Data and further information is available from SBA at
http://www.sba.gov/advocacy/849/12162.
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    70. Proposed Reliability Standards MOD-025-2, MOD-026-1, MOD-027-1,
PRC-019-1 and PRC-024-1, MOD-025-2 help ensure that generators remain
in operation during specified voltage and frequency excursions,
properly coordinate protective relays and generator voltage regulator
controls, and ensure that generator models accurately reflect the
generator's capabilities and equipment performance. The Commission
estimates that the small entities to which Reliability Standards PRC-
019-1, PRC-024-1 and MOD-025-1 applies will

incur compliance \104\ and paperwork/record keeping costs \105\
totaling $655,228 ($13,372 per generator owner). For Reliability
Standards MOD-026-1 and MOD-027-1, the Commission estimates that a
subset of the small generator owner entities will incur compliance and
paperwork/record keeping costs of $198,176 ($9,008 per generator
owner).\106\ This will result in a per entity compliance and paperwork/
record-keeping cost for the subset of generator owners complying with
MOD-026-1 and MOD-027-1 of $22,380 \107\ and the remaining small
generator owners who only have to comply with PRC-019-1, PRC-024-1 and
MOD-025-1 incurring a $13,372 cost per entity, as previously described.
Additionally, small transmission planner entities will incur compliance
and paperwork/record keeping costs \108\ totaling $49,392 ($1,176 per
transmission planner) \109\ to comply with MOD-026-1 and MOD-027-1.
---------------------------------------------------------------------------

    \104\ Assuming 50 hours per generator owner per reliability
standard for relay settings/testing and other non-paperwork based on
$70/hour. These are non-paperwork related costs, not associated with
the burden described in the information collection section above.
    \105\ This cost came from the above PRC-019-1, PRC-024-1, and
MOD-025-2 tables in the information collection section.
    \106\ These two figures were not calculated correctly in the
NOPR and have been corrected here.
    \107\ This figure was not calculated correctly in the NOPR and
has been corrected here.
    \108\ This cost came from the above MOD-026-1 and MOD-027-1
tables in the information collection section.
    \109\ These two figures were not calculated correctly in the
NOPR and have been corrected here.
---------------------------------------------------------------------------

    71. The Commission does not consider the estimated costs per small
entity to have a significant economic impact on a substantial number of
small entities. Accordingly, the Commission certifies that this Final
Rule will not have a significant economic impact on a substantial
number of small entities.

VII. Environmental Analysis

    72. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\110\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that are clarifying,
corrective, or procedural or that do not substantially change the
effect of the regulations being amended.\111\ The actions proposed here
fall within this categorical exclusion in the Commission's regulations.
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    \110\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs., Regulations
Preambles 1986-1990 ] 30,783 (1987).
    \111\ 18 CFR 380.4(a)(2)(ii).
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VIII. Document Availability

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

    76. These regulations are effective May 27, 2014. The Commission
has determined, with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996.

By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-06725 Filed 3-26-14; 8:45 am]
BILLING CODE 6717-01-P