[Federal Register Volume 72, Number 116 (Monday, June 18, 2007)]
[Notices]
[Pages 33462-33476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11685]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RR07-11-000]


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

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

A. EPAct 2005 and Mandatory Reliability Standards

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

    As a general matter, we will accept the following two types of 
regional differences, provided they are otherwise just, reasonable, 
not unduly discriminatory or preferential, and in the public 
interest, as required by the statute: (1) A regional difference that 
is more stringent than the continent-wide Reliability Standard, 
including a regional difference that addresses matters that the 
continent-wide Reliability Standard does not; and (2) a

[[Page 33463]]

regional Reliability Standard that is necessitated by a physical 
difference in the Bulk-Power System.\18\
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    \18\ Id.
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B. WECC

    7. WECC is responsible for overseeing transmission system 
reliability in the Western Interconnection since 2002, when WECC was 
formed from predecessor reliability organizations. The WECC region 
encompasses nearly 1.8 million square miles, including 14 western U.S. 
states, the Canadian provinces of Alberta and British Columbia, and the 
northern portion of Baja California in Mexico. WECC developed a 
Reliability Management System (RMS) pursuant to which transmission 
operators in the Western Interconnection agreed by contract to be bound 
by the WECC reliability criteria and sanctions for non-compliance. 
According to WECC, the criteria are recognized by all WECC members but 
are contractually binding only on members that signed an RMS 
Agreement.\19\
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    \19\ See WECC April 17, 2007 Comments at 16.
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    8. In an April 19, 2007 order, the Commission accepted delegation 
agreements between NERC and each of eight Regional Entities.\20\ In the 
April 19 Order, the Commission accepted WECC as a Regional Entity 
organized on an Interconnection-wide basis. In addition, the Commission 
accepted WECC's Standards Development Manual which sets forth WECC's 
Reliability Standards development process.\21\ The Commission also 
directed WECC to make certain clarifications to its Standards 
Development Manual in a filing to be submitted within 180 days of the 
order.
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    \20\ North American Electric Reliability Corp., 119 FERC ] 
61,060 at P 432 (2007) (April 19 Order).
    \21\ Id. at PP 469-470.
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C. The Eight Proposed Regional Reliability Standards

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

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

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

[[Page 33464]]

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

D. Notice of Filing and Responsive Pleadings

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

[[Page 33465]]

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

II. Discussion

A. Procedural Matters

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

B. General and Procedural Objections to the Regional Reliability 
Standards

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

[[Page 33466]]

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

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

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

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

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

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

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

C. Discussion of WECC's Regional Reliability Standards

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

[[Page 33467]]

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

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

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

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

Comments

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

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

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

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

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

[[Page 33468]]

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

Commission Determination

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

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

    54. The Commission agrees with the shortcomings identified by NERC 
regarding WECC-BAL-STD-002-0 and expects WECC in developing a 
permanent, replacement standard to address these shortcomings as it has 
committed to do. For example, for each of the proposed regional 
Reliability Standards, (1) Regional definitions should conform to the 
definitions set forth in the NERC glossary, unless a specific deviation 
has been justified; and (2) documents that are referenced in the 
Reliability Standard should be attached to the Reliability Standard. 
Likewise, with respect to this and each of the proposed regional 
Reliability Standards, we agree with NERC that WECC must remove the 
sanctions table that is inconsistent with NERC's Sanction Guidelines 
and develop Violation Risk Factors (levels of non-compliance) and 
Violation Severity Levels that conform to corresponding NERC standards. 
In approving NERC's Sanction Guidelines, the Commission emphasized the 
need to achieve consistency in the assessment of penalties across the 
regions. Elimination of the WECC sanctions table will further this 
goal.\66\
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

[[Page 33469]]

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

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

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

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

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

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

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

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

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

Comments

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

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

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

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

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

[[Page 33470]]

TLR procedures, while retaining this initial step.

Commission Determination

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

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

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

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

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

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

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

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

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

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

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

Comments

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

Commission Determination

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

[[Page 33471]]

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

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

    80. Further, Xcel incorrectly characterizes the Commission's 
previous statements regarding when a regional difference may be 
justified. The Commission has identified two types of regional 
differences that it will accept, provided they otherwise satisfy the 
statutory requirements for approval: (1) A regional difference that is 
more stringent than the continent-wide Reliability Standard, including 
a regional difference that addresses matters that the continent-wide 
Reliability Standard does not; and (2) a regional Reliability Standard 
that is necessitated by a physical difference in the Bulk-Power 
System.\82\ Xcel incorrectly combines the two appropriate types of 
regional differences as a single standard category where a regional 
difference sets forth a stringency needed to address a physical 
difference in the Bulk-Power System. Thus, we reject Xcel's argument 
that WECC-PRC-STD-001-1 should not be approved because it is not based 
on an actual physical difference in the Western Interconnection.
---------------------------------------------------------------------------

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

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

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

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

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

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

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

Comments

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

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

Commission Determination

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

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

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

[[Page 33472]]

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

Comments

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

Commission Determination

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

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

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

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

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

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

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

[[Page 33473]]

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

Comments

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

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

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

Commission Determination

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

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

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

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

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

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

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

[[Page 33474]]

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

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

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

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

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

Comments

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

Commission Determination

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

Comments

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

Commission Determination

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

D. Effective Date

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

E. Information Collection Statement

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

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

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

[[Page 33475]]

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

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

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

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

[[Page 33476]]

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

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

    Total Annual Hours for Collection: 4,160 reporting + 416 
recordkeeping = 4,576 hours.
    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost to be $515,840 as shown below:
    Reporting = 4,160 hours @ $120/hour = $499,200.
    Recordkeeping = 416 hours @ $40/hour = $16,640.
    Total Costs = Reporting ($499,200) + Recordkeeping ($16,640) = 
$515,840.
    Title: FERC-725E Regional Reliability Standards (WECC).
    Action: Proposed Collection of Information.
    OMB Control No.: To be determined.
    Respondents: Business or other for profit, and/or not for profit 
institutions.
    Frequency of Responses: Periodic and intermittent.
    Necessity of the Information: The eight Reliability Standards would 
implement the Congressional mandate of the Energy Policy Act of 2005 to 
develop mandatory and enforceable Reliability Standards to better 
ensure the reliability of the nation's Bulk-Power System.
    Internal Review: The Commission has reviewed the requirements 
pertaining to mandatory Reliability Standards for the Bulk-Power System 
and determined the proposed requirements are necessary to meet the 
statutory provisions of the Energy Policy Act of 2005. These 
requirements conform to the Commission's plan for efficient information 
collection, communication and management within the energy industry. 
The Commission has assured itself, by means of internal review, that 
there is specific, objective support for the burden estimates 
associated with the information requirements.
    132. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Michael Miller, 
Office of the Executive Director, Phone: (202) 502-8415, fax: (202) 
273-0873, e-mail: [email protected]]. Comments on the 
requirements of this order may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy 
Regulatory Commission], e-mail: [email protected].

F. Regulatory Flexibility Act Certification

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

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

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

    By the Commission.
Kimberly D. Bose,
Secretary.
 [FR Doc. E7-11685 Filed 6-15-07; 8:45 am]
BILLING CODE 6717-01-P