[Federal Register Volume 73, Number 208 (Monday, October 27, 2008)]
[Rules and Regulations]
[Pages 63770-63794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25139]



[[Page 63769]]

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Part II





Department of Energy





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Federal Energy Regulatory Commission



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18 CFR Part 40



 Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination; Final Rule

  Federal Register / Vol. 73, No. 208 / Monday, October 27, 2008 / 
Rules and Regulations  

[[Page 63770]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-3-000; Order No. 716]


Mandatory Reliability Standard for Nuclear Plant Interface 
Coordination

Issued October 16, 2008.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act (FPA), the 
Commission approves the Nuclear Plant Interface Coordination 
Reliability Standard developed by the North American Electric 
Reliability Corporation (NERC). In addition, pursuant to section 
215(d)(5) of the FPA, the Commission directs NERC to develop a 
modification to the Reliability Standard to address a specific concern. 
The Reliability Standard requires a nuclear plant generator operator 
and its suppliers of back-up power and related transmission and/or 
distribution services to coordinate concerning nuclear licensing 
requirements for safe nuclear plant operation and shutdown and system 
operating limits. The Commission also approves four related definitions 
for addition to the NERC Glossary of Terms, and directs various changes 
to proposed violation risk factors, which measure the potential impact 
of violations of the Reliability Standard on the reliability of the 
Bulk-Power System.

DATES: Effective Dates: The final rule will become effective November 
26, 2008.

FOR FURTHER INFORMATION CONTACT:
Robert Snow (Technical Information), Office of Electric Reliability, 
Division of Reliability Standards, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6716;
Michael Gandolfo (Technical Information), Office of Electric 
Reliability, Division of Reliability Standards, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-6817;
Richard M. Wartchow (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8744;
Christy Walsh (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6523.

SUPPLEMENTARY INFORMATION: 

 
                 Table of Contents                      Paragraph Nos.
 
I. Background......................................  2
    A. Proposed Reliability Standard NUC-001-1.....  2
    B. Proposed NERC Glossary Definitions..........  9
    C. Notice of Proposed Rulemaking...............  10
    D. Procedural Matters..........................  12
II. Discussion.....................................  13
    A. Approval of NUC-001-1.......................  14
    B. Applicability...............................  20
        1. Notification of Parties to Interface      22
         Agreements.
        2. Transmission Entities and Agreements on   32
         NPIRs.
        3. Dispute Resolution......................  74
    C. Form of Agreements..........................  83
    D. Enforcement and Conflicts with Other          89
     Regulations.
    E. Scope of Agreements.........................  95
        1. Commission Questions....................  98
        2. Other Scope Related Issues..............  105
    F. Coordination................................  117
        1. Coordination Among Transmission Entities  119
        2. Addressing System Changes...............  128
    G. Violation Risk Factors......................  132
        1. General Violation Risk Factor Issues....  137
        2. Requirement-Specific Issues.............  151
    H. Violation Severity Levels...................  188
III. Information Collection Statement..............  193
IV. Environmental Analysis.........................  203
V. Regulatory Flexibility Act Analysis.............  204
VI. Document Availability..........................  207
Appendix A: List of Comments to Notice of Proposed
 Rulemaking.
 

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. 
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Commission approves the Nuclear Plant Interface Coordination 
Reliability Standard (NUC-001-1) developed by the North American 
Electric Reliability Corporation (NERC), the Commission-certified 
Electric Reliability Organization (ERO). In addition, pursuant to 
section 215(d)(5) of the FPA, the Commission directs NERC to develop a 
modification to the Reliability Standard to address a specific 
concern.\2\ The Reliability Standard requires a nuclear plant generator 
operator and its suppliers of back-up power and transmission and/or 
distribution services to coordinate concerning nuclear licensing 
requirements for safe nuclear plant operation and shutdown and system 
operating limits (SOLs).\3\

[[Page 63771]]

The Commission also approves four related definitions for addition to 
the NERC Glossary of Terms,\4\ and directs various changes to proposed 
violation risk factors, which measure the potential impact of 
violations of the Reliability Standard on the reliability of the Bulk-
Power System.\5\
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    \1\ 16 U.S.C. 824o (2006).
    \2\ 16 U.S.C. 824o(d)(5).
    \3\ NERC proposes to define nuclear plant generator operator as 
any generator operator or generator owner that is a nuclear plant 
licensee responsible for operation of a nuclear facility licensed to 
produce commercial power. See the discussion of NERC's proposed 
Glossary terms below. The Reliability Standard itself defines those 
suppliers who provide such generation, transmission and distribution 
services pursuant to agreements under NUC-001-1 as ``transmission 
entities,'' as discussed below.
    \4\ See, e.g., Mandatory Reliability Standards for the Bulk-
Power System, Order No. 693, RM06-16-000, 72 FR 16416, FERC Stats. & 
Regs. ] 31,242, at P 1893 (Apr. 4, 2007), order on reh'g, Order No. 
693-A, 120 FERC ] 61,053 (2007) (approving the NERC Glossary of 
Terms Used in Reliability Standards (as revised) (Glossary) 
originally filed April 4, 2006).
    \5\ The Commission is not proposing any new or modified text to 
its regulations. Rather, as set forth in 18 CFR Part 40, a proposed 
Reliability Standard will not become effective until approved by the 
Commission, and the ERO must post on its Web site each effective 
Reliability Standard.
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I. Background

A. Proposed Reliability Standard NUC-001-1

    2. On November 19, 2007, NERC filed its petition for Commission 
approval of the Nuclear Plant Interface Coordination Reliability 
Standard, designated NUC-001-1 (November 19, 2007 Petition).\6\ NERC 
supplemented the filing on December 11, 2007 (December 11, 2007 
Supplement) to propose four related NERC Glossary terms: ``Nuclear 
Plant Generator Operator,'' ``Nuclear Plant Off-site Power Supply (Off-
site Power),'' ``Nuclear Plant Licensing Requirements (NPLRs),'' and 
``Nuclear Plant Interface Requirements (NPIRs).'' In the November 19, 
2007 Petition, NERC stated that the proposed Reliability Standard 
addresses the coordination of interface requirements for two domains: 
(i) Bulk-Power System planning and operations and (ii) nuclear power 
plant licensing requirements for off-site power necessary to enable 
safe nuclear plant operation and shutdown.
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    \6\ NUC-001-1 is attached in Appendix A to the March 20 Notice 
of Proposed Rulemaking (NOPR) in this proceeding, and is available 
on the Commission's eLibrary document retrieval system in Docket No. 
RM08-3-000 and also on NERC's Web site, http://www.nerc.com. See 18 
CFR Part 40, Mandatory Reliability Standard for Nuclear Plant 
Interface Coordination, NOPR, Docket No. RM08-3-000, 73 FR 16,586 
(March 28, 2008), FERC Stats. and Regs. ] 32,629 (2008).
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    3. Reliability Standard NUC-001-1 applies to nuclear plant 
generator operators and ``transmission entities.'' To account for the 
variations in nuclear plant design and grid interconnection 
characteristics, the Reliability Standard defines transmission entities 
as ``all entities that are responsible for providing services related 
to Nuclear Plant Interface Requirements (NPIRs)'' and lists eleven 
types of functional entities that could provide services related to 
NPIRs.\7\
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    \7\ The list of functional entities consists of transmission 
operators, transmission owners, transmission planners, transmission 
service providers, balancing authorities, reliability coordinators, 
planning authorities, distribution providers, load-serving entities, 
generator owners and generator operators. Applicability issues are 
addressed in a separate section, below.
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    4. In the November 19, 2007 Petition, NERC explained that nuclear 
plant generator operators and transmission entities operate according 
to separate, established reliability and safety procedures. To provide 
for coordination of these separate procedures, the ERO developed NUC-
001-1 to require a nuclear plant generator operator to coordinate 
operations and planning with its transmission entities by developing 
procedures that reflect nuclear plant licensing requirements and 
SOLs,\8\ including interconnection reliability operating limits 
(IROLs), affecting nuclear plant operations.\9\ The Reliability 
Standard requires nuclear plant generator operators and transmission 
entities to develop expectations and procedures for coordinating 
operations to meet the nuclear plant licensing requirements, as well as 
SOLs and IROLs, and to develop agreements or arrangements, which may 
include mutually agreed upon procedures or protocols, reflecting those 
expectations and procedures. These agreements or arrangements are known 
as interface agreements. The resulting operations and planning 
requirements developed in the agreements to address the nuclear plant 
licensing requirements, SOLs and IROLs are called nuclear plant 
interface requirements or NPIRs.\10\ NERC stated that Requirements R3 
through R8, which state that the interface agreement parties will 
address the NPIRs in planning, operations, and facility upgrade and 
outage coordination, provide additional specificity on these 
expectations.
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    \8\ The NERC Glossary defines system operating limit or SOL as 
``the value * * * that satisfies the most limiting of the prescribed 
operating criteria for a specified system configuration to ensure 
operation within acceptable reliability criteria. * * * ''
    \9\ The NERC Glossary defines IROL as a ``system operating limit 
that, if violated, could lead to instability, uncontrolled 
separation, or Cascading Outages that adversely impact the 
reliability of the bulk electric system.''
    \10\ See NUC-001-1, Requirement R2 and the proposed NERC 
Glossary term, Nuclear Plant Interface Requirements (NPIR).
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    5. In the November 19, 2007 Petition, NERC noted that nuclear plant 
generator operators must already fulfill nuclear licensing requirements 
for off-site power.\11\ NERC stated that, while various forms of 
agreements exist to meet the nuclear power plant general design 
criterion for off-site power, NUC-001-1 places a new, mandatory and 
enforceable obligation under section 215 of the FPA on both nuclear 
plant generator operators and transmission entities. NUC-001-1 requires 
these entities to inform one another of limits and requirements on 
their systems and to enter into agreements to coordinate and operate 
their systems to address nuclear plant licensing requirements and 
related system limits.
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    \11\ The Nuclear Regulatory Commission (NRC), which regulates 
facilities that are associated with reactor safety or emergency 
response at a nuclear generation plant, has regulatory requirements 
for offsite power systems, as provided in the NRC regulations, 10 
CFR Part 50, Appendix A--General Design Criteria for Nuclear Power 
Plants, criterion 17.
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    6. The nuclear plant licensing requirements addressed in the 
Reliability Standard include requirements for off-site power to enable 
safe operation and shutdown during an electric system or plant event 
and requirements for avoiding nuclear safety issues as a result of 
changes in electric system conditions during a disturbance, transient, 
or normal conditions. NERC cited general design criterion 17 for 
nuclear power plants, which requires nuclear plant generator operators 
to obtain off-site electric power that will provide sufficient capacity 
to permit safety systems to function, assure that reactor coolant 
design limits are not exceeded, prevent core cooling, and maintain 
containment integrity and other vital functions.
    7. NERC stated that NUC-001-1, in combination with the nuclear 
license general design criteria requirements, achieves the vital public 
interest of assuring safe nuclear power generation. According to NERC, 
the Reliability Standard is beneficial to nuclear plant generator 
operators because it will assist them in meeting nuclear plant 
licensing requirements to safely produce nuclear power. It is also 
beneficial to Bulk-Power System users, due to the significant support 
that nuclear power plants provide to the Reliable Operation of the 
Bulk-Power System.
    8. NERC requested that NUC-001-1 take effect in areas subject to 
the Commission's jurisdiction on the first day of the first full 
calendar quarter falling 15 months after Commission approval.

B. Proposed NERC Glossary Definitions

    9. In the December 11, 2007 Supplement, NERC proposed to add the 
following four terms to the NERC Glossary:


[[Page 63772]]


    Nuclear Plant Generator Operator: Any Generator Operator or 
Generator Owner that is a [n]uclear [p]lant [l]icensee responsible 
for operation of a nuclear facility licensed to produce commercial 
power.
    Nuclear Plant Off-site Power Supply or Off-site Power: The 
electric power supply provided from the electric system to the 
nuclear power plant distribution system as required per the nuclear 
power plant license.
    Nuclear Plant Licensing Requirements (NPLRs): Requirements 
included in the design basis of the nuclear plant and statutorily 
mandated for the operation of the plant, including nuclear power 
plant licensing requirements for: (1) Off-site power supply to 
enable safe shutdown of the plant during an electric system or plant 
event; and (2) Avoiding preventable challenges to nuclear safety as 
a result of an electric system disturbance, transient, or condition.
    Nuclear Plant Interface Requirements (NPIRs): The requirements, 
based on NPLRs and Bulk Electric System requirements, that have been 
mutually agreed to by the Nuclear Plant Generator Operator and the 
applicable Transmission Entities.

C. Notice of Proposed Rulemaking

    10. On March 20, 2008, the Commission issued a Notice of Proposed 
Rulemaking (NOPR), which proposed to approve Reliability Standard NUC-
001-1 as mandatory and enforceable. In the NOPR, the Commission also 
raised a number of concerns and asked for clarification from the ERO 
and comments from the public. The Commission proposed to approve the 
NERC definitions and proposed revisions to the violation risk factors 
for NUC-001-1.
    11. As described more fully below, the ERO and other interested 
parties provided comments in response to the NOPR. These comments are 
summarized and addressed in the discussion portion of this Final Rule.

D. Procedural Matters

    12. The NOPR required that comments be filed within 30 days after 
publication in the Federal Register, or April 28, 2008. On April 16, 
2008, the Commission granted a motion filed by EEI and NEI extending 
the comment date to May 13, 2008. Approximately 23 entities filed 
comments, including several late-filed comments. The Commission accepts 
these late filed comments. Appendix A provides a list of the 
commenters.

II. Discussion

    13. In this Final Rule, the Commission approves Reliability 
Standard, NUC-001-1, effective as proposed by the ERO. In addition, 
pursuant to section 215(d)(5) of the FPA, the Commission directs the 
ERO to develop a modification to one provision, Requirement R9.3.5, to 
clarify the impact of the Requirement on two important operating 
procedures, in response to comments received. This Final Rule largely 
accepts the explanations and clarifications provided in the ERO's 
comments and addresses the positions raised by NERC and the other 
commenters on the specific issues raised in the NOPR. As proposed in 
the NOPR, this Final Rule does not take any action on the regional 
difference, because it applies outside of the United States and is not 
applicable to any facilities within the Commission's jurisdiction.\12\ 
The Final Rule directs modifications to the violation risk factors for 
the Reliability Standard, as discussed below. Finally, the Final Rule 
approves the additional Glossary terms.
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    \12\ NERC proposes to adopt as a regional difference for Canada 
a separate definition of nuclear plant licensing requirements that 
does not reference regulatory requirements for off-site power supply 
for safe plant shutdown because Canada does not have regulatory 
standards for off-site power comparable to those established by the 
NRC.
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A. Approval of NUC-001-1

    14. NERC and other commenters generally support the NOPR proposal 
to approve Reliability Standard NUC-001-1.\13\ EEI, Ameren, Dominion, 
and Ontario IESO and Hydro One state that they support approval of the 
Reliability Standard as improving coordination between nuclear plant 
generator operators and transmission entities.
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    \13\ See, e.g., Constellation, Detroit Edison, Dominion, EEI, 
Entergy, Exelon, Ontario IESO and Hydro One, Midwest ISO, and 
Ontario Power comments.
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    15. In contrast, CenterPoint Energy asserts that NUC-001-1 is 
flawed and unnecessary, arguing that it deals with contractual matters 
that should be addressed through a tariff or standard agreement, not a 
Reliability Standard, to ensure that nuclear plant generator operators 
do not receive unreasonable competitive advantages over other 
competitors.\14\ CenterPoint Energy also states that the Commission 
should mitigate potential market power and transparency concerns 
created by the Reliability Standard in regions where an independent 
transmission operator is not the entity that performs interconnected 
operations with the nuclear plant generator operators.\15\ CenterPoint 
Energy is concerned that a requirement in a NPIR could result in a 
change in transmission operations and cause significant reliability or 
market disruptions. According to CenterPoint Energy, this could be 
mitigated by a requirement that nuclear plant generator operators 
retain documentation ``whenever a nuclear plant operator effectively 
alters transmission operating decisions of the independent operator due 
to alleged NPIR concerns.'' \16\
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    \14\ CenterPoint Energy comments at 1.
    \15\ Id. at 3.
    \16\ Id. at 4.
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    16. National Grid emphasizes that NUC-001-1 is intended to address 
technical aspects of the interface between transmission entities and 
nuclear plant generator operators as opposed to the commercial aspects. 
According to National Grid, the proposed Reliability Standard obliges 
all responsible entities to work together on creating NPIRs suitable to 
each nuclear power plant, whether the service provided to the nuclear 
power plant is subject to federal or state jurisdiction. According to 
National Grid, execution of an interface agreement and subsequent 
compliance with NPIRs should not change the jurisdictional status of 
the services provided. National Grid also requests that the Commission 
direct the ERO and its Regional Entities to ensure that nuclear plant 
generator operators look to the proper transmission entities for the 
provision of NPIR-related services and that they bear incremental costs 
of NPIR compliance.
Commission Determination
    17. Pursuant to section 215(d) of the FPA, the Commission approves 
Reliability Standard NUC-001-1 as mandatory and enforceable. The 
Commission finds that coordination of nuclear licensing requirements 
and grid operating limits through auditable interface agreements will 
ensure that an important resource is operated safely and reliably, 
while minimizing grid disturbances from separation of nuclear power 
plants from the grid, due to the loss or degradation of auxiliary power 
supply. Further, the Commission disagrees with CenterPoint Energy that 
the Reliability Standard is flawed and unnecessary. Nuclear power 
plants represent an important power resource and provide reliability 
support throughout the Bulk-Power System. Unlike other large units, 
nuclear power plants are subject to separate regulatory oversight that 
mandates stringent operating and auxiliary power requirements, which, 
if not met, require the plant to separate from the grid. We find that 
NUC-001-1 is an appropriate means to ensure that the particular 
requirements faced by nuclear power plants are met, maximizing the 
reliability support to be provided while minimizing the potential for 
grid disruption caused by separation.
    18. CenterPoint Energy provides no evidence to support its claims 
that assertions by nuclear plant generator operators concerning NPIRs 
could be

[[Page 63773]]

used to affect grid or market operations. We note that the NRC oversees 
a nuclear power plant's development of and compliance with its 
licensing requirements related to facilities that are associated with 
reactor safety or emergency response through its regulatory 
proceedings. NUC-001-1 supplements NRC oversight of nuclear plant 
facilities by providing oversight of the transmission entities that 
operate facilities on the Bulk-Power System providing off-site power 
supply and delivery service to meet nuclear plant licensing 
requirements.
    19. Neither National Grid nor CenterPoint Energy has provided any 
information on how the NPIRs could result in undue negative impact on 
competition. Because all jurisdictional tariffs have requirements for 
the provision of non-discriminatory service, the Commission does not 
anticipate that transmission entities would agree to NPIRs that do not 
provide for comparable service. While comparable service includes 
appropriate cost allocations, that subject is outside of the scope of 
this proceeding.\17\ In regard to National Grid's non-cost-related 
comments, National Grid has not suggested any way in which the 
Reliability Standard could change the jurisdictional status of service 
provided to a nuclear plant generator operator, and therefore, we do 
not see a need to address this concern here.
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    \17\ See NERC November 19, 2007 Petition, Exhibit B, Record of 
Proposed Reliability Standard Development, ``Consideration of 
Comments, Draft 2 SAR on Nuclear Plant Offsite Power Reliability, 
May 23, 2005'' at 3 of 25 (agreeing that the Nuclear Reliability 
Standard does not address cost recovery issues).
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B. Applicability

    20. Reliability Standard NUC-001-1 applies to nuclear plant 
generator operators and transmission entities, such as off-site power 
suppliers and entities that provide distribution and transmission 
services that affect plant operations. NERC states that the Reliability 
Standard meets the criteria that it apply to users, owners and 
operators of the Bulk-Power System because it will apply to 
transmission entities, which are responsible for providing NPIR-related 
services. Therefore, these entities are subject to the Reliability 
Standard and may be registered pursuant to the NERC compliance registry 
process.
    21. The Commission approves the applicability provisions of NUC-
001-1 as appropriately identifying the applicable entities, while 
providing the flexibility to accommodate differing design criteria, 
grid configurations and services procured by the various nuclear power 
plants addressed. The Commission finds appropriate the ERO's use of the 
term transmission entities in NUC-001-1 to refer to the subset of 
registered entities that provide services to nuclear plant generator 
operators. Similarly, the term nuclear plant generator operators refers 
to the subset of generator owners and generator operators that are NRC 
licensees. While the Commission prefers that Reliability Standards 
apply to all entities within a functional category defined in the 
Registry Criteria, it has approved appropriate limitations incorporated 
into an applicability provision.\18\ We address the specific questions 
raised by the Commission in the NOPR, as well as responses and 
comments, on an issue-by-issue basis below.
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    \18\ See, e.g., MOD-010-0 (limiting applicability to members of 
NERC functional classes specified in the MOD-011-0, Requirement R1); 
and PRC-007-0 (limiting applicability to members of functional 
classes owning and operating an underfrequency load shedding 
program).
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1. Notification of Parties to Interface Agreements
    22. Requirement R1 of NUC-001-1 provides: ``[t]he Nuclear Plant 
Generator Operator shall provide the proposed NPIRs in writing to the 
applicable transmission entities and shall verify receipt.'' In the 
NOPR, the Commission indicates its understanding that Requirement R1 
means that if a nuclear plant generator operator fails to provide all 
appropriate NPIRs to an applicable transmission entity, the operator 
will not be in compliance with the Reliability Standard.\19\ Further, 
the Commission observed that a nuclear plant generator operator will 
know, as a result of the NRC licensing process, which applicable 
entities to contact and what services are needed to meet NRC 
requirements.
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    \19\ NOPR at P 21.
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a. Comments
    23. NERC and Entergy agree that it is unlikely that a nuclear plant 
generator operator would fail to obtain appropriate services and 
identify and contact transmission entities. They concur that a nuclear 
plant generator operator will know the applicable services it needs 
through the NRC licensing process. NERC explains that, as an NRC 
licensing requirement, the nuclear plant generator operator would have 
previously coordinated with transmission entities.
    24. Entergy describes the NRC licensing process and explains that a 
nuclear plant generator operator will know the capability of its 
offsite power supplier to supply the power required during operations 
as well as situations that could result in a loss of off-site power. 
Entergy concludes that ``it is very unlikely'' that a nuclear plant 
generator operator would fail to contact the entities necessary to 
receive the appropriate services.
    25. NEI agrees with the Commission's observation that nuclear plant 
generator operators are capable of identifying and contacting the 
appropriate transmission entities. However, NEI opposes any proposal to 
expand this notification requirement into an affirmative requirement 
that nuclear plant generator operators must ``obtain appropriate 
services'' from transmission entities. NEI requests that the Commission 
clarify that this is a notification requirement, not a requirement to 
obtain services (that, according to NEI, should not be included in the 
Reliability Standard).
    26. According to NEI, the obligations of the nuclear plant 
generator operator to provide notice to transmission entities should be 
limited to those entities known or reasonably knowable by the nuclear 
plant generator operator, since the identity of some transmission 
entities could be proprietary. NEI argues that transmission entities 
that have been notified by the nuclear plant generator operator that 
they are responsible for providing services relating to NPIRs should 
then have the obligation to provide further notice to other applicable 
transmission entities that provide services to the first transmission 
entities.
    27. ATC proposes replacing the phrase ``proposed NPIRs'' with a 
reference to nuclear plant licensing requirements including an explicit 
recognition of a transmission entity's ability to propose transmission 
system operating limits to be addressed as NPIRs in the interface 
agreement. According to ATC, this will remedy the current conundrum, 
where a nuclear power plant is obligated to ``propose NPIRs,'' while 
NPIRs are defined as having been agreed to by both parties.
b. Commission Determination
    28. The Commission accepts NERC's proposal to require nuclear plant 
generator operators to identify entities that provide services related 
to off-site power supply or delivery. With NERC's and other industry 
representatives' assurances, the Commission is satisfied that the 
appropriate transmission entities can be identified based on the 
nuclear plant generator operators' historical compliance with NRC 
licensing requirements to obtain off-site

[[Page 63774]]

power and develop solutions with grid operators to avoid service 
interruptions from foreseeable grid disturbances.
    29. The Commission does not share the concern expressed by 
commenters that Requirement R1 imposes an affirmative obligation on a 
nuclear plant generator operator to obtain appropriate services. 
Requirement R1 obligates a nuclear plant generator operator to provide 
proposed NPIRs in writing to transmission entities. The nuclear plant 
generator operator is already obligated to obtain service to meet NPIRs 
that are based on nuclear plant licensing requirements enforced by the 
NRC. We note that Requirement R2 does contain an affirmative obligation 
that the nuclear plant generator operator and transmission entities 
develop and execute an interface agreement to implement NPIRs. With 
this understanding, we find that the nuclear plant generator operators' 
role in providing notice of proposed NPIRs to all applicable 
transmission entities is appropriate. A nuclear plant generator 
operator may be found in noncompliance for failing to provide notice to 
an entity responsible for providing services relating to its off-site 
power-related licensing requirements.
    30. NERC and industry representatives clarify that the entities 
that the nuclear plant generator operator is to provide with proposed 
NPIRs are known to the nuclear plant generator operator based on the 
nuclear plant generator operator's historic need to obtain service to 
meet their license requirements. The Commission does not share NEI's 
concern that the nuclear plant generator operator may not know upstream 
utilities that provide service to the primary service providers. We 
note that Requirement R1 obligates a nuclear plant generator operator 
to contact entities that provide services to meet NPIRs, which are 
based on nuclear licensing requirements for off-site power supply and 
avoiding foreseeable grid disruptions. Any upstream service providers 
that provide services related to NPIRs must be identified by the 
nuclear plant generator operator in the NPIRs. Otherwise there is no 
obligation to identify non-primary service providers.
    31. As for ATC's concern with the use of the phrase ``proposed 
NPIRs'' as opposed to a reference to nuclear plant licensing 
requirements that will form the basis for NPIRs, the Commission finds 
the current Requirements are sufficiently clear and flexible to 
accommodate counterproposals by transmission entities to address system 
limits during interface agreement development.\20\
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    \20\ The Commission notes that ATC originally suggested the 
language ``proposed NPIRs'' as an alternative to the original draft 
language ``current'' NPIRs. NERC November 19, 2007 Petition, Exhibit 
B, ``Consideration of Comments on 1st Draft of Nuclear Plant Off-
site Power Coordination Standard,'' at 15 of 69 (Aug. 15, 2006).
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2. Transmission Entities and Agreements on NPIRs
    32. NUC-001-1 applies to nuclear plant generator operators and 
transmission entities. The Applicability section of the Reliability 
Standard (i) defines transmission entities as ``all entities that are 
responsible for providing services related to Nuclear Plant Interface 
Requirements (NPIRs),'' and (ii) lists 11 types of entities, identified 
in the NERC registry criteria based on the NERC Functional Model,\21\ 
that may serve as transmission entities.
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    \21\ NERC Statement of Compliance Registry Criteria (Revision 
3), filed with its Supplemental Information Filing, Docket No. RM06-
16-000 (Feb. 6, 2007), approved in Order No. 693 at P 92-96; NERC 
Functional Model, Version 3 (approved by NERC Board of Trustees, 
Feb. 13, 2007).
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    33. NERC explained in its November 19, 2007 Petition:

    Because the relationship of each nuclear plant generator 
operator with its provider of transmission-related services is 
unique, it will be important and necessary for the registration 
process to identify on a plant-by-plant basis the specific 
transmission entities required to identify NPIRs and develop the 
requisite agreement. Once the agreement becomes final, all 
applicable nuclear plant generator operator and transmission 
entities for each agreement will be identified by name and specific 
function. The respective Regional Entity will then be responsible 
for ensuring that each nuclear plant generator operator and 
transmission entities identified in the agreement(s) is registered 
on the NERC Compliance Registry for the applicable function(s). NERC 
will work with the Regional Entities to ensure that all nuclear 
plant generator operator and transmission entities included in the 
agreements that result from the NPIRs are listed in the Compliance 
Registry for this specific reliability standard.\22\
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    \22\ NERC November 19, 2007 Petition at 12-13.
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a. NOPR Proposals
    34. In the NOPR, the Commission proposed to accept the 
identification and registration process described by NERC in the 
November 19, 2007 Petition with the understanding that NERC will use 
its authority under the compliance registry process to register all 
users, owners, and operators of the Bulk-Power System that provide 
transmission or generating services relating to off-site power supply 
or delivery.\23\ Further, the Commission requested clarification from 
the ERO, as well as public comment, on three issues: (i) How NERC's 
plan to identify transmission entities on a ``plant-by-plant basis'' in 
the compliance registration process relates to the definition of bulk 
electric system; (ii) whether NUC-001-1 is enforceable against a 
transmission entity upon execution of an interface agreement or some 
earlier time; and (iii) how the Reliability Standard will be 
implemented for an entity that both operates a nuclear power plant and 
is responsible to provide services related to NPIRs.
---------------------------------------------------------------------------

    \23\ See id. at 12.
---------------------------------------------------------------------------

i. Identification of Entities Subject to NUC-001-1 Through the 
Compliance Registry
(1) NOPR
    35. As mentioned above, the Commission proposed in the NOPR to 
accept NERC's Applicability approach for NUC-001-1 with the 
understanding that NERC would use its authority under the compliance 
registry process to register all users, owners and operators of the 
Bulk-Power System that provide transmission or generating services 
relating to off-site power supply or delivery.\24\ Further, the NOPR 
noted that certain auxiliary power suppliers and transmission service 
providers may serve nuclear power plants through facilities that fall 
outside the definition of bulk electric system. The NOPR stated that:
---------------------------------------------------------------------------

    \24\ NOPR at P 25-26.

    The Commission understands that NERC and the Regional Entities 
will register these and other service providers that provide 
interconnection and/or auxiliary power facilities vital to nuclear 
plant operation through NERC's authority to register an owner or 
operator of an otherwise exempt facility that is needed for Bulk-
Power System reliability, on a facility-by-facility basis. Once 
registered, the transmission entity providing such services to a 
nuclear generating plant may be subject to other Reliability 
Standards applicable to the functional class within the NERC 
functional model for which the transmission entity has been 
registered, as deemed appropriate through the registration process. 
With this understanding, the Commission proposes to accept the scope 
of the definition of transmission entities as appropriate.\25\
---------------------------------------------------------------------------

    \25\ Id. P 26 (footnotes omitted).
---------------------------------------------------------------------------

(2) Comments
    36. NERC states that it concurs with the Commission's understanding 
that NERC will use its authority under the compliance registry process 
to register all users, owners and operators of the Bulk-Power System 
that provide transmission or generating services relating to off-site 
power supply or

[[Page 63775]]

delivery. NERC will register the owner of an otherwise exempt facility 
on a facility-by-facility basis. Further, NERC agrees that, once 
registered, the transmission entity may be subject to other Reliability 
Standards applicable to the functional class within the NERC Functional 
Model, as deemed appropriate through the registration process, with an 
exception for low-voltage facilities, as discussed in section 
II(B)(2)(b) below.
    37. EEI generally agrees with the Commission's conclusion that, 
once registered, a transmission entity providing services to a nuclear 
generating plant may be subject to other Reliability Standards 
applicable to the function for which the transmission entity has been 
registered. EEI also supports NERC's interpretation that identification 
as a transmission entity under NUC-001-1 Requirements should not change 
a party's obligations under other Reliability Standards.
    38. NEI suggests that entities that are not currently subject to 
NERC registration, jurisdiction, and enforcement authority should be 
able to sign an interface agreement without submitting to NERC 
jurisdiction. NEI states that such an entity may be bound to comply 
with the interface agreement, but should not automatically be subject 
to all other NERC Reliability Standards and enforcement authority. NEI 
predicts that subjecting entities to NERC jurisdiction and enforcement 
authority will dissuade parties from signing interface agreements, 
contrary to the intent of this Reliability Standard. The applicability 
of the other Reliability Standards should be determined by the 
governing statute and regulations, and the terms of the other 
Reliability Standards, and should not be incorporated through this 
Reliability Standard. According to NEI, the Regional Entity 
registration process, not the execution of an interface agreement, 
determines whether an entity is subject to NUC-001-1. NEI asks the 
Commission to clarify that entities that sign an interface agreement 
are not automatically subject to NERC jurisdiction for Reliability 
Standards beyond NUC-001-1.
    39. Southern suggests that it may not be appropriate to apply 
certain Reliability Standards requirements to nuclear plant generator 
operators, in particular those relating to ``functions of supplying 
energy and Interconnected Operations Services.'' On the other hand, 
entities registered as a generator owner or generator operator may 
fulfill the requirements set forth in NERC's definitions of these 
terms, but may not be licensed by the NRC and may not be ``responsible 
for operation of a nuclear facility.'' Southern asks the Commission to 
direct NERC to review the application of its registration requirements 
to nuclear plant generator operators.
    40. Several commenters object to the use of the term transmission 
entities. Wisconsin Electric suggests that NUC-001-1 does not follow 
the NERC Functional Model, due to use of the term transmission 
entities. TVA makes a similar objection to the term nuclear plant 
generator operator, which does not appear in the NERC functional model, 
and suggests use of the term generator operators of nuclear plants with 
the Applicability section only listing generator operator. Southern 
suggests that, under the definition of nuclear plant generator 
operator, there may be licensees that do not meet the definition of a 
generator operator or generator owner, as nuclear plant generator 
operator is defined. According to Southern, some NRC licensees may be 
responsible for operating nuclear facilities but may not meet NERC's 
definitions of a generator owner or generator operator.
    41. Constellation agrees that the nuclear plant generator operator 
must take the lead in identifying transmission entities, but urges the 
Commission to implement a dispute resolution process to assist the 
nuclear plant generator operators. Constellation is concerned that, 
under NUC-001-1, the nuclear plant generator operator will have the 
primary burden of ensuring that the parties enter into NPIR agreements; 
however, Constellation also argues that a transmission entity must be 
appropriately identified and have entered into an NPIR agreement before 
it is formally included in the NERC Compliance Registry.
(3) Commission Determination
    42. The Commission accepts NERC's approach to determining 
applicable entities. The Commission agrees with the ERO that the 
identification of transmission entities, which may fit any one of 11 
functional categories described in the NERC Functional Model, provides 
the ERO with needed breadth and flexibility in identifying and 
registering all users, owners and operators of the Bulk-Power System 
that provide services related to NPIRs.
    43. Further, the ERO makes clear that, in implementation, it plans 
to register an owner or operator of an otherwise exempt facility that 
is needed for Bulk-Power System reliability, on a facility-by-facility 
basis. Once registered, a transmission entity may be subject to other 
applicable Reliability Standards, as deemed appropriate through the 
registration process. The Commission agrees that it is appropriate that 
a registered transmission entity comply with other applicable 
Reliability Standards for the functional category for which it is 
registered. This approach will support Bulk-Power System reliability 
and better assure that a transmission entity is capable of satisfying 
responsibilities set forth in an interface agreement.
    44. NEI requests clarification that entities that sign an interface 
agreement are not automatically subject to ERO jurisdiction for 
Reliability Standards beyond NUC-001-1. As discussed above, the 
Commission agrees with the ERO that Reliability Standards beyond NUC-
001-1 should apply to a newly-registered transmission entity, for the 
functional category for which it is registered. Further, we observe 
that the ERO indicates that it will make this determination ``as deemed 
appropriate through the registration process.'' We understand this to 
mean that the ERO has reserved some flexibility in determining which 
Reliability Standards are to be applied to a newly-registered 
transmission entity, and the ERO may consider individual circumstances 
in the process. The Commission agrees with NEI that the applicability 
of particular Reliability Standards beyond NUC-001-1 should not be 
decided in this proceeding. Rather, we leave it to the ERO to make such 
determinations in the first instance in the registration process.
    45. Southern comments that it may not be appropriate to require 
nuclear plant generator operators to comply with certain Reliability 
Standards that apply to generator owners and generator operators. The 
Commission, however, is not convinced that a blanket waiver is 
warranted. Rather, similar to our explanation immediately above, the 
ERO may consider the individual circumstances of a generator owner or 
generator operator and determine whether, for example, a registered 
entity is needed for Bulk-Power System reliability and operates 
facilities that are addressed in a particular Reliability Standard.
    46. Southern has not provided any specific examples of nuclear 
plant licensees that would not meet NERC's definition of nuclear plant 
generator operator. The Commission addresses NERC's registry 
determinations in appropriate proceedings on appeal. A registry 
proceeding may address whether a generator owner or operator meets the 
NERC registry criteria or should otherwise be registered based on a 
finding that the facility is material to Bulk-Power System reliability. 
We also

[[Page 63776]]

reject the concerns raised by Wisconsin Electric and TVA that the terms 
transmission entity and nuclear plant generator operator do not appear 
in the NERC Functional Model. While the NERC Functional Model is a 
useful guidance document, ``the Applicability section of a particular 
Reliability Standard should be the ultimate determinant of 
applicability of each Reliability Standard.'' \26\ Moreover, the ERO's 
definition of transmission entity is linked to the functional 
categories set forth in the NERC Functional Model.\27\ Likewise, the 
nuclear plant generator operator can simply be viewed as a sub-category 
of the generator operator function.
---------------------------------------------------------------------------

    \26\ Order No. 693 at P 127.
    \27\ See Reliability Standard NUC-001-1, Section A.4.2.
---------------------------------------------------------------------------

b. Applicability to Small Entities and Low Voltage Facilities
i. NOPR
    47. In the NOPR, the Commission noted that some nuclear power 
plants may obtain auxiliary power through lower voltage facilities that 
are not included in a Regional Entity's definition of bulk electric 
system and that other nuclear power plants may retain alternate sources 
of auxiliary power provided through lower voltage facilities operated 
by a small utility or cooperative that is not included in a Regional 
Entity's definition of bulk electric system.\28\ The Commission sought 
clarification from NERC on how it would register such entities and how 
this relates to the definition of bulk electric system.
---------------------------------------------------------------------------

    \28\ NOPR at P 26.
---------------------------------------------------------------------------

ii. Comments
    48. NERC clarifies that ``for lower voltage facilities that provide 
such services to a Nuclear Power Plant, the registration of those 
entities and the applicability of the NERC Reliability Standards 
therein to that functional class of entities will be limited to those 
facilities identified by the Nuclear Plant Generator Operator in its 
NPIRs.'' \29\
---------------------------------------------------------------------------

    \29\ NERC comments at 8.
---------------------------------------------------------------------------

    49. Constellation anticipates that some transmission entities, in 
particular those that are not previously registered, may be reluctant 
to enter into nuclear interface agreements. Constellation is concerned 
that small generators that are currently exempt from registration may 
be unwilling to continue to provide services or enter into new 
agreements for services if provision of such services causes them to be 
registered by NERC. Constellation cites the cost burdens and risk of 
penalties as having a chilling effect on these entities' willingness to 
continue to provide their discrete services to nuclear power plants. 
Constellation suggests that the curtailment of such services could 
impair the ability of nuclear plant generator operators to meet their 
license requirements. To address these concerns, Constellation requests 
that the Commission direct NERC to evaluate these risks and to propose 
mechanisms to ensure that small entities will not be deterred from 
providing services.
    50. Entergy explains that under the NRC license requirements, a 
nuclear power plant is required to have two sources of off-site power. 
For one of Entergy's plants, one of those sources relies, at certain 
times, on reactive power support from a small hydropower facility that 
generates power at a distribution level voltage, and Entergy and the 
facility have entered into an agreement for that reactive power 
support. According to Entergy, this facility is not currently 
registered or part of the bulk electric system. Entergy expresses 
concern that if this entity becomes subject to NUC-001-1, it may cancel 
its current service agreement with Entergy because the risk of 
potential penalties and future compliance costs could be too high, thus 
jeopardizing Entergy's NRC license. Therefore, Entergy asks the 
Commission to clarify that if an entity does not currently qualify for 
inclusion on the NERC Compliance Registry, provision of NPIR-related 
services will not subject that entity to registration.
iii. Commission Determination
    51. The Commission accepts NERC's clarification that registration 
of lower voltage facilities and the applicability of NUC-001-1 will be 
limited to those facilities identified by the nuclear plant generator 
operator in its NPIRs.\30\ We would expect that any NPIRs agreed to 
between a nuclear plant generator operator and transmission entity 
would include all facilities needed to transmit offsite power and 
auxiliary power to the nuclear facility. The Commission remains 
sensitive to the need for NERC to register operators of lower-voltage 
facilities used to deliver off-site power.\31\ The NOPR stated the 
Commission's understanding that NERC would register entities operating 
facilities not currently identified in the Regional Entities' 
definition of bulk electric system that are needed for Bulk-Power 
System reliability, through NERC's authority to register an owner or 
operator of an otherwise exempt facility that is needed for Bulk-Power 
System reliability, on a facility-by-facility basis.\32\ We note that 
it is in the best interest of the nuclear plant generator operator to 
have any such facility identified in the NPIRs.
---------------------------------------------------------------------------

    \30\ This approach for lower voltage facilities is consistent 
with our determination in prior proceedings that the ERO may 
register an entity that falls below the minimum registry criteria on 
a facility-by-facility basis. See Order No. 693-A at P 38.
    \31\ See NOPR at P 22 and 26.
    \32\ Id. P 26 (citing Order No. 693-A at P 38; NERC Statement of 
Compliance Registry, Revision 3.1 at 8).
---------------------------------------------------------------------------

    52. We find that NERC's approach should mitigate the concerns of 
commenters who speculate that small entities may wish to cease 
providing services rather than become subject to other Reliability 
Standards applicable to the functional class in which they would be 
registered. In this manner, application of the Reliability Standard to 
smaller entities operating lower voltage facilities that were not 
previously registered is limited to the facilities used to provide 
services to the nuclear plant generator operator. Commenters' other 
concerns largely address smaller entities' potential reluctance to 
continue providing service--that is, so long as these entities are 
users, owners or operators of the Bulk-Power System they may be 
registered by NERC and subject to the Reliability Standard. An entity 
that has failed to execute an interface agreement will be found in 
violation of the Reliability Standard.
    53. We believe that limited registration of smaller entities, in 
combination with NERC's use of the registry process and tying 
enforceability to the receipt of a proposed NPIR (rather than execution 
of a formal agreement), should limit the majority of concerns raised by 
commenters on behalf of small entities. Entergy's concern with 
obtaining reactive power is mitigated by the fact that the Commission's 
policies recognize alternate sources for ancillary services--reactive 
power is a required ancillary service to be provided by transmission 
providers--and the Commission's policies also provide for merchant 
ancillary service sales where appropriate. However, these issues are 
best resolved in appropriate registration proceedings.
    54. The Commission notes that in addition to smaller, previously 
unregistered entities, larger currently-registered entities may also 
provide service over lower voltage facilities that may be material to 
the reliability of the Bulk-Power System. These entities' lower-voltage 
facilities highlight a potential gap in applicability, because it could 
be argued that those facilities are

[[Page 63777]]

not currently subject to the Reliability Standards since they may fall 
outside a Regional Entity's definition of the bulk electric system. 
This potential gap is illustrated where a larger entity essentially 
provides a transmission service, but the applicability of NUC-001-1 and 
other Reliability Standards is uncertain, because service is provided 
over lower voltage facilities. We direct the ERO to review the impact 
on the Bulk-Power System for registration purposes of any entity 
providing service related to NPIRs over a lower-voltage facility 
similar to other facilities used to provide service, regardless of 
whether such service is provided by a currently-registered entity or a 
previously unregistered entity.\33\
---------------------------------------------------------------------------

    \33\ The Commission notes, however, that the NUC-001-1 drafting 
team has described such cases of distribution level supply as ``the 
exception, not the rule.'' See NERC Nuclear Reliability Standard 
drafting team, Consideration of Comments on 2nd Draft of Nuclear 
Off-site Power Supply Standard, at 54 (Feb. 7, 2007), filed in 
November 19, 2007 Petition, Exhibit B, Record of Development of 
Proposed Reliability Standard.
---------------------------------------------------------------------------

c. Critical Facilities
i. NOPR
    55. In the NOPR, the Commission asked whether NERC would, in 
registering entities not otherwise registered, consider lower voltage 
facilities needed to serve NPIRs to be critical facilities.
ii. Comments
    56. NERC responded that it does not currently have an approved NERC 
Glossary definition for ``critical facility'' per Order No. 693's 
directive.\34\ Consequently NERC states it will refrain from using the 
term in its response and until such time as the definition is developed 
and approved. However, NERC notes that a nuclear power plant would be 
unable to operate without transmission services from lower voltage 
facilities supplying off-site power, and the absence of such services 
would result in the real and reactive output of the plant being 
unavailable to the system. NERC states that the determination of 
whether a plant is material to the reliability of the Bulk-Power System 
is determined at the Regional Entity level, but notes that nuclear 
power plants typically provide both real and reactive power to the 
transmission grid.
---------------------------------------------------------------------------

    \34\ Section III.d.2 of the NERC compliance registry states that 
the functions transmission owner and transmission operator shall 
include an entity ``that owns/operates a transmission element below 
100 kV associated with a facility that is included on a critical 
facilities list that is defined by the Regional Entity.''
---------------------------------------------------------------------------

    57. SCE&G states that it finds the Commission's reference in the 
NOPR to ``critical facilities'' to be troubling, since NUC-001-1 should 
not affect the characterization of a facility as critical and such 
determination should be made by NERC. According to SCE&G, the existing 
NERC definition of ``critical asset,'' combined with the methodology in 
Reliability Standard CIP-002-1 is the correct method to determine if a 
facility is ``critical'' to the bulk electric system. SCE&G also 
maintains that NUC-001-1 does not affect the characterization of a 
critical facility, which is determined instead by the NERC definition 
of critical asset and the methodology provided in CIP-002-1.
iii. Commission Determination
    58. The Commission notes that the term ``critical facility'' under 
Order No. 693 is a facility not otherwise included in a Regional 
Entity's definition of the bulk electric system but that has been 
identified by the Regional Entity as being critical to the system 
reliability.\35\ This is different from the definition of ``critical 
asset'' under CIP-002-1. The Commission accepts NERC's explanation of 
whether it would consider lower voltage facilities needed to serve 
NPIRs to be critical facilities when it registers new entities and 
notes that the definition of the term ``critical facility'' will be 
resolved in a future proceeding.
---------------------------------------------------------------------------

    \35\ Order No. 693 at P 77.
---------------------------------------------------------------------------

d. Timing of NUC-001-1 Enforceability to Transmission Entities
i. NOPR
    59. In the NOPR, the Commission sought comment on its understanding 
that NUC-001-1 would become applicable to, and enforceable against, a 
transmission entity only when the transmission entity executed an 
interface agreement. In other words, the provider of NPIR-related 
service would become a transmission entity, as that term is defined by 
NUC-001-1, subject to NUC-001-1 and other Reliability Standards, upon 
execution of the interface agreement.
ii. Comments
    60. In response to the Commission's question on timing, NERC 
clarified that the interface agreement with a nuclear plant generator 
operator is not the mechanism that determines whether an entity is a 
transmission entity subject to NUC-001-1. Instead, a nuclear plant 
generator operator initiates the identification by proposing an NPIR to 
an applicable transmission entity, and, at this point, the identified 
transmission entity is placed on the Compliance Registry and becomes 
subject to the requirements of NUC-001-1, not when the agreement 
required in Requirement R2 is established.\36\
---------------------------------------------------------------------------

    \36\ NERC comments at 11.
---------------------------------------------------------------------------

    61. Several commenters support approaches similar to the NERC 
position.\37\ These commenters generally agree that NUC-001-1 applies 
to a transmission entity once it has been notified of an NPIR by the 
nuclear plant generator operator. EEI, for instance, states its 
understanding that the NUC-001-1 drafting team and NERC staff intended 
that a nuclear plant generator operator would identify the transmission 
entities for each nuclear power plant under NUC-001-1, whether or not 
they had already entered into an agreement. NEI recommends that a 
potential transmission entity should be deemed a transmission entity 
subject to the requirements of NUC-001-1 once it becomes registered as 
a transmission entity under NUC-001-1 and receives proposed NPIRs from 
the nuclear plant generator operator pursuant to Requirement R1. NEI 
states that transmission entity status should continue unless and until 
NERC determines otherwise, based on a full and fair analysis of the 
facts and evidence presented by the affected parties.\38\
---------------------------------------------------------------------------

    \37\ See EEI, Exelon, Detroit Edison, and NEI comments.
    \38\ See also Detroit Edison comments.
---------------------------------------------------------------------------

    62. EEI states that, for a newly identified entity that is not on 
the Compliance Registry, the Regional Entities should examine whether 
an entity is properly classified as a transmission entity before 
registering the entity and thus requiring it to comply with the 
Reliability Standard. Entergy concurs that the NERC registration 
process, rather than the execution of an interface agreement, 
determines whether an entity is subject to NUC-001-1.
    63. The commenters supporting the NERC clarification generally 
state that holding that NUC-001-1 is only applicable to a transmission 
entity after it executes an interface agreement would be inequitable 
because, in the event of disagreement, the nuclear plant generator 
operator could be held in violation, while the transmission owner would 
not.\39\ NEI states that the need to prompt all potential transmission 
entities to conform to NUC-001-1 is particularly important where 
potential transmission entities have no corporate affiliation with the 
nuclear plant generator operator, because such an entity may wish to 
avoid executing an

[[Page 63778]]

interface agreement to avoid exposure to NUC-001-1.
---------------------------------------------------------------------------

    \39\ See EEI, Exelon, and NEI comments; See also Constellation 
comments at 8.
---------------------------------------------------------------------------

    64. EEI notes that, in some cases, the failure to agree may be the 
result of good-faith differences between the parties such that 
sanctions should not be imposed, except as a last resort. NEI also 
suggests that no enforcement action, other than arbitration through a 
Regional Entity, should be taken in the absence of agreement, but asks 
the Commission to clarify that while the Reliability Standard may not 
be enforceable by NERC or the Commission without an agreement, the 
contractual service commitments may be enforceable by other means. 
Constellation requests clarification that only Requirement R1 is 
enforceable against the nuclear plant generator operator until the NPIR 
agreement is executed, because the other requirements involve 
implementation of an agreement, which the nuclear plant generator 
operator cannot do unilaterally.
    65. NEI emphasizes that licensing requirements should already be 
known to affected transmission entities and argues that existing 
procedures must remain in effect both prior to and after the effective 
date of the agreement under NUC-001-1. According to NEI, registration 
based on notification by the nuclear plant generator operator is 
appropriate because nuclear plant generator operators are in the best 
position to interpret nuclear plant licensing requirements and system 
needs affecting operations. According to NEI, NUC-001-1 should be 
enforceable against the transmission service providers whose 
commitments to provide services formed part of the basis for the 
original plant license regardless of whether an interface agreement has 
been executed. NEI suggests that Requirement R3 should be applicable 
regardless of the parties' compliance efforts to date.
    66. According to NEI, the NRC requires each nuclear license 
applicant to perform stability studies for the transmission grid that 
delivers offsite power to the nuclear power plant and demonstrate that 
the loss of the largest operating unit on the grid would not result in 
loss of grid stability or affect the delivery of offsite power to the 
nuclear power plant.\40\ NEI also notes that the types of studies 
performed and the conclusions are documented in the safety analysis 
report for each nuclear power plant. NEI suggests that nuclear plant 
licensees and transmission service providers are already obliged to 
provide assurances with respect to the capability and stability of 
offsite power sources for the nuclear plant.
---------------------------------------------------------------------------

    \40\ NEI comments at 4 (citing Chapter 8 of the NRC Standard 
Review Plan (NUREG 0800)).
---------------------------------------------------------------------------

    67. In contrast, ConEdison, SCE&G, and ISO/RTO Council argue that 
NUC-001-1 should not be enforceable against transmission entities until 
an interface agreement is executed. According to ISO/RTO Council, 
representatives of NERC's functional classes become transmission 
entities by agreeing to meet an NPIR through an interface agreement. 
SCE&G questions whether it is appropriate to define as a transmission 
entity any entity that enters into an interface agreement with a 
nuclear plant generator operator. It asks the Commission to clarify the 
standards which will apply to every entity entering into an interface 
agreement.
iii. Commission Determination
    68. Based on the ERO's and others' comments, the Commission does 
not adopt the understanding put forth in the NOPR. NERC and others have 
made clear that NUC-001-1 was intended to apply to transmission 
entities following receipt of notification from the nuclear plant 
generator operator, rather than after execution of the interface 
agreement. The applicability of NUC-001-1 is determined by the function 
performed by the entity--that is, an entity that provides services 
relating to a nuclear plant generator operator's nuclear plant 
licensing requirements is subject to NUC-001-1 on the latter of the 
effective date of the Reliability Standard or when a proposed NPIR is 
provided by the nuclear plant generator operator. This is consistent 
with other Reliability Standards where an entity is subject to a 
Reliability Standard based on the factual determination of whether it 
operates certain facilities or provides a certain service, not based on 
the consent of the entity.
    69. We believe that this interpretation resolves the concerns of 
commenters who predict that entities supplying services to enable 
nuclear plant generator operators to meet nuclear plant licensing 
requirements would balk at executing an interface agreement if they 
become subject to NUC-001-1. This should not occur since transmission 
entities will be identified as providing services relating to NPIRs by 
a nuclear plant generator operator and will become subject to NUC-001-1 
when they receive notice, not when they finalize an agreement.
e. Applicability in Integrated Systems
i. NOPR
    70. In the NOPR, the Commission voiced its concerns regarding the 
implementation of NUC-001-1 in a situation where a single entity is 
both the nuclear plant generator operator and the transmission entity, 
such as a vertically-integrated utility. We sought comment on whether 
an agreement or arrangement would be required in such a case and, if 
so, what type of arrangement was required to comply with the 
Reliability Standard.
ii. Comments
    71. In response, NERC states that NUC-001-1 may accommodate various 
industry structures and situations, including an integrated utility 
structure. According to NERC, NUC-001-1 requires appropriate agreements 
or arrangements to ensure that mutually agreed upon NPIRs are 
established. Because the necessary agreement or arrangement can include 
``mutually agreed upon procedures or protocols'' per Footnote 1 of 
Requirement R2, they need not necessarily be in the form of a formally 
executed agreement between officers of separate companies. NERC notes 
that compliance measures M3 through M8 ensure that auditable 
documentation of such arrangements exist. NERC concludes that these 
requirements may be met by a single entity.
    72. Most commenters addressing the issue concur that a formal 
signed contract between the departments of an integrated utility is not 
necessary.\41\ However, Detroit Edison and Midwest ISO state that 
department or business unit representatives should execute an interface 
agreement or other evidence of participation to comply with NUC-001-1. 
Thus, these commenters propose that compliance could be demonstrated 
through agreements featuring varying degrees of formality. NEI argues 
instead that an integrated entity could set forth in writing the 
procedures to be followed by each unit as consistent with Requirement 
R2 and such internal documentation would be provided in an audit. SCE&G 
states that compliance may be achieved through internal coordination 
between the generation and transmission components of an integrated 
utility and, where appropriate, a formal agreement between an 
integrated utility and outside entities.

[[Page 63779]]

iii. Commission Determination
---------------------------------------------------------------------------

    \41\ See EEI, Entergy, Southern, NEI, and SCE&G comments.
---------------------------------------------------------------------------

    73. The Commission accepts NERC's clarification that NUC-001-1 
applies to nuclear plant generator operators and transmission entities 
where both parties are in a single integrated system. NERC clarified 
that a formal agreement is not necessary to have an agreement, 
procedures, or protocols in place that will comply with Requirement R2. 
Based on this clarification and industry comments, we accept NERC's 
conclusion that the Requirements of NUC-001-1 can be met by a single 
entity that is both the nuclear plant generator operator and the 
transmission entity. The Commission directs the ERO, in enforcing NUC-
001-1, to require that an integrated entity provides documentation of 
its arrangements, including appropriate procedures and protocols, 
ensuring that its business units perform the functions under NUC-001-1 
that would otherwise be met by separate entities. This will ensure that 
an integrated entity's compliance with NUC-001-1 is auditable in a 
manner comparable to other entities that are subject to the Reliability 
Standard.
3. Dispute Resolution
a. NOPR Proposal
    74. In the NOPR, the Commission sought input on circumstances 
involving an off-site power supplier or other transmission entity that 
disagrees with a nuclear plant generator operator that it needs to 
execute an interface agreement. The Commission asked how NERC should 
resolve the impasse and whether NERC should propose to register the 
entity (if it was not already registered) without an executed interface 
agreement.
b. Comments
    75. NERC states that, if a transmission entity and nuclear plant 
generator operator fail to agree to an NPIR, it may require mediation 
or arbitration of the dispute as part of a mitigation or remedial 
action strategy. If a nuclear plant generator operator and a 
transmission entity fail to reach agreement, NERC clarifies that it 
proposes to find each entity in non-compliance with Requirement R2. 
According to NERC, the nuclear plant generator operator and 
transmission entity would be subject to penalties, sanctions, 
mitigation, and remedial actions until agreement is reached. NERC notes 
that its March 4, 2008 submission of violation severity levels 
identified the failure to reach an agreement under Requirement R2 as a 
Severe violation severity level.
    76. Several commenters support use of a dispute resolution process 
before NERC or a Regional Entity in the case of disagreement over 
NPIRs.\42\ Dominion, ISO/RTO Council and Midwest ISO call for a formal 
dispute resolution process to resolve issues if parties cannot reach 
agreement. Constellation expresses concern that the nuclear plant 
generator operator would have the primary burden of ensuring the 
parties enter into NPIR agreements, based on the understanding 
reflected in the NOPR, and states that an early intervention process is 
essential for NERC and the Commission to provide assistance to parties 
facing difficulty reaching agreement. Constellation also asks that the 
Commission require NERC to establish and file within 60 days a proposed 
dispute resolution process to assist parties in reaching agreement. 
ISO/RTO Council requests the Commission to define a clear process with 
definitive criteria for resolving disputes between nuclear plant 
generator operators and transmission entities over the scope of the 
NPIRs.
---------------------------------------------------------------------------

    \42\ See ISO/RTO Council, Ontario Power, Midwest ISO, and NEI 
comments.
---------------------------------------------------------------------------

    77. Midwest ISO and National Grid express additional concerns over 
disagreement on individual NPIRs. Midwest ISO states that it is unclear 
what will occur if a named transmission entity disagrees that it has 
the role identified by the nuclear plant generator operator or if there 
is disagreement regarding the necessity for, or impacts of, the 
proposed NPIRs. Midwest ISO anticipates disputes among the various 
transmission entities and nuclear plant generator operators about which 
tariff, service agreement, or operating agreement provisions may be 
relied on to meet NUC-001-1 requirements.
    78. Midwest ISO cites differing views as to the exact definition of 
NPIRs among nuclear plant generator operators and other stakeholders 
and therefore requests that the definition of NPIRs be clarified. 
National Grid states that disagreement should not forestall 
implementation of non-controversial NPIRs, but that it is nevertheless 
unclear whether NPIRs proposed by one side or the other shall have any 
force or effect while subject to a dispute resolution procedure.
    79. NEI proposes that, if the parties were to fail to reach 
agreement on an interface agreement within 30 days, the Regional Entity 
could provide a dispute resolution mechanism. According to NEI, NERC 
could provide for subsequent appeals. However, NEI states that failure 
to enter into an interface agreement should not be considered a 
violation or failure to comply, as long as the parties are negotiating 
in good faith and following NERC's proposed dispute resolution and 
appeal processes.
c. Commission Determination
    80. The Commission accepts the ERO's explanation of its 
registration and compliance options when parties fail to come to an 
agreement. Should parties fail to come to an agreement and thus find 
themselves in violation of the requirement that they have such an 
agreement in place, NERC states that it may require mediation or 
arbitration as a remedial action. We agree that ordering such dispute 
resolution processes may be an appropriate response in some instances 
in which there is no immediate risk to grid reliability and support 
NERC requiring the use of arbitration or mediation on a voluntary basis 
where appropriate.\43\
---------------------------------------------------------------------------

    \43\ Where there is an immediate reliability risk, we direct the 
ERO to take appropriate action to address the risk.
---------------------------------------------------------------------------

    81. National Grid's concerns are speculative. However, if the 
parties cannot agree on proposed NPIRs, then NERC may require mediation 
or arbitration as a remedial action. We do not see the need at this 
time for NERC to develop formal arbitration procedures to govern all 
dispute resolution proceedings. The ERO has the discretion to adopt 
such procedures as are appropriate to the circumstances, in the event 
that the parties do not themselves propose acceptable procedures.\44\
---------------------------------------------------------------------------

    \44\ Should NERC require the parties to engage in dispute 
resolution procedures as a remedial action or in lieu of, or along 
with, other sanctions upon a finding that the parties are in 
violation of the Reliability Standard, NERC must notify the 
Commission as it would for any imposition of a remedy to a 
violation. See NERC Rules of Procedure, section 408.1.
---------------------------------------------------------------------------

    82. We anticipate that Midwest ISO's concerns regarding NPIR 
negotiations should be resolved by the parties themselves. Given that 
the parties have already been able to agree to the services needed to 
meet NRC licensing requirements, the same parties should be able to 
successfully identify the services provided, confirm that they address 
NRC criteria for off-site power and system limits, and document such 
services in an auditable format consistent with the NUC-001-1 
Requirements.

C. Form of Agreements

1. Comments
    83. Several commenters request clarification that existing 
arrangements may be relied on to meet NUC-001-1 requirements to have an 
interface

[[Page 63780]]

agreement in place to address NPIRs.\45\ These commenters suggest that 
nuclear plant generator operators and transmission entities may rely on 
existing interface agreements and thus that NUC-001-1 does not require 
execution of a new agreement, and may incorporate by reference matters 
covered in other agreements or tariff provisions.
---------------------------------------------------------------------------

    \45\ See Constellation, Dominion, and ISO/RTO Council comments.
---------------------------------------------------------------------------

    84. The ISO/RTO Council, in particular, asks the Commission to 
clarify that any entity designated as a transmission entity will be 
allowed to rely on existing tariffs and contracts to satisfy the 
mandates of Requirements R2 and R9 and will not be required to execute 
entirely new agreements that merely duplicate tariff and contractual 
arrangements that already are in place, allowing nuclear power plants 
to maintain compliance with existing NRC license criteria. ISO/RTO 
Council states:

    To the extent that an RTO or ISO--or indeed any other 
transmission operator--provides these services to generators, the 
services generally are reflected in existing tariffs and agreements 
between specific transmission operators and generators. For example, 
in New York, generators and [NYISO] execute a service agreement 
under the NYISO's Market Administration and Control Area Services 
Tariff (``Services Tariff''), which governs, among other things, the 
NYISO's ``provision of Control Area Services * * * including 
services related to ensuring the reliable operation of the NYS Power 
System.'' The service agreement requires the NYISO and its 
counterparties, including generators, to follow NYISO tariffs and 
procedures. The Services Tariff requires the NYISO to ``develop, and 
modify as appropriate, procedures for the * * * reliable operation 
of the NYCA in accordance with the terms and conditions of the 
Tariff.'' These procedures are set forth in detail in the NYISO 
manuals, and already cover the core elements of the agreements 
mandated pursuant to R9 of NUC-001-1. The technical requirements 
outlined in R9.2, including identification of system parameters and 
configurations and applicable limits, largely are reflected in the 
NYISO's Transmission and Dispatch Manual. The requirements outlined 
in R9.3 with respect to operations and maintenance coordination 
largely are reflected in the NYISO's Outage Scheduling manual. These 
manuals define the NYISO's obligations to specific generators, 
including nuclear generators, pursuant to the terms of the Services 
Tariff.\46\
---------------------------------------------------------------------------

    \46\ ISO/RTO Council comments at 4-5.

    85. According to ISO/RTO Council, new service agreements between 
transmission operators and nuclear plant generator operators under NUC-
001-1 should also be incorporated into the applicable transmission 
operator tariffs or manuals. International Transmission requests 
clarification on whether parties will be expected already to have a 
signed agreement which meets the requirements of NUC-001-1 in place on 
the date on which the Reliability Standard becomes effective. 
Constellation requests confirmation that multi-party agreements will be 
accommodated.
    86. EEI also requests that the Commission clarify that nuclear 
plant generator operators and transmission entities, affiliated and 
unaffiliated, do not need to enter into new agreements if an existing 
agreement between the parties is sufficient for compliance with NUC-
001-1. National Grid states that NERC should provide additional 
guidance on what responsible entities must do to comply with the 
Reliability Standard within fifteen months of regulatory approval. 
National Grid characterizes NERC's position as proposing that parties 
establish an ``overall coordination platform'' to meet the NPIRs.
2. Commission Determination
    87. Based on NERC's statement that parties may rely on less formal 
procedures and protocols, the Commission finds that NUC-001-1 does not 
dictate any particular format for the interface agreement. Nuclear 
plant generator operators and transmission entities may rely on pre-
existing arrangements so long as the parties can document the fact that 
they have agreed that the pre-existing arrangements address all of the 
NPIRs, cover all required facilities and otherwise fulfill the 
requirements of NUC-001-1.\47\ This includes multi-party agreements.
---------------------------------------------------------------------------

    \47\ Nuclear plant generator operators and transmission entities 
that choose to rely on generally-applicable tariffs should make 
provision to ensure that the tariff terms and conditions continue to 
meet the parties' needs should the tariff or nuclear licensing 
requirements change, and document such an arrangement.
---------------------------------------------------------------------------

    88. In response to ISO/RTO Council's request, we clarify that, as 
with any transmission entity, a regional service provider may rely on 
existing tariff provisions. However, the Commission understands that, 
in a region served by a regional service provider such as a regional 
transmission organization (RTO) or independent system operator (ISO), 
the regional authority will be required to meet NPIRs that require 
service over its system. Within the geographical boundaries of their 
service territory, potential transmission entities may also provide 
service over lower voltage facilities that are not covered by the RTO 
or ISO tariff. In such a case, we direct the ERO to assess whether the 
entity providing service over the lower voltage facilities is also 
subject to NUC-001-1, as discussed in section II(B)(2)(b), above, 
concerning Transmission Entities and Agreements on NPIRs. If such an 
entity is providing service that is not covered by the tariff, the 
nuclear plant generator operator would need to take steps to identify 
these entities as providing services related to an NPIR and thereby 
ensure compliance with NUC-001-1 on these lower-voltage facilities 
pursuant to our discussion in section II(B)(2)(b) above.

D. Enforcement and Conflicts With Other Regulations

1. Comments
    89. Comments regarding the enforcement of NUC-001-1 addressed both 
potential conflicts with the Commission's standards of conduct rules, 
and potential conflicts with NRC requirements.
    90. EEI requests clarification that the communications required to 
comply with NUC-001-1 are permitted under the Commission's standards of 
conduct rules. The Commission previously clarified that transmission 
providers may communicate with affiliated nuclear power plants 
regarding certain matters related to the safety and reliability of the 
transmission system and of the nuclear power plants in order to comply 
with requirements of the NRC. EEI asks the Commission to clarify that 
their provisions apply equally to unaffiliated entities that must 
comply with NUC-001-1 and that a transmission entity is not subject to 
enforcement under the standards of conduct, applicable tariff or other 
authority for providing information in compliance with NUC-001-1.\48\
---------------------------------------------------------------------------

    \48\ EEI comments at 9.
---------------------------------------------------------------------------

    91. NEI states that while the NUC-001-1 requirements are structured 
to help identify potential conflicts and coordinate their resolution 
through changes to the NPIRs, unforeseen situations could arise that 
are not adequately covered in the NPIRs and interface agreements under 
NUC-001-1. NEI argues that penalties should not be imposed if a nuclear 
plant generator operator fails to comply with a NUC-001-1 interface 
agreement or other Reliability Standard because the nuclear plant 
generator operator complied instead with NRC requirements. NEI 
recommends that NUC-001-1 be revised to recognize the primary 
obligation of nuclear plant generator operators to protect public 
health and safety through compliance with NRC regulations and the 
nuclear plant

[[Page 63781]]

license, and proposes revised language.\49\
---------------------------------------------------------------------------

    \49\ NEI proposes that an additional paragraph be added to NUC-
001-1 to address this potential conflict between the Commission and 
the NRC: ``FERC recognizes the necessity of nuclear plant generator 
operators to protect the public health and safety through compliance 
with NRC regulations and license obligations. A nuclear power 
generator operator's compliance with NPIRs is excused if necessary 
to comply with NRC regulations or license obligations. 
Notwithstanding any other provisions of FERC rules or regulations, 
any penalty that might be imposed arising from compliance by a 
nuclear plant generator operator arising from compliance with NRC 
regulations or license obligations shall not be imposed.'' NEI 
comments at 11.
---------------------------------------------------------------------------

    92. Similarly, Duke states that while it does not object to NUC-
001-1, the Commission should clearly define the boundary between NRC 
nuclear safety requirements and Commission grid reliability 
requirements. According to Duke, because NRC licensing criteria address 
health and safety issues, those criteria should take precedence and a 
nuclear plant generator operator should not be penalized for non-
compliance with a conflicting interface agreement or other Reliability 
Standard provision. Duke cites unforeseen circumstances as well as 
specific examples where NRC safety criteria may take precedence.\50\ 
Also, Constellation requests assurance that, when there are overlapping 
requirements, registered entities will be subject to a single penalty 
only.
---------------------------------------------------------------------------

    \50\ Duke proposed the following examples: (a) The inability of 
a nuclear generator to exceed its license power limits to respond to 
underfrequency events, (b) specific license requirements for support 
from the grid, such as priority off site power after a blackout, and 
(c) license-required separation in response to degraded grid voltage 
or frequency conditions.
---------------------------------------------------------------------------

2. Commission Determination
    93. In response to EEI's request for clarification that 
communications required to comply with this Reliability Standard are 
permitted under the Commission's standards of conduct regulations, the 
Commission notes that it is addressing this subject through its 
rulemaking on standards of conduct in Docket No. RM07-1-000.\51\ A 
number of commenters in that docket sought clarification as to whether 
communications involving the Reliability Standards are exempt from 
standards of conduct prohibitions. The Final Rule to adopt revised 
standards of conduct, issued by the Commission, addresses the subject 
of exemptions.
---------------------------------------------------------------------------

    \51\ Standards of Conduct for Transmission Providers, Notice of 
Proposed Rulemaking, Docket No. RM07-1-000, 73 FR 16228 (Mar. 27, 
2008), FERC Stats. and Regs. ] 32,630 (2008). Revisions to the 
Standards of Conduct for Transmission Providers, Final Rule, Docket 
No. RM07-1-000, 125 FERC ] 61,062 (2008).
---------------------------------------------------------------------------

    94. Comments suggesting that mitigating circumstances may warrant 
waiver of penalties are beyond the scope of this proceeding and should 
be addressed in an appropriate enforcement proceeding. The Commission 
understands that the NPIRs are specifically identified to enable a 
nuclear plant generator operator to meet its NRC licensing requirements 
at all times. As such, there should be no question of priority of the 
NRC criteria and NUC-001-1 Requirements. As to Duke's examples, all of 
the existing Reliability Standards have a sound engineering basis and 
do not require exceeding defined power limits, identify priorities, and 
account for known interactions such as separation of any generating 
facility due to degraded grid voltage or frequency.

E. Scope of Agreements

1. NOPR
    95. The NOPR noted that the Requirements of NUC-001-1 specify 
various contractual terms, including certain studies and procedures, to 
be addressed through interface agreements but do not describe specific 
substantive terms to be included in the agreements. In response, the 
NOPR expressed concern whether NUC-001-1 established an appropriate 
scope for the interface agreements. In its November 19, 2007 Petition, 
NERC stated that the NUC-001-1 drafting team adopted a consensus 
approach to coordinating nuclear power plant and transmission grid 
operations.\52\ According to NERC, the consensus approach provides a 
platform for coordination at the interface that allows both nuclear 
plant generator operators and transmission entities to respect their 
main system drivers. Therefore, according to NERC, the NUC-001-1 
drafting team adopted the interface agreement as a model for 
coordination and placed the obligation on nuclear plant generator 
operators and transmission entities to coordinate operational 
requirements by consensus.
---------------------------------------------------------------------------

    \52\ November 19, 2007 Petition at 26.
---------------------------------------------------------------------------

    96. In recognition of the successful working model of existing 
interface agreements, the NOPR proposed to accept NUC-001-1 and find 
appropriate the proposed level of detail defining substantive 
provisions to be included in interface agreements.
2. Commission Determination
    97. The Commission generally finds the scope of the Nuclear 
Reliability Standard requirements adequate to address the development 
and implementation of interface agreements between nuclear plant 
generator operators and transmission entities, subject to the 
discussion of particular issues below.
a. Commission Questions
i. Interim Revisions
(1) NOPR
    98. The NOPR proposed to approve the provisions for updating 
interface agreements, but requested comment on whether NUC-001-1 
adequately provides for revisions to reflect interim changes.
(2) Comments
    99. In response to the NOPR's inquiry whether NUC-001-1 includes 
sufficient provision for updates outside of the three-year review 
process, NERC states that it believes that the combination of 
Requirements R7, R8, R9.3.4, R9.4, and R9.4.1 adequately provides for 
the updating of NPIRs outside the three-year review window as 
circumstances warrant. Entergy concurs, asserting that NUC-001 
adequately provides for interim updates to interface agreements. 
Southern states that it is feasible for interface agreements ``to 
provide for negotiation and amendments to address emerging transmission 
and generating system limits and revised nuclear plant licensing 
requirements prior to, or contemporaneously with, implementing 
operations solutions'' \53\ to address permanent, but not temporary, 
changes. Southern indicates that amendment of the agreement would not 
be practical in temporary situations because an ``emerging'' system 
limit will be resolved within a relatively short period of time.
---------------------------------------------------------------------------

    \53\ Southern comments at 8-9.
---------------------------------------------------------------------------

(3) Commission Determination
    100. Based on the comments received, the Commission finds that NUC-
001-1 makes adequate provision for interim updates. While not all 
system changes can be anticipated, the Commission expects that 
significant changes to the parties' operating relationship would be 
formalized and documented in an auditable format as interim changes in 
an addendum or revisions to the agreement, as appropriate.
b. Amendments to Operational Procedures
i. NOPR
    101. The NOPR noted the Commission's preference that new 
operational procedures be reflected in the interface agreements prior 
to being implemented upon nuclear power plant start-up or 
reauthorization, or shortly thereafter. The Commission requested 
comment whether interface agreements

[[Page 63782]]

could provide for negotiation and amendments to address emerging 
transmission and generating system limits and revised nuclear plant 
licensing requirements prior to, or contemporaneously with, 
implementing operations solutions.
ii. Comments
    102. NEI states that NRC regulations include extensive requirements 
and processes for changes to nuclear power plants and their operations. 
Thus, NEI opposes a requirement to revise the interface agreement prior 
to making changes to a nuclear power plant or its operations. NEI 
suggests that implementation details to address changes in the grid 
configuration would be addressed in procedures, and should not require 
revisions to an interface agreement, while Requirements R7 and R8 
require parties to review design changes to determine their impact on 
NPIRs.
    103. Entergy responded that NPIRs are amended on a flexible time 
horizon under each individual interface agreement, and that this 
approach provides both entities with the flexibility to respond to 
emerging issues.
iii. Commission Determination
    104. Based on the comments received, the Commission finds that NUC-
001-1 makes adequate provision for updates to address changing 
transmission and generator limits or revised nuclear plant licensing 
requirements before operating solutions are implemented.
 3. Other Scope Related Issues
a. Requirement R9.3.5
    105. Commenters raise concerns regarding Requirement R9.3.5, which 
were not anticipated in the NOPR. According to NEI, Requirement R9.3.5 
mixes two separate events incorporated in nuclear power plant design 
and license conditions: (i) Coping times for station blackouts and (ii) 
restoration of off-site power.\54\ NEI explains that station blackouts 
include a loss of off-site power and select emergency alternating 
current (AC) power sources (generally on-site). In the case of such an 
event, NEI explains that the nuclear plant generator operator has 
responsibility to restore the emergency AC power sources within the 
demonstrated coping time. NEI states, however, that a transmission 
entity should assign off-site power restoration priority independent of 
coping time and that NERC should clarify Requirement R9.3.5 references 
to station blackout and off-site power restoration priority. 
Specifically, NEI recommends appending the requirement with the phrase 
``to ensure restoration of Off-site Power is afforded priority 
reflecting that reliance on emergency AC power sources is not 
preferred.'' \55\
---------------------------------------------------------------------------

    \54\ Requirement R9 establishes a minimum set of elements to be 
addressed in interface agreements. Requirement R9.3.5 states that 
the operations and maintenance coordination elements should include 
``Provision to consider nuclear plant coping times required by the 
nuclear plant licensing requirements and their relation to the 
coordination of grid and nuclear plant restoration following a 
nuclear plant loss of off-site power.'' See also TVA comments, 
Enclosure at 1.
    \55\ NEI comments at 11-12.
---------------------------------------------------------------------------

    106. Southern states that the phrase ``coping times'' in 
Requirement R9.3.5 is ambiguous because the term has various meanings 
in the nuclear context and does not necessarily equate to a specific 
time period. Southern proposes the following alternative language for 
NERC consideration: ``Provision to consider the [nuclear plant 
licensing requirements] related to the coordination of grid and nuclear 
plant restoration following a nuclear plant loss of Off-site Power.'' 
\56\
---------------------------------------------------------------------------

    \56\ Southern comments at 8.
---------------------------------------------------------------------------

i. Commission Determination
    107. Based on the industry comments received, it appears that the 
references in Requirement R9.3.5 to coping times for station blackouts 
and restoration of off-site power are ambiguous--insofar as commenters 
suggest that the relationship between the two issues is not clear, and 
thus, is not adequately addressed as presented in Requirement R9.3.5. 
Therefore, we direct the ERO to modify Requirement 9.3.5 to clarify 
references to coping times and off-site power restoration to address 
the concerns raised in the comments through its Reliability Standards 
development process. This approach permits a full vetting of new 
suggestions raised by commenters in NOPR comments and encourages 
interested entities to participate in the ERO Reliability Standards 
development process rather than wait to express their views until a 
proposed new or modified Reliability Standard is filed with the 
Commission.\57\ We agree with commenters that the provision is 
inartfully drafted and needs to be clarified; however, there does not 
appear to be any reason that parties to an interface agreement should 
not coordinate concerning both issues as an interim measure. The 
Commission directs NERC to develop a modification to Requirement 
R9.3.5, as discussed above. In addition, to ensure the matter is 
addressed expeditiously, we direct NERC to submit a timeline for 
developing and filing the modification as a compliance filing to be 
made within 30 days of the date of this Final Rule.
---------------------------------------------------------------------------

    \57\ Order No. 693 at P 188.
---------------------------------------------------------------------------

b. Personnel Training
    108. International Transmission requests clarification whether 
Requirement R9.4.5 regarding personnel training applies to the 
transmission entity, the nuclear plant generator operator or both, and 
whether this requirement can be satisfied by existing training programs 
related to SOLs or IROLs. Midwest ISO requests that the Commission 
require the ERO to modify Requirement R9.3.6 to clearly provide that it 
only requires each entity to train its own operating personnel on the 
content of the applicable agreements, procedures and other documents 
related to NUC-001-1.
i. Commission Determination
    109. The Commission clarifies that employees of nuclear plant 
generator operators and transmission entities should receive the 
training necessary to execute the terms of the interface agreement, and 
such training should be specified in the interface agreement between 
the parties. In addition, employees operating facilities used to 
provide services to meet NPIRs should be properly trained to 
Reliability Standard training requirements that apply to those 
facilities or the function served by the employees.
c. Planning
    110. Midwest ISO proposes that the type of planning mandated by 
Requirement R9.2.3 should be more specifically defined. According to 
Midwest ISO, adherence to NUC-001-1 requires near real-time planning to 
support the NPIRs. Midwest ISO notes that other NERC Reliability 
Standards require mid-term and long-term planning.
i. Commission Determination
    111. The Commission declines to address Midwest ISO's request to 
clarify the planning required under Requirement R9.2.3. Because NPIRs 
are based on NRC licensing requirements, the scope of planning mandated 
by Requirement R9.2.3 will largely be determined by the nuclear plant 
licensing requirements. As such, the determination is beyond the scope 
of this proceeding and is best resolved in the interface agreement 
development process between parties who are familiar with the 
facilities involved. In general, the Commission believes that the NPIRs 
needed to ensure the operation of nuclear power plants must

[[Page 63783]]

be included in the planning process for all time frames as appropriate.
d. Requests for Limits on Scope of Interface Agreements
    112. Several commenters request limits to the scope of nuclear 
plant licensing requirements and SOLs that may become the subject of 
NPIRs addressed in an interface agreement. CenterPoint Energy objects 
to Requirements R3 through R9 insofar as they do not limit the types of 
information or actions that are to be requested and provided. Dominion 
states that NUC-001-1 should not duplicate requirements that are 
already stipulated in other Commission-approved Reliability Standards.
    113. Southern is concerned that the stated purpose of NUC-001-1, 
together with certain of its provisions, may impose operational 
requirements on a nuclear plant generator operator beyond those 
established in NRC licensing requirements.\58\ According to Southern, 
the development and implementation of interface arrangements and any 
supplemental procedures should be left to the discretion and judgment 
of transmission entities and nuclear plant generator operators, 
operating within their respective regulatory frameworks. Southern 
recommends that the Commission direct NERC to amend the proposed 
Nuclear Reliability Standard, as appropriate, to avoid conflicts with 
NRC licensing requirements, and clarify that nothing in NUC-001-1 or 
the NOPR is intended to create any such conflict.
---------------------------------------------------------------------------

    \58\ See also National Grid comments.
---------------------------------------------------------------------------

    114. ConEdison also notes that transmission entities that provide 
services under the agreement should receive fair compensation. 
According to ConEdison, the requirements contained in the NOPR would 
require the various transmission entities provide additional services 
or a heightened level of services already provided to the nuclear plant 
generator operator.
i. Commission Determination
    115. The Commission declines to direct the clarification proposed 
in the comments. We believe that these concerns expressed by the 
commenters are unfounded. Because NPIRs are based on NRC licensing 
requirements, the scope of procedures to be developed will largely be 
limited to procedures needed to address the nuclear plant licensing 
requirements. In addition, by agreement of the nuclear plant generator 
operator and transmission entities, parties will develop protocols and 
may make system improvements to address system limits that present 
preventable challenges to off-site power supply caused by grid 
disturbances. Thus, the basis for the NPIRs, and the terms of the 
interface agreements, is limited to what is needed to ensure reliable 
operation or safe shutdown of the nuclear power plant. Because the 
procedures embodied in NPIRs are developed by agreement of the parties, 
we do not share Southern's concern that additional operating 
requirements could be imposed on a nuclear plant generator operator.
    116. As previously discussed, ConEdison's and others' arguments 
that transmission entities should receive compensation if they provide 
services relating to NPIRs are beyond the scope of this proceeding. 
These matters are appropriately left to the parties to the interface 
agreements to resolve.

F. Coordination

    117. Requirements R7 and R8 require communication between nuclear 
plant generator operators and transmission entities regarding 
significant changes in design, configuration, operation, or limits of 
their facilities:

    Requirement R7: Per the Agreements developed in accordance with 
this standard, the Nuclear Plant Generator Operator shall inform the 
applicable Transmission Entities of actual or proposed changes to 
nuclear plant design, configuration, operations, limits, protection 
systems, or capabilities that may impact the ability of the electric 
system to meet the NPIRs.
    Requirement R8: Per the Agreements developed in accordance with 
this standard, the applicable Transmission Entities shall inform the 
Nuclear Plant Generator Operator of actual or proposed changes to 
electric system design, configuration, operations, limits, 
protection systems, or capabilities that may impact the ability of 
the electric system to meet the NPIRs.

    118. In addition, Requirement R6 obligates interface agreement 
parties to coordinate outages and maintenance activities; Requirement 
R9.3.6 requires coordination of physical and cyber-security 
protections; and Requirement R9.3.7 requires coordination of special 
protection systems and load shedding. Thus, these Requirements provide 
for communication between a nuclear plant generator operator and its 
individual transmission entities, as well as the reverse for 
communication from the transmission entities to the nuclear plant 
generator operator.
1. Coordination Among Transmission Entities
a. NOPR Proposal
    119. The NOPR expressed concern that NUC-001-1 Requirements do not 
explicitly provide for communication and coordination among the various 
transmission entities that is necessary to facilitate the provision of 
generation and transmission services to support the nuclear power plant 
operations. The NOPR stated the Commission's understanding that, 
historically, control area operators provided the necessary 
coordination and communication with neighboring entities, including 
RTO-type grid operators and other interconnected utilities and load 
serving entities, when necessary. The NOPR stated the Commission's 
expectation that the parties to nuclear plant interface agreements 
would continue to provide for coordination among transmission entities, 
pursuant to the Requirements of NUC-001-1, in particular the 
Requirement R9.3.1 obligation to provide for coordination of interface 
facilities in the interface agreement. Interface agreement parties may 
continue to designate former integrated control area operators when 
appropriate or may revise their approach, reflecting changes under 
restructuring to grid operations when necessary, consistent with 
coordination responsibilities provided for in existing Reliability 
Standards. Based on such an understanding, the NOPR proposed to accept 
the coordination provisions as requiring all appropriate coordination 
among transmission entities and requested comment.
b. Comments
    120. NEI states that NUC-001-1 includes adequate coordination 
provisions, in particular through Requirement R9.4, together with the 
other Reliability Standards. NEI notes that transmission service 
providers have historically provided coordination and NUC-001-1 will 
not impose new burdens. Detroit Edison agrees that transmission 
entities should coordinate as necessary to ensure full compliance with 
NUC-001-1. According to Entergy, the proposed Nuclear Reliability 
Standard, in conjunction with other Reliability Standards, ensures that 
all necessary parties are involved in the interface agreements.
    121. International Transmission notes that current practice under 
existing coordination agreements is to communicate when the 
transmission system is one event away from violating a SOL or IROL so 
that each party is advised of the possible effects on the other of 
responsive actions and the risks of a contingency. International 
Transmission states that clarification is needed on whether 
implementation of communication protocols established in the interface 
agreement will constitute compliance with NUC-001-1.

[[Page 63784]]

International Transmission is concerned that the occurrence of a 
contingency would be treated as a violation of the NPIRs or NUC-001-1.
    122. Southern is concerned that the NOPR's general description of 
certain coordination provisions \59\ may be interpreted as requiring a 
nuclear plant generator operator to actually coordinate responses on 
the transmission system. According to Southern, the nuclear plant 
generator operator does not typically operate the system and, 
therefore, it would not be appropriate to require the nuclear plant 
generator operator to be responsible for coordination of responses on 
the transmission system. Southern states that such an interpretation 
would be inappropriate because it would go beyond the purpose of NUC-
001-1 and the responsibilities of the respective parties. According to 
Southern, a transmission provider will respond to the issues listed 
because it actually operates the system. Therefore, the Commission 
should clarify that the standard does not require nuclear plant 
generator operators to coordinate responses on the transmission system.
---------------------------------------------------------------------------

    \59\ NOPR at P 14.
---------------------------------------------------------------------------

    123. NEI similarly objects to the Requirements that require 
interface agreements to provide for coordination of operational and 
maintenance issues. According to NEI, coordinating responses goes 
beyond the purpose of NUC-001-1 and the responsibilities of the 
respective parties. NEI suggests that rather than coordinating 
responses to unusual circumstances, it is more accurate to state that 
an interface agreement must include elements to address the operations 
and maintenance coordination of unusual conditions.
c. Commission Determination
    124. The Commission confirms its understanding that coordination 
under the Reliability Standard includes coordination among transmission 
entities. No party objected to the Commission's interpretation that the 
coordination required under Requirement R9.3.1 includes designating an 
entity to coordinate among various transmission entities providing 
unbundled services, and that such a role had been previously filled by 
former control area operators. Therefore, we adopt that proposal.
    125. International Transmission's request for clarification whether 
a contingency may be considered a violation of an NPIR raises issues 
concerning what level of service is adequate to meet the NPIRs 
addressed in an interface agreement. Furthermore, International 
Transmission has not stated how communication protocols, as presented 
in NUC-001-1, would imply that the occurrence of a contingency would 
violate NUC-001-1. Such issues are best resolved by those parties 
during the development of the agreement.
    126. As for Southern's objection to the parties to an interface 
agreement coordinating responses to system events, we see nothing 
objectionable to the requirement that the parties to an interface 
agreement have procedures and protocols in place to respond to changing 
system conditions, consistent with nuclear license requirements and SOL 
procedures, as well as the remaining Reliability Standards. Nothing in 
the Reliability Standard or the NOPR description suggests that the 
nuclear plant generator operator is to be the party to coordinate 
transmission system responses.
    127. Similarly, with respect to NEI's concern that the parties to 
an interface agreement be required to coordinate operational and 
maintenance issues where necessary, we conclude that a generator and a 
transmission system operator may agree to coordinate maintenance 
schedules in order to address system conditions, so long as the 
agreement is consistent, in this case, with the generator's license 
requirements, the Reliability Standards, and the standards of 
conduct.\60\
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    \60\ Standards of Conduct for Transmission Providers, Notice of 
Proposed Rulemaking, Docket No. RM07-1-000, 73 FR 16228 (Mar. 27, 
2008), FERC Stats. and Regs. ] 32,630 (2008). Revisions to the 
Standards of Conduct for Transmission Providers, Final Rule, Docket 
No. RM07-1-000, 125 FERC ] 61,062 (2008).
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2. Addressing System Changes
    128. Requirements R7 and R8 require parties to inform each other of 
design, configuration, operations, limits, protection systems, or 
capabilities that that may impact their ability to meet NPIRs.
a. Comments
    129. Entergy asks the Commission to clarify the level of proposed 
change that would trigger a Requirement R7 and R8 information exchange. 
According to Entergy, proposals to change a plant's ``design, 
configuration, operations, limits, protection systems, or 
capabilities'' are evaluated routinely, due to the multitude of complex 
systems within a nuclear power plant, and the long lifetimes of such 
facilities. Entergy points out that the NRC has extensive general 
design criteria and requirements for changes.\61\ Entergy notes that 
proposals may never be approved, scheduled, or implemented and suggests 
that transmission system and facility proposals may be subject to 
similar concerns.
---------------------------------------------------------------------------

    \61\ See 10 CFR Part 50, Appendix B and 10 CFR 50.59.
---------------------------------------------------------------------------

    130. Entergy notes the limitations in the Requirements that the 
proposed changes to be reported are those that ``may impact the ability 
of the electric system to meet the NPIRs,'' but claims that the 
description lacks clarity. Entergy suggests that nuclear plant 
generator operators and transmission entities will not be able to 
implement the Requirements without a determination of what changes to 
communicate and questions whether every discussion about a possible 
design change, technological improvement, or sale of facilities must be 
communicated. Entergy proposes that the Commission bypass agreement of 
the parties to an interface agreement and establish a limitation to 
include proposed changes that are formally approved, scheduled for 
implementation, and could significantly impact the ability of the Bulk-
Power System to meet the NPIRs.
b. Commission Determination
    131. The Commission declines to direct the clarification requested 
by Entergy. The Commission disagrees that the requirement to 
communicate changes that ``may impact the ability of the electric 
system to meet the NPIRs'' is not a clear requirement. It is an example 
of ``what'' is required, not ``how'' it should be performed which 
should be included in the agreements. The Commission believes that 
there are many plant-specific issues and does not expect they will be 
individually addressed in the Reliability Standard. However, it is 
clear what is required and the compliance audits will check that the 
entities have sufficiently covered them in their agreements.

G. Violation Risk Factors

    132. As part of its compliance and enforcement program, NERC must 
assign a lower, medium or high violation risk factor to each 
Requirement of each mandatory Reliability Standard to associate a 
violation of the Requirement with its potential impact on the 
reliability of the Bulk-Power System. Violation risk factors are 
defined as follows:

    High Risk Requirement: (a) Is a requirement that, if violated, 
could directly cause or contribute to Bulk-Power System instability, 
separation, or a cascading sequence of failures, or could place the 
Bulk-Power System at an unacceptable risk of instability, 
separation, or cascading failures; or (b) is a requirement in a 
planning time frame that, if violated, could, under emergency, 
abnormal, or restorative

[[Page 63785]]

conditions anticipated by the preparations, directly cause or 
contribute to Bulk-Power System instability, separation, or a 
cascading sequence of failures, or could place the Bulk-Power System 
at an unacceptable risk of instability, separation, or cascading 
failures, or could hinder restoration to a normal condition.
    Medium Risk Requirement: (a) Is a requirement that, if violated, 
could directly affect the electrical state or the capability of the 
Bulk-Power System, or the ability to effectively monitor and control 
the Bulk-Power System, but is unlikely to lead to Bulk-Power System 
instability, separation, or cascading failures; or (b) is a 
requirement in a planning time frame that, if violated, could, under 
emergency, abnormal, or restorative conditions anticipated by the 
preparations, directly affect the electrical state or capability of 
the Bulk-Power System, or the ability to effectively monitor, 
control, or restore the Bulk-Power System, but is unlikely, under 
emergency, abnormal, or restoration conditions anticipated by the 
preparations, to lead to Bulk-Power System instability, separation, 
or cascading failures, nor to hinder restoration to a normal 
condition.
    Lower Risk Requirement: Is administrative in nature and (a) is a 
requirement that, if violated, would not be expected to affect the 
electrical state or capability of the Bulk-Power System, or the 
ability to effectively monitor and control the Bulk-Power System; or 
(b) is a requirement in a planning time frame that, if violated, 
would not, under the emergency, abnormal, or restorative conditions 
anticipated by the preparations, be expected to affect the 
electrical state or capability of the Bulk-Power System, or the 
ability to effectively monitor, control, or restore the Bulk-Power 
System.\62\
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    \62\ North American Electric Reliability Corp., 119 FERC ] 
61,145, at P 9 (Violation Risk Factor Order), order on reh'g, 120 
FERC ] 61,145 (2007) (Violation Risk Factor Rehearing Order).

    133. In its November 19, 2007 Petition, NERC identified and 
proposed violation risk factors for each Requirement of Reliability 
Standard NUC-001.\63\ The NOPR reviewed NERC's proposal consistent with 
the terms proposed in the Violation Risk Factor Order, in which the 
Commission addressed violation risk factors filed by NERC for Version 0 
and Version 1 Reliability Standards.\64\
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    \63\ NERC proposes a lower violation risk factor for 
Requirements R1, R2 and R9 and a medium violation risk factor for 
Requirements R3 through R8.
    \64\ See Violation Risk Factor Order at P 19-36 (discussing five 
guidelines to evaluate the validity of each violation risk factor 
assignment).
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NOPR Proposal
    134. In the NOPR, the Commission disagreed with NERC's suggestion 
that NUC-001-1 Requirements were primarily administrative in nature and 
proposed to direct the ERO to raise violation risk factors for several 
Requirements. The NOPR stated the Commission's general view that a 
Reliability Standard to ensure safe and reliable nuclear power plant 
operation and shutdown merits medium or high violation risk factors, 
rather than lower, due to the reliability benefits of nuclear power and 
the impact of separating a plant from the grid.
    135. The NOPR noted that NUC-001-1 Requirements co-mingle 
administrative tasks with more critical requirements to ensure safe 
nuclear power plant operation and shutdown. These Requirements also 
provide for the safe and reliable operation of the grid, response to 
potential emergency conditions and implementation of procedures to 
address changing and emergency conditions. The NOPR sought comment on 
the Commission's proposals to raise violation risk factors for NUC-001-
1, Requirements R2 (from lower to medium), R4, R5, R7, and R8 (medium 
to high), and R9 (lower to medium).
    136. The NOPR also stated the Commission's understanding that NERC 
would apply the violation risk factor for the main Requirement to any 
violation of a sub-Requirement, unless separate violation risk factors 
are assigned to the Requirement and the sub-Requirement.
1. General Violation Risk Factor Issues
a. Comments
    137. NERC and other commenters object to what they characterize as 
the general basis described in the NOPR for justifying changes to 
violation risk factors.\65\ They object to the Commission's reliance on 
cited reliability benefits of nuclear power and the impact of 
separating a plant from the grid to justify raising the risk factors. 
NERC and EEI state that, despite the unique characteristics of nuclear 
power generation the reliability benefits of nuclear power and the 
impact of separation from the grid are not different from the 
reliability impacts of a large output fossil generating facility. EEI 
further states that these reliability concerns are addressed in other 
Reliability Standards that apply to all generators, regardless of fuel 
type.
---------------------------------------------------------------------------

    \65\ See generally Ameren, ATC, Detroit Edison, EEI, Entergy, 
Exelon, ISO/RTO Council, Ontario Power, Southern, and SCE&G 
comments.
---------------------------------------------------------------------------

    138. Duke echoes these concerns, stating that violation risk 
factors (and violation severity levels) should establish penalty ranges 
that are proportionate to the potential impact of violations on the 
Bulk-Power System (medium or lower), but should not expose nuclear 
plant generator operators and transmission entities to extreme 
penalties simply because nuclear power plants are large units.
    139. Ameren maintains that NUC-001-1 is administrative in nature, 
not operational and the Commission should not revise the violation risk 
factors.
    140. Detroit Edison argues that the Commission's proposal to 
increase the violation risk factors undermines the integrity and value 
of the NERC Reliability Standards development process and states that 
the Commission has not justified its departure from the determinations 
reached through that process.\66\ EEI similarly believes that any 
proposal to change violation risk factors or other aspects of 
Reliability Standards must be considered through NERC's ANSI-approved 
Reliability Standards development process.\67\
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    \66\ See also Ontario IESO and Hydro One, and SCE&G comments.
    \67\ Southern supports the EEI comments on violation risk 
factors. Ameren, Exelon, and Ontario Power support directing 
revisions through the Reliability Standards development process.
---------------------------------------------------------------------------

    141. Constellation requests assurance that when there are 
overlapping requirements, registered entities will be subject to a 
single penalty only.
    142. Finally, EEI comments that any proposal to change violation 
risk factors or other aspects of Reliability Standards must be 
considered through NERC's Reliability Standard development process. It 
points out that the Commission adopted this approach in Order No. 706, 
stating that ``where a directive for modification appears to be 
determinative of the outcome, the Commission provided guidance to the 
ERO standards development process but permitted consideration of an 
equivalent alternative approach that adequately addresses the 
Commission's underlying goal or concern `as efficiently or effectively 
as the Commission proposal.' \68\
---------------------------------------------------------------------------

    \68\ EEI comments at 8.
---------------------------------------------------------------------------

b. Commission Determination
    143. The Commission declines to adopt the procedures proposed by 
the commenters. The Commission has previously determined that violation 
risk factors are not a part of the Reliability Standards.\69\ NERC has 
had an opportunity to fully vet the NUC-001-1 violation risk factors 
through the Reliability Standards development process. The Commission 
believes that, for those violation risk factors that do not comport 
with the Commission's previously-articulated guidelines for analyzing 
violation risk factor

[[Page 63786]]

designations, there is little benefit in once again allowing the 
Reliability Standards development process to reconsider a designation 
based on the Commission's concerns. Therefore, we will not allow NERC 
to reconsider the violation risk factor designations in this instance 
but, rather, direct below that NERC make specific modifications to its 
designations. NERC must submit a compliance filing with the revised 
violation risk factors no later than 90 days before the date the 
relevant Reliability Standard becomes enforceable.
---------------------------------------------------------------------------

    \69\ Violation Risk Factor Rehearing Order, 120 FERC ] 61,145 at 
P 11-16, citing North American Reliability Corp., 118 FERC ] 61,030, 
at P 91, order on clarification and reh'g, 119 FERC ] 61,046 (2007).
---------------------------------------------------------------------------

    144. That being said, NERC may choose the procedural vehicle to 
change the violation risk factors consistent with the Commission's 
directives. NERC may use the Reliability Standards development process, 
so long as it meets Commission-imposed deadlines.\70\ In this instance, 
the Commission sees no vital reason to direct the ERO to use section 
1403 of its Rules of Procedure to revise the violation risk factors 
discussed below, so long as the revised violation risk factors address 
the Commission's concerns and are filed no less than 90 days before the 
effective date of the relevant Reliability Standard.
---------------------------------------------------------------------------

    \70\ See North American Electric Reliability Corp., 118 FERC ] 
61,030, at P 91, order on compliance, 119 FERC ] 61,046, at P 33 
(2007).
---------------------------------------------------------------------------

    145. Coordinating operations and planning between the nuclear power 
plant and its transmission entities serves two purposes; safety of the 
nuclear power plant and reliability of the Bulk-Power System. With 
regard to safety, the Blackout Report highlighted the importance of 
coordinated operations and planning between the Bulk-Power System and 
nuclear power plants, stating ``[a]s the design and operation of the 
electricity grid is taken into account when evaluating the safety 
analysis of nuclear power plants, changes to the electricity grid must 
be evaluated for the impact on plant safety.'' \71\ With regard to 
reliability, since the NPIR supports many of the requirements necessary 
for the nuclear power plant to operate connected to the bulk electric 
system, not having an NPIR could result in the long-term outage of one 
or all nuclear power plants at a particular site to which the NPIR is 
applicable. This is relevant because the bulk electric system is not 
required to be planned to have multiple nuclear power plants out of 
service during peak load periods. As a result, the Commission disagrees 
with commenters that object to its reliance on the impact of a nuclear 
power plant separating from the grid to justify elevating violation 
risk factors for requirements of the Reliability Standard. While the 
Commission recognizes that the power produced from nuclear and non-
nuclear power plants is the same, the conditions under which nuclear 
power plants can safely operate are inherently different than non-
nuclear power plants because a nuclear power plant must meet all 
licensing requirements established by the NRC to remain connected to 
the grid.
---------------------------------------------------------------------------

    \71\ See U.S.-Canada Power System Outage Task Force, Final 
Report on the August 14, 2003 Blackout in the United States and 
Canada: Causes and Recommendations, at 129 (April 2004) (Blackout 
Report).
---------------------------------------------------------------------------

    146. The Commission is concerned that a lack of coordination of 
operations and planning between a nuclear power plant and its 
transmission entities with respect to the interface capabilities and 
requirements has the potential to result in both the unanticipated 
separation and the long term outage of one or all nuclear power plants 
at a site from the Bulk-Power System. The former has the potential to 
place the Bulk-Power System at risk for cascading outages while the 
latter may result in inadequate system capabilities to meet the 
projected firm load in either the planning or operating horizon. For 
example, once disconnected, before a nuclear power plant can reconnect 
to the Bulk-Power System, not only must Bulk-Power System conditions be 
suitable, but the nuclear power plant must also complete certain 
activities relevant to ensuring the safety of the plant to resume power 
production. Since nuclear power plants are typically designed as base 
load plants, the Commission is concerned that while the Bulk-Power 
System may typically be able to withstand the disconnection of a 
nuclear power plant for a reasonable period until such time Bulk-Power 
System conditions allow for reconnection and the nuclear power plant is 
permitted to reconnect, a prolonged disconnection of a nuclear power 
plant because its NPIRs are not satisfied may not be sustainable 
without affecting system capabilities, thus putting the Bulk-Power 
System at risk for instability, separation, or cascading outages.
    147. The Commission also disagrees with arguments that elevated 
violation risk factors for Requirements of the Reliability Standard are 
not justified because the reliability concern of instability, 
separation, or cascading outages are already addressed in other 
Reliability Standards. The Commission agrees with commenters that, as 
required by other Reliability Standards, the Bulk-Power System is 
planned and operated such that there will not be any interruptions of 
firm transmission service after one event, such as the loss of a 
generator, nuclear fueled or otherwise.\72\ However, the Commission has 
previously determined that it is not appropriate to mitigate perceived 
content issues among Reliability Standards, as suggested by commenters 
in this instance as the duplication of reliability objectives, through 
the violation risk factor assignment.\73\ A violation risk factor 
represents the potential reliability risk a violation of a requirement 
presents to the Bulk-Power System. This assessed reliability risk is 
independent of, and not contingent upon, compliance with other 
Reliability Standard requirements. The Commission recognizes the 
complementary nature of some Reliability Standard Requirements and the 
fact that some requirements may share the same reliability objective. 
In fact, the Commission expects the assignment of a violation risk 
factor corresponding to requirements that address similar reliability 
goals in different Reliability Standards to be treated comparably.\74\
---------------------------------------------------------------------------

    \72\ See Order No. 693 at P 1794 (``[b]ased on the record before 
us, we believe that the transmission planning Reliability Standard 
should not allow an entity to plan for the loss of non-consequential 
load in the event of a single contingency''). The Commission 
recognized that load directly connected to a fault would be removed 
from service. See also TPL-001-000, Table 1, ``Transmission Planning 
Standards--Normal and Emergency Conditions.''
    \73\ North American Electric Reliability Corp., 121 FERC ] 
61,179, at P 16 (2007) (Order on Violation Risk Factor Compliance 
Filing).
    \74\ Violation Risk Factor Order, 119 FERC ] 61,145 at P 25.
---------------------------------------------------------------------------

    148. Commenters also argue that elevated violation risk factors are 
not justified because the proposed Reliability Standard is 
administrative in nature, not operational. The Commission disagrees. 
While the Commission recognized in the NOPR that many of the 
requirements of the Nuclear Reliability Standard are administrative in 
nature, these same requirements provide for the development of 
procedures to ensure the safe and reliable operation of the grid, and 
responses to potential emergency conditions.\75\ As such, we disagree 
with arguments that the proposed standard focuses on nuclear safety 
through the administrative requirement of establishing agreements and 
not grid reliability.
---------------------------------------------------------------------------

    \75\ NOPR at P 51.
---------------------------------------------------------------------------

    149. Constellation's request for assurance that, when there are 
overlapping requirements, registered entities will be subject to a 
single penalty is a compliance issue and is thus best addressed on a 
case-by-case basis in the context of a compliance

[[Page 63787]]

proceeding. We note that each instance of non-compliance with a 
Requirement is a separate violation. This is consistent with the FPA 
which establishes the statutory maximum penalty amount of $1 million on 
a per day, per violation basis as reflected in the order certifying 
NERC as the ERO.\76\ However, the Commission approved NERC's Sanction 
Guidelines that allow NERC, in the context of a compliance proceeding, 
to use its discretion in the determination of monetary penalties for a 
violation of a Requirement of a Reliability Standard.\77\
---------------------------------------------------------------------------

    \76\ 16 U.S.C. 825o-1(b) (2006). See also North American 
Electric Reliability Corp., 116 FERC ] 61,062, at P 412 
(Certification Order), order on reh'g and compliance, 117 FERC ] 
61,126 (2006).
    \77\ Section 3.10 of the NERC Sanction Guidelines states in 
part, ``NERC or the regional entity can determine and levy a 
separate penalty or sanction, or direct remedial action, upon a 
violator for each individual violator for each individual violation. 
However, in instances of multiple violations related to a single act 
or common incidence of noncompliance, NERC or the regional entity 
will generally determine and issue a single aggregate penalty, 
sanction, or remedial action directive bearing reasonable 
relationship to the aggregate of the related violations.''
---------------------------------------------------------------------------

    150. EEI's argument that Order No. 706 requires changes to the 
violation risk factors to be considered through the Reliability 
Standards development process is flawed. The passages in Order No. 706 
cited by EEI concern modification of the Reliability Standard itself. 
As the Commission has repeatedly held, the violation risk factors are 
not a part of the Reliability Standards. In fact, in Order No. 706, we 
stated that ``we will not allow NERC to reconsider the violation risk 
factor designations in this instance but, rather, direct below that 
NERC make specific modifications to its designations.'' \78\ However, 
similar to our action in this order, Order No. 706 allowed NERC to 
choose the procedural vehicle to change the violation risk factors, so 
long as it meets Commission-imposed deadlines.\79\
---------------------------------------------------------------------------

    \78\ Mandatory Reliability Standards for Critical Infrastructure 
Protection, Docket No. RM06-22-000; Order No. 706, 73 FR 7368 (Feb. 
7, 2008), 122 FERC ] 61,040, at P 757, order on reh'g, Order No. 
706-A, 123 FERC ] 61,174 (2008).
    \79\ Id.
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 2. Requirement-Specific Issues
a. Requirement R2
i. NOPR
    151. The NOPR proposed to direct the ERO to raise the violation 
risk factor for Requirement R2 from lower to medium. The NOPR justified 
this proposal because the Requirement co-mingles the administrative 
element of having an executed agreement in place with the operational 
element of determining how the parties to the interface agreement will 
address nuclear plant licensing requirements and SOLs in order to 
provide for safe nuclear plant operation and shutdown. Thus, the 
operational requirements established will include requirements for off-
site power to enable safe operation and shutdown during an electric 
system or plant event. Therefore, the NOPR noted that a violation of 
Requirement R2 ``could, under emergency, abnormal, or restorative 
conditions anticipated by the preparations, directly affect the 
electrical state or capability of the Bulk-Power System'' and found 
that a medium violation risk factor is appropriate.
ii. Comments
    152. Ontario IESO and Hydro One and SCE&G disagree with the 
Commission that Requirement R2 has a direct impact on the electrical 
state or capability of the Bulk-Power System. They argue that, in the 
absence of an agreement, each party would continue to operate its own 
system in accordance with all applicable Reliability Standards.\80\ 
Entergy and NEI argue that Requirement R2 is an administrative 
requirement, and state that violations can be quickly detected and 
corrected and will not directly affect the Bulk-Power System. Entergy 
also points out that Requirement R2 takes place in the planning 
timeframe and concludes that a lower violation risk factor is more 
appropriate.
---------------------------------------------------------------------------

    \80\ Detroit Edison states that it agrees with Ontario IESO and 
Hydro One on specific violation risk factor issues, and Ontario 
Power and SCE&G also disagree with the Commission's proposals.
---------------------------------------------------------------------------

iii. Commission Determination
    153. The Commission adopts the NOPR proposal. As the Commission 
identified in the NOPR, Requirement R2 co-mingles the administrative 
element of having an executed agreement in place with the operational 
element of determining how the parties to the interface will address 
nuclear plant licensing requirements and SOLs. Consistent with 
violation risk factor guideline five, the Commission expects the 
assigned violation risk factor to reflect the highest reliability risk 
objective of the requirement.\81\ A failure to establish operational 
and implementation elements of the NPIRs, the higher reliability risk 
objective of the requirement, has the potential under emergency, 
abnormal, or restorative conditions to directly affect the electrical 
state or capability of the Bulk-Power System.
---------------------------------------------------------------------------

    \81\ Violation Risk Factor Order, 119 FERC ] 61,145 at P 32.
---------------------------------------------------------------------------

    154. Arguments that elevating a violation risk factor is not 
justified because Requirement R2 is an administrative requirement that 
takes place in the planning time frame, thus violations are quickly 
detected and corrected are fundamentally flawed.\82\ NERC contemplates 
in its definitions of the violation risk factor levels, the reliability 
risk a requirement violation presents in both the operating and 
planning time frames. Consistent with NERC's definition, a violation 
risk factor represents the potential reliability risk a violation of a 
requirement presents to the Bulk-Power System, regardless of the time 
frame.
---------------------------------------------------------------------------

    \82\ See NEI comments at 8, and Entergy comments at 15.
---------------------------------------------------------------------------

    155. With regard to comments from Ontario IESO and Hydro One and 
SCE&G, as explained previously in this Final Rule, it is not 
appropriate to assign a requirement's violation risk factor based on 
compliance with other Reliability Standards.
    156. Accordingly, the Commission directs the ERO to revise the 
violation risk factor assignment for Requirement R2 from lower to 
medium no later then 90 days before the effective date of the 
Reliability Standard.
b. Requirements R4.2 and R4.3
i. NOPR
    157. The NOPR proposed to direct the ERO to raise the violation 
risk factors for sub-Requirements R4.2 and R4.3 to high. Sub-
Requirements R4.2 and R4.3 require a transmission entity to incorporate 
NPIRs into operating analyses, operate to meet the NPIRs and inform the 
nuclear plant generator operator when the ability to assess performance 
to meet the NPIRs is lost.
    158. The NOPR states that sub-Requirement R4.2 obligates a 
transmission entity to operate its electric system to meet NPIRs 
established in an interface agreement. Furthermore, NPIRs are described 
as forming the basis for nuclear plant generator operators and 
transmission entities to ``coordinate planning, assessment, analysis, 
and operation of the bulk power system to ensure safe nuclear plant 
operations and shutdowns.'' Therefore, the NOPR noted that, under 
emergency, abnormal, or restorative conditions, a violation of 
Requirement R4.2 could directly cause or contribute to Bulk-Power 
System instability, separation, or a cascading sequence of failures, or 
could place the Bulk-Power System at an unacceptable risk of 
instability, separation, or

[[Page 63788]]

cascading failures,\83\ and proposed a high violation risk factor for 
Requirement R4.2.
---------------------------------------------------------------------------

    \83\ See also NERC November 19, 2007 Petition at 20 (``The 
proposed reliability standard also acknowledges that the obligation 
to public safety relative to nuclear plant operation establishes a 
unique set of requirements that other generating facilities are not 
subjected to. In order to protect the common good, the applicable 
transmission entities must respect these unique requirements that 
maintain and/or restore offsite power adequate to supply minimum 
nuclear safety requirements.'').
---------------------------------------------------------------------------

    159. The NOPR noted that Requirement R4.3 obligates a transmission 
entity to inform the nuclear plant generator operator when the ability 
to monitor the system and verify NPIRs is lost. The NOPR noted that a 
nuclear plant generator operator that is not aware that a transmission 
entity can no longer guarantee that NPIRs are met to respond to, would 
suffer an impaired ability to anticipate, emergencies and changing 
system conditions. Because such an event could increase the likelihood 
that the plant is separated from the transmission system and cause 
significant degradation in Bulk-Power System reliability, characterized 
by instability, uncontrolled islanding and cascading, the NOPR proposed 
to direct the ERO to raise the violation risk factor for Requirement 
R4.3 from medium to high, and requested comment.
ii. Comments
    160. Several commenters object to the proposal to raise the 
violation risk factor of Requirement R4.2 and R4.3.\84\ NEI 
characterizes Requirement R4.2 as requiring transmission entities to 
operate their electrical systems to meet the NPIRs incorporated in the 
interface agreements and describes Requirement R4.3 as requiring 
transmission entities which lose the ability to monitor their systems 
to maintain compliance with NPIRs to communicate this information to 
the affected nuclear plant generator operators. NEI, ConEdison, and 
Entergy state that the Commission's concerns regarding the loss of a 
single generator are addressed in other NERC Reliability Standards that 
minimize the risk of system instability, separation, or cascading loss 
if a generator were to go offline.
---------------------------------------------------------------------------

    \84\ See ConEdison, Detroit Edison, Entergy, Ontario IESO and 
Hydro One, Midwest ISO, NEI, Ontario Power, and SCE&G comments.
---------------------------------------------------------------------------

    161. NEI states that transmission planning and operations 
Reliability Standards require the transmission system to be able to 
withstand threats from the loss of a single generator. According to 
NEI, entities having the responsibility to meet the Requirements of 
these other Reliability Standards already incorporate the limitations 
of nuclear generating plants into their studies and analyses and 
address the loss of a given generator and limit the effect of the loss 
on the grid. NEI states that NUC-001-1 deals only with the important 
interaction and communication between the nuclear plant generator 
operator and transmission entities to ensure that the NPIRs are met, 
while the operation of the Bulk-Power System and requirements to 
prevent instability, separation, or cascading failures are adequately 
addressed by other Reliability Standards.
    162. Ontario IESO and Hydro One characterize the consequences of a 
violation of Requirement R4.2 or R4.3 as affecting a nuclear plant 
generator operator's license requirements and may result in a shut 
down, but argue that such a result, while significant to the generator, 
would not cause significant degradation in Bulk-Power System. Ontario 
IESO and Hydro One state that the shut down of a power plant is a 
controlled process, not a contingency, and conclude that reliability 
impacts such as instability, uncontrolled islanding and cascading would 
not result.
    163. Midwest ISO disagrees with the Commission's assessment that a 
high violation risk factor is necessary for Requirement R4.2. In most 
cases, if the reliability coordinator and transmission operator are in 
a condition in which the bulk electric system cannot support the off-
site power requirements of a nuclear plant, the nuclear plant is not at 
risk of tripping. Normally, in its licensing requirements, the plant is 
required after a period of time (usually two to eight hours) to begin a 
controlled shutdown of the reactor in this situation.
iii. Commission Determination
    164. The Commission confirms its findings proposed in the NOPR and 
directs the ERO to revise the violation risk factor for Requirements 
R4.2 and R4.3 from medium to high. We disagree with the 
characterization that Requirements R4.2 and R4.3 deal only with the 
``important interaction and communication between the nuclear plant 
[generator] operator and transition entities to ensure that the NPIRs 
are met.'' \85\ As discussed in the NOPR, these requirements are 
directly relevant to ensuring the continued operation of a nuclear 
power plant on the Bulk-Power System. A failure of the transmission 
entity to operate as needed to provide the NPIR or inform the nuclear 
plant generator operator when its ability to assess the operation of 
the electric system is lost, puts the Bulk-Power System at risk of 
cascading outages. We note that most nuclear plant sites operate more 
than one nuclear power plant. If a transmission entity loses its 
ability to assess the operation of the electric system affecting its 
NPIRs, it will, in most cases, impact more than one nuclear power plant 
where the result would be the shutdown, controlled or otherwise, of the 
applicable nuclear plant site. As a result, there could be significant 
loss of firm transmission service if not cascading.
---------------------------------------------------------------------------

    \85\ NEI comments at 8.
---------------------------------------------------------------------------

    165. The Commission is also not persuaded by the argument that 
elevated violation risk factors are not justified because the shutdown 
of a nuclear power plant is a controlled process and not a contingency. 
NERC defines a contingency as, ``the unexpected failure or outage of a 
system component, such as a generator, transmission line, circuit 
breaker, switch or other electrical element.'' Although the shut down 
of a nuclear power plant is described as a ``controlled'' process 
because of the methodical and orderly operation of safety systems to 
disconnect the plant from the Bulk-Power System, the shut down is 
initiated because Bulk-Power System conditions are unsuitable for the 
continued operation of the nuclear power plant on the Bulk-Power 
System. If the shutdown, albeit controlled, of a nuclear power plant is 
unexpected in the course of the operation of the Bulk-Power System, it 
is, nonetheless, a contingency that must be accommodated in real time 
operations without the loss of firm service.
    166. Further, not continuously providing specific NPIRs may result 
in the additional loss of one or more nuclear power plants during 
single or multiple contingencies. The Commission is concerned that an 
initial system event near, but unrelated to, one or more nuclear power 
plants that degrades system conditions beyond the nuclear power plant's 
license requirements could result in the disconnection of one or more 
nuclear power plants from the Bulk-Power System. In this case, the 
outages of multiple nuclear power plants would be the result of one 
contingency and would be considered by the Commission to be a single 
event. However, the reliability impact to the bulk electric system due 
to this single event may not be addressed in operations planning and 
long term planning, thus putting the Bulk-Power System at risk of 
cascading outages. Thus, not achieving the NPIRs could put the Bulk-
Power System in

[[Page 63789]]

danger of instability, separation or a cascading sequence of failures.
    167. For the reasons discussed previously in this Final Rule, the 
Commission reiterates that it is not appropriate to assess a 
requirement's violation risk factor assignment based on compliance with 
other Reliability Standard requirements.
    168. Therefore, consistent with the definition of a high violation 
risk factor, for the reasons discussed above, the Commission directs 
the ERO to revise the violation risk factor assignment for Requirements 
R4.2 and R4.3 from medium to high no later then 90 days before the 
effective date of the Reliability Standard.
c. Requirement R5
i. NOPR
    169. The NOPR proposed to direct the ERO to raise the violation 
risk factor for Requirement R5 from medium to high. The NOPR noted that 
Requirement R5 obligates a nuclear plant generator operator to operate 
its system consistent with the interface agreement developed under NUC-
001-1, and that the separation of a typically large nuclear power plant 
from the grid may significantly affect grid operations. Because nuclear 
power plant service interruptions could be initiated by incidents 
occurring on the nuclear power plant system, including incidents 
stemming from a failure to meet interface agreement terms, a violation 
of Requirement R5 could directly affect the reliability of the system. 
That possibility suggested that the violation risk factor for 
Requirement R5 should be raised from medium to high.
ii. Comments
    170. Several commenters object to the proposal to raise the 
Requirement R5 violation risk factor from medium to high.\86\ NEI 
characterizes Requirement R5 as ensuring that the nuclear plant 
generator operator understands and implements the interface agreements, 
and coordinates with the applicable transmission entities to ensure 
nuclear plant safe operation and shutdown. According to NEI, the 
nuclear industry consensus is that operation of the Bulk-Power System 
to prevent instability, separation, or cascading failures is adequately 
addressed by other Reliability Standards. According to NEI, the NOPR 
overstates the significance of the separation of a nuclear plant from 
the Bulk-Power System, because all Bulk-Power Systems are designed and 
operated to handle the loss of the largest generator on the grid as an 
N-1 contingency, including a large nuclear power plant, which may not 
be the largest generator on the grid. Hence, the separation of a 
nuclear power plant should not be assumed to result in a loss of Bulk-
Power System stability. NEI states that transmission grids must be able 
to withstand the loss of a single generating unit, including nuclear 
power plants and other facilities.\87\ Thus, according to NEI the 
tripping of a large nuclear unit should not directly cause Bulk-Power 
System instability, separation or a cascading sequence of failures or 
place the Bulk-Power System at an unacceptable risk of instability, 
separation, or cascading failures. Should a nuclear generating unit 
separate from the grid and the resultant ``post-trip'' voltage be 
insufficient to meet the nuclear offsite power requirements for the 
site, it would not result in the automatic separation of the remaining 
nuclear units. Any subsequent shutdown of the nuclear units should not 
introduce grid or nuclear system transients because the shutdown would 
be an operator controlled, orderly process to ensure compliance with 
the requirements of the license.
---------------------------------------------------------------------------

    \86\ See Detroit Edison, Ontario IESO and Hydro One, Entergy, 
Ontario Power, and SCE&G comments.
    \87\ NEI cites the NERC ``Category B'' stability criteria which 
it describes as the most restrictive criteria. See TPL-001-000, 
Table 1, ``Transmission Planning Standards.'' NEI also cites what it 
characterizes as more stringent regional criteria that require that 
the common mode simultaneous outage of two generator units (nuclear 
or otherwise) connected to the same switchyard shall not result in 
cascading, though not addressed by the initiating events in NERC 
``Category C.''
---------------------------------------------------------------------------

    171. Ontario IESO and Hydro One concede that failure to meet this 
requirement may significantly affect grid control and operation, but 
suggest that the reliability of the power grid will not be affected in 
a way that will cause instability, uncontrolled islanding and cascading 
because the separation of the plant would be coordinated and 
implemented in a controlled manner. Entergy states that the purpose of 
NUC-001-1 is to ensure the safe operation of nuclear power plants by 
requiring plant operators and transmission entities to coordinate to 
meet NPIRs and that other Reliability Standards provide for operation 
of the Bulk-Power System to prevent instability, separation, or 
cascading failures.
iii. Commission Determination
    172. The Commission adopts the NOPR proposal. Commenters argue that 
elevating the violation risk factor assignment for Requirement R5 is 
not justified because: (1) The Commission overstates the significance 
of separation of a nuclear plant from the Bulk-Power System; (2) the 
reliability concerns associated with instability, separation, or 
cascading outages are already addressed in other Reliability Standards, 
and (3) the shutdown of a nuclear power plant is a controlled process 
and not a contingency.
    173. Each of these arguments has been previously addressed in this 
Final Rule. Accordingly, the Commission directs the ERO to revise the 
violation risk factor assignment for Requirement R5 from medium to high 
no later then 90 days before the effective date of the Reliability 
Standard.
d. Requirements R7 and R8
i. NOPR
    174. The NOPR proposed to direct the ERO to raise the violation 
risk factors for Requirements R7 and R8 from medium to high, and sought 
comment. Requirements R7 and R8 obligate a nuclear plant generator 
operator and its transmission entities to inform each other of actual 
or proposed changes to their facilities that affect their ability to 
meet NPIRs. Because the information to be exchanged, such as ``limits'' 
and ``protection systems,'' affects the ability of a plant to remain 
connected to the Bulk-Power System, the NOPR stated that a failure to 
provide information could result in a nuclear plant disconnecting from 
the Bulk-Power System, and place the Bulk-Power System at risk for 
cascading outages. To account for such a risk, the NOPR proposed to 
direct the ERO to raise the violation risk factors for Requirements R7 
and R8 from medium to high.
ii. Comments
    175. NEI states the violation risk factors for Requirements R7 and 
R8 should not be changed. NEI states Requirements R7 and R8 require 
nuclear plant generator operators and their transmission entities to 
communicate with each other regarding any changes to their facilities 
that could affect their capacity to meet their NPIR obligations. Since 
violations of these requirements are not likely to lead to Bulk-Power 
System instability, separation, or cascading failures, the violation 
risk factors for Requirements R7 and R8 should not be changed. Entergy 
also argues that Requirements R7 and R8 should have a medium violation 
risk factor, since a failure of communication to be avoided under the 
Requirements is not likely to lead to significant events such as Bulk-
Power System instability, separation, or cascading failures, but only 
over the parties ability to monitor and oversee the Bulk-Power System 
or cause other unspecified problems.

[[Page 63790]]

    176. Ontario IESO and Hydro One also suggest that the violation 
risk factors of Requirements R7 and R8 be assigned to medium, not 
high.\88\ They agree that failure to meet these requirements may 
significantly affect grid control and operation, but not the 
reliability of the power grid characterized by instability, 
uncontrolled islanding and cascading. Finally, ConEdison believes that 
the violation risk factor for Requirement R8 should not be changed 
because transmission planners and operators do not analyze generation 
from nuclear power plants differently than other generators or the 
requirements are largely administrative.
---------------------------------------------------------------------------

    \88\ See also Detroit Edison, Ontario Power, and SCE&G comments.
---------------------------------------------------------------------------

iii. Commission Determination
    177. The Commission adopts the NOPR proposal. As discussed in the 
NOPR and in additional detail above, if transmission entities and 
nuclear plant generator operators do not provide or otherwise 
communicate information concerning system changes to each other, their 
planning and operating analyses may not include the true consequences 
of a single contingency. As a result, unanticipated events that could 
result in the disconnection of one or more nuclear power plants from 
the Bulk-Power System, in addition to the consequences of the 
initiating event, could place the Bulk-Power System at risk for 
cascading outages.
    178. Arguments that elevating the violation risk factor assignment 
for Requirements R7 and R8 is not justified because the shutdown of a 
nuclear power plant is a controlled process and transmission planners 
and operators do not analyze nuclear power plants differently than 
other generation have been previously addressed in this Final Rule.
    179. Accordingly, consistent with the definition of a high 
violation risk factor, and for the reasons discussed above, the 
Commission directs the ERO to revise the violation risk factor 
assignment for Requirements R7 and R8 from medium to high no later then 
90 days before the effective date of the Reliability Standard.
e. Requirement R9
i. NOPR
    180. The NOPR proposed to direct the ERO to raise the violation 
risk factor for Requirement R9 from lower to medium, and sought 
comment. Requirement R9 describes specific administrative, technical, 
operations, maintenance, coordination, communications, and training 
elements that a nuclear plant generator operator and its transmission 
entities must include in their interface agreement. The NOPR stated 
that Requirement R9 is similar to Requirement R2, in that it co-mingles 
an administrative element of incorporating the various elements into 
the interface agreement with the operational element of determining how 
the parties to the interface agreement will address the administrative, 
technical, operations, maintenance, coordination, communications, and 
training issues in order to provide for safe nuclear power plant 
operation and shutdown. The NOPR stated that a violation of Requirement 
R9 could result in an inability to resolve system conditions in an 
emergency because the necessary operational or emergency planning 
elements may not be in place. Therefore, the NOPR noted that a 
violation of Requirement R9 ``could, under emergency, abnormal, or 
restorative conditions anticipated by the preparations, directly affect 
the electrical state or capability of the Bulk-Power System.'' In 
response, the NOPR proposed to find that a medium violation risk factor 
is appropriate for Requirement R9, but stated that if the ERO wishes to 
assign a lower violation risk factor to the purely administrative sub-
Requirements of Requirement R9, it could propose appropriate 
differentiation in its comments.
ii. Comments
    181. Commenters object to raising this violation risk factor 
because Requirement R9 is a planning requirement that is administrative 
in nature. Because generation from nuclear power plants is not analyzed 
differently than other generation by transmission planners and 
operators their operations do not justify higher risk factors.
    182. NEI states the violation risk factor for Requirement R9 should 
not be changed. Requirement R9 sets forth the specific administrative, 
technical, operations, maintenance, coordination, communications, and 
training elements that a nuclear plant generator operator and its 
transmission entities must incorporate in the interface agreement. It 
argues that, while the implementation of these elements is substantive, 
Requirement R9 is an administrative requirement to include the 
specified provisions. Violations of this requirement can be readily 
identified and corrected; therefore, violations should not directly 
affect the Bulk-Power System.
    183. Entergy characterizes Requirement R9 as addressing the various 
elements that parties must address in an interface agreement and 
supporting the terms in Requirements R3 through 8. Entergy states that 
Requirement R9 is administrative in nature, occurs in the planning time 
frame and violations could be easily corrected without affecting the 
reliability of the Bulk-Power System.
iii. Commission Determination
    184. Consistent with the NOPR, the Commission directs the ERO to 
revise the violation risk factor assignment for Requirement R9 from 
lower to medium. The Commission disagrees with commenters that a lower 
violation risk factor is appropriate because Requirement R9 is an 
administrative requirement to include the specified provisions. While 
the Commission recognized in the NOPR that many of the requirements of 
the proposed Reliability Standard are administrative in nature, these 
same requirements provide for the development of procedures to ensure 
the safe and reliable operation of the grid, and responses to potential 
emergency conditions.
    185. Further, as identified in the NOPR, Requirement R9 co-mingles 
the administrative element of incorporating the various elements into 
the interface agreement with the operational elements of determining 
how the parties to the interface agreement will address the 
administrative, technical, operations, maintenance, coordination, 
communications, and training issues for safe nuclear power plant 
operation and shutdown. Consistent with violation risk factor Guideline 
5, the Commission expects the assigned violation risk factor to reflect 
the highest reliability risk objective of the requirement. A violation 
of the highest reliability risk objectives of Requirement R9, under 
emergency, abnormal, or restorative conditions has the potential to 
affect the electrical state or capability of the Bulk-Power System.
    186. As discussed previously in this Final Rule, arguments that 
elevating the violation risk factor assigned to Requirement R9 are not 
justified because the subject requirement takes place in the planning 
time frame, thus violations are quickly detected and corrected, are 
fundamentally flawed.
    187. Therefore, consistent with the definition of a medium 
violation risk factor, and for the reasons discussed above, the 
Commission directs the ERO to revise the violation risk factor 
assignment for Requirement R9 from lower to medium no later then 90 
days before the effective date of the Reliability Standard.

[[Page 63791]]

H. Violation Severity Levels

    188. For each Requirement of a Reliability Standard, NERC states 
that it will also define up to four violation severity levels--lower, 
moderate, high and severe--as measurements of the degree to which the 
Requirement was violated. For a specific violation of a particular 
Requirement, NERC or the Regional Entity will establish the initial 
value range for the base penalty amount by finding the intersection of 
the applicable violation risk factor and violation severity level in 
the Base Penalty Amount Table in Appendix A of the Sanction 
Guidelines.\89\
---------------------------------------------------------------------------

    \89\ See North American Electric Reliability Corp., 119 FERC ] 
61,248, at P 74 (2007) (directing NERC to develop up to four 
violation severity levels (lower, moderate, high, and severe) as 
measurements of the degree of a violation for each requirement and 
sub-requirement of a Reliability Standard).
---------------------------------------------------------------------------

1. NOPR
    189. The NOPR noted that NERC's November 19, 2007 Petition proposed 
violation severity levels that apply generally to all violations of the 
Requirements of NUC-001-1, rather than to specific Requirements and 
sub-Requirements, but that NERC had submitted proposed new violation 
severity levels for each Requirement and sub-Requirement of NUC-001-1 
in Docket No. RR08-4-000.\90\
---------------------------------------------------------------------------

    \90\ The updated NUC-001-1 violation severity levels are 
provided in NERC's March 4, 2008 filing of revised Exhibit A, 
containing the NERC violation severity level matrix, in Docket No. 
RR08-4-000.
---------------------------------------------------------------------------

    190. The NOPR stated the Commission's intention to address issues 
relating to NUC-001-1 violation severity levels in the Docket No. RR08-
4-000 proceeding, but approve the proposed undifferentiated violation 
severity levels on an interim basis, in case the revised violation 
severity levels are not approved before the NUC-001-1 effective date. 
Because the initial violation severity levels for NUC-001-1 resemble 
previously proposed levels of non-compliance by grouping Requirements 
in NUC-001-1 rather than distinguishing on a per-Requirement and sub-
Requirement basis, the NOPR proposed to treat the proposed, 
undifferentiated violation severity levels for NUC-001-1 consistent 
with the treatment adopted for levels of non-compliance, until the 
Requirement and sub-Requirement-specific violation severity levels are 
approved.\91\
---------------------------------------------------------------------------

    \91\ See North American Electric Reliability Corp., 119 FERC ] 
61,248 at P 78-80.
---------------------------------------------------------------------------

2. Comments
    191. NERC concurs with the Commission's approach to violation 
severity levels.
3. Commission Determination
    192. The Commission takes no action on the violation severity 
levels in this Final Rule. The June 19, 2008 Order on violation 
severity levels directed the ERO to assess the violation severity 
levels for proposed NUC-001-1 in accordance with the Commission's 
guidelines set forth in that order.\92\ As such, NERC has been directed 
to re-submit violation severity levels for NUC-001-1, including 
appropriate revisions based on the application of the Commission's 
guidelines, as part of NERC's six-month compliance filing directed in 
the Violation Severity Level Order.\93\
---------------------------------------------------------------------------

    \92\ North American Electric Reliability Corp., 123 FERC ] 
61,284, at P 14 (2008) (Violation Severity Level Order).
    \93\ The Commission notes that NERC has sought rehearing of the 
Violation Severity Level Order concerning the scope and timing of 
the compliance filing in Docket No. RR08-4-001.
---------------------------------------------------------------------------

III. Information Collection Statement

    193. The Office of Management and Budget (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\94\ 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 this Final 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) \95\ requires each federal 
agency to seek and obtain OMB approval before undertaking a collection 
of information directed to 10 or more persons, or continuing a 
collection for which OMB approval and validity of the control number 
are about to expire.\96\ The PRA defines the phrase ``collection of 
information'' to be the ``obtaining, causing to be obtained, 
soliciting, or requiring the disclosure to third parties or the public, 
of facts or opinions by or for an agency, regardless of form or format, 
calling for either--

    \94\ 5 CFR 1320.11.
    \95\ 44 U.S.C. 3501-20.
    \96\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
---------------------------------------------------------------------------

    (i) answers to identical questions posed to, or identical 
reporting or recordkeeping requirements imposed on ten or more 
persons, other than agencies, instrumentalities, or employees of the 
United States; or (ii) answers to questions posed to agencies, 
instrumentalities, or employees of the United States which are to be 
used for general statistical purposes.'' \97\
---------------------------------------------------------------------------

    \97\ 44 U.S.C. 3502(3)(A).

    194. This Final Rule approves the new Reliability Standard 
developed by NERC as the ERO. In addition, the Final Rule directs the 
ERO to develop a modification to one Requirement through its 
Reliability Standards development process. Section 215 of the FPA 
authorizes the ERO to develop and enforce Reliability Standards that 
provide for an adequate level of reliability of the Bulk-Power System. 
Pursuant to the statute, the ERO must submit each Reliability Standard 
that it proposes to be made effective to the Commission for 
approval.\98\
---------------------------------------------------------------------------

    \98\ See 16 U.S.C. 824o(d).
---------------------------------------------------------------------------

    195. Reliability Standard NUC-001-1 does not require responsible 
entities to file information with the Commission. Nor, with the 
exception of a three year self-certification of compliance, does the 
Reliability Standard require responsible entities to file information 
with the ERO or Regional Entities. However, the Reliability Standard 
does require responsible entities to develop and maintain certain 
information for a specified period of time, subject to inspection by 
the ERO or Regional Entities.
    196. Reliability Standard NUC-001-1 requires nuclear plant 
generator operators and entities that provide generation, transmission 
and distribution services relating to off-site power (these entities 
are defined as ``transmission entities'') to enter into interface 
agreements with nuclear plant generator operators that will govern 
certain communication, training, operational and planning elements for 
use in addressing generation and transmission system limits and nuclear 
licensing requirements. The Commission understands that most entities 
subject to this Reliability Standard already have such agreements in 
place. The responsible entities are also required to retain evidence 
that they executed such an agreement and incorporated its terms into 
systems planning and operations. Further, each nuclear plant generator 
operator and transmission entity must self-certify its compliance to 
the compliance monitor once every three years.
    197. The Commission is submitting these reporting and recordkeeping 
requirements to OMB for its review and approval under section 3507(d) 
of the PRA. In the NOPR, the Commission sought comments on the 
Commission's need for this information, whether the information will 
have practical utility, the accuracy of provided burden

[[Page 63792]]

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.
    198. Our estimate below regarding the number of respondents is 
based on the NERC compliance registry as of April 2007 and NERC's 
November 19, 2007 Petition that is the subject of this proceeding. In 
its Petition, NERC states that 104 nuclear power plants are subject to 
the proposed Reliability Standard. These plants are run by 
approximately 30 different utilities and are located on 65 different 
sites. Each plant must contract with transmission entities to obtain 
off-site power, and coordinate distribution and transmission services 
for such power.
    199. The Nuclear Reliability Standard identifies 11 categories of 
functional entities that could be a transmission entity when providing 
covered services, including transmission operators, transmission 
owners, transmission planners, transmission service providers, 
balancing authorities, reliability coordinators, planning authorities, 
distribution providers, load-serving entities, generator owners and 
generator operators. NERC's compliance registry indicates that there is 
a significant amount of overlap among the entities that perform these 
functions. Therefore, in some instances, a single entity may be 
registered under several of these functions. The November 19, 2007 
Petition includes NERC drafting team comments which report, ``In many 
cases, agreements are not two-party [agreements]--they are often multi-
party agreements involving RTO/ISO Protocols, transmission and 
generation owners and others.'' \99\ Therefore, this analysis attempts 
to account for the overlap of services to be provided by entities 
responsible for the various roles identified in the Reliability 
Standard, as well as the fact that certain plants may need to 
coordinate with multiple entities.
---------------------------------------------------------------------------

    \99\ NERC Nuclear Reliability Standard drafting team, 
``Consideration of Comments, Draft 2--SAR on Nuclear Plant Offsite 
Power Reliability'' at 2 (May 23, 2005), filed in November 19, 2007 
Petition, Exh. B, Record of Development of Proposed Reliability 
Standard.
---------------------------------------------------------------------------

    200. Under NUC-001-1, the 104 nuclear power plants must coordinate 
with off-site power suppliers and related transmission and/or 
distribution service providers. NUC-001-1 drafting team reports in its 
responses to SAR comments, ``Nuclear plant generators and most nuclear 
offsite power supplies interconnect with the bulk electric system at 
transmission system voltage levels. While backup station service for 
some plants may be provided via distribution lines, these cases are the 
exception, not the rule.'' \100\ Assuming conservatively, that not more 
than half of the nuclear power plants call for multi-party coordination 
and those that do involve all the types of parties listed by the 
drafting team, the Commission estimates that 52 nuclear power plants 
will execute bi-lateral interface agreements and 52 nuclear power 
plants will execute multi-lateral interface agreements with 
approximately four other parties. Thus, the Commission estimates that 
the 104 nuclear power plants will enter into agreements with an 
additional 260 parties to bilateral and multi-party agreements, 
providing 364 as the total number of entities required to comply with 
the information ``reporting'' or development requirements of the 
Nuclear Reliability Standard.\101\
---------------------------------------------------------------------------

    \100\ NERC Nuclear Reliability Standard drafting team, 
``Consideration of Comments on 2nd Draft of Nuclear Off-site Power 
Supply Standard'' at 54 (Feb. 7, 2007), filed in November 19, 2007 
Petition, Exh. B, Record of Development of Proposed Reliability 
Standard.
    \101\ Because it is assumed that each plant operator must ensure 
that appropriate agreements are in place for each plant, this 
analysis assesses the workload by measuring the work for 104 plants, 
rather than for the 30 nuclear plant operators.
---------------------------------------------------------------------------

    201. Burden Estimate: The Public Reporting burden for the 
requirements contained in the Final Rule is as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Number of    Number of
             Data collection              respondents   responses             Hours per  respondent                       Total annual  hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
 FERC-725F:
Nuclear Plant Owners or Operators.......          104            1  Reporting: 80............................  Reporting: 8,320.
                                          ...........  ...........  Recordkeeping: 40........................  Recordkeeping: 4,160.
Investor-Owned Utilities................          130            1  Reporting: 80............................  Reporting: 10,400.
                                          ...........  ...........  Recordkeeping: 40........................  Recordkeeping: 5,200.
Large Municipals, Cooperatives and other          130            1  Reporting: 80............................  Reporting: 10,400.
 agencies.
                                          ...........  ...........  Recordkeeping: 40........................  Recordkeeping: 5,200.
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................          364  ...........  .........................................  43,680.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Total Hours: (Reporting 29,120 hours + Recordkeeping 14,560 hours) 
= 43,680 hours. (FTE = Full Time Equivalent or 2,080 hours)
    Total Annual hours for Collection: Reporting + Recordkeeping = 
43,680 hours.
    Information Collection Costs: The Commission finds the average 
annualized cost to be the total annual hours (Reporting) 29,120 times 
$120 = $3,494,400.
    Recordkeeping = @ $40/hour = $ 582,400, with labor calculated as 
file/record clerk @ $17 an hour + supervisory @ $23 an hour.
    Total costs = $4,076,800.
    The Commission believes that this estimate may be conservative 
because most if not all of the applicable entities currently have 
agreements in place to provide for coordination between a nuclear plant 
generator operator and its local transmission, distribution and off-
site power suppliers. Furthermore, multiple plants are located on 
certain sites, and one entity may operate multiple plants, providing 
for potential economies in updating, drafting and executing the 
interface agreements.
    Title: FERC-725F, Mandatory Reliability Standard for Nuclear Plant 
Interface Coordination.
    Action: Final Rule.
    OMB Control No.: [To be determined.]
    Respondents: Business or other for profit, and/or not for profit 
institutions.
    Frequency of Responses: One time to initially comply with the rule, 
and then on occasion as needed to revise or modify. In addition, annual 
and three-year self-certification requirements will apply.
    Necessity of the Information: NUC-001-1, implements the 
Congressional mandate of the Energy Policy Act of 2005 to develop 
mandatory and enforceable Reliability Standards to better ensure the 
reliability of the nation's Bulk-Power System. Specifically, the 
Nuclear Reliability Standard will ensure that system operating limits 
or SOLs used in the

[[Page 63793]]

reliability planning and operation of the Bulk-Power System are 
coordinated with nuclear licensing requirements in order to ensure the 
safe operation and shut down of nuclear power plants.
    Internal review: The Commission has reviewed the requirements 
pertaining to the Nuclear Reliability Standard for the Bulk-Power 
System and determined that the requirements adopted 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.
    202. 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 the Final Rule 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].

IV. Environmental Analysis

    203. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\102\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. The actions proposed here fall within the categorical 
exclusion in the Commission's regulations for rules that are 
clarifying, corrective or procedural, for information gathering, 
analysis, and dissemination.\103\ Accordingly, neither an environmental 
impact statement nor environmental assessment is required.
---------------------------------------------------------------------------

    \102\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
and Regs. ] 30,783 (1987).
    \103\ 18 CFR 380.4(a)(5).
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V. Regulatory Flexibility Act Analysis

    204. The Regulatory Flexibility Act of 1980 (RFA) \104\ generally 
requires a description and analysis of Final Rules that will have 
significant economic impact on a substantial number of small entities. 
Most of the entities, i.e., planning authorities, reliability 
coordinators, transmission planners and transmission operators, to 
which the requirements of this rule would apply do not fall within the 
definition of small entities.\105\
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    \104\ 5 U.S.C. 601-12.
    \105\ 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 (2006). 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.
---------------------------------------------------------------------------

    205. As indicated above, based on available information regarding 
NERC's compliance registry, approximately 364 entities, including 
owners and operators of 104 nuclear power plants, will be responsible 
for compliance with the new Reliability Standard. It is estimated that 
one-third of the responsible entities, about 130 entities, would be 
municipal and cooperative organizations. In addition to generator 
owners and operators and distribution service providers, the Nuclear 
Reliability Standard applies to planning authorities, transmission 
planners, transmission operators and reliability coordinators, which 
tend to be larger entities. Thus, the Commission believes that only a 
portion, approximately 30 to 40 of the municipal and cooperative 
organizations to which the Reliability Standard applies, qualify as 
small entities.\106\ The Commission does not consider this a 
substantial number of all municipal and cooperative organizations. 
Moreover, as discussed above, the Nuclear Reliability Standard will not 
be a burden on the industry since most if not all of the applicable 
entities currently coordinate operations and planning with nuclear 
plant generator operators and the Nuclear Reliability Standard will 
simply provide a common framework for agreements governing such 
coordination and many of the entities already have agreements in place 
to meet prior NRC requirements.
---------------------------------------------------------------------------

    \106\ According to the DOE's Energy Information Administration 
(EIA), there were 3,284 electric utility companies in the United 
States in 2005, and 3,029 of these electric utilities qualify as 
small entities under the SBA definition. Among these 3,284 electric 
utility companies are: (1) 883 cooperatives of which 852 are small 
entity cooperatives; (2) 1,862 municipal utilities, of which 1842 
are small entity municipal utilities; (3) 127 political 
subdivisions, of which 114 are small entity political subdivisions; 
and (4) 219 privately owned utilities, of which 104 could be 
considered small entity private utilities. See Energy Information 
Administration Database, Form EIA-861, Dept. of Energy (2005), 
available at http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
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    206. Based on this understanding, the Commission certifies that 
this Final Rule will not have a significant economic impact on a 
substantial number of small entities. Accordingly, no regulatory 
flexibility analysis is required.

VI. Document Availability

    207. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    208. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    209. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at (866) 208-3676) or e-mail at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
[email protected].

    By the Commission.
Kimberly D. Bose,
Secretary.

    Note: This Appendix will not appear in the Code of Federal 
Regulations.


                Comments on Notice of Proposed Rulemaking
------------------------------------------------------------------------
            Abbreviation                            Entity
------------------------------------------------------------------------
Ameren.............................  Ameren Service Co.

[[Page 63794]]

 
ATC\+\.............................  American Transmission Company LLC.
CenterPoint Energy.................  CenterPoint Energy Houston
                                      Electric, LLC.
ConEdison..........................  Consolidated Edison of New York,
                                      Inc.
Constellation......................  Constellation Energy Group, Inc.
Detroit Edison.....................  Detroit Edison Company.
Dominion...........................  Dominion Resources, Inc.
Duke...............................  Duke Energy Corporation.
EEI................................  Edison Electric Institute.
Entergy............................  Entergy Services, Inc.
Exelon.............................  Exelon Corporation.
ISO/RTO Council....................  ISO/RTO Council.
International Transmission.........  International Transmission Co.,
                                      Michigan Electric Transmission
                                      Co., LLC and ITC Midwest.
Midwest ISO........................  Midwest Independent Transmission
                                      System Operator, Inc.
National Grid\+\...................  National Grid USA.
NERC...............................  North American Electric Reliability
                                      Corp.
NEI\+\.............................  Nuclear Energy Institute.
Ontario IESO and Hydro One.........  Independent Electricity System
                                      Operator of Ontario and Hydro One
                                      Networks Inc.
Ontario Power......................  Ontario Power Generation Inc.
SCE&G..............................  South Carolina Electric and Gas
                                      Company.
Southern...........................  Southern Company Services, Inc.
TVA................................  Tennessee Valley Authority.
Wisconsin Electric.................  Wisconsin Electric Power Company.
------------------------------------------------------------------------
\+\ Comments filed out-of-time.

 [FR Doc. E8-25139 Filed 10-24-08; 8:45 am]
BILLING CODE 6717-01-P