[Federal Register Volume 74, Number 101 (Thursday, May 28, 2009)]
[Proposed Rules]
[Pages 25461-25478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12350]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM08-13-000]


Transmission Relay Loadability Reliability Standard

May 21, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the Federal 
Energy Regulatory Commission proposes to approve Reliability Standard 
PRC-023-1 (Transmission Relay Loadability Reliability Standard) 
developed by the North American Electric Reliability Corporation. The 
proposed Reliability Standard requires certain transmission owners, 
generator owners, and distribution providers to set protective relays 
according to specific criteria in order to ensure that the relays 
reliably detect and protect the electric network from all fault 
conditions, but do not limit transmission loadability or interfere with 
system operators' ability to protect system reliability. While all 
relays detect and protect the electric network from fault conditions, 
the proposed Reliability Standard applies only to load-responsive phase 
protection relays. In addition, pursuant to section 215(d)(5) of the 
Federal Power Act, the Commission proposes to direct NERC to develop 
modifications to the proposed Reliability Standard to address specific 
concerns identified by the Commission.

DATES: Comments are due July 27, 2009.

ADDRESSES: Interested persons may submit comments, identified by Docket

[[Page 25462]]

No. RM08-13-000, by any of the following methods:
     Agency Web Site: http://www.ferc.gov. Documents created 
electronically using word processing software should be filed in native 
applications or print-to-PDF format and not in a scanned format.
     Mail/Hand Delivery. Commenters unable to file comments 
electronically must mail or hand deliver an original and 14 copies of 
their comments to: Federal Energy Regulatory Commission, Secretary of 
the Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:
Joshua Konecni (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6291.
Michael Henry (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8532.
Cynthia Pointer (Technical Information), Office of Electric 
Reliability, Division of Reliability Standards, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-6069.
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.

SUPPLEMENTARY INFORMATION: 

Table of Contents

 
 
 
I. Background...............................................           2
    A. Protective Relays....................................           2
    B. Protective Relays and the August 14, 2003 Blackout...          10
    C. Task Force Final Blackout Report.....................          11
    D. NERC and Task Force Recommendations..................          12
II. Proposed Reliability Standard PRC-023-1.................          15
    A. Requirements.........................................          18
        1. Requirement R1...................................          19
        2. Requirement R2...................................          23
        3. Requirement R3...................................          24
    B. Interactions With Other Standards....................          25
    C. Effective Date.......................................          26
III. Discussion.............................................          28
    A. Legal Standard.......................................          28
    B. Decision.............................................          30
    C. Applicability........................................          35
        1. Applicability to Entities With Facilities                  36
         Operated Between 100 kV and 200 kV and to
         Facilities Operated Below 100 kV That Are Critical
         to the Reliability of the Bulk Electric System.....
        2. Generator Step-Up and Auxiliary Transformers.....          46
    D. Need to Address Additional Issues....................          49
        1. Zone 3/Zone 2 Relays Applied as Remote Circuit             50
         Breaker Failure and Backup Protection..............
        2. Protective Relays Operating Unnecessarily Due to           54
         Stable Power Swings................................
    E. Concerns With the Implementation of Certain Criteria           61
     Under Requirement R1...................................
        1. Requirement R1.2.................................          63
        2. Requirement R1.10................................          66
        3. Requirement R1.12................................          70
    F. Requirement R3 and Its Sub-Requirements..............          74
    G. Attachment A.........................................          76
        1. Section (2): Evaluation of Out-of-Step Blocking            77
         Schemes............................................
        2. Section (3): List of Protection Systems Excluded           78
         From the Standard..................................
    H. Effective Date.......................................          82
    I. Violation Risk Factors...............................          87
        1. Requirement R1and Its Sub-Requirements...........          91
        2. Requirement R3...................................          93
    J. Violation Severity Levels............................          95
        1. Requirement R1...................................          99
        2. Requirement R2...................................         102
        3. Requirement R3...................................         105
IV. Information Collection Statement........................         109
V. Environmental Analysis...................................         115
VI. Regulatory Flexibility Act Analysis.....................         116
VII. Comment Procedures.....................................         119
VIII. Document Availability.................................         123
 

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Federal Energy Regulatory Commission (Commission) proposes to approve 
Reliability Standard PRC-023-1 (Transmission Relay Loadability 
Reliability Standard), developed by the North American Electric 
Reliability Corporation (NERC) in its capacity as the Electric 
Reliability Organization (ERO).\2\ The proposed Reliability Standard 
requires certain transmission owners, generator owners, and 
distribution providers to set protective relays according to specific 
criteria in order to ensure that the relays reliably detect and protect 
the electric network

[[Page 25463]]

from all fault conditions, but do not limit transmission loadability 
\3\ or interfere with system operators' ability to protect system 
reliability.\4\ In addition, pursuant to section 215(d)(5) of the 
FPA,\5\ the Commission proposes to direct the ERO to develop 
modifications to the proposed Reliability Standard to address specific 
concerns identified by the Commission.
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    \1\ 16 U.S.C. 824o.
    \2\ Section 215(e)(3) of the FPA directs the Commission to 
certify an ERO to develop mandatory and enforceable Reliability 
Standards, subject to Commission review and approval. 16 U.S.C. 
824o(e)(3). Following a selection process, the Commission selected 
and certified NERC as the ERO. North American Electric Reliability 
Corp., 116 FERC ] 61,062 (ERO Certification Order), order on reh'g & 
compliance, 117 FERC ] 61,126 (ERO Rehearing Order) (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, No. 06-1426, 2009 U.S. App. LEXIS 9905 
(D.C. Cir. May 8, 2009).
    \3\ In the context of the proposed Reliability Standard, 
``loadability'' refers to the ability of protective relays to 
refrain from operating under load conditions.
    \4\ The Commission is not proposing any new or modified text to 
its regulations. Rather, as provided 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 website each effective 
Reliability Standard.
    \5\ 16 U.S.C. 824(d)(5).
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I. Background

A. Protective Relays

    2. Protection systems are used to detect, operate, and initiate the 
removal of faults on an electric system.\6\ Some protection systems use 
redundancy, measurements, and telecommunications facilities to 
accurately identify and confirm the location of a fault; \7\ others use 
a single system that relies only on local information.\8\
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    \6\ A ``fault'' is defined in the NERC Glossary of Terms used in 
Reliability Standards as, ``[a]n event occurring on an electric 
system such as a short circuit, a broken wire, or an intermittent 
connection.''
    \7\ ``Redundancy'' means that the primary component has a 
``twin'' component that operates to isolate the fault in the same 
manner at approximately the same time. The transmission planner may 
assume that, at any given time, either the primary component or its 
redundant component will be operable and therefore the system will 
clear the contingency in the time associated with the primary 
protection.
    \8\ ``Local information'' refers to system measurements obtained 
at the immediate location of the protective relay. Achieving 
protection coordination and performance are required in the present 
Reliability Standards. Special protection systems and redundancy are 
not required as long as the applied system can achieve the desired 
performance.
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    3. Protective relays, also known as primary relays, are one type of 
equipment used in protection systems.\9\ Protective relays read 
electrical measurements (such as current, voltage, and frequency) and 
remove from service any system element that suffers a fault and 
threatens to damage equipment or interfere with effective operation of 
the system.\10\ Protective relays are applied to protect specific 
system elements and are set to recognize certain electrical 
measurements as indicating a fault. When a protective relay detects a 
fault, it sends a signal to an interrupting device (such as a circuit 
breaker) \11\ to disconnect the element or elements from the rest of 
the system.
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    \9\ By definition, protection systems include protective relays, 
associated communication systems, voltage and current sensing 
devices, station batteries, and DC control circuitry. See NERC 
Glossary of Terms Used in Reliability Standards.
    \10\ There are two generic types of protective relays: those 
that have fixed characteristics (i.e., those that are used similar 
to a control switch, such as lockout relays) and those whose 
characteristic can be set to vary (i.e., those that are used to 
detect faults). The proposed Reliability Standard is applicable to 
the latter type of protective relay.
    \11\ A ``circuit breaker'' is a power operated switch capable of 
interrupting current (e.g., load, fault, etc.) that is within its 
rating.
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    4. The sequence in which protective relays operate is important. 
For example, on a transmission line, coordination of protection through 
distance settings and time delays ensures that the relay closest to a 
fault can operate before a relay farther away from the fault.\12\ If 
the more distant relay operates first, it will disconnect both the 
transmission equipment necessary to remove the fault and ``healthy'' 
equipment that should remain in service.
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    \12\ ``Coordination of protection'' is defined by the Institute 
of Electrical and Electronics Engineers (IEEE) Std. C37.113-1999, 
``IEEE Guide for Protective Relay Applications to Transmission 
Lines'' as ``[t]he process of choosing settings or time delay 
characteristics of protective devices, such that operation of the 
devices will occur in a specified order to minimize customer service 
interruption and power system isolation due to a power system 
disturbance.''
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    5. Impedance relays are the most common type of relays used to 
protect transmission lines. Impedance relays continuously measure local 
voltage and current on the protected transmission line and operate when 
the measured magnitude and phase of the impedance (voltage/current) 
falls within the settings or reach of the relay.\13\ Impedance relays 
can also provide backup protection and protection against remote 
circuit breaker failure.
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    \13\ The ``reach'' of the relay refers to the length of the 
transmission line for which the relay is set to protect and is 
generally used in reference to impedance relays. Proposed 
Reliability Standard PRC-023-1 establishes criteria to be used for 
setting phase impedance, as well as, overcurrent relays dependent on 
the system configuration where the relay is applied. The system 
configurations are described in sub-Requirements R1.1 through R1.13. 
Further, as impedance relays, also known as distance relays, detect 
changes in currents (I*) and voltages (V*) to determine the apparent 
impedance (Z*) according to the relationship of Z* = V*/I* of the 
line, impedance are directionally sensitive. They are forward 
looking into the lines that they are protecting, i.e., they protect 
against faults in front of and not behind the relay's installed 
location.
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    6. Multiple impedance relays are installed at each end of the 
transmission line \14\ with each typically used to protect a certain 
percentage, or zone, of the local transmission line and remote lines. 
The purpose of zonal protection is to protect each part of the local 
and remote transmission lines (i.e., no ``gaps'') and to disconnect 
only the equipment necessary to remove a fault even if the closest 
protection system does not operate as desired. Impedance relays may be 
set to cover one, two, or three protection zones (zone 1, zone 2, and 
zone 3 respectively), with appropriate time delays to achieve 
coordination of protection.
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    \14\ Impedance relays are installed at each end of a 
transmission line and protect it in the forward looking direction of 
the relay, i.e., the impedance relays at the opposite terminals of a 
line ``look'' toward each other to detect line faults that are 
within their respective reaches and directions.
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    7. Zone 1 relays are typically set to reach 80 percent of the 
protected transmission line. They leave a 20 percent margin at the far 
end of the line to avoid operating for faults for which they are not 
intended to operate, such as for faults on an adjacent line.\15\ Zone 1 
relays provide fast primary protection and so are set to operate 
without an intentional time delay.
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    \15\ The margin takes into account measurement errors of the 
relay, imprecise line impedance used in the relay setting 
calculation, and changes in system conditions.
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    8. Zone 2 relays provide backup protection and are typically set to 
reach 125 percent of the protected transmission line, i.e., 100 percent 
of the protected transmission line and 25 percent of the adjacent 
transmission line (i.e., they have a 25 percent margin). Because zone 2 
relays can operate for faults on both the protected transmission line 
and on parts of adjacent transmission lines connected to the remote 
terminal,\16\ they are set with a time delay to allow for coordination 
of protection with the zone 1 relay on the faulted line. This time 
delay is determined or verified through system planning analysis.\17\
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    \16\ For example, a zone 2 relay will operate if the impedance 
on the adjacent line and the impedance of the protected line fall 
within the relay's setting.
    \17\ System planning analysis would identify the performance, 
required by Table 1 of the Transmission Planning (TPL) Reliability 
Standards.
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    9. Zone 3 relays provide remote circuit breaker failure and backup 
protection (i.e., when the remote circuit breaker fails to open to 
remove a fault) for remote distance faults on a transmission line; they 
amount to a backup of the zone 2 backup.\18\ Zone 3 relays and zone 2 
relays set to operate like zone 3 relays (zone 3/zone 2 relays) are 
typically set to reach 100 percent of the protected transmission line 
with a margin of more than 100 percent of the longest line (including 
any series elements such as transformers) that emanates from the remote 
buses. To ensure coordination of protection, zone

[[Page 25464]]

3/zone 2 relays are set with a longer time delay than zone 2 relays.
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    \18\ James S. Thorp, Power Systems Engineering Research Center, 
The Protection System in Bulk Power Networks 5 (2003).
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B. Protective Relays and the August 14, 2003 Blackout

    10. On August 14, 2003, a blackout that began in Ohio affected 
significant portions of the Midwest and Northeast United States, and 
Ontario, Canada (2003 blackout). This blackout affected an area with an 
estimated 50 million people and 61,800 megawatts of electric load.\19\ 
The subsequent investigation and report completed by the U.S.-Canada 
Power System Outage Task Force (Task Force) concluded that a 
substantial number of lines disconnected when backup distance and phase 
relays operated under non-fault conditions. The Task Force determined 
that the unnecessary operation of these relays contributed to cascading 
outages at the start of the blackout and accelerated the geographic 
spread of the cascade.\20\ Seeking to prevent or minimize the scope of 
future blackouts, both the Task Force and NERC made recommendations to 
ensure that protective relays do not contribute to future blackouts.
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    \19\ 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, (April 2004) (Final Blackout Report), available 
at http://www.ferc.gov/industries/electric/indus-act/blackout.asp.
    \20\ Id. at 80.
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C. Task Force Final Blackout Report

    11. The Task Force determined that one of the principal reasons why 
cascading outages spread beyond Ohio was the operation of zone 3/zone 2 
relays in response to overloads rather than true faults.\21\ The Task 
Force identified fourteen 345 kV and 138 kV transmission lines that 
disconnected because of zone 3/zone 2 relays applied as remote circuit 
breaker failure and backup protection. Among these relays were several 
zone 2 relays in Michigan that were set to overreach their protected 
lines by more than 200 percent without any intentional time delay.\22\ 
The Task Force stated that although these and the other relays operated 
according to their settings, they operated so quickly that they impeded 
the natural ability of the electric system to hold together and did not 
allow time for operators to try to stop the cascade.\23\ The Task Force 
described the unnecessary operation of these relays as the ``common 
mode of failure that accelerated the geographic spread of the 
cascade.'' \24\ The Task Force also indicated that as the cascade 
progressed beyond Ohio it spread because of dynamic power swings and 
the resulting instability.\25\
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    \21\ Id. at 73.
    \22\ Id. at 80.
    \23\ Id.
    \24\ Id.
    \25\ Id. at 81.
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D. NERC and Task Force Recommendations

    12. NERC conducted its own investigation into the 2003 blackout and 
developed recommendations to prevent and mitigate future cascades. 
Recommendation 8A of the NERC Report addresses the need to evaluate 
zone 3 relays to determine whether they will operate under extreme 
emergency conditions:

    All transmission owners shall, no later than September 30, 2004, 
evaluate the zone 3 relay settings on all transmission lines 
operating at 230 kV and above for the purpose of verifying that each 
zone 3 relay is not set to trip on load under extreme emergency 
conditions[]. In each case that a zone 3 relay is set so as to trip 
on load under extreme conditions, the transmission operator shall 
reset, upgrade, replace, or otherwise mitigate the overreach of 
those relays as soon as possible and on a priority basis, but no 
later than December 31, 2005. Upon completing analysis of its 
application of zone 3 relays, each transmission owner may no later 
than December 31, 2004 submit justification to NERC for applying 
zone 3 relays outside of these recommended parameters. The Planning 
Committee shall review such exceptions to ensure they do not 
increase the risk of widening a cascading failure of the power 
system.\26\

    \26\ August 14, 2003 Blackout: NERC Actions to Prevent and 
Mitigate the Impacts of Future Cascading Blackouts 13 (2004) (NERC 
Report).
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    13. In Recommendation No. 21A of the Final Blackout Report, the 
Task Force recommended that NERC go further than it had proposed in its 
report:

    NERC [should] broaden the review [described in Recommendation 8A 
of the NERC Report] to include operationally significant 115 kV and 
138 kV lines, e.g., lines that are part of monitored flowgates or 
interfaces. Transmission owners should also look for zone 2 relays 
set to operate like zone 3 [relays].\27\
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    \27\ Final Blackout Report at 158.

    14. NERC states that PRC-023-1 responds to these recommendations.

II. Proposed Reliability Standard PRC-023-1

    15. Reliability Standard PRC-023-1 requires certain transmission 
owners, generator owners, and distribution providers to set certain 
protective relays according to specific criteria to ensure that they 
detect only faults for which they must operate and do not operate 
unnecessarily during non-fault load conditions. NERC proposes that PRC-
023-1 apply to transmission owners, generator owners, and distribution 
providers with load-responsive phase protection systems as described in 
Attachment A to PRC-023-1, applied to: (1) All transmission lines and 
transformers with low-voltage terminals operated or connected at 200 kV 
and above; and (2) those transmission lines and transformers with low-
voltage terminals operated or connected between 100 kV and 200 kV that 
are designated by planning coordinators as critical to the reliability 
of the bulk electric system. The proposed Reliability Standard also 
prescribes the settings that should be used when it is appropriate to 
use a 0.85 per unit voltage and a power factor angle of 30 degrees. 
NERC states that PRC-023-1 has a broader application than the 
recommendations in the NERC and Task Force final reports, which address 
only zone 3/zone 2 relays, because other load-responsive relays were 
found to have contributed to the 2003 blackout.
    16. Under the proposed Reliability Standard, protective relay 
settings must provide essential facility protection for faults without 
preventing operation of the Bulk-Power System in accordance with 
established Facility Ratings.\28\ If essential facility protection 
imposes a more constraining limit on the system, PRC-023-1 requires 
that the Facility Rating reflect that limit. Proposed Reliability 
Standard PRC-023-1 applies to any protective functions that could 
operate with or without time delay, on load current, including but not 
limited to: Phase distance, out-of-step tripping, switch-on-to-fault, 
overcurrent relays, and communication-aided protection applications. It 
also requires evaluation of out-of-step blocking schemes \29\ to ensure 
that they do not operate for faults during specified loading 
conditions.\30\
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    \28\ As defined in NERC's Glossary of Terms Used in Reliability 
Standards.
    \29\ ``Out-of-step blocking'' refers to a protection system that 
is capable distinguishing between a fault and a power swing. If a 
power swing is detected, the protection system, ``blocks,'' or 
prevents the tripping of its associated transmission facilities.
    \30\ See PRC-023-1 Attachment A, Item 1.
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    17. The proposed Reliability Standard expressly excludes from its 
requirements: Relay elements enabled only when other relays or 
associated systems fail (e.g., overcurrent elements enabled only during 
abnormal system conditions or a loss of communications), protection 
relay systems intended for the detection of ground fault conditions or 
for protection during stable power swings, generator protective relays

[[Page 25465]]

susceptible to load, relay elements used only for special protection 
systems applied and approved in accordance with NERC Reliability 
Standards PRC-012 through PRC-017,\31\ protection relay systems 
designed to respond only in time periods that allow operators 15 
minutes or longer to respond to overload conditions, thermal emulation 
relays used in conjunction with dynamic Facility Ratings, relay 
elements associated with DC lines, and relay elements associated with 
DC converter transformers.
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    \31\ The Commission has approved PRC-015-0, PRC-016-0, and PRC-
017-0 and has not approved or remanded PRC-012-0, PRC-013-0, and 
PRC-014-0.
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A. Requirements

    18. Proposed Reliability Standard PRC-023-1 consists of three 
compliance requirements.\32\ Requirements R1 and R2 apply to 
transmission owners, generator owners, and distribution providers with 
transmission lines or transformers with low-voltage terminals connected 
at 200 kV and above. Requirement R3 requires planning coordinators to 
identify the facilities operated between 100 kV and 200 kV that are 
critical to the reliability of the bulk electric system, and therefore 
subject to Requirement R1.
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    \32\ NERC has also filed a document entitled: ``PRC-023 
Reference--Determination and Application of Practical Relaying 
Loadability Ratings.'' NERC states that this document explains the 
rationale behind the requirements in the proposed Reliability 
Standard and provides the calculation methodology to help entities 
comply. NERC states that the reference document is presented for 
information only and does not request that the Commission take 
action on it.
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1. Requirement R1
    19. Requirement R1 states that each transmission owner, generator 
owner, and distribution provider subject to the proposed Reliability 
Standard shall use one of the criteria prescribed in sub-Requirements 
R1.1 through R1.13 for any specific circuit terminal to prevent its 
phase protective relay settings from limiting transmission system 
loadability while maintaining reliable protection of the bulk electric 
system for all fault conditions.\33\
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    \33\ Requirement R1 also requires each transmission owner, 
generator owner, and distribution provider to evaluate relay 
loadability at 0.85 per unit voltage and a power factor angle of 30 
degrees.
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    20. Sub-Requirements R1.1 through R1.13 prescribe specific criteria 
to be used for certain transmission system configurations. These 
criteria account for the presence of devices such as series capacitors 
and address circuit and transformer thermal capability. NERC states 
that the criteria set forth in the sub-requirements reflect the maximum 
circuit loading for various system configurations and allow the 
protective relays subject to the proposed Reliability Standard to be 
set for optimum protection while carrying that load. NERC claims that 
each criterion balances the need to protect the system with the 
optimization of load carrying capability.
    21. Sub-Requirement R1.1 specifies transmission line relay settings 
based on the highest seasonal Facility Rating using the 4-hour thermal 
rating of a transmission line, plus a design margin of 150 percent. 
Sub-Requirement R1.2 allows transmission line relays to be set so that 
they do not operate at or below 115 percent of the highest seasonal 15-
minute Facility Rating of a circuit, when a 15-minute rating has been 
calculated and published for use in real-time operations. Sub-
Requirement R1.3 allows transmission line relays to be set so that they 
do not operate at or below 115 percent of the maximum theoretical power 
capability.\34\ Sub-Requirement R1.4 may be applied where series 
capacitors are used on long transmission lines to increase power 
transfer.\35\ Sub-Requirement R1.5 applies in cases where the maximum 
end-of-line three-phase fault current is small relative to the thermal 
loadability of the conductor.\36\ Sub-Requirement R1.6 may be used for 
system configurations where generation is remote from load busses or 
main transmission busses. Under these conditions, protective relays 
must be set so that they do not operate at or below 230 percent of the 
aggregated generation nameplate capability in the remote area.
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    \34\ The power transfer calculation may be performed by using 
either an infinite source with a 1.00 per unit bus voltage at each 
end of the transmission line or an impedance at each end of the 
line, which reflects the actual system source impedance with a 1.05 
per unit voltage behind each source impedance.
    \35\ Special consideration must be made in computing the maximum 
power flow that protective relays must accommodate on series-
compensated transmission lines, the greater of 115 percent of the 
highest emergency rating of the series capacitor or 115 percent of 
the maximum power transfer on the circuit calculated according to 
sub-Requirement R1.3.
    \36\ Such cases exist due to some combination of weak sources, 
long lines, and the topology of the transmission system.
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    22. NERC states that Sub-Requirement R1.7 is appropriate for system 
configurations that have load centers that are remote from the 
generation center. The protective relays at the load center terminal 
must be set such that they operate only above 115 percent of the 
maximum current flow from the load to generation source under any 
system configuration. Sub-Requirement R1.8 applies to system 
configurations that have one or more transmission lines connecting a 
remote, net importing load center to the rest of the system. Under 
these conditions, the protective relays at the bulk electric system end 
must be set so that they operate only above 115 percent of the maximum 
current flow to the load center under any system configuration. 
Similarly, sub-Requirement R1.9 applies to the load end and requires 
protective relays to be set so that they operate only above 115 percent 
of the maximum current flow to the bulk electric system under any 
system configuration. Sub-Requirement R1.10 is specific to transmission 
transformer fault protective relays and transmission lines terminated 
only with a transformer.\37\ Sub-Requirement R1.11 may be used when 
sub-Requirement R1.10 cannot be met.\38\ Sub-Requirement R1.12 may be 
used when the circuits have three or more terminals. In these cases, 
line distance relays are still required to provide adequate protection 
for multi-terminal circuits, but their settings (required to be set at 
125 percent of the apparent impedance with a maximum torque angle at 90 
degrees or the highest supported by the relay manufacturer) \39\ will 
limit the desired circuit loading capability. This limited circuit 
loading capability will become the Facility Rating of the circuit. 
Finally, sub-Requirement R1.13 is intended to apply when otherwise 
supportable situations and practical limitations are identified under 
sub-Requirements R1.1 through R1.12. In these situations, the phase 
protective relays must be set so that they operate above 115 percent of 
such identified limitations.
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    \37\ The protective relays must be set so that they operate only 
above the greater of (i) 150 percent of maximum transformer 
nameplate rating, and (ii) 115 percent of the highest operator 
established emergency transformer rating.
    \38\ In these cases additional considerations are specified to 
limit unnecessary operation due to load according to one of the 
following: (i) Set the relays to allow transformer overload 
operation at higher than 150 percent of the maximum applicable 
rating, or 115 percent of the highest operator established emergency 
transformer rating whichever is greater, and allows at least 15 
minutes for the operator to take controlled action to relieve the 
overload, and (ii) install supervision for the relays using either a 
top oil (setting no less than 100 degrees Celsius) or simulated 
winding hot spot temperature elements (setting no less than 140 
degrees Celsius).
    \39\ Relay loadability must be evaluated at the relay trip point 
at 0.85 per unit voltage and a power factor angle of 30 degrees.
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2. Requirement R2
    23. Requirement R2 states that transmission owners, generator 
owners, and distribution providers that use a circuit with the 
protective relay settings determined by the practical limitations 
described in sub-Requirements R1.6

[[Page 25466]]

through R1.9, R1.12, or R1.13 must use the calculated circuit 
capability as the circuit's Facility Rating and must obtain the 
agreement of the planning coordinator, transmission operator, and 
reliability coordinator with the calculated circuit capability.
3. Requirement R3
    24. Requirement R3 requires planning coordinators to designate 
which transmission lines and transformers with low-voltage terminals 
operated or connected between 100 kV and 200 kV are critical to the 
reliability of the bulk electric system (because they prevent a 
cascade) and therefore subject to Requirement R1.\40\ Sub-Requirements 
R3.1 and R3.1.1 specify that planning coordinators must identify these 
facilities through a process that considers input from adjoining 
planning coordinators and affected reliability coordinators. Sub-
Requirements R3.2 and R3.3 require planning coordinators to maintain a 
list of these facilities and provide it to reliability coordinators, 
transmission owners, generator owners, and distribution providers 
within 30 days of its initial establishment, and within 30 days of any 
subsequent change.
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    \40\ The Commission notes that ``planning coordinator'' is an 
undefined entity in the NERC Glossary of Terms Used in Reliability 
Standards. The Commission understands that the ERO has proposed to 
implement the term ``planning coordinator'' in its glossary in a 
separate proceeding currently before the Commission.
---------------------------------------------------------------------------

B. Interactions With Other Standards

    25. NERC states that proposed Reliability Standard PRC-023-1 
interacts with several existing Reliability Standards, including: FAC-
008-1,\41\ FAC-009-1,\42\ IRO-002-1,\43\ IRO-005-1,\44\ and TOP-008-
1.\45\ NERC states that the interactions between these Reliability 
Standards and the proposed Reliability Standard require that limits be 
established for all system elements, interconnected systems be operated 
within these limits, operators take immediate action to mitigate 
operation outside these limits, and protective relays refrain from 
operating until the observed condition on their protected element 
exceeds these limits.
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    \41\ FAC-008-1 requires that transmission owners and generator 
owners have a Facility Ratings methodology.
    \42\ FAC-009-1 requires that transmission owners and generator 
owners establish Facility Ratings for their equipment and distribute 
them to affected entities.
    \43\ IRO-002-1 requires that reliability coordinators have 
sufficient monitoring to ensure that potential or actual System 
Operating Limits or Interconnection Reliability Operating Limits are 
identified.
    \44\ IRO-005-1 requires that reliability coordinators be aware 
at all times of the current state of the interconnected system 
(including all pre-contingency element conditions) and all post-
contingency element conditions, and have mitigation plans to 
alleviate System Operating Limit or Interconnection Reliability 
Operating Limit violations.
    \45\ TOP-008-1 requires that transmission operators operate 
their systems to avoid System Operating Limit and Interconnection 
Reliability Operating Limit violations and take immediate steps to 
alleviate the conditions causing the violations when they occur.
---------------------------------------------------------------------------

C. Effective Date

    26. NERC proposes that PRC-023-1 be made effective consistent with 
the implementation plan specified in proposed Reliability Standard.\46\ 
That plan proposes that Requirements R1 and R2 be made effective on the 
beginning of the first calendar quarter following applicable regulatory 
approvals. For smaller facilities deemed critical to system reliability 
that are subject to Requirements R1 and R2, NERC proposes an effective 
date of the beginning of the first calendar quarter 39 months after 
applicable regulatory approvals. NERC also proposes that, upon being 
notified that a facility operated between 100 kV and 200 kV has been 
added to the critical facilities list established in Requirement R3, 
the facility owner will have 24 months to comply with Requirement R1 
and its sub-requirements. For Requirement R3, NERC proposes an 
effective date of 18 months following applicable regulatory approvals. 
NERC states that the technical requirements of the proposed Reliability 
Standard have been voluntarily implemented by most applicable entities 
starting in January 2005.
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    \46\ On February 2, 2009, NERC filed an erratum to its petition 
to address an inadvertent reference to the requested effective date. 
NERC requests that the Reliability Standard be made effective 
consistent with the implementation plan accompanying the Reliability 
Standard.
---------------------------------------------------------------------------

    27. NERC also proposes to include a footnote to the ``Effective 
Dates'' section that states that entities that have received temporary 
exceptions approved by the NERC Planning Committee (via the NERC System 
and Protection and Control Task Force) before approval of the proposed 
Reliability Standard shall not be found in non-compliance with the 
Reliability Standard or receive sanctions if: (1) The approved requests 
for temporary exceptions include a mitigation plan (including schedule) 
to come into full compliance and (2) the non-conforming relay settings 
are mitigated according to the approved mitigation plan.

III. Discussion

A. Legal Standard

    28. Section 215(d)(2) of the FPA states that the Commission may 
approve, by rule or order, a proposed Reliability Standard or 
modification to a Reliability Standard if it determines that the 
Standard is just, reasonable, not unduly discriminatory or 
preferential, and in the public interest.\47\ If the Commission 
disapproves of the proposed Standard in whole or in part, it must 
remand the proposed Standard to the ERO for further consideration.\48\ 
Section 215(d)(5) grants the Commission authority, upon its own motion 
or upon complaint, to order the ERO to submit to the Commission a 
proposed Reliability Standard or a modification to a Reliability 
Standard that addresses a specific matter if the Commission considers 
such a modified Reliability Standard appropriate to carry out section 
215.
---------------------------------------------------------------------------

    \47\ 16 U.S.C. 824o(d)(2).
    \48\ 16 U.S.C. 824o(d)(4).
---------------------------------------------------------------------------

    29. Unlike Reliability Standards, which set forth requirements with 
which applicable entities must comply, violation risk factors and 
violation severity levels do not set forth requirements, but instead 
are factors used in the determination of a monetary penalty for a 
violation of a Reliability Standard requirement.\49\ The Commission's 
authority to revise violation risk factors and violation severity 
levels is not circumscribed by section 215(d).
---------------------------------------------------------------------------

    \49\ North American Electric Reliability Corp., 123 FERC ] 
61,284, at P 15 (2008); North American Electric Reliability Corp., 
119 FERC ] 61,145 at P 17, order on reh'g and compliance filing, 120 
FERC ] 61,145 (2007).
---------------------------------------------------------------------------

B. Decision

    30. Pursuant to section 215(d)(2) of the FPA, the Commission 
proposes to approve Reliability Standard PRC-023-1 as just, reasonable, 
not unduly discriminatory or preferential, and in the public interest. 
The Commission agrees with the ERO that PRC-023-1 is a significant step 
toward improving the reliability of the Bulk-Power System in North 
America because it requires that protective relay settings provide 
essential facility protection for faults, while allowing the Bulk-Power 
System to be operated in accordance with established Facility Ratings.
    31. As stated by NERC, Reliability Standard PRC-023-1 interacts 
with several existing Reliability Standards. Reliability Standards are 
intended to provide coordinated and complementary requirements that 
ensure reliable operation of the Bulk-

[[Page 25467]]

Power System.\50\ Consequently, in implementing PRC-023-1, registered 
entities must comply with the requirements of other Reliability 
Standards. For example, protective relay settings determined and 
applied in accordance with the requirements of PRC-023-1 must be 
included in determining system performance, System Operating Limits, 
and Interconnection Reliability Operating Limits, and must be 
coordinated with other protective relay settings as required by the 
applicable Reliability Coordination (IRO), Transmission Operations 
(TOP), and TPL Reliability Standards.\51\ Only in this way can the 
entity satisfy its obligations under other Reliability Standards and 
comply with the requirement in PRC-023-1 to set protective relays while 
``maintaining reliable protection of the bulk electric system for all 
fault conditions.'' \52\
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    \50\ For example, the critical clearing time needed to achieve 
the criteria identified in Table 1 of the TPL Reliability Standards 
would be an input to the coordination of protection systems in 
Reliability Standard PRC-001-1.
    \51\ See Mandatory Reliability Standards for the Bulk-Power 
System, Order No. 693, FERC Stats. & Regs. ] 31,242, at P 1435, 
order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007) 
(``Protection systems on Bulk-Power System elements are an integral 
part of reliable operations * * * In deriving [System Operating 
Limits] and [Interconnection Reliability Operating Limits], 
moreover, the functions, settings, and limitations of protection 
systems are recognized and integrated.'').
    \52\ PRC-023-1, Requirement R1.
---------------------------------------------------------------------------

    32. Similarly, Reliability Standards TPL-001-0 through TPL-004-0 
require annual system assessments to determine if the system meets 
performance requirements, and if not, to determine what corrective 
action plans must be implemented.\53\ In the Commission's view, 
protective relay settings of both primary and backup systems 
implemented in accordance with PRC-023-1 are subject to these 
requirements and must be considered as part of performing a valid 
assessment.\54\
---------------------------------------------------------------------------

    \53\ See TPL-002-0 and TPL-003-0 Reliability Standards, 
Requirements R1 and R2.
    \54\ See TPL-002-0 through TPL-004-0, Requirement R1.
---------------------------------------------------------------------------

    33. The Commission also emphasizes that the requirements of PRC-
023-1 apply to all protection systems as described in Attachment A that 
provide protection to the facilities defined in sections 4.1.1 through 
4.1.4 of PRC-023-1, regardless of whether the protection systems 
provide primary or backup protection and regardless of their physical 
location. This is because protective relays are always applied to 
protect specific system elements,\55\ such that when PRC-023-1 states 
that it governs certain protection systems ``applied to'' certain 
facilities, it means that the specified protection systems must be set 
according to its requirements if they are applied to protect the 
specified facilities. Consequently, transmission owners, generator 
owners, and distribution providers with protective relays applied to 
protect the facilities defined in sections 4.1.1 through 4.1.4 of PRC-
023-1 must set the relays according to PRC-023-1's requirements. For 
example, a protective relay physically installed on the low-voltage 
side of a generator step-up transformer with the purpose of providing 
backup protection to a transmission line operated above 200 kV must be 
set in accordance with the requirements of PRC-023-1 because it is 
applied to protect a facility defined in the PRC-023-1. This is an 
important aspect of PRC-023-1 because it ensures that all protective 
relays subject to it that protect and could therefore disconnect the 
facilities defined in it are set in accordance with its requirements, 
thereby avoiding a gap in protection that would undermine its goal of 
ensuring reliable operation.
---------------------------------------------------------------------------

    \55\ See e.g. Reliability Standard PRC-001-1, Requirement R1 
(requiring that ``[e]ach Transmission Operator, Balancing Authority, 
and Generator Operator shall be familiar with the purpose and 
limitations of protection system schemes applied in its area.'') 
(emphasis added).
---------------------------------------------------------------------------

    34. Additionally, pursuant to section 215(d)(5) of the FPA, the 
Commission proposes to direct the ERO to use its Reliability Standards 
development process to modify PRC-023-1 to address specific concerns. 
The Commission also proposes to direct the ERO to revise certain 
violation risk factors and violation severity levels for PRC-023-1 by 
applying the guidelines set forth in the Violation Risk Factor Order 
\56\ and the Violation Severity Level Order.\57\ As discussed below, 
the Commission also reminds the ERO that there are other concerns 
identified in the Final Blackout Report that the ERO should address and 
seeks ERO and public comment to gather more information about these 
issues. After being informed by the ERO and public comment, the 
Commission may, in the final rule, direct the ERO to develop further 
modifications to PRC-023-1.
---------------------------------------------------------------------------

    \56\ North American Electric Reliability Corp., 119 FERC ] 
61,145, order on reh'g and compliance filing, 120 FERC ] 61,145 
(2007) (Violation Risk Factor Order).
    \57\ North American Electric Reliability Corporation, 123 FERC ] 
61,284, order on reh'g and compliance filing, 125 FERC ] 61,212 
(2008) (Violation Severity Level Order).
---------------------------------------------------------------------------

C. Applicability

    35. NERC proposes that Reliability Standard PRC-023-1 apply to 
transmission owners, generator owners, and distribution providers with 
load-responsive phase protection systems as described in Attachment A 
to PRC-023-1, applied to all transmission lines and transformers with 
low-voltage terminals operated or connected at 200 kV and above, and to 
those transmission lines and transformers with low-voltage terminals 
operated or connected between 100 kV and 200 kV that are designated by 
planning coordinators as critical to the reliability of the bulk 
electric system.\58\ The Commission seeks comment on PRC-023-1's 
applicability with respect to: (1) Transmission owners, generator 
owners, and distribution providers with facilities operated between 100 
kV and 200 kV and facilities operated below 100 kV that are designated 
as critical to the reliability of the bulk electric system; and (2) 
generator step-up and auxiliary transformers.
---------------------------------------------------------------------------

    \58\ Section 4 (Applicability) of the proposed Standard 
provides:
    4.1. Transmission Owners with load-responsive phase protection 
systems as described in Attachment A, applied to facilities defined 
below:
    4.1.1 Transmission lines operated at 200 kV and above.
    4.1.2 Transmission lines operated at 100 kV to 200 kV as 
designated by the Planning Coordinator as critical to the 
reliability of the Bulk Electric System.
    4.1.3 Transformers with low voltage terminals connected at 200 
kV and above.
    4.1.4 Transformers with low voltage terminals connected at 100 
kV to 200 kV as designated by the Planning Coordinator as critical 
to the reliability of the Bulk Electric System.
    4.2. Generator Owners with load-responsive phase protection 
systems as described in Attachment A, applied to facilities defined 
in 4.1.1 through 4.1.4.
    4.3. Distribution Providers with load-responsive phase 
protection systems as described in Attachment A, applied according 
to facilities defined in 4.1.1 through 4.1.4., provided that those 
facilities have bi-directional flow capabilities.
    4.4. Planning Coordinators.
---------------------------------------------------------------------------

1. Applicability to Entities With Facilities Operated Between 100 kV 
and 200 kV and to Facilities Operated Below 100 kV That Are Critical to 
the Reliability of the Bulk Electric System
    36. Requirement R3 and its sub-requirements require the planning 
coordinator to have a process to determine and maintain a list of 
facilities operated between 100 kV and 200 kV that are critical to the 
reliability of the bulk electric system and are therefore subject to 
Requirement R1. There is no similar requirement for facilities operated 
below 100 kV that are designated by Regional Entities as critical to 
reliability.
    37. In its petition, NERC states that it decided not to make PRC-
023-1 applicable to all facilities operated above 100 kV because doing 
so would

[[Page 25468]]

increase implementation costs ``by approximately two orders of 
magnitude'' and distract financial, analytical, and staff resources 
from other areas that it claims have a higher effect on 
reliability.\59\ NERC also claims that making PRC-023-1 applicable to 
all circuits 100 kV and above (absent a determination of criticality as 
established in the Requirements) would have little additional benefit 
to the reliability of the interconnected system.\60\ NERC states that 
the protection of circuits above 200 kV is considerably demanding of 
the most protective relays, and it is therefore customary that most 
modern protective relays are applied to circuits above 200 kV.\61\ NERC 
further states that communications-based relaying, which can detect 
faults over the entire length of a circuit as well as provide 
communications-based backup protection (rather than backup protection 
based on overreaching distance relays) is much more common at 200 kV 
and above, and that the substation bus arrangements at 200 kV and above 
diminish the need for relays at remote locations that will detect 
faults in the event of protective equipment failure.\62\ NERC states 
that these factors contributed to its decision to make PRC-023-1 
universally applicable to all facilities 200 kV and above, and to make 
it applicable only to facilities between 100 kV and 200 kV that are 
designated as critical to the reliability of the bulk electric 
system.\63\
---------------------------------------------------------------------------

    \59\ NERC Petition at 19, 41.
    \60\ Id. at 19.
    \61\ Id. at 23.
    \62\ Id.
    \63\ Id.
---------------------------------------------------------------------------

    38. NERC does not specifically address facilities operated below 
100 kV that are designated by Regional Entities as critical to 
reliability, but it explains in general that it decided to make PRC-
023-1 voltage-level-specific because the definition of what is included 
in the ``bulk electric system'' varies throughout the eight Regional 
Entities and because the effects of PRC-023-1 are not constrained to 
regional boundaries.\64\
---------------------------------------------------------------------------

    \64\ Id. at 18-19; 39-41. For example, if one Region has purely 
performance-based criteria and an adjoining Region has voltage-based 
criteria, these criteria may not permit consideration of the effects 
of protective relay operation in one Region upon the behavior of 
facilities in the adjoining Region.
---------------------------------------------------------------------------

Commission Proposal
    39. The Commission expects that the planning coordinator's process 
for determining the facilities operated between 100 kV and 200 kV that 
are critical to the reliability of the bulk electric system will be 
robust enough to identify all such facilities and will be consistent 
across regions. With this in mind, the Commission is concerned that the 
approach established in Requirement R3 may not meet these expectations.
    40. Requirement R3 uses an ``add in'' approach to identify 
facilities operated between 100 kV and 200 kV that are critical to the 
reliability of the bulk electric system and therefore subject to 
Requirement R1 (i.e., initially exclude facilities operated between 100 
kV and 200 kV from the requirements of the Standard, then through study 
``add in'' facilities that are determined to be critical to the 
reliability of the bulk electric system). Since approximately 85 
percent of circuit miles of electric transmission are operated at 253 
kV and below,\65\ the Commission believes that the approach in 
Requirement R3 may not result in a comprehensive study to identify 
applicable facilities and, at the outset, will effectively exempt a 
large percentage of bulk electric system facilities that should 
otherwise be subject to the Reliability Standard. In fact, NERC 
acknowledged that an ``add in'' approach resulted in such an outcome 
with respect to the identification of Critical Cyber Assets.\66\
---------------------------------------------------------------------------

    \65\ U.S. Department of Energy, ``The Electric System Delivery 
Report'' issued in 2006 indicates that of the 635,000 miles of U.S. 
electric transmission, approximately 538,000 miles (342,000 miles 
132 kV and below; 196,000 miles 132 kV-253 kV) are 253 kV and below.
    \66\ In an April 7, 2009 letter to industry stakeholders, NERC 
commented on the results of the self-certification compliance survey 
for Reliability Standard CIP-002-1 Critical Cyber Asset 
Identification. NERC stated that survey results indicate that 
entities may not have taken a comprehensive approach to identifying 
Critical Assets in all cases, and instead relied on an ``add in'' 
approach to identify assets. Because of this, NERC stated that a 
``rule out'' approach may be more appropriate and requested that 
entities re-do their identification process for Critical Assets.
---------------------------------------------------------------------------

    41. In its report on the 2003 blackout, NERC recommended that all 
transmission owners should evaluate the zone 3 relay settings 
``operating at 230 kV and above.'' \67\ In the Final Blackout Report, 
the Task Force recommended that NERC go further than it had proposed 
and ``broaden the review to include operationally significant 115 kV 
and 138 kV lines, e.g., lines that are part of monitored flowgates or 
interfaces.'' \68\ While NERC offers a general explanation of why it 
proposed that PRC-023-1 apply only to facilities operated at 200 kV and 
above,\69\ it does not provide a technical analysis to support the 
``add in'' approach in Requirement R3. During the 2003 blackout, load-
responsive phase protection relays without communications-based 
relaying operated unnecessarily, contributing to cascading outages. 
This occurred for facilities operated above and below 200 kV. While 
NERC asserts that most facilities operated at 200 kV and above have 
communications-based relaying, it also states that facilities operated 
at lower voltages generally do not.\70\ Consequently, facilities 
operated below 200 kV remain vulnerable to the same problems that 
contributed to cascading during the 2003 blackout.
---------------------------------------------------------------------------

    \67\ NERC Report at 13.
    \68\ Final Blackout Report at 158.
    \69\ NERC Petition at 23.
    \70\ Id.
---------------------------------------------------------------------------

    42. Moreover, the Commission is not persuaded by NERC's unsupported 
assertion that subjecting all facilities operated above 100 kV to PRC-
023-1 would increase implementation costs ``by approximately two orders 
of magnitude'' and distract financial, analytical, and staff resources 
from other areas that might have a greater impact on reliability. PRC-
023-1 implements a Final Blackout Report recommendation that was 
specifically developed to prevent cascading outages. The Commission 
believes that there is no area that has a greater impact on the 
reliability of the bulk electric system than preventing cascading 
outages. Consequently, ensuring that PRC-023-1 applies to all 
facilities that are critical to the reliability of the bulk electric 
system is necessary for it to achieve its intended reliability 
objective.
    43. In order to meet this goal, it is the Commission's view that 
the process for determining the facilities operated between 100 kV and 
200 kV that are critical to the reliability of the bulk electric system 
must include the same system simulations and assessments that are 
required by the TPL Reliability Standards for reliable operation for 
all Category of Contingencies used in transmission planning.\71\ The 
Commission believes that such an assessment would ensure that for all 
operating configurations, the bulk electric system facilities subject 
to the proposed Reliability Standard would have the appropriate 
settings applied to their protective relays. The Commission expects 
that a comprehensive process to determine which facilities are critical 
to the reliability of the bulk electric system should necessarily 
identify nearly every facility operated at or above 100 kV.

[[Page 25469]]

This is because a large percentage of the bulk electric system not only 
falls into the 100 kV to 200 kV category, but also supports the 
reliability of the high voltage transmission system (200 kV and above). 
Therefore, the Commission proposes to direct the ERO to modify PRC-023-
1 to make it applicable to all facilities operated at or above 100 kV. 
The Commission recognizes that there might be a few limited examples of 
facilities operated between 100 kV and 200 kV that are not critical to 
the reliability of the bulk electric system. Therefore, the Commission 
also proposes to consider exceptions on a case-by-case basis for 
facilities operated between 100 kV to 200 kV that demonstrably would 
not result in cascading outages, instability, uncontrolled separation, 
violation of facility ratings, or interruption of firm transmission 
service.
---------------------------------------------------------------------------

    \71\ See TPL-002-0 and TPL-003-0 Reliability Standards, 
Requirements R1.3, and R1.3.1 through R1.3.12. For example, for PRC-
023-1, the Commission expects that the base cases used to determine 
the applicable facilities would include various generation 
dispatches, topologies, and maintenance outages, and would consider 
the effect of redundant and backup protection systems.
---------------------------------------------------------------------------

    44. The Commission also believes that facilities that have been 
identified as necessary for reliable operation of the bulk electric 
system, as identified in the Compliance Registry,\72\ should be made 
subject to the proposed Reliability Standard. Although the proposed 
Reliability Standard does not apply to transmission owners with 
facilities operated below 100 kV, and such facilities are not included 
in NERC's standard definition of the bulk electric system, NERC 
acknowledges that the definition ``allows for [r]egional variations in 
the definition of bulk electric system.'' \73\ Thus, NERC's Statement 
of Compliance Registry Criteria,\74\ defines entities with transmission 
facilities operated below 100 kV that are designated by a Regional 
Entity as critical to reliability as ``transmission owner[s]/
operator[s]'' subject to the requirements of the compliance registry 
and therefore to the requirements of Reliability Standards.\75\ In 
other words, NERC acknowledges that there are facilities operated below 
100 kV that are critical to the reliability of the bulk electric 
system.
---------------------------------------------------------------------------

    \72\ NERC maintains a registry of entities that are required to 
comply with approved Reliability Standards to the extent that they 
are owners, operators, and users of the bulk power system, perform a 
function listed in the functional types identified in the Statement 
of Compliance Registry Criteria, and are material to the reliable 
operation of the interconnected bulk power system as defined by the 
Statement of Compliance Registry Criteria.
    \73\ NERC Petition at 40. NERC defines the Bulk Electric System 
thusly:
    As defined by the Regional Reliability Organization, the 
electrical generation resources, transmission lines, 
interconnections with neighboring systems, and associated equipment, 
generally operated at voltages of 100 kV or higher. Radial 
transmission facilities serving only load with one transmission 
source are generally not included in this definition.
    \74\ In the Statement of Compliance Registry Criteria, NERC 
states that it will include in its compliance registry each entity 
that it concludes can materially impact the reliability of the bulk 
power system. NERC Statement of Compliance Registry Criteria 
(Revision 5.0) at 3 (October 16, 2008). See North American Electric 
Reliability Corp., 125 FERC ] 61,057 (2008) (accepting revisions to 
NERC's Registry Criteria).
    \75\ The Statement of Compliance Registry Criteria defines 
``transmission owner/operator'' as:
    III.d.1 An entity that owns or operates an integrated 
transmission element associated with the bulk power system 100 kV 
and above, or lower voltage as defined by the Regional Entity 
necessary to provide for the reliable operation of the 
interconnected transmission grid; or
    III.d.2 An entity that owns/operates a transmission element 
below 100 kV associated with a facility that is included on a 
critical facilities list defined by the Regional Entity.
---------------------------------------------------------------------------

    45. In Order No. 693, the Commission accepted the NERC definition 
of bulk electric system but expressed concern about the potential for 
gaps in coverage of facilities with regard to regional definitions.\76\ 
In the Commission's view, NERC has failed to provide a sufficient 
technical record to justify the exemption of facilities operated below 
100 kV that have been identified by the Regional Entity as necessary to 
the reliability of the bulk electric system. Consequently, the 
Commission proposes to direct the ERO to modify PRC-023-1 to make it 
applicable to facilities operated below 100 kV that are designated by 
the Regional Entity as critical to the reliability of the bulk electric 
system. The Commission understands that conforming modifications to the 
requirements of PRC-023-1 will be necessary to reflect these proposals. 
The Commission requests comment on each of its proposals.
---------------------------------------------------------------------------

    \76\ Order No. 693, FERC Stats. & Regs. ] 31,242, at P 77.
---------------------------------------------------------------------------

2. Generator Step-Up and Auxiliary Transformers
    46. NERC states that generator step-up transformer relay 
loadability was intentionally omitted from PRC-023-1.\77\ NERC contends 
that generator step-up relay loadability merits particular attention in 
the area of generator protection, and therefore that it would be 
inappropriate to include it in a transmission relay loadability 
standard without consideration of the overall generator protective 
system in place. NERC claims that it is ``imperative'' that generator 
step-up transformer protection settings be coordinated with other 
generator protection functions as well as the associated local 
transmission system protection.\78\ NERC states that this requires 
careful consideration of the transient, sub-transient, and steady state 
generator responses to system conditions, and consideration of how the 
resultant loadings on the generator step-up factor into 
loadability.\79\
---------------------------------------------------------------------------

    \77\ NERC Petition at 38.
    \78\ Id.
    \79\ Id.
---------------------------------------------------------------------------

    47. NERC states that the Standard Drafting Team did not include 
technical experts from the generator industry. NERC explains that to 
include generation it would have had to identify and recruit additional 
experts, delaying the presentation of PRC-023-1 by six months. NERC 
states that generator protection standards for relay loadability will 
be addressed in future Reliability Standards.
Commission Proposal
    48. It is the Commission's intention that the ERO address in a 
timely manner the reliability objectives relevant to relay loadability, 
which include generator step-up and auxiliary transformers. One way to 
ensure that this occurs is for the Commission to direct the ERO to 
modify the proposed Reliability Standard to address these issues. This 
approach also has the advantage of placing coordination between 
generator and transmission protection systems in the same Reliability 
Standard. Consequently, the Commission seeks comment on whether it 
should direct the ERO to modify the proposed Reliability Standard to 
address generator step-up and auxiliary transformer loadability, or 
whether generator step-up and auxiliary transformer loadability should 
be addressed in a separate Reliability Standard, as the ERO intends. 
The Commission also seeks comment as to what is a reasonable timeframe 
for developing a modification or separate Reliability Standard to 
address generator step-up and auxiliary transformer loadability.

D. Need To Address Additional Issues

    49. It is the Commission's view that to ensure reliable operation 
of the system the ERO must address both the reach of zone 3/zone 2 
relays applied as remote circuit breaker failure and backup protection, 
and issues related to load increases, overload, and stable power swings 
that occur under recognized system conditions.\80\ As proposed, PRC-
023-1 addresses only issues related to load increases and overloads 
(loadability).
---------------------------------------------------------------------------

    \80\ Like those issues addressed in Reliability Standards TPL-
002-0, TPL-003-0, and TPL-004-0.
---------------------------------------------------------------------------

1. Zone 3/Zone 2 Relays Applied as Remote Circuit Breaker Failure and 
Backup Protection
    50. Typically, zone 3/zone 2 relays are set to reach 100 percent of 
the protected

[[Page 25470]]

transmission line with a margin of more than 100 percent of the longest 
line (including any series elements such as transformers) that emanates 
from the remote buses. If zone 3/zone 2 relays detect a fault on an 
adjacent transmission line in their reach, and the relays on the 
faulted line fail to operate, the zone 3/zone 2 relays will operate as 
backup and remove the fault. However, when they operate they will 
disconnect both the faulted transmission line and ``healthy'' 
facilities that should have remained in service. To ensure coordination 
of protection and avoid unnecessarily disconnecting ``healthy'' 
facilities, zone 3/zone 2 relays are typically set to operate after a 
time delay.
    51. The Task Force identified fourteen 345 kV and 138 kV 
transmission lines that disconnected during the 2003 blackout because 
of zone 3/zone 2 relays applied as remote circuit breaker failure and 
backup protection.\81\ Among the relays that operated unnecessarily 
were several zone 2 relays in Michigan that overreached their protected 
lines by more than 200 percent and operated without a time delay.\82\ 
The Task Force stated that although these and the other relays operated 
according to their settings, they operated so quickly that they impeded 
the natural ability of the electric system to hold together and did not 
allow time for operators to try to stop the cascade.\83\
---------------------------------------------------------------------------

    \81\ Final Blackout Report at 80.
    \82\ Id.
    \83\ Id.
---------------------------------------------------------------------------

Commission Proposal
    52. The Commission is concerned that zone 3/zone 2 relays will 
operate because of line load or overload in extreme contingency 
conditions even in the absence of a fault.\84\ The large setting of 
zone 3/zone 2 relays makes them susceptible to operating in the absence 
of a fault under abnormal system conditions. This is because under 
abnormal system conditions, such as very high loading and large, but 
stable power swings, the current and voltage as measured by the 
impedance relay may fall within the very large magnitude and phase 
setting of the relay. When this occurs, the relay is susceptible to 
operation.
---------------------------------------------------------------------------

    \84\ Id.
---------------------------------------------------------------------------

    53. NERC states in its petition that PRC-023-1 is silent on the 
application of zone 3/zone 2 relays as remote circuit breaker failure 
and backup protection because it establishes requirements for any load-
responsive relay regardless of its protective function.\85\ However, 
given the Task Force's conclusions about the role zone 3/zone 2 played 
in the spread of the cascade in the 2003 blackout, it is the 
Commission's view that the ERO should develop a maximum allowable relay 
reach for zone 3/zone 2 relays applied as remote circuit breaker 
failure and backup protection. The Commission seeks comment on whether 
it should direct the ERO to develop a maximum allowable reach, and if 
so, whether it should direct the ERO to develop a modification to PRC-
023-1 or a new Reliability Standard.
---------------------------------------------------------------------------

    \85\ NERC Petition at 39.
---------------------------------------------------------------------------

2. Protective Relays Operating Unnecessarily Due to Stable Power Swings
    54. Despite the loss of fourteen key transmission lines, the Task 
Force found that during the 2003 blackout the system did not become 
dynamically unstable until at least after the Hampton-Pontiac and 
Thetford-Jewell 345 kV lines disconnected.\86\ These lines disconnected 
in a phase of the cascade that was caused by dynamic, but stable power 
swings.
---------------------------------------------------------------------------

    \86\ Final Blackout Report at 82-83.
---------------------------------------------------------------------------

    55. Transient and stable power swings occur most commonly when a 
fault and faulted facilities are quickly removed from the system, 
typically within 0.1 second of detection, and the system and affected 
generators stabilize within several seconds, typically within 3 
seconds. Dynamic power swings can also occur when the system recovers 
from a disturbance and achieves transient stability (typically within a 
0-3 second time frame) and then returns to a steady state over a longer 
period of time (typically within 3-30 seconds, or even minutes). Prior 
to the system returning to a new steady state operating condition, it 
may exhibit power swings that may decrease rapidly or increase in 
magnitude. When the power swings decrease, the system will be able to 
achieve a new stable operating condition, provided that the relays 
protecting ``healthy'' facilities have not operated unnecessarily 
because of the stable power swings.
    56. Each time zone 3/zone 2 relays operated and disconnected 
facilities because of high loading, the power flowing on the 
transmission system increased in magnitude and oscillated, i.e., 
``swung,'' back and forth across a large portion of the interconnected 
systems around Lake Erie. Initially, with each swing the transmission 
system recovered and appeared to stabilize. However, as the power 
swings and oscillations increased in magnitude, zone 3/zone 2 and other 
relays measured levels of currents and voltages that, because of their 
settings, indicated a fault. Consequently, these relays operated 
unnecessarily and disconnected ``healthy'' transmission lines. As more 
``healthy'' transmission lines were disconnected, power swings and 
oscillations increased in magnitude causing more ``healthy'' lines to 
disconnect, thus spreading the cascade.
    57. The proposed Reliability Standard does not address the 
unnecessary operation of protective relays due to stable power swings. 
NERC states that it did not address power swings in PRC-023-1 because 
the focus of the proposed Standard is on loadability at a time when 
operators can take action to protect the system.\87\ NERC states that 
during the 2003 blackout the power swing time frame was too short for 
operators to act, which is typical for severe power swings.\88\ NERC 
states that in the electrical vicinity of severe power swings, relays 
cannot distinguish power swings from faults that trigger their 
operation.\89\
---------------------------------------------------------------------------

    \87\ NERC Petition at 39.
    \88\ Id.
    \89\ Id.
---------------------------------------------------------------------------

Commission Proposal
    58. While zone 3/zone 2 relays operated during the 2003 blackout 
according to their settings and specifications, the inability of these 
relays to distinguish between a dynamic, but stable power swing and an 
actual fault contributed to the cascade. Because PRC-023-1 addresses 
only the unnecessary operation of protective relays caused by high 
loading conditions, and does not address unnecessary operation caused 
by stable power swings, the Commission is concerned that relays set 
according to PRC-023-1 could still operate unnecessarily because of 
stable power swings.
    59. NERC states that in the electrical vicinity of severe power 
swings, relays cannot distinguish between stable power swings and 
actual faults. However, there are several protection applications and 
relays that are less susceptible to transient or dynamic power swings, 
including pilot wire differential, phase comparison, and blinder-
blocking applications and relays, and impedance relays with non-
circular operating characteristics.\90\ Each of these protection 
applications and relays uses existing technology and has been tested 
and applied effectively

[[Page 25471]]

to mitigate relay susceptibility to power swings.
---------------------------------------------------------------------------

    \90\ Non-circular operating characteristics include, for 
example, off-set MHO, blinder, reactance, and lenticular operating 
characteristics that while still providing a long reach, are less 
susceptible to power swings.
---------------------------------------------------------------------------

    60. Because the inability of protective relays to distinguish 
between actual faults and stable power swings contributed to the 
cascade in the 2003 blackout, and given the availability of protection 
applications and relays that can effectively mitigate this problem, it 
is the Commission's view that the use of protective relay systems that 
cannot differentiate between faults and stable power swings constitutes 
mis-coordination of the protection system and is inconsistent with 
entities' obligations under existing Reliability Standards.\91\ In the 
Commission's view, a protective relay system that cannot refrain from 
operating under non-fault conditions because of a technological 
impediment is unable to achieve the performance required for reliable 
operation. Consequently, the Commission seeks comment on whether it 
should direct the ERO to develop a Reliability Standard or a 
modification that requires applicable entities to use protective relay 
systems that can differentiate between faults and stable power swings 
and phases out protective relay systems that cannot meet this 
requirement. The Commission may direct a Reliability Standard or a 
modification in response to these comments.
---------------------------------------------------------------------------

    \91\ See supra P 31. As discussed previously, protective relay 
settings determined and applied in accordance with the requirements 
of PRC-023-1 must be included in determining system performance, 
System Operating Limits, and Interconnection Reliability Operating 
Limits, and must be coordinated with other protective relay settings 
as required by the applicable IRO, TOP, and TPL Reliability 
Standards.
---------------------------------------------------------------------------

E. Concerns With the Implementation of Certain Criteria Under 
Requirement R1

    61. Requirement R1 establishes criteria (Requirements R1.1 through 
R1.13) to prevent phase protective relay settings from limiting 
transmission system loadability while maintaining reliable protection 
of the bulk electric system for all fault conditions. These criteria 
reflect the maximum circuit loading for the various system 
configurations and conditions and permit the relays to be set for 
optimum protection while carrying that load. The criterion to be used 
depends on the configuration and conditions in the system in which the 
protective relay will be applied.
    62. The Commission is concerned that some criteria established in 
Requirement R1 might accommodate the use of protective relays for 
certain system configurations where the protective relays may not be 
appropriate or help achieve the reliability objective of the proposed 
Reliability Standard. In particular, the Commission is concerned with 
the implementation of criteria established by Requirements R1.2 
(Transmission Line Established 15-Minute Rating), R1.10 (Transformer 
Overcurrent Protection), and R1.12 (Long Line Relay Loadability).
1. Requirement R1.2
    63. Requirement R1.2 directs the transmission owner, generation 
owner, or distribution provider to set transmission line relays so that 
they do not operate at or below 115 percent of the highest seasonal 15-
minute Facility Rating of a circuit. A footnote attached to Requirement 
R1.2 provides that ``[w]hen a 15-minute rating has been calculated and 
published for use in real-time operations, the 15-minute rating can be 
used to establish the loadability requirement for the protective 
relays.'' \92\
---------------------------------------------------------------------------

    \92\ NERC states in its petition that it modified the footnote 
in response to Commission staff's concern that 15-minute ratings may 
be used that are not completely reflected as facility ratings. The 
modification clarified that Requirement R1.2 references 15-minute 
ratings where such ratings have been calculated and are used for 
real-time operations. NERC Petition at 37.
---------------------------------------------------------------------------

Commission Proposal
    64. The Commission is concerned that Requirement R1.2 might 
conflict with Requirement R4 of existing Reliability Standard TOP-004-1 
(Transmission Operations), which states that ``if a transmission 
operator enters an unknown operating state, it will be considered to be 
in an emergency and shall restore operations to respect proven 
reliability power system limits within 30 minutes.'' \93\ The 
Commission is concerned that the transmission operator (or any other 
reliability entity affected by the facility) might conclude that it has 
30 minutes to restore the system to normal when in fact it has only 15 
minutes because the relay settings for certain transmission facilities 
have been set to operate at the 15-minute rating in accordance with 
Requirement R1.2. This may have an adverse impact on system 
reliability, since the operator might not take Requirement R1.2 into 
consideration.
---------------------------------------------------------------------------

    \93\ See Reliability Standard TOP-004-1, Requirement R4.
---------------------------------------------------------------------------

    65. To ensure the reliability of the Bulk-Power System, Reliability 
Standards PRC-023-1 and TOP-004-1 should give a transmission operator 
the same amount of time to restore the system to normal operations. The 
Commission acknowledges that Requirement R1.2 references the 
``publishing'' of a facility's 15-minute rating; however, we are not 
persuaded that publication of a rating is sufficient to address the 
potential conflict. Consequently, the Commission proposes to direct the 
ERO to either revise Requirement R1.2 to apply it to Reliability 
Standard TOP-004-1 or develop a new requirement that transmission 
owners, generation owners, and distribution providers give their 
transmission operators a list of transmission facilities that implement 
Requirement R1.2, or propose an equally effective and efficient 
approach to avoid the potential conflict. The Commission seeks comment 
on each of these proposals.
2. Requirement R1.10
    66. Requirement R1.10 establishes criteria for applicable entities 
to set transformer fault protective relays and transmission line relays 
on transmission lines that terminate in a transformer. For this system 
configuration, protective relays would be set such that the transformer 
fault protective relays and transmission line relays do not operate at 
or below the greater of 150 percent of the applicable maximum 
transformer name-plate rating (expressed in amperes), including the 
forced cooled ratings corresponding to all installed supplemental 
cooling equipment, or 115 percent of the highest owner-established 
emergency transformer rating.\94\
---------------------------------------------------------------------------

    \94\ NERC states that the Standard Drafting Team did not contain 
any experts on equipment ratings. NERC Petition at 31.
---------------------------------------------------------------------------

Commission Proposal
    67. The Commission understands that facility owners determine the 
ratings of their facilities based on a number of factors, and that they 
use verified methodologies to determine expected temperatures and other 
parameters needed to establish a rating.\95\ It is the Commission's 
view, however, that overloading facilities at any time, but especially 
during system faults, could lower reliability and present a safety 
concern.
---------------------------------------------------------------------------

    \95\ The methodology for determining transformer ratings 
includes analysis of all aspects of the transformer, such as 
bushings, leads, stray flux heating, core heating, winding hot 
spots, and the formation of bubbles at those hot spots.
---------------------------------------------------------------------------

    68. The application of a transmission line terminated in a 
transformer enables the transmission owner to avoid installing a bus 
and local circuit breaker on both sides of the transformer. Protective 
relay settings implemented according to Requirement R1.10 for this 
topology would allow the transformer to be subjected to overloads 
higher than its established ratings for unspecified periods of time. 
Transformers that have been subjected to currents over their

[[Page 25472]]

maximum rating have been recorded as failing violently and resulted in 
substantial fires. This negatively impacts reliability and raises 
safety concerns. While safety considerations are outside the 
jurisdiction of the Commission, requirements in a Reliability Standard 
should not be interpreted as requiring unsafe actions or designs.
    69. Consequently, the Commission proposes to direct the ERO to 
submit a modification that requires any entity that implements 
Requirement R1.10 to verify that the limiting piece of equipment is 
capable of sustaining the anticipated overload current for the longest 
clearing time associated with the fault from the facility owner. If the 
facility owner can not verify that ability, the facility owner should 
apply either different protection systems or change the topology to 
avoid this configuration to be in compliance with PRC-023-1. The 
Commission seeks comments on this proposal.
3. Requirement R1.12
    70. Requirement R1.12 establishes relay loadability criteria when 
the desired transmission line capability is limited by the requirement 
to adequately protect the transmission line. In these cases, the line 
distance relays are still required to provide adequate protection, but 
the implemented relay settings will limit the desired loading 
capability of the circuit. NERC states that in the event an essential 
fault protection imposes a more constraining limit on the system, the 
limit imposed by the fault protection is reflected within the facility 
rating.\96\
---------------------------------------------------------------------------

    \96\ NERC Petition at 14.
---------------------------------------------------------------------------

    71. NERC claims that PRC-023-1 should cause no undue negative 
effect on competition or restrict the grid beyond what is necessary for 
reliability.\97\ It explains that, with the exception of those relays 
that legitimately define and restrict the facility rating, PRC-023-1 
removes arbitrary limits related to relay loadability that cause 
transmission capability limitations. NERC further points out that no 
market-based entity is required to comply with PRC-023-1.
---------------------------------------------------------------------------

    \97\ Id. at 27.
---------------------------------------------------------------------------

Commission Proposal
    72. The Commission is concerned that Requirement R1.12 allows 
entities to technically comply with PRC-023-1 but not achieve its 
stated purpose. Since protective relay settings are allowed to limit 
the load carrying capability of a transmission line, that line is not 
being utilized to its full potential in response to sudden increases in 
line loadings or power swings, i.e., the natural response of the Bulk-
Power System will be less robust in response to system disturbances.
    73. Entities subject to PRC-023-1 must employ a protection system 
that meets their reliability obligations, but a protection system that 
requires the application of Requirement R1.12 may not satisfy this 
requirement. Consequently, the Commission seeks comment on whether use 
of such a protection system is consistent with the reliability 
objectives of PRC-023-1, and whether the Commission should direct a 
modification that would require that entities that employ such a system 
use a different protection relay system that would meet the reliability 
objective of the Reliability Standard.

F. Requirement R3 and Its Sub-Requirements

    74. Requirement R3 requires planning coordinators to designate 
which transmission lines and transformers with low-voltage terminals 
operated or connected between 100 kV and 200 kV are critical to the 
reliability of the bulk electric system and therefore subject to 
Requirement R1. Sub-Requirements R3.1 and R3.1.1 specify that planning 
coordinators must determine these facilities through a process that 
considers input from adjoining planning coordinators and affected 
reliability coordinators. Sub-Requirements R3.2 and R3.3 require 
planning coordinators to maintain a list of designated facilities and 
provide it to reliability coordinators, transmission owners, generator 
owners, and distribution providers within 30 days of its initial 
establishment, and within 30 days of any subsequent change.
Commission Proposal
    75. In light of the Commission's proposal to direct the ERO to 
modify PRC-023-1 to make it applicable to all facilities operated at or 
above 100 kV, with the possibility of case-by-case exceptions, and to 
all facilities operated below 100 kV that are designated by the 
Regional Entity as critical to the reliability of the bulk electric 
system, the Commission proposes to direct the ERO to revise Requirement 
R3 and Sub-Requirement R3.2 to require that the planning coordinator 
maintain a list that reflects the Commission's proposal. Moreover, it 
is the Commission's view that the Regional Entity should know which 
facilities in its area are subject to the Reliability Standard. 
Accordingly, the Commission proposes to direct the ERO to modify 
Requirement R3.3 to add the Regional Entity to the list of entities 
that receive the list as required by Requirement R3.2.

G. Attachment A

    76. Attachment A of PRC-023-1 contains three sections: (1) A list 
of examples of load-responsive relays subject to PRC-023-1, (2) a 
statement that out-of-step blocking protective schemes shall be 
evaluated to ensure that those applications do not block trip for fault 
during the loading conditions defined within the requirements of PRC-
023-1, and (3) a list of Protective Systems that are excluded from the 
requirements of the PRC-023-1. The Commission has concerns about 
sections (2) and (3).
1. Section (2): Evaluation of Out-of-Step Blocking Schemes
    77. Section (2) of Attachment A states that the ``[S]tandard 
includes out-of-step blocking schemes which shall be evaluated to 
ensure that they do not block trip for fault during the loading 
conditions defined within the requirements.'' This obligation, however, 
is not included as a requirement in the proposed Reliability Standard. 
Instead, it is included in Attachment A. Requirements should be in the 
requirements section of a Reliability Standard to ensure compliance. 
Since the ERO intends to require the evaluation of out-of-step blocking 
applications, language to this effect should be included as a 
requirement and not as a statement in an Attachment. Consequently, the 
Commission proposes to direct the ERO to modify PRC-023-1 by adding the 
statement in section (2) of Attachment A as an additional requirement 
with the appropriate violation risk factor and violation severity level 
assignments.
2. Section (3): List of Protection Systems Excluded From the Standard
    78. Section (3) lists certain protection systems that are excluded 
from the requirements of PRC-023-1. However, in its petition NERC does 
not provide a technical rationale for excluding any load-responsive 
phase protection systems from the requirements of PRC-023-1. Thus, it 
is not clear to the Commission that the exclusions in section 3 are 
justified.\98\
---------------------------------------------------------------------------

    \98\ The exclusion of protection systems intended for the 
detection of ground fault conditions appears to be unnecessary 
because these systems are not load-responsive.
---------------------------------------------------------------------------

    79. For example, subsection 3.1 excludes from the requirements of 
PRC-023-1: (1) Overcurrent elements that are enabled only during loss 
of potential conditions and (2) elements that are enabled only during a 
loss of

[[Page 25473]]

communications. This subsection could be interpreted to exclude certain 
protection systems that use communications to compare current 
quantities and directions at both ends of a transmission line, such as 
pilot wire protection or current differential protection systems 
supervised by fault detector relays. The Commission understands that if 
supervising fault detector relays are excluded from PRC-023-1, and are 
set below the rating of the protected element, the loss of 
communications and heavy line loading conditions that approach the line 
rating would cause these protective relays to operate and unnecessarily 
disconnect the line. If adjacent transmission lines have similar 
protection systems and settings, those protection systems would also 
operate unnecessarily, resulting in cascading outages.
    80. The Commission seeks comment on whether the exclusions in 
section 3 are technically justifiable and whether the Commission should 
direct the ERO to modify PRC-023-1 by deleting specific subsections in 
section 3. The Commission also seeks comment on whether it should 
direct the ERO to modify subsection 3.1 to clarify that it does not 
exclude from the requirements of PRC-023-1 such protection systems as 
described above.
    81. The Commission also notes that subsection 3.5 excludes from the 
requirements of PRC-023-1 ``relay elements used only for [s]pecial 
[p]rotection [s]ystems applied and approved in accordance with NERC 
Reliability Standards PRC-012 through PRC-017.'' Since PRC-012-0, PRC-
013-0 and PRC-014-0 are currently proposed Reliability Standards 
pending with the Commission, subsection 3.5 is not enforceable until 
approved by the Commission.\99\
---------------------------------------------------------------------------

    \99\ Order No. 693-A, FERC Stats. & Regs. ] 31,242 at P 138.
---------------------------------------------------------------------------

H. Effective Date

    82. NERC requests that PRC-023-1 be made effective consistent with 
the implementation plan accompanying the Reliability Standard. For 
Requirements R1 and R2, NERC proposes that transmission lines operated 
at 200 kV and above and transformers with low-voltage terminals 
connected at 200 kV and above (except switch-on-to fault-schemes) be 
made effective on the beginning of the first calendar quarter following 
applicable regulatory approvals. For transmission lines operated 
between 100 kV and 200 kV and transformers with low-voltage terminals 
connected between 100 kV and 200 kV that are designated by planning 
coordinators as critical to the reliability of the bulk electric system 
(including switch-on-to fault-schemes) in order to prevent a cascade, 
NERC proposes an effective date of the beginning of the first calendar 
quarter 39 months after applicable regulatory approvals. NERC also 
proposes that each transmission owner, generator owner, and 
distribution provider have 24 months from notification by the planning 
coordinator that a facility has been added to the planning 
coordinator's critical facilities list (pursuant to Requirement R3.3) 
to comply with R1 and its sub-requirements. For Requirement R3, NERC 
proposes an effective date of 18 months following applicable regulatory 
approvals.
    83. NERC also proposes to include a footnote to the ``Effective 
Dates'' section that states that entities that have received temporary 
exceptions approved by the NERC Planning Committee (via the NERC System 
and Protection and Control Task Force) before approval of the proposed 
Reliability Standard shall not be found in non-compliance with the 
Reliability Standard or receive sanctions if: (1) The approved requests 
for temporary exceptions include a mitigation plan (including schedule) 
to come into full compliance and (2) the non-conforming relay settings 
are mitigated according to the approved mitigation plan.\100\
---------------------------------------------------------------------------

    \100\ The footnote states:
    Temporary Exceptions that have already been approved by the NERC 
Planning Committee via the NERC System and Protection and Control 
Task Force prior to the approval of this [Reliability] [S]tandard 
shall not result in either findings of non-compliance or sanctions 
if all of the following apply: (1) The approved requests for 
Temporary Exceptions include a mitigation plan (including schedule) 
to come into full compliance, and (2) the non-conforming relay 
settings are mitigated according to the approved mitigation plan.
---------------------------------------------------------------------------

    84. NERC contends this implementation plan presents a reasonable 
time frame to allow all entities to be in compliance. NERC states that 
the technical requirements of PRC-023-1 have been implemented by most 
applicable entities starting in January 2005 under voluntary activities 
directed by the NERC Planning Committee and that most entities have 
provided assurances to NERC that they have implemented these technical 
requirements. NERC states that the implementation period established in 
the implementation plan provides an opportunity for those entities that 
did not participate in the voluntary activities to comply with PRC-023-
1, and for all entities to establish the documentation necessary to 
demonstrate compliance.
Commission Proposal
    85. The Commission proposes to approve the implementation plan as 
it relates to facilities operated at 200 kV and above. In light of the 
Commission's proposal to direct the ERO to modify PRC-023-1 to make it 
applicable to all facilities operated at or above 100 kV, with the 
possibility of case-by-case exceptions, and to all facilities operated 
below 100 kV that are designated by the Regional Entity as critical to 
the reliability of the bulk electric system, the Commission proposes an 
effective date of 18 months following applicable regulatory approvals 
for facilities operated below 200 kV. The Commission seeks comment on 
these proposals.
    86. The Commission proposes not to approve the temporary exemption 
of certain entities from enforcement actions while they come into 
compliance with PRC-023-1's requirements. In the Commission's view, it 
is best that discussions about potential enforcement actions are left 
out of a Reliability Standard and instead handled by NERC's compliance 
and enforcement program. Consequently, the Commission proposes to 
direct the ERO to modify PRC-023-1 by removing the footnote.

I. Violation Risk Factors

    87. As part of its compliance and enforcement program, NERC assigns 
a low, 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 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

[[Page 25474]]

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.\101\
---------------------------------------------------------------------------

    \101\ Violation Risk Factor Order, 119 FERC ] 61,145 at P 9.

    88. In the Violation Risk Factor Order, the Commission addressed 
violation risk factors filed by NERC for Version 0 and Version 1 
Reliability Standards. In that order, the Commission used five 
guidelines for evaluating the validity of each violation risk factor 
assignment: (1) Consistency with the conclusions of the Final Blackout 
Report; (2) consistency within a Reliability Standard; (3) consistency 
among Reliability Standards with similar Requirements; (4) consistency 
with NERC's proposed definition of the violation risk factor level; and 
(5) assignment of violation risk factor levels to those requirements in 
certain Reliability Standards that co-mingle a higher risk reliability 
objective and a lower risk reliability objective.\102\
---------------------------------------------------------------------------

    \102\ For a complete discussion of each guideline, see id. P 19-
36.
---------------------------------------------------------------------------

    89. In its petition, NERC assigned violation risk factors only to 
the main requirements of the proposed Reliability Standard and did not 
assign violation risk factors to any of the sub-requirements.\103\ NERC 
assigns Requirement R1 a high violation risk factor, Requirement R2 a 
medium violation risk factor, and Requirement R3 a medium violation 
risk factor.
---------------------------------------------------------------------------

    \103\ We note that, in Version Two Facilities Design, 
Connections and Maintenance Reliability Standards, Order No. 722, 
126 FERC ] 61,255 at P 45 (2009), the ERO proposed to develop 
violation risk factors and violation severity levels for 
Requirements but not sub-requirements. The Commission denied the 
proposal as ``premature'' and, instead, encouraged the ERO to 
``develop a new and comprehensive approach that would better 
facilitate the assignment of violation severity levels and violation 
risk factors.''
---------------------------------------------------------------------------

    90. As an initial matter, NERC's compliance and enforcement program 
requires it to assign a violation risk factor to each sub-requirement 
of a proposed Reliability Standard. In addition, the Violation Severity 
Level Order stated that each requirement assigned a violation risk 
factor also must be assigned at least one violation severity 
level.\104\ As set forth in the NERC's Sanction Guidelines, the 
intersection of these two factors is the first step in the 
determination of a monetary penalty for a violation of a requirement of 
a Reliability Standard. Therefore, consistent with Commission precedent 
and NERC's Sanction Guidelines, each requirement must have a violation 
risk factor and violation severity level assignment.
---------------------------------------------------------------------------

    \104\ Violation Severity Level Order, 123 FERC ] 61,284 at P 3.
---------------------------------------------------------------------------

1. Requirement R1 and Its Sub-Requirements
    91. Requirement R1 establishes criteria (sub-Requirements R1.1-
R1.13) to prevent phase protective relay settings from limiting 
transmission system loadability while maintaining reliable protection 
of the bulk electric system for all fault conditions.\105\ NERC assigns 
Requirement R1 a high violation risk factor. The Commission agrees that 
Requirement R1 should be assigned a high violation risk factor because 
a violation of Requirement R1 has the potential to cause cascading 
outages like those that occurred during the 2003 blackout. NERC did not 
assign violation risk factors to sub-Requirements R1.1 through R1.13.
---------------------------------------------------------------------------

    \105\ Requirement R1 also requires each transmission owner, 
generator owner, and distribution provider to evaluate relay 
loadability at 0.85 per unit voltage and a power factor angle of 30 
degrees.
---------------------------------------------------------------------------

Commission Proposal
    92. The Commission agrees that Requirement R1 should be assigned a 
high violation risk factor because a violation of Requirement R1 has 
the potential to cause cascading outages like those that occurred 
during the 2003 blackout. It is the Commission's view that because the 
sub-requirements in Requirement R1 set forth criteria for compliance 
with Requirement R1, the reliability risk of a violation of any one of 
the sub-requirements is the same as with a violation of Requirement R1. 
Therefore, consistent with the high violation risk factor assigned to 
Requirement R1, the Commission proposes to direct the ERO to assign a 
high violation risk factor to each of the sub-Requirements R1.1 through 
R1.13. The Commission seeks comment on this proposal.
2. Requirement R3
    93. Requirement R3 requires planning coordinators to designate 
which transmission lines and transformers with low-voltage terminals 
operated or connected between 100 kV and 200 kV are critical to the 
reliability of the bulk electric system in order to prevent a cascade 
and therefore should be subject to Requirement R1. NERC assigns 
Requirement R3 a medium violation risk factor.
Commission Proposal
    94. In light of the Commission's proposal to direct the ERO to 
modify Requirement R3 and its sub-requirements, the Commission proposes 
to direct the ERO to assign a violation risk factor to the revised 
Requirement R3 and its revised sub-requirements that is consistent with 
the revisions and the Violation Risk Factor Guidelines.

J. Violation Severity Levels

    95. 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.\106\
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    \106\ See North American Electric Reliability Corp., 119 FERC ] 
61,248 at P 74, order on clarification, 120 FERC ] 61,239 (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 and submit a compliance filing by March 1, 
2008.).
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    96. In the Violation Severity Level Order, the Commission addressed 
violation severity level assignments filed by NERC for the 83 
Reliability Standards approved in Order No. 693. In that order, the 
Commission developed four guidelines for evaluating violation severity 
levels filed by NERC: (1) Violation severity level assignments should 
not have the unintended consequence of lowering the current level of 
compliance; (2) violation severity level assignments should ensure 
uniformity and consistency among all approved Reliability Standards in 
the determination of penalties; (3) violation severity level 
assignments should be consistent with the corresponding requirement; 
and (4) violation severity level assignments should be based on a 
single violation,

[[Page 25475]]

not on a cumulative number of violations.\107\
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    \107\ For a complete discussion of each guideline, see the 
Violation Severity Level Order, 123 FERC ] 61,284 at P 19-36.
---------------------------------------------------------------------------

    97. In its petition, NERC proposes violation severity levels for 
Requirements R1, R2, and R3. NERC did not propose violation severity 
levels for sub-Requirements R1.1 through R1.13 and R3.1 through R3.3.
    98. The Commission is concerned that the violation severity levels 
assigned to Requirements R1 and R2 may not be consistent with certain 
guidelines set forth in the Violation Severity Level Order. Moreover, 
NERC did not propose violation severity levels for any sub-
requirements. As discussed previously, each requirement that is 
assigned a violation risk factor must also be assigned at least one 
violation severity level. Accordingly, the Commission proposes to 
direct the ERO to revise violation severity levels assigned to 
Requirements R1 and R2 as well as to submit violation severity levels 
for sub-Requirements R1.1 through R1.13 that are consistent with the 
guidelines set forth in the Violation Severity Order as discussed 
below.
1. Requirement R1
    99. Requirement R1 and sub-Requirements R1.1 through R1.13 
establish criteria to be used for setting phase protective relays. NERC 
proposes violation severity levels that assign a ``moderate'' severity 
for a violation when the applicable entity complied with the criteria, 
but its evidence of compliance is incomplete or incorrect for one or 
more of the criteria and a ``severe'' violation when the relays' 
settings do not comply with any of the criteria or evidence does not 
exist to support compliance with any one of the criteria.
Commission Proposal
    100. It is the Commission's view that the violation severity levels 
NERC assigns to Requirement R1 combine the degree or severity of a 
violation of the Requirement (e.g., the relay settings do not comply 
with any of the sub-requirements) with an outcome with regard to 
determining compliance with the Requirement (e.g., evidence that the 
relay settings comply with the sub-requirements). For example, 
Guideline 3 ensures that assigned violation severity levels are 
consistent with the corresponding requirement i.e., the degrees of non-
compliance are based on the text of the requirement. The text of 
Requirement R1 does not explicitly state that the applicable entity 
have evidence that the relay settings comply with the criteria set 
forth in the sub-Requirements R1.1 through R1.13; only that the 
applicable entity use criteria. The Commission believes that having 
evidence that the relay settings comply with the criteria is an outcome 
that is expected with compliance with the Requirement. This is 
consistent with NERC's description of a requirement's ``Measure'' and 
not indicative of the degree to which the Requirement was 
violated.\108\ As such, since the text of the assigned violation 
severity level as it is not consistent with the corresponding 
requirement, the assigned violation severity levels are not consistent 
with Guideline 3.
---------------------------------------------------------------------------

    \108\ NERC Reliability Standards Development Procedure, see 
descriptions of ``Measure'' and ``Violation Severity Level.''
---------------------------------------------------------------------------

    101. The Commission believes that violation severity levels for 
Requirement R1 and its sub-requirements could be assigned applying a 
binary approach; i.e., either an entity applied the criteria or it did 
not. Consistent with the binary approach, a single violation severity 
level assignment for Requirement R1 and single violation severity level 
for each of the sub-Requirements R1.1 through R1.13 is appropriate. 
Therefore, the Commission proposes to direct the ERO to assign a single 
violation severity level to Requirement R1 and a single violation 
severity level to each of the sub-Requirements R1.1 through R1.13, 
consistent with its Guideline 2a compliance filing in Docket No. RR08-
4-004 and seeks comment on this proposal.\109\
---------------------------------------------------------------------------

    \109\ In its Guideline 2a compliance filing in Docket No. RR08-
4-004 currently before the Commission, NERC proposes to assign the 
single violation severity level for binary Requirements to the 
``severe'' category.
---------------------------------------------------------------------------

2. Requirement R2
    102. Requirement R2 states that transmission owners, generator 
owners, and distribution providers that use a circuit with the 
protective relays' settings determined by the practical limitations 
described in sub-Requirements R1.6 through R1.9, R1.12, or R1.13 must 
use the calculated circuit capability as the circuit's Facility Rating 
and must obtain the agreement of the planning coordinator, transmission 
operator, and reliability coordinator with the calculated circuit 
capability. NERC designates the Requirement as a binary requirement and 
assigns a ``lower'' violation severity level if an applicable entity 
uses the criteria described in sub-Requirements R1.6 through R1.9, 
R1.12, or R1.13, but evidence does not exist that the required 
agreement was obtained.
Commission Proposal
    103. It is the Commission's view that the violation severity level 
NERC assigns to Requirement R2 does not reflect the degree or severity 
of a violation of the requirement, but rather describes an outcome with 
regard to determining compliance with the requirement. As discussed 
previously, Guideline 3 ensures that assigned violation severity levels 
are consistent with the corresponding requirement. The text of 
Requirement R2 does not explicitly state that the applicable entity 
have evidence of the agreement; only that agreement is obtained. While 
the Commission agrees that Requirement R2 is a binary requirement, the 
Commission disagrees with the text of the assigned violation severity 
level as it is not consistent with the corresponding requirement, and 
thus not consistent with Guideline 3. As such, the Commission proposes 
that the single violation severity level assigned to Requirement R2 
should be for the failure of the applicable entity that used the 
described criteria to calculate circuit capability as the Facility 
rating to obtain agreement on that rating with the required entities. 
The Commission seeks comment on this proposal.
    104. Also, the Commission points out that the single violation 
severity level NERC assigns to this binary requirement appears to be 
inconsistent with NERC's Guideline 2a compliance filing in Docket No. 
RR08-4-004. In that docket, NERC assigns the single violation severity 
level for binary requirements to the ``severe'' category. Here, it 
assigns the single violation severity level to the ``lower'' category. 
Consistent with Guideline 2a of the Violation Severity Level Order, the 
Commission expects the single violation severity level assigned to 
binary requirements to be consistent. Consequently, the Commission 
proposes to direct the ERO to revise the violation severity level it 
assigns to Requirement R2 to be consistent with Guideline 2a.
 3. Requirement R3
    105. Requirement R3 requires planning coordinators to designate 
which transmission lines and transformers with low-voltage terminals 
operated or connected between 100 kV and 200 kV are critical to the 
reliability of the bulk electric system in order to prevent a cascade 
and therefore subject to Requirement R1. Sub-Requirements R3.1 and 
R3.1.1 specify that planning coordinators must have a process to 
determine those facilities and that this process must consider input 
from adjoining planning coordinators and

[[Page 25476]]

affected reliability coordinators. Sub-Requirements R3.2 and R3.3 
require planning coordinators to maintain a list of designated 
facilities and provide it to reliability coordinators, transmission 
owners, generator owners, and distribution providers within 30 days of 
its initial establishment, and within 30 days of any subsequent change. 
NERC proposes a ``severe'' violation severity level when the applicable 
entity has neither a process to determine facilities that are critical 
to the reliability of the bulk-electric system nor a current list of 
critical facilities, and ``moderate'' and ``high'' violation severity 
levels based on the number of days that a planning coordinator is late 
in providing the list to the required entities.
Commission Proposal
    106. In light of the Commission's proposal to direct the ERO to 
modify Requirement R3 and its sub-requirements, the Commission proposes 
to direct the ERO to assign a violation severity level to the revised 
Requirement R3 and its revised sub-requirements that is consistent with 
the revisions and the guidelines set forth in the Violation Severity 
Level Order.
Summary
    107. Reliability Standard PRC-023-1 appears to be just, reasonable, 
not unduly discriminatory or preferential, and in the public interest. 
Accordingly, the Commission proposes to approve Reliability Standard 
PRC-023-1 as mandatory and enforceable. In proposing to approve PRC-
023-1, the Commission emphasizes that (1) protective relay settings 
determined and applied in accordance with its requirements must be 
included in determining system performance, System Operating Limits and 
Interconnection Reliability Operating Limits, and must be coordinated 
with other protective relay settings as required by the applicable IRO, 
TOP, and TPL Reliability Standards and (2) the proposed Reliability 
Standard's requirements govern all relays subject to the proposed 
Reliability Standard applied to protect, in any capacity, the 
applicable facilities defined in the proposed Reliability Standard.
    108. In addition, the Commission proposes to direct the ERO to 
address specific concerns and revise violation risk factors and 
violation severity level assignments of the Reliability Standard as 
discussed above applying the guidelines set forth in the Violation Risk 
Factor Order and Violation Severity Order 90 days before the effective 
date of the Reliability Standard.

IV. Information Collection Statement

    109. The Office of Management and Budget (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\110\ 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 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) \111\ requires each federal agency to 
seek and obtain OMB approval before undertaking a collection of 
information directed to ten or more persons, or continuing a collection 
for which OMB approval and validity of the control number are about to 
expire.\112\
---------------------------------------------------------------------------

    \110\ 5 CFR 1320.11.
    \111\ 44 U.S.C. 3501-20.
    \112\ 44 U.S.C. 3502(3)(A)(i), 44 U.S.C. 3507(a)(3).
---------------------------------------------------------------------------

    110. The Commission is submitting these reporting and recordkeeping 
requirements to OMB for its review and approval under section 3507(d) 
of the PRA. Comments are solicited on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of provided burden estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods for minimizing the respondent's burden, including the 
use of automated information techniques.
    111. This NOPR proposes to approve one new Reliability Standard 
developed by NERC as the ERO. Section 215 of the FPA authorizes the ERO 
to develop Reliability Standards to provide for the operation of the 
Bulk-Power System. Pursuant to the statute, the ERO must submit to the 
Commission for approval each Reliability Standard that it proposes to 
be made effective.\113\
---------------------------------------------------------------------------

    \113\ See 16 U.S.C. 824o(d).
---------------------------------------------------------------------------

    112. Proposed Reliability Standard PRC-023-1 does not require 
responsible entities to file information with the Commission. However, 
the Reliability Standard requires applicable entities to develop and 
maintain certain information, subject to audit by a Regional Entity. In 
particular, transmission owners, generator owners and distribution 
providers must ``have evidence'' to show that each of its transmission 
relays are set according to the one of the criteria in Requirement R1 
of the Reliability Standard.\114\ In certain circumstances set forth in 
the Reliability Standard, transmission owners, generator owners and 
distribution providers must have evidence that a facility rating was 
agreed to by the relevant planning authority, transmission operator and 
reliability coordinator.\115\ Further, planning coordinators must have 
(1) a documented process for the determination of facilities that are 
critical to bulk electric system reliability and (2) a current list of 
such facilities.
---------------------------------------------------------------------------

    \114\ See Reliability Standard PRC-023-1, Measure M1.
    \115\ Id., Measure M2.
---------------------------------------------------------------------------

    113. Public Reporting Burden: Our estimate below regarding the 
number of respondents is based on the NERC compliance registry as of 
March 3, 2009 and NERC's July 30, 2008 Petition that is the subject of 
this proceeding. According to the NERC compliance registry, as of March 
3, 2009, NERC has registered 568 distribution providers, 825 generator 
owners and 324 transmission owners. Further, NERC has registered 79 
planning authorities. However, the Reliability Standard does not apply 
to all transmission owners, generator owners and distribution 
providers. Rather, the Reliability Standard applies to transmission 
owners, generator owners and distribution providers with load-response 
phase protection systems applied to transmission lines operated at 200 
kV and above--and other criteria set forth in the Applicability section 
of the Standard, and as described in Attachment A of the Standard. 
Further, some entities are registered for multiple functions, so there 
is some overlap between the entities registered as distribution 
providers, transmission owners, and generator owners. Given these 
additional parameters, the Commission estimates that the Public 
Reporting burden for the requirements contained in the NOPR is as 
follows:

[[Page 25477]]



----------------------------------------------------------------------------------------------------------------
                                   Number of       Number of        Hours per
        Data collection           respondents      responses        respondent           Total annual hours
----------------------------------------------------------------------------------------------------------------
FERC-725G
M1--TOs, GOs and DPs must                  450               1  Reporting: 0.....  Reporting: 0.
 ``have evidence'' to show                                      Recordkeeping:     Recordkeeping: 45,000.
 that each of its transmission                                   100.
 relays are set according to
 Requirement R1.
M2--Certain TOs, GOs and DPs               166               1  Reporting: 0.....  Reporting: 0.
 must have evidence that a                                      Recordkeeping: 10  Recordkeeping: 1,660.
 facility rating was agreed to
 by PA, TOP and RC.
M3--PC must document process                79               1  175..............  13,825.
 for determining critical
 facilities and (2) a current
 list of such facilities.
                               ---------------------------------------------------------------------------------
    Total.....................  ..............  ..............  .................  60,485.
----------------------------------------------------------------------------------------------------------------

     Total Annual hours for Collection: (Reporting + 
recordkeeping) = 60,485 hours. Information Collection Costs: The 
Commission seeks comments on the costs to comply with these 
requirements. It has projected the average annualized cost to be the 
total annual hours.

Recordkeeping = 60,485 @ $40/hour = $--241,940 ---- .
Labor (file/record clerk @ $17 an hour + supervisory @ $23 an hour)

     Total costs = $--241,940 ---- .
     Title: FERC-725-G Mandatory Reliability Standard for 
Transmission Relay Loadability.
     Action: Proposed Collection of Information.
     OMB Control No: [To be determined.]
     Respondents: Business or other for profit, and/or not for 
profit institutions.
     Frequency of Responses: On Occasion
     Necessity of the Information: The Transmission Relay 
Loadability Reliability Standard, if adopted, would implement the 
Congressional mandate of the Energy Policy Act of 2005 to develop 
mandatory and enforceable Reliability Standards to better ensure the 
reliability of the nation's Bulk-Power System. Specifically, the 
proposed Reliability Standard would ensure that protective relays are 
set according to specific criteria to ensure that relays reliably 
detect and protect the electric network from all fault conditions, but 
do not limit transmission loadability or interfere with system 
operator's ability to protect system reliability.
     Internal review: The Commission has reviewed the 
requirements pertaining to the proposed Reliability Standard for the 
Bulk-Power System and determined that the proposed requirements are 
necessary to meet the statutory provisions of the Energy Policy Act of 
2005. These requirements conform to the Commission's plan for efficient 
information collection, communication and management within the energy 
industry. The Commission has assured itself, by means of internal 
review, that there is specific, objective support for the burden 
estimates associated with the information requirements.
    114. 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 proposed 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].

V. Environmental Analysis

    115. 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.\116\ 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.\117\ Accordingly, neither an environmental 
impact statement nor environmental assessment is required.
---------------------------------------------------------------------------

    \116\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47,897 (Dec. 17, 1987), FERC Stats. 
& Regs. ] 30,783 (1987).
    \117\ 18 CFR 380.4(a)(5) (2008).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act Analysis

    116. The Regulatory Flexibility Act of 1980 (RFA) \118\ 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., transmission owners, generator owners, 
distribution providers, and ``planning coordinators,'' or alternatively 
``planning authorities,'' to which the requirements of this rule would 
apply do not fall within the definition of small entities.\119\
---------------------------------------------------------------------------

    \118\ 5 U.S.C. 601-12.
    \119\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act (SBA), 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.
---------------------------------------------------------------------------

    117. As indicated above, based on available information regarding 
NERC's compliance registry, approximately 525 entities will be 
responsible for compliance with the new Reliability Standard. The 
Commission certifies that the proposed Reliability Standard will not 
have a significant adverse impact on a substantial number of small 
entities.
    118. Based on this understanding, the Commission certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities. Accordingly, no regulatory flexibility 
analysis is required.

VII. Comment Procedures

    119. The Commission invites interested persons to submit comments 
on the matters and issues proposed in this notice to be adopted, 
including any related matters or alternative proposals that commenters 
may wish to discuss. Comments are due July 27, 2009. Comments must 
refer to Docket No. RM08-13-000, and must include the commenter's name, 
the organization they represent, if applicable, and their address in 
their comments.
    120. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents

[[Page 25478]]

created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format. Commenters filing electronically do not need to make a paper 
filing.
    121. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street, NE., Washington, DC 20426.
    122. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VIII. Document Availability

    123. 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.
    124. 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.
    125. 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 1-866-208-3676) 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].

List of Subjects in 18 CFR Part 40

    Electric power, Reporting and recordkeeping requirements.

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E9-12350 Filed 5-27-09; 8:45 am]
BILLING CODE 6717-01-P