[Federal Register Volume 76, Number 80 (Tuesday, April 26, 2011)]
[Rules and Regulations]
[Pages 23171-23177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10011]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-8-000; Order No. 750]


Electric Reliability Organization Interpretations of 
Interconnection Reliability Operations and Coordination and 
Transmission Operations Reliability Standards

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the Federal 
Energy Regulatory Commission hereby approves the North American 
Electric Reliability Corporation's (NERC) interpretation of the 
Commission-approved Reliability Standards, IRO-005-1, Reliability 
Coordination--Current-Day Operations, Requirement R12, and TOP-005-1, 
Operational Reliability Information, Requirement R3. Specifically, the 
interpretation finds that a transmission owner must report a Special 
Protection System that is operating with only one communication channel 
in service to the reliability coordinator and neighboring systems upon 
request, or when the loss of the communication channel will result in 
the failure of the Special Protection System to operate as designed.

DATES: Effective Date: This rule will become effective May 26, 2011.

FOR FURTHER INFORMATION CONTACT: Danny Johnson (Technical Information), 
Office of Electric Reliability, Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426. Telephone: (202) 502-8892. 
[email protected].
    Richard M. Wartchow (Legal Information), Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-8744.

SUPPLEMENTARY INFORMATION:

135 FERC ] 61,041

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.

Issued April 21, 2011

    1. Pursuant to section 215 of the Federal Power Act, the Federal 
Energy Regulatory Commission hereby approves the North American 
Electric Reliability Corporation's (NERC) interpretation of the 
Commission-

[[Page 23172]]

approved Reliability Standards, IRO-005-1, Reliability Coordination--
Current-Day Operations, and TOP-005-1, Operational Reliability 
Information. Specifically, the interpretation finds that a transmission 
owner must report a Special Protection System that is operating with 
only one communication channel in service to the reliability 
coordinator and neighboring systems upon request, or when the loss of 
the communication channel will result in the failure of the Special 
Protection System to operate as designed. In the Final Rule, the 
Commission declines to adopt the proposal from the Notice of Proposed 
Rulemaking (NOPR) to direct the Electric Reliability Organization (ERO) 
to develop modifications to the Reliability Standards to require 
additional reporting and instead approves the interpretation as 
submitted.\1\
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    \1\ Electric Reliability Organization Interpretations of 
Interconnection Reliability Operations and Coordination and 
Transmission Operations Reliability Standards, Notice of Proposed 
Rulemaking, 75 FR 80391 (Dec. 22, 2010), 133 FERC ] 61,234, at P 27 
(2010) (NOPR).
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I. Background

A. FPA Section 215 and Mandatory Reliability Standards

    2. Section 215 of the FPA requires a Commission-certified ERO to 
develop mandatory and enforceable Reliability Standards, which are 
subject to Commission review and approval. Once approved, the 
Reliability Standards may be enforced by the ERO, subject to Commission 
oversight, or by the Commission independently.\2\
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    \2\ See 16 U.S.C. 824o(e)(3).
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    3. Pursuant to section 215 of the FPA, the Commission established a 
process to select and certify an ERO \3\ and subsequently certified 
NERC as the ERO.\4\ On April 4, 2006, as modified on August 28, 2006, 
NERC submitted to the Commission a petition seeking approval of 107 
proposed Reliability Standards. On March 16, 2007, the Commission 
issued a Final Rule, Order No. 693, approving 83 of these 107 
Reliability Standards and directing other action related to these 
Reliability Standards.\5\ In addition, pursuant to section 215(d)(5) of 
the FPA, the Commission directed NERC to develop modifications to 56 of 
the 83 approved Reliability Standards.\6\
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    \3\ Rules Concerning Certification of the Electric Reliability 
Organization; and Procedures for the Establishment, Approval and 
Enforcement of Electric Reliability Standards, Order No. 672, FERC 
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC 
Stats. & Regs. ] 31,212 (2006).
    \4\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
    \5\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order 
No. 693-A, 120 FERC ] 61,053 (2007).
    \6\ 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, ``The 
Commission * * * may order the Electric Reliability Organization 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 new or modified 
reliability standard appropriate to carry out this section.''
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    4. NERC's Rules of Procedure provide that a person that is 
``directly and materially affected'' by Bulk-Power System reliability 
may request an interpretation of a Reliability Standard.\7\ The ERO's 
standards process manager will assemble a team with relevant expertise 
to address the requested interpretation and also form a ballot pool. 
NERC's Rules provide that, within 45 days, the team will draft an 
interpretation of the Reliability Standard, with subsequent balloting. 
If approved by ballot, the interpretation is appended to the 
Reliability Standard, forwarded to the NERC Board of Trustees (Board) 
for adoption and filed with the applicable regulatory authority for 
regulatory approval.
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    \7\ NERC's interpretation process is detailed in its Rules of 
Procedure, Appendix 3A, Standards Process Manual, at 27-29 
(effective Sept. 3, 2010).
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B. IRO-005-1 and TOP-005-1 Reliability Standards

    5. In this proceeding, the Commission addresses NERC's 
interpretation of the IRO-005-1 and TOP-005-1 Reliability Standards, as 
previously discussed in the NOPR. In Order No. 693, the Commission 
approved prior versions of the IRO-005-1 and TOP-005-1, with 
modifications.\8\ The Commission directed NERC to modify TOP-005-1 to 
specify the operational status of Special Protection Systems and power 
system stabilizers as information that transmission operators are 
expected to share, unless otherwise agreed.\9\ Because these and other 
intervening changes are not material to the substance of the 
interpretation, the discussion in this Final Rule is intended to apply 
equally to the subsequent versions of these standards as appropriate.
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    \8\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 945, 1648.
    \9\ Id. P 1648 (directing revisions to TOP-005-1, Attachment 1). 
The Commission addressed the most recent versions of the IRO-005-1 
and TOP-005-1 Reliability Standards in Mandatory Reliability 
Standards for Interconnection Reliability Operating Limits, Order 
No. 748, 76 FR, 16240 (Mar. 23, 2011), 134 FERC ] 61,213 (2011) 
(revising responsibilities for interconnection reliability operating 
limit and system operating limit monitoring), Notice of Proposed 
Rulemaking, 75 FR 71613 (Nov. 24, 2010), FERC Stats. & Regs. ] 
32,665, at P 65 (2010).
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1. Reliability Standard IRO-005-1
    6. Reliability Standard IRO-005-1 applies to transmission 
operators, balancing authorities, reliability coordinators and 
purchasing selling entities. The IRO-005-1 Purpose statement provides: 
``The Reliability Coordinator must be continuously aware of conditions 
within its Reliability Coordinator Area and include this information in 
its reliability assessments. The Reliability Coordinator must monitor 
Bulk Electric System parameters that may have significant impacts upon 
the Reliability Coordinator Area and neighboring Reliability 
Coordinator Areas.'' Requirement R12 of IRO-005-1 states in relevant 
part:

    Whenever a Special Protection System that may have an inter-
Balancing Authority, or inter-Transmission Operator impact (e.g., 
could potentially affect transmission flows resulting in a SOL or 
IROL violation) is armed, the Reliability Coordinator shall be aware 
of the impact of the operation of that Special Protection System on 
inter-area flows. The Transmission Operator shall immediately inform 
the Reliability Coordinator of the status of the Special Protection 
System including any degradation or potential failure to operate as 
expected.
2. Reliability Standard TOP-005-1
    7. Reliability Standard TOP-005-1 applies to transmission 
operators, balancing authorities, reliability coordinators and 
purchasing selling entities, and has the stated purpose of ensuring 
that reliability entities have the operating data needed to monitor 
system conditions within their areas.\10\
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    \10\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1642.
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    8. Requirement R3 of TOP-005-1 states in relevant part:

    Upon request, each Balancing Authority and Transmission Operator 
shall provide to other Balancing Authorities and Transmission 
Operators with immediate responsibility for operational reliability, 
the operating data that are necessary to allow these Balancing 
Authorities and Transmission Operators to perform operational 
reliability assessments and to coordinate reliable operations. 
Balancing Authorities and Transmission Operators shall provide the 
types of data as listed in Attachment 1-TOP-005-0 ``Electric System 
Reliability Data,'' unless otherwise agreed to by the Balancing 
Authorities and Transmission Operators with immediate responsibility 
for operational reliability.

TOP-005-1, Attachment 1 includes ``New or degraded special protection 
systems'' in the types of data to be reported.

[[Page 23173]]

C. Special Protection Systems

    9. Also in Order No. 693, the Commission reviewed standards 
addressing Special Protection System design, operation, and 
coordination.\11\ The Commission declined to approve them because they 
were ``fill in the blank'' standards that required regional reliability 
organizations to develop criteria for each region. Subsequently, NERC 
has produced a white paper providing background for its Protection 
System Reliability Standards development effort.\12\ After this 
standards development effort was initiated, the NERC Regional 
Reliability Standards Working Group identified the Special Protection 
System standard as one that required regional standard development.\13\ 
The Commission understands that the regional standard development 
efforts are currently ongoing.
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    \11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1520, 
1528, et seq. (declining to approve or remand certain Special 
Protection Systems-related Reliability Standards, including PRC-012-
0, Special Protection System Review Procedure; PRC-013-0, Special 
Protection System Database; PRC-014-0, Special Protection System 
Assessment). The Commission used the term fill-in-the-blank 
standards to refer to proposed standards that required the regional 
reliability organizations to develop at a later date criteria for 
use by users, owners or operators within each region.
    \12\ NERC System Protection and Control Subcommittee (SPCS), 
November 18, 2008 white paper on Protection System Reliability, 
Redundancy of Protection System Elements available at http://www.nerc.com/filez/spctf.html (posted Jan. 14, 2009).
    \13\ NERC Regional Reliability Standards Working Group, notes on 
October 29, 2009 meeting, available at http://www.nerc.com/filez/rrswg.html.
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    10. The NERC glossary provides definitions of terms used in the 
Reliability Standards and defines a ``Special Protection System'' as:

    An automatic protection scheme designed to detect abnormal or 
predetermined system conditions and take corrective actions other 
than and/or in addition to the isolation of faulted component to 
maintain system reliability. Such action may include changes in 
demand, generation (MW and MVAR), or system configuration to 
maintain system stability, acceptable voltage or power flows.\14\
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    \14\ In the Western Interconnection, a Special Protection System 
is called a ``Remedial Action Scheme.''

    11. Special Protection Systems generally are used to address system 
reliability vulnerabilities in lieu of installing additional Bulk-Power 
System facilities. For instance, a Special Protection System may be 
used to control generator output to limit line loading after a 
contingency, or a Special Protection System may rely on pre-determined 
operational protocols to reconfigure the system in response to 
identified system conditions to prevent system instability or cascading 
outages, and protect other facilities in response to transmission 
outages.

D. NERC's Interpretation Filing

    12. NERC filed its interpretation on November 24, 2009. The 
interpretation responds to a request from Manitoba Hydro asking NERC to 
interpret whether a Special Protection System that is operating with 
only one communication channel in service would be considered 
``degraded,'' and thus subject to the reporting requirements found in 
these standards.\15\ NERC's interpretation finds that a transmission 
owner must report a Special Protection System that is operating with 
only one communication channel in service to the reliability 
coordinator and neighboring systems upon request, or when the loss of 
the communication channel will result in the failure of the Special 
Protection System to operate as designed.
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    \15\ The NERC Petition provides a copy of Manitoba Hydro's 
November 28, 2008 request for interpretation as Exhibit A.
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1. NERC Interpretation Process
    13. Manitoba Hydro asked whether a Special Protection System that 
is operating with only one communication channel in service would be 
considered ``degraded'' for the purposes of these standards. Manitoba 
Hydro stated:

    Unlike other facilities, Special Protection Systems are required 
by NERC standards to be designed with redundant communication 
channels, so that if one communication channel fails the [Special 
Protection System] is able to remain in operation. Requirement R1.3 
of NERC Standard PRC-012-0 requires a Regional Reliability 
Organization with Transmission Owners that use [Special Protection 
Systems] to have a documented review procedure to ensure that 
[Special Protection Systems] comply with reliability standards and 
criteria, including: ``requirements to demonstrate that the [Special 
Protection System] shall be designed so that a single [Special 
Protection System] component failure, when the [Special Protection 
System] was intended to operate, does not prevent the interconnected 
transmission system from meeting the performance requirements in 
TPL-001-0, TPL-002-0 and TPL-003-0.'' Accordingly, [Special 
Protection Systems] are designed to continue to perform their 
function with only one communication channel in service.

    14. Accordingly, Manitoba Hydro asserted that a Special Protection 
System should not be considered ``degraded'' if it is operating with 
one communication channel out of service.
    15. Consistent with the NERC Rules of Procedure, NERC assembled a 
team to respond to the request for interpretations of these two 
Reliability Standard requirements and presented the proposed 
interpretations to industry ballot, using a process similar to the 
process it uses for the development of Reliability Standards.\16\ 
According to NERC, the interpretations were developed and approved by 
industry stakeholders using the NERC Reliability Standards Development 
Procedure and approved by the NERC Board.
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    \16\ NERC Standards Process Manual at 27-29.
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    16. In response to Manitoba Hydro's interpretation request, NERC 
provided the following:

    TOP-005-1 does not provide, nor does it require, a definition 
for the term ``degraded.''
    The IRO-005-1 ([Requirement] R12) standard implies that degraded 
is a condition that will result in a failure of an [Special 
Protection System] to operate as designed. If the loss of a 
communication channel will result in the failure of an [Special 
Protection System] to operate as designed, then the Transmission 
Operator would be mandated to report that information. On the other 
hand, if the loss of a communication channel will not result in the 
failure of the [Special Protection System] to operate as designed, 
then such a condition can be, but is not mandated to be, reported.

    17. In the background section of the interpretation, NERC affirms 
that transmission operators are required to provide information such as 
that listed in the TOP-005-1, Attachment 1 examples upon request, 
``whether or not [a facility] is or is not in some undefined `degraded' 
state.'' \17\
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    \17\ NERC Petition, Exhibit B at 5 (proposing text of 
interpretation as Appendix 1 to IRO-005-1 and TOP-005-1, and 
including ``Background Information for Interpretation'' section).
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    18. In addition, the background section of the NERC interpretation 
emphasizes that the information to be provided under IRO-005-1 relates 
to events that may have a significant impact on the system, especially 
where operating limits are or may be exceeded. Specifically, this 
background section states:

    IRO-005-1 mandates that each Reliability Coordinator monitor 
predefined base conditions (Requirement R1), collect additional data 
when operating limits are or may be exceeded (Requirement R3), and 
identify actual or potential threats (Requirement R5). The basis for 
that request is left to each Reliability Coordinator. The Purpose 
statement of IRO-005-1 focuses on the Reliability Coordinator's 
obligation to be aware of conditions that may have a ``significant'' 
impact upon its area and to communicate that information to others 
(Requirements R7 and R9). Please note: it is from this communication 
that Transmission Operators and Balancing Authorities would either 
obtain or would know to ask for [Special Protection System] 
information from another Transmission Operator.\18\
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    \18\ Id., Exhibit B at 6.


[[Page 23174]]


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    19. In addition, the NERC Petition states:

    The NERC Board of Trustees, in approving these interpretations, 
did so using a standard of strict construction that does not expand 
the reach of the standard or correct a perceived gap or deficiency 
in the standard. However, the NERC Board of Trustees recommended 
that any gaps or deficiencies in a Reliability Standard that are 
evident through the interpretation process be addressed promptly by 
the standard drafting team.\19\
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    \19\ NERC Petition at 5.

    20. NERC reports that it will examine any gaps or deficiencies in 
Reliability Standards TOP-005-1 and IRO-005-2 when it develops the next 
version of these standards through the Reliability Standards 
development process. According to NERC, the interpretations do not 
modify the language contained in the requirements under review. NERC 
states that the interpretations do not represent new or modified 
Reliability Standard requirements and will provide instruction and 
guidance of the intent and application of the requirements. NERC 
requests that the Commission approve the interpretations and make them 
effective immediately after approval, consistent with the Commission's 
procedures.
    21. NERC submitted its Petition for Approval of Interpretations to 
Reliability Standard TOP-005-1--Operational Reliability Information and 
Reliability Standard IRO-005-1--Reliability Coordination--Current Day 
Operations (Petition) on November 24, 2009, seeking Commission approval 
of the interpretations referenced in the title of its pleading.

E. Notice of Proposed Rulemaking

1. Proposed Determination
    22. In the NOPR, the Commission proposed to approve the 
interpretation as just and reasonable and not inconsistent with the 
language of the Reliability Standards. However, to address a concern 
that a Special Protection System that has lost a communication channel 
could compromise system reliability, the Commission proposed to direct 
that the ERO develop modifications to the Reliability Standards to 
address a potential reliability gap and ensure that a component 
failure, wherein a Special Protection System may not be able to perform 
as designed to ensure required Bulk-Power System performance, is 
reported to the appropriate reliability entities. To assist its 
consideration of the issues in this proceeding, the Commission 
requested comment on its proposal, and requested that reliability 
coordinators and transmission operators report whether it would be 
useful to the operation and coordination of the transmission system to 
receive information concerning the loss of a redundant communication 
channel.
    23. In the NOPR, the Commission acknowledged the NERC System 
Protection and Control Subcommittee's (SPCS) November 18, 2008 white 
paper, ``Protection System Reliability, Redundancy of Protection System 
Elements,'' which explained that ``[r]edundancy means that two or more 
functionally equivalent Protection Systems are used to protect each 
electric system element.'' \20\ The SPCS also explained that ``[a] 
fundamental concept of redundancy is that Protection Systems need to be 
designed such that electric system faults will be cleared, even if a 
component of the Protection System fails.'' \21\ In other words, 
redundant communication channels are a means to provide for the 
reliable operation of the Special Protection System. Thus, the 
Commission found that, should a communication channel fail at the time 
the Special Protection System is required to operate, the designed 
redundancy of the Special Protection System ensures that the Bulk-Power 
System can meet its reliability performance requirements.
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    \20\ NERC SPCS White Paper at 9, available at http://www.nerc.com/filez/spctf.html (dated Jan. 14, 2009).
    \21\ Id.; see also Table 4-3 in the white paper noting possible 
responses to communication channel failure including adding a 
redundant channel or performing testing to ensure that delayed fault 
clearing does not violate the planning standards.
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    24. However, the NOPR expressed the Commission's concern that, 
given NERC's proposed interpretation, a loss of a communication 
channel, a necessary and inherent performance requirement of a Special 
Protection System, may not be considered a reportable event under the 
current reporting requirements. The NOPR highlighted the critical 
status of Special Protection Systems, noting that they are by their 
nature used to address system reliability vulnerabilities to prevent 
system instability, cascading outages, and protect other facilities in 
response to contingencies. Therefore, a failure of the remaining 
communication component of a Special Protection System creates a 
reliability risk to the Bulk-Power System. We continued that where one 
communication channel has failed, the Special Protection System may not 
be able to meet the performance criteria of the Reliability Standards 
and in particular the performance criteria specified in the 
Transmission Planning (TPL) standards, because the Special Protection 
System may not withstand a second component failure. In conclusion, the 
Commission expressed its view that such a Special Protection System 
would be operating at some state less than the normal secure state and 
should need to be reported to the appropriate reliability entities in 
order for these reliability entities to accurately assess operational 
reliability.
2. Comments
    25. NERC, Manitoba Hydro, Bonneville Power Administration 
(Bonneville), Edison Electric Institute (EEI), Entergy Services, Inc. 
(Entergy) and the ISO/RTO Council submitted comments in response to the 
NOPR. Electric Reliability Council of Texas, Inc. (ERCOT) submitted 
comments prior to the NOPR.
    26. Commenters support the Commission's proposal to approve NERC's 
interpretation. However, with respect to the Commission's proposal to 
direct NERC to develop additional reporting requirements,\22\ NERC and 
others responded to the Commission's proposal and emphasize that the 
information to be reported under the NOPR proposal is already available 
pursuant to other requirements. For instance, ISO/RTO Council states 
that the information is available to a reliability coordinator under 
IRO-002-1, Requirement R2.\23\ NERC asserts that knowledge of the loss 
of a communication channel could be of general interest to a 
reliability coordinator or transmission operator and reports that its 
drafting teams are currently reviewing whether such entities should 
have the authority to request any and all information deemed necessary 
to protect the reliability of the bulk electric system, including the 
status of Special Protection System communication channels.\24\
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    \22\ NOPR, 133 FERC ] 61,234 at P 23, 27 (expressing concern 
that a Special Protection System that has lost a communication 
channel could compromise system reliability, but would not be 
reported to the appropriate reliability entities).
    \23\ ISO/RTO Council at 3 (citing similar requirement in new, 
proposed Reliability Standard, IRO-010-1a, Requirement R3). See also 
NERC at 4-5; NOPR, 133 FERC ] 61,234 at P 18 (noting interpretation 
assertion that reporting under TOP-005-1 is not dependent on whether 
a Special Protection System is in a degraded state); Order No. 748, 
134 FERC ] 61,213.
    \24\ NERC at 4.
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    27. Entergy cites IRO-005-2, Requirement R1.1 which states that a 
reliability coordinator must monitor the status of bulk electric system 
elements, including critical auxiliaries such as Special Protection 
Systems. According to Entergy, IRO-005-2, Requirement

[[Page 23175]]

R1.1, demonstrates that information on the loss of Special Protection 
System communication channels is already available to reliability 
coordinators. Entergy likewise cites IRO-005-2, Requirement R1.1, which 
provides that each reliability coordinator shall monitor its 
reliability coordinator area parameters, including ``Current Status of 
Bulk Electric Systems elements (transmission or generation including 
critical auxiliaries such as Automatic Voltage Regulators and Special 
Protection Systems) and system loading.'' \25\ Entergy states, ``In 
order to monitor the status of a Special Protection System, a 
reliability coordinator must know whether any of the redundant 
components of a Special Protection System are non-operational.'' \26\
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    \25\ Entergy at 7.
    \26\ Id.
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    28. Entergy also identifies IRO-002-1, Requirement R5, which 
provides that each Reliability coordinator shall have of the capability 
to monitor its reliability coordinator area and surrounding reliability 
coordinator areas ``to ensure that potential or actual System Operating 
Limits or Interconnection Reliability Operating Limit violations are 
identified.'' Entergy concludes that reliability coordinators must know 
whether redundant components of a Special Protection System are 
operational, in order to monitor the status of the Special Protection 
System. Entergy also asserts that a reliability coordinator must 
monitor the status of communication channels in order to meet its 
obligations to ensure that unplanned events do not interfere with its 
ability to determine system operating limit violations under IRO-003-2 
and IRO-002-1. Entergy concludes that, to the extent the information 
would be useful to the reliability coordinators, ``they already have 
it.''
    29. Commenters disagree with the premise that the loss of a Special 
Protection System communication channel could have an impact on 
reliability because the remaining channel ensures that the system is 
able to function.\27\ According to ISO/RTO Council and NERC, the loss 
of a communication channel on a redundant Special Protection System 
does not require changes to operational protocols, such as by moving 
towards more conservative operations, because the Special Protection 
System is expected to operate properly with the other communication 
channel in service.\28\ NERC reports that industry experts determined 
that a reliability coordinator or transmission operator will operate as 
usual, and not more conservatively, upon learning that a Special 
Protection System is operating normally, even though a communication 
channel is out of service, and objected to the proposal as imposing a 
reporting burden without a corresponding reliability benefit.
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    \27\ See NERC at 3; Bonneville at 3; EEI at 5 and Affidavit of 
W. Miller; Entergy at 5; ISO/RTO Council at 3, 4; Manitoba Hydro at 
4-5.
    \28\ E.g., NERC at 3; ISO/RTO Council at 3-4.
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    30. According to ISO/RTO Council, the loss of a communication 
channel does not require specific planning and operating actions based 
on the particular system conditions being experienced.\29\
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    \29\ ISO/RTO Council at 5.
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    31. Some commenters predict that requiring reports on out-of-
service communication channels could result in a flood of reports that 
are not useful to system planning and operation. Bonneville reports 
that it has over 600 communication channels dedicated to its Special 
Protection Systems, and notes that some channels are bound to 
experience technical difficulties or be taken out of service during an 
outage. Bonneville concludes that requiring its dispatchers to report 
to the reliability coordinator every time a communication channel fails 
or is removed from service would result in additional reporting and 
documentation with no corresponding benefit. Bonneville also commented 
that ``loss of communication channels happens frequently.'' \30\
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    \30\ Bonneville at 3.
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    32. Several commenters object to the Commission's taking action in 
an interpretation proceeding to propose changes to the Reliability 
Standard requirements and propose alternate venues to press any 
concerns that are identified.\31\ ERCOT, on the other hand, objects to 
the interpretation claiming that NERC should have provided clarity or 
guidance as to what constitutes a degraded Special Protection System.
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    \31\ EEI at 6; NERC at 4.
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II. Discussion

    33. The Commission declines to adopt the NOPR proposal and approves 
NERC's interpretation of IRO-005-1, Requirement R12 and TOP-005-1, 
Requirement R3 as submitted. The Commission approves the interpretation 
as consistent with the language of the Reliability Standards, and finds 
the interpretation just and reasonable. Based on the comments of NERC 
and the industry that no reliability gap exists, the Commission will 
rely on their expert opinion and decline to adopt the NOPR proposal to 
direct the ERO develop modifications to the Reliability Standards. 
These actions are discussed more fully below.
    34. The Commission agrees with the ERO that, with regard to IRO-
005-2 Requirement R12, if a redundant Special Protection System with 
one communication channel out of service can still perform reliably 
with the remaining channel and its function would therefore not be 
considered degraded under IRO-005-2.\32\ We also agree with the ERO and 
Entergy that if a reliability coordinator has identified a Special 
Protection System that is necessary for Reliable Operation, the 
reliability coordinator can request detailed data as needed, including 
the status of the components of a Special Protection System.\33\ The 
Reliability Coordinator is obligated to receive and consider data to 
support its assessment of the performance of the system in order to 
protect against SOL and IROL events--this could include data about the 
status of communication facilities.\34\ We agree with commenters that, 
while the specific wording in the Requirement does not compel the 
affected entities to report the outage of a single communication 
channel as degraded if the system remains functional, the information 
can be compelled by the Reliability Coordinator.
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    \32\ See NERC Petition, Exhibit B at 6 (providing text to 
interpretation as appendix to IRO-005-1 and TOP-005-1).
    \33\ See NERC Petition, Exhibit B at 5 (``Background Information 
for Interpretation''); Entergy at 7; see also IRO-002-1, Requirement 
R2 (``Each reliability coordinator shall determine the data 
requirements to support its reliability coordination tasks and shall 
request such data.'').
    \34\ IRO-002-1, Requirement R2; see also NERC Petition, Exhibit 
B at 5, ``Background Information for Interpretation'' (discussing 
TOP-005-1).
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    35. In the NOPR, the Commission expressed concern that the 
interpretation may create a reliability gap with regard to the 
reporting requirements for a Special Protection System that is able to 
operate as designed, but still poses a reliability risk to the Bulk-
Power System with loss of a single communication channel with redundant 
design. The ERO asserts that the fact ``that one communication channel 
of a Special Protection System may be out of service in no way prevents 
that Special Protection System from performing its designed function.'' 
As such, a system operator would not be required to make changes to its 
operational protocols. The ERO nevertheless states that ``* * * the 
knowledge of the loss of a communication channel could be of general 
interest to a reliability

[[Page 23176]]

coordinator or transmission operator.'' Finally, the ERO and ISO/RTO 
Council indicate that this information is available to reliability 
coordinators pursuant to requirements in other reliability standards, 
and is therefore not necessary as a reporting requirement in TOP-005-1.
    36. We are persuaded that a requirement to report the outage of a 
single communication channel where redundant channels exist is 
unnecessary because both the ERO and ISO/RTO point to existing 
requirements in other Reliability Standards that would make this 
information available to the reliability coordinator upon its 
request.\35\ Such requirements provide the reliability coordinator 
authority to compel such information as it may deem necessary to ensure 
reliable operation of the Bulk-Power System including information on 
the outage of communication channels. Our review of the record in this 
proceeding satisfies the concerns we expressed in the NOPR and 
therefore we do not find it necessary to establish the NOPR reporting 
requirement proposal.
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    \35\ IRO-005-1, Requirement R2; see also the interpretation, 
Background Information for Interpretation, discussing TOP-005-1.
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    37. In light of the Commission's decision not to implement the NOPR 
proposal concerning the reporting of the loss of a redundant 
communication channel, we need not address commenters' objections to 
our proposal. Ultimately, the decision whether the redundancy of a 
particular system is needed to perform as designed is a judgment call 
that must be made by the appropriate reliability entities (i.e., the 
transmission operator and the reliability coordinator).

III. Information Collection Statement

    38. The Office of Management and Budget (OMB) regulations require 
that OMB approve certain reporting and recordkeeping (collections of 
information) imposed by an agency.\36\ The information contained here 
is also subject to review under section 3507(d) of the Paperwork 
Reduction Act of 1995.\37\
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    \36\ 5 CFR 1320.11.
    \37\ 44 U.S.C. 3507(d).
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    39. As stated above, the IRO-005-1 and TOP-005-1 Reliability 
Standards that are the subject of the approved interpretation was 
approved in Order No. 693, and the related information collection 
requirements were reviewed and approved, accordingly.\38\ The approved 
interpretations of IRO-005-1 and TOP-005-1 do not modify or otherwise 
affect the collection of information already in place.
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    \38\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 945, 1648.
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    40. With respect to TOP-005-1, the interpretation clarifies that 
NERC affirms that transmission operators are required to provide 
information upon request, without regard to whether the equipment is 
operating in a degraded state, as posited in the request for an 
interpretation.\39\ Consequently, the interpretation does not change 
the information that a transmission owner must report, because the 
requesting entity is free to request the same types of information as 
before, and the same logs, data, or measurements would be maintained.
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    \39\ NERC Petition, Exhibit B at 5 (proposing text of 
interpretation as Appendix 1 to IRO-005-1 and TOP-005-1).
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    41. With respect to IRO-005-1, the interpretation states that a 
transmission operator is mandated to report the loss of a communication 
channel, if the loss will result in the failure of a Special Protection 
System to operate as designed. Thus, the interpretation and the 
comments received in this rulemaking clarify that the reporting 
requirements focus on whether a Special Protection System can continue 
to perform its reliability function.
    42. Thus, the interpretations of the current Reliability Standards 
at issue in this rulemaking will not modify the reporting burden. 
However, we will submit this Final Rule to OMB for informational 
purposes.
    43. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, e-mail: 
[email protected], Phone: (202) 502-8663, fax: (202) 273-0873].
    44. For submitting comments concerning the collection(s) of 
information and the associated burden estimate(s), please send your 
comments to the contact listed above and to the Office of Information 
and Regulatory Affairs, Office of Information and Regulatory Affairs, 
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy 
Regulatory Commission, phone (202) 395-4638, fax: (202) 395-7285, e-
mail: [email protected]. Please reference OMB Control Number 
1902-0244 and the docket number of this rulemaking in your 
submission.].

IV. Environmental Analysis

    45. 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.\40\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. Included in the exclusion are rules that are clarifying, 
corrective, or procedural or that do not substantially change the 
effect of the regulations being amended.\41\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \40\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 
Regulations Preambles 1986-1990 ] 30,783 (1987).
    \41\ 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act

    46. The Regulatory Flexibility Act of 1980 (RFA) \42\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a proposed rule and that minimize 
any significant economic impact on a substantial number of small 
entities. The Small Business Administration's (SBA) Office of Size 
Standards develops the numerical definition of a small business.\43\ 
The SBA has established a size standard for electric utilities, stating 
that a firm is small if, including its affiliates, it is primarily 
engaged in the transmission, generation and/or distribution of electric 
energy for sale and its total electric output for the preceding twelve 
months did not exceed four million megawatt hours.\44\
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    \42\ 5 U.S.C. 601-612.
    \43\ 13 CFR 121.101.
    \44\ 13 CFR 121.201, Sector 22, Utilities & n. 1.
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    47. Initially, as noted above, this Final Rule addresses an 
interpretation of the IRO-005-1 and TOP-005-1 Reliability Standards, 
which were already approved in Order No. 693, and, therefore, does not 
create an additional regulatory impact on small entities. Therefore, 
the Commission certifies that this Final Rule will not have a 
significant impact on a substantial number of small entities.

VI. Document Availability

    48. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal

[[Page 23177]]

business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, 
NE., Room 2A, Washington, DC 20426.
    49. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    50. User assistance is available for eLibrary and the Commission'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].

VII. Effective Date and Congressional Notification

    51. These regulations are effective May 26, 2011. The Commission 
has determined, with the concurrence of the Administrator of the Office 
of Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-10011 Filed 4-25-11; 8:45 am]
BILLING CODE 6717-01-P