[Federal Register Volume 76, Number 82 (Thursday, April 28, 2011)]
[Rules and Regulations]
[Pages 23690-23708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10226]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM09-9-000; Order No. 751]


Version One Regional Reliability Standards for Facilities Design, 
Connections, and Maintenance; Protection and Control; and Voltage and 
Reactive

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final rule.

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SUMMARY: Under section 215 of the Federal Power Act, the Commission 
hereby approves four revised regional Reliability Standards developed 
by the Western Electricity Coordinating Council and approved by the 
North American Electric Reliability Corporation, which the Commission 
has certified as the Electric Reliability Organization responsible for 
developing and enforcing mandatory Reliability Standards. These 
regional Reliability Standards have been designated by the Western 
Electricity Coordinating Council as FAC-501-WECC-1--Transmission 
Maintenance, PRC-004-WECC-1--Protection System and Remedial Action 
Scheme Misoperation, VAR-002-WECC-1--Automatic Voltage Regulators, and 
VAR-501-WECC-1--Power System Stabilizer. Reliability Standard FAC-501-
WECC-1 addresses transmission maintenance for specified transmission 
paths in the Western Interconnection. Reliability Standard PRC-004-
WECC-1 addresses the analysis of misoperations that occur on 
transmission and generation protection systems and remedial action 
schemes in the Western Interconnection. Reliability Standard VAR-002-
WECC-1 is meant to ensure that automatic voltage regulators remain in 
service on synchronous generators and condensers in the Western 
Interconnection. Reliability Standard VAR-501-WECC-1 is meant to ensure 
that power system stabilizers remain in service on synchronous 
generators in the Western Interconnection. In addition, the Commission 
approves five new regional definitions applicable within the Western 
Interconnection.

DATES: Effective Date: This rule will become effective June 27, 2011.

FOR FURTHER INFORMATION CONTACT:
Nick Henery (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8636.
Scott Sells (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6664.
A. Cory Lankford (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6711.

SUPPLEMENTARY INFORMATION:

Table of Contents

 
                                                             Paragraph
                                                              numbers
 
I. Background...........................................               2
    A. Mandatory Reliability Standards..................               2
    B. Western Electricity Coordinating Council.........               5
    C. Proposed Regional Reliability Standards..........               7
II. Discussion..........................................              11
    A. FAC-501-WECC-1 Transmission Maintenance..........              14
        1. WECC Transfer Path Table.....................              19
        2. System Operating Limits......................              25
        3. Summary......................................              33
    B. PRC-004-WECC-1...................................              34
        1. WECC Transfer Path Table and WECC Remedial                 40
         Action Schemes Table...........................
        2. Summary......................................              51
    C. VAR-002-WECC-1...................................              52
        1. Automatic Voltage Regulator In-Service                     57
         Requirement....................................
        2. Exclusion of Synchronous Generators That                   68
         Operate Less Than Five Percent of All Hours
         During a Calendar Quarter......................
        3. Automatic Voltage Regulator Replacement......              73
        4. Automatic Voltage Regulator Performance......              78
        5. Summary......................................              85
    D. VAR-501-WECC-1...................................              86
        1. Power System Stabilizer In-Service                         88
         Requirement....................................
        2. Exclusion of Synchronous Generators That                   96
         Operate for Less Than Five Percent of All Hours
         During a Calendar Quarter......................
        3. Power System Stabilizer Replacement..........             100
        4. Power System Stabilizer Performance..........             105
        5. Reporting Burden.............................             112
        6. Summary......................................             117
    E. NERC VAR-002-1.1b................................             118
    F. Violation Risk Factors and Violation Severity                 122
     Levels.............................................

[[Page 23691]]

 
III. Information Collection Statement...................             134
IV. Environmental Analysis..............................             139
V. Regulatory Flexibility Act...........................             140
VI. Document Availability...............................             144
VII. Effective Date and Congressional Notification......             147
 

135 FERC ] 61,061

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

Issued April 21, 2011

    1. Under section 215 of the Federal Power Act (FPA),\1\ the 
Commission hereby approves four revised regional Reliability Standards 
developed by the Western Electricity Coordinating Council (WECC) and 
approved by the North American Electric Reliability Corporation (NERC), 
which the Commission has certified as the Electric Reliability 
Organization (ERO) responsible for developing and enforcing mandatory 
Reliability Standards. These regional Reliability Standards have been 
designated by WECC as FAC-501-WECC-1--Transmission Maintenance, PRC-
004-WECC-1--Protection System and Remedial Action Scheme Misoperation, 
VAR-002-WECC-1--Automatic Voltage Regulators, and VAR-501-WECC-1--Power 
System Stabilizer. Reliability Standard FAC-501-WECC-1 addresses 
transmission maintenance for specified transmission paths in the 
Western Interconnection. Reliability Standard PRC-004-WECC-1 addresses 
the analysis of misoperations that occur on transmission and generation 
protection systems and remedial action schemes in the Western 
Interconnection. Reliability Standard VAR-002-WECC-1 is meant to ensure 
that automatic voltage regulators remain in service on synchronous 
generators and condensers in the Western Interconnection. Reliability 
Standard VAR-501-WECC-1 is meant to ensure that power system 
stabilizers remain in service on synchronous generators in the Western 
Interconnection. In addition, the Commission approves five new regional 
definitions applicable within the Western Interconnection.
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    \1\ 16 U.S.C. 824o (2006).
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I. Background

A. 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\ 16 U.S.C. 824o(e)(3).
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    3. Reliability Standards that the ERO proposes to the Commission 
may include Reliability Standards that are proposed to the ERO by a 
Regional Entity to be effective in that region.\3\ A Regional Entity is 
an entity that has been approved by the Commission to enforce 
Reliability Standards under delegated authority from the ERO.\4\ When 
the ERO reviews a regional Reliability Standard that would be 
applicable on an Interconnection-wide basis and that has been proposed 
by a Regional Entity organized on an Interconnection-wide basis, the 
ERO must rebuttably presume that the regional Reliability Standard is 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest.\5\ In turn, the Commission must give ``due weight'' to 
the technical expertise of the ERO and of a Regional Entity organized 
on an Interconnection-wide basis.\6\
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    \3\ 16 U.S.C. 824o(e)(4).
    \4\ 16 U.S.C. 824o(a)(7) and (e)(4).
    \5\ 18 CFR 39.5 (2010).
    \6\ 16 U.S.C. 824o(d)(2).
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    4. In Order No. 672, the Commission urged uniformity of Reliability 
Standards, but recognized a potential need for regional differences.\7\ 
Accordingly, the Commission stated that:
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    \7\ Rules Concerning Certification of the Electric Reliability 
Organization; Procedures for the Establishment, Approval, and 
Enforcement of Electric Reliability Standards, Order No. 672, 71 FR 
8662 (Feb. 17, 2006), FERC Stats. & Regs. ] 31,204, at P 290, order 
on reh'g, Order No. 672-A, 71 FR 19814 (Apr. 18, 2006), FERC Stats. 
& Regs. ] 31,212 (2006).

    As a general matter, we will accept the following two types of 
regional differences, provided they are otherwise just, reasonable, 
not unduly discriminatory or preferential and in the public 
interest, as required under the statute: (1) a regional difference 
that is more stringent than the continent-wide Reliability Standard, 
including a regional difference that addresses matters that the 
continent-wide Reliability Standard does not; and (2) a regional 
Reliability Standard that is necessitated by a physical difference 
in the Bulk-Power System.\8\
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    \8\ Id. P 291.
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B. Western Electricity Coordinating Council

    5. On April 19, 2007, the Commission accepted delegation agreements 
between NERC and each of eight Regional Entities.\9\ In its order, the 
Commission accepted WECC as a Regional Entity organized on an 
Interconnection-wide basis. As a Regional Entity, WECC oversees 
transmission system reliability in the Western Interconnection. The 
WECC region encompasses nearly 1.8 million square miles, including 14 
western U.S. states, the Canadian provinces of Alberta and British 
Columbia, and the northern portion of Baja California in Mexico.
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    \9\ North American Electric Reliability Corp., 119 FERC ] 
61,060, at P 432 (2007).
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    6. In June 2007, the Commission approved eight regional Reliability 
Standards for WECC including the currently-effective WECC PRC-STD-001-
1, PRC-STD-003-1, PRC-STD-005-1, VAR-STD-002a-1 and VAR-STD-002b-1.\10\ 
The Commission directed WECC to develop certain modifications to WECC 
PRC-STD-001-1, PRC-STD-003-1, PRC-STD-005-1, VAR-STD-002a-1 and VAR-
STD-002b-1, as identified by NERC in its filing letter for the current 
standards.\11\ For example, the Commission determined that: (1) 
Regional definitions should conform to definitions set forth in the 
NERC Glossary of Terms Used in Reliability Standards (NERC Glossary), 
unless a specific deviation has been justified; and, (2) documents that 
are referenced in the Reliability Standard should be attached to the 
Reliability Standard. The Commission also found that it is important 
that regional Reliability Standards and NERC Reliability Standards 
achieve a reasonable level of consistency in their structure so that 
there is a common understanding of the elements.
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    \10\ North American Electric Reliability Corp., 119 FERC ] 
61,260 (2007).
    \11\ Id.
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C. Proposed Regional Reliability Standards

    7. On March 25, 2009, NERC submitted a petition (NERC Petition) to 
the Commission seeking approval of four WECC regional Reliability

[[Page 23692]]

Standards.\12\ The four proposed WECC regional Reliability Standards 
are designated as FAC-501-WECC-1, PRC-004-WECC-1, VAR-002-WECC-1 and 
VAR-501-WECC-1.\13\ In its petition, NERC explains that the four 
proposed regional Reliability Standards are meant to replace certain 
currently-effective regional Reliability Standards:
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    \12\ See 18 CFR 39.5(a) (requiring the ERO to submit regional 
Reliability Standards on behalf of a Regional Entity).
    \13\ The proposed regional Reliability Standards are not 
attached to the Final Rule. They are, however, available on the 
Commission's eLibrary document retrieval system in Docket No. RM09-
9-000 and are posted on the ERO's Web site, available at: http://www.nerc.com.
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     FAC-501-WECC-1 is intended to replace the current approved 
WECC PRC-STD-005-1;
     PRC-004-WECC-1 is intended to replace WECC PRC-STD-001-1 
and WECC PRC-STD-003-1;
     VAR-002-WECC-1 is intended to replace WECC VAR-STD-002a-1; 
and
     VAR-501-WECC-1 is intended to replace WECC VAR-STD-002b-1.
    NERC states that the NERC board of trustees approved the proposed 
regional Reliability Standards on October 29, 2008, on the condition 
that WECC address certain shortcomings raised during the comment 
periods in the next revision of the Reliability Standards.
    8. NERC requests an effective date for FAC-501-WECC-1, VAR-002-
WECC-1 and VAR-501-WECC-1 of the first day of the first quarter after 
Commission approval. For PRC-004-WECC-1, NERC requests an effective 
date of the first day of the second quarter after approval by the 
Commission.
    9. On December 17, 2010, the Commission issued a Notice of Proposal 
Rulemaking (NOPR) in which it proposed to approve the four revised 
regional Reliability Standards. In addition, under section 215(d)(5) of 
the FPA, the Commission proposed to direct WECC, working through its 
standards development process, to develop modifications to these 
regional Reliability Standards.\14\
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    \14\ Version One Regional Reliability Standards for Facilities 
Design, Connections, and Maintenance; Protection and Control; and 
Voltage and Reactive, Notice of Proposed Rulemaking, 75 FR 80,397 
(Dec. 22, 2010), FERC Stats. & Regs. ] 32,667 (2010).
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    10. As indicated in Appendix A, fourteen entities filed comments in 
response to the NOPR.

II. Discussion

    11. As discussed below, we approve Reliability Standards FAC-501-
WECC-1, PRC-004-WECC-1, VAR-002-WECC-1, and VAR-501-WECC-1 as just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest. We find that the revised WECC Reliability Standards 
are more stringent than the corresponding NERC Reliability Standards 
either because they address issues not covered in the requirements of 
the corresponding NERC Reliability Standards or because they offer more 
detailed requirements than the corresponding NERC Reliability 
Standards. For these same reasons, we find that the requirements of 
these revised regional Reliability Standards are not redundant of the 
requirements of the corresponding NERC Reliability Standards. Moreover, 
we find that these revised WECC Reliability Standards are sufficient to 
maintain the reliability of the Bulk-Power System in the Western 
Interconnection.
    12. We also find that the revised regional Reliability Standards 
offer several improvements over the currently-effective regional 
Reliability Standards. Consistent with the Commission's directives in 
its June 2008 order, the revised regional Reliability Standards replace 
the former sanctions table with violation risk factors and violation 
severity levels. The revised regional Reliability Standards also remove 
compliance-related information and elements from the requirements.
    13. In addition, we direct WECC to address a concern pertaining to 
the applicability of FAC-501-WECC-1 and PRC-004-WECC-1, which reference 
tables of major transmission paths and remedial action schemes posted 
on the WECC Web site. We also adopt our NOPR to direct NERC to remove 
the WECC regional definition of Disturbance from the NERC Glossary to 
ensure consistency between the regional and NERC defined terms.

A. FAC-501-WECC-1 Transmission Maintenance

NERC Petition
    14. In its petition, NERC explained that proposed FAC-501-WECC-1 is 
intended to replace approved WECC PRC-STD-005-1. The proposed regional 
Reliability Standard would apply to transmission owners that maintain 
transmission paths listed in the table titled ``Major WECC Transfer 
Paths in the Bulk Electric System'' (WECC Transfer Path Table), which 
is no longer an attachment to the Reliability Standard but is 
maintained on the WECC Web site. Proposed FAC-501-WECC-1 contains three 
main provisions. Requirement R1 provides that each transmission owner 
must have a transmission maintenance and inspection plan, and each 
transmission owner must annually review and update as required its 
transmission maintenance and inspection plan. Requirement R2 states 
that each transmission owner must include specified maintenance 
categories \15\ when developing its transmission maintenance and 
inspection plan. Requirement R3 states that each transmission owner 
must implement and follow its transmission maintenance and inspection 
plan.
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    \15\ The maintenance categories to be included in the 
transmission maintenance and inspection plan are included in 
Attachment 1 of FAC-501-WECC-1--``Transmission Line and Station 
Maintenance Details.''
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    15. In its petition, NERC recommended approval of FAC-501-WECC-1, 
stating that the proposed regional Reliability Standard addresses 
matters that the NERC Reliability Standard does not. Specifically, 
according to NERC, FAC-501-WECC-1 requires, for specified transmission 
paths, a highly detailed maintenance and inspection plan for all 
transmission and substation equipment components, beyond the relay and 
communication system maintenance and testing required by the 
corresponding NERC Reliability Standard.\16\
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    \16\ NERC Petition at 11, 14.
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NOPR Proposal
    16. In the NOPR, the Commission proposed to approve FAC-501-WECC-1 
as just, reasonable, not unduly discriminatory or preferential, and in 
the public interest. The Commission stated that, as explained by NERC, 
proposed FAC-501-WECC-1 appears to be more stringent, by virtue of its 
requirement for a highly detailed maintenance and inspection plan, 
compared to the corresponding NERC Reliability Standard.
    17. The Commission pointed out that, in approving the currently-
effective WECC PRC-STD-005-1, the Commission directed WECC to make 
certain modifications to the regional Reliability Standard. The 
Commission stated that the proposed regional Reliability Standard 
appeared to address these directives by no longer referencing any WECC 
forms, and removing text regarding the Compliance Monitoring Period. 
The Commission also pointed out that the proposed regional Reliability 
Standard no longer refers to a regional definition of Disturbance, 
which conflicted with the definition of Disturbance in the NERC 
Glossary. Since the term is not included in any of the proposed 
regional Reliability Standards, the Commission proposed to direct NERC 
to remove this regional definition from the NERC Glossary of Terms upon 
Commission approval of

[[Page 23693]]

FAC-501-WECC-1. The proposed regional Reliability Standard also removes 
the sanctions table and includes violation risk factors, violation 
severity levels, measures and time horizons, as directed by the 
Commission. The Commission proposed to find that the proposed removal 
of the sanctions table and inclusion of violation risk factors, 
violation severity levels, measures and time horizons, appeared 
generally consistent with the Commission's directives, and signify 
meaningful improvement. Accordingly, the Commission proposed to approve 
FAC-501-WECC-1 and NERC's petition to retire currently-effective WECC 
PRC-STD-005-1.
    18. The Commission also sought comment on two issues regarding FAC-
501-WECC-1: (1) The use of the WECC Transfer Path Table and (2) the use 
of the term ``system operating limit,'' as discussed below.
1. WECC Transfer Path Table
    19. Regional Reliability Standard FAC-501-WECC-1 applies to 
transmission owners that maintain transmission paths listed in the most 
current WECC Transfer Path Table provided on WECC's Web site. The table 
currently posted on WECC's Web site identifies the same 40 major paths 
as the table attached to the currently-effective regional Reliability 
Standard, WECC PRC-STD-005-1.
NOPR Proposal
    20. In the NOPR, the Commission expressed concern that, by 
referencing the WECC Transfer Path Table posted on the WECC Web site, 
the applicability of FAC-501-WECC-1 could change without review and 
approval by NERC and the Commission. The Commission explained that the 
possibility for the applicability of the Reliability Standard to change 
at any time could create confusion for entities that need to comply as 
well as any compliance or enforcement staff trying to determine which 
entities are responsible for complying with the Reliability Standard. 
Accordingly, the Commission proposed to direct WECC to develop a 
modification to FAC-501-WECC-1 to address this concern.
    21. The Commission offered examples of how WECC might address the 
Commission's concern. First, the Commission suggested that WECC could 
include its criterion for identifying and modifying major transmission 
paths listed in the WECC Transfer Path Table and make an informational 
filing each time it makes a modification to the table. A second option 
the Commission proposed was that WECC file its criterion with the 
Commission and post revised transfer path tables and associated 
catalogs on its Web site before they become effective with concurrent 
notification to NERC and the Commission. Alternatively, the Commission 
suggested that the Regional Entity could include the WECC Transfer Path 
Table as an attachment to the modified Reliability Standard. In this 
way, the Commission would be able to verify that the Regional Entity is 
applying the requirements of FAC-501-WECC-1 in a just and reasonable 
manner.
Comments
    22. WECC, as well as Bonneville, PacifiCorp, and SDG&E, support the 
Commission's proposal to require WECC to provide greater certainty 
regarding the applicability of FAC-501-WECC-1 based on the WECC 
Transfer Path Table. WECC supports the Commission's second approach and 
suggests that the Commission direct WECC to file its criterion for 
identifying and modifying major transmission paths listed in the 
tables. Moreover, WECC commits to publicly post any revisions to the 
table on the WECC Web site with concurrent notification to the 
Commission, NERC, and industry. WECC explains that posting the WECC 
Transfer Path Table to the Web site is preferred because the current 
WECC Regional Reliability Standards development process and subsequent 
NERC and FERC approval processes do not result in timely updates to the 
table.
    23. Likewise, Bonneville, PacifiCorp, and SDG&E support the 
Commission's proposal to require WECC to develop and file criterion to 
clarify how major transmission paths are included in or excluded from 
the WECC Transfer Path Table. Bonneville believes that filing such 
criterion would provide transparency for transmission owners that are 
affected by changes to the table. PacifiCorp comments that WECC should 
not be required to include the criterion or the WECC Transfer Path 
Table as an attachment to the Reliability Standard because it would 
require a modification to the standard and, thus, added delay, every 
time WECC proposed a change to the criteria or the table. By contrast, 
the Bureau of Reclamation recommends that the Commission approve the 
proposed Reliability Standard and direct WECC to append the current 
WECC Transfer Path Table.
Commission Determination
    24. Consistent with our NOPR proposal and WECC's comments the 
Commission directs WECC to file, within 60 days from the issuance of 
this Final Rule, its criterion for identifying and modifying major 
transmission paths listed in the WECC Transfer Path Table. Moreover, 
the Commission accepts WECC's commitment to publicly post any revisions 
to the WECC Transfer Path Table on the WECC Web site with concurrent 
notification to the Commission, NERC, and industry. We believe that 
this process balances the interests of WECC in developing timely 
revisions to the WECC Transfer Path Table with the need for adequate 
transparency for transmission owners that are affected by changes to 
the WECC Transfer Path Table.
2. System Operating Limits
    25. WECC proposes to replace references to Operating Transfer 
Capability limits in WECC PRC-STD-001-1 with System Operating Limits in 
FAC-501-WECC-1. Currently, WECC determines transfer capability based on 
a ``rated system path'' methodology and the WECC Transfer Path Table 
and associated catalog identify the facilities that make up each rated 
system path. Unlike a System Operating Limit, WECC's definition of 
Operating Transfer Capability limits is restricted to direct or 
parallel transmission elements between or within specific transmission 
operators. Moreover, the rating of a System Operating Limit, which is 
based on an operating criterion that is either thermally (based on 
facility ratings) or stability-based (based on transient stability, 
voltage stability, or system voltage limits), is the first element to 
calculate in order to determine the Operating Transfer Capability limit 
rating.
NOPR Proposal
    26. In the NOPR, the Commission expressed concern that the terms 
Operating Transfer Capability limit and System Operating Limit were not 
interchangeable. Specifically, the Commission expressed concern that 
the introduction of the NERC Glossary definition of System Operating 
Limit in Requirement R1 of the proposed regional Reliability Standard 
could create confusion regarding which transmission owners are required 
to maintain a transmission maintenance and inspection plan. The 
Commission expressed further concern that, by using the term System 
Operating Limit, Requirement R1 could apply to more transmission 
facilities than identified in the WECC Transfer Path Table and 
associated catalog.
Comments
    27. WECC, supported by SDG&E, urges the Commission to approve FAC-

[[Page 23694]]

501-WECC-1 as filed. NERC and several other commenters support the 
Commission's proposal to approve FAC-501-WECC-1.\17\ WECC agrees that 
there are slight differences between the definitions of Operating 
Transfer Capability limits and System Operating Limits but contends 
that the intent and the effect is the same and the applicability is 
clear. WECC explains that both limits are calculated using the same 
methodologies and result in the same values. WECC further explains that 
it made this change to address the Commission's concerns related to the 
proliferation of regional terms. Moreover, WECC states that, beginning 
with the 2008-2009 winter System Operating Limit seasonal study report 
and continuing to the present, WECC has defined the limits calculated 
as System Operating Limits. WECC states that it uses these seasonal 
studies to formulate the correct System Operating Limits for 
transmission paths in the West.
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    \17\ E.g. Bonneville, Reclamation, PacifiCorp.
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    28. SDG&E and TANC support the use of System Operating Limits 
instead of Operating Transfer Capability limits. SDG&E comments that 
the methodology for determining System Operating Limits is the same as 
for Operating Transfer Capability limits and that there is no confusion 
related to the use of System Operating Limit in Requirement R1. TANC 
comments that an interpretation of Requirement R1 that requires 
transmission owners of major paths to be responsible for maintaining 
and inspecting transmission facilities owned by other entities whose 
facilities may be necessary to maintain System Operating Limits 
associated with the major path would be infeasible, overly burdensome 
on the individual owners of the major paths and inconsistent with the 
spirit of the proposed regional Reliability Standard as written. TANC 
suggests that using the term Operating Transfer Capability limit as a 
substitute for System Operating Limit may resolve any confusion, as 
could a modification clarifying that each major path transmission 
owner's responsibility is to inspect and maintain its own facilities.
    29. Bonneville and PacifiCorp also support the use of the term 
System Operating Limit instead of the term Operating Transfer 
Capability because both terms result in the same requirement that 
maintenance be performed to ensure that each path is capable of 
operating up to the path's limit. Nevertheless, Bonneville and 
PacifiCorp comment that Requirement R1 is unclear as to which 
facilities are covered and who is responsible for the maintenance of 
those facilities. Bonneville contends that the transmission owner 
should be responsible only for the facilities it owns, and the standard 
should make this clear. PacifiCorp suggests that Requirement R1 should 
be modified to reflect that transmission owners should have a 
transmission maintenance and inspection plan detailing their 
requirements ``that apply to all transmission facilities identified by 
the Transmission Operator of the transmission path as necessary'' for 
System Operating Limits associated with each of the transmission paths 
identified in the WECC Transfer Path Table.
    30. By contrast, in light of the concerns raised by the Commission 
in the NOPR, CDWR asks the Commission to consider maintaining current 
Reliability Standard PRC-STD-005-1.
Commission Determination
    31. The Commission finds that the Regional Entity has adequately 
explained its intended use of System Operating Limits as a replacement 
for Operating Transfer Capability limits. As WECC and others have 
described, transmission owners within the Western Interconnection will 
continue to identify capability limits associated with their own paths 
listed in the WECC Transfer Path Table using the same methodology as 
they have used under the currently-effective WECC PRC-STD-001-1. We 
accept the substitution of terms based on WECC's explanation that all 
it has done is to replace references to Operating Transfer Capability 
limits with System Operating Limits in order to address the 
Commission's concern regarding the proliferation of regional terms.
    32. In response to our concern that use of the term System 
Operating Limit could expand the applicability of FAC-501-WECC-1 to 
transmission facilities that are not listed in the WECC Transfer Path 
Table, we accept WECC's explanation that the applicability of the 
Reliability Standard is clear. Consistent with comments filed by 
Bonneville and PacifiCorp, we find that it would be unreasonable to 
interpret FAC-501-WECC-1 as requiring transmission owners to be 
responsible for maintaining and inspecting transmission facilities 
related to System Operating Limits on paths that they do not own. 
Nevertheless, we believe that this could be clearer in the language of 
Requirement R1. Accordingly, we recommend that WECC consider the 
comments of Bonneville, PacifiCorp and TANC when it develops future 
modifications to FAC-501-WECC-1.
3. Summary
    33. We adopt our NOPR proposal and approve FAC-501-WECC-1 as just, 
reasonable, not unduly discriminatory or preferential and in the public 
interest. We find that the revised regional Reliability Standard is 
more stringent than the corresponding NERC Reliability Standard, PRC-
005-1, by virtue of its requirement for a highly detailed maintenance 
and inspection plan for all transmission and substation equipment 
components associated with transmission paths identified in the WECC 
Transfer Path Table.

B. PRC-004-WECC-1

NERC Petition
    34. Regional Reliability Standard PRC-004-WECC-1 is intended to 
replace two currently-effective WECC Reliability Standards, PRC-STD-
001-1 and PRC-STD-003-1. In its petition, NERC explained that PRC-004-
WECC-1 is more stringent than the currently-effective corresponding 
NERC Reliability Standards because the former requires that all 
transmission and generation protection system and remedial action 
scheme misoperations on major WECC transfer paths be analyzed and 
mitigated within a specific timeframe. In contrast, corresponding NERC 
Reliability Standard PRC-003-1 requires Regional Entities to establish 
procedures for review, analysis, reporting, and mitigation of 
transmission and generation protection system misoperations, but it 
does not specifically address the owners of the transmission and 
generation facilities. NERC also explained that NERC Reliability 
Standard PRC-004-1 has requirements for protection system 
misoperations, but does not provide for the additional requirements 
included in PRC-004-WECC-1.\18\
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    \18\ See NERC Petition at 11, 19-20. In Order No. 693, the 
Commission found that PRC-003-1 was a fill-in-the-blank Reliability 
Standard in part because its requirements apply to the Regional 
Reliability Organizations, now called Regional Entities, which the 
Commission was not persuaded NERC can enforce a Regional Entity's 
compliance with a Reliability Standard. Mandatory Reliability 
Standards for the Bulk-Power System, Order No. 693, FERC Stats. & 
Regs., Regulations Preambles 2006-2007 ] 31,242, at P 1460-1461, 
order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
---------------------------------------------------------------------------

    35. Regional Reliability Standard PRC-004-WECC-1 contains three 
provisions. Requirement R1 provides that ``System Operators and System 
Protection Personnel'' of transmission owners and generator owners must 
analyze all protection system and remedial action scheme operations. 
Requirements R1.1 and R1.2 identify time limits for the review and 
analysis

[[Page 23695]]

of transmission element tripping, remedial action scheme operations and 
protection systems. Requirement R2 identifies actions required by 
transmission owners and generator owners for each protection system or 
remedial action scheme misoperation, including identifying timelines 
for removing the equipment that failed from service. Requirement R3 
states that transmission owners and generator owners must submit an 
incident report for each misoperation or repair of equipment that 
misoperated.
    36. Both the currently-effective and proposed regional Reliability 
Standards apply to transmission owners and transmission operators. 
However, PRC-004-WECC-1 also applies to generator owners that own 
facilities listed in the the table titled ``Major WECC Remedial Action 
Schemes'' (WECC Remedial Action Schemes Table), which is available on 
WECC's Web site.\19\ In addition, WECC proposes four new regional 
definitions for Functionally Equivalent Protection System, Functionally 
Equivalent Remedial Action Scheme, Security-Based Misoperation and 
Dependability Based Misoperation.
---------------------------------------------------------------------------

    \19\ See proposed regional Reliability Standard PRC-004-WECC-1, 
Section 4 (Applicability).
---------------------------------------------------------------------------

NOPR Proposal
    37. The Commission proposed to approve PRC-004-WECC-1 as just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest.\20\ The Commission also proposed to approve NERC's 
petition to withdraw currently-effective WECC PRC-STD-001-1 and WECC 
PRC-STD-003-1. The Commission explained that PRC-004-WECC-1 appears 
more stringent than the corresponding NERC PRC-004-1. Moreover, PRC-
004-WECC-1 addresses Commission directives to develop modifications to 
the currently-effective regional Reliability Standards.
---------------------------------------------------------------------------

    \20\ NOPR, FERC Stats. & Regs. ] 32,667 at P 32.
---------------------------------------------------------------------------

    38. The Commission noted that, in approving the currently-effective 
WECC PRC-STD-001-1 and WECC PRC-STD-003-1, the Commission directed WECC 
to make certain modifications in developing replacement Reliability 
Standards. To address these directives, WECC no longer references any 
WECC forms and the text regarding the compliance monitoring period has 
been removed from the proposed Standard. In addition, the revised 
regional Reliability Standard does not reference the regional 
definition of Disturbance, which did not match the NERC definition of 
Disturbance in the NERC Glossary. The revised regional Reliability 
Standard also removes the definition of Business Day. Since these terms 
are not included in any of the existing or proposed regional 
Reliability Standards, the Commission proposed to direct NERC to remove 
these regional definitions from the NERC Glossary upon approval of PRC-
004-WECC-1. The revised regional Reliability Standard also removes the 
sanctions table and includes violation risk factors, violation severity 
levels, measures and time horizons. The Commission commended WECC for 
addressing these directives.
    39. The Commission sought comment on two issues concerning PRC-004-
WECC-1: (1) The use of the WECC Transfer Path Table and the WECC 
Remedial Action Schemes Table to define applicability and (2) the need 
for the four new regional definitions to be added to the NERC Glossary 
of Terms.
1. WECC Transfer Path Table and WECC Remedial Action Schemes Table
    40. Similar to regional Reliability Standard FAC-501-WECC-1, 
discussed above, the applicability of Reliability Standard PRC-004-
WECC-1 is dependent upon references to the WECC Transfer Path Table and 
the WECC Remedial Action Schemes Table, which WECC posts on its Web 
site. The NOPR raised the same applicability concerns as discussed 
above in the context of FAC-501-WECC-1. In turn, WECC offered to file 
the criteria for identifying paths and remedial action schemes 
associated with these tables.
Commission Determination
    41. Consistent with our NOPR proposal and WECC's comments the 
Commission directs WECC to file, within 60 days from the issuance of 
this Final Rule, its criteria for identifying and modifying major 
transmission paths listed in the WECC Transfer Path Table and major 
remedial actions schemes listed in the WECC Remedial Action Schemes 
Table. Moreover, the Commission accepts WECC's commitment to publicly 
post any revisions to the WECC Transfer Path Table, WECC Remedial 
Action Schemes Table, and the associated catalogs on the WECC Web site 
with concurrent notification to the Commission, NERC, and industry. We 
believe that this process balances the interests of WECC in developing 
timely revisions to the WECC Transfer Path Table with the need for 
adequate transparency for transmission owners that are affected by 
changes to the WECC Transfer Path Table and the WECC Remedial Action 
Schemes Table. Regional Definitions Associated With PRC-004-WECC-1
NERC Petition
    42. The revised regional Reliability Standard includes four new 
regional definitions meant to apply only in WECC. Two of the proposed 
definitions (Functionally Equivalent Protection System and Functionally 
Equivalent Remedial Action Scheme) have added ``functionally 
equivalent'' to terms that already exist in the NERC Glossary.\21\ In 
addition, WECC has developed two regional definitions for the term 
Misoperation, as it is defined in the NERC Glossary. NERC explains that 
the terms Security-Based Misoperations and Dependability-Based 
Misoperations are meant to address: (1) Incorrect operation of a 
protection system (Security-Based Misoperation); and (2) absence of a 
protection system to operate (Dependability-Based Misoperation).
---------------------------------------------------------------------------

    \21\ See NERC Glossary definitions for Protection System and 
Remedial Action Scheme.
---------------------------------------------------------------------------

NOPR Proposal
    43. In the NOPR, the Commission expressed concern about the 
unnecessary proliferation of glossary terms and whether the proposed 
WECC definitions were unnecessary variations of terms already defined 
in the NERC Glossary.\22\ With regard to the definitions of 
Functionally Equivalent Protection System and Functionally Equivalent 
Remedial Action Scheme, the Commission expressed concern that the new 
definitions do not add any further clarity to the NERC Glossary terms. 
Accordingly, we sought an explanation from WECC and other interested 
commenters regarding whether these new terms are more inclusive than 
the corresponding NERC Glossary definitions and, if so, how.
---------------------------------------------------------------------------

    \22\ NERC Glossary of Terms used in Reliability Standards, 
available at: http://www.nerc.com/files/GlossaryofTerms2011Mar15.pdf.
---------------------------------------------------------------------------

    44. The Commission also noted that WECC proposes to define 
Functionally Equivalent Protection System as ``[a] Protection System 
that provides performance as follows: Each Protection System can detect 
the same faults within the zone of protection * * *'' \23\ The 
Commission expressed concern that the meaning of the phrase ``detect 
the same faults'' was unclear in this definition. Accordingly, we 
sought comment on the meaning of the phrase ``the same faults'' within 
the definition.
---------------------------------------------------------------------------

    \23\ See Proposed Reliability Standard PRC-004-WECC-1, proposed 
definition of Functionally Equivalent Protection System.
---------------------------------------------------------------------------

    45. With regard to the bifurcation of the term Misoperation, the 
Commission expressed concern that the two new regional definitions may 
be confusing because at least some of the requirements for each type of

[[Page 23696]]

misoperation appear to overlap. Accordingly, we sought an explanation 
from WECC and other interested commenters regarding why these two new 
regional terms are necessary or desirable within the context of the 
proposed regional Reliability Standard, and how they will enhance 
reliability.
Comments
    46. WECC, supported by SDG&E, contends that the addition of the 
terms Functionally Equivalent Protection System and Functionally 
Equivalent Remedial Action Scheme adds clarity because they apply only 
to a subset of protection systems and remedial action schemes and are 
thus less inclusive than the corresponding NERC Glossary definition. 
WECC explains that a Functionally Equivalent Protection System or 
Functionally Equivalent Remedial Action Scheme is a protection system 
or remedial action scheme that provides redundancy to the specific 
protection system or remedial action scheme that failed. WECC further 
explains that a Functionally Equivalent Protection System or Remedial 
Action Scheme is not identical to the one that misoperated but rather 
provides redundancy over the same part of the Interconnection as the 
remedial action scheme or protection system that misoperated. Finally, 
WECC explains that the phrase ``detect the same faults'' is intended to 
take on its plain meaning, i.e., that both protection systems (the 
primary and the functionally equivalent protection system) can detect 
and protect against the same problem on the system.\24\
---------------------------------------------------------------------------

    \24\ See WECC Comments at page 11.
---------------------------------------------------------------------------

    47. Bonneville and PacifiCorp generally agree that the terms 
Functionally Equivalent Protection System and Functionally Equivalent 
Remedial Action Scheme are useful because they describe a protection 
system or remedial action scheme that is able to provide the necessary 
functionality of a protection system or remedial action scheme without 
the loss of any necessary dependability for the system. PacifiCorp 
further suggests that the Commission direct NERC to consider the 
development of a continent-wide definition of Functionally Equivalent 
Protection System and Functionally Equivalent Remedial Action Scheme.
    48. WECC, supported by SDG&E, Bonneville, and PacifiCorp, contends 
that definitions of Security-Based Misoperation and Dependability-Based 
Misoperation should be retained because they provide clarity in the 
implementation of PRC-004-WECC-1. WECC states that these two 
definitions were developed recognizing that misoperations can be 
grouped into two types, incorrect operation and failure to operate. 
WECC explains that a Dependability-Based Misoperation occurs during a 
system fault, and its impact to the bulk electric system is minimal if 
other functionally equivalent redundancies exist to eliminate, or at 
least minimize, any impact from any single misoperation. By contrast, a 
Security-Based Misoperation isolates an element from the bulk electric 
system unnecessarily either when another protection system is already 
responding to contingency conditions or when noise in a communication 
system trips an element even though no fault occurred. WECC comments 
that PRC-004-WECC-1 therefore requires different actions based on which 
category of misoperation has occurred.
Commission Determination
    49. In view of the comments supporting these regional definitions, 
the Commission accepts the four new defined terms to be applicable only 
in the Western Interconnection. However, similar to our policy set 
forth in Order No. 672 that favors the development of uniform 
Reliability Standards,\25\ the Commission believes NERC, as a rule, 
should develop definitions that apply uniformly across the different 
Interconnections and strive to minimize the use of regional definitions 
and terminology.
---------------------------------------------------------------------------

    \25\ Order No. 672, FERC Stats. & Regs. ] 31,204 at P 290 (``The 
Commission believes that uniformity of Reliability Standards should 
be the goal and the practice, the rule rather than the exception. 
Greater uniformity will encourage best practices, thereby enhancing 
reliability and benefiting consumers and the economy'').
---------------------------------------------------------------------------

    50. We will not direct NERC to consider PacifiCorp's suggestion 
that the Commission direct NERC to consider the development of a 
continent-wide definition of functionally equivalent protection system 
and functionally equivalent remedial action scheme. We note that NERC 
has an ongoing project that could address this issue.\26\ We encourage 
NERC to consider the comments of PacifiCorp in this proceeding during 
the development of Project 2009-07 and encourage PacifiCorp to 
participate in this NERC project.
---------------------------------------------------------------------------

    \26\ NERC Project 2009-07 Reliability of Protection Systems, 
available at: http://www.nerc.com/filez/standards/Project2009-07_Reliability_of_Protection_Systems.html.
---------------------------------------------------------------------------

2. Summary
    51. The Commission adopts its NOPR proposal to approve PRC-004-
WECC-1 as just, reasonable, not unduly discriminatory or preferential, 
and in the public interest. As discussed above, we direct WECC to file 
its criteria for identifying and modifying major transmission paths 
listed in the WECC Transfer Path Table and major remedial action 
schemes listed in the WECC Remedial Action Schemes Table. We also 
accept WECC's explanation regarding its need for the four new regional 
definitions to be added to the NERC Glossary of Terms.

C. VAR-002-WECC-1

    52. Regional Reliability Standard VAR-002-WECC-1 applies to 
generator operators and transmission operators that operate synchronous 
condensers. Requirement R1 provides that each generator operator and 
transmission operator shall have automatic voltage regulators in 
service and in automatic voltage control mode for synchronous 
generators and synchronous condensers during 98 percent of all 
operating hours unless exempted by the transmission operator. Sub-
requirements R1.1 through R1.10 detail the type of exemptions that the 
transmission operator may grant to the generator operator to excuse the 
generator from operating the automatic voltage regulator in automatic 
voltage control mode. Requirement R2 states that each generator 
operator and transmission operator must have documentation identifying 
the number of hours excluded for each sub-requirement R1.1 through 
R1.10.
    53. Consistent with the Commission directives, the revised regional 
Reliability Standard replaces the former sanctions table with violation 
risk factors, violation severity levels, measures and time 
horizons.\27\ WECC also proposes a new glossary term, Commercial 
Operation, applicable only in the Western Interconnection.
---------------------------------------------------------------------------

    \27\ See North America Electric Reliability Corp., 119 FERC ] 
61,260 at P 117.
---------------------------------------------------------------------------

NERC Petition
    54. The NERC Petition requested Commission approval of VAR-002-
WECC-1. In addition, the Petition explained that, during the standards 
development process, NERC expressed concern regarding two aspects of 
the regional Reliability Standard, and that WECC responded in writing 
to NERC's concerns. First, with regard to Requirement R1 of VAR-002-
WECC-1, WECC explained that the requirement to keep automatic voltage 
regulators in service and in automatic voltage control mode during 98 
percent of all operating hours is a translation of the limits set in 
the levels of non-compliance associated

[[Page 23697]]

with the current regional Reliability Standard.\28\ In addition, WECC 
explained that the two percent allowance provides more time to start up 
generating facilities when the automatic voltage regulators are not yet 
in voltage control mode and allows for evaluation when a generator 
operator responds to an unforeseen event.\29\
---------------------------------------------------------------------------

    \28\ The levels of non-compliance assigned to the currently-
effective regional Reliability Standard specify that there shall be 
a level 1 non-compliance if automatic voltage regulators are in 
service less than 98 percent but at least 96 percent or more of all 
hours during which the synchronous generating unit is on line for 
each calendar quarter.
    \29\ NERC Petition at 34-35.
---------------------------------------------------------------------------

    55. Second, NERC expressed concern regarding sub-requirement R1.1, 
which includes an exemption for units operating less than five percent 
of all hours during a calendar quarter, because the provision 
``excludes the hours attributed to the synchronous generator or 
condenser that operates for less than five percent of all hours during 
any calendar quarter.'' \30\ WECC responded by explaining that (1) this 
exemption is a carryover from the currently effective regional 
Reliability Standard and (2) the five percent exclusion permits the 
continued practice of allowing the operation of peaking units without 
penalty for having an out-of-service automatic voltage regulator per 
the manufacturer's recommendations.\31\
---------------------------------------------------------------------------

    \30\ Id. at 34-35.
    \31\ Id. at 35.
---------------------------------------------------------------------------

NOPR Proposal
    56. The Commission proposed to approve VAR-002-WECC-1 as just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest. Further, the Commission proposed the concurrent 
retirement of currently-effective WECC VAR-STD-002a-1. The Commission 
proposed to find that VAR-002-WECC-1 is more stringent than the 
corresponding NERC Reliability Standard. In addition, the Commission 
sought comment on several issues concerning VAR-002-WECC-1 including: 
(1) The automatic voltage regulator in-service requirement, (2) the 
exclusion of synchronous generators that operate less than five percent 
of all hours during a calendar quarter, (3) the replacement period for 
automatic voltage regulators, and (4) automatic voltage regulator 
performance.
1. Automatic Voltage Regulator In-Service Requirement
    57. Requirement R1 of regional Reliability Standard VAR-002-WECC-1 
provides that ``Generator Operators and Transmission Operators shall 
have [automatic voltage regulators] in service and in automatic voltage 
control mode 98 [percent] of all operating hours for synchronous 
generators or synchronous condensers.'' \32\ Requirement R1 then 
identifies ten circumstances in which a generator operator or 
transmission operator is excused from this requirement.
---------------------------------------------------------------------------

    \32\ Regional Reliability Standard VAR-002-WECC-1, Requirement 
R1.
---------------------------------------------------------------------------

NOPR Proposal
    58. In the NOPR, the Commission proposed to find that, by 
specifying the circumstances in which a generator operator or 
transmission operator is excused from operating with automatic voltage 
regulator in-service and in automatic voltage control mode, Requirement 
R1 is more stringent than the requirement in NERC VAR-002-1.1b. 
Nevertheless, the Commission expressed its concern that, where 
installed, automatic voltage regulators should be in-service at all 
times except in circumstances when the generator is operating at an 
output level that is not within the design parameters of the automatic 
voltage regulator or when operations of the automatic voltage regulator 
would result in instability. Accordingly, we sought comment on whether 
the Commission should direct WECC to develop a modification to the 
proposed regional Reliability Standard to address our concern. The 
Commission offered, for example, that WECC could develop a modification 
replacing the blanket two percent exemption with a list of specific 
exemptions that would accommodate generating units that are starting up 
or responding to unforeseen events and are operating outside of 
applicable facility ratings.
Comments
    59. WECC, supported by CDWR, urges the Commission to approve VAR-
002-WECC-1 with its exemption from using automatic voltage regulators 
during two percent of all operating hours. WECC contends that this 
exemption is not new and is included in WECC VAR-STD-002a-1, which 
addresses automatic voltage regulators. WECC explains that the current 
regional Reliability Standards includes levels of non-compliance that 
assess no penalty for generator operators that operate with their 
automatic voltage regulators in service at least 98 percent of the 
time. WECC contends that moving this exemption from the levels of non-
compliance to the revised requirement was necessary to meet the 
Commission's violation severity level guideline 3, which states that 
violation severity levels ``should not appear to redefine or undermine 
the requirement.'' \33\
---------------------------------------------------------------------------

    \33\ WECC Comments at 15, citing North American Electric 
Reliability Corp., 123 FERC ] 61,284, at P 32 (2008) (Violation 
Severity Level Order).
---------------------------------------------------------------------------

    60. WECC further contends that a directive reducing the two percent 
exemption will not increase the reliable performance of the Western 
Interconnection. WECC explains that the exemption is reasonable and a 
best business practice developed to enhance and protect reliability. 
WECC further explains that generator operators need the flexibility to 
take their automatic voltage regulator out of service when an operator 
is not comfortable with the performance of the automatic voltage 
regulator. WECC contends that requiring automatic voltage regulators to 
be in service 100 percent of all operating hours would be an onerous 
requirement that may, in fact, create a perverse incentive for 
generator operators to take their generation off-line rather than risk 
non-compliance with a more stringent requirement. Furthermore, WECC 
contends that the Commission's suggestion that WECC develop a list of 
specific exemptions is untenable. WECC explains that it is difficult to 
define all of the reasons why it may be necessary to take an automatic 
voltage regulator out of service unless the exclusions were written 
more broadly. WECC also contends that when a generator operator is 
responding to alarms, it may not have sufficient time to determine if 
the situation complies with a list of exemptions.
    61. Although EPSA states that it supports the requirement that 
equipment such as automatic voltage regulators and power system 
stabilizers be available for a high percentage of the time a generator 
is in-service, EPSA urges the Commission to not mandate 100 percent 
availability for such ancillary equipment. EPSA contends that requiring 
equipment on generators to be available 100 percent of the time would 
not improve the reliability of the bulk electric system and would 
remove valuable generation from the grid, possibly due to what might be 
merely a minor problem associated with the ancillary equipment.
    62. The Bureau of Reclamation comments that the NOPR and revised 
regional Reliability Standard do not use consistent terminology when 
referring to the operation of the automatic voltage regulator. The 
Bureau of Reclamation explains that the use of the terms ``[automatic 
voltage regulator] in service'' and ``[automatic voltage regulator] in 
automatic voltage control mode'' is misleading making it hard to

[[Page 23698]]

determine the basis for compliance. The Bureau of Reclamation states 
that, in discussing this issue with members of the drafting team, the 
intent was to capture the hours the excitation system was in automatic 
voltage regulator mode but the language of the standard is unclear. The 
Bureau of Reclamation suggests that Requirement R1 of VAR-002-WECC-1 
should state: ``Generator Operators and Transmission Operators shall 
have the excitation system in [automatic voltage regulator] mode 98% of 
all operating hours for synchronous generators or synchronous 
condensers.''
    63. Mariner comments that there is an inadequacy in VAR-002-WECC-1. 
Mariner states that a voltage schedule is needed to appropriately 
program the automatic voltage regulator to operate in automatic voltage 
control mode. However, the continent-wide Reliability Standard VAR-001-
1 allows transmission owners to provide either a voltage schedule or a 
reactive power schedule to the generator operators. Mariner comments 
that a reactive power schedule does not provide a generator operator 
with enough information to appropriately program the automatic voltage 
regulator to operate in automatic voltage control mode as required, 
such that the reactive power output must continuously be monitored and 
manually adjusted throughout the day, thereby defeating the purpose of 
the ``automatic'' voltage regulator. Mariner further states that 
operating with these continuous manual adjustments to maintain a 
constant reactive power output could actually harm the reliability of 
the system. Accordingly, Mariner recommends that the Commission remand 
regional Reliability Standard VAR-002-WECC-1.
Commission Determination
    64. We recognize that the stated exemption from operating automatic 
voltage regulators during two percent of all operating hours is 
included in the levels of non-compliance associated with the currently-
effective WECC VAR-STD-002a-1. We find that, by moving the exemption 
from the levels of non-compliance to the revised requirement, the 
revision is consistent with the Commission's guidelines on violation 
severity levels.\34\ We also accept that requiring an exhaustive list 
of exemptions could result in overly broad exemptions that could allow 
generator operators to operate without automatic voltage regulators for 
more than two percent of all operating hours. If this were to occur, 
reliability could be diminished.
---------------------------------------------------------------------------

    \34\ See Violation Severity Level Order, 123 FERC ] 61,284 at P 
32; see also North American Electric Reliability Corp., 119 FERC ] 
61,260 at P 109 (directing that a substantive compliance 
responsibility be set forth in the Requirement of a Reliability 
Standard); Order No. 693, FERC Stats. & Regs., Regulations Preambles 
2006-2007 ] 31,242 at P 253 (stating ``while Measures and Levels of 
Non-Compliance provide useful guidance to the industry, compliance 
will in all cases be measured by determining whether a party met or 
failed to meet the Requirement given the specific facts and 
circumstances of its use, ownership or operation of the Bulk-Power 
System'').
---------------------------------------------------------------------------

    65. The Commission understands that the purpose of the two percent 
exemption is to allow the generator operator to remove the automatic 
voltage regulator from service when the generator operator determines 
that automatic voltage regulator operation would jeopardize the 
generator or reliability of the Bulk-Power System. All hours included 
in the two percent exemption must be consistent with the purpose of the 
revised Regional Reliability Standard, which is to ensure the 
reliability of the Bulk-Power System within the Western Interconnection 
by ensuring that automatic voltage regulators on synchronous generators 
and condensers are kept in service and controlling voltage.\35\ We will 
not direct WECC to modify the two percent exemption for automatic 
voltage regulator operation.
---------------------------------------------------------------------------

    \35\ NERC states that WECC explained ``the two percent allowance 
provides for time to start up generating facilities * * * It also 
allows for evaluation when the Generator Operators respond to 
unforeseen events.'' NERC Petition at 34. In addition, WECC states 
``Generator Operators need the flexibility to take either their 
[automatic voltage regulator] or [power system stabilizer] out of 
service when an operator is not comfortable with the performance of 
the [automatic voltage regulator] or [power system stabilizer]. * * 
* Furthermore, when a Generator Operator is responding to alarms, 
there is not sufficient time to determine if the situation complies 
with the Standard's exclusions. Giving the Generator Operator the 
time to evaluate the situation impacting the performance of an 
[automatic voltage regulator] or [power system stabilizer], rather 
than taking the generator out of service, provides for situational 
awareness and enhances reliability.'' WECC Comments at 15-16.
---------------------------------------------------------------------------

    66. In response to the comments filed by the Bureau of Reclamation, 
we agree that there is a difference between the automatic voltage 
regulator being ``in service'' and the automatic voltage regulator 
being ``in automatic voltage control mode.'' As the Bureau of 
Reclamation explained, modern excitation systems can include several 
control function modes, one of which is automatic voltage regulator 
mode. If the excitation controller is operating in automatic voltage 
regulator mode, then the generator is operating in automatic voltage 
control mode. If the excitation controller is operating in another 
mode, the generator is not operating in automatic voltage control mode. 
Accordingly, we believe that VAR-002-WECC-1 makes this distinction 
clear by requiring synchronous generators and synchronous condensers to 
have the automatic voltage regulator in service and in automatic 
voltage control mode.
    67. With regard to Mariner's concern, we note that WECC has an 
ongoing project to address this issue.\36\ We encourage WECC to 
consider the comments of Mariner in this proceeding during the 
development of its Project WECC-0046 and encourage Mariner to 
participate.
---------------------------------------------------------------------------

    \36\ WECC Project WECC-0046--VAR-001-WECC-1 Voltage and Reactive 
Control can be followed at: http://www.wecc.biz/Standards/Development/Pages/default.aspx.
---------------------------------------------------------------------------

2. Exclusion of Synchronous Generators That Operate Less Than Five 
Percent of All Hours During a Calendar Quarter
    68. Requirement R1.1 of regional Reliability Standard VAR-002-WECC-
1 allows exclusion of any synchronous generator or synchronous 
condenser that ``operates for less than five percent of all hours 
during any calendar quarter'' from operating with automatic voltage 
regulator in service and in automatic voltage control mode. During the 
Reliability Standard development process of the revised regional 
Reliability Standard, NERC expressed concern regarding the exclusion of 
these hours.\37\ WECC explained that the ``exclusion below the five 
percent threshold during a calendar quarter permits the continued 
practice of allowing the operation of peaking units without penalty for 
having an out-of-service [automatic voltage regulator] per the 
manufacturer recommendations'' since ``[p]eaking units often operate, 
for short periods, at low megawatt levels (below where manufacture[r]s 
recommend placing the [automatic voltage regulators] in-service).''\38\
---------------------------------------------------------------------------

    \37\ NERC Petition at 34-35.
    \38\ Id. at 35.
---------------------------------------------------------------------------

NOPR Proposal
    69. In the NOPR, the Commission observed that it appears that WECC 
developed the five percent threshold provision to account for out-of-
service automatic voltage regulators per the manufacturer 
recommendations regarding automatic voltage regulator design 
limitations. The Commission expressed concern, however, that the 
provision is written more broadly than necessary. The Commission stated 
that it appears inefficient to allow an exemption for any synchronous 
generator or synchronous condenser that ``operates for less than five 
percent of all hours during any calendar quarter'' in order to address 
concerns about operation limits based on manufacture

[[Page 23699]]

recommendations, and that such an exemption could potentially exempt 
other generator operators and transmission operators. Thus, the 
Commission sought comment on whether it should direct WECC to develop a 
modification through its Reliability Standards development process that 
addresses this concern. The Commission suggested that one reasonable 
solution would be to develop a replacement requirement that directly 
addresses the need for an exemption for peaking units operating 
automatic voltage regulators when necessary to satisfy manufacturer 
recommendations regarding the operation of an automatic voltage 
regulator.
Comments
    70. WECC, supported by SDG&E, comments that the five percent 
exemption is not new and is included in the applicability sections of 
WECC VAR-STD-002a-1 and VAR-STD-002b-1. WECC contends that the 
retention of this exclusion in VAR-002-WECC-1 will not diminish the 
reliability of the bulk electric system in the Western Interconnection. 
WECC further contends that it would not be cost-effective for some 
older generators that are used for short periods to replace, repair, or 
upgrade their automatic voltage regulator. WECC contends that it is 
more likely that these generators would be retired rather than make 
such repairs and, thus, they would no longer be available during peak 
periods. Thus, WECC argues, removing the five percent exemption could 
have a negative impact on reliability.
    71. EPSA supports an exemption from requiring ancillary equipment 
such as automatic voltage regulators on facilities that are online five 
percent or less of the time each year if the unit is not required to 
meet system operating limits or interconnection reliability operating 
limits.
Commission Determination
    72. The Commission recognizes that an exclusion for synchronous 
generators or synchronous condensers that operate for less than five 
percent of all hours during a calendar quarter from compliance with the 
requirement to have an automatic voltage regulator in service and in 
automatic voltage control mode exists as part of the ``applicability'' 
provision of currently-effective WECC VAR-STD-002a-1. We also 
understand that it may not be cost-effective for some older generators 
that are used only for short periods of time to replace, repair, or 
upgrade their automatic voltage regulator.
    The Commission, therefore, accepts this exclusion on the basis of 
WECC's explanation that the retention of this exclusion will not 
diminish the reliability of the bulk electric system in the Western 
Interconnection. Even with the additional stringency of the regional 
Reliability Standard, generator operators must still comply with the 
requirements of NERC VAR-002-1.1b, which requires generators with 
automatic voltage regulators to operate each generator in the automatic 
voltage control mode unless the generator operator has notified the 
transmission operator.
3. Automatic Voltage Regulator Replacement
    73. Sub-requirement R1.6 of VAR-002-WECC-1 lengthens the automatic 
voltage regulator replacement timeline due to component failure from 15 
months to 24 months ``to accommodate design and procurement especially 
for nuclear units.'' \39\ NERC supported the extension of the outage 
time frame for the automatic voltage regulators.
---------------------------------------------------------------------------

    \39\ NERC Petition at Exhibit C, ``Consideration of Comments for 
VAR-002-WECC-1--Automatic Voltage Regulator Comments were due 
January 2, 2008.''
---------------------------------------------------------------------------

NOPR Proposal
    74. The Commission, giving due weight to WECC and NERC, proposed to 
accept the Reliability Standard with this revision. Nevertheless, the 
Commission expressed concern that allowing an additional nine months of 
non-operation of an automatic voltage regulator is not necessary for 
many, if not most, units. The Commission commented that the additional 
replacement time could lead to a decrease in generation that can react 
in automatic voltage regulator mode. In the event of a contingency, 
this decrease in generation could have an impact on bulk electric 
system reliability. The Commission suggested that it may be appropriate 
for the Commission to direct WECC to develop a modification to this 
provision to address our concern. As an example, the Commission 
suggested that WECC could allow fifteen months for replacement with an 
opportunity to seek an extension up to nine months where justified. 
Alternatively, WECC could retain a fifteen month replacement period for 
non-nuclear generator units, and a twenty-four month replacement period 
for nuclear generator units. The Commission sought comment regarding 
the historical replacement period for nuclear and non-nuclear units, 
and the appropriateness of the Commission proposal.
Comments
    75. WECC comments that it has gained considerable knowledge on this 
subject since its previous standard was approved by the Commission. 
WECC states that drafting team members reviewed replacement experiences 
for a number of different types of generators and concluded that a 15-
month replacement requirement was extremely tight. In addition, WECC 
states that because many automatic voltage regulators date back to the 
early 1970s or earlier, extensive refinements must be made to the 
design of the automatic voltage regulator and the excitation system to 
integrate an old analog system with a new digital system. WECC also 
points out that strict procurement regulations, contracting 
requirements, the limited number of suppliers, delivery, and 
installation time all make a 15-month deadline infeasible. WECC further 
contends that the number of units that are operating without an 
automatic voltage regulator in service at the same time due to 
component failure is typically very limited. Thus, WECC argues, the 
additional time allowed for replacement would have very little to no 
impact on the overall reliability of the bulk electric system.
    76. EPSA also contends that 15 months is an insufficient period in 
which to require a generator to replace an automatic voltage regulator 
because of the length of the procurement period and the importance of 
fulfilling compliance requirements with respect to the replacement 
equipment. Accordingly, EPSA contends that the 24-month period 
represents an improvement that should be adopted by the Commission. 
SDG&E agrees that the replacement period should be extended to 24 
months based on industry experience with these generator components.
Commission Determination
    77. We recognize, as WECC points out, that replacing an old 
automatic voltage regulator may require significant refinements to the 
design of the automatic voltage regulator and the excitation system to 
integrate a new digital system with an existing analog system, thereby 
requiring additional time. We also recognize that, as WECC and EPSA 
explain, procurement periods for new automatic voltage regulators might 
require more than 15 months. Although we did not receive any specific 
details regarding historical automatic voltage regulator replacement 
timeframes, WECC states that the drafting team members reviewed 
replacement experiences for a number

[[Page 23700]]

of different types of generators and concluded the 15-month replacement 
requirement was ``extremely tight.'' \40\ Based on these explanations, 
we approve the regional Reliability Standard with the modified 
provision, Requirement R1.6, which allows up to 24 months for replacing 
an excitation system due to component failure.
---------------------------------------------------------------------------

    \40\ WECC Comments at 18.
---------------------------------------------------------------------------

4. Automatic Voltage Regulator Performance
    78. The current regional Reliability Standard provides that ``[a]ll 
synchronous generators with automatic voltage control equipment shall 
normally be operated in voltage control mode and set to respond 
effectively to voltage deviations.'' The revised Reliability Standard 
VAR-002-WECC-1 removes this requirement.
NOPR Proposal
    79. The Commission noted that the NERC Petition does not provide 
any explanation for, or potential impact of, removing the provision. 
Accordingly, the Commission sought further comment on the impact of 
removing this provision from the currently-effective WECC regional 
Reliability Standard. The Commission expressed concern that, by 
removing the requirement for automatic voltage regulators to respond 
effectively to voltage deviations, the proposed regional Reliability 
Standard would not require entities to assess the performance of the 
automatic voltage regulators to ensure they are appropriately 
responding to voltage deviations to support reliability of the Bulk-
Power System.
Comments
    80. WECC comments that it removed the requirement for generators 
with automatic control equipment to operate in automatic voltage 
control mode because NERC Reliability Standard VAR-002-1.1b already 
requires generator operators to operate each generator connected to the 
interconnected transmission system in the automatic voltage control 
mode unless the generator operator has notified the transmission 
operator. Thus, WECC contends, exclusion of this requirement from VAR-
002-WECC-1 will have no impact on the reliability of the bulk electric 
system because generators must still comply with the requirements of 
NERC Reliability Standard VAR-002-1.1b. WECC further contends that 
including this requirement in the revised regional Reliability Standard 
would unnecessarily expose entities in the West to the possibility of 
non-compliance with the same requirement in two different Reliability 
Standards.
    81. The Bureau of Reclamation also contends that it is unnecessary 
to maintain a requirement for automatic voltage regulators to respond 
to voltage deviations. The Bureau of Reclamation explains that the 
requirement to ensure proper tuning and performance of automatic 
voltage regulators is covered under the MOD series of Reliability 
Standards, specifically MOD-012-1 and MOD-013-1.
Commission Determination
    82. As WECC points out, Requirement R1 of NERC Reliability Standard 
VAR-002-1.1b requires generator operators to ``operate each generator 
connected to the interconnected transmission system in the automatic 
voltage control mode (automatic voltage regulator in service and 
controlling voltage).'' WECC explains that it understood the currently-
effective regional requirement for all synchronous generators with 
automatic voltage control equipment to be normally operating in voltage 
control mode and set to respond effectively to voltage deviations to be 
duplicative of Requirement R1 of NERC Reliability Standard VAR-002-
1.1b. The Commission believes that, if a generator operator with an 
installed automatic voltage regulator complies with the NERC 
requirement to have the generator in automatic voltage control mode, 
generators should be set to respond effectively to voltage deviations. 
Thus, we find that there will be no impact to the reliability of the 
bulk electric system if this provision is removed from the regional 
Reliability Standard because the requirement remains enforceable under 
NERC Reliability Standard VAR-002-1.1.b.
    83. The Commission disagrees with the Bureau of Reclamation's 
comment that NERC Reliability Standards MOD-012-0 and MOD-013-1 address 
requirements for ensuring proper tuning and performance of automatic 
voltage regulators.\41\ The Commission agrees that the requirements in 
MOD-012-0 require entities to provide dynamic system modeling and 
simulation data, including data regarding ``excitation systems, voltage 
regulators, turbine-governor systems, power system stabilizers, and 
other associated generation equipment'' to the Regional Entities and 
NERC for use in reliability analysis of the interconnected transmission 
system.\42\ These Reliability Standards do not require proper 
performance and tuning of an automatic voltage regulator, but the data 
required by NERC Reliability Standard MOD-012-0 could help identify 
improper performance of an automatic voltage regulator when employed in 
certain reliability analyses.
---------------------------------------------------------------------------

    \41\ Order No. 693 approved Reliability Standard MOD-012-0 as 
mandatory and enforceable. However, Order No. 693 deemed MOD-013-0 
as a fill-in-the-blank Reliability Standard in part because its 
requirements apply to the Regional Reliability Organizations, now 
called Regional Entities, which the Commission was not persuaded 
NERC can enforce a Regional Entity's compliance with a Reliability 
Standard. See Order No. 693, FERC Stats. & Regs., Pregulations 
Preambles ] 31,242 at P 301.
    \42\ Reliability Standard MOD-013-1, Requirement R1.2.
---------------------------------------------------------------------------

    84. Accordingly, in view of WECC's comments that NERC Reliability 
Standard VAR-002-1.1b subjects WECC generators to the requirement for 
generators to be normally operated ``in voltage control mode and set to 
respond effectively to voltage deviations,'' and that a similar 
regional Reliability Standard requirement would be duplicative, we will 
not direct any modifications to VAR-002-WECC-1.
5. Summary
    85. For the reasons discussed above, the Commission adopts its NOPR 
proposal to approve VAR-002-WECC-1 as just, reasonable, not unduly 
discriminatory or preferential, and in the public interest. The 
Commission also approves NERC's petition to retire currently-effective 
WECC-VAR-STD-002a-1. Based on the comments received from WECC and other 
entities, we will not, at this time, direct any modifications to 
Reliability Standard VAR-002-WECC-1.

D. VAR-501-WECC-1

    86. Regional Reliability Standard VAR-501-WECC-1 contains two 
requirements that are intended to ensure that power system stabilizers 
on synchronous generators are kept in service. Requirement R1 provides 
that each generator operator with a synchronous generator equipped with 
a power system stabilizer must have the power system stabilizer in 
service during 98 percent of all operating hours. NERC explains that a 
power system stabilizer is part of the excitation control system of a 
generator used to increase power transfer levels by improving power 
system dynamic performance. Sub-requirements R1.1 through R1.12 set 
forth exceptions to the operating requirement in Requirement R1. 
Requirement R2 states that each generator operator must have 
documentation identifying the number of hours excluded for each sub-
requirement R1.1 through R1.12.

[[Page 23701]]

NOPR Proposal
    87. In the NOPR, the Commission proposed to approve VAR-501-WECC-1 
as just, reasonable, not unduly discriminatory or preferential, and in 
the public interest. The Commission also proposed to approve NERC's 
proposed retirement of currently-effective WECC VAR-STD-002b-1. 
Nevertheless, the Commission sought comment on certain provisions of 
VAR-501-WECC-1 including: (1) The power system stabilizer in-service 
requirement, (2) the exclusion of synchronous generators that operate 
for less than five percent of all hours during a calendar quarter, (3) 
the replacement period for power system stabilizers, and (4) power 
system stabilizer performance.
1. Power System Stabilizer In-Service Requirement
    88. Requirement R1 of VAR-501-WECC-1 provides that ``Generator 
Operators shall have [power system stabilizers] in service 98 [percent] 
of all operating hours for synchronous generators equipped with [power 
system stabilizers].'' \43\ Requirement R1 also sets forth twelve 
circumstances in which a generator operator is excused from this 
requirement.
---------------------------------------------------------------------------

    \43\ Proposed regional Reliability Standard VAR-501-WECC-1, 
Requirement R1.
---------------------------------------------------------------------------

NOPR Proposal
    89. In the NOPR, the Commission observed that by specifying the 
circumstances in which a generator operator is excused from keeping its 
power system stabilizer in service, the proposed requirement appears to 
be more stringent than the currently-effective requirement in NERC 
Reliability Standard VAR-002-1.1b, which requires only that a generator 
operator notify its transmission operator when there is a change in 
status of its power system stabilizer. Nevertheless, the Commission 
commented that, where installed, power system stabilizers should be in-
service at all times, equipment and facility ratings permitting, unless 
exempted by the transmission operator.
    90. Similar to its concerns with automatic voltage regulators 
addressed in VAR-002-WECC-1, the Commission stated that an exemption to 
an in-service requirement might be appropriate to accommodate 
generating facilities when they are starting up or operating outside of 
their facility ratings. The Commission expressed concern, however, that 
the proposed regional Reliability Standard provides no limitation as to 
when generating units may use the two percent exemption. Accordingly, 
we sought comment on whether the Commission should direct WECC to 
develop a modification to the proposed regional Reliability Standard 
that would address our concern. The Commission suggested, as an 
example, that WECC could develop a modification to replace the blanket 
two percent exemption with a more specific list of exemptions that 
would accommodate generating units that are starting up or are 
operating outside of applicable facility ratings.
Comments
    91. WECC, supported by CDWR, urges the Commission to approve VAR-
501-WECC-1 with its exemption for using power system stabilizers two 
percent of all operating hours. WECC comments that VAR-501-WECC-1 
addresses an issue that is not covered by any NERC Reliability 
Standard. In addition, WECC contends that this exemption is not new and 
is included in WECC VAR-STD-002b-1, which addresses power system 
stabilizer operation. WECC explains that the current regional 
Reliability Standard includes levels of non-compliance that assess no 
penalty for generator operators that operate with their power system 
stabilizers in service at least 98 percent of the time. WECC contends 
that moving this exemption from the levels of non-compliance to the 
revised requirement was necessary to meet the Commission's violation 
severity level guideline 3, which states that violation severity levels 
``should not appear to redefine or undermine the requirement.'' \44\
---------------------------------------------------------------------------

    \44\ WECC Comments at 15, citing Violation Severity Level Order, 
123 FERC ] 61,284 at P 32.
---------------------------------------------------------------------------

    92. WECC further contends that a directive reducing the two percent 
exemption will not increase the reliable performance of the Western 
Interconnection. WECC explains that the exemption is reasonable and a 
best business practice developed to enhance and protect reliability. 
WECC further explains that generator operators need the flexibility to 
take their power system stabilizers out of service when an operator is 
not comfortable with the performance of the power system stabilizer. 
WECC contends that requiring power system stabilizers to be in service 
100 percent of all operating hours would be an onerous requirement that 
may, in fact, create a perverse incentive for generator operators to 
take their generation off-line rather than risk non-compliance with a 
more stringent requirement. Furthermore, WECC contends that the 
Commission's suggestion that WECC develop a list of specific exemptions 
is untenable. WECC explains that it is difficult to define all of the 
reasons where it may be necessary to take a power system stabilizer out 
of service. WECC also contends that when a generator operator is 
responding to alarms, it may not have sufficient time to determine if 
the situation complies with a list of exemptions.
    93. The Bureau of Reclamation points out that three of the twelve 
exceptions for the in-service requirement concern the power output 
level of the generator: Requirement R1.4 concerns when the unit is 
operating in synchronous condenser mode; Requirement R1.5 concerns when 
the unit is generating less power than the design limit for effective 
power system stabilizer operation; and Requirement R1.6 concerns when 
the unit is passing through a range of output that is a known ``rough 
zone.'' The Bureau of Reclamation comments that for most hydro 
generators the power system stabilizer is always in-service but control 
of power system stabilizers is performed by the power system stabilizer 
controller, automatically engaging or bypassing the power system 
stabilizer when output reaches a certain level. The Bureau of 
Reclamation contends that, as hydro generators are commonly used for 
regulation and peaking, these generators could be passing through the 
power system stabilizer pre-programmed levels several times a day. The 
Bureau of Reclamation recommends that the Commission remand VAR-501-
WECC-1.
Commission Determination
    94. We accept the explanation of WECC and other supporting comments 
on this matter. We recognize that the stated exemption from operating 
power system stabilizers two percent of all operating hours is included 
in the levels of non-compliance associated with the currently-effective 
WECC VAR-STD-002b-1. Further, we find that, by moving the stated 
exemption from the levels of non-compliance measures to the revised 
requirement, the revision is consistent with the Commission's 
guidelines on violation severity levels and with our determinations in 
Order No. 693.\45\ We also accept that requiring an exhaustive list of 
exemptions could

[[Page 23702]]

result in overly broad exemptions that could allow generator operators 
to operate without power system stabilizers for more than two percent 
of all operating hours. If this were to occur, reliability could be 
diminished.
---------------------------------------------------------------------------

    \45\ See Violation Severity Level Order, 123 FERC ] 61,284 at P 
32; see also North American Electric Reliability Corp., 119 FERC ] 
61,260 at 109 (directing that a substantive compliance 
responsibility be set forth in the Requirement of a Reliability 
Standard); Order No. 693, FERC Stats. & Regs., Regulations Preambles 
2006-2007 ] 31,242 at P 253 (stating ``while Measures and Levels of 
Non-Compliance provide useful guidance to the industry, compliance 
will in all cases be measured by determining whether a party met or 
failed to meet the Requirement given the specific facts and 
circumstances of its use, ownership or operation of the Bulk-Power 
System'').
---------------------------------------------------------------------------

    95. The Commission understands that the purpose of the two percent 
exemption is to allow the generator operator with an installed power 
system stabilizer to remove the power system stabilizer from service 
when the generator operator determines that power system stabilizer 
operation would jeopardize the generator or reliability of the Bulk-
Power System. All hours included in the two percent exemption must be 
consistent with the purpose of the revised regional Reliability 
Standard, which is to ensure the reliability of the Bulk-Power System 
within the Western Interconnection by ensuring that power system 
stabilizers on synchronous generators are kept in service and 
controlling voltage.\46\ We will not direct WECC to modify the two 
percent exemption for power system stabilizer operation.
---------------------------------------------------------------------------

    \46\ See supra note 35.
---------------------------------------------------------------------------

2. Exclusion of Synchronous Generators That Operate for Less Than Five 
Percent of All Hours During a Calendar Quarter
    96. Requirement R1.1 of regional Reliability Standard VAR-501-WECC-
1 allows exclusion of any synchronous generator that operates for less 
than five percent of all hours during any calendar quarter from the 
requirement that it operate with power system stabilizers in service. 
In its petition, NERC explained that, during the Reliability Standard 
development process of the regional Reliability Standard, NERC 
expressed concern regarding the exclusion of these hours.\47\ WECC 
responded by explaining that the ``exclusion below the five percent 
threshold during a calendar quarter permits the continued practice of 
allowing the operation of peaking units without penalty for having an 
out-of-service power system stabilizer per the manufacturer 
recommendations'' since ``[p]eaking units often operate, for short 
periods, at low megawatt levels (below where manufacture[r]s recommend 
placing the [power system stabilizer] in-service).'' \48\
---------------------------------------------------------------------------

    \47\ NERC Petition at 40.
    \48\ Id.
---------------------------------------------------------------------------

NOPR Proposal
    97. In the NOPR, the Commission noted that it appears that WECC 
developed the five percent threshold to account for out-of-service 
power system stabilizer per manufacturer recommendations. We sought 
comment on whether the proposed provision is written more broadly than 
necessary. Based on the comments received, the Commission stated that 
it might propose to direct WECC to develop a modification through its 
Reliability Standards development process that addresses this concern. 
The Commission suggested that one reasonable solution would be to 
develop a replacement requirement that directly addresses the need for 
an exemption for peaking units that may not operate with power system 
stabilizers to satisfy manufacturer recommendations.
Comments
    98. WECC, supported by SDG&E and EPSA, comments that the five 
percent exemption is not new and is included in the applicability 
sections of WECC VAR-STD-002a-1 and VAR-STD-002b-1. WECC contends that 
the retention of this exclusion in the VAR-501-WECC-1 will not diminish 
the reliability of the bulk electric system in the Western 
Interconnection. WECC further contends that it would not be cost-
effective for some older generators that are used for short periods to 
replace, repair, or upgrade their power system stabilizers. WECC 
contends that it is more likely that these generators would be retired 
rather than make such repairs and, thus, they would no longer be 
available during peak periods. Thus, WECC contends, removing the five 
percent exemption could have a negative impact on reliability.
Commission Determination
    99. We recognize that a stated exclusion for synchronous generators 
that operate for less than five percent of all hours during a calendar 
quarter from compliance with the requirement to have a power system 
stabilizer in service exists in the applicability section of the 
currently-effective WECC VAR-STD-002b-1. We also understand that it may 
not be cost-effective for some older generators that are used only for 
short periods of time to replace, repair, or upgrade their power system 
stabilizers. We, therefore, agree that this exclusion will not diminish 
the reliability of the bulk electric system in the Western 
Interconnection. We believe that the requirement is acceptable because 
there is no corresponding NERC requirement for power system stabilizers 
and, thus, the revised standard is more stringent than the requirements 
of the NERC Reliability Standards. Accordingly, we are satisfied with 
WECC's explanation on this matter.
3. Power System Stabilizer Replacement
    100. Proposed sub-requirement R1.10 lengthens the power system 
stabilizer replacement timeline due to component failure from 15 months 
to 24 months ``to accommodate design and procurement especially for 
nuclear units.'' \49\
---------------------------------------------------------------------------

    \49\ NERC Petition at Exhibit C, ``Consideration of Comments for 
VAR-501-WECC-1--Power System Stabilizer Comments were due January 2, 
2008.''
---------------------------------------------------------------------------

NOPR Proposal
    101. The Commission proposed to accept this requirement even though 
WECC provided limited evidence in the record to support the extension 
of the outage time frame for power system stabilizers from 15 months to 
24 months. However, since the rationale provided for the increased 
replacement period is based on the needs of nuclear power generators, 
the Commission expressed concern whether the additional nine months are 
necessary for many, if not most, units. The Commission explained that 
the additional replacement time could lead to a decrease in generation 
units operating with power system stabilizers. The Commission commented 
that, in the event of a contingency, such a decrease could have an 
impact on bulk electric system reliability. Accordingly, the Commission 
sought comment regarding the historical replacement period for nuclear 
and non-nuclear units, and the appropriateness of the Commission 
proposal.
Comments
    102. WECC comments that it has gained considerable knowledge on 
this subject since the Commission approved the currently-effective 
regional Reliability Standard in 2007. WECC states that drafting team 
members reviewed replacement experiences for a number of different 
types of generators and concluded that a 15 month replacement 
requirement was extremely tight. In addition, WECC states that because 
many power system stabilizers date back to the early 1970s or earlier, 
extensive refinements must be made to the design of the power system 
stabilizer and the excitation system to integrate an old analog system 
with a new digital system. WECC also points out that strict procurement 
regulations, contracting requirements, the limited number of suppliers, 
delivery, and installation time all make a 15 month deadline 
infeasible. WECC further contends that the number of units that are 
operating without a power system stabilizer in service at the same time 
due to component failure is typically very limited. Thus, WECC argues, 
there

[[Page 23703]]

would be very little, if any, impact on bulk electric system 
reliability that would result from an increase in the outage time frame 
to 24 months.
    103. EPSA comments that 15 months is an insufficient period in 
which to require a generator to replace a power system stabilizer 
because of the length of the procurement period and the importance of 
fulfilling compliance requirements with respect to the replacement 
equipment. Accordingly, EPSA advocates that the 24-month period 
represents an improvement that should be adopted by the Commission. 
SDG&E agrees that the replacement period should be extended to 24 
months based on industry experience with these generator components.
Commission Determination
    104. We recognize, as WECC points out, that replacing an old power 
system stabilizer may require significant refinements to the design of 
the power system stabilizer and the excitation system to integrate a 
new digital system with an existing analog system, thereby requiring 
additional time. We also recognize that, as WECC and EPSA explain, 
procurement periods for new power system stabilizers might require more 
than 15 months. Although we did not receive any specific details 
regarding historical power system stabilizer replacement timeframes, 
WECC states that the drafting team members reviewed replacement 
experiences for a number of different types of generators and concluded 
the 15-month replacement requirement was ``extremely tight.'' \50\ 
Based on these explanations, we approve the regional Reliability 
Standard with the modified provision, Requirement R1.6, which allows up 
to 24 months for replacing a power system stabilizer and excitation 
system due to component failure.
---------------------------------------------------------------------------

    \50\ WECC Comments at 18.
---------------------------------------------------------------------------

4. Power System Stabilizer Performance
    105. The current regional Reliability Standard requires all 
generators with power system stabilizers to be properly tuned in 
accordance with the WECC requirements.\51\ The proposed regional 
Reliability Standard removes the tuning requirement without explanation 
or analysis of the potential impact of removing the provision.
---------------------------------------------------------------------------

    \51\ Id. Requirement WR1 of the currently-effective regional 
Reliability Standard provides: ``Power System Stabilizers on 
generators shall be kept in service at all times, unless one of the 
exemptions listed in Section C (Measures) applies, and shall be 
properly tuned in accordance with WECC requirements.''
---------------------------------------------------------------------------

NOPR Proposal
    106. In the NOPR, the Commission expressed its belief that, if a 
power system stabilizer is in-service, it must be properly tuned to 
enhance system damping and maintain system stability. The Commission, 
therefore, sought further explanation from WECC and NERC, and public 
comment, on the impact of removing the tuning requirement.
Comments
    107. WECC states that the Commission is correct that a properly-
tuned power system stabilizer is necessary to enhance system damping. 
WECC contends, however, that a power system stabilizer tuning 
requirement is not necessary because, in order for a generator operator 
to meet the in-service requirements of VAR-501-WECC-1 without 
experiencing inappropriate system oscillations, that generator operator 
typically must have a properly tuned power system stabilizer. WECC adds 
that VAR-501-WECC-1 is a performance, not a tuning standard, which is 
why WECC's standards development drafting team excluded this 
requirement from the revised regional Reliability Standard.
    108. Moreover, WECC contends that power system stabilizer tuning 
should not be added to VAR-501-WECC-1 because tuning is highly site and 
unit specific, making it difficult to enforce a ``proper tuning'' 
requirement. WECC further contends that identifying whether or not a 
power system stabilizer or excitation system is properly tuned is very 
dependent upon the professional opinion of the expert performing the 
tuning. WECC also points out that older analog power system stabilizers 
are being replaced with newer digital versions, which do not require 
any further adjustments unless changes are made to the system 
configuration. Moreover, WECC contends that because the new digital 
power system stabilizers, unlike the older analog versions, do not 
drift, the periodic testing requirement which sought to address drift 
by requiring a five-year tuning power system stabilizer testing program 
is no longer necessary.
    109. EPSA comments that a generator operator can purchase, install 
and tune power system stabilizer equipment but regional entities may 
have the tools to measure proper tuning. EPSA contends that an out-of-
tune power system stabilizer could be identified faster using analyses 
performed by the transmission operator or regional entity than the 
owner of the power system stabilizer could identify by routinely 
checking power system stabilizer tuning parameters. Moreover, EPSA 
comments, new power system stabilizers are digital, so less component 
drift takes place than in older power system stabilizers that would 
need to be checked periodically. EPSA predicts that it may not be long 
before new power system stabilizers are self-learning and self-tuning.
    110. In contrast, PacifiCorp suggests modifying the proposed 
regional Reliability Standard to include language that the power system 
stabilizer shall be tuned in accordance with WECC requirements, without 
prescribing any intervals. PacifiCorp further suggests that carrying 
over this requirement from the current standard would ensure any power 
system stabilizer will be properly tuned.
Commission Determination
    111. Although a properly-tuned power system stabilizer is necessary 
to enhance system damping, we accept the exclusion of the current 
tuning requirement based on WECC's explanation that, in order for a 
generator operator with an installed power system stabilizer to meet 
the in-service requirements of VAR-501-WECC-1, the power system 
stabilizer must be properly tuned to prevent experiencing inappropriate 
system oscillations. A tuning requirement would require removal of the 
power system stabilizer from service, which may cause the generator 
operator to be non-compliant with the performance requirements of VAR-
501-WECC-1. Accordingly, we will not direct any modifications to VAR-
501-WECC-1 regarding a power system stabilizer tuning requirement. If, 
in the future, WECC develops a requirement for power system stabilizer 
tuning, we urge WECC to consider the comments submitted by PacifiCorp 
to include such a tuning requirement.
5. Reporting Burden
NOPR Proposal
    112. In the NOPR, the Commission noted that the revised WECC 
Reliability Standards do not modify or otherwise affect the burdens 
related to the collection of information already in place. Thus, the 
Commission preliminarily concluded that the revised WECC Reliability 
Standards will neither increase the reporting burden nor impose any 
additional information collection requirements.
Comments
    113. Melissa Kurtz, USACE NWW, USACE Portland, USACE Seattle 
contend that, contrary to the Commission's burden estimate in the NOPR, 
compliance with VAR-501-

[[Page 23704]]

WECC-1 will impose an additional burden on entities that must now track 
when a power system stabilizer is off. These commenters state that the 
power system stabilizer is largely handled by the generator exciter, 
which is programmed to activate and deactivate the power system 
stabilizer depending on generator loading conditions. They explain that 
the exciter automatically turns the power system stabilizer off when 
the unit is passing through a rough zone, when the unit is generating 
less power than its design limit for effective power system stabilizer 
operation, or when the unit is condensing. They contend that VAR-501-
WECC-1 will require tracking the status of the power system stabilizer 
that is turning on and off automatically along with the reason it is 
turned off. They also explain that a power system stabilizer is a piece 
of remote equipment that sits on the powerhouse floor and is not 
conveniently located for observation. Thus, they argue that the 
required tracking is not reasonable and will not add to system 
reliability because it uses scarce resources to track the information. 
Further, commenters state that tracking this information would require 
hardware and software modifications by staff. They suggest that 
evidence of compliance through system settings is more beneficial than 
micromanaging the results of a machine.
    114. The Bureau of Reclamation states that it has no process to 
track the minutes that the power system stabilizer is in a bypass 
condition and to develop such a process, as would be required under 
Requirement R2 of VAR-501-WECC-1, would be very burdensome. The Bureau 
of Reclamation further comments that tracking such a transient 
condition does not add to the reliability of the bulk electric system. 
Finally, the Bureau of Reclamation points out that the current regional 
Reliability Standard does not include a requirement to track and 
document the time the power system stabilizer controller places the 
power system stabilizer in bypass condition.
Commission Determination
    115. The Commission finds that VAR-501-WECC-1 does not impose any 
new reporting requirements. Under Requirement R3.1 of NERC Reliability 
Standard VAR-002-1.1b a generator operator must notify its transmission 
operator as soon as practical but no later than 30 minutes after a 
``status or capability change on any generator Reactive Power resource, 
including the status of each automatic voltage regulator and power 
system stabilizer and the expected duration of the change in status or 
capability.'' \52\ Thus, generator operators already must monitor and 
report changes in status of their power system stabilizers.
---------------------------------------------------------------------------

    \52\ NERC Reliability Standard VAR-002-1.1b, Requirement R3.1.
---------------------------------------------------------------------------

    116. We believe that the documentation requirement for exempt 
outages of power system stabilizers under Requirement R2 of VAR-501-
WECC-1 is consistent with the existing reporting requirement under 
Requirement R3.1 of NERC VAR-002-1.1b. If a generator operator must 
already notify its transmission operator of a change in status of each 
power system stabilizer, it should not create an added burden to 
document those changes. Thus, we do not expect implementation of VAR-
501-WECC-1 to result in an increased reporting burden to generator 
operators. If, however, generator operators in the Western 
Interconnection continue to be concerned about their compliance with 
either of these Reliability Standards, we believe that such a concern 
is best addressed through the compliance programs at either WECC or 
NERC.
6. Summary
    117. The Commission adopts its NOPR proposal to approve VAR-501-
WECC-1 as just, reasonable, not unduly discriminatory or preferential, 
and in the public interest. We accept WECC's explanations for the 
issues raised in the NOPR. Accordingly, we will not, at this time, 
direct WECC to develop any modifications to VAR-501-WECC-1. We also 
dismiss arguments raised by Melissa Kurtz, USACE NWW, USACE Portland, 
and USACE Seattle that the revised regional Reliability Standard 
creates an undue reporting burden.

E. NERC VAR-002-1.1b

    118. In the NOPR, the Commission sought comment as to whether it 
should direct NERC to develop a modification to VAR-002-1.1b to clarify 
that, if a generator has an automatic voltage regulator or power system 
stabilizer installed, it must be in-service at all times, equipment and 
facility ratings permitting, unless exempted by the transmission 
operator.
    119. The Commission noted that NERC Reliability Standard does not 
address power system stabilizer tuning. The Commission stated that a 
properly tuned power system stabilizer is necessary to enhance system 
damping. If a power system stabilizer is installed, periodic review of 
the power system stabilizer tuning is a significant component of 
maintaining system stability to ensure that system changes have not 
impacted the performance of the power system stabilizer in supporting 
system stability. Accordingly, the Commission sought comment on whether 
it should propose to direct NERC to develop a continent-wide 
Reliability Standard to address this concern. The Commission added that 
any resulting proposal to direct the development of modifications to 
the NERC Reliability Standards would be addressed in a separate 
proceeding.
Comments
    120. NERC comments that it has not performed the technical analysis 
necessary to determine whether it is necessary for Bulk-Power System 
reliability to develop a tuning requirement for power system 
stabilizers. If the Commission receives comments that would compel it 
to direct NERC to develop such a requirement, NERC asks that the 
Commission allow NERC enough flexibility so that it can appropriately 
prioritize the directive.
Commission Determination
    121. The Commission will not, at this time, commence a new 
proceeding to propose a directive to NERC to develop a requirement on 
power system stabilizer tuning. We recognize that the need for a 
requirement on power system stabilizer tuning is reduced as generator 
operators install new digital power system stabilizers, which are less 
prone to drifting and should not require adjustment unless changes are 
made to system configurations. Nevertheless, we may revisit this 
proposal as more practical experience with the new digital technology 
progresses.

F. Violation Risk Factors and Violation Severity Levels

    122. In the event of a violation of a Reliability Standard, 
consistent with NERC practices, WECC establishes the initial value 
range for the corresponding base penalty amount. To do so, WECC assigns 
a violation risk factor for each requirement of a Reliability Standard 
that relates to the expected or potential impact of a violation of the 
requirement on the reliability of the Bulk-Power System. In addition, 
WECC defines up to four violation severity levels--Lower, Moderate, 
High, and Severe--as measurements for the degree to which the 
requirement was violated in a specific circumstance.
    123. Violation risk factors and violation severity levels are not 
part of the Reliability Standard and, thus, are appropriately treated 
as an appendix to

[[Page 23705]]

NERC's Rules of Procedure.\53\ Revisions of violation severity levels 
do not modify the Reliability Standard. Accordingly, NERC and the 
regional entities are not required to comport with the Reliability 
Standards development provisions of section 215 of the FPA when 
revising a violation risk factor or violation severity level 
assignment.\54\
---------------------------------------------------------------------------

    \53\ Violation Severity Level Order, 123 FERC ] 61,284 at P 15.
    \54\ See North American Electric Reliability Corporation, 120 
FERC ] 61,145 at P 16.
---------------------------------------------------------------------------

    124. In Order No. 705, the Commission approved 63 of NERC's 72 
proposed violation risk factors for the version one FAC Reliability 
Standards and directed NERC to file violation severity level 
assignments before the version one FAC Reliability Standards become 
effective.\55\ Subsequently, NERC developed violation severity levels 
for each requirement of the Commission-approved FAC Reliability 
Standards, as measurements for the degree to which the requirement was 
violated in a specific circumstance.
---------------------------------------------------------------------------

    \55\ Facilities Design, Connections and Maintenance Reliability 
Standards, Order No. 705, 121 FERC ] 61,296, at P 137 (2007).
---------------------------------------------------------------------------

    125. On June 19, 2008, the Commission issued its Violation Severity 
Level Order approving the violation severity level assignments filed by 
NERC for the 83 Reliability Standards approved in Order No. 693.\56\ In 
that order, the Commission offered four guidelines for evaluating the 
validity of violation severity levels, and ordered a number of reports 
and further compliance filing to bring the remainder of NERC's 
violation severity levels into conformance with the Commission's 
guidelines. The four guidelines are: (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; \57\ (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, not a cumulative number of violations.\58\ 
The Commission found that these guidelines will provide a consistent 
and objective means for assessing, inter alia, the consistency, 
fairness and potential consequences of violation severity level 
assignments. The Commission noted that these guidelines were not 
intended to replace NERC's own guidance classifications but, rather, to 
provide an additional level of analysis to determine the validity of 
violation severity level assignments.
---------------------------------------------------------------------------

    \56\ Violation Severity Level Order, 123 FERC ] 61,284.
    \57\ Guideline 2 contains two sub-parts: (a) The single 
violation severity level assignment category for binary requirements 
should be consistent and (b) violation severity levels assignments 
should not contain ambiguous language.
    \58\ Violation Severity Level Order, 123 FERC ] 61,284 at P 17.
---------------------------------------------------------------------------

    126. On August 10, 2009, NERC submitted an informational filing 
setting forth a summary of revised guidelines that NERC intends to use 
in determining the assignment of violation risk factors and violation 
severity levels for Reliability Standards. NERC states that these 
revised guidelines were consistent with Commission's guidelines. On May 
5, 2010, NERC submitted an informational filing as a supplement to its 
pending March 5, 2010 Violation Severity Level Order compliance 
filing.\59\ In that May 5, 2010 filing, NERC proposes to assign a 
violation severity level only to each main requirement. Thus, a 
violation of any number of sub-requirements would trigger only a single 
violation of the main requirement. This proposed ``roll-up'' 
methodology is currently pending before the Commission in Docket No. 
RR08-4-005.
---------------------------------------------------------------------------

    \59\ North American Reliability Corporation, Filing of the North 
American Electric Reliability Corporation regarding the Assignment 
of Violation Risk Factors and Violation Severity Levels, Docket No. 
RR08-4-005 (filed May 5, 2010).
---------------------------------------------------------------------------

WECC Proposal
    127. As discussed above, WECC has developed violation risk factors 
and violation severity levels for each of these revised regional 
Reliability Standards. WECC states that it developed these violation 
risk factors and violation severity levels in response to comments from 
NERC and the Commission that it should replace its existing sanctions 
tables. In addition, NERC states in its petition that WECC has agreed 
to conform the format of the violation severity levels to that of the 
NERC Reliability Standards in revisions to the four regional 
Reliability Standards.
Commission Determination
    128. The Commission approves the violation risk factors and 
violation severity levels assigned to FAC-501-WECC-1, PRC-004-WECC-1, 
VAR-002-WECC-1, and VAR-501-WECC-1. We note, however, that there appear 
to be some missing violation risk factors and severity levels. Even 
with these potential gaps, however, the requirements of the WECC 
Reliability Standards approved in this Final Rule shall be enforceable 
upon their implementation.
    129. In FAC-501-WECC-1, the Lower violation severity level applies 
when the transmission maintenance and inspection plan does not include 
facilities for one of the paths in the WECC Transfer Path Table, but 
the transmission owners are performing maintenance and inspection for 
those facilities. The Moderate violation severity level applies when 
the transmission maintenance and inspection plan does not include 
facilities for two of the paths in the WECC Transfer Path Table, and 
the transmission owners are not performing maintenance and inspection 
for those facilities. Based on these two violation severity level 
assignments, it is ambiguous which violation severity level would apply 
if the transmission maintenance and inspection plan does not include 
facilities for one of the paths in the WECC Transfer Path Table, and 
the transmission owners are not performing maintenance and inspection 
for those facilities.
    130. In PRC-004-WECC-1, the violation severity levels for 
Requirement R2.3 do not define any potential violations for the 
transmission owner even though both Requirement 2.3 and sub-Requirement 
2.3.1 apply to the transmission owner, a situation that could be viewed 
as violating violation severity level guideline 3. Also in PRC-004-
WECC-1, violation risk factors have not been assigned for Requirements 
R2, R2.4 and R2.4.1. If WECC believes that it would be inappropriate to 
assign violation risk factors to these requirements, it should submit 
an explanation.
    131. In VAR-002-WECC-1, Requirement R1 requires the automatic 
voltage regulators to be ``in service and in automatic voltage control 
mode'' but the violation severity levels for Requirement R1 specify 
only that the automatic voltage regulator must be ``in service,'' which 
could be viewed as violating violation severity level guideline 3. 
Also, the violation severity levels for VAR-002-WECC-1, Requirement R1 
lower the level of compliance from the levels of non-compliance 
associated with the currently-effective VAR-STD-002a-1. VAR-STD-002a-1 
includes four levels of non-compliance (Level 1, Level 2, Level 3, and 
Level 4) which have been translated into the four violation severity 
levels (Lower, Moderate, High, and Severe). The four levels of non-
compliance are defined by the automatic voltage regulator in service 
hours being: (Level 1) less than 98 percent but at least 96 percent; 
(Level 2)

[[Page 23706]]

less than 96 percent but at least 94 percent; (Level 3) less than 94 
percent but at least 92 percent; and (Level 4) less than 92 percent. 
The violation severity levels assigned to Requirement R1 of VAR-002-
WECC-1 are defined by the automatic voltage regulator in service hours 
being: (Lower) less than 98 percent but at least 90 percent; (Moderate) 
less than 90 percent but at least 80 percent; (Higher) less than 80 
percent but at least 70 percent; and (Severe) less than 70 percent. 
This change appears to violate violation severity level guideline 1. In 
addition, WECC has determined that High and Severe violation severity 
levels are not applicable to Requirement R2 of VAR-002-WECC-1.
    132. In VAR-501-WECC-1, the violation severity levels for 
Requirement R1 lower the level of compliance from the levels of non-
compliance associated with the currently-effective VAR-STD-002a-1. VAR-
STD-002b-1 includes four levels of non-compliance (Level 1, Level 2, 
Level 3, and Level 4) which have been translated into the four 
violation severity levels (Lower, Moderate, High, and Severe). The four 
levels of non-compliance are defined by the power system stabilizer in 
service hours being: (Level 1) less than 98 percent but at least 96 
percent; (Level 2) less than 96 percent but at least 94 percent; (Level 
3) less than 94 percent but at least 92 percent; and (Level 4) less 
than 92 percent. The proposed violation severity levels are defined by 
the power system stabilizer in service hours being: (Lower) less than 
98 percent but at least 90 percent; (Moderate) less than 90 percent but 
at least 80 percent; (Higher) less than 80 percent but at least 70 
percent; and (Severe) less than 70 percent. This change appears to 
violate violation severity level guideline 1. For Requirement R2, only 
lower and moderate violation severity levels were defined.
    133. Consistent with our concerns outlined above, we direct WECC to 
consider modifications to the violation risk factors and violation 
severity levels assigned to these four regional Reliability Standards. 
Accordingly, we direct WECC to submit revisions to or explanations 
justifying these violation risk factors and violation severity levels 
within 60 days from the issuance of this order. Consistent with NERC 
practice, these violation risk factors and violation severity levels 
should be in table format. Interested parties will have an opportunity 
to comment on this filing. In addition, the Commission supports WECC's 
agreement to conform the violation severity levels format to that of 
the NERC Reliability Standards related to FAC-501-WECC-1, VAR-002-WECC-
1 and VAR-501-WECC-1 in future revisions to the regional Reliability 
Standards.\60\ Accordingly, we expect WECC to make future revisions to 
these and other violation risk factors and violation severity level 
assignments consistent with any changes in NERC and Commission 
guidelines.
---------------------------------------------------------------------------

    \60\ NERC Petition at 18, 35 and 40.
---------------------------------------------------------------------------

III. Information Collection Statement

    134. The information collection requirements in this Final Rule are 
identified under the Commission data collection FERC-725E, ``Mandatory 
Reliability Standards for the Western Electricity Coordinating 
Council.'' The information collection requirements are being submitted 
to the Office of Management and Budget (OMB) for review under section 
3507(d) of the Paperwork Reduction Act of 1995.\61\ OMB's regulations 
to approve certain information collection requirements imposed by 
agency rule.\62\
---------------------------------------------------------------------------

    \61\ 44 U.S.C. 3507(d).
    \62\ 5 CFR 1320.11
---------------------------------------------------------------------------

    135. The four new regional Reliability Standards (FAC-501-WECC-1, 
PRC-004-WECC-1, VAR-002-WECC-1, and VAR-501-WECC-1) replace existing 
regional Reliability Standards PRC-STD-001-1, PRC-STD-003-1, PRC-STD-
005-1, VAR-STD-002a-1, and VAR-STD-002b-1, which were approved by the 
Commission in its June 2007 Order.\63\ In addition, the new regional 
Reliability Standards introduce five new regional definitions for the 
NERC Glossary: Functionally Equivalent Protection System, Functionally 
Equivalent Remedial Action Scheme, Security-Based Misoperations, 
Dependability-Based Misoperations, and Commercial Operation. We find 
that the requirements of these revised regional Reliability Standards 
may result in minor changes in burden to applicable entities but, 
overall, these requirements will not substantially add to or increase 
burden to entities that must already comply with the existing regional 
Reliability Standards and the corresponding NERC Reliability Standards.
---------------------------------------------------------------------------

    \63\ North American Electric Reliability Corp. 119 FERC ] 
61,260.
---------------------------------------------------------------------------

    136. There are, however, two differences with respect to the 
applicability of the new versus the existing regional Reliability 
Standards. First, existing regional Reliability Standard WECC PRC-STD-
005-1 is applicable to transmission owners or operators that maintain 
transmission paths indicated in the WECC Transfer Path Table. By 
contrast, new Reliability Standard FAC-501-WECC-1 is applicable only to 
transmission owners that maintain transmission paths indicated in the 
WECC Transfer Path Table. Thus, transmission operators no longer must 
comply with these regional requirements. Second, existing regional 
Reliability Standard WECC VAR-STD-002a-1 is applicable only to 
generator operators of synchronous generators whereas new regional 
Reliability Standard VAR-002-WECC-1 is applicable to both generator 
operators and transmission operators of synchronous condensers. Thus, 
Reliability Standard VAR-002-WECC-1 creates a new burden for 
transmission operators of synchronous condensers, which we evaluate 
below.
    137. Public Reporting Burden: Our estimate below regarding the 
number of respondents is based on the WECC compliance registry as of 
December 2, 2010. According to WECC's compliance registry, as of that 
date there are 52 transmission operators. As discussed above, new WECC 
Reliability Standard FAC-501-WECC-1 removes as an applicable entity 
transmission operators that maintain transmission paths listed in the 
WECC Transfer Path Table. In addition, new Reliability Standard VAR-
002-WECC-1 adds as applicable entities a subset of transmission 
operators that operate synchronous condensers. Although these 
requirements apply to a subset of transmission operators, it is unclear 
which transmission operators should be included and so we base our 
burden estimate on the total number of transmission operators. Given 
these parameters, the Commission estimates the savings related with the 
removal of transmission operators from FAC-501-WECC-1 and the added 
public reporting burden for transmission operators that must comply 
with Reliability Standard VAR-002-WECC-1 is as follows:

[[Page 23707]]



----------------------------------------------------------------------------------------------------------------
                                                                    Number of
           FERC-725E data collection                Number of        annual         Hours per      Total annual
                                                   respondents      responses      respondent         hours
                                                            (A)             (B)             (C)      (A x B x C)
----------------------------------------------------------------------------------------------------------------
Recordkeeping for transmission operators                     52               1              10          a (520)
 complying with PRC-STD-005-1..................
Reporting for transmission operators complying               52               4              10           2,080
 with VAR-002-WECC-1...........................
Recordkeeping for transmission operators                     52               4               1             208
 complying with VAR-002-WECC-1.................
----------------------------------------------------------------------------------------------------------------
a (Savings).

    Total Estimated Annual Hours for Collection: (Reporting/Compliance 
+ recordkeeping) = 1,768 hours.
    Reporting/Compliance = 2,080 @ $120/hour = $249,600.
    Recordkeeping = (312) hours @ $28/hour = ($8,736) (savings).
    Total Cost = $240,864.
    Title: FERC-725E, Mandatory Reliability Standards for the Western 
Electricity Coordinating Council.
    Action: Proposed Revision to FERC-725E.
    OMB Control No.: 1902-0244.
    Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
    Frequency of Responses: On occasion.
    Necessity of the Information: This Final Rule approves four 
regional Reliability Standards that pertain to facilities design, 
connections, and maintenance; protection and control; and voltage and 
reactive. This Final Rule also approves the addition of five new terms 
to the NERC Glossary of Terms. This Final Rule finds the Reliability 
Standards and related definitions just, reasonable, not unduly 
discriminatory or preferential, and in the public interest.
    138. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, Attn: 
Ellen Brown, Office of the Executive Director, 888 First Street, NE., 
Washington, DC 20426, E-mail: [email protected], Tel: (202) 502-
8663, Fax: (202) 273-0873. Comments on the requirements of this Final 
Rule may also be sent to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503 
[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 
For security reasons, comments should be sent by e-mail to OMB at oira 
[email protected]. Please reference OMB Control Number 1902-0244, 
RIN 1902-AE17, and the docket number of this Final Rule in your 
submission.

IV. Environmental Analysis

    139. 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.\64\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. The actions directed in this Final Rule fall within the 
categorical exclusion in the Commission's regulations for rules that 
are clarifying, corrective or procedural, for information gathering, 
analysis, and dissemination.\65\ Accordingly, neither an environmental 
impact statement nor an environmental assessment is required.
---------------------------------------------------------------------------

    \64\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \65\ 18 CFR 380.4(a)(5).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    140. The Regulatory Flexibility Act of 1980 (RFA) \66\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The requirements of the Reliability Standards approved in this Final 
Rule would apply primarily to transmission owners of major transmission 
paths and remedial action schemes within the Western Interconnection, 
generator owners of major remedial action schemes within the Western 
Interconnection, transmission operators that operate major transmission 
paths or remedial action schemes in the Western Interconnection, and 
generator and transmission operators that operate synchronous 
generators and condensers within the Western Interconnection that are 
connected to the bulk electric system. Many of these entities do not 
fall within the definition of small entities but some transmission 
owners, generator owners, transmission operators and generator 
operators would be deemed small entities.\67\ The new regional 
Reliability Standards reflect a continuation of existing requirements 
currently applicable to these entities.
---------------------------------------------------------------------------

    \66\ 5 U.S.C. 601-612.
    \67\ 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. 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.
---------------------------------------------------------------------------

    141. There are only two modifications to the applicable entities 
for this group of regional Reliability Standards. Proposed FAC-501-
WECC-1 no longer applies to transmission operators. Proposed VAR-002-
WECC-1 has added applicability to transmission operators, but only the 
subset that operate synchronous condensers that are connected to the 
bulk electric system.
    142. Based on available information regarding NERC's compliance 
registry, and our best assessment of the application of the proposed 
regional Reliability Standards, approximately 275 unique entities will 
be responsible for compliance with the proposed regional Reliability 
Standards, of which 52 are transmission operators. Of the 52 
transmission operators, only a subset that operate synchronous 
condensers connected to the bulk electric system will be subject to the 
proposed VAR-002-WECC-1, i.e., required to have automatic voltage 
regulators in service and in automatic voltage control mode 98 percent 
of operating hours on synchronous condensers, and document the hours 
that are excluded from automatic voltage regulator operation. The 
Commission estimates that this requirement will impose a cost of $4,912 
on transmission operators that operate synchronous condensers connected 
to the bulk electric system. We believe that this figure should not 
represent a significant portion of operating costs.
    143. Based on the foregoing, the Commission certifies that this 
Final Rule will not have a significant impact on a substantial number 
of small

[[Page 23708]]

entities. Accordingly, no regulatory flexibility analysis is required.

VI. Document Availability

    144. 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.
    145. 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.
    146. 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].

VII. Effective Date and Congressional Notification

    147. This Final Rule shall become effective June 27, 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.
    148. The effective date of the Final Rule is separate from the 
implementation date of the Reliability Standards approved herein. 
According to a schedule developed by WECC, FAC-501-WECC-1, VAR-002-
WECC-1 and VAR-501-WECC-1 shall become effective as of the first day of 
the first quarter after Commission approval. In addition, PRC-004-WECC-
1 shall become effective as of the first day of the second quarter 
after approval by the Commission.
    Thus, if the Final Rule is published in the Federal Register on or 
before May 2, 2011, the Final Rule would become effective in 60 days, 
FAC-501-WECC-1, VAR-002-WECC-1 and VAR-501-WECC-1 would be implemented 
beginning July 1, 2011, and PRC-004-WECC-1 would be implemented 
beginning October 1, 2011. If, however, the Final Rule is published in 
the Federal Register after May 2, 2011, the Final Rule would become 
effective in 60 days, FAC-501-WECC-1, VAR-002-WECC-1 and VAR-501-WECC-1 
would be implemented beginning October 1, 2011, and PRC-004-WECC-1 
would be implemented beginning January 1, 2012.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping 
requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

                     Appendix A--List of Commenters
------------------------------------------------------------------------
               Name                             Abbreviation
------------------------------------------------------------------------
Bonneville Power Administration...  Bonneville.
U.S. Bureau of Reclamation........  Bureau of Reclamation.
California Department of Water      CDWR.
 Resources State Water Project.
Electric Power Supply Association.  EPSA.
Mariner Consulting Services, Inc..  Mariner.
Melissa Kurtz.....................  ....................................
North American Electric             NERC.
 Reliability Corp.
PacifiCorp........................  PacifiCorp.
San Diego Gas & Electric Co.......  SDG&E.
Transmission Agency of Northern     TANC.
 California.
U.S. Army Corps of Engineers NNW..  USACE NNW.
U.S. Army Corps of Engineers        USACE Portland.
 Portland.
U.S. Army Corps of Engineers        USACE Seattle.
 Seattle.
Western Electricity Coordinating    WECC.
 Council.
------------------------------------------------------------------------

[FR Doc. 2011-10226 Filed 4-27-11; 8:45 am]
BILLING CODE 6717-01-P