[Federal Register Volume 77, Number 55 (Wednesday, March 21, 2012)]
[Rules and Regulations]
[Pages 16435-16447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6758]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 39 and 40

[Docket No. RM11-16-000; Order No. 759]


Transmission Relay Loadability Reliability Standard

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the 
Commission approves Reliability Standard PRC-023-2 (Transmission Relay 
Loadability) submitted by the North American Electric Reliability 
Corporation (NERC), the Electric Reliability Organization certified by 
the Commission. The Reliability Standard requires transmission owners, 
generation owners, and distribution providers to set load-responsive 
phase protective relays according to specific criteria to ensure that 
the relays reliably detect--and protect the electric network from--
fault conditions, but do not limit transmission loadability or 
interfere with system operators' ability to protect system reliability. 
The Commission also approves NERC Rules of Procedure Section 1700--
Challenges to Determinations, which provides registered entities a 
means to challenge determinations made by planning coordinators under 
Reliability Standard PRC-023.

DATES: Effective Date: This rule will become effective May 7, 2012.

FOR FURTHER INFORMATION CONTACT:

Kevin Ryan (Legal Information), Office of the General Counsel, Federal 
Energy Regulatory Commission, 888 First Street NE., Washington, DC 
20426, (202) 502-6840.
Kenneth U. Hubona (Technical Information), Office of Electric 
Reliability, Division of Reliability Standards, Federal Energy 
Regulatory Commission, 13511 Label Lane, Suite 203, Hagerstown, MD 
21740, (301) 665-1608.

SUPPLEMENTARY INFORMATION:

[[Page 16436]]

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, 
John R. Norris, and Cheryl A. LaFleur.
Transmission Relay Loadability Reliability Standard
Docket No. RM11-16-000
Order No. 759
Final Rule
(Issued March 15, 2012)
    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Commission approves Reliability Standard PRC-023-2 (Transmission Relay 
Loadability) submitted by the North American Electric Reliability 
Corporation (NERC), the Electric Reliability Organization (ERO) 
certified by the Commission. The Reliability Standard requires 
transmission owners, generation owners, and distribution providers to 
set load-responsive phase protective relays according to specific 
criteria to ensure that the relays reliably detect--and protect the 
electric network from--fault conditions, but do not limit transmission 
loadability or interfere with system operators' ability to protect 
system reliability.\2\ The Commission also approves NERC Rules of 
Procedure Section 1700--Challenges to Determinations, which provides 
registered entities a means to challenge determinations made by 
planning coordinators under Reliability Standard PRC-023.
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    \1\ 16 U.S.C. 824o (2006).
    \2\ In the context of the proposed Reliability Standard, 
``loadability'' refers to the ability of protective relays to 
refrain from operating under all permissible loading conditions on 
all applicable transmission lines and transformers.
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I. Background

A. Relay Protection Systems

    2. Protective relays are devices that detect and initiate the 
removal of faults on an electric system.\3\ They are designed to read 
electrical measurements, such as current, voltage, and frequency, and 
can be set to recognize certain measurements as indicating a fault. 
When a protective relay detects a fault on an element of the system 
under its protection, it sends a signal to an interrupting device(s) 
(such as a circuit breaker) to disconnect the element from the rest of 
the system. Impedance relays, which are the most common type of relays 
used to protect transmission lines, continuously measure voltage and 
current on the protected transmission line and operate when the 
measured magnitude and phase angle of the impedance (voltage/current) 
falls within the settings of the relay.
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    \3\ A ``fault'' is defined in the NERC Glossary of Terms used in 
Reliability Standards as ``[a]n event occurring on an electric 
system such as a short circuit, broken wire, or an intermittent 
connection.''
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B. Reliability Standard PRC-023-1 and Order No. 733

    3. Currently effective Reliability Standard PRC-023-1 applies to 
relay settings on (1) all transmission lines and transformers with low-
voltage terminals operated or connected at or above 200 kV; and (2) 
those transmission lines and transformers with low voltage terminals 
operated or connected between 100 kV and 200 kV that are designated by 
planning coordinators as critical to the reliability of the bulk 
electric system.\4\ The Reliability Standard consists of three 
Requirements and an Attachment A. Requirement R1 requires entities with 
certain transmission facilities to set their relays according to one of 
thirteen specific settings (sub-parts R1.1 through R1.13) designed to 
maximize loadability while maintaining Reliable Operation of the bulk 
electric system for all fault conditions. Requirement R2 provides 
additional obligations for entities that elect certain settings. 
Requirement R3 requires planning coordinators to designate facilities, 
operated between 100 kV and 200 kV, that are critical to the 
reliability of the bulk electric system and are therefore subject to 
Requirement R1. Attachment A specifies the protection systems that are 
subject to and excluded from the Standard's Requirements.
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    \4\ Pursuant to section 40.3 of the Commission's regulations, 
all Commission-approved Reliability Standards are available on 
NERC's Web site at www.nerc.com. See 18 CFR 40.3.
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    4. On March 18, 2010, the Commission issued a Final Rule approving 
Reliability Standard PRC-023-1 (Transmission Relay Loadability), that 
requires transmission owners, generator owners, and distribution 
providers set load-responsive phase protection relays according to 
specific criteria to ensure that the relays reliably detect and protect 
the electric network from all fault conditions, but do not operate 
during non-fault load conditions.\5\ In addition, under section 
215(d)(5) of the FPA, the Commission directed the ERO to develop 
modifications to the Standard to address certain issues identified by 
the Commission.
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    \5\ Transmission Relay Loadability Reliability Standard, Order 
No. 733, 130 FERC ] 61,221 (2010), order on reh'g and clarification, 
Order No. 733-A, 134 FERC ] 61,127 (2011); clarified, Order No. 733-
B, 136 FERC ] 61,185 (2011).
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1. Currently Effective Requirement R1
    5. Requirement R1 states that each transmission owner, generator 
owner, and distribution provider subject to Reliability Standard PRC-
023-1 shall use one of the criteria prescribed in sub-parts R1.1 
through R1.13 for any specific circuit terminal to prevent its phase 
protective relay setting from limiting transmission system loadability 
while maintaining reliable protection of the bulk electric system for 
all fault conditions.
    6. In Order No. 733, the Commission directed the ERO, under section 
215(d)(5) of the FPA, to develop modifications to Requirement R1 to: 
(1) Require that transmission owners, generator owners, and 
distribution providers give their transmission operators a list of 
transmission facilities that implement sub-part R1.2; \6\ (2) require 
entities that have protective relays set pursuant to sub-part R1.10 to 
verify that the limiting piece of equipment is capable of sustaining 
the anticipated overload for the longest clearing time associated with 
a fault; \7\ and (3) require the ERO to document, subject to audit by 
the Commission, and to make available for review to users, owners, and 
operators of the Bulk-Power System, by request, a list of those 
facilities that have protective relays set pursuant to sub-part 
R1.12.\8\
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    \6\ Order No. 733, 130 FERC ] 61,221, at P 186.
    \7\ Id. P 203.
    \8\ Id. P 224.
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2. Currently Effective Requirement R2
    7. Requirement R2 states that transmission owners, generator 
owners, and distribution providers that use a circuit with the 
protective relay settings determined by the practical limitations 
described in specified R1 sub-parts must use the calculated circuit 
capability as the circuit's facility rating and must obtain the 
agreement of the planning coordinator, transmission operator, and 
reliability coordinator with the calculated circuit capability.
3. Currently Effective Requirement R3
    8. Requirement R3 requires planning coordinators to designate which 
transmission lines and transformers with low-voltage terminals operated 
or connected between 100 kV and 200 kV are critical to the reliability 
of the bulk electric system and therefore subject to Requirement R1. 
Sub-part R3.1 requires planning coordinators to have a process to 
identify critical facilities. Sub-part R3.1.1 specifies that the 
process must

[[Page 16437]]

consider input from adjoining planning coordinators and affected 
reliability coordinators. Sub-parts R3.2 and R3.3 require planning 
coordinators to maintain a list of critical facilities and provide it 
to reliability coordinators, transmission owners, generator owners, and 
distribution providers within 30 days of initially establishing it, and 
within 30 days of any subsequent change.
    9. In Order No. 733, the Commission directed the ERO to modify 
Requirement R3 to: (1) Apply an ``add in'' approach to sub-100 kV 
facilities that are owned or operated by currently registered entities 
or entities that become registered entities in the future, and are 
associated with a facility that is included on a critical facilities 
list defined by the Regional Entity; \9\ (2) specify the test that 
planning coordinators must use to determine whether a sub-200 kV 
facility is critical to the reliability of the Bulk-Power System; \10\ 
and (3) add the Regional Entity to the list of entities that receive a 
list of sub-200 kV facilities determined by the planning coordinator to 
be critical to the reliability of the bulk electric system.\11\ In 
addition, the Commission directed the ERO to develop an appeals process 
for entities to challenge a criticality determination.\12\
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    \9\ Id. P 60.
    \10\ Id. P 69.
    \11\ Id. P 237.
    \12\ Id. P 97.
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4. Currently Effective Attachment A
    10. Attachment A to Reliability Standard PRC-023-1 specifies which 
protection systems are subject to and excluded from the Standard's 
Requirements. Section 1 of Attachment A provides that the Reliability 
Standard applies to any protective functions that can operate with or 
without time delay, on load current, including but not limited to: (1) 
Phase distance; (2) out-of-step tripping; (3) switch-on-to-fault; (4) 
overcurrent relays; and (5) communication-aided protection 
applications. Section 2 states that the Reliability Standard requires 
evaluation of out-of-step blocking schemes \13\ to ensure that they do 
not operate for faults during the loading conditions defined in the 
Standard's Requirements. Finally, section 3 expressly excludes certain 
relay elements and protection systems from the Reliability Standard's 
Requirements.
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    \13\ ``Out-of-step blocking'' refers to a protection system that 
is capable of distinguishing between a fault and a power swing. If a 
power swing is detected, the protection system, ``blocks,'' or 
prevents the tripping of its associated transmission facilities.
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    11. The Commission, in Order No. 733, directed the ERO to modify 
Attachment A to: (1) include section 2 as an additional Requirement 
with the appropriate violation risk factor and violation severity level 
in the Reliability Standard; \14\ and (2) include supervising relay 
elements on the list of relays and protection systems that are 
specifically subject to the reliability Standard.\15\
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    \14\ Order No. 733 at 244.
    \15\ Id. P 264.
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5. Currently Effective Implementation Plan
    12. Reliability Standard PRC-023-1 established staggered effective 
dates for various Requirements and facilities. The Standard also 
included a footnote (exceptions footnote) to the ``Effective Dates'' 
section honoring temporary exceptions from enforcement actions approved 
by the NERC Planning Committee before NERC proposed the Reliability 
Standard.
    13. In Order No. 733, the Commission directed the ERO, under 
section 215(d)(5), to modify the Reliability Standard to include an 
implementation plan for sub-100 kV facilities \16\ and to remove the 
exceptions footnote from the ``Effective Dates'' section of the 
Reliability Standard.\17\
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    \16\ Id. P 283.
    \17\ Id. P 284.
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II. NERC Petition: Proposed Reliability Standard PRC-023-2 and Rule of 
Procedure, Section 1700--Challenges to Determinations

    14. In a March 18, 2011 Filing (March 18 Petition), NERC requests 
Commission approval of Reliability Standard PRC-023-2 (Transmission 
Relay Loadability) and NERC Rules of Procedure Section 1700--Challenges 
to Determinations.
    15. In support of the March 18 Petition, NERC states that the 
proposed Reliability Standard requires transmission owners, generator 
owners, and distribution providers to verify relay loadability using 
methods that achieve ``the reliability goal of this Standard in an 
effective and efficient manner familiar to the responsible entities.'' 
\18\ In addition, NERC specifically identifies the benefits of proposed 
Reliability Standard PRC-023-2 as including (a) consistent 
identification of operationally critical circuits operated below 200 kV 
that must comply with the Requirements of the Standard, and (b) 
providing transmission operators, planning coordinators, reliability 
coordinators, and the ERO with more information regarding the criteria 
selected by entities for verifying relay loadability.\19\
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    \18\ March 18 Petition at 42.
    \19\ Id. at 5.
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A. Reliability Standard PRC-023-2

    16. Reliability Standard PRC-023-2 contains six requirements with 
the stated purpose of ensuring that protective relay settings do not 
limit transmission loadability, do not interfere with system operators' 
ability to take remedial action to protect system reliability, and are 
set to reliably detect all fault conditions and protect the electrical 
network from these faults.\20\ The proposed Reliability Standard also 
includes two attachments. Attachment A specifies the protection systems 
that are subject to and excluded from the Standard's Requirements. 
Attachment B specifies the criteria for determining the circuits which 
must comply with Requirements R1 through R5.
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    \20\ Reliability Standard PRC-023-2, Section A.3 (Purpose).
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Requirement R1
    17. NERC describes Reliability Standard PRC-023-2 Requirement R1 as 
follows:

    Requirement R1 mandates that each Transmission Owner, Generator 
Owner, and Distribution Provider shall use any one of the identified 
criteria (Requirement R1, criteria 1 through 13) for any specific 
circuit terminal to prevent its phase protective relay settings from 
limiting transmission system loadability while maintaining reliable 
protection of the [bulk electric system] for all fault conditions. 
Each Transmission Owner, Generator Owner, and Distribution Provider 
shall evaluate relay loadability at 0.85 per unit voltage and power 
factor angle of 30 degrees[.] \21\
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    \21\ March 18 Petition at 30.

    18. With the exception of clarifying language and the addition of 
criterion 10.1, proposed Requirement R1 retains the same criteria as 
currently existing PRC-023-1. Criteria 1 through 13 prescribe specific 
criteria to be used for certain transmission system configurations. 
These criteria account for the presence of devices such as series 
capacitors, and address circuit and transformer thermal capability.
    19. Criterion 1 specifies transmission line relay settings based on 
the highest seasonal facility rating using the 4-hour thermal rating of 
a transmission line, plus a design margin of 150 percent. Criterion 2 
allows transmission line relays to be set so that they do not operate 
at or below 115 percent of the highest seasonal 15-minute facility 
rating of a circuit, when a 15-minute rating has been calculated and 
published for use in real-time operations. Criterion 3 allows

[[Page 16438]]

transmission line relays to be set so that they do not operate at or 
below 115 percent of the maximum theoretical power capability. 
Criterion 4 may be applied where series capacitors are used on long 
transmission lines to increase power transfer. Criterion 5 applies in 
cases where the maximum end-of-line three-phase fault current is small 
relative to the thermal loadability of the conductor. Criterion 6 may 
be used for system configurations where generation is remote from load 
busses or main transmission busses.
    20. Criterion 7 is appropriate for system configurations that have 
load centers that are remote from the generation center. Criterion 8 
applies to system configurations that have one or more transmission 
lines connecting a remote, net importing load center to the rest of the 
system. Criterion 9 applies to the same system configuration, but 
applies to the load end. Criterion 10 is specific to transmission 
transformer fault protective relays and transmission lines terminated 
only with a transformer. Criterion 11 may be used for transformer 
overload protection relays when criterion 10 cannot be met. Criterion 
12 may be used when the circuits have three or more terminals. The 
limited circuit loading capability established by this criterion will 
become the facility rating of the circuit. Finally, criterion 13 is 
intended to apply when otherwise supportable situations and practical 
limitations are not identified under criteria 1 through 12.
    21. NERC explains that Reliability Standard PRC-023-2 modifies PRC-
023-1 by adding criterion 10.1 to address the Commission's directive 
that entities with protective relays set pursuant to Requirement R1.10 
of PRC-023-1, which is criterion 10 of Requirement 1 of PRC-023-2, must 
verify that the limiting piece of equipment is capable of sustaining 
the anticipated overload for the longest clearing time associated with 
a fault.\22\ The criterion requires coordination so that settings on a 
transformer's load responsive relay do not expose the transformer to a 
fault level and duration that exceeds the transformer's mechanical 
withstand capability.\23\ NERC further states in the March 18 Petition 
that it believes Requirement 10.1 is equally effective and efficient as 
the approach directed in Order No. 733.\24\
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    \22\ Id. at 20.
    \23\ The mechanical withstand capability is determined on the 
basis of the transformer's design and the periodic transformer 
maintenance to preserve that capability by the owner. The withstand 
capability could be compromised, for example, if the moisture level 
in a transformer is allowed to increase above the design value but 
remains within dielectric acceptance.
    \24\ March 18 Petition at 20-21.
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Requirement R2
    22. Proposed Reliability Standard PRC-023-2 adds a new Requirement 
R2 that requires each transmission owner, generation owner, and 
distribution provider to set its out-of-step blocking elements to allow 
tripping of phase protective relays for faults that occur during the 
loading conditions modeled under Requirement R1. NERC states in the 
March 18 Petition that Requirement R2 has been added to proposed 
Reliability Standard PRC-023-2 to address the Commission's directive to 
include section 2 of PRC-023-1 Attachment A as an additional 
Requirement with the appropriate violation risk factor and violation 
severity level.\25\ NERC has assigned this proposed Requirement a high 
violation risk factor and a severe violation severity level reflecting 
the impact to reliability of violating the Requirement.
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    \25\ Id. at 24.
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Requirements R3, R4, and R5
    23. Requirement R3 in Reliability Standard PRC-023-2 renumbers and 
makes conforming edits to Requirement R2 from PRC-023-1. Requirement R4 
requires an entity that chooses to use Requirement R1 criterion 2 as 
the basis for verifying transmission line relay loadability to provide 
its planning coordinator, transmission operator, and reliability 
coordinator with an updated list of circuits associated with those 
transmission line relays at least once each calendar year. Similarly, 
Reliability Standard PRC-023-2 adds a new Requirement R5 that requires 
entities that set transmission line relays according to Requirement R1 
criterion 12 to provide an updated list of the circuits associated with 
those relays to its Regional Entity at least once each calendar year, 
to allow the ERO to compile a list of all circuits that have protective 
relays settings that limit circuit capability. In the March 18 
Petition, NERC states that new Requirements R4 and R5, respectively, 
address the Commission's directives relating to providing transmission 
operators a list of transmission facilities that implement criterion 2 
and directing that the ERO create a list of those facilities that have 
protective relays set pursuant to criterion 12.\26\
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    \26\ Id. at 20, 23.
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Requirement R6
    24. Requirement R6 of Reliability Standard PRC-023-2 requires each 
planning coordinator to conduct an assessment at least once each 
calendar year (but no less frequently than every 15 months) by applying 
the criteria in Attachment B to determine the circuits in its planning 
coordinator area for which entities must comply with Requirements R1 
through R5. Sub-part 6.1 requires the planning coordinator to maintain 
a list of circuits subject to PRC-023-2 per application of Attachment B 
identifying the year in which any criterion in Attachment B applies. 
Sub-part 6.2 requires the planning coordinator to provide the list to 
all Regional Entities, reliability coordinators, transmission owners, 
generators owners, and distribution providers within its planning 
coordinator area within 30 calendar days of establishing the initial 
list, and 30 days of any subsequent change thereto. NERC states in the 
March 18 Petition that the proposed sub-part 6.2, formerly Requirement 
R3.3 in PRC-023-1, modifies the Requirement in order to address the 
Commission's directive to add the Regional Entity to the list of 
entities that receive the list of critical facilities.\27\
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    \27\ Id. at 24.
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Attachment A
    25. Attachment A to Reliability Standard PRC-023-2 includes a new 
section 1.6 that extends the Standard's applicability to include phase 
overcurrent supervisory elements (i.e., phase fault detectors) 
associated with current-based, communication-assisted schemes (i.e., 
pilot wire, phase comparison, and line current differential) where the 
scheme is capable of inadvertent tripping for loss of communications, 
even if there is no fault on the line. In addition, conforming changes 
are made to proposed section 2.1, formerly section 3.1 of the PRC-023-
1, to recognize that elements described in new section 1.6 are no 
longer excluded from the proposed Standard's scope. NERC states in the 
March 18 Petition that these changes have been made to address the 
Commission's directives to include supervising relay elements on the 
list of relays and protection systems that are specifically subject to 
the Reliability Standard.\28\ NERC further states that it believes 
section 1.6 of Attachment A is equally effective and efficient in 
addressing the Commission's concern as the approach directed in Order 
No. 733.\29\
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    \28\ Id. at 25.
    \29\ Id.

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[[Page 16439]]

Attachment B
    26. Attachment B of Reliability Standard PRC-023-2 specifies six 
criteria that planning coordinators must apply to identify sub-200kV 
facilities that are subject to compliance with the Reliability 
Standard. Specifically, a facility is subject to PRC-023-2 if the 
facility meets any one of the following six criteria:
     Is a monitored facility of a permanent flowgate in the 
Eastern Interconnection, a major transfer path within the Western 
Interconnection, or a comparable monitored facility in the Quebec 
Interconnection, that has been included to address reliability concerns 
for loading of that circuit (Criteria B1);
     Is a monitored facility of an interconnection reliability 
operating limit, where the limit was determined in the planning horizon 
pursuant to Reliability Standard FAC-010 (System Operating Limits 
Methodology for Planning Horizon) (Criteria B2);
     Forms a path to supply off-site power to a nuclear plant 
as established in the nuclear plant interface requirements pursuant to 
Reliability Standard NUC-001 (Nuclear Plant Interface Coordination) 
(Criteria B3).\30\
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    \30\ As we stated previously, ``[w]e would expect that any 
[nuclear plant interface requirements] agreed to between a nuclear 
plant generator operator and transmission entity would include all 
facilities needed to transmit offsite power and auxiliary power to 
the nuclear facility. Mandatory Reliability Standard for Nuclear 
Plant Interface Coordination, 125 FERC ] 61,065, at P 51 (2008).
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     Is identified through a sequence of power flow analyses 
specified in Attachment B and performed by the planning coordinator 
(Criteria B4);
     Is selected by the planning coordinator based on technical 
studies or assessments other than those specified above, in 
consultation with the facility owner (Criteria B5); or
     Is mutually agreed upon for inclusion by the planning 
coordinator and the facility owner (Criteria B6).
    27. NERC states in the March 18 Petition that while the six 
criteria presented in Attachment B vary from some of the guidance 
provided in Order No. 733, they nonetheless identify all facilities 
that must be subject to proposed Reliability Standard PRC-023-2 in 
order to achieve the Standard's reliability objective.\31\ NERC further 
reports that it is in the process of applying the test to a 
representative sample of utilities from each of the three 
Interconnections and plans to file the results of these tests by 
February 17, 2013. NERC states that it plans to revise Attachment B, if 
necessary, pending the results of this test and clarifications made in 
Order No. 733-A.\32\
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    \31\ March 18 Petition at 14.
    \32\ Id. at 13.
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    28. The Commission, in Order No. 733, provided guidance that a test 
to determine critical sub-200 kV facilities should include the same 
simulations and assessments as the Transmission Planning (TPL) 
Reliability Standards.\33\ While the TPL Standards permit manual system 
adjustments between two contingencies, NERC explains in the March 18 
Petition that it believes it is more informative, and in line with the 
reliability objective, to require testing of double contingencies 
without such manual adjustments, thereby modeling a situation in which 
an operator fails to, or does not have time to, make appropriate system 
adjustments. This focused testing exceeds the requirements of the TPL 
Standards and, NERC asserts, is an equally efficient and effective 
approach to addressing the Commission's concern that the test must be 
sufficiently robust to provide assurance that all appropriate 
facilities are identified and made subject to the Reliability Standard 
for the Standard to achieve its purpose.
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    \33\ Order No. 733 at P 80.
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    29. In Order No. 733, the Commission also provided guidance 
regarding elements of a definition of desirable system performance that 
must inform any test to determine which sub-200 kV circuits are 
critical to system reliability. The Commission's guidance stated, among 
other things, that the power system should maintain all facilities 
within their applicable thermal (i.e., current), voltage, or stability 
ratings (short time ratings are applicable).\34\ In the March 18 
Petition, NERC asserts that it is most appropriate to focus on avoiding 
thermal loading of transmission circuits.\35\ In order to achieve its 
reliability goal, NERC believes, Reliability Standard PRC-023-2 must 
apply to circuits whose relays will be challenged by excessive thermal 
loading to the point that a relay hampers the system operator's ability 
to take remedial action. NERC believes this test is an equally 
effective and efficient approach to addressing the Commission's concern 
regarding the rigorousness of the test.\36\
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    \34\ Id. P 84.
    \35\ March 18 Petition at 19. With respect to NERC's assertion, 
the Commission agrees that avoiding thermal loading may be 
appropriate criteria for some regions. However, for other regions, 
such as the Western Interconnection, voltage and stability criteria 
considerations would be included as appropriate.
    \36\ As explained in the March 18 Petition, the system 
performance measure in this test is less rigorous than that required 
by TPL-003 (System Performance Following Loss of Two or More bulk 
electric system Elements) because it ignores voltage and stability 
ratings. NERC points out, however, that the contingency condition in 
Attachment B is more stringent than that in TPL-003, and the 
contingency and system performance measure were developed together 
in order to align with the reliability objective of the proposed 
Standard. March 18 Petition at 19.
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Implementation Plan
    30. In the March 18 Petition, NERC proposes staggered effective 
dates for Reliability Standard PRC-023-2, i.e., the mandatory 
compliance date after an allotted implementation period, for each of 
the Standard's requirements. The implementation plan provides 18 months 
for planning coordinators to apply the criteria in Attachment B and 
determine which sub-200 kV circuits must be subject to the Standard. 
Those entities responsible for compliance on circuits identified by a 
planning coordinator pursuant to Requirement R6 are provided until the 
first day of the first calendar quarter 39 months following 
notification to become compliant, or until the first day of the first 
calendar year in which any criterion in Attachment B applies if the 
planning coordinator indentifies the circuit in an assessment of a 
future year more than 39 months beyond the year in which the assessment 
is conducted.
Violation Risk Factors/Violation Severity Levels
    31. NERC assigns Requirements R1, R2, and R6 a ``high'' violation 
risk factor, Requirement R3 a ``medium'' violation risk factor, and 
Requirements R4 and R5 a ``lower'' violation risk factor. NERC also 
proposes violation severity levels for each of the Requirements of 
Reliability Standard PRC-023-2.

B. NERC Rules of Procedure Section 1700--Challenges to Determinations

    32. In addition to the Reliability Standard, NERC included in its 
petition new Rules of Procedure Section 1700--Challenges to 
Determinations, which provides a process for registered entities to 
challenge a planning coordinator's determination made under a 
Reliability Standard that a facility operated below 200 kV is subject 
to compliance with the standard. Pursuant to Rule 1702, a registered 
entity is encouraged, but not required, initially to meet with the 
planning coordinator to resolve any dispute. If the matter remains 
unresolved, the registered entity may challenge the determination with 
the appropriate Regional Entity. The registered entity may appeal the 
Regional Entity's decision to NERC, and the NERC Board of Trustees 
would appoint a panel to review the Regional

[[Page 16440]]

Entity decision. The Board of Trustees has the authority, but not the 
duty, to review the matter upon the request of the planning coordinator 
or registered entity. The registered entity may appeal the final NERC 
decision to the applicable governmental authority, e.g., the Commission 
for appeals within the United States.

III. Notice of Proposed Rulemaking and Comments

    33. On September 15, 2011, the Commission issued a Notice of 
Proposed Rulemaking (NOPR) proposing to approve Reliability Standard 
PRC-023-2.\37\ In the NOPR, the Commission proposed to approve 
Reliability Standard PRC-023-2. The Commission indicated that the 
Version 2 standard and new Rule of Procedure 1700 adequately address 
the directed modifications set forth in Order No. 733. The Commission 
also proposed to accept the Attachment B criteria for identifying sub-
200 kV facilities to which the Reliability Standard applies.\38\ 
Finally, the Commission proposed to approve the implementation plan, 
Violation Risk Factors, and Violation Severity levels.
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    \37\ Transmission Relay Loadability Reliability Standard, 136 
FERC ] 61,187 (September 15, 2011) (September 15 NOPR).
    \38\ Id. P 38.
---------------------------------------------------------------------------

    34. In addition, the NOPR set forth certain questions regarding the 
Attachment B criteria.\39\ Specifically, the Commission proposed the 
following questions to be addressed in the report regarding the 
application of Attachment B criteria NERC intends to file by February 
17, 2013:
---------------------------------------------------------------------------

    \39\ Id. PP 41-45.
---------------------------------------------------------------------------

     Whether the power system assessment proposed in criterion 
B4 includes the critical system conditions utilized under Reliability 
Standard TPL-003-0 Requirement R1.3.2; \40\
---------------------------------------------------------------------------

    \40\ Id. P. 43.
---------------------------------------------------------------------------

     Whether applicable entities evaluate relay loadability 
under the B4 criterion consistent with Requirement R1 which requires, 
in part, that they ``evaluate relay loadability at 0.85 per unit 
voltage and a power factor angle of 30 degrees'' in addition to 
applicable current data; \41\
---------------------------------------------------------------------------

    \41\ Id.
---------------------------------------------------------------------------

     What ``technical studies or assessments'' will be used by 
planning coordinators to identify critical facilities under Criterion 
B5; \42\ and
---------------------------------------------------------------------------

    \42\ Id. P 44.
---------------------------------------------------------------------------

     Whether Attachment B is sufficiently comprehensive to 
capture all circuits in a planning coordinator's area that could have 
an operational impact on the reliability of the bulk electric 
system.\43\
---------------------------------------------------------------------------

    \43\ Id. P 45.
---------------------------------------------------------------------------

    35. On September 21, 2011, notice of the September 15 NOPR was 
published in the Federal Register with comments due on or before 
November 21, 2011.\44\ Timely comments were filed by the American 
Public Power Association (APPA), ISO New England Inc. (ISO-NE), the 
Midwest Independent System Operator, Inc. (MISO), and NERC.
---------------------------------------------------------------------------

    \44\ 76 FR 58,424 (2011).
---------------------------------------------------------------------------

IV. Discussion

    36. Pursuant to section 215(d)(2) of the FPA, the Commission 
approves Reliability Standard PRC-023-2, including the Violation Risk 
Factors and Violation Severity Levels, and implementation plan. The 
Reliability Standard meets the directives outlined in Order No. 733, 
and further contributes to the reliability of the Bulk-Power System by 
requiring load-responsive phase protection relay settings that will 
provide essential facility protection for faults while not limiting 
transmission loadability or interfering with system operators' ability 
to protect system reliability. In addition, the Reliability Standard 
provides for the consistent identification of operationally critical 
circuits operated below 200 kV that must comply with the Requirements 
of the Standard. Accordingly, we find that the Reliability Standard is 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest.
    37. Also, pursuant to section 215(f) of the FPA, the Commission 
approves NERC Rule of Procedure Section 1700--Challenges to 
Determinations as just, reasonable, not unduly discriminatory or 
preferential, in the public interest, and satisfying the requirements 
of section 215(c) of the FPA.\45\ Rule of Procedure Section 1700 
addresses the Order No. 733 directive for a mechanism by which a 
registered entity can challenge a determination by a planning 
coordinator made pursuant to Reliability Standard PRC-023-2.
---------------------------------------------------------------------------

    \45\ Section 215(f) of the FPA provides, inter alia, that ``[a] 
proposed rule or proposed rule change shall take effect upon a 
finding by the Commission, after notice and opportunity for comment, 
that the change is just, reasonable, not unduly discriminatory or 
preferential, is in the public interest and satisfies the 
requirements of subsection (c).''
---------------------------------------------------------------------------

    38. NERC indicates in its comments that it is in the process of 
applying the test set forth in Attachment B of Reliability Standard 
PRC-023-2 to a representative sample of utilities from each of the 
three Interconnections and will file the results of these tests in a 
report on or before February 17, 2013. We adopt the NOPR proposal and 
direct NERC to address in the report several specific questions 
regarding the implementation of the applicability criteria set forth in 
Attachment B, as discussed below.
    39. Further, commenters raise a number of concerns regarding the 
specific substantive Requirements of the Reliability Standard, the 
Standard's Attachment B, and the violation risk factor designations. 
These commenter concerns are discussed below.

A. Reliability Standard PRC-023-2

1. Requirement R1
    40. Requirement 1 of PRC-023-2 provides that applicable entities 
must use one of the identified criteria (Requirement R1, criteria 1 
through 13) for any specific circuit terminal to prevent its phase 
protective relay settings from limiting transmission system loadability 
while maintaining reliable protection of the [bulk electric system] for 
all fault conditions. Requirement R1.13 provides that ``[w]here other 
situations present practical limitations on circuit capability, set the 
phase protection relays so they do not operate at or below 115% of such 
limitations.''
    41. MISO contends that over-reliance on criterion R1.13 would 
adversely impact operations, reliability, flexibility, and transmission 
congestion costs, and lead to unnecessary transmission expansion in the 
future to comply with transmission planning standards. To avoid this 
result, MISO requests that the Commission clarify the applicability of 
the standard by narrowing the scope of the protection systems covered 
by the Standard under Attachment A. In particular, MISO requests the 
Commission clarify that the following protection systems are excluded 
from the standard: (a) Differential current relays and negative 
sequence relays; (b) supervisory elements with unanimous consent logic; 
(c) redundant voting protective relay schemes; and (d) switch-on-to-
fault protective relay schemes. We address MISO's request below.
a. Differential Current Relays & Negative Sequence Relays
    42. MISO requests that we clarify that differential current relay 
elements and negative sequence relay elements should not be covered by 
the standard ``as they would not trip with or without time delay on 
load current.'' \46\ MISO argues that the exclusion of these

[[Page 16441]]

specific relay elements from the proposed standard ``would be 
consistent with the purpose and intent of the standard and would 
prevent an inappropriate and unnecessary expansion of the standard's 
applicability.'' \47\
---------------------------------------------------------------------------

    \46\ MISO Comments at 3.
    \47\ Id.
---------------------------------------------------------------------------

    43. We grant MISO's request for clarification in part. As noted by 
MISO, differential current relay elements and negative sequence relay 
elements, by their nature, are not load responsive. As the Commission 
noted previously, the exclusion of a protection system from Reliability 
Standard PRC-023 appears to be unnecessary if the system is not load-
responsive.\48\ Therefore, we grant MISO's request for clarification to 
the extent that non-load responsive relays are not covered by 
Reliability Standard PRC-023-2, however we decline to direct NERC to 
include the assets in the exclusion list of Section 3 of Attachment A 
as the exclusion list should be limited to protection systems that 
would otherwise be subject to the Standard.
---------------------------------------------------------------------------

    \48\ Transmission Relay Loadability Reliability Standard, 127 
FERC ] 61,175, at n. 98 (2009).
---------------------------------------------------------------------------

b. Supervisory Relay Elements
    44. In Order No. 733, the Commission directed NERC to include 
supervisory relay elements on the list of relays and protection systems 
that are specifically subject to the PRC-023 Reliability Standard.\49\ 
In Order No. 733-B, the Commission clarified that its directive 
regarding the applicability of the Reliability Standard to supervisory 
relays does not foreclose the development of an approach tailored to 
eliminate application of the standard to some supervisory relays but 
not to others, where technically justified.\50\
---------------------------------------------------------------------------

    \49\ Order No. 733 at P 264.
    \50\ Order No. 733-B at P 39.
---------------------------------------------------------------------------

    45. In response to the directive, NERC modified Attachment A of 
Reliability Standard PRC-023-2, which identifies types of protection 
systems that are subject to, and others that are excluded from, the 
standard. In part, Attachment A provides that ``this standard includes 
any protective functions which could trip with or without time delay, 
on load current, including but not limited to * * * 1.6. Phase 
overcurrent supervisory elements (i.e., phase fault detectors) 
associated with current-based, communication-assisted schemes * * * 
where the scheme is capable of tripping for loss of communications.'' 
In the March 18 Petition, NERC explained that section 1.6, while 
addressing a subset of supervisory relays, is equally effective and 
efficient in addressing the Commission's reliability concern. According 
to NERC, including all supervisory relays would have unintended 
negative impacts on system reliability by impacting the dependability 
and security of certain protection systems.\51\ NERC explains that 
supervisory overcurrent elements used as fault detectors ``by 
themselves cannot trip on load current, with or without time delay. 
Since the trip logic requires assertion of the fault detector and the 
supervised protective function (which already is required to meet the 
loadability requirements), the overall protective function will meet 
the loadability requirement.'' \52\
---------------------------------------------------------------------------

    \51\ March 18 Petition at 25-28.
    \52\ Id. at 27.
---------------------------------------------------------------------------

Comments
    46. In its comments, MISO raises a concern that an interpretation 
of the term ``phase overcurrent supervisory elements'' in section 1.6 
of Attachment A that includes elements in a unanimous consent scheme 
could lead to unnecessary facility limit reductions.\53\ MISO asks the 
Commission to clarify that it is acceptable to consider ``unanimous 
consent'' logic when evaluating transmission relay loadability. 
According to MISO, ``[i]f a relay scheme contains multiple relay 
elements and requires `unanimous consent' among two or more of the 
relay elements in order to initiate a tripping action [of a circuit 
breaker], transmission relay loadability should be based solely on the 
relay element that is least sensitive to load so long as the relay 
elements could never initiate a tripping action without the operation 
of the relay element least sensitive to load.'' \54\
---------------------------------------------------------------------------

    \53\ MISO Comments at 4.
    \54\ Id.
---------------------------------------------------------------------------

Commission Determination
    47. Giving due weight to NERC's technical expertise on this issue, 
we approve NERC's modification to Attachment A and find that NERC has 
developed an equally efficient and effective approach to addressing the 
Order No. 733 directive regarding supervisory relays. NERC's proposal 
identifies a subset of supervisory relay elements, consistent with the 
Commission's clarification in Order No. 733-B.
    48. We deny MISO's request for clarification. There are various 
types of protection schemes. MISO describes a specific protection 
scheme that uses unanimous consent logic and asks whether elements of 
the scheme are subject to Reliability Standard PRC-023-2. This is a 
fact intensive inquiry, and we will not rule on this matter based on 
the information provided in MISO's comments. If MISO seeks further 
clarification of this issue, it should pursue the matter with NERC. The 
Commission will not make a determination on MISO's specific scenario 
without a complete record and without it going through NERC's 
Reliability Standards development process or interpretation process.
c. Redundant Voting Schemes--the Most Load Sensitive Relay
    49. MISO requests that we clarify how entities should handle 
certain redundant voting protective relay schemes.\55\ MISO explains 
that, in a redundant voting protective relay scheme for a transmission 
facility, there are three protective relay schemes and only two of the 
three must operate to initiate tripping. MISO argues that the most load 
sensitive of these three relay schemes should be exempt from the 
standard, ``so long as the most load sensitive of the three protective 
relay scheme can never initiate a tripping action on its own with[out] 
a tripping output from one of the other two protective relay schemes.'' 
\56\
---------------------------------------------------------------------------

    \55\ MISO Comments at 5.
    \56\ Id.
---------------------------------------------------------------------------

    50. We decline to grant MISO's request on this issue. MISO's 
limited comments on this issue do not provide adequate information or 
technical support for its request. Without adequate support, the 
Commission cannot respond to MISO's request.
d. Switch-on-to-Fault Protective Relay Schemes
    51. MISO requests that the Commission clarify that a switch-on-to-
fault protective relay scheme, which is specifically included in 
section 1.3 of Attachment A, may be excluded from the requirements of 
the Reliability Standard if it meets each of three stated conditions 
presented by MISO.\57\
---------------------------------------------------------------------------

    \57\ Id. at 5-6.
---------------------------------------------------------------------------

    52. Currently effective Reliability Standard PRC-023 explicitly 
addresses switch-on-to-fault protective relay schemes. Switch-on-to-
fault schemes are protection systems designed to trip a transmission 
line breaker when the breaker is closed into a fault. Because the 
current fault detectors for these systems must be set low enough to 
detect ``zero-voltage'' faults, i.e., close-in, three-phase faults, 
these systems may be susceptible to operate on load.\58\ We note that 
the System Protection and Control Task Force acknowledged, with

[[Page 16442]]

regard to switch-on-to-fault schemes ``* * * a concern, based on actual 
events which have occurred in connection with blackouts, for the 
undesired operation of [switch-on-to-fault] schemes when a breaker is 
closed into a line.'' \59\ Because the relays applied in switch-on-to-
fault schemes are load-responsive, the Commission agreed with the ERO's 
technical decision to make such relays subject to the requirements of 
PRC-023. As noted above, MISO proposed a set of conditions that would 
remove an otherwise load-responsive relay from the requirements of 
Reliability Standard PRC-023. MISO has not, however, provided any 
explanation or technical support for its proposed conditions. 
Therefore, we decline to grant the requested clarification.
---------------------------------------------------------------------------

    \58\ Order No. 733 at n. 187.
    \59\ NERC Planning Committee, System Protection and Control Task 
Force, ``Switch-on-to-Fault Schemes in the Context of Line Relay 
Loadability,'' at 2 (June 7, 2006).
---------------------------------------------------------------------------

2. Requirement R3
    53. Requirement R3 of PRC-023-2 requires a transmission owner, 
generator owner and/or distribution provider to obtain the agreement of 
the planning coordinator, transmission operator, and reliability 
coordinator for a calculated circuit capacity with the practical 
limitations described in Requirement R1, criteria 6, 7, 8, 9, 12, or 
13.
a. Comments
    54. MISO requests that the Commission clarify that Requirement R3 
was not intended to create an obligation of the planning coordinator, 
transmission operator and reliability coordinator to independently 
verify or approve the calculated circuit capability provided by the 
transmission owner, generation owner or distribution provider.\60\ MISO 
argues that this obligation to obtain the agreement could impute an 
obligation on the planning coordinator, transmission operator and/or 
reliability coordinator to evaluate the calculated circuit capability 
without providing corresponding criteria that should be applied in the 
evaluation.\61\ MISO also requests that the Commission provide guidance 
on how such entities should resolve disputes over calculated circuit 
capabilities.
---------------------------------------------------------------------------

    \60\ Id. at 6-7.
    \61\ Id.
---------------------------------------------------------------------------

b. Commission Determination
    55. We deny MISO's request for clarification. The Commission 
addressed MISO's concern in Order No. 733.\62\ Specifically, in the 
Order No. 733 rulemaking, commenters argued that the use of the term 
``agreement'' in PRC-023-1 simply meant that ``the entity calculating 
the circuit capability is required to provide the circuit capability to 
the relevant functional entities'' and that ``planning coordinators, 
transmission operators, and reliability coordinators must simply agree 
that they will use the circuit capability provided by the transmission 
owner, generator owner, or distribution owner.'' \63\ The concerns 
raised at that time mirror the concerns raised by MISO; commenters 
indicated that the applicable parties did not want to be ``responsible 
for reviewing and approving the calculated circuit capabilities under 
Requirement R[3].'' \64\
---------------------------------------------------------------------------

    \62\ Order No. 733 at P 229.
    \63\ Id. P 228.
    \64\ Id.
---------------------------------------------------------------------------

    56. The Commission rejected the commenters' arguments in Order No. 
733, finding that the language ``shall obtain the agreement'' requires 
that ``the entity calculating the circuit capability must reach an 
understanding with the relevant functional entity that the calculated 
circuit capability is capable of achieving the reliability goal of PRC-
023-1.'' \65\ In addition, the Commission clarified that since the 
Standard is ``intended to ensure that protective relay settings do not 
limit transmission loadability or interfere with system operators' 
ability to take remedial action to protect system reliability, and to 
ensure that relays reliably detect all fault conditions and protect the 
electrical network from these faults,'' the agreement required under 
Requirement R3 should ``center around achieving these purposes.'' \66\ 
Having adequately addressed this matter in Order No. 733, it is 
unnecessary to elaborate further in response to MISO and, accordingly, 
we deny MISO's request on this issue.
---------------------------------------------------------------------------

    \65\ Id. P 229.
    \66\ Id.
---------------------------------------------------------------------------

    57. Further, to the extent that a dispute arises between 
responsible entities over the determination of a calculated circuit 
capability under Requirement R3, nothing precludes the responsible 
entities from raising the dispute with the applicable Regional Entity.
3. Requirement R6
    58. Requirement R6 of the Reliability Standard requires planning 
coordinators to conduct an assessment applying the criteria in 
Attachment B to determine a list of circuits subject to PRC-023-2 
Requirements R1 through R5. Under Attachment B, the planning 
coordinator is required to evaluate ``[t]ransmission lines operated 
below 100 kV and transformers with low voltage terminals connected 
below 100 kV that are part of the [bulk electric system].''
a. Comments
    59. MISO requests clarification regarding the application of 
Requirement R6 to sub-100 kV facilities.\67\ Specifically, MISO 
requests clarification ``with regard to what final and FERC-approved 
process is used by the Regional Entities to identify sub-100 kV 
facilities `critical to the reliability of the bulk electric system.' 
'' \68\ MISO further requests clarification on how planning 
coordinators will be provided access to the list of such sub-100 kV 
facilities, and, finally, MISO requests clarification whether the use 
of such a list of sub-100 kV facilities is adequate to demonstrate 
compliance with Requirement R6.
---------------------------------------------------------------------------

    \67\ MISO Comments at 8.
    \68\ Id.
---------------------------------------------------------------------------

b. Commission Determination
    60. With regard to MISO's request concerning the identification of 
sub-100 kV facilities, we note that bulk electric system facilities are 
currently identified through the application of NERC's definition of 
bulk electric system and NERC's registration process, as applied by the 
Regional Entities.\69\ Regional Entities should inform planning 
coordinators of such sub-100kV facilities that already may have been 
identified so that the planning coordinator is able to fulfill its 
responsibilities pursuant to Requirement R6.
---------------------------------------------------------------------------

    \69\ Mandatory Reliability Standards for the Bulk-Power System, 
Order No. 693 FERC Stats. & Regs. ] 31,242, at P 77 (2007).
---------------------------------------------------------------------------

    61. We deny MISO's request for clarification ``that the use of such 
a list as/if provided by the Regional Entities is adequate to 
demonstrate compliance with a requirement to evaluate `Transmission 
lines operated below 100 kV and transformers with low voltage terminals 
connected below 100 kV that are part of the [bulk electric system].' 
''\70\ The identification of facilities is only the first step in the 
process of determining whether the Standard applies. Once a planning 
coordinator has been provided with a list of sub-100 kV facilities that 
are part of the bulk electric system, if any, it must apply the 
criteria in Attachment B to determine whether Requirements R1 through 
R5 of Reliability Standard PRC-023-2 will apply to the individual 
facilities.
---------------------------------------------------------------------------

    \70\ MISO Comments at 8.
---------------------------------------------------------------------------

4. Attachment B
    62. Attachment B specifies which circuits must comply with

[[Page 16443]]

Requirements R1 through R5. Criterion B4 addresses circuits that are 
identified through a specified sequence of power flow analyses 
performed by the planning coordinator, which simulate double 
contingencies without manual adjustments between the contingencies.
a. Comments
    63. IS0-NE requests that the Commission direct the ERO to remove 
criterion B4 of Attachment B from PRC-023-2.\71\ ISO-NE argues: (1) 
That such a criterion does not accurately recognize how the bulk 
electric system is operated; (2) that the system is neither planned nor 
operated to withstand two overlapping outages without intervening 
operator action; and (3) that such testing may result in unsolved 
cases, or voltages well below criteria.\72\ As an example, ISO-NE cites 
a system designed to bring on fast start generation before the second 
contingency. ISO-NE argues that testing under that scenario without the 
fast start generation removes transmission paths into an area, thus 
increasing current flows on the remaining circuits and increasing 
reactive losses, resulting in lower voltages. In addition, ISO-NE 
states that unsolved cases have no flows to evaluate and therefore 
cannot be analyzed as required under criterion B4, and that solved 
cases with below-criteria voltage and excessive currents are 
unrealistic. ISO-NE concludes that such simulations may misidentify 
system conditions as severe cases when in reality they are not, 
thwarting the purpose of the testing.
---------------------------------------------------------------------------

    \71\ ISO-NE Comments at 4.
    \72\ Id. at 2-3.
---------------------------------------------------------------------------

    64. ISO-NE also asserts that criterion B4 provides no guidance on 
how the planning coordinator should dispatch the system in a model that 
tests overlapping contingencies, potentially resulting in different 
base assumptions used by the various planning coordinators.
b. Commission Determination
    65. The Commission recognizes that concerns exist regarding the 
application of Attachment B. As discussed below, NERC will be providing 
a summary of the base cases used in applying the Attachment B criteria 
and an assessment of how the base cases used for the analysis relate to 
TPL-003-0, Requirement R1.3.2 in response to our Order No. 733 
directive. In the NOPR, the Commission expressed concern that criterion 
B4 of Attachment B is silent as to the rigor of the simulations other 
than requiring planning coordinators to use their engineering 
judgment.\73\ NERC's additional information regarding the base cases 
used in applying the Attachment B criteria will allow the Commission 
and other interested parties to evaluate whether further modifications 
to Attachment B may be warranted. Accordingly, we deny ISO-NE's request 
on this issue and will not direct the ERO to develop modifications to 
Attachment B at this time.
---------------------------------------------------------------------------

    \73\ September 15 NOPR at P 43.
---------------------------------------------------------------------------

    66. Therefore, we decline to direct NERC to remove criterion B4 
from PRC-023-2 at this time.
5. Violation Risk Factors/Violation Severity Levels
    67. As noted above, NERC has proposed a ``high'' violation risk 
factor for Requirement R6 of Reliability Standard PRC-023-2.
a. Comments
    68. MISO requests that the Commission reject the assignment of a 
high violation risk factor to Requirement 6, arguing: (1) That a high 
violation risk factor implies there is a direct correlation between 
instability, uncontrolled separation and cascading outages and the 
maintenance of a list of sub-200 kV circuits to which the planning 
coordinator believes the requirements of the standard applies; (2) that 
there is no such direct correlation, as evidenced by the fact that NERC 
has created and the Commission is proposing to accept a process by 
which entities can dispute the inclusion of circuits on the planning 
coordinator's list; and (3) that appearance on or absence from the list 
in itself will not cause or prevent instability, uncontrolled 
separation and cascading outages; some other event or Reliability 
Standards violation (i.e., operating above System Operating Limits) 
would have to occur to trigger any impact to reliability.\74\
---------------------------------------------------------------------------

    \74\ MISO Comments at 7-8.
---------------------------------------------------------------------------

b. Commission Determination
    69. In Order No. 733, we directed NERC to assign a ``high'' 
violation risk factor to Requirement R3 of Reliability Standard PRC-
023-1.\75\ The Requirement at issue is renumbered Requirement R6 in 
Reliability Standard PRC-023-2. NERC's assignment of a ``high'' 
violation risk factor to Requirement R6 is therefore consistent with 
our prior directive.
---------------------------------------------------------------------------

    \75\ Order No. 733 at P 297.
---------------------------------------------------------------------------

    70. MISO's request is an untimely argument against an explicit 
directive from Order No. 733. Therefore, we reject MISO's request for a 
rejection of the assignment of a ``high'' violation risk factor to 
Requirement R6.
6. NERC Report on Implementation of Attachment B
    71. In Order No. 733, the Commission directed NERC to specify the 
test that planning coordinators will use to determine whether a sub-200 
kV facility is critical to the reliability of the Bulk-Power 
System.\76\ In addition, the Commission directed NERC to file both the 
test and the results of applying the test to a representative sample of 
utilities from each of the three interconnections.\77\ Attachment B to 
Reliability Standard PRC-023-2 represents the test filed in response to 
the above described directive. The NOPR set forth questions intended to 
assist the Commission's understanding regarding the implementation of 
the test. Specifically, the Commission proposed that NERC address the 
following questions regarding the application of Attachment B criteria 
in the report:
---------------------------------------------------------------------------

    \76\ Id. P 69.
    \77\ Id.
---------------------------------------------------------------------------

     Whether the power system assessment proposed in criterion 
B4 includes the critical system conditions utilized under Reliability 
Standard TPL-003-0 Requirement R1.3.2; \78\
---------------------------------------------------------------------------

    \78\ Id. P 43.
---------------------------------------------------------------------------

     Whether applicable entities evaluate relay loadability 
under the B4 criterion consistent with Requirement R1 which requires, 
in part, that they ``evaluate relay loadability at 0.85 per unit 
voltage and a power factor angle of 30 degrees'' in addition to 
applicable current data; \79\
---------------------------------------------------------------------------

    \79\ Id.
---------------------------------------------------------------------------

     What ``technical studies or assessments'' will be used by 
planning coordinators to identify critical facilities under criterion 
B5; \80\ and
---------------------------------------------------------------------------

    \80\ Id. P 44.
---------------------------------------------------------------------------

     Whether Attachment B is sufficiently comprehensive to 
capture all circuits in a planning coordinator's area that could have 
an operational impact on the reliability of the bulk electric 
system.\81\
---------------------------------------------------------------------------

    \81\ Id. P 45.
---------------------------------------------------------------------------

a. Comments
    72. In its November 21, 2011 Comments, NERC, with APPA concurring, 
responds to the questions proposed for inclusion in the report NERC 
intends to file by February 17, 2013.
    73. With regard to the question whether the power system assessment 
proposed in criterion B4 includes the critical system conditions 
utilized under

[[Page 16444]]

Reliability Standard TPL-003-0, Requirement R1.3.2, NERC states that 
the goal of the power flow analysis is to have planning coordinators 
utilize the base cases that are used for demonstrating compliance with 
the TPL Reliability Standards.\82\ NERC proposes to include in its 
report a summary of the base cases used in applying the Attachment B 
criteria and an assessment of how the base cases used for the analysis 
relate to TPL-003-0, Requirement R1.3.2.\83\
---------------------------------------------------------------------------

    \82\ NERC Comments at 3.
    \83\ Id.
---------------------------------------------------------------------------

    74. In response to the proposed question whether applicable 
entities evaluate relay loadability under the B4 criterion consistent 
with Requirement R1 which requires, in part, that they ``evaluate relay 
loadability at 0.85 per unit voltage and a power factor angle of 30 
degrees'' in addition to applicable current data, NERC states that, 
although the measures in criterion B4 of Attachment B do not explicitly 
reference voltage and power factor, the measures were derived from 
Requirement R1 of PRC-023-2; specifically, 0.85 per unit voltage and 30 
degree power factor angle.\84\ NERC states, therefore, that it is not 
necessary for it to include in the report a comparison of the results 
obtained using criterion B4 to the results that would be achieved based 
on assumptions consistent with Requirement R1.
---------------------------------------------------------------------------

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

    75. Regarding the question proposed in the NOPR concerning what 
``technical studies or assessments'' will be used by planning 
coordinators to identify facilities under criterion B5, NERC states 
that Attachment B does not identify a specific list to avoid 
unnecessarily limiting the technical studies or assessments a planning 
coordinator may use to identify circuits.\85\ NERC proposes to include 
a discussion in the report on the types of studies that planning 
coordinators may use.\86\
---------------------------------------------------------------------------

    \85\ Id. at 4-5.
    \86\ Id. at 5.
---------------------------------------------------------------------------

    76. Finally, in response to the last proposed question of whether 
Attachment B is sufficiently comprehensive to capture all circuits in a 
planning coordinator's area that could have an operational impact on 
the reliability of the bulk electric system, NERC proposes to include 
in the report an assessment that demonstrates whether Attachment B is 
comprehensive enough to capture all circuits that could have an 
operational impact on the reliability of the bulk electric system in 
the context of transmission relay loadabilty.\87\
---------------------------------------------------------------------------

    \87\ Id.
---------------------------------------------------------------------------

b. Commission Determination
    77. As discussed above, NERC reports that it is in the process of 
applying the test set forth in Attachment B to a representative sample 
of utilities from each of the three Interconnections and will file the 
results of these tests in a report on or before February, 2013. In 
light of the discussion in NERC's November 21 Comments,\88\ we accept 
NERC's proposed plan to respond to the following three questions and 
direct NERC to include in the report:
---------------------------------------------------------------------------

    \88\ Id. at 12-19.
---------------------------------------------------------------------------

     A summary of the base cases used in applying the 
Attachment B criteria and an assessment of how the base cases used for 
the analysis relate to TPL-003-0, Requirement R1.3.2;
     A discussion of the types of studies that planning 
coordinators may use to identify circuits under Attachment B; and
     An assessment that demonstrates whether Attachment B is 
comprehensive enough to capture all circuits that could have an 
operational impact on the reliability of the bulk electric system in 
the context of transmission relay loadabilty.
    78. However, we are not persuaded by NERC's statement that it is 
not necessary for NERC to include in the report a comparison of the 
results obtained using criterion B4 to the results that would be 
achieved based on assumptions consistent with Requirement R1. The 0.85 
per unit and 30 degrees power factor criteria in Requirement R1 is 
based on system conditions, voltage, current, and angle, observed prior 
to the cascading stage of the blackout. Although NERC states that 
criterion B4 was derived from these system criteria,\89\ the Commission 
is concerned that testing, which does not, at a minimum, compare 
whether criteria that do not consider voltage or angle affect the 
appropriate identification of applicable facilities, is not responsive 
to ensuring the reliability objective of the critical facilities test 
or the reliability objective of PRC-023. For these reasons, we direct 
NERC to evaluate, in the report, relay loadability under the B4 
criterion consistent with Requirement R1, which requires, in part, that 
NERC ``evaluate relay loadability at 0.85 per unit voltage and a power 
factor angle of 30 degrees'' in addition to applicable current data.
---------------------------------------------------------------------------

    \89\ Id. at 3.
---------------------------------------------------------------------------

B. NERC Rules of Procedure Section 1700--Challenges to Determinations

1. NERC Petition
    79. In its petition, NERC submitted new Rules of Procedure Section 
1700--Challenges to Determinations, which sets out the procedure for a 
registered entity to challenge a determination by a planning 
coordinator under Reliability Standard PRC-023-2.
2. NOPR
    80. In the NOPR, we proposed to approve NERC Rules of Procedure 
Section 1700, specifically proposed Rule 1702, finding that it 
addresses the Order No. 733 directives that NERC establish a mechanism 
for registered entities to challenge criticality determinations made by 
a planning coordinator.
3. Comments
    81. No comments were filed concerning proposed Rules of Procedure 
Section 1700--Challenges to Determinations.
4. Commission Determination
    82. NERC's proposal is responsive to the Commission's directive in 
Order No. 733. Accordingly, we adopt our NOPR proposal and we approve, 
pursuant to section 215(f) of the FPA, NERC Rule of Procedure Section 
1700--Challenges to Determinations as just, reasonable, not unduly 
discriminatory or preferential, in the public interest, and satisfying 
the requirements of section 215(c) of the FPA.

V. Information Collection Statement

    83. The Office of Management and Budget (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\90\ Upon approval of a collection(s) of information, OMB 
will assign an OMB control number and expiration date. Respondents 
subject to the filing requirement of this rule will not be penalized 
for failing to respond to these collections of information unless the 
collections of information display a valid OMB control number. The 
Paperwork Reduction Act (PRA) \91\ requires each federal agency to seek 
and obtain OMB approval before undertaking a collection of information 
directed to ten or more persons, or continuing a collection for which 
OMB approval and validity of the control number are about to 
expire.\92\
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    \90\ 5 CFR 1320.11.
    \91\ 44 U.S.C. 3501-20.
    \92\ 44 U.S.C. 3502(A)(3)(i), 44 U.S.C. 3507(a)(3).
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    84. The Commission is submitting these reporting and recordkeeping

[[Page 16445]]

requirements to OMB for its review and approval under section 3507(d) 
of the PRA. Comments are solicited on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of provided burden estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods for minimizing the respondent's burden, including the 
use of automated information techniques.
    85. This Final Rule approves Reliability Standard PRC-023-2 
(Transmission Relay Loadability) which replaces currently effective 
Reliability Standard PRC-023-1 approved by the Commission in Order No. 
733. Rather than creating entirely new requirements regarding the 
setting of protective relays, the revised Reliability Standard instead 
modifies and improves the existing Reliability Standard. Thus this 
Final Rule does not impose entirely new burdens on the effected 
entities. For example, the currently effective Reliability Standard 
PRC-023-1 requires transmission owners, generation owners, and 
distribution providers to each have evidence to show that each of its 
transmission relays are set according to one of the criteria in 
criteria R1.1 through R1.13. Similarly, revised Reliability Standard 
PRC-023-2 requires transmission owners, generation owners, and 
distribution providers to have evidence that each of its transmission 
relays is set according to one of the 13 criteria in Requirement R1 but 
adds that each such entity shall also have evidence that relays set 
according to criterion 10 do not expose the transformer to fault levels 
and durations beyond those indicated in the Standard. Thus, the 
recordkeeping obligations for some Requirements are more specific but 
not necessarily more expansive than those of currently effective 
Reliability Standard PRC-023-1. However, revised PRC-023-2 does add new 
Requirements, each of which has new recordkeeping obligations.
    86. Requirement R2 requires each transmission owner, generator 
owner, and distribution provider to have evidence that its out-of-step 
blocking elements are set in accordance with the Standard, and 
Requirements R4 and R5 require those same entities to maintain evidence 
that they have informed the appropriate parties of their updated lists 
of certain circuits. Under Requirement R6, planning coordinators are 
required to execute a test for applicability of the Standard as set 
forth in Attachment B and retain analyses, calculation summaries, or 
study reports to evidence execution of the test, whereas under the 
currently effective PRC-023-1, a test was required but only the results 
needed to be retained. Because an unspecified test is currently 
required to be carried out on facilities operated at between 100 kV and 
200 kV under currently effective Reliability Standard PRC-023-1, for 
purposes of this analysis, we assume that there is little additional 
cost for planning coordinators to implement and document that portion 
of the test. However, the Requirement R6 of the revised Standard 
imposes the new burdens of performing the test on sub-100 kV 
facilities, maintaining appropriate records, and distributing the list 
of circuits identified by the test to Regional Entities.
    87. Public Reporting Burden: Our estimate below regarding the 
number of respondents is based on the NERC compliance registry as of 
January 26, 2012. According to the NERC compliance registry, there are 
337 transmission owners, 858 generation owners, 554 distribution 
providers, and 81 planning coordinators. However, under NERC's 
compliance registration program, entities may be registered for 
multiple functions, so these numbers incorporate some double counting. 
The net number of entities responding will be approximately 660 
entities registered as a transmission owner, a distribution provider, 
or a generation owner that is also a transmission owner and/or a 
distribution owner, and 81 planning coordinators.\93\ The estimated 
burden for the requirements in this Order follow:
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    \93\ Under its applicability provisions, proposed Reliability 
Standard applies to specified circuits such that very few, if any, 
generator owners that are not also a transmission owner and/or a 
distribution provider will be subject to the Standard.
    \94\ The burden hours are based on estimates that the Commission 
has used for similar reporting requirements.
    \95\ This applies to the portion of R6 that deals with testing 
for sub-100 kV facilities as described in the text. In addition it 
includes burden hours associated with adding Regional Entities to 
the list of entities to receive a list of circuits from the planning 
coordinator.

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
   Changes to FERC-725G data       Number of       Number of        Average burden hours per       Total annual
          collection              respondents    responses per            response \94\                hours
                                   annually       respondent
                                      (1)             (2)                      (3)                  (1 x 2 x 3)
----------------------------------------------------------------------------------------------------------------
R1 criterion 1.10: TOs, GOs,               660               1  Analysis for                   8           5,280
 and DPs must analyze and                                        compliance
 document criterion 1.10                                         documents.
 compliance.
                                                               -------------------------------------------------
                                ..............  ..............  Record Retention               2           1,320
----------------------------------------------------------------------------------------------------------------
R2: TOs, GOs, and DPs must                 660               1  Analysis for                   8           5,280
 perform analysis and retain                                     compliance
 evidence of compliance.                                         documents.
                                                               -------------------------------------------------
                                ..............  ..............  Record Retention               2           1,320
----------------------------------------------------------------------------------------------------------------
R4 and R5: TOs, GOs, and DPs               660               1  Reporting (dist.              10           6,600
 must distribute updated lists                                   of list).
 and retain evidence that
 lists were distributed.
                                                               -------------------------------------------------
                                ..............  ..............  Record Retention              10           6,600
----------------------------------------------------------------------------------------------------------------
R6: PC must perform                         81               1  Reporting                     20           1,620
 assessment, distribute list                                     (assessment and
 of circuits and retain                                          dist. of list).
 evidence of testing and
 distribution \95\.
                                                               -------------------------------------------------
                                ..............  ..............  Record Retention              10             810
----------------------------------------------------------------------------------------------------------------
    Total.....................  ..............  ..............  ................  ..............          28,830
----------------------------------------------------------------------------------------------------------------


[[Page 16446]]

    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements and recordkeeping burden 
associated with Reliability Standard PRC-023-2.
     Total Annual Hours for Collection: (Reporting and Record 
Retention) = 28,830 hours.
     Total Estimated Reporting/Analysis Cost = 18,780 hours @ 
$120/hour = $2,253,600.
     Total Estimated Record Retention Cost = 10,050 hours @ 
$28/hour = $281,400.
     Total Estimated Annual Cost (Reporting + Record Retention) 
\96\ = $2,535,000.
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    \96\ The hourly reporting cost is based on the estimated cost of 
an engineer to implement the requirements of the rule. The record 
retention cost comes from Commission staff research on record 
retention requirements.
---------------------------------------------------------------------------

     Title: Mandatory Reliability Standards for the Bulk-Power 
System
     Action: FERC 725G, Proposed Modification to FERC-725G.
     OMB Control No: 1902-0252.
     Respondents: Business or other for profit, and/or not for 
profit institutions.
     Frequency of Responses: On occasion.
     Necessity of the Information: This Final Rule approves a 
revised Reliability Standard that modifies an existing requirement 
regarding setting protective relays according to specific criteria in 
order to ensure that the relays reliably detect and protect the 
electric network from all fault conditions, but do not limit 
transmission loadability or interfere with system operators' ability to 
protect system reliability. Reliability Standard PRC-023-2 requires 
entities to set transmission relays according to specified criteria and 
to retain evidence of compliance. It also requires planning 
coordinators to implement a test to determine which sub-200 kV 
facilities are critical to the reliability of the power system and 
subjects such facilities to the requirements of the Standard. The 
revised Reliability Standard requires entities to maintain records 
subject to review by the Commission and NERC to ensure compliance with 
the Reliability Standard.
     Internal review: The Commission has reviewed the 
requirements pertaining to the revised Reliability Standard for the 
Bulk-Power System and determined that the requirements are necessary to 
meet the statutory provisions of the Energy Policy Act of 2005. These 
requirements conform to the Commission's plan for efficient information 
collection, communication and management within the energy industry. 
The Commission has assured itself, by means of internal review, that 
there is specific objective support for the burden estimates associated 
with the information requirements.
    88. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office 
of the Executive Director, email: [email protected], Phone: (202) 
502-8663, fax: (202) 273-0873]. Comments on the requirements of this 
order may also be sent to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Washington, DC 20503 
[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 
For security reasons, comments should be sent by email to OMB at [email protected]. Please reference OMB Control Number 1902-0252 
and the docket number of this Order in your submission.

VI. Environmental Analysis

    89. 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.\97\ The 
actions proposed here fall within the categorical exclusion in the 
Commission's regulations for rules that are clarifying, corrective or 
procedural, for information gathering, analysis, and dissemination.\98\ 
Accordingly, neither an environmental impact statement nor 
environmental assessment is required.
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    \97\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 
Regulations Preambles 1986-1990 ] 30,783 (1987).
    \98\ 18 CFR 380.4(a)(5).
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VII. Regulatory Flexibility Act Analysis

    90. The Regulatory Flexibility Act of 1980 (RFA) \99\ generally 
requires a description and analysis of proposed and final rules that 
will have significant economic impact on a substantial number of small 
entities. The RFA mandates consideration of regulatory alternatives 
that accomplish the stated objectives of a proposed order and that 
minimize any significant economic impact on a substantial number of 
small entities. The Small Business Administration's (SBA) Office of 
Size Standards develops the numerical definition of a small 
business.\100\ The SBA has established a size standard for electric 
utilities, stating that a firm is small if, including its affiliates, 
it is primarily engaged in the transmission, generation and/or 
distribution of electric energy for sale and its total electric output 
for the preceding twelve months did not exceed four million megawatt-
hours.\101\
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    \99\ 5 U.S.C. 601-612.
    \100\ 13 CFR 121.101.
    \101\ 13 CFR 121.201, Sector 22, Utilities & n.1.
---------------------------------------------------------------------------

    91. Reliability Standard PRC-023-2 modifies currently existing 
Reliability Standard PRC-023-1 which requires applicable entities to 
set protective relays according to specific criteria, to communicate 
about such settings with specified entities, and to conduct assessments 
to determine the applicability of the Standard to 100-200 kV 
facilities. The revised Standard modifies PRC-023-1 by (1) increasing 
communication and documentation requirements, (2) extending the 
applicability of the Standard to formerly excluded relays, and (3) 
standardizing the terms of the assessment whose terms were formerly not 
specified. In addition, PRC-023-2 extends the current requirement that 
planning coordinators annually assess which 100-200 kV circuits must be 
brought into compliance with the Standard and will require planning 
coordinators to carry out the assessment with respect to some sub-100 
kV facilities.
    92. Comparison of the NERC compliance registry with data submitted 
to the Energy Information Administration on Form EIA-861 indicates that 
perhaps as many as 108 transmission owners, 327 distribution providers, 
52 generation owners, and 14 planning coordinators qualify as small 
entities. However, under NERC's compliance registration program, 
entities may be registered for multiple functions, so these numbers 
incorporate some double counting. The net number of registered entities 
that qualify as small entities responding to this rule will be 
approximately 339 entities registered as a transmission owner, a 
distribution provider, or a generation owner that is also a 
transmission owner and/or a distribution provider, and 8 planning 
coordinators. The Final Rule directly affects each of the small 
entities. Therefore, FERC has determined that this Final Rule will have 
an impact on a substantial number of small entities. However, the 
Commission has determined that the impact on entities affected by the 
Final Rule will not be significant. The Commission estimates that in 
order to comply with the Standard's modification of existing 
requirements each of the small entities registered as planning 
coordinators will face a cost of $2,680 and each of the remaining small 
entities (transmission owners, distribution providers, or generation

[[Page 16447]]

owners that are also transmission owners and/or distribution providers) 
will face a cost of $3,512. Accordingly, the Commission determines that 
the incremental cost of Reliability Standard PRC-023-2 (going from PRC-
023-1 to PRC-023-2) is minimal, and should not present a significant 
operating cost to any of the small entities.
    93. Based on this understanding, the Commission certifies that this 
Reliability Standard will not have a significant economic impact on a 
substantial number of small entities. Accordingly, no regulatory 
flexibility analysis is required.

VIII. Document Availability

    94. 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.
    95. 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.
    96. 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 email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-6758 Filed 3-20-12; 8:45 am]
BILLING CODE 6717-01-P