[Federal Register Volume 78, Number 142 (Wednesday, July 24, 2013)]
[Proposed Rules]
[Pages 44475-44483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-17730]


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DEPARMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM13-7-000]


Protection System Maintenance Reliability Standard

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the 
Commission proposes to approve a revised Reliability Standard, PRC-005-
2--Protection System Maintenance, to supersede four existing 
Reliability Standards, PRC-005-1.1b (Transmission and Generation 
Protection System Maintenance and Testing), PRC-008-0 (Underfrequency 
Load Shedding Equipment Maintenance), PRC-011-0 (Undervoltage Load 
Shedding Equipment Maintenance) and PRC-017-0 (Special Protection 
System Maintenance and Testing). In addition, the Commission seeks 
clarification and comment on three aspects of the proposed Reliability 
Standard and proposes to modify one violation severity level.

DATES: Comments are due September 23, 2013.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
    Those unable to file electronically may mail or hand-deliver 
comments to: Federal Energy Regulatory Commission, Secretary of the 
Commission, 888 First Street NE., Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process,

[[Page 44476]]

see the Comment Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
Tom Bradish (Technical Information), Office of Electric Reliability, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, (301) 665-1391, [email protected].
Julie Greenisen (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, (202) 502-6362, [email protected].

SUPPLEMENTARY INFORMATION: 

144 FERC ] 61,055

(July 18, 2013)

    1. Pursuant to section 215 of the Federal Power Act (FPA),\1\ the 
Commission proposes to approve a revised Reliability Standard, PRC-005-
2--Protection System Maintenance, to supersede four existing 
Reliability Standards, PRC-005-1.1b (Transmission and Generation 
Protection System Maintenance and Testing), PRC-008-0 (Underfrequency 
Load Shedding Equipment Maintenance), PRC-011-0 (Undervoltage Load 
Shedding Equipment Maintenance) and PRC-017-0 (Special Protection 
System Maintenance and Testing). The proposed modifications, in part, 
respond to certain Commission directives issued in Order No. 693,\2\ in 
which the Commission approved initial versions of these four 
Reliability Standards governing maintenance and testing of protection 
systems, and maintenance of underfrequency and undervoltage load 
shedding equipment.
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    \1\ 16 U.S.C. 824o (2006).
    \2\ Mandatory Reliability Standards for the Bulk Power System, 
Order No. 693, 72 FR 16,416 (April 4, 2007), FERC Stats. & Regs. ] 
31,242 (2007), order on reh'g, Order No. 693-A, 120 FERC ] 61,053 
(2007).
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    2. Proposed Reliability Standard PRC-005-2 represents an 
improvement over the four existing standards covering protection system 
maintenance and testing, by incorporating specific, required minimum 
maintenance activities and maximum time intervals for maintenance of 
individual components of protection systems and load shedding equipment 
affecting the bulk electric system. While the proposed Reliability 
Standard also gives responsible entities the option of developing their 
own, performance-based maintenance intervals for most components, the 
intervals must be designed to achieve a minimum performance level, and 
must be adjusted if that target performance level is not actually 
achieved. In addition, the proposed Reliability Standard combines the 
maintenance and testing requirements for protection systems into one 
comprehensive Reliability Standard, as was suggested by the Commission 
in Order No. 693.\3\
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    \3\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1475.
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    3. While the proposed Reliability Standard contains overall 
improvements, as discussed below, we seek additional information and 
comments on the following: (A) Verification of operability and settings 
upon placement in-service of new or modified protection systems; (B) 
use of a four percent target for countable events in performance-based 
programs; and (C) violation severity levels for certain Requirement R1 
violations.
    4. We also propose to approve the six new definitions associated 
with proposed Reliability Standard PRC-005-2, i.e., Component, 
Component Type, Countable Event, Protection System Maintenance Program, 
Segment, and Unresolved Maintenance Issue. Of these newly defined 
terms, NERC proposes to include only the term Protection System 
Maintenance Program in its Glossary of Terms, with the remainder 
applying only to Reliability Standard PRC-005-2.
    5. Finally, we propose to approve NERC's proposed implementation 
plan for the proposed Reliability Standard, which requires entities to 
develop a compliant protection system maintenance program within twelve 
months, but allows for the transition over time of maintenance 
activities and documentation to conform to the new minimum maintenance 
activities and maximum maintenance intervals.

I. Background

A. Regulatory Background

    6. Section 215 of the FPA requires a Commission-certified Electric 
Reliability Organization (ERO) to develop mandatory and enforceable 
Reliability Standards, subject to Commission review and approval.\4\ 
Once approved, the Reliability Standards may be enforced by the ERO 
subject to Commission oversight, or by the Commission independently.\5\
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    \4\ Id. at 824o(c) and (d).
    \5\ See id. at 824o(e).
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    7. In 2006, the Commission certified NERC as the ERO pursuant to 
FPA section 215.\6\ In 2007, in Order No. 693, the Commission approved 
an initial set of Reliability Standards submitted by NERC, including 
initial versions of four protection system and load-shedding-related 
maintenance standards, i.e., PRC-005-1, PRC-008-0, PRC-011-0, and PRC-
017-0.\7\
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    \6\ North American Electric Reliability Corp., 116 FERC ] 
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd 
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
    \7\ Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 1474, 
1492, 1497, and 1514.
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    8. In approving these protection system-related Reliability 
Standards, the Commission directed NERC to develop or to consider a 
number of modifications. Specifically, the Commission directed NERC to: 
(1) Develop a revision to PRC-005-1 incorporating a maximum time 
interval during which to conduct maintenance and testing of protection 
systems; and (2) consider combining into one standard the various 
maintenance and testing requirements for all of the maintenance and 
testing-related Reliability Standards for protection systems, 
underfrequency load shedding (UFLS) equipment and undervoltage load 
shedding (UVLS) equipment.\8\
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    \8\ In Order No. 763, the Commission approved Reliability 
Standard PRC-006-1 pertaining to ``underfrequency load shedding'' 
which also encompasses ``undervoltage load shedding.'' Automatic 
Underfrequency Load Shedding and Load Shedding Plans Reliability 
Standards, Order No. 763, 139 FERC ] 61,098 (2012).
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    9. In a subsequent order, issued in response to NERC's request for 
approval of its interpretation of PRC-005-1 (Order No. 758), the 
Commission issued three additional directives, addressing deficiencies 
in the existing version of Reliability Standard PRC-005.\9\ The 
Commission directed NERC to modify Reliability Standard PRC-005-1, 
through its standards development process, to: (1) Identify and include 
the auxiliary relays and non-electrical sensing devices designed to 
sense or take action against any abnormal system condition that will 
affect reliable operation (such as sudden pressure relays); (2) include 
specific requirements for maintenance and testing of reclosing relays 
that affect the reliable operation of the bulk-power system; and (3) 
include specific requirements for maintenance and testing of DC control 
circuitry.
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    \9\ Interpretation of Protection System Reliability Standard, 
138 FERC ] 61,094 (2012) (Order No. 758).
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B. Existing Protection System-Related Maintenance Standards

    10. Under currently-effective Reliability Standard PRC-005-1b, 
transmission owners, generator owners, and applicable distribution 
providers are required to have a protection system maintenance and 
testing program for any protection system elements that affect the bulk 
electric system, and must

[[Page 44477]]

document their compliance with that program. The program must include 
maintenance and testing intervals and their basis, and a summary of 
maintenance and testing procedures. However, Reliability Standard PRC-
005-1b does not impose any specific requirements regarding maintenance 
activities, standards or intervals. Similarly, Reliability Standards 
PRC-008-0, PRC-011-0, and PRC-017-0 require applicable transmission 
owners, distribution providers and generator owners to have a 
maintenance and testing program in place for UFLS equipment, UVLS 
equipment, and special protection systems, respectively, and to 
document their compliance with their program. These Reliability 
Standards, like PRC-005-1b, do not impose any specific requirements 
regarding maintenance activities, standards or intervals.

C. NERC Petition and Proposed Standard PRC-005-2

    11. On February 26, 2013, NERC submitted a petition seeking 
approval of proposed Reliability Standard PRC-005-2, six new 
definitions associated with that standard, and a proposed 
implementation plan that includes retirement of the four currently-
effective Reliability Standards that address maintenance and testing of 
transmission and generation protection systems, UFLS and UVLS 
equipment, and special protection systems. NERC maintains that the 
proposed Reliability Standard not only consolidates the four currently-
effective standards into a single standard, but also addresses the 
directives in Order No. 693 related to those standards.\10\
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    \10\ NERC Petition at 2. See also NERC Petition at 12 where NERC 
states that while additional directives related to the PRC-005 
Reliability Standard were issued by the Commission in a subsequent 
order, Order No. 758, these directives are being addressed in future 
projects related to PRC-005. NERC indicates in its petition that it 
will address these remaining directives in future versions of PRC-
005, and that it is currently addressing the maintenance and testing 
of reclosing relays in a new Project [2007-17]. See NERC Petition at 
7-8 (citing NERC's Informational Filing in Compliance with Order No. 
758, Docket No. RM10-5, and NERC Project 2007-17 Protection System 
Maintenance--Phase 2 (Reclosing Relays)).
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    12. NERC states that the proposed Reliability Standard establishes 
minimum acceptable maintenance activities and accompanying maximum 
allowable maintenance intervals for specific component types, gives 
responsible entities flexibility to implement ``condition-based 
maintenance'' that allows for adjustment of intervals and activities to 
reflect monitoring of components, and establishes requirements for the 
implementation of performance-based maintenance programs.\11\ NERC 
maintains that the proposed standard will improve reliability by:

    \11\ Id. at 3.

    (i) defining and establishing criteria for a Protection System 
Maintenance Program; (ii) reducing the risk of Protection System 
Misoperations; (iii) clearly stating the applicability of the 
Requirements in proposed PRC-005-2 to certain Functional Entities 
and Facilities; (iv) establishing Requirements for time-based 
maintenance programs that include maximum allowable maintenance 
intervals for all relevant devices; and (v) establishing 
Requirements for condition-based and performance-based maintenance 
programs where hands-on maintenance intervals are adjusted to 
reflect the known and reported condition or the historical 
performance, respectively, of the relevant devices.\12\
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    \12\ Id.

    13. NERC asserts that the proposed Reliability Standard not only 
represents a comprehensive approach to documenting and implementing 
programs for maintenance of all protection systems affecting the 
reliability of the bulk electric system, but also reduces the risk of 
misoperations ``by applying consistent, best practice maintenance and 
inspection activities of Protection System Components.'' \13\ NERC 
maintains that the proposed Reliability Standard represents an 
improvement over the four standards that would be superseded, because 
none of the existing standards contain technical requirements for any 
of the maintenance programs, but merely specify that a program be in 
place and that each responsible entity comply with the requirements of 
its own program.\14\
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    \13\ Id. at 11.
    \14\ Id.
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    14. NERC also maintains that the proposed Reliability Standard 
satisfies three outstanding directives from Order No. 693 related to 
the PRC maintenance standards. First, NERC explains that the proposed 
Reliability Standard includes maximum allowable intervals for 
maintenance of protection system components (as set out in Tables 1-1 
through 1-5, Table 2 and Table 3 of Reliability Standard PRC-005-
2).\15\ Second, Reliability Standard PRC-005-2 combines the 
requirements for PRC-005, PRC-008, PRC-011 and PRC-017 into one new, 
revised standard, addressing maintenance for transmission and 
generation protection systems, for special protection systems, and for 
UFLS and UVLS equipment.\16\ Finally, in Order No. 693, the Commission 
directed NERC to consider whether load serving entities and 
transmission operators should be included in the applicability of PRC-
004.\17\ NERC maintains that it considered whether load-serving 
entities and transmission operators should be subject to any of the PRC 
maintenance and testing requirements, but determined that the 
applicable maintenance requirements need only apply to equipment owners 
such as generation owners, transmission owners, and certain 
distribution providers.\18\ NERC explains that ``[w]hile an equipment 
owner may need to coordinate with the operating entities in order to 
schedule the actual maintenance, the responsibility resides with the 
equipment owners to complete the required maintenance.'' \19\
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    \15\ Id. at 12.
    \16\ Id. at 12-13.
    \17\ Order No. 693, FERC Stats & Regs. ] 31,242 at P 1469.
    \18\ NERC Petition at 13.
    \19\ Id.
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    15. The proposed Reliability Standard includes five requirements. 
Under Requirement R1, each responsible entity must establish a 
protection system maintenance program that: (1) Identifies which method 
(time-based or performance-based) will be used for each protection 
system component type, except that the maintenance program for all 
batteries associated with the station DC supply of a protection system 
must be time-based; and (2) identifies monitored component attributes 
for each component type where monitoring is used as a basis for 
extending maintenance intervals.
    16. Under Requirement R2, any responsible entity that uses 
performance-based maintenance intervals must follow the procedures set 
out in Attachment A of the proposed Reliability Standard to set and to 
adjust, as necessary, appropriate maintenance intervals. The Attachment 
A procedures allow a responsible entity to establish maintenance 
intervals for a given population of similar components based on 
historical performance, as long as there is a statistically significant 
population of components for which performance can be examined and 
monitored. For example, under the Attachment A procedures, a 
responsible entity can only use a performance-based interval for 
``segments'' with a component population of at least 60 components.\20\ 
The maximum allowable

[[Page 44478]]

maintenance interval for a given segment is required to be set such 
that the segment will experience countable events of no more than four 
percent of the components within that segment, for the greater of 
either the last 30 components maintained or all components maintained 
in the previous year.\21\
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    \20\ NERC defines ``segment'' as ``Protection Systems or 
components of a consistent design standard, or a particular model or 
type from a single manufacturer that typically share other common 
elements. Consistent performance is expected across the entire 
population of a Segment.'' NERC Petition, Ex. B (PRC-005-2) at 26.
    \21\ NERC defines ``countable event'' as ``a failure of a 
component requiring repair or replacement, any condition discovered 
during the maintenance activities in Tables 1-1 through 1-5 and 
Table 3 which requires corrective action, or a Misoperation 
attributed to hardware failure or calibration failure.'' NERC 
Petition, Ex. B (PRC-005-2) at 26.
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    17. In addition, to continue to utilize a performance-based 
interval, the responsible entity must update its list of components and 
segments annually (or whenever a change occurs within a segment), must 
maintain a minimum number or percentage of components a year, and must 
analyze a given segment's maintenance record to determine the 
percentage of countable events. If the percentage of countable events 
for the last 30 components maintained or the number of components 
maintained over the last year (whichever is larger) exceeds four 
percent, the responsible entity must implement an action plan to reduce 
the expected countable events to less than four percent for that 
segment within the next three years.
    18. Requirements R3 and R4 require a responsible entity to adhere 
to the requirements of its protection system maintenance program, 
including performance of minimum maintenance activities. Under 
Requirement R3, which governs time-based maintenance, the activities 
must be performed in accordance with the intervals prescribed in the 
tables attached to PRC-005-2. Under Requirement R4, the activities must 
be carried out in accordance with the performance-based intervals 
established under Requirement R2 and Attachment A.
    19. Under Requirement R5, responsible entities must ``demonstrate 
efforts to correct identified Unresolved Maintenance Issues,'' which 
are defined as ``deficienc[ies] identified during a maintenance 
activity that causes the component to not meet the intended 
performance, cannot be corrected during the maintenance interval, and 
requires follow-up corrective action.'' NERC explains that the intent 
of Requirement R5 is ``to assure that Protection System components are 
returned to working order following the discovery of failures or 
malfunctions during scheduled maintenance.'' \22\
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    \22\ NERC Petition at 18.
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    20. With respect to implementation, NERC proposes to require 
entities to fully comply with Requirements R1, R2 and R5 within 12 
months of regulatory approval (or 24 months from the date of NERC Board 
approval where no regulatory approval is required).\23\ Accordingly, 
applicable entities must develop their revised protection system 
maintenance program within one year.\24\ NERC's proposed implementation 
plan would allow a more lengthy implementation period with respect to 
achieving full compliance with the newly-prescribed maintenance 
activities and documentation, permitting a transition of maintenance 
activities and documentation over time, with the compliance period 
scaled to the length of the applicable maximum maintenance 
interval.\25\ Thus, for component types with the shortest allowable 
maintenance interval (i.e., less than one year, or between one and two 
years), entities would be required to fully comply with the new 
requirements within 18 months of regulatory approval, and 36 months of 
regulatory approval, respectively.\26\ For components types with longer 
maintenance intervals (3, 6 and 12 years), NERC proposes to require 
compliance over the applicable maintenance interval in equally 
distributed steps. For component types with the longest maximum 
allowable maintenance interval (i.e., 12 years), entities must be 30 
percent compliant within 5 years, 60 percent compliant within 9 years, 
and fully compliant within 13 years after regulatory approval.\27\
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    \23\ NERC Petition, Ex. C (Implementation Plan) at 2, 4.
    \24\ See id. at 2.
    \25\ Id.
    \26\ Id. at 4.
    \27\ Id. at 5. NERC notes, however, that ``[o]nce an entity has 
designated PRC-005-2 as its maintenance program for specific 
Protection System components, they cannot revert to the original 
program for those components.'' Id. at 2.
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    21. NERC explains that this implementation program takes into 
consideration that certain entities may not currently be performing all 
required maintenance activities specified in proposed PRC-005-2, and 
may not have all the documentation necessary to demonstrate 
compliance.\28\ NERC further states that ``it is unrealistic for those 
entities to be immediately compliant with the new activities or 
intervals,'' and that ``entities should be allowed to become compliant 
in such a way as to facilitate a continuing maintenance program.'' \29\ 
Finally, NERC explains that it developed this step-wise implementation 
plan ``in order that entities may implement this standard in a 
systematic method that facilitates an effective ongoing Protection 
System Maintenance Program.'' \30\
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    \28\ Id. at 1.
    \29\ Id.
    \30\ Id. at 2.
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II. Discussion

    22. Pursuant to section 215(d)(2) of the FPA, the Commission 
proposes to approve Reliability Standard PRC-005-2, the six associated 
definitions referenced in the proposed standard, and NERC's proposed 
implementation plan. The proposed Reliability Standard appears to 
adequately address the Commission directives from Order No. 693 with 
respect to: (1) Including maximum allowable intervals in PRC-005; (2) 
combining PRC-005, PRC-008, PRC-011, and PRC-017; and (3) considering 
whether load serving entities and transmission operators should be 
included in the applicability of the PRC-005 Reliability Standard. 
Proposed Reliability Standard PRC-005-2 should also improve reliability 
by reducing the risk of protection system misoperations and 
establishing requirements for condition-based and performance-based 
maintenance programs where hands-on maintenance intervals are adjusted 
to reflect the known and reported condition or the historical 
performance of the relevant devices.
    23. However, we believe that further clarification is warranted 
with respect to certain aspects of proposed PRC-005-2, including NERC's 
proposed approach to enforcement of its requirements. Additional 
information is also needed to fully evaluate NERC's proposed targets 
for the establishment of performance-based maintenance intervals. As 
discussed below, we seek additional information and comments on the 
following: (A) Verification of operability and settings upon placement 
in-service of new or modified protection systems; (B) use of a four 
percent target for countable events in performance-based programs; and 
(C) violation severity levels for certain Requirement R1 violations.

A. Verification of Operability and Settings Upon Placement In-Service

    24. As proposed, Reliability Standard PRC-005-2 does not include 
separate requirements for protection system commissioning testing for 
new or modified equipment (i.e., testing activities necessary to ensure 
that new or modified equipment has been built and will function in 
accordance with its

[[Page 44479]]

design). NERC maintains that such testing is often performed by a 
different organization (such as a start-up or commissioning group of 
the organization, or a contractor hired to construct and start-up or 
commission the facility) than the organization responsible for the on-
going maintenance of the protection system, and that the activities 
required for such testing will not necessarily correlate to the 
maintenance activities required by the proposed standard.\31\
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    \31\ NERC Petition, Ex. E (Supplementary Reference and FAQ) at 
35.
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    25. At the same time, NERC acknowledges that ``a thorough 
commission testing program would include, either directly or 
indirectly, the verification of all those Protection System attributes 
addressed by the maintenance activities specified in the Tables of PRC-
005-2,'' and that ``an entity would be wise to retain commissioning 
records to show a maintenance start date.'' \32\ In addition, NERC 
states that ``PRC-005-2 assumes that thorough commission testing was 
performed prior to a protection system being placed in service.'' \33\ 
Finally, in discussing whether the initial date for setting the time 
clock for maintenance should be the date of commission testing versus 
the in-service date, NERC asserts that ``[w]hichever method is chosen, 
for newly installed Protection Systems the components should not be 
placed into service until minimum maintenance activities have taken 
place.'' \34\
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    \32\ Id. NERC also notes that an entity ``that requires that 
their commissioning tests have, at a minimum, the requirements of 
PRC-005-2 would help that entity prove time interval maximums by 
setting the initial time clock.'' Id.
    \33\ Id.
    \34\ Id. (emphasis added).
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    26. NERC's petition assumes that components will not be placed into 
service until they have been determined to be within the same range of 
operability and accuracy as would be required when completing the 
maintenance and inspection activities delineated in proposed 
Reliability Standard PRC-005-2. However, the Reliability Standard does 
not include a requirement to verify that protection system equipment 
and components operate at least as accurately as required under the 
PRC-005-2 maintenance standards when those components are first placed 
in service or are modified. We are concerned that a reliability gap may 
exist if entities are not required to demonstrate compliance with PRC-
005-2 standards when relevant equipment or components are placed in 
service or modified.\35\
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    \35\ For example, Table 1-1 of PRC-005-2 requires entities to 
``verify that settings are as specified,'' to ``verify operation of 
the relay inputs and outputs that are essential to proper 
functioning of the protection system,'' or to ``verify acceptable 
measurement of power system input values'' for particular types of 
protective relays. NERC Petition, Ex. B (Proposed Reliability 
Standard PRC-005-2) at Table 1-1.
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    27. We note that the failure to verify the accurate functioning of 
protection system components when placed in service, or when 
subsequently modified, has been identified as a direct cause of 
misoperations in several instances, resulting in violations of the 
currently-effective PRC-004 standard. For example, Notice of Penalty 
filings in Docket Nos. NP11-105, NP11-129, and NP13-37 contain 
Reliability Standard PRC-004 violations where protection systems were 
placed in service and misoperated.\36\ Accordingly, we seek explanation 
from NERC regarding whether and, if so, how it intends to interpret and 
enforce Reliability Standard PRC-005-2 to require that newly installed 
or modified protection system equipment or components perform at the 
same level as is required for subsequent compliance, including 
verification of applicable settings as specified whenever a relay is 
repaired, replaced, or upgraded with a new firmware version.\37\
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    \36\ In one instance, the Texas Reliability Entity found that: 
(1) An entity had incorrectly wired a capacitance coupled voltage 
transformer used in the protection scheme when it was replaced, 
resulting in approximately 20 misoperations; and (2) an entity had 
incorrectly wired and set a protective relay system compounded by 
contractor or consultant design errors, leading to five 
misoperations, in violation of its commissioning verification 
procedures, which called for end-to-end testing of the trip output 
logic wiring and trip testing, and posing a moderate risk to the 
reliability of the Bulk-Power System. See Notice of Penalty 
regarding American Electric Power Service Corp., Docket No. NP13-37-
000 (filed May 30, 2013). See also Notice of Penalty filings in 
Docket Nos. NP11-105 (incorrect CT wiring configuration led to 
misoperations) and NP11-129 (failure by a contractor relay 
technician to remove a shorting screw after testing of relay led to 
misoperation).
    \37\ The Commission believes that vendor-issued firmware 
upgrades for microprocessor relays are common, and verification of 
settings whenever an upgrade is installed is critical for proper 
relay performance.
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    28. If NERC does not believe that it can interpret and enforce the 
proposed Reliability Standard to include such a requirement, we seek 
comment on whether the proposed standard should be modified to address 
our underlying concern, i.e., verification that newly-commissioned or 
modified equipment and components meet the same requirements specified 
for subsequent maintenance and testing in the proposed Reliability 
Standard.

B. Four Percent Target for Countable Events in Performance-Based 
Program

    29. Pursuant to Requirement R2 of proposed Reliability Standard 
PRC-005-2, responsible entities may choose to establish performance-
based maintenance intervals for individual component types, according 
to the procedures set out in Attachment A of the standard. According to 
the Attachment A procedures, the responsible entity must first develop 
a list of components to be included in the designated segment (with a 
minimum population of 60 components).\38\ Using that analysis and 
looking at the greater of either the last 30 components maintained or 
all components maintained within the segment over the last year, the 
responsible entity must set a maximum allowable interval for each 
segment so that countable events will occur on no more than four 
percent of the components within that segment. In addition, the 
maintenance history of the segment is to be reviewed at least annually 
to determine the overall performance of the segment, and, if the four 
percent target is not met, the entity is required to develop and 
implement an action plan to reduce countable events to less than four 
percent within three years.\39\
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    \38\ Until such time as the entity has performed and analyzed 
the required maintenance activities applicable to the segment for at 
least 30 individual components, it must maintain the segment using 
PRC-005-2's time-based intervals, as specified in Tables 1-1 to 1-5, 
2 and 3, i.e., it cannot adopt a performance-based interval until it 
has performed and analyzed the maintenance history for a minimum 
pool of components.
    \39\ As NERC explains in the Supplementary Reference and FAQ 
(Ex. E) attached to its petition, entities using a performance-based 
program must not only ``demonstrate how they analyze findings of 
performance failures and aberrations'' but must also ``implement 
continuous improvement actions'' to meet the failure rate targets. 
See NERC Petition, Ex. E at 40. NERC provides examples of the kinds 
of methods that can be used to correct segment performance, 
including decreasing the maximum allowable interval, identifying 
sub-groups of components within the segment that may need more 
targeted action, and replacement of poorly performing components 
within a segment. Id. at 44. See also id. at 47 (providing an 
example calculation of the development and adjustment of a 
performance-based interval, showing an immediate adjustment to the 
maintenance interval, and consequent increase in number of units 
tested annually, when failure rates exceed 4 percent).
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    30. Under the proposed standard, an entity would not be in 
violation of Requirement R2 of the standard upon failing to achieve a 4 
percent or less failure rate for a given segment in the first year the 
failure occurs, but would violate Requirement R2 if: (1) The entity 
could not show that the interval selected was initially set to expect a 
failure rate of no more than 4 percent; (2) the entity fails to make 
immediate

[[Page 44480]]

changes to its performance-based maintenance program to achieve a 4 
percent target within 3 years; or (3) the entity does not actually 
achieve a 4 percent failure rate for that segment within 3 years after 
adjusting its program.\40\
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    \40\ See generally, id. at 40-53.
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    31. In the Technical Justification NERC submitted as part of its 
petition, NERC explains the basis for selecting a four percent target 
for countable events as follows:

    The 4% number was developed using the following:
    General experience of the drafting team based on open 
discussions of past performance.
    Test results provided by Consumers Energy for the years 1998-
2008 showing a yearly average of 7.5% out-of-tolerance relay test 
results and a yearly average of 1.5% defective rate.
    Two failure analysis reports from Tennessee Valley Authority 
(TVA) where TVA identified problematic equipment based on a 
noticeably higher failure of a certain relay type (failure rate of 
2.5%) and voltage transformer type (failure rate of 3.6%).\41\
---------------------------------------------------------------------------

    \41\ NERC Petition, Ex. D (Technical Justification) at 5.

    32. NERC does not provide any further details about the scope and 
specific results of the referenced studies, or a clear explanation of 
how the four percent figure was derived from these studies. Moreover, 
the referenced studies appear to focus on out-of-tolerance rates for 
electro-mechanical protective relays, and NERC provided little to no 
support for application of those expected rates to other types of 
components.\42\
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    \42\ An out-of-tolerance condition indicates that the device is 
not performing within the manufacturer's specified band of tolerance 
or accuracy, but for electro-mechanical protective relays an out-of-
tolerance condition does not imply that the device is not 
operational.
---------------------------------------------------------------------------

    33. While NERC provides some historical support for the use of a 
four percent target figure for countable events in setting an 
appropriate performance-based maintenance interval for certain 
component types (e.g., electro-mechanical protective relays), it is 
also not clear whether the four percent rate is appropriate for 
component types known to have higher levels of reliability 
(particularly microprocessor-based relays, trip coils, and lockout 
devices). Microprocessor-based relays, for example, rarely go out-of-
tolerance due to continuously-running self-diagnostic routines.\43\ 
Thus, these types of relays either operate as installed and set, or, if 
faulty, indicate an alarm condition that may disable the device. A four 
percent failure rate for any given segment of microprocessor-based 
relays could indicate a significant issue with that relay type, 
warranting further investigation and possible system-wide replacement 
rather than continuation of routine maintenance.
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    \43\ Schweitzer Engineering Laboratories, Inc. (SEL) indicates 
in its 2009 white paper ``SEL Recommendations on Periodic 
Maintenance Testing of Protective Relays'' a measurement of hardware 
failures of about 0.33% failures per year for microprocessor-based 
relays.
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    34. In light of NERC's finding in its State of Reliability Report 
that protection system misoperations are the leading initiating cause 
of disturbance events (other than weather and ``unknown''),\44\ we seek 
comment from NERC and other interested parties that provides further 
information and technical support for whether failure rates should be 
established for each component type rather than relying upon a blanket 
rate for all component types. If, in the alternative, a blanket failure 
rate is to be established, we seek comment on whether the use of a 
blanket four percent failure rate for all component types is better-
suited for setting appropriate performance-based maintenance intervals. 
This information could inform a determination whether modification of 
the target rate is appropriate. Alternatively, if the technical 
information to address our concern is not currently available and 
cannot be provided in comments, we propose to direct that NERC study 
and submit a report and recommendations based on the study results 
concerning the expected failure rates for individual component types.
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    \44\ NERC Report: State of Reliability 2013 at 13 (May 2013).
---------------------------------------------------------------------------

C. Correcting Unresolved Maintenance Issues (Requirement R5)

    35. Under Requirement R5, responsible entities must ``demonstrate 
efforts to correct identified Unresolved Maintenance Issues.'' An 
``unresolved maintenance issue'' is defined as a ``deficiency 
identified during a maintenance activity that causes the component to 
not meet the intended performance, cannot be corrected during the 
maintenance interval, and requires follow-up corrective action.'' \45\
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    \45\ NERC Petition at 14.
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    36. According to NERC, the reliability objective of Requirement R5 
is to ``assure that Protection System components are returned to 
working order following the discovery of failure or malfunctions during 
scheduled maintenance,'' \46\ and restoration of a protection system 
component to working order is not otherwise explicitly required by the 
maintenance activities specified in the PRC-005-2 Tables.\47\ NERC 
explains the rationale behind Requirement R5, and the latitude to 
complete correction or restoration of a discovered problem outside of 
the normal maintenance interval, as follows:
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    \46\ Id. 18.
    \47\ NERC Petition, Ex. D (Technical Justification) at 16 (The 
maintenance activities specified in the Tables 1-1 through 1-5, 
Table 2, and Table 3 do not present any requirements related to 
restoration.'')

    The drafting team does not believe entities should be found in 
violation of a maintenance program requirement because of the 
inability to complete a remediation program within the original 
maintenance interval. The drafting team does believe corrective 
actions should be timely but concludes it would be impossible to 
postulate all possible remediation projects and therefore, 
impossible to specify bounding time frames for resolution of all 
possible Unresolved Maintenance Issues or what documentation might 
be sufficient to provide proof that effective corrective action has 
been initiated. Therefore Requirement R5 requires only the entity 
demonstrate efforts to correct the Unresolved Maintenance 
Issues.\48\
---------------------------------------------------------------------------

    \48\ Id. at 17.

    37. We agree that allowing entities additional time beyond the 
maximum maintenance interval period to complete ``restorative'' action 
may be warranted in certain circumstances, including when the 
corrective action involves redesign, ordering additional equipment, or 
timing corrective work to correspond to planned outages.\49\ However, 
we expect that these instances will be limited and, in most 
circumstances, entities should have the capability to replace 
components and make minor repairs within the maximum maintenance 
interval. Our expectation is consistent with the assumptions NERC used 
in developing the maximum maintenance intervals for proposed 
Reliability Standard PRC-005-2, which include an allowance for the 
``grace period'' that transmission owners and generation owners often

[[Page 44481]]

include in their maintenance programs.\50\
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    \49\ The ``corrective actions'' to be taken by a transmission 
owner, generator owner, or distribution provider under PRC-005-2 
include potentially time-consuming tasks such as physical repair and 
replacement of faulty equipment in the protection system. Notably, 
under PRC-001-1, transmission operators and generator operators have 
a separate obligation to take ``corrective action'' when a 
protective relay or equipment failure reduces system reliability. 
``Corrective action'' under PRC-001-1 refers to operator control 
actions such as removing the facility without protection from 
service, generation redispatch, transmission reconfiguration, etc., 
which actions must be completed as soon as possible and within at 
least 30 minutes. See NERC Reliability Standard PRC-001-1; Order No. 
693, FERC Stats. & Regs. ] 31,242 at PP 1439-1440.
    \50\ See NERC Petition, Ex. F (Technical Justification for 
Maintenance Intervals) at 1-2; see also Ex. E (Supplementary 
Reference and FAQ) at 36.
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D. Violation Severity Level for R1 Violation--Station Batteries

    38. Under the second sentence of Part 1.1 of Requirement R1, all 
batteries associated with station DC supply must be included in a time-
based maintenance program, i.e., they are not eligible for a 
performance-based program. NERC explains the rationale behind this 
unique treatment of DC station supply batteries as follows:

    Batteries are the only element of a Protection System that is a 
perishable item with a shelf life. As a perishable item batteries 
require not only a constant float charge to maintain their freshness 
(charge), but periodic inspection to determine if there are problems 
associated with their aging process and testing to see if they are 
maintaining a charge or can still deliver their rated output as 
required.
. . .
    All of the above mentioned factors and several more not 
discussed here are beyond the control of the Functional Entities 
that want to use a performance-based maintenance (PBM) program for 
its Protection Systems. These inherent variances in the aging 
process of a battery cell make establishment of a designated segment 
based on manufacturer and type of battery impossible.\51\
---------------------------------------------------------------------------

    \51\ NERC Petition, Ex. D (Technical Justification) at 8.

    39. NERC has assigned a ``lower'' violation severity level for the 
failure to include applicable station batteries under a time-based 
maintenance program. NERC states as to Requirement R1 that ``[t]here is 
an incremental aspect to the violation and the [violation severity 
levels] follow the guidelines for incremental violations,'' indicating 
that NERC believes the Commission's violation severity guideline for 
binary requirements is not applicable.\52\ We believe this assignment 
is inconsistent with the binary nature of Part 1.1 of Requirement R1, 
since entities either satisfy the obligation to include station 
batteries in a time-based program or fail to meet the requirement in 
its entirety.\53\ Moreover, we believe a low violation severity level 
designation does not properly reflect the number of historical 
violations associated with station battery maintenance.\54\ We 
therefore propose to direct NERC to modify the violation severity level 
for violations of this element of Part 1.1 of Requirement R1 to 
``severe,'' and seek comment on this proposal.
---------------------------------------------------------------------------

    \52\ NERC Petition, Ex. I (Discussion of Assignments of VRFs and 
VSLs) at 10.
    \53\ NERC's assignment appears to be inconsistent with its 
approach to the assignment of violation severity levels for binary 
requirements, as accepted by the Commission in 2011. See North 
American Electric Reliability Corporation, 135 FERC ] 61,166, at P 
13 (2011) (``NERC explains that if there are degrees of 
noncompliance that result in performance that partially meets the 
reliability objective of the requirement such that the performance 
or product has some reliability-related value, then the requirement 
will have multiple violation severity levels that address a range of 
severity utilizing two or more of the four violation severity level 
categories. Requirements that are binary, i.e., `pass/fail,' will 
have only one violation severity level--severe.''). Here, NERC 
indicates that a performance-based maintenance program for station 
batteries is untenable, and provides a single violation severity 
level relating to this portion of Requirement R1, but assigns it a 
``lower'' violation severity level.
    \54\ See, e.g., Docket Nos. NP10-34-000, NP10-160-000, NP11-107-
000, NP11-154-000, NP11-162-000, NP11-164-000, NP11-181-000, NP11-
186-000, NP11-209-000, NP11-215-000, NP11-252-000, NP11-255-000, 
NP12-10-000, NP12-18-000, NP12-26-000, NP12-30-000, NP12-36-000, 
NP12-40-000, NP13-8-000, NP13-33-000 (all of which include 
violations of PRC-005 related to maintenance and testing of station 
batteries or battery banks).
---------------------------------------------------------------------------

III. Information Collection Statement

    40. The following collection of information contained in this 
Notice of Proposed Rulemaking is subject to review by the Office of 
Management and Budget (OMB) under section 3507(d) of the Paperwork 
Reduction Act of 1995.\55\ OMB's regulations require approval of 
certain information collection requirements imposed by agency 
rules.\56\ Upon approval of a collection(s) of information, OMB will 
assign an OMB control number and an expiration date. Respondents 
subject to the filing requirements of a 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.
---------------------------------------------------------------------------

    \55\ 44 U.S.C. 3507(d) (2006).
    \56\ 5 CFR 1320.11 (2012).
---------------------------------------------------------------------------

    41. We solicit comments on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of the burden estimates, ways to enhance the quality, utility, 
and clarity of the information to be collected or retained, and any 
suggested methods for minimizing respondents' burden, including the use 
of automated information techniques. Specifically, the Commission asks 
that any revised burden or cost estimates submitted by commenters be 
supported by sufficient detail to understand how the estimates are 
generated.
    42. The Commission proposes to approve Reliability Standard PRC-
005-2, which will replace PRC-005-1.1b (Transmission and Generation 
Protection System Maintenance and Testing), PRC-008-0 (Underfrequency 
Load Shedding Equipment Maintenance), PRC-011-0 (Undervoltage Load 
Shedding Equipment Maintenance) and PRC-017-0 (Special Protection 
System Maintenance and Testing). The proposed Reliability Standard 
combines the requirements for maintenance and testing of protection 
systems, special protection systems, underfrequency load shedding 
equipment, and undervoltage load shedding equipment into one, 
comprehensive standard. In addition, the proposed Reliability Standard 
sets out minimum maintenance activities and maximum maintenance 
intervals for the various components of these systems, but also allows 
applicable entities to adopt performance-based maintenance intervals in 
certain circumstances.
    43. Proposed Reliability Standard PRC-005-2 includes specific 
requirements about the minimum maintenance activities required for each 
type of applicable component, as well as a maximum time interval during 
which the maintenance must be completed. Because the specific 
requirements were designed to reflect common industry practice, 
entities are not expected to experience a meaningful change in actual 
maintenance and documentation practices. However, applicable entities 
will have to perform a one-time review of their current protection 
system maintenance programs to ensure that they meet the requirements 
of the revised standard PRC-005-2. Accordingly, all expected 
information collection costs are expected to be limited to the first 
year of implementation of the revised standard.
    44. Public Reporting Burden: Our estimate below regarding the 
number of respondents is based on the NERC compliance registry as of 
June 10, 2013. According to the compliance registry, 544 entities are 
registered as distribution providers, 898 entities are registered as 
generation owners, and 346 entities are registered as transmission 
owners within the United States. However, due to significant overlap, 
the total number of these affected entities (i.e., entities registered 
as a distribution provider, a generation owner, a transmission owner, 
or some combination of these three functional entities) is 867 
entities.
    45. Affected entities must perform a one-time review of their 
existing protection system maintenance program to ensure that it 
contains at a minimum the activities listed in Tables 1 through 3 in 
Reliability Standard PRC-005-2 and that the activities are performed

[[Page 44482]]

within the applicable maximum interval listed in Tables 1 through 3. If 
the existing protection system maintenance program does not meet the 
criteria in Reliability Standard PRC-005-2, the entity will have to 
make certain adjustments to the program.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Number of      Number of PSMP  Average  number
                            Requirement                                  affected      reviewed  per    of  hours per     Total burden      Total cost
                                                                         entities          entity           review           hours
                                                                                (1)              (2)              (3)              (4)              (5)
                                                                                                                           (1)*(2)*(3)     (4)*$70 \57\
--------------------------------------------------------------------------------------------------------------------------------------------------------
One time review and adjustment of existing protection system                    867                1                8            6,936         $485,520
 maintenance program...............................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \57\ This figure is the average of the salary plus benefits for 
a manager and an engineer. The figures are taken from the Bureau of 
Labor and Statistics at (http://bls.gov/oes/current/naics3_221000.htm).
---------------------------------------------------------------------------

    Title: FERC-725P, Mandatory Reliability Standards: Reliability 
Standard PRC-005-2.
    Action: Proposed Collection of Information.
    OMB Control No: To be determined.
    Respondents: Business or other for-profit and not-for-profit 
institutions.
    Frequency of Responses: One time.
    Necessity of the Information: The proposed Reliability Standard 
PRC-005-2, if adopted, would implement the Congressional mandate of the 
Energy Policy Act of 2005 to develop mandatory and enforceable 
Reliability Standards to better ensure the reliability of the nation's 
Bulk-Power System. Specifically, the proposal would ensure that 
transmission and generation protection systems affecting the 
reliability of the bulk electric system are maintained and tested.
    46. Internal review: The Commission has reviewed revised 
Reliability Standard PRC-005-2 and made a determination that approval 
of this standard is necessary to implement section 215 of the FPA. The 
Commission has assured itself, by means of its internal review, that 
there is specific, objective support for the burden estimates 
associated with the information requirements.
    47. Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
Office of the Executive Director, 888 First Street, NE., Washington, DC 
20426 [Attention: Ellen Brown, email: [email protected], phone: 
(202) 502-8663, fax: (202) 273-0873].
    48. Comments concerning the information collections proposed in 
this NOPR and the associated burden estimates, should be sent to the 
Commission in this docket and may also be sent to the Office of 
Management and Budget, Office of Information and Regulatory Affairs 
[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 
For security reasons, comments should be sent by email to OMB at the 
following email address: [email protected]. Please reference 
the docket number of this Notice of Proposed Rulemaking (Docket No. 
RM13-7-000) in your submission.

IV. Regulatory Flexibility Act Analysis

    49. The Regulatory Flexibility Act of 1980 (RFA) \58\ generally 
requires a description and analysis of Proposed Rules that will have 
significant economic impact on a substantial number of small entities. 
As discussed above, proposed Reliability Standard PRC-005-2 would apply 
to 867 individual entities (the number of entities registered as a 
distribution provider, a generator owner, a transmission owner, or any 
combination of those three functional entities). Comparison of the NERC 
Compliance Registry with data submitted to the Energy Information 
Administration on Form EIA-861 indicates that, of these entities, 230 
may qualify as small entities.\59\ Of the 230 small entities, 90 are 
registered as a combination of distribution providers, generator owners 
and transmission owners, but it is assumed that each entity would have 
only one comprehensive program to review.
---------------------------------------------------------------------------

    \58\ 5 U.S.C. 601-12.
    \59\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act (SBA), which defines a 
``small business concern'' as a business that is independently owned 
and operated and that is not dominant in its field of operation. See 
15 U.S.C. 632 (2006). According to the Small Business 
Administration, an electric utility is defined as ``small'' if, 
including its affiliates, it is primarily engaged in the generation, 
transmission, and/or distribution of electric energy for sale and 
its total electric output for the preceding fiscal year did not 
exceed 4 million megawatt hours.
---------------------------------------------------------------------------

    50. The Commission estimates that, on average, each of the 230 
small entities affected will have a one-time cost of $560, representing 
a one-time review of the program for each entity, consisting of 8 man-
hours at $70/hour as explained above in the information collection 
statement. We do not consider this cost to be a significant economic 
impact for small entities. Accordingly, the Commission certifies that 
proposed Reliability Standard PRC-005-2 will not have a significant 
economic impact on a substantial number of small entities. The 
Commission seeks comment on this certification.

V. Environmental Analysis

    51. 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.\60\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. Included in the exclusion are rules that are clarifying, 
corrective, or procedural or that do not substantially change the 
effect of the regulations being amended.\61\ The actions proposed 
herein fall within this categorical exclusion in the Commission's 
regulations.
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    \60\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, FERC Stats. & Regs., Regulations 
Preambles 1986-1990 ] 30,783 (1987).
    \61\ 18 CFR 380.4(a)(2)(ii).
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VI. Comment Procedures

    52. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due September 23, 2013. Comments must refer to 
Docket No. RM13-7-000, and must include the commenter's name, the 
organization they represent, if applicable, and address.
    53. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The

[[Page 44483]]

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

VII. Document Availability

    56. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE., Room 
2A, Washington, DC 20426.
    57. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    58. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's 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 direction of the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2013-17730 Filed 7-23-13; 8:45 am]
BILLING CODE 6717-01-P