[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)]
[Proposed Rules]
[Pages 33441-33448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12428]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 40
[Docket No. RM16-7-000]
Disturbance Control Standard--Contingency Reserve for Recovery
From a Balancing Contingency Event Reliability Standard
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission proposes to approve
Reliability Standard BAL-002-2 (Disturbance Control Standard--
Contingency Reserve for Recovery from a Balancing Contingency Event)
submitted by the North American Electric Reliability Corporation
(NERC). Proposed Reliability Standard BAL-002-2 is designed to ensure
that applicable entities balance resources and demand and return their
Area Control Error to defined values following a Reportable Balancing
Contingency Event. In addition, the Commission proposes to direct NERC
to modify Reliability Standard BAL-002-2 to address concerns related to
the possible extension or delay of the periods for Area Control Error
recovery and contingency reserve restoration. The Commission also
proposes to direct NERC to address a reliability gap regarding megawatt
losses above the most severe single contingency.
DATES: Comments are due July 25, 2016.
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.
Mail/Hand Delivery: 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, see the Comment
Procedures Section of this document.
FOR FURTHER INFORMATION CONTACT:
Enakpodia Agbedia (Technical Information), Office of Electric
Reliability, Division of Reliability Standards, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
Telephone: (202) 502-6750, [email protected].
Mark Bennett (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, Telephone: (202) 502-8524, [email protected].
SUPPLEMENTARY INFORMATION: 1. Under section 215 of the Federal Power
Act (FPA),\1\ the Commission proposes to approve proposed Reliability
Standard BAL-002-2 (Disturbance Control Standard--Contingency Reserve
for Recovery from a Balancing Contingency Event). The North American
Electric Reliability Corporation (NERC), the Commission-certified
Electric Reliability Organization (ERO), submitted proposed Reliability
Standard BAL-002-2 for Commission approval. Proposed Reliability
Standard BAL-002-2 applies to balancing authorities and reserve sharing
groups. Proposed Reliability Standard BAL-002-2 is designed to ensure
that these entities are able to recover from system contingencies by
deploying adequate reserves to return their Area Control Error (ACE) to
defined values and by replacing the capacity and energy lost due to
generation or transmission equipment outages.\2\ In addition, the
Commission proposes to approve eight new and revised definitions
proposed by NERC for inclusion in the NERC Glossary of Terms Used in
NERC Reliability Standards (NERC Glossary) and to retire currently-
effective Reliability Standard BAL-002-1 immediately prior to the
effective date of proposed Reliability Standard BAL-002-2. The
Commission also proposes to approve, with certain modifications, the
associated violation risk factors and violation severity levels, and
implementation plan.
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\1\ 16 U.S.C. 824(o). Proposed Reliability Standard BAL-002-2 is
available on the Commission's eLibrary document retrieval system in
Docket No. RM16-7-000 and on the NERC Web site, www.nerc.com.
\2\ ACE is the instantaneous difference between a balancing
authority's Net Actual and Scheduled Interchange, taking into
account the effects of Frequency Bias, correction for meter error,
and Automatic Time Error Correction, if operating in that mode. NERC
Glossary of Terms Used in NERC Reliability Standards at 7 (updated
April 20, 2016).
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2. Pursuant to section 215(d)(5) of the FPA,\3\ the Commission
proposes to direct NERC to modify Reliability Standard BAL-002-2 to
address concerns related to the possible extension or delay of the
periods for ACE recovery and contingency reserve restoration. The
Commission also proposes to direct NERC to address a reliability gap
regarding megawatt losses above the most severe single contingency.
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\3\ 16 U.S.C. 824o(d)(5).
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I. Background
A. Mandatory Reliability Standards and Order No. 693 Directives
3. Section 215 of the FPA requires a Commission-certified Electric
Reliability Organization (ERO) to develop mandatory and enforceable
Reliability Standards that are subject to Commission review and
approval. The Commission may approve, by rule or order, a proposed
Reliability Standard or modification to a Reliability Standard if it
determines that the Standard is just, reasonable, not unduly
discriminatory or preferential and in the public interest.\4\ Once
approved, the Reliability Standards may be enforced by NERC, subject to
Commission oversight, or by the Commission independently.\5\ Pursuant
to section 215 of the FPA, the Commission established a process to
select and certify an ERO,\6\ and subsequently certified NERC.\7\
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\4\ Id. 824o(d)(2).
\5\ Id. 824o(e).
\6\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
\7\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g and compliance, 117 FERC ] 61,126 (2006),
aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).
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4. On March 16, 2007, the Commission issued Order No. 693,
approving 83 of the 107 Reliability Standards filed by NERC, including
Reliability Standard BAL-002-0.\8\ In
[[Page 33442]]
addition, pursuant to section 215(d)(5) of the FPA, the Commission
directed the ERO to develop modifications to Reliability Standard BAL-
002-0 to: (1) Include a requirement that explicitly provides that
demand side management may be used as a resource for contingency
reserves; (2) develop a continent-wide contingency reserve policy; and
(3) refer to the ERO rather than the NERC Operating Committee in
Requirements R4.2 and R6.2.\9\ On January 10, 2011, the Commission
approved Reliability Standard BAL-002-1, which addressed the third
directive described above.\10\
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\8\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order
No. 693-A, 120 FERC ] 61,053 (2007).
\9\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 356.
\10\ North American Electric Reliability Corp., 134 FERC ]
61,015 (2011).
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B. Proposed Reliability Standard BAL-002-2
5. On January 29, 2016, NERC filed a petition seeking approval of
proposed Reliability Standard BAL-002-2; eight new or revised
definitions to be added to the NERC Glossary; and the associated
violation risk factors and violation severity levels, effective date,
and implementation plan.\11\ NERC states that the proposed Reliability
Standard is just, reasonable, not unduly discriminatory or
preferential, and in the public interest because it satisfies the
factors set forth in Order No. 672, which the Commission applies when
reviewing a proposed Reliability Standard.\12\ NERC also contends that
proposed Reliability Standard BAL-002-2 addresses the outstanding
directives from Order No. 693 regarding the use of demand side
management as a resource for contingency reserve and the development of
a continent-wide contingency reserve policy.
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\11\ The eight proposed new and revised definitions for
inclusion in the NERC Glossary are for the following terms:
Balancing Contingency Event, Most Severe Single Contingency,
Reportable Balancing Contingency Event, Contingency Event Recovery
Period, Contingency Reserve Restoration Period, Pre-Reporting
Contingency Event ACE Value, Reserve Sharing Group Reporting ACE,
and Contingency Reserve. NERC Petition at 28-34.
\12\ NERC Petition at 13 and Ex. F (Order No. 672 Criteria).
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6. NERC proposes to consolidate six requirements in currently-
effective Reliability Standard BAL-002-1 into three requirements. NERC
contends that proposed Reliability Standard BAL-002-2 improves upon
existing Reliability Standard BAL-002-1 because ``it clarifies
obligations associated with achieving the objective of BAL-002 by
streamlining and organizing the responsibilities required therein,
enhancing the obligation to maintain reserves, and further defining
events that predicate action under the standard.'' \13\ NERC also
maintains that proposed Reliability Standard BAL-002-2 ``address[es]
and supersede[s]'' the proposed interpretation previously submitted by
NERC (i.e., of Reliability Standard BAL-002-1a) and now pending in
Docket No. RM13-6-000.\14\
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\13\ Id. at 13.
\14\ Id. at 1. On February 12, 2013, NERC filed a proposed
interpretation of Reliability Standard BAL-002-1 that construed the
Reliability Standard so that the 15 minute ACE recovery period would
not apply to events of a magnitude exceeding an entity's most severe
single contingency. In a NOPR issued on May 16, 2013, the Commission
proposed to remand the proposed interpretation on procedural
grounds. Electric Reliability Organization Interpretation of
Specific Requirements of the Disturbance Control Performance
Standard, 143 FERC ] 61,138 (2013). The rulemaking on the proposed
interpretation is pending. In the petition in the immediate
proceeding, NERC states that, upon approval of proposed Reliability
Standard BAL-002-2, NERC will file a notice of withdrawal of the
proposed interpretation. NERC Petition at 1.
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7. Proposed Requirement R1 requires a responsible entity, either a
balancing authority or reserve sharing group, experiencing a Reportable
Balancing Contingency Event to deploy its contingency reserves to
recover its ACE to certain prescribed values within the Contingency
Event Recovery Period of 15 minutes.\15\ However, proposed Reliability
Standard BAL-002-2 relieves responsible entities from strict compliance
with the existing time periods for ACE recovery and contingency reserve
restoration ``to ensure responsible entities retain flexibility to
maintain service to Demand, while managing reliability, and to avoid
duplication with other Reliability Standards.'' \16\
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\15\ Reportable Balancing Contingency Event means: ``Any
Balancing Contingency Event occurring within a one-minute interval
of an initial sudden decline in ACE based on EMS scan rate data that
results in a loss of MW output less than or equal to the Most Severe
Single Contingency, and greater than or equal to the lesser amount
of: (i) 80% of the Most Severe Single Contingency, or (ii) the
amount listed below for the applicable Interconnection. Prior to any
given calendar quarter, the 80% threshold may be reduced by the
responsible entity upon written notification to the Regional
Entity.'' NERC Petition at 30. Contingency Event Recovery Period
means: ``A period that begins at the time that the resource output
begins to decline within the first one-minute interval of a
Reportable Balancing Contingency Event, and extends for fifteen
minutes thereafter.'' Id. at 32.
\16\ Id. at 4.
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8. Specifically, Requirement R1, Part 1.3.1 provides that a
balancing authority or reserve sharing group is not subject to
Requirement R1, Part 1.1 if it: (1) Is experiencing a Reliability
Coordinator declared Energy Emergency Alert Level; (2) is utilizing its
contingency reserve to mitigate an operating emergency in accordance
with its emergency Operating Plan, and (3) has depleted its contingency
reserve to a level below its most severe single contingency (MSSC).
9. In addition, under Requirement R1, Part 1.3.2, a balancing
authority or reserve sharing group is not subject to Requirement R1,
Part 1.1 if the balancing authority or reserve sharing group
experiences: (1) Multiple Contingencies where the combined megawatt
(MW) loss exceeds its most severe single contingency and that are
defined as a single Balancing Contingency Event or (2) multiple
Balancing Contingency Events within the sum of the time periods defined
by the Contingency Event Recovery Period and Contingency Reserve
Restoration Period whose combined magnitude exceeds the Responsible
Entity's most severe single contingency.
10. Proposed Requirement R2 provides that each responsible entity:
shall develop, review and maintain annually, and implement an
Operating Process as part of its Operating Plan to determine its
Most Severe Single Contingency and to make preparations to have
Contingency Reserve equal to, or greater than the Responsible
Entity's Most Severe Single Contingency available for maintaining
system reliability.
NERC explains that Requirement R2 requires responsible entities to
demonstrate that their process for calculating their most severe single
contingency ``surveys all contingencies, including single points of
failure, to identify the event that would cause the greatest loss of
resource output used by the [reserve sharing group or balancing
authority] to meet Firm Demand.'' \17\ NERC further states that
Requirement R2 supports Requirements R1 and R3 in proposed Reliability
Standard BAL-002-2 ``as these requirements rely on proper calculation
of [most severe single contingency].'' \18\
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\17\ Id. at 25.
\18\ Id. NERC provides examples of how responsible entities may
calculate the most severe single contingency in the petition. See
NERC Petition, Ex. B (Calculating Most Severe Single Contingency).
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11. Proposed Requirement R3 provides that ``each Responsible
Entity, following a Reportable Balancing Contingency Event, shall
restore its Contingency Reserve to at least its Most Severe Single
Contingency, before the end of the Contingency Reserve Restoration
Period [90 minutes], but any Balancing Contingency Event that occurs
before the end of a Contingency Reserve Restoration Period resets the
beginning of the Contingency Event Recovery Period.''
12. NERC explains that the revised language in the consolidated
requirements in proposed Reliability
[[Page 33443]]
Standard BAL-002-2 will improve efficiency and clarity by removing
``unnecessary entities from compliance to capture only those entities
that are vital for reliability.'' \19\ NERC states that the proposed
new definitions for Balancing Contingency Event and Reportable
Balancing Contingency Event more clearly identify the types of events
that cause frequency deviations necessitating action under the proposed
Reliability Standard and provide additional detail regarding the types
of resources that may be identified as contingency reserves.
Furthermore, NERC states that proposed Reliability Standard BAL-002-2
``ensures objectivity of the reserve measurement process by
guaranteeing a Commission-sanctioned continent-wide reserve policy,''
and therefore satisfies an outstanding Order No. 693 directive for
uniform elements, definitions and requirements for a continent-wide
contingency reserve policy.\20\ Finally, NERC states that the proposed
revised definition of Contingency Reserves ``improves the existing
definition by addressing a Commission directive in Order No. 693 to
allow demand side management to be used as a resource for contingency
reserve when necessary.'' \21\
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\19\ NERC Petition at 14.
\20\ Id.
\21\ Id. at 33.
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13. NERC submitted proposed violation risk factors and violation
severity levels for each requirement of the proposed Reliability
Standard and an implementation plan and effective dates. NERC states
that these proposals were developed and reviewed for consistency with
NERC and Commission guidelines. NERC proposes an effective date for the
proposed Reliability Standard that is the first day of the first
calendar quarter that is six months after the date of Commission
approval. NERC explains that the proposed implementation date will
allow entities to make necessary modifications to existing software
programs to ensure compliance.\22\
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\22\ Id. Ex. D (Implementation Plan) at 3.
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14. On February 12, 2016, NERC submitted a supplemental filing to
clarify a statement in the petition that proposed Reliability Standard
BAL-002-2 would operate in conjunction with Reliability Standard TOP-
007-0 to control system frequency by addressing transmission line
loading in the event of a transmission overload. NERC explains that,
while Reliability Standard TOP-007-0 will be retired on April 1, 2017,
``the obligations related to [transmission line loading] under TOP-007-
0 will be covered by Commission-approved TOP-001-3, EOP-003-2, IRO-009-
2, and IRO-008-2 . . . by requiring relevant functional entities to
communicate [Interconnection Reliability Operating Limits (IROL)] and
[System Operating Limits (SOL)] exceedances so that the [reliability
coordinator] can direct appropriate corrective action to mitigate or
prevent those events.'' \23\
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\23\ NERC February 12, 2016 Supplemental Filing at 2-3.
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15. On March 31, 2016, NERC submitted a second supplemental filing
to ``further clarify the extent to which BAL-002-2 interacts with other
Commission-approved Reliability Standards to promote Bulk Power System
reliability . . . [and support] the overarching policy objective
reflected in the stated purpose of Reliability Standard BAL-002-2.''
\24\ In its filing, NERC expands upon the explanation in the petition
regarding how an ``integrated'' and ``coordinated suite of Reliability
Standards'' (BAL-001-2, BAL-003-1, TOP-007-0, EOP-002-3, EOP-011-1,
IRO-008-2, and IRO-009-2) will apply to events causing MW losses above
a responsible entity's most severe single contingency, and how those
other Reliability Standards are better designed to manage the greater
risks created by such events.\25\
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\24\ NERC March 31, 2016 Supplemental Filing at 1, 5.
\25\ Id. at 2-5.
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II. Discussion
16. Pursuant to FPA section 215(d)(2), we propose to approve
Reliability Standard BAL-002-2 as just, reasonable, not unduly
discriminatory or preferential, and in the public interest. We also
propose to approve NERC's eight new and revised proposed definitions
and, with certain proposed modifications, the proposed violation risk
factor and violation severity level assignments. In addition, we
propose to approve NERC's implementation plan, in which NERC proposes
an effective date of the first day of the first calendar quarter, six
months after the date of Commission approval, and the retirement of
currently-effective BAL-002-1 immediately before that date.\26\
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\26\ NERC Petition, Ex. D (Implementation Plan) at 3.
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17. The purpose of proposed Reliability Standard BAL-002-2 is to
ensure that balancing authorities and reserve sharing groups balance
resources and demand and return their ACE to defined values following a
Reportable Balancing Contingency Event. We agree with NERC that it is
essential for grid reliability for responsible entities to balance
resources and demand, and restore system frequency, to recover from a
system event, and that they maintain reserves necessary to replace
capacity and energy lost due to generation or transmission outages.
Proposed Reliability Standard BAL-002-2 improves upon currently-
effective Reliability Standard BAL-002-1 by consolidating the number of
requirements to streamline and clarify the obligations related to
achieving these goals.
18. We believe that proposed BAL-002-2 satisfies the Order No. 693
directive that NERC develop a continent-wide contingency reserve
policy.\27\ Further, we agree with NERC that, in addition to the
proposed Reliability Standard, the development of a continent-wide
contingency reserve policy includes revisions to Reliability Standard
BAL-001-1a (superseded by BAL-001-1) (Real Power Balancing Control
Performance).\28\ When approving Reliability Standard BAL-002-0 in
Order No. 693, the Commission directed the ERO to develop modifications
to Reliability Standard BAL-002-0 to include a requirement that
explicitly provides that demand side management may be used as a
resource for contingency reserves.\29\ NERC states that the ``proposed
definition of Contingency Reserve improves the existing definition by
addressing a Commission directive in Order No. 693 to allow demand side
management to be used as a resource for contingency reserve when
necessary.'' \30\ Further, NERC asserts that the drafting team elected
to expand the definition of contingency reserve to explicitly include
capacity associated with demand side management.\31\ However, the
proposed definition does not include the NERC-defined term Demand-Side
Management.\32\ The Commission seeks comment on whether the proposed
definition of contingency reserve should include the NERC-defined term
Demand-Side Management for better clarity.
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\27\ Order No. 693, FERC Stats. & Regs ] 31,242 at PP 340, 341
and 356.
\28\ NERC Petition at 9.
\29\ Order No. 693, FERC Stats. & Regs. ] 31,242 at PP 330, 335
and 356.
\30\ NERC Petition at 33.
\31\ NERC Petition, Ex. E (BAL-002-2 Background Document) at 6.
\32\ The NERC Glossary currently defines Demand-Side Management
as ``the term for all activities or programs undertaken by Load
Serving Entity or its customers to influence the amount or timing of
electricity they use.'' NERC Glossary of Terms Used in NERC
Reliability Standards at 35 (updated April 20, 2016). As of July 1,
2016, the new definition of Demand-Side Management will be: ``All
activities or programs undertaken by any applicable entity to
achieve a reduction in Demand.'' Id.
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19. In addition to proposing to approve Reliability Standard BAL-
002-
[[Page 33444]]
2, the Commission, pursuant to section 215(d)(5) of the FPA, proposes
to direct NERC to develop modifications regarding the 15-minute ACE
recovery period in Requirement R1 and the 90-minute Contingency Reserve
Restoration Period in Requirement R3 under certain circumstances. We
also propose to direct NERC to develop a new or modified Reliability
Standard that addresses the reliability impact of megawatt losses above
a responsible entity's most severe single contingency, because
``recovery of ACE within a specified time period and restoration of
Contingency Reserves due to unlikely events above a responsible
entity's most severe single contingency is not within the scope of
proposed Reliability Standard BAL-002-2.'' \33\
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\33\ NERC Petition at 14-15.
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20. The Commission seeks comment on the following issues discussed
below: (1) The 15-minute ACE recovery period; (2) the 90-minute
Contingency Reserve Restoration Period; (3) the exclusion of losses
above the most severe single contingency in the proposed definition of
Reportable Balancing Contingency Event; and (4) NERC's proposal to
reduce from High to Medium the violation risk factor for proposed
Requirements R1 and R2.
A. The 15-Minute ACE Recovery Period
21. Proposed Reliability Standard BAL-002-2, Requirement R1
obligates a balancing authority or reserve sharing group that
experience a Reportable Balancing Contingency Event to return its
Reporting ACE to pre-defined values within the 15-minute Contingency
Event Recovery Period. Proposed Requirement R1, Part 1.3.1 provides an
``exemption'' from the 15-minute ACE recovery period based upon the
occurrence of a reliability coordinator-declared Energy Emergency Alert
level and the depletion of the entity's contingency reserves to below
its most severe single contingency to mitigate the operating emergency.
NERC states that this exemption ``eliminates the existing conflict with
EOP-011-1, as it removes undefined auditor discretion when assessing
compliance and allows the responsible entity flexibility to maintain
service to load while managing reliability.'' \34\ Further, NERC
explains that this exemption does not eliminate an entity's obligation
to respond to a Reportable Balancing Contingency Event, but rather it
will ``simply allow more time to return the Reporting ACE to the
defined limits than would otherwise be allowed.'' \35\ The proposed
Reliability Standard does not expressly provide a definitive and
enforceable deadline for ACE recovery under these circumstances.
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\34\ NERC Petition at 22.
\35\ Id. at 24.
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22. In proposing to approve Reliability Standard BAL-002-2, we
agree that NERC's proposal clarifies the obligations imposed on
responsible entities and is therefore an improvement on currently-
effective Reliability Standard BAL-002-1. Furthermore, Proposed
Reliability Standard BAL-002-2 improves on the currently effective BAL-
002-1 by obligating the responsible entities to accurately calculate
most severe single contingency according to system models maintained by
the balancing authority and reserve sharing groups. NERC's explanation
for the relief from the 15-minute ACE recovery period raises concerns,
however, because it is unclear how or when an entity will prepare for a
second contingency during the indeterminate extension of the 15-minute
ACE recovery period that proposed Requirement R1, Part 1.3 permits. A
balancing authority that is operating out-of-balance for an extended
period of time is ``leaning on the system'' by relying on external
resources to meet its obligations and could affect other entities
within an Interconnection, particularly if another entity is reacting
to a grid event while unaware that the first entity has not restored
its ACE. Therefore, while an extension of the 15-minute ACE recovery
period may be appropriate under certain emergency conditions, we
believe that the reliability coordinator should make that decision
rather than an individual balancing authority or reserve sharing group.
With a wide-area view, the reliability coordinator has the authority,
with more or better information and objectivity, to make the decision
whether to extend the ACE recovery period after an entity has met the
criteria described in Requirement R1, Part 1.3.1. In other words, a
reliability coordinator's extension of the 15-minute ACE recovery
period may be appropriate based on all of the circumstances, if an
entity has met the criteria in Requirement R1, Part 1.3.1.
23. NERC suggests that reliability coordinator approval of an
extension of the 15-minute ACE recovery period is redundant because the
reliability coordinator is involved in the creation of balancing
authority Operating Plans pursuant to Reliability Standard EOP-011-1,
which already requires a balancing authority to communicate with its
reliability coordinator.\36\ However, there is currently no express
requirement that the reliability coordinator must make or approve the
decision to extend the 15-minute ACE recovery period. Further, while
Reliability Standard EOP-011-1, Requirement R3, requires the
reliability coordinator to review balancing authority Operating Plans
and notify a balancing authority of any ``reliability risks'' the
reliability coordinator may identify with a time frame for the
resubmittal of revised Operating Plans, that Reliability Standard does
not require reliability coordinator approval of Operating Plans.
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\36\ Id. at 23.
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24. Accordingly, the Commission proposes to direct NERC to develop
modifications to Reliability Standard BAL-002-2 that would require
Reporting ACE recovery within the 15-minute Contingency Event Recovery
Period unless the relevant reliability coordinator expressly authorizes
an extension of the 15-minute ACE recovery period after the balancing
authority has met the criteria described in Requirement R1, Part 1.3.1.
Additionally, the Commission's proposal would include modifying the
standard to identify the reliability coordinator as an Applicable
Entity. The Commission seeks comment on this proposal.
B. The 90-Minute Contingency Reserve Restoration Period
25. Proposed Reliability Standard BAL-002-2, Requirement R3
requires a balancing authority or reserve sharing group to restore its
contingency reserves to at least its most severe single contingency
before the end of the Contingency Reserve Restoration Period, which
NERC proposes to define as ``a period not exceeding 90 minutes
following the end of the Contingency Event Recovery Period.'' \37\
Requirement R3 further states that ``any Balancing Contingency Event
that occurs before the end of a Contingency Reserve Restoration Period
resets the beginning of the Contingency Event Recovery Period.'' \38\
Under this approach, a
[[Page 33445]]
second contingency ``resets'' this 90-minute restoration window,
regardless of the amount of the megawatt loss resulting from that
event.
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\37\ NERC Petition, Ex. D (Implementation Plan). The 90-minute
contingency reserve restoration period begins after the end of the
15-minute ACE restoration period under Requirement R1. Accordingly,
responsible entities must restore contingency reserves within 105
minutes of the occurrence of a Reportable Balancing Contingency
Event to comply with Requirement R3.
\38\ Balancing Contingency Event means: ``Any single event
described in Subsections (A), (B), or (C) below, or any series of
such otherwise single events, with each separated from the next by
one minute or less.
A. Sudden loss of generation:
a. Due to
i. unit tripping,
ii. loss of generator Facility resulting in isolation of the
generator from the Bulk Electric System or from the responsible
entity's System, or
iii. sudden unplanned outage of transmission Facility;
b. And, that causes an unexpected change to the responsible
entity's ACE;
B. Sudden loss of an import, due to unplanned outage of
transmission equipment that causes an unexpected imbalance between
generation and Demand on the Interconnection.
C. Sudden restoration of a Demand that was used as a resource
that causes an unexpected change to the responsible entity's ACE.
NERC Petition Ex. D.''
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26. NERC asserts that the 90-minute contingency restoration period
``is just and reasonable by providing adequate opportunity for a
responsible entity to recover from an event while also maintaining
reliability and recovery of reserves in a timely manner.'' \39\
Further, NERC states that the ``reset'' for a Balancing Contingency
Event provides ``time and flexibility for an entity's ongoing
recovery,'' and is intended to accommodate the ``heightened
sensitivities applicable during such a Contingency Reserve Restoration
Period.'' \40\ NERC explains that the `` `reset' avoids punishing a
responsible entity for an unexpected event, occurring within [sic]
Contingency Restoration Period, which may make it infeasible to fully
restore the requisite level of Contingency Reserves as intended.'' \41\
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\39\ NERC Petition at 26.
\40\ Id. at 27.
\41\ Id.
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27. We agree with NERC that a ``reset'' of the Contingency Reserve
Restoration Period may be appropriate in some instances. For example, a
Balancing Contingency Event involving substantial megawatt loss that
occurs during the recovery period following a Reportable Balancing
Contingency Event may make it infeasible to fully restore the
contingency reserves as originally planned. Proposed Reliability
Standard BAL-002-2 Requirement R3 improves on the currently-effective
BAL-002-1 by requiring the balancing authority or reserve sharing group
to restore its contingency reserves to ``at least its MSSC'' following
a reportable balancing contingency event. However, Requirement R3
potentially allows unlimited ``resets'' of the 90-minute restoration
period, even for insignificant megawatt losses from a Balancing
Contingency Event that occur after the initial Reportable Balancing
Contingency Event.
28. NERC explains that responsible entities need relief from the
loss of any additional megawatts above those resulting from a
Reportable Balancing Contingency Event because ``this compounding loss
inevitably increases the total recovery necessary to replenish the
reserves while also meeting current demand.'' \42\ However, while
megawatt losses occurring during the Contingency Reserve Restoration
Period that qualify as a Reportable Balancing Contingency Event could
reasonably justify an extension of the 90-minute Contingency Reserve
Restoration Period, there is less need for a Balancing Contingency
Event, which could involve an insignificant loss of megawatts, to
result automatically in a resetting of the time period. Under such
circumstances, balancing authorities and reserve sharing groups should
be required to restore the initial megawatt losses associated with the
Reportable Balancing Contingency Event within the 90-minute restoration
period, but could be allowed to ``credit'' megawatt losses from the
Balancing Contingency Event, and have an additional 90 minutes to
restore those losses.\43\ This would prevent the possibility of
multiple resets that could result in entities not maintaining
sufficient contingency reserves for long periods of time.
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\42\ Id.
\43\ For example, two generation units are lost, one of 900 MW
(a Reportable Balancing Contingency Event) and another of 200 MW (a
Balancing Contingency Event) 16 minutes later. Because of this
second 200 MW loss, the balancing authority would be required to
restore its contingency reserves to 700 MW (900 MW less the 200 MW
Balancing Contingency Event) within the 90-minute contingency
restoration period.
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29. The Commission proposes to direct that NERC develop
modifications to Reliability Standard BAL-002-2 to eliminate the
potential for unlimited resets and ensure that contingency reserves
must be restored within the 90-minute Contingency Reserve Restoration
Period. One possible approach would be to give a balancing authority or
reserve sharing group ``credits'' for megawatt losses resulting from
Balancing Contingency Events during the 90-minute Contingency Reserve
Restoration Period and allow an additional 90 minutes to restore
reserves associated with those megawatt losses, if necessary. The
Commission seeks comment on this proposal.
C. Exclusion of Megawatt Losses Above the Most Severe Single
Contingency
30. NERC proposes to define Reportable Balancing Contingency Event
as:
[a]ny Balancing Contingency Event occurring within a one-minute
interval of an initial sudden decline in ACE based on EMS scan rate
data that results in a loss of MW output less than or equal to the
[most severe single contingency], and greater than or equal to the
lesser amount of: (i) 80% of the [most severe single contingency] .
. . Prior to any given calendar quarter, the 80% threshold may be
reduced by the responsible entity upon written notification to the
Regional Entity.
NERC states that this definition ``provides the scope of
obligations required under Requirements R1 and R3 of BAL-002-2 [and]
impose obligations on responsible entities to take certain recovery
actions upon the occurrence of a Reportable Balancing Contingency Event
to sustain Reporting ACE and adequate levels of Contingency Reserves.''
\44\
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\44\ NERC Petition at 30-31 and Ex. D (Implementation Plan).
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31. NERC's proposed definition would limit balancing authority and
reserve sharing group responsibility to megawatt losses between 80
percent and 100 percent of their most severe single contingency that
occur within a one minute interval. As NERC explains, if a balancing
authority has a most severe single contingency of 1000 megawatts and a
generation unit with a capacity of 850 megawatts is lost, this system
event is within the scope of proposed Reliability Standard BAL-002-2
because the loss is greater than 80 percent of, but does not exceed,
the most severe single contingency. NERC contrasts that situation with
the example of a balancing authority's loss of two generation units,
one of 750 megawatts and another of 300 megawatts within 60 seconds of
one another. The total generation loss of 1050 megawatts in this
example is exempt from proposed Reliability Standard BAL-002-2 because
the total loss resulting from the two events, which are aggregated
because both events occurred within one minute of each other, is
greater than the balancing authority's most severe single contingency
of 1000 megawatts.\45\
---------------------------------------------------------------------------
\45\ See NERC Petition, Ex. A (Examples of Reportable Balancing
Contingency Events).
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32. NERC explains that events causing megawatt losses above a
balancing authority's or reserve sharing group's most severe single
contingency are not within the scope of proposed Reliability Standard
BAL-002-2, and therefore those megawatt losses are not subject to the
15-minute ACE recovery period or the 90-minute Contingency Reserve
Restoration Period.\46\ Instead, balancing
[[Page 33446]]
authorities and reserve sharing groups must respond to these large
events under the suite of related Reliability Standards mentioned
above: BAL-001-2, BAL-3-1, TOP-007-0, EOP-002-3, EOP-011-1, IRO-008-2,
and IRO-009-2. According to NERC, ``this integrated and coordinated
approach would ensure reliability while also avoiding any gap in
coverage and providing means to address complex issues arising during
events that exceed MSSC.'' \47\
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\46\ NERC states that between 2006 and 2011, ninety disturbance
events exceeded the most severe single contingency, with no year
experiencing more than 29 events. According to NERC, ``evaluation of
this data illustrates that events greater than MSSC occur very
infrequently.'' NERC March 31, 2016 Supplemental Filing at 3, n.5,
citing the 2012 State of Reliability (May 2012) accessible online at
http://www.nerc.com/files/2012_sor.pdf.
\47\ NERC Petition at 15.
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33. NERC's proposed limitation on the scope of proposed Reliability
Standard BAL-002-2 raises questions, particularly NERC's assumption
that megawatt exceedances above the most severe single contingency,
however small, often or always will result in ``complex issues.'' We
recognize that in extreme megawatt loss scenarios triggering energy
emergencies, Reliability Standard EOP-011-1 and the broader suite of
Reliability Standards NERC mentions could provide appropriate
reliability protection when proposed Reliability Standard BAL-002-2
would not apply. However, a reliability gap may exist for megawatt
exceedances of the most severe single contingency that do not cause
energy emergencies or otherwise clearly implicate the other Reliability
Standards cited by NERC. Our concern is that unless this gap is
addressed, the potential for balancing authorities to lean on the
Interconnection by relying on external resources for an indeterminate
period exists.
34. The Commission seeks comment from NERC and other entities on
how to address that gap and whether to impose a reasonable obligation
for balancing authorities and reserve sharing groups to address
scenarios involving megawatt losses above the most severe single
contingency that do not cause energy emergencies. Based on the
comments, the Commission may direct that NERC develop a new or modified
Reliability Standard to address that reliability gap.
D. NERC's Proposed Violation Risk Factor for Requirements R1 and R2
35. NERC proposes a ``medium'' violation risk factor for each
requirement of proposed Reliability Standard BAL-002-2. Currently-
effective Reliability Standard BAL-002-1 assigns a ``high'' violation
risk factor for its Requirements R3 and R3.1, which NERC explains are
analogous to proposed Requirements R1 and R2 in the proposed
Reliability Standard.\48\ We do not believe that NERC adequately
justifies lowering the assignment of the violation risk factor for
proposed Requirements R1 and R2 from high to medium. Proposed
Requirement R1 requires a balancing authority or reserve sharing group
to deploy contingency reserves in response to all Reportable Balancing
Contingency Events as the means for recovering Reporting ACE. Proposed
Requirement R2 requires a balancing authority or reserve sharing group
to develop, review and maintain a process within its Operating Plans
for determining its most severe single contingency and to prepare to
have contingency reserves equal to, or greater than, its most severe
single contingency.
---------------------------------------------------------------------------
\48\ NERC Petition, Ex. I (Mapping Document for BAL-002-2).
---------------------------------------------------------------------------
36. NERC provides insufficient support for the proposed violation
risk factor for proposed Requirements R1 and R2. In justifying the
assignment of a medium violation risk factor. NERC asserts, without
explanation, that a medium violation risk factor is ``consistent with
other reliability standards (i.e., BAL-001-2, BAL-003-1).'' \49\ NERC
also contends, without explanation, that proposed Requirement R3 is
similar in concept to the current enforceable BAL-001-0.1a standard
Requirements R1 and R2, which have an approved Medium [violation risk
factor], and approved reliability standards BAL-001-1 and BAL-003-
1.\50\ The conclusory statements in NERC's petition regarding the
alleged similarities between proposed Requirements R1 and R2 and other
Reliability Standards does not adequately explain the alleged bases for
reducing the violation risk factor for Requirements R1 and R2 from the
analogous Requirement R3 in the currently-effective Reliability
Standard.
---------------------------------------------------------------------------
\49\ NERC Petition, Ex. G (Analysis of Violation Risk Factors
and Violation Severity Levels) at 4.
\50\ Id.
---------------------------------------------------------------------------
37. NERC further states that while a violation of proposed
Requirements R1 or R2 could directly affect the electrical state or
capability of the bulk electric system, it ``would unlikely result in
the Bulk Electric System instability, separation or cascading failures
since this requirement is an after-the-fact calculation, not performed
in Real-time.'' \51\ We believe this to be an inadequate justification
for lowering the violation risk factors for proposed Requirements R1
and R2. While a calculation of how far out of compliance may occur
after the fact, the issue is the risk resulting from a failure to meet
the performance set forth in the requirement in real time. With regard
to proposed Requirement R2 requiring responsible entities to have a
process for determining their most severe single contingency, NERC
itself states that ``proper calculation of MSSC is critical for
reliability.'' \52\
---------------------------------------------------------------------------
\51\ Id. Ex. G (Analysis of Violation Risk Factors and Violation
Severity Levels) at 3-4.
\52\ NERC March 31, 2016 Supplemental Filing at 3.
---------------------------------------------------------------------------
38. Accordingly, we propose to direct that NERC assign a high
violation risk factor to proposed Reliability Standard BAL-002-2,
Requirements R1 and R2. We seek comment on this proposal.
III. Information Collection Statement
39. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting and recordkeeping (collections of
information) imposed by an agency.\53\ Upon approval of a collection(s)
of information, OMB will assign an OMB control number and expiration
date. Respondents subject to the filing requirements of this rule will
not be penalized for failing to respond to these collections of
information unless the collections of information display a valid OMB
control number.
---------------------------------------------------------------------------
\53\ 5 CFR 1320.11.
---------------------------------------------------------------------------
40. The Commission is submitting these reporting and recordkeeping
requirements to OMB for its review and approval under section 3507(d)
of the Paper Reduction Act of 1995, 44 U.S.C. 3507(d) (2012). Comments
are solicited on the Commission's need for this information, whether
the information will have practical utility, the accuracy of the
provided burden estimate, 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.
41. This Notice of Proposed Rulemaking proposes to approve
revisions to Reliability Standard BAL-002-2. NERC states in its
petition that the proposed Reliability Standard applies to balancing
authorities and reserve sharing groups, and is designed to ensure that
these entities are able to recover from system contingencies by
deploying adequate reserves to return their ACE to defined values and
by replacing the capacity and energy lost due to generation or
transmission equipment outages. The Commission also proposes to approve
NERC's seven proposed new definitions and one proposed revised
definition, and the retirement of currently-effective Reliability
Standard BAL-002-1
[[Page 33447]]
immediately prior to the effective date of BAL-002-1.
42. Public Reporting Burden: Our estimate below regarding the
number of respondents is based on the NERC Compliance Registry as of
April 15, 2016. According to the NERC Compliance Registry, there are 70
balancing authorities in the Eastern Interconnection, 34 balancing
authorities in the Western Interconnection and one balancing authority
in the Electric Reliability Council of Texas (ERCOT). The Commission
bases individual burden estimates on the time needed for balancing
authorities and reserve sharing groups to maintain annually, the
operating process and operating plan that are required in the
Reliability Standard. These burden estimates are consistent with
estimates for similar tasks in other Commission-approved Reliability
Standards. The following estimates relate to the requirements for this
Notice of Proposed Rulemaking in Docket No. RM16-7-000.
RM16-7-000 NOPR
[BAL-002-2: Disturbance Control Standard--Contingency Reserve for Recovery from a Balancing Contingency Event] \54\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average burden Total annual
Number of Annual number Total number hours & cost burden hours & Cost per
respondents of responses of responses per response total annual respondent ($)
per respondent \55\ cost
(1) (2) (1) * (2) = (4) (3) * (4) = (5) / (1)
(3) (5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
BA/RSG: \56\ Develop and Maintain annually, Operating 105 1 105 8 840 $773
Process and Operating Plans............................ $773 $81,119
BA/RSG: Record Retention \57\........................... 105 1 105 4 420 112
$112 $11,760
-----------------------------------------------------------------------------------------------
Total............................................... .............. .............. 210 .............. 1.260 885
$92,879
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title: FERC-725R, Mandatory Reliability Standard BAL-002-2.
---------------------------------------------------------------------------
\54\ Proposed Reliability Standard BAL-002-2 applies to
balancing authorities and reserve sharing groups. However, the
burden associated with the balancing authorities complying with
Requirements R1 and R3 is not included within this table because the
Commission accounted for it under Commission-approved Reliability
Standard BAL-002-1.
\55\ The estimated hourly cost (salary plus benefits) of $96.57
is an average based on Bureau of Labor Statistics (BLS) information
(http://www.bls.gov/oes/current/naics2_22.htm) for an electrical
engineer ($64.20/hour) and a lawyer ($128.94).
\56\ BA = Balancing Authority; RSG = Reserve Sharing Group.
\57\ $28/hour, based on a Commission staff study of record
retention burden cost.
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Action: Proposed Collection of Information.
OMB Control No.: 1902-0268.
Respondents: Businesses or other for-profit institutions; not-for-
profit institutions.
Frequency of Responses: On Occasion.
Necessity of the Information: This proposed rule proposes to
approve Reliability Standard BAL-002-2, which is designed to ensure
that a responsible entity, either a balancing authority or reserve
sharing group, is able to recover from system contingencies by
deploying adequate reserves to return their ACE to defined values and
replacing the capacity and energy lost due to generation or
transmission equipment outages. Proposed Reliability Standard BAL-002-
2, Requirement R1 requires a responsible entity, either a balancing
authority or reserve sharing group, experiencing a Reportable Balancing
Contingency Event to deploy its contingency reserves to recover its ACE
to certain prescribed values within the Contingency Event Recovery
Period of 15 minutes. Proposed Requirement R2 requires a balancing
authority or reserve sharing group to develop, review and maintain a
process within its Operating Plans for determining its most severe
single contingency and prepare to have contingency reserves equal to,
or greater than, its most severe single contingency. Proposed
Requirement R3 provides that, following a Reportable Balancing
Contingency Event, the responsible entity shall restore its Contingency
Reserve to at least its most severe single contingency, before the end
of the Contingency Reserve Restoration Period of 90 minutes.
Internal Review: The Commission reviewed the proposed Reliability
Standard and made a determination that its action is necessary to
implement section 215 of the FPA. These requirements, if accepted,
should conform to the Commission's expectation for generation and
demand balance throughout the Eastern and Western Interconnections as
well as within the ERCOT Region.
43. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426 [Attention:
Ellen Brown, Office of the Executive Director, email:
[email protected], phone: (202) 502-8663, fax: (202) 273-0873].
44. For submitting comments concerning the collection(s) of
information and the associated burden estimate(s), please send your
comments to the Commission and to the Office of Management and Budget,
Office of Information and Regulatory Affairs, Washington, DC 20503
[Attention: Desk Officer for the Federal Energy Regulatory Commission,
phone: (202) 395-4638, fax: (202) 395-7285]. For security reasons,
comments to OMB should be submitted by email to:
[email protected]. Comments submitted to OMB should include
FERC-725R and Docket Number RM16- 7-000.
IV. Environmental Analysis
45. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\58\ 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
[[Page 33448]]
regulations being amended.\59\ The actions proposed here fall within
this categorical exclusion in the Commission's regulations.
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\58\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
\59\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------
V. Regulatory Flexibility Act
46. The Regulatory Flexibility Act of 1980 (RFA) \60\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
As shown in the information collection section, the proposed
Reliability Standard applies to 105 entities. Comparison of the
applicable entities with the Commission's small business data indicates
that approximately 23 \61\ are small business entities.\62\ Of these,
the Commission estimates that approximately five percent, or one of
these 23 small entities, will be affected by the new requirements of
the proposed Reliability Standard.
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\60\ 5 U.S.C. 601-612.
\61\ 21.73 percent of the total number of affected entities.
\62\ The Small Business Administration sets the threshold for
what constitutes a small business. Public utilities may fall under
one of several different categories, each with a size threshold
based on the company's number of employees, including affiliates,
the parent company, and subsidiaries. For the analysis in this Final
Rule, we are using a 500 employee threshold for each affected
entity. Each entity is classified as Electric Bulk Power
Transmission and Control (NAICS code 221121).
---------------------------------------------------------------------------
47. The Commission estimates that the small entities affected by
proposed Reliability Standard BAL-002-2 will incur an annual compliance
cost of up to $20,355 (i.e., the cost of developing, and maintaining
annually operating process and operating plans), resulting in a cost of
approximately $885 per balancing authority and/or reserve sharing
group. These costs represent an estimate of the costs a small entity
could incur if the entity is identified as an applicable entity. The
Commission does not consider the estimated cost per small entity to
have a significant economic impact on a substantial number of small
entities. Accordingly, the Commission certifies that this NOPR will not
have a significant economic impact on a substantial number of small
entities.
VI. Comment Procedures
48. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due July 25, 2016. Comments must refer to
Docket No. RM16-7-000, and must include the commenter's name, the
organization they represent, if applicable, and their address in their
comments.
49. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents 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.
50. 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.
51. 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
52. 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.
53. 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 of this document, excluding the last three digits, in
the docket number field.
54. 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.
Issued: May 19, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-12428 Filed 5-25-16; 8:45 am]
BILLING CODE 6717-01-P