81_FR_33543 81 FR 33441 - Disturbance Control Standard-Contingency Reserve for Recovery From a Balancing Contingency Event Reliability Standard

81 FR 33441 - Disturbance Control Standard-Contingency Reserve for Recovery From a Balancing Contingency Event Reliability Standard

DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission

Federal Register Volume 81, Issue 102 (May 26, 2016)

Page Range33441-33448
FR Document2016-12428

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.

Federal Register, Volume 81 Issue 102 (Thursday, May 26, 2016)
[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)]
[Proposed Rules]
[Pages 33441-33448]
From the Federal Register Online  [www.thefederalregister.org]
[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, Enakpodia.Agbedia@ferc.gov.
    Mark Bennett (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, Telephone: (202) 502-8524, Mark.Bennett@ferc.gov.

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\
---------------------------------------------------------------------------

    \39\ NERC Petition at 26.
    \40\ Id. at 27.
    \41\ Id.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \44\ NERC Petition at 30-31 and Ex. D (Implementation Plan).
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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: 
DataClearance@ferc.gov, 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: 
oira_submission@omb.eop.gov. 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

    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



                                                                             Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules                                                   33441

                                                       (2) For service information identified in            electronically using word processing                   by NERC for inclusion in the NERC
                                                    this AD, contact Airbus, Airworthiness                  software should be filed in native                     Glossary of Terms Used in NERC
                                                    Office—EIAS, 1 Rond Point Maurice                       applications or print-to-PDF format and                Reliability Standards (NERC Glossary)
                                                    Bellonte, 31707 Blagnac Cedex, France;                  not in a scanned format.                               and to retire currently-effective
                                                    telephone: +33 5 61 93 36 96; fax: +33 5 61
                                                    93 44 51; email: account.airworth-eas@
                                                                                                              • Mail/Hand Delivery: Those unable                   Reliability Standard BAL–002–1
                                                    airbus.com; Internet: http://www.airbus.com.            to file electronically may mail or hand-               immediately prior to the effective date
                                                    You may view this service information at the            deliver comments to: Federal Energy                    of proposed Reliability Standard BAL–
                                                    FAA, Transport Airplane Directorate, 1601               Regulatory Commission, Secretary of the                002–2. The Commission also proposes
                                                    Lind Avenue SW., Renton, WA. For                        Commission, 888 First Street NE.,                      to approve, with certain modifications,
                                                    information on the availability of this                 Washington, DC 20426.                                  the associated violation risk factors and
                                                    material at the FAA, call 425–227–1221.                   Instructions: For detailed instructions              violation severity levels, and
                                                      Issued in Renton, Washington, on May 17,              on submitting comments and additional                  implementation plan.
                                                    2016.                                                   information on the rulemaking process,                   2. Pursuant to section 215(d)(5) of the
                                                    Dionne Palermo,                                         see the Comment Procedures Section of                  FPA,3 the Commission proposes to
                                                    Acting Manager, Transport Airplane                      this document.                                         direct NERC to modify Reliability
                                                    Directorate, Aircraft Certification Service.            FOR FURTHER INFORMATION CONTACT:                       Standard BAL–002–2 to address
                                                    [FR Doc. 2016–12352 Filed 5–25–16; 8:45 am]               Enakpodia Agbedia (Technical                         concerns related to the possible
                                                    BILLING CODE 4910–13–P                                  Information), Office of Electric                       extension or delay of the periods for
                                                                                                            Reliability, Division of Reliability                   ACE recovery and contingency reserve
                                                                                                            Standards, Federal Energy Regulatory                   restoration. The Commission also
                                                    DEPARTMENT OF ENERGY                                    Commission, 888 First Street NE.,                      proposes to direct NERC to address a
                                                                                                            Washington, DC 20426, Telephone:                       reliability gap regarding megawatt losses
                                                    Federal Energy Regulatory                               (202) 502–6750, Enakpodia.Agbedia@                     above the most severe single
                                                    Commission                                              ferc.gov.                                              contingency.
                                                                                                              Mark Bennett (Legal Information),                    I. Background
                                                    18 CFR Part 40                                          Office of the General Counsel, Federal
                                                                                                            Energy Regulatory Commission, 888                      A. Mandatory Reliability Standards and
                                                    [Docket No. RM16–7–000]
                                                                                                            First Street NE., Washington, DC 20426,                Order No. 693 Directives
                                                    Disturbance Control Standard—                           Telephone: (202) 502–8524,
                                                                                                                                                                      3. Section 215 of the FPA requires a
                                                    Contingency Reserve for Recovery                        Mark.Bennett@ferc.gov.
                                                                                                                                                                   Commission-certified Electric
                                                    From a Balancing Contingency Event                      SUPPLEMENTARY INFORMATION: 1. Under                    Reliability Organization (ERO) to
                                                    Reliability Standard                                    section 215 of the Federal Power Act                   develop mandatory and enforceable
                                                                                                            (FPA),1 the Commission proposes to                     Reliability Standards that are subject to
                                                    AGENCY: Federal Energy Regulatory                       approve proposed Reliability Standard
                                                    Commission, DOE.                                                                                               Commission review and approval. The
                                                                                                            BAL–002–2 (Disturbance Control                         Commission may approve, by rule or
                                                    ACTION: Notice of proposed rulemaking.                  Standard—Contingency Reserve for                       order, a proposed Reliability Standard
                                                                                                            Recovery from a Balancing Contingency                  or modification to a Reliability Standard
                                                    SUMMARY:   The Federal Energy
                                                                                                            Event). The North American Electric                    if it determines that the Standard is just,
                                                    Regulatory Commission proposes to
                                                                                                            Reliability Corporation (NERC), the                    reasonable, not unduly discriminatory
                                                    approve Reliability Standard BAL–002–
                                                                                                            Commission-certified Electric                          or preferential and in the public
                                                    2 (Disturbance Control Standard—
                                                                                                            Reliability Organization (ERO),                        interest.4 Once approved, the Reliability
                                                    Contingency Reserve for Recovery from
                                                                                                            submitted proposed Reliability Standard                Standards may be enforced by NERC,
                                                    a Balancing Contingency Event)
                                                                                                            BAL–002–2 for Commission approval.                     subject to Commission oversight, or by
                                                    submitted by the North American
                                                                                                            Proposed Reliability Standard BAL–                     the Commission independently.5
                                                    Electric Reliability Corporation (NERC).
                                                                                                            002–2 applies to balancing authorities                 Pursuant to section 215 of the FPA, the
                                                    Proposed Reliability Standard BAL–
                                                                                                            and reserve sharing groups. Proposed                   Commission established a process to
                                                    002–2 is designed to ensure that
                                                                                                            Reliability Standard BAL–002–2 is                      select and certify an ERO,6 and
                                                    applicable entities balance resources
                                                                                                            designed to ensure that these entities are             subsequently certified NERC.7
                                                    and demand and return their Area
                                                                                                            able to recover from system                               4. On March 16, 2007, the
                                                    Control Error to defined values
                                                                                                            contingencies by deploying adequate                    Commission issued Order No. 693,
                                                    following a Reportable Balancing
                                                                                                            reserves to return their Area Control                  approving 83 of the 107 Reliability
                                                    Contingency Event. In addition, the
                                                                                                            Error (ACE) to defined values and by                   Standards filed by NERC, including
                                                    Commission proposes to direct NERC to
                                                                                                            replacing the capacity and energy lost                 Reliability Standard BAL–002–0.8 In
                                                    modify Reliability Standard BAL–002–2
                                                                                                            due to generation or transmission
                                                    to address concerns related to the
                                                                                                            equipment outages.2 In addition, the                     3 16  U.S.C. 824o(d)(5).
                                                    possible extension or delay of the
                                                                                                            Commission proposes to approve eight                     4 Id. 824o(d)(2).
                                                    periods for Area Control Error recovery
                                                                                                            new and revised definitions proposed                     5 Id. 824o(e).
                                                    and contingency reserve restoration.                                                                             6 Rules Concerning Certification of the Electric
                                                    The Commission also proposes to direct                    1 16 U.S.C. 824(o). Proposed Reliability Standard    Reliability Organization; and Procedures for the
                                                    NERC to address a reliability gap                       BAL–002–2 is available on the Commission’s             Establishment, Approval, and Enforcement of
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                                                    regarding megawatt losses above the                     eLibrary document retrieval system in Docket No.       Electric Reliability Standards, Order No. 672, FERC
                                                    most severe single contingency.                         RM16–7–000 and on the NERC Web site,                   Stats. & Regs. ¶ 31,204, order on reh’g, Order No.
                                                                                                            www.nerc.com.                                          672–A, FERC Stats. & Regs. ¶ 31,212 (2006).
                                                    DATES: Comments are due July 25, 2016.                    2 ACE is the instantaneous difference between a        7 North American Electric Reliability Corp., 116

                                                    ADDRESSES: Comments, identified by                      balancing authority’s Net Actual and Scheduled         FERC ¶ 61,062, order on reh’g and compliance, 117
                                                    docket number, may be filed in the                      Interchange, taking into account the effects of        FERC ¶ 61,126 (2006), aff’d sub nom. Alcoa, Inc. v.
                                                                                                            Frequency Bias, correction for meter error, and        FERC, 564 F.3d 1342 (D.C. Cir. 2009).
                                                    following ways:                                         Automatic Time Error Correction, if operating in         8 Mandatory Reliability Standards for the Bulk-
                                                       • Electronic Filing through http://                  that mode. NERC Glossary of Terms Used in NERC         Power System, Order No. 693, FERC Stats. & Regs.
                                                    www.ferc.gov. Documents created                         Reliability Standards at 7 (updated April 20, 2016).                                             Continued




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                                                    33442                   Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules

                                                    addition, pursuant to section 215(d)(5)                 maintain reserves, and further defining                Operating Plan, and (3) has depleted its
                                                    of the FPA, the Commission directed the                 events that predicate action under the                 contingency reserve to a level below its
                                                    ERO to develop modifications to                         standard.’’ 13 NERC also maintains that                most severe single contingency (MSSC).
                                                    Reliability Standard BAL–002–0 to: (1)                  proposed Reliability Standard BAL–                       9. In addition, under Requirement R1,
                                                    Include a requirement that explicitly                   002–2 ‘‘address[es] and supersede[s]’’                 Part 1.3.2, a balancing authority or
                                                    provides that demand side management                    the proposed interpretation previously                 reserve sharing group is not subject to
                                                    may be used as a resource for                           submitted by NERC (i.e., of Reliability                Requirement R1, Part 1.1 if the
                                                    contingency reserves; (2) develop a                     Standard BAL–002–1a) and now                           balancing authority or reserve sharing
                                                    continent-wide contingency reserve                      pending in Docket No. RM13–6–000.14                    group experiences: (1) Multiple
                                                    policy; and (3) refer to the ERO rather                    7. Proposed Requirement R1 requires                 Contingencies where the combined
                                                    than the NERC Operating Committee in                    a responsible entity, either a balancing               megawatt (MW) loss exceeds its most
                                                    Requirements R4.2 and R6.2.9 On                         authority or reserve sharing group,                    severe single contingency and that are
                                                    January 10, 2011, the Commission                        experiencing a Reportable Balancing                    defined as a single Balancing
                                                    approved Reliability Standard BAL–                      Contingency Event to deploy its                        Contingency Event or (2) multiple
                                                    002–1, which addressed the third                        contingency reserves to recover its ACE                Balancing Contingency Events within
                                                    directive described above.10                            to certain prescribed values within the                the sum of the time periods defined by
                                                                                                            Contingency Event Recovery Period of                   the Contingency Event Recovery Period
                                                    B. Proposed Reliability Standard BAL–                   15 minutes.15 However, proposed                        and Contingency Reserve Restoration
                                                    002–2                                                   Reliability Standard BAL–002–2                         Period whose combined magnitude
                                                       5. On January 29, 2016, NERC filed a                 relieves responsible entities from strict              exceeds the Responsible Entity’s most
                                                    petition seeking approval of proposed                   compliance with the existing time                      severe single contingency.
                                                    Reliability Standard BAL–002–2; eight                   periods for ACE recovery and                             10. Proposed Requirement R2
                                                    new or revised definitions to be added                  contingency reserve restoration ‘‘to                   provides that each responsible entity:
                                                    to the NERC Glossary; and the                           ensure responsible entities retain                     shall develop, review and maintain annually,
                                                    associated violation risk factors and                   flexibility to maintain service to                     and implement an Operating Process as part
                                                    violation severity levels, effective date,              Demand, while managing reliability,                    of its Operating Plan to determine its Most
                                                    and implementation plan.11 NERC states                  and to avoid duplication with other                    Severe Single Contingency and to make
                                                    that the proposed Reliability Standard is               Reliability Standards.’’ 16                            preparations to have Contingency Reserve
                                                    just, reasonable, not unduly                               8. Specifically, Requirement R1, Part               equal to, or greater than the Responsible
                                                    discriminatory or preferential, and in                  1.3.1 provides that a balancing authority              Entity’s Most Severe Single Contingency
                                                                                                                                                                   available for maintaining system reliability.
                                                    the public interest because it satisfies                or reserve sharing group is not subject
                                                    the factors set forth in Order No. 672,                 to Requirement R1, Part 1.1 if it: (1) Is                NERC explains that Requirement R2
                                                    which the Commission applies when                       experiencing a Reliability Coordinator                 requires responsible entities to
                                                    reviewing a proposed Reliability                        declared Energy Emergency Alert Level;                 demonstrate that their process for
                                                    Standard.12 NERC also contends that                     (2) is utilizing its contingency reserve to            calculating their most severe single
                                                    proposed Reliability Standard BAL–                      mitigate an operating emergency in                     contingency ‘‘surveys all contingencies,
                                                    002–2 addresses the outstanding                         accordance with its emergency                          including single points of failure, to
                                                    directives from Order No. 693 regarding                                                                        identify the event that would cause the
                                                    the use of demand side management as                      13 Id.  at 13.                                       greatest loss of resource output used by
                                                    a resource for contingency reserve and                    14 Id.  at 1. On February 12, 2013, NERC filed a     the [reserve sharing group or balancing
                                                    the development of a continent-wide                     proposed interpretation of Reliability Standard        authority] to meet Firm Demand.’’ 17
                                                                                                            BAL–002–1 that construed the Reliability Standard
                                                    contingency reserve policy.                             so that the 15 minute ACE recovery period would
                                                                                                                                                                   NERC further states that Requirement
                                                       6. NERC proposes to consolidate six                  not apply to events of a magnitude exceeding an        R2 supports Requirements R1 and R3 in
                                                    requirements in currently-effective                     entity’s most severe single contingency. In a NOPR     proposed Reliability Standard BAL–
                                                    Reliability Standard BAL–002–1 into                     issued on May 16, 2013, the Commission proposed        002–2 ‘‘as these requirements rely on
                                                                                                            to remand the proposed interpretation on
                                                    three requirements. NERC contends that                  procedural grounds. Electric Reliability               proper calculation of [most severe single
                                                    proposed Reliability Standard BAL–                      Organization Interpretation of Specific                contingency].’’ 18
                                                    002–2 improves upon existing                            Requirements of the Disturbance Control                  11. Proposed Requirement R3
                                                    Reliability Standard BAL–002–1                          Performance Standard, 143 FERC ¶ 61,138 (2013).        provides that ‘‘each Responsible Entity,
                                                                                                            The rulemaking on the proposed interpretation is
                                                    because ‘‘it clarifies obligations                      pending. In the petition in the immediate
                                                                                                                                                                   following a Reportable Balancing
                                                    associated with achieving the objective                 proceeding, NERC states that, upon approval of         Contingency Event, shall restore its
                                                    of BAL–002 by streamlining and                          proposed Reliability Standard BAL–002–2, NERC          Contingency Reserve to at least its Most
                                                    organizing the responsibilities required                will file a notice of withdrawal of the proposed       Severe Single Contingency, before the
                                                                                                            interpretation. NERC Petition at 1.
                                                    therein, enhancing the obligation to                       15 Reportable Balancing Contingency Event
                                                                                                                                                                   end of the Contingency Reserve
                                                                                                            means: ‘‘Any Balancing Contingency Event               Restoration Period [90 minutes], but any
                                                    ¶ 31,242, order on reh’g, Order No. 693–A, 120          occurring within a one-minute interval of an initial   Balancing Contingency Event that
                                                    FERC ¶ 61,053 (2007).                                   sudden decline in ACE based on EMS scan rate data      occurs before the end of a Contingency
                                                      9 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at
                                                                                                            that results in a loss of MW output less than or       Reserve Restoration Period resets the
                                                    P 356.                                                  equal to the Most Severe Single Contingency, and
                                                      10 North American Electric Reliability Corp., 134     greater than or equal to the lesser amount of: (i)     beginning of the Contingency Event
                                                    FERC ¶ 61,015 (2011).                                   80% of the Most Severe Single Contingency, or (ii)     Recovery Period.’’
                                                      11 The eight proposed new and revised definitions     the amount listed below for the applicable               12. NERC explains that the revised
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                                                    for inclusion in the NERC Glossary are for the          Interconnection. Prior to any given calendar           language in the consolidated
                                                    following terms: Balancing Contingency Event,           quarter, the 80% threshold may be reduced by the
                                                    Most Severe Single Contingency, Reportable              responsible entity upon written notification to the    requirements in proposed Reliability
                                                    Balancing Contingency Event, Contingency Event          Regional Entity.’’ NERC Petition at 30. Contingency
                                                                                                            Event Recovery Period means: ‘‘A period that             17 Id.at 25.
                                                    Recovery Period, Contingency Reserve Restoration
                                                    Period, Pre-Reporting Contingency Event ACE             begins at the time that the resource output begins       18 Id.NERC provides examples of how
                                                    Value, Reserve Sharing Group Reporting ACE, and         to decline within the first one-minute interval of a   responsible entities may calculate the most severe
                                                    Contingency Reserve. NERC Petition at 28–34.            Reportable Balancing Contingency Event, and            single contingency in the petition. See NERC
                                                      12 NERC Petition at 13 and Ex. F (Order No. 672       extends for fifteen minutes thereafter.’’ Id. at 32.   Petition, Ex. B (Calculating Most Severe Single
                                                    Criteria).                                                 16 Id. at 4.                                        Contingency).



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                                                                                Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules                                                   33443

                                                    Standard BAL–002–2 will improve                            001–3, EOP–003–2, IRO–009–2, and                      frequency, to recover from a system
                                                    efficiency and clarity by removing                         IRO–008–2 . . . by requiring relevant                 event, and that they maintain reserves
                                                    ‘‘unnecessary entities from compliance                     functional entities to communicate                    necessary to replace capacity and energy
                                                    to capture only those entities that are                    [Interconnection Reliability Operating                lost due to generation or transmission
                                                    vital for reliability.’’ 19 NERC states that               Limits (IROL)] and [System Operating                  outages. Proposed Reliability Standard
                                                    the proposed new definitions for                           Limits (SOL)] exceedances so that the                 BAL–002–2 improves upon currently-
                                                    Balancing Contingency Event and                            [reliability coordinator] can direct                  effective Reliability Standard BAL–002–
                                                    Reportable Balancing Contingency                           appropriate corrective action to mitigate             1 by consolidating the number of
                                                    Event more clearly identify the types of                   or prevent those events.’’ 23                         requirements to streamline and clarify
                                                    events that cause frequency deviations                        15. On March 31, 2016, NERC                        the obligations related to achieving
                                                    necessitating action under the proposed                    submitted a second supplemental filing                these goals.
                                                    Reliability Standard and provide                           to ‘‘further clarify the extent to which                 18. We believe that proposed BAL–
                                                    additional detail regarding the types of                   BAL–002–2 interacts with other                        002–2 satisfies the Order No. 693
                                                    resources that may be identified as                        Commission-approved Reliability                       directive that NERC develop a
                                                    contingency reserves. Furthermore,                         Standards to promote Bulk Power                       continent-wide contingency reserve
                                                    NERC states that proposed Reliability                      System reliability . . . [and support] the            policy.27 Further, we agree with NERC
                                                    Standard BAL–002–2 ‘‘ensures                               overarching policy objective reflected in             that, in addition to the proposed
                                                    objectivity of the reserve measurement                     the stated purpose of Reliability                     Reliability Standard, the development of
                                                    process by guaranteeing a Commission-                      Standard BAL–002–2.’’ 24 In its filing,               a continent-wide contingency reserve
                                                    sanctioned continent-wide reserve                          NERC expands upon the explanation in                  policy includes revisions to Reliability
                                                    policy,’’ and therefore satisfies an                       the petition regarding how an                         Standard BAL–001–1a (superseded by
                                                    outstanding Order No. 693 directive for                    ‘‘integrated’’ and ‘‘coordinated suite of             BAL–001–1) (Real Power Balancing
                                                    uniform elements, definitions and                          Reliability Standards’’ (BAL–001–2,                   Control Performance).28 When
                                                    requirements for a continent-wide                          BAL–003–1, TOP–007–0, EOP–002–3,                      approving Reliability Standard BAL–
                                                    contingency reserve policy.20 Finally,                     EOP–011–1, IRO–008–2, and IRO–009–                    002–0 in Order No. 693, the
                                                    NERC states that the proposed revised                      2) will apply to events causing MW                    Commission directed the ERO to
                                                    definition of Contingency Reserves                         losses above a responsible entity’s most              develop modifications to Reliability
                                                    ‘‘improves the existing definition by                      severe single contingency, and how                    Standard BAL–002–0 to include a
                                                    addressing a Commission directive in                       those other Reliability Standards are                 requirement that explicitly provides that
                                                    Order No. 693 to allow demand side                         better designed to manage the greater                 demand side management may be used
                                                    management to be used as a resource for                    risks created by such events.25                       as a resource for contingency reserves.29
                                                    contingency reserve when necessary.’’ 21                                                                         NERC states that the ‘‘proposed
                                                                                                               II. Discussion
                                                       13. NERC submitted proposed                                                                                   definition of Contingency Reserve
                                                    violation risk factors and violation                          16. Pursuant to FPA section 215(d)(2),             improves the existing definition by
                                                    severity levels for each requirement of                    we propose to approve Reliability                     addressing a Commission directive in
                                                    the proposed Reliability Standard and                      Standard BAL–002–2 as just,                           Order No. 693 to allow demand side
                                                    an implementation plan and effective                       reasonable, not unduly discriminatory                 management to be used as a resource for
                                                    dates. NERC states that these proposals                    or preferential, and in the public                    contingency reserve when necessary.’’ 30
                                                    were developed and reviewed for                            interest. We also propose to approve                  Further, NERC asserts that the drafting
                                                    consistency with NERC and                                  NERC’s eight new and revised proposed                 team elected to expand the definition of
                                                    Commission guidelines. NERC proposes                       definitions and, with certain proposed                contingency reserve to explicitly
                                                    an effective date for the proposed                         modifications, the proposed violation                 include capacity associated with
                                                    Reliability Standard that is the first day                 risk factor and violation severity level              demand side management.31 However,
                                                    of the first calendar quarter that is six                  assignments. In addition, we propose to               the proposed definition does not
                                                    months after the date of Commission                        approve NERC’s implementation plan,                   include the NERC-defined term
                                                    approval. NERC explains that the                           in which NERC proposes an effective                   Demand-Side Management.32 The
                                                    proposed implementation date will                          date of the first day of the first calendar           Commission seeks comment on whether
                                                    allow entities to make necessary                           quarter, six months after the date of                 the proposed definition of contingency
                                                    modifications to existing software                         Commission approval, and the                          reserve should include the NERC-
                                                    programs to ensure compliance.22                           retirement of currently-effective BAL–                defined term Demand-Side Management
                                                       14. On February 12, 2016, NERC                          002–1 immediately before that date.26                 for better clarity.
                                                    submitted a supplemental filing to                            17. The purpose of proposed                           19. In addition to proposing to
                                                    clarify a statement in the petition that                   Reliability Standard BAL–002–2 is to                  approve Reliability Standard BAL–002–
                                                    proposed Reliability Standard BAL–                         ensure that balancing authorities and
                                                    002–2 would operate in conjunction                         reserve sharing groups balance                          27 Order No. 693, FERC Stats. & Regs ¶ 31,242 at


                                                    with Reliability Standard TOP–007–0 to                     resources and demand and return their                 PP 340, 341 and 356.
                                                                                                                                                                       28 NERC Petition at 9.
                                                    control system frequency by addressing                     ACE to defined values following a
                                                                                                                                                                       29 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at
                                                    transmission line loading in the event of                  Reportable Balancing Contingency
                                                                                                                                                                     PP 330, 335 and 356.
                                                    a transmission overload. NERC explains                     Event. We agree with NERC that it is                    30 NERC Petition at 33.

                                                    that, while Reliability Standard TOP–                      essential for grid reliability for                      31 NERC Petition, Ex. E (BAL–002–2 Background

                                                                                                               responsible entities to balance resources             Document) at 6.
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                                                    007–0 will be retired on April 1, 2017,
                                                    ‘‘the obligations related to [transmission                 and demand, and restore system                          32 The NERC Glossary currently defines Demand-

                                                                                                                                                                     Side Management as ‘‘the term for all activities or
                                                    line loading] under TOP–007–0 will be                         23 NERC February 12, 2016 Supplemental Filing
                                                                                                                                                                     programs undertaken by Load Serving Entity or its
                                                    covered by Commission-approved TOP–                        at 2–3.
                                                                                                                                                                     customers to influence the amount or timing of
                                                                                                                                                                     electricity they use.’’ NERC Glossary of Terms Used
                                                                                                                  24 NERC March 31, 2016 Supplemental Filing at
                                                      19 NERC
                                                                                                                                                                     in NERC Reliability Standards at 35 (updated April
                                                                  Petition at 14.                              1, 5.                                                 20, 2016). As of July 1, 2016, the new definition of
                                                      20 Id.                                                      25 Id. at 2–5.
                                                                                                                                                                     Demand-Side Management will be: ‘‘All activities
                                                      21 Id.   at 33.                                             26 NERC Petition, Ex. D (Implementation Plan) at   or programs undertaken by any applicable entity to
                                                      22 Id.   Ex. D (Implementation Plan) at 3.               3.                                                    achieve a reduction in Demand.’’ Id.



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                                                    33444                     Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules

                                                    2, the Commission, pursuant to section                   Reliability Standard does not expressly                requirement that the reliability
                                                    215(d)(5) of the FPA, proposes to direct                 provide a definitive and enforceable                   coordinator must make or approve the
                                                    NERC to develop modifications                            deadline for ACE recovery under these                  decision to extend the 15-minute ACE
                                                    regarding the 15-minute ACE recovery                     circumstances.                                         recovery period. Further, while
                                                    period in Requirement R1 and the 90-                        22. In proposing to approve                         Reliability Standard EOP–011–1,
                                                    minute Contingency Reserve Restoration                   Reliability Standard BAL–002–2, we                     Requirement R3, requires the reliability
                                                    Period in Requirement R3 under certain                   agree that NERC’s proposal clarifies the               coordinator to review balancing
                                                    circumstances. We also propose to                        obligations imposed on responsible                     authority Operating Plans and notify a
                                                    direct NERC to develop a new or                          entities and is therefore an improvement               balancing authority of any ‘‘reliability
                                                    modified Reliability Standard that                       on currently-effective Reliability                     risks’’ the reliability coordinator may
                                                    addresses the reliability impact of                      Standard BAL–002–1. Furthermore,                       identify with a time frame for the
                                                    megawatt losses above a responsible                      Proposed Reliability Standard BAL–                     resubmittal of revised Operating Plans,
                                                    entity’s most severe single contingency,                 002–2 improves on the currently                        that Reliability Standard does not
                                                    because ‘‘recovery of ACE within a                       effective BAL–002–1 by obligating the                  require reliability coordinator approval
                                                    specified time period and restoration of                 responsible entities to accurately                     of Operating Plans.
                                                    Contingency Reserves due to unlikely                     calculate most severe single contingency
                                                    events above a responsible entity’s most                 according to system models maintained                     24. Accordingly, the Commission
                                                    severe single contingency is not within                  by the balancing authority and reserve                 proposes to direct NERC to develop
                                                    the scope of proposed Reliability                        sharing groups. NERC’s explanation for                 modifications to Reliability Standard
                                                    Standard BAL–002–2.’’ 33                                 the relief from the 15-minute ACE                      BAL–002–2 that would require
                                                       20. The Commission seeks comment                      recovery period raises concerns,                       Reporting ACE recovery within the 15-
                                                    on the following issues discussed                        however, because it is unclear how or                  minute Contingency Event Recovery
                                                    below: (1) The 15-minute ACE recovery                    when an entity will prepare for a second               Period unless the relevant reliability
                                                    period; (2) the 90-minute Contingency                    contingency during the indeterminate                   coordinator expressly authorizes an
                                                    Reserve Restoration Period; (3) the                      extension of the 15-minute ACE                         extension of the 15-minute ACE
                                                    exclusion of losses above the most                       recovery period that proposed                          recovery period after the balancing
                                                    severe single contingency in the                         Requirement R1, Part 1.3 permits. A                    authority has met the criteria described
                                                    proposed definition of Reportable                        balancing authority that is operating                  in Requirement R1, Part 1.3.1.
                                                    Balancing Contingency Event; and (4)                     out-of-balance for an extended period of               Additionally, the Commission’s
                                                    NERC’s proposal to reduce from High to                   time is ‘‘leaning on the system’’ by                   proposal would include modifying the
                                                    Medium the violation risk factor for                     relying on external resources to meet its              standard to identify the reliability
                                                    proposed Requirements R1 and R2.                         obligations and could affect other                     coordinator as an Applicable Entity. The
                                                                                                             entities within an Interconnection,                    Commission seeks comment on this
                                                    A. The 15-Minute ACE Recovery Period
                                                                                                             particularly if another entity is reacting             proposal.
                                                       21. Proposed Reliability Standard                     to a grid event while unaware that the
                                                    BAL–002–2, Requirement R1 obligates a                    first entity has not restored its ACE.                 B. The 90-Minute Contingency Reserve
                                                    balancing authority or reserve sharing                   Therefore, while an extension of the 15-               Restoration Period
                                                    group that experience a Reportable                       minute ACE recovery period may be                        25. Proposed Reliability Standard
                                                    Balancing Contingency Event to return                    appropriate under certain emergency                    BAL–002–2, Requirement R3 requires a
                                                    its Reporting ACE to pre-defined values                  conditions, we believe that the                        balancing authority or reserve sharing
                                                    within the 15-minute Contingency                         reliability coordinator should make that               group to restore its contingency reserves
                                                    Event Recovery Period. Proposed                          decision rather than an individual                     to at least its most severe single
                                                    Requirement R1, Part 1.3.1 provides an                   balancing authority or reserve sharing                 contingency before the end of the
                                                    ‘‘exemption’’ from the 15-minute ACE                     group. With a wide-area view, the                      Contingency Reserve Restoration Period,
                                                    recovery period based upon the                           reliability coordinator has the authority,             which NERC proposes to define as ‘‘a
                                                    occurrence of a reliability coordinator-                 with more or better information and                    period not exceeding 90 minutes
                                                    declared Energy Emergency Alert level                    objectivity, to make the decision                      following the end of the Contingency
                                                    and the depletion of the entity’s                        whether to extend the ACE recovery                     Event Recovery Period.’’ 37 Requirement
                                                    contingency reserves to below its most                   period after an entity has met the
                                                                                                                                                                    R3 further states that ‘‘any Balancing
                                                    severe single contingency to mitigate the                criteria described in Requirement R1,
                                                                                                                                                                    Contingency Event that occurs before
                                                    operating emergency. NERC states that                    Part 1.3.1. In other words, a reliability
                                                                                                                                                                    the end of a Contingency Reserve
                                                    this exemption ‘‘eliminates the existing                 coordinator’s extension of the 15-minute
                                                                                                                                                                    Restoration Period resets the beginning
                                                    conflict with EOP–011–1, as it removes                   ACE recovery period may be
                                                                                                                                                                    of the Contingency Event Recovery
                                                    undefined auditor discretion when                        appropriate based on all of the
                                                                                                                                                                    Period.’’ 38 Under this approach, a
                                                    assessing compliance and allows the                      circumstances, if an entity has met the
                                                    responsible entity flexibility to maintain               criteria in Requirement R1, Part 1.3.1.                  37 NERC Petition, Ex. D (Implementation Plan).
                                                    service to load while managing                              23. NERC suggests that reliability                  The 90-minute contingency reserve restoration
                                                    reliability.’’ 34 Further, NERC explains                 coordinator approval of an extension of                period begins after the end of the 15-minute ACE
                                                    that this exemption does not eliminate                   the 15-minute ACE recovery period is                   restoration period under Requirement R1.
                                                                                                             redundant because the reliability                      Accordingly, responsible entities must restore
                                                    an entity’s obligation to respond to a                                                                          contingency reserves within 105 minutes of the
                                                                                                             coordinator is involved in the creation
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                                                    Reportable Balancing Contingency                                                                                occurrence of a Reportable Balancing Contingency
                                                    Event, but rather it will ‘‘simply allow                 of balancing authority Operating Plans                 Event to comply with Requirement R3.
                                                    more time to return the Reporting ACE                    pursuant to Reliability Standard EOP–                    38 Balancing Contingency Event means: ‘‘Any

                                                                                                             011–1, which already requires a                        single event described in Subsections (A), (B), or (C)
                                                    to the defined limits than would                                                                                below, or any series of such otherwise single events,
                                                    otherwise be allowed.’’ 35 The proposed                  balancing authority to communicate                     with each separated from the next by one minute
                                                                                                             with its reliability coordinator.36                    or less.
                                                      33 NERC    Petition at 14–15.                          However, there is currently no express                   A. Sudden loss of generation:
                                                      34 NERC    Petition at 22.                                                                                      a. Due to
                                                      35 Id. at 24.                                           36 Id.   at 23.                                         i. unit tripping,



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                                                                              Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules                                                     33445

                                                    second contingency ‘‘resets’’ this 90-                     additional megawatts above those                       rate data that results in a loss of MW output
                                                    minute restoration window, regardless                      resulting from a Reportable Balancing                  less than or equal to the [most severe single
                                                    of the amount of the megawatt loss                         Contingency Event because ‘‘this                       contingency], and greater than or equal to the
                                                                                                                                                                      lesser amount of: (i) 80% of the [most severe
                                                    resulting from that event.                                 compounding loss inevitably increases                  single contingency] . . . Prior to any given
                                                        26. NERC asserts that the 90-minute                    the total recovery necessary to replenish              calendar quarter, the 80% threshold may be
                                                    contingency restoration period ‘‘is just                   the reserves while also meeting current                reduced by the responsible entity upon
                                                    and reasonable by providing adequate                       demand.’’ 42 However, while megawatt                   written notification to the Regional Entity.
                                                    opportunity for a responsible entity to                    losses occurring during the Contingency                   NERC states that this definition
                                                    recover from an event while also                           Reserve Restoration Period that qualify                ‘‘provides the scope of obligations
                                                    maintaining reliability and recovery of                    as a Reportable Balancing Contingency                  required under Requirements R1 and R3
                                                    reserves in a timely manner.’’ 39 Further,                 Event could reasonably justify an                      of BAL–002–2 [and] impose obligations
                                                    NERC states that the ‘‘reset’’ for a                       extension of the 90-minute Contingency                 on responsible entities to take certain
                                                    Balancing Contingency Event provides                       Reserve Restoration Period, there is less              recovery actions upon the occurrence of
                                                    ‘‘time and flexibility for an entity’s                     need for a Balancing Contingency Event,                a Reportable Balancing Contingency
                                                    ongoing recovery,’’ and is intended to                     which could involve an insignificant                   Event to sustain Reporting ACE and
                                                    accommodate the ‘‘heightened                               loss of megawatts, to result                           adequate levels of Contingency
                                                    sensitivities applicable during such a                     automatically in a resetting of the time               Reserves.’’ 44
                                                    Contingency Reserve Restoration                            period. Under such circumstances,                         31. NERC’s proposed definition
                                                    Period.’’ 40 NERC explains that the                        balancing authorities and reserve                      would limit balancing authority and
                                                    ‘‘ ‘reset’ avoids punishing a responsible                  sharing groups should be required to                   reserve sharing group responsibility to
                                                    entity for an unexpected event,                            restore the initial megawatt losses                    megawatt losses between 80 percent and
                                                    occurring within [sic] Contingency                         associated with the Reportable                         100 percent of their most severe single
                                                    Restoration Period, which may make it                      Balancing Contingency Event within the                 contingency that occur within a one
                                                    infeasible to fully restore the requisite                  90-minute restoration period, but could                minute interval. As NERC explains, if a
                                                    level of Contingency Reserves as                           be allowed to ‘‘credit’’ megawatt losses               balancing authority has a most severe
                                                    intended.’’ 41                                             from the Balancing Contingency Event,                  single contingency of 1000 megawatts
                                                        27. We agree with NERC that a ‘‘reset’’                and have an additional 90 minutes to                   and a generation unit with a capacity of
                                                    of the Contingency Reserve Restoration                     restore those losses.43 This would                     850 megawatts is lost, this system event
                                                    Period may be appropriate in some                          prevent the possibility of multiple resets             is within the scope of proposed
                                                    instances. For example, a Balancing                        that could result in entities not                      Reliability Standard BAL–002–2
                                                    Contingency Event involving substantial                    maintaining sufficient contingency                     because the loss is greater than 80
                                                    megawatt loss that occurs during the                       reserves for long periods of time.                     percent of, but does not exceed, the
                                                    recovery period following a Reportable                        29. The Commission proposes to                      most severe single contingency. NERC
                                                    Balancing Contingency Event may make                       direct that NERC develop modifications                 contrasts that situation with the
                                                    it infeasible to fully restore the                         to Reliability Standard BAL–002–2 to                   example of a balancing authority’s loss
                                                    contingency reserves as originally                         eliminate the potential for unlimited                  of two generation units, one of 750
                                                    planned. Proposed Reliability Standard                     resets and ensure that contingency                     megawatts and another of 300
                                                    BAL–002–2 Requirement R3 improves                          reserves must be restored within the 90-               megawatts within 60 seconds of one
                                                    on the currently-effective BAL–002–1 by                    minute Contingency Reserve Restoration                 another. The total generation loss of
                                                    requiring the balancing authority or                       Period. One possible approach would be                 1050 megawatts in this example is
                                                    reserve sharing group to restore its                       to give a balancing authority or reserve               exempt from proposed Reliability
                                                    contingency reserves to ‘‘at least its                     sharing group ‘‘credits’’ for megawatt                 Standard BAL–002–2 because the total
                                                    MSSC’’ following a reportable balancing                    losses resulting from Balancing                        loss resulting from the two events,
                                                    contingency event. However,                                Contingency Events during the 90-                      which are aggregated because both
                                                    Requirement R3 potentially allows                          minute Contingency Reserve Restoration                 events occurred within one minute of
                                                    unlimited ‘‘resets’’ of the 90-minute                      Period and allow an additional 90                      each other, is greater than the balancing
                                                    restoration period, even for insignificant                 minutes to restore reserves associated                 authority’s most severe single
                                                    megawatt losses from a Balancing                           with those megawatt losses, if                         contingency of 1000 megawatts.45
                                                    Contingency Event that occur after the                     necessary. The Commission seeks                           32. NERC explains that events causing
                                                    initial Reportable Balancing                               comment on this proposal.                              megawatt losses above a balancing
                                                    Contingency Event.                                                                                                authority’s or reserve sharing group’s
                                                        28. NERC explains that responsible                     C. Exclusion of Megawatt Losses Above
                                                                                                               the Most Severe Single Contingency                     most severe single contingency are not
                                                    entities need relief from the loss of any                                                                         within the scope of proposed Reliability
                                                                                                                 30. NERC proposes to define                          Standard BAL–002–2, and therefore
                                                       ii. loss of generator Facility resulting in isolation   Reportable Balancing Contingency
                                                    of the generator from the Bulk Electric System or
                                                                                                                                                                      those megawatt losses are not subject to
                                                    from the responsible entity’s System, or
                                                                                                               Event as:                                              the 15-minute ACE recovery period or
                                                       iii. sudden unplanned outage of transmission            [a]ny Balancing Contingency Event occurring            the 90-minute Contingency Reserve
                                                    Facility;                                                  within a one-minute interval of an initial             Restoration Period.46 Instead, balancing
                                                       b. And, that causes an unexpected change to the         sudden decline in ACE based on EMS scan
                                                    responsible entity’s ACE;                                                                                           44 NERC Petition at 30–31 and Ex. D
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                                                       B. Sudden loss of an import, due to unplanned             42 Id.                                               (Implementation Plan).
                                                    outage of transmission equipment that causes an              43 For example, two generation units are lost, one     45 See NERC Petition, Ex. A (Examples of
                                                    unexpected imbalance between generation and                                                                       Reportable Balancing Contingency Events).
                                                                                                               of 900 MW (a Reportable Balancing Contingency
                                                    Demand on the Interconnection.
                                                                                                               Event) and another of 200 MW (a Balancing                46 NERC states that between 2006 and 2011,
                                                       C. Sudden restoration of a Demand that was used         Contingency Event) 16 minutes later. Because of        ninety disturbance events exceeded the most severe
                                                    as a resource that causes an unexpected change to          this second 200 MW loss, the balancing authority       single contingency, with no year experiencing more
                                                    the responsible entity’s ACE. NERC Petition Ex. D.’’       would be required to restore its contingency           than 29 events. According to NERC, ‘‘evaluation of
                                                       39 NERC Petition at 26.
                                                                                                               reserves to 700 MW (900 MW less the 200 MW             this data illustrates that events greater than MSSC
                                                       40 Id. at 27.
                                                                                                               Balancing Contingency Event) within the 90-minute      occur very infrequently.’’ NERC March 31, 2016
                                                       41 Id.                                                  contingency restoration period.                                                                  Continued




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                                                    33446                    Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules

                                                    authorities and reserve sharing groups                   the proposed Reliability Standard.48 We              performance set forth in the requirement
                                                    must respond to these large events                       do not believe that NERC adequately                  in real time. With regard to proposed
                                                    under the suite of related Reliability                   justifies lowering the assignment of the             Requirement R2 requiring responsible
                                                    Standards mentioned above: BAL–001–                      violation risk factor for proposed                   entities to have a process for
                                                    2, BAL–3–1, TOP–007–0, EOP–002–3,                        Requirements R1 and R2 from high to                  determining their most severe single
                                                    EOP–011–1, IRO–008–2, and IRO–009–                       medium. Proposed Requirement R1                      contingency, NERC itself states that
                                                    2. According to NERC, ‘‘this integrated                  requires a balancing authority or reserve            ‘‘proper calculation of MSSC is critical
                                                    and coordinated approach would ensure                    sharing group to deploy contingency                  for reliability.’’ 52
                                                    reliability while also avoiding any gap                  reserves in response to all Reportable                  38. Accordingly, we propose to direct
                                                    in coverage and providing means to                       Balancing Contingency Events as the                  that NERC assign a high violation risk
                                                    address complex issues arising during                    means for recovering Reporting ACE.                  factor to proposed Reliability Standard
                                                    events that exceed MSSC.’’ 47                            Proposed Requirement R2 requires a                   BAL–002–2, Requirements R1 and R2.
                                                       33. NERC’s proposed limitation on the                 balancing authority or reserve sharing               We seek comment on this proposal.
                                                    scope of proposed Reliability Standard                   group to develop, review and maintain
                                                                                                             a process within its Operating Plans for             III. Information Collection Statement
                                                    BAL–002–2 raises questions,
                                                    particularly NERC’s assumption that                      determining its most severe single                     39. The Office of Management and
                                                    megawatt exceedances above the most                      contingency and to prepare to have                   Budget (OMB) regulations require that
                                                    severe single contingency, however                       contingency reserves equal to, or greater            OMB approve certain reporting and
                                                    small, often or always will result in                    than, its most severe single contingency.            recordkeeping (collections of
                                                                                                                36. NERC provides insufficient                    information) imposed by an agency.53
                                                    ‘‘complex issues.’’ We recognize that in
                                                                                                             support for the proposed violation risk              Upon approval of a collection(s) of
                                                    extreme megawatt loss scenarios
                                                                                                             factor for proposed Requirements R1                  information, OMB will assign an OMB
                                                    triggering energy emergencies,
                                                                                                             and R2. In justifying the assignment of              control number and expiration date.
                                                    Reliability Standard EOP–011–1 and the
                                                                                                             a medium violation risk factor. NERC
                                                    broader suite of Reliability Standards                                                                        Respondents subject to the filing
                                                                                                             asserts, without explanation, that a
                                                    NERC mentions could provide                                                                                   requirements of this rule will not be
                                                                                                             medium violation risk factor is
                                                    appropriate reliability protection when                                                                       penalized for failing to respond to these
                                                                                                             ‘‘consistent with other reliability
                                                    proposed Reliability Standard BAL–                                                                            collections of information unless the
                                                                                                             standards (i.e., BAL–001–2, BAL–003–
                                                    002–2 would not apply. However, a                                                                             collections of information display a
                                                                                                             1).’’ 49 NERC also contends, without
                                                    reliability gap may exist for megawatt                                                                        valid OMB control number.
                                                                                                             explanation, that proposed Requirement
                                                    exceedances of the most severe single                    R3 is similar in concept to the current                40. The Commission is submitting
                                                    contingency that do not cause energy                     enforceable BAL–001–0.1a standard                    these reporting and recordkeeping
                                                    emergencies or otherwise clearly                         Requirements R1 and R2, which have an                requirements to OMB for its review and
                                                    implicate the other Reliability Standards                approved Medium [violation risk                      approval under section 3507(d) of the
                                                    cited by NERC. Our concern is that                       factor], and approved reliability                    Paper Reduction Act of 1995, 44 U.S.C.
                                                    unless this gap is addressed, the                        standards BAL–001–1 and BAL–003–                     3507(d) (2012). Comments are solicited
                                                    potential for balancing authorities to                   1.50 The conclusory statements in                    on the Commission’s need for this
                                                    lean on the Interconnection by relying                   NERC’s petition regarding the alleged                information, whether the information
                                                    on external resources for an                             similarities between proposed                        will have practical utility, the accuracy
                                                    indeterminate period exists.                             Requirements R1 and R2 and other                     of the provided burden estimate, ways
                                                       34. The Commission seeks comment                      Reliability Standards does not                       to enhance the quality, utility, and
                                                    from NERC and other entities on how to                   adequately explain the alleged bases for             clarity of the information to be
                                                    address that gap and whether to impose                   reducing the violation risk factor for               collected, and any suggested methods
                                                    a reasonable obligation for balancing                    Requirements R1 and R2 from the                      for minimizing the respondent’s burden,
                                                    authorities and reserve sharing groups                   analogous Requirement R3 in the                      including the use of automated
                                                    to address scenarios involving megawatt                  currently-effective Reliability Standard.            information techniques.
                                                    losses above the most severe single                         37. NERC further states that while a                41. This Notice of Proposed
                                                    contingency that do not cause energy                     violation of proposed Requirements R1                Rulemaking proposes to approve
                                                    emergencies. Based on the comments,                      or R2 could directly affect the electrical           revisions to Reliability Standard BAL–
                                                    the Commission may direct that NERC                      state or capability of the bulk electric             002–2. NERC states in its petition that
                                                    develop a new or modified Reliability                    system, it ‘‘would unlikely result in the            the proposed Reliability Standard
                                                    Standard to address that reliability gap.                Bulk Electric System instability,                    applies to balancing authorities and
                                                                                                             separation or cascading failures since               reserve sharing groups, and is designed
                                                    D. NERC’s Proposed Violation Risk                        this requirement is an after-the-fact                to ensure that these entities are able to
                                                    Factor for Requirements R1 and R2                        calculation, not performed in Real-                  recover from system contingencies by
                                                       35. NERC proposes a ‘‘medium’’                        time.’’ 51 We believe this to be an                  deploying adequate reserves to return
                                                    violation risk factor for each                           inadequate justification for lowering the            their ACE to defined values and by
                                                    requirement of proposed Reliability                      violation risk factors for proposed                  replacing the capacity and energy lost
                                                    Standard BAL–002–2. Currently-                           Requirements R1 and R2. While a                      due to generation or transmission
                                                    effective Reliability Standard BAL–002–                  calculation of how far out of compliance             equipment outages. The Commission
                                                                                                             may occur after the fact, the issue is the
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                                                    1 assigns a ‘‘high’’ violation risk factor                                                                    also proposes to approve NERC’s seven
                                                    for its Requirements R3 and R3.1, which                  risk resulting from a failure to meet the            proposed new definitions and one
                                                    NERC explains are analogous to                                                                                proposed revised definition, and the
                                                                                                               48 NERC Petition, Ex. I (Mapping Document for
                                                    proposed Requirements R1 and R2 in                                                                            retirement of currently-effective
                                                                                                             BAL–002–2).
                                                                                                               49 NERC Petition, Ex. G (Analysis of Violation
                                                                                                                                                                  Reliability Standard BAL–002–1
                                                    Supplemental Filing at 3, n.5, citing the 2012 State     Risk Factors and Violation Severity Levels) at 4.
                                                    of Reliability (May 2012) accessible online at http://     50 Id.                                                  52 NERC    March 31, 2016 Supplemental Filing at
                                                    www.nerc.com/files/2012_sor.pdf.                           51 Id. Ex. G (Analysis of Violation Risk Factors   3.
                                                      47 NERC Petition at 15.                                and Violation Severity Levels) at 3–4.                    53 5   CFR 1320.11.



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                                                                                    Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules                                                                              33447

                                                    immediately prior to the effective date                                  Interconnection, 34 balancing                                       operating process and operating plan
                                                    of BAL–002–1.                                                            authorities in the Western                                          that are required in the Reliability
                                                      42. Public Reporting Burden: Our                                       Interconnection and one balancing                                   Standard. These burden estimates are
                                                    estimate below regarding the number of                                   authority in the Electric Reliability                               consistent with estimates for similar
                                                    respondents is based on the NERC                                         Council of Texas (ERCOT). The                                       tasks in other Commission-approved
                                                    Compliance Registry as of April 15,                                      Commission bases individual burden                                  Reliability Standards. The following
                                                    2016. According to the NERC                                              estimates on the time needed for                                    estimates relate to the requirements for
                                                    Compliance Registry, there are 70                                        balancing authorities and reserve                                   this Notice of Proposed Rulemaking in
                                                    balancing authorities in the Eastern                                     sharing groups to maintain annually, the                            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

                                                                                                                                                    Annual                                       Average                Total annual        Cost per
                                                                                                                       Number of                   number of               Total number       burden hours              burden hours       respondent
                                                                                                                      respondents               responses per              of responses         & cost per              & total annual         ($)
                                                                                                                                                  respondent                                   response 55                   cost

                                                                                                                              (1)                        (2)               (1) * (2) = (3)            (4)                (3) * (4) = (5)    (5) ÷ (1)

                                                    BA/RSG: 56     Develop and Maintain annu-
                                                       ally, Operating Process and Operating
                                                       Plans .....................................................                    105                            1                 105                     8                   840             $773
                                                                                                                                                                                                            $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                                           experiencing a Reportable Balancing                                 email: DataClearance@ferc.gov, phone:
                                                    Reliability Standard BAL–002–2.                                          Contingency Event to deploy its                                     (202) 502–8663, fax: (202) 273–0873].
                                                       Action: Proposed Collection of                                        contingency reserves to recover its ACE                               44. For submitting comments
                                                    Information.                                                             to certain prescribed values within the
                                                       OMB Control No.: 1902–0268.                                                                                                               concerning the collection(s) of
                                                                                                                             Contingency Event Recovery Period of                                information and the associated burden
                                                       Respondents: Businesses or other for-                                 15 minutes. Proposed Requirement R2
                                                    profit institutions; not-for-profit                                                                                                          estimate(s), please send your comments
                                                                                                                             requires a balancing authority or reserve
                                                    institutions.                                                                                                                                to the Commission and to the Office of
                                                                                                                             sharing group to develop, review and
                                                       Frequency of Responses: On                                                                                                                Management and Budget, Office of
                                                                                                                             maintain a process within its Operating
                                                    Occasion.                                                                                                                                    Information and Regulatory Affairs,
                                                                                                                             Plans for determining its most severe
                                                       Necessity of the Information: This                                    single contingency and prepare to have                              Washington, DC 20503 [Attention: Desk
                                                    proposed rule proposes to approve                                                                                                            Officer for the Federal Energy
                                                                                                                             contingency reserves equal to, or greater
                                                    Reliability Standard BAL–002–2, which                                                                                                        Regulatory Commission, phone: (202)
                                                                                                                             than, its most severe single contingency.
                                                    is designed to ensure that a responsible                                                                                                     395–4638, fax: (202) 395–7285]. For
                                                                                                                             Proposed Requirement R3 provides that,
                                                    entity, either a balancing authority or                                                                                                      security reasons, comments to OMB
                                                                                                                             following a Reportable Balancing
                                                    reserve sharing group, is able to recover                                                                                                    should be submitted by email to: oira_
                                                                                                                             Contingency Event, the responsible
                                                    from system contingencies by deploying                                                                                                       submission@omb.eop.gov. Comments
                                                                                                                             entity shall restore its Contingency
                                                    adequate reserves to return their ACE to                                                                                                     submitted to OMB should include
                                                                                                                             Reserve to at least its most severe single
                                                    defined values and replacing the                                                                                                             FERC–725R and Docket Number RM16-
                                                                                                                             contingency, before the end of the
                                                    capacity and energy lost due to                                                                                                              7–000.
                                                                                                                             Contingency Reserve Restoration Period
                                                    generation or transmission equipment
                                                    outages. Proposed Reliability Standard                                   of 90 minutes.                                                      IV. Environmental Analysis
                                                    BAL–002–2, Requirement R1 requires a                                        Internal Review: The Commission
                                                    responsible entity, either a balancing                                   reviewed the proposed Reliability                                      45. The Commission is required to
                                                    authority or reserve sharing group,                                      Standard and made a determination that                              prepare an Environmental Assessment
                                                                                                                             its action is necessary to implement                                or an Environmental Impact Statement
                                                      54 Proposed Reliability Standard BAL–002–2                             section 215 of the FPA. These                                       for any action that may have a
                                                    applies to balancing authorities and reserve sharing                     requirements, if accepted, should                                   significant adverse effect on the human
                                                    groups. However, the burden associated with the                          conform to the Commission’s
                                                    balancing authorities complying with Requirements
                                                                                                                                                                                                 environment.58 The Commission has
                                                    R1 and R3 is not included within this table because
                                                                                                                             expectation for generation and demand                               categorically excluded certain actions
                                                    the Commission accounted for it under                                    balance throughout the Eastern and                                  from this requirement as not having a
                                                    Commission-approved Reliability Standard BAL–                            Western Interconnections as well as
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                                                    002–1.
                                                                                                                                                                                                 significant effect on the human
                                                      55 The estimated hourly cost (salary plus benefits)
                                                                                                                             within the ERCOT Region.                                            environment. Included in the exclusion
                                                    of $96.57 is an average based on Bureau of Labor                            43. Interested persons may obtain                                are rules that are clarifying, corrective,
                                                    Statistics (BLS) information (http://www.bls.gov/                        information on the reporting                                        or procedural or that do not
                                                    oes/current/naics2_22.htm) for an electrical                             requirements by contacting the                                      substantially change the effect of the
                                                    engineer ($64.20/hour) and a lawyer ($128.94).                           following: Federal Energy Regulatory
                                                      56 BA = Balancing Authority; RSG = Reserve

                                                    Sharing Group.                                                           Commission, 888 First Street NE.,                                     58 Regulations Implementing the National
                                                      57 $28/hour, based on a Commission staff study of                      Washington, DC 20426 [Attention: Ellen                              Environmental Policy Act of 1969, Order No. 486,
                                                    record retention burden cost.                                            Brown, Office of the Executive Director,                            FERC Stats. & Regs. ¶ 30,783 (1987).



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                                                    33448                    Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Proposed Rules

                                                    regulations being amended.59 The                         RM16–7–000, and must include the                       Issued: May 19, 2016.
                                                    actions proposed here fall within this                   commenter’s name, the organization                   Nathaniel J. Davis, Sr.,
                                                    categorical exclusion in the                             they represent, if applicable, and their             Deputy Secretary.
                                                    Commission’s regulations.                                address in their comments.                           [FR Doc. 2016–12428 Filed 5–25–16; 8:45 am]
                                                    V. Regulatory Flexibility Act                               49. The Commission encourages                     BILLING CODE 6717–01–P
                                                                                                             comments to be filed electronically via
                                                      46. The Regulatory Flexibility Act of
                                                                                                             the eFiling link on the Commission’s
                                                    1980 (RFA) 60 generally requires a
                                                                                                             Web site at http://www.ferc.gov. The                 DEPARTMENT OF JUSTICE
                                                    description and analysis of proposed
                                                    rules that will have significant                         Commission accepts most standard
                                                                                                             word processing formats. Documents                   Bureau of Alcohol, Tobacco, Firearms,
                                                    economic impact on a substantial                                                                              and Explosives
                                                    number of small entities. As shown in                    created electronically using word
                                                    the information collection section, the                  processing software should be filed in
                                                                                                             native applications or print-to-PDF                  27 CFR Part 478
                                                    proposed Reliability Standard applies to
                                                    105 entities. Comparison of the                          format and not in a scanned format.                  [Docket No. ATF 24P; AG Order No. 3672–
                                                    applicable entities with the                             Commenters filing electronically do not              2016]
                                                    Commission’s small business data                         need to make a paper filing.                         RIN 1140–AA10
                                                    indicates that approximately 23 61 are                      50. Commenters that are not able to
                                                    small business entities.62 Of these, the                 file comments electronically must send               Commerce in Firearms and
                                                    Commission estimates that                                an original of their comments to:                    Explosives; Secure Gun Storage,
                                                    approximately five percent, or one of                    Federal Energy Regulatory Commission,                Amended Definition of Antique
                                                    these 23 small entities, will be affected                Secretary of the Commission, 888 First               Firearm, and Miscellaneous
                                                    by the new requirements of the                           Street NE., Washington, DC 20426.                    Amendments
                                                    proposed Reliability Standard.                              51. All comments will be placed in                AGENCY: Bureau of Alcohol, Tobacco,
                                                      47. The Commission estimates that                                                                           Firearms, and Explosives (ATF),
                                                                                                             the Commission’s public files and may
                                                    the small entities affected by proposed                                                                       Department of Justice.
                                                                                                             be viewed, printed, or downloaded
                                                    Reliability Standard BAL–002–2 will
                                                                                                             remotely as described in the Document                ACTION: Notice of proposed rulemaking.
                                                    incur an annual compliance cost of up
                                                                                                             Availability section below. Commenters
                                                    to $20,355 (i.e., the cost of developing,                                                                     SUMMARY:    The Department of Justice
                                                                                                             on this proposal are not required to
                                                    and maintaining annually operating                                                                            (DOJ) proposes amending the
                                                    process and operating plans), resulting                  serve copies of their comments on other
                                                                                                             commenters.                                          regulations of the Bureau of Alcohol,
                                                    in a cost of approximately $885 per                                                                           Tobacco, Firearms, and Explosives
                                                    balancing authority and/or reserve                       VII. Document Availability                           (ATF), largely to codify into regulation
                                                    sharing group. These costs represent an                                                                       certain provisions of Public Law 105–
                                                    estimate of the costs a small entity could                 52. In addition to publishing the full             277, Omnibus Consolidated and
                                                    incur if the entity is identified as an                  text of this document in the Federal                 Emergency Supplemental
                                                    applicable entity. The Commission does                   Register, the Commission provides all                Appropriations Act, 1999. The proposed
                                                    not consider the estimated cost per                      interested persons an opportunity to                 rule would amend ATF’s regulations to
                                                    small entity to have a significant                       view and/or print the contents of this               account for the existing statutory
                                                    economic impact on a substantial                         document via the Internet through the                requirement for applicants for firearms
                                                    number of small entities. Accordingly,                   Commission’s Home Page (http://                      dealer licenses to certify that secure gun
                                                    the Commission certifies that this NOPR                  www.ferc.gov) and in the Commission’s                storage or safety devices will be
                                                    will not have a significant economic                     Public Reference Room during normal                  available at any place where firearms
                                                    impact on a substantial number of small                  business hours (8:30 a.m. to 5:00 p.m.               are sold under the license to
                                                    entities.                                                Eastern time) at 888 First Street NE.,               nonlicensed individuals. This
                                                    VI. Comment Procedures                                   Room 2A, Washington, DC 20426.                       certification is already included in the
                                                                                                               53. From the Commission’s Home                     ATF Form 7, Application for Federal
                                                      48. The Commission invites interested                                                                       Firearms License. The proposed
                                                                                                             Page on the Internet, this information is
                                                    persons to submit comments on the                                                                             regulation would also require applicants
                                                                                                             available on eLibrary. The full text of
                                                    matters and issues proposed in this                                                                           for manufacturer or importer licenses to
                                                                                                             this document is available on eLibrary
                                                    notice to be adopted, including any                                                                           complete the certification if the licensee
                                                                                                             in PDF and Microsoft Word format for
                                                    related matters or alternative proposals                                                                      will have premises where firearms are
                                                    that commenters may wish to discuss.                     viewing, printing, and/or downloading.
                                                                                                             To access this document in eLibrary,                 sold to nonlicensees. Moreover, the
                                                    Comments are due July 25, 2016.                                                                               proposed regulation would require that
                                                    Comments must refer to Docket No.                        type the docket number of this
                                                                                                             document, excluding the last three                   the secure gun storage or safety device
                                                      59 18                                                  digits, in the docket number field.                  be compatible with the firearms offered
                                                             CFR 380.4(a)(2)(ii).
                                                                                                                                                                  for sale by the licensee. Finally, it also
                                                      60 5 U.S.C. 601–612.                                     54. User assistance is available for               would conform the definitions of certain
                                                       61 21.73 percent of the total number of affected
                                                                                                             eLibrary and the Commission’s Web site               terms to the statutory language set forth
                                                    entities.
                                                       62 The Small Business Administration sets the
                                                                                                             during normal business hours from the                in the Omnibus Consolidated and
jstallworth on DSK7TPTVN1PROD with PROPOSALS




                                                    threshold for what constitutes a small business.         Commission’s Online Support at (202)                 Emergency Supplemental
                                                    Public utilities may fall under one of several           502–6652 (toll free at 1–866–208–3676)               Appropriations Act of 1999, including
                                                    different categories, each with a size threshold         or email at ferconlinesupport@ferc.gov,
                                                    based on the company’s number of employees,                                                                   the definition of ‘‘antique firearm,’’
                                                    including affiliates, the parent company, and
                                                                                                             or the Public Reference Room at (202)                which would be amended to include
                                                    subsidiaries. For the analysis in this Final Rule, we    502–8371, TTY (202) 502–8659. Email                  certain modern muzzle loading firearms.
                                                    are using a 500 employee threshold for each              the Public Reference Room at                         DATES: Written comments must be
                                                    affected entity. Each entity is classified as Electric   public.referenceroom@ferc.gov.
                                                    Bulk Power Transmission and Control (NAICS code                                                               postmarked and electronic comments
                                                    221121).                                                  By direction of the Commission.                     must be submitted on or before August


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Document Created: 2016-05-26 01:14:05
Document Modified: 2016-05-26 01:14:05
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking.
DatesComments are due July 25, 2016.
ContactEnakpodia 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]
FR Citation81 FR 33441 

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