131 FERC ¶ 61,136
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Jon Wellinghoff, Chairman;
Marc Spitzer, Philip D. Moeller,
and John R. Norris.
Mandatory Reliability Standards for the Bulk PowerDocket No. RM06-16-011
System
ORDER GRANTING REHEARING FOR FURTHER CONSIDERATION AND
SCHEDULING TECHNICAL CONFERENCE
(Issued May 13, 2010)
1. In a March 18, 2010 order,1 the Commission established a six month compliance
deadline for the North American Electric Reliability Corporation (NERC), the
Commission-certified electric reliability organization (ERO), to submit modifications to
Reliability Standard BAL-003-0 that are responsive to the Commission’s directive in
Order No. 693.2 NERC and other entities submitted requests for rehearing and
clarification. With regard to the compliance deadline, NERC and other entities contend
that the development of a frequency response requirement is a technically complex matter
and that the Commission directive cannot reasonably be met in the allotted six months.
Duke Energy Carolinas, LLC (Duke Carolinas), in its pleading, recommends that the
Commission convene a technical conference to develop a greater understanding of
frequency response issues and to promote a more collaborative approach among the
Commission, NERC and industry.
2. In this order, we do not substantively address the requests for rehearing and
clarification. Rather, we grant rehearing for the limited purpose of further consideration,
and timely-filed requests for rehearing will not be deemed denied by operation of law. In
addition, we direct Commission staff to convene a technical conference to provide an
1 North American Electric Reliability Corp., 130 FERC ¶ 61,218 (2010) (March 18 Order).
2 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).
Docket No. RM06-16-011- 2 -
opportunity for a public discussion regarding technical issues pertaining to the
development of a frequency response requirement. In its request for rehearing, NERC
proposed a “task list” with a timeline for work on a frequency response requirement, but
the proposal contained no deadline for the final, and most important, task of filing a
proposed Reliability Standard for Commission review. Thus, we direct that NERC
submit, within 30 days after the technical conference, a proposed schedule that includes
firm deadlines for completing studies, analyses needed to develop a frequency response
requirement, and for submission of a modified Reliability Standard that is responsive to
the Commission directives in Order No. 693 pertaining to Reliability Standard BAL-003-
0. The Commission will provide notice and opportunity to comment on the proposed
schedule, as well as other matters discussed at the technical conference. In the meantime, we will defer the six month compliance deadline set forth in the March 18 Order pending further order by the Commission.
I.Background
3.In Order No. 693, the Commission, inter alia, approved NERC’s Resource and
Demand Balancing (BAL) Reliability Standards, including BAL-003-0, which addresses frequency response and bias.3 The Commission concluded that “the minimum frequency response needed for Reliable Operation should be defined and methods of obtaining the frequency response identified.”4 Accordingly, in Order No. 693 the Commission
approved Reliability Standard BAL-003-0 as mandatory and enforceable and directed the ERO to develop a modification to BAL-003-0 through the Reliability Standards
development process that: “… defines the necessary amount of Frequency Response
needed for Reliable Operation for each balancing authority with methods of obtaining
and measuring that the frequency response is achieved.”5 The Commission also directed NERC to determine an appropriate periodicity of frequency response surveys necessary to ensure that the requirements of BAL-003-0 are being met.
4. In the March 18 Order, the Commission noted that NERC has established a project
(Project No. 2007-12) to develop the modifications to BAL-003-0 directed by the
Commission in Order No. 693. The Commission observed that, while NERC initiated a
Standard Authorization Request (SAR) to obtain information regarding Frequency
Response, almost three years had passed since the Commission’s issuance of Order
3 The terms Frequency Response and Frequency Bias are defined in the NERC Glossary of Terms Used in Reliability Standards:
http://www.nerc.com/docs/standards/rs/Glossary_2009April20.pdf.
4 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 372.
5 Id. P 375.
Docket No. RM06-16-011- 3 -
No. 693, and the NERC standards drafting team had not proposed modifications to
Reliability Standard BAL-003-0 in response to the Commission’s directive.6
Accordingly, the Commission set a compliance deadline of six months for the
development of modifications to Reliability Standard BAL-003-0 that comply with the Commission’s Order No. 693 directives.
II.Rehearing Requests and Clarification
5.Requests for rehearing and/or clarification of the Commission’s March 18 Order
were filed by NERC, American Public Power Association (APPA), Georgia
Transmission Corporation and Georgia System Operations Corporation (Georgia
Transmission), Midwest Independent Transmission System Operator, Inc. (Midwest
ISO), Edison Electric Institute (EEI), Duke Carolinas, and PJM Interconnection, L.L.C
(PJM).7
NERC Request
6. NERC submits that the Commission’s directive to develop a Frequency Response Reliability Standard in six months is unreasonable given the complexity of the Frequency Response issue. Additionally, NERC contends that the Commission incorrectly
concluded that the BAL-003-0 Reliability Standard sets a Frequency Response of one percent or greater for all Balancing Authorities.
7. NERC recognizes that “immediate actions aimed to arrest the decline in frequency response in the Eastern Interconnection are necessary.”8 According to NERC, frequency performance expectation must be studied on an Interconnection-wide basis before an
individual Balancing Authority frequency response can be established. Thus, according to NERC, it will not be able to comply with all of the Commission’s directives set forth in Order No. 693 pertaining to BAL-003-0 within the six month compliance deadline
with the sufficiently rigorous engineering analysis necessary to determine the frequency response requirement needed for each Interconnection.
6 March 18 Order, 130 FERC ¶ 61,218 at P 2, 17.
7 Tampa Electric Company filed a motion to intervene and comments in support of the
NERC request for rehearing and clarification. Similarly, the eight Regional Entities
(ReliabilityFirst Corporation, Midwest Reliability Organization, Florida Reliability Coordinating
Council, Texas Regional Entity, Northeast Power Coordinating Council, Inc., Western
Electricity Coordinating Council, SERC Reliability Corporation, and Southwest Power Pool
Regional Entity) jointly filed a motion to intervene and comments in support of the NERC
pleading. Wisconsin Electric filed comments in support of the NERC and EEI pleadings.
8 NERC Request for Rehearing at 3.
Docket No. RM06-16-011- 4 -
8. In addition, NERC reviews the action it has taken to date to study and analyze
frequency response. NERC identifies several issues that require deliberation in
developing a frequency response requirement, including: (1) need for a minimum
response for each event (rate, amount and duration); (2) the measurement selected must
be accurate and easy to implement; (3) a method of allocation must be developed; and
(4) the standard should not preclude, and should encourage, market solutions.9 NERC
also supports coordinated action by the Commission and NERC to the extent that market
solutions are adopted to deal with frequency response as an ancillary service. According
to NERC, resolving these and other issues within the six-month deadline is unreasonable.
9. Rather, NERC proposes an alternative schedule that identifies “near term” tasks to
be completed within six months and “long term” tasks to be completed within a year.10
NERC also proposes submitting a compliance filing in six months to describe the status
of NERC’s Frequency Response initiatives, and a second compliance filing within one
year to describe the analyses performed by NERC as a result of the responses to the
Frequency Response survey and any next steps that will be necessary. The NERC
schedule set forth in Attachment B of the NERC pleading does not provide a time frame
for submitting a responsive Reliability Standard establishing a frequency response
requirement. NERC, in its pleading, provides that “NERC targets completion of a
revised BAL-003 Reliability Standard within 18 months of the date of this filing.”11
Other Requests for Rehearing and Clarification
10. Other entities, such as EEI, Duke Carolinas, Georgia Transmission, PJM, and
Midwest ISO also seek rehearing, arguing that the six month compliance deadline is
unreasonable because it does not provide adequate time for NERC to perform the
technical analysis necessary to determine an appropriate frequency response requirement. Midwest ISO contends that the March 18 Order overlooks the substantial effort by NERC to comply with the Order No. 693 directives and misapprehends the nature and
complexity of Reliability Standard BAL-003-0. Midwest ISO, as well as PJM, identify and discuss technical complexities that they believe must be addressed when developing a frequency response requirement.
11. Similarly, Duke Carolinas claims that highly complex and iterative processes must occur to develop a meaningful frequency response performance standard. First,
9 Id. at 10, and Attachment A, Testimony of Howard F. Illian at 14-18.
10 See NERC Request for Rehearing, Attachment B, NERC Frequency Response Initiative Objectives and Tasks (Near-Term and Long-Term).
11 Id. at 16.
Docket No. RM06-16-011- 5 -
according to Duke Carolinas, the ERO must conduct an analysis to determine the
appropriate amount of frequency response for each interconnection. Second, frequency
response must be equitably allocated among balancing authorities. Third, there must be
coordination between balancing authorities, generator owners and load-serving entities.
Duke Carolinas contends that each process could result in changes to the way generators
are operated, and new ancillary costs to be recovered. Thus, Duke Carolinas argues that a
six month deadline is not realistic and advocates that the Commission not establish any
deadline for NERC to develop revisions to BAL-003-0. Duke Carolinas also
recommends that the Commission convene a technical conference to encourage greater understanding of frequency response issues and to promote a more collaborative
approach among the Commission, NERC and industry.
12. EEI and others also contend that, due to the complexities in developing a
frequency response requirement, the Commission’s six month compliance deadline
effectively denies the ERO the opportunity to use its technical expertise in developing the modifications, and circumvents the ERO’s stakeholder process. Further, EEI argues, similar to NERC, that the Commission erred in concluding that BAL-003-0 sets a
frequency response of one percent or greater for all balancing authorities.
III.Commission Discussion
13.On rehearing, parties raise both technical and procedural concerns. In order to
afford additional time for consideration of the matters raised or to be raised, rehearing of
the Commission's order is hereby granted for the limited purpose of further consideration,
and timely-filed rehearing requests will not be deemed denied by operation of law.12
Accordingly, the Commission will not rule at this time on NERC’s proposed alternative
schedule, or the other requests suggesting that the six-month compliance deadline is
unreasonable.
14. As described above, NERC and other entities seeking rehearing discuss the
technical complexities associated with establishing an adequate frequency response
requirement. Based on this information, it appears that a conference to discuss these
issues would be helpful in developing a greater understanding of frequency response
issues. Therefore, we direct Commission staff to convene a technical conference to
12 In the absence of Commission action within 30 days from the date the rehearing request was filed, the request for rehearing (and any timely requests for rehearing filed subsequently) would be deemed denied. 18 C.F.R. § 385.713 (2009). See San Diego
Gas & Electric Company v. Sellers of Energy and Ancillary Services Into Markets
Operated by the California Independent System Operator and the California Power
Exchange, 95 FERC ¶ 61,173 (2001) (clarifying that a single tolling order applies to all rehearing requests that were timely filed).
Docket No. RM06-16-011- 6 -
provide an opportunity for a public discussion regarding technical issues pertaining to the development of a frequency response requirement. In scheduling a technical conference, we do not decide the merits of issues raised in the rehearing requests.
15. Further, we direct that the ERO submit, within 30 days after the technical
conference, a proposed schedule that includes interim targets for completing studies and
analyses needed to develop a frequency response requirement, and a firm compliance
deadline for submission of a modified Reliability Standard that is responsive to the
Commission directives in Order No. 693 pertaining to Reliability Standard BAL-003-0.
The Commission will provide notice and opportunity to comment on the ERO’s proposed schedule, as well as other matters discussed at the technical conference. In the meantime, we will defer the six month compliance deadline set forth in the March 18 Order pending further order by the Commission.
The Commission orders:
(A) In order to afford additional time for consideration of the matters raised or to be raised, rehearing of the Commission's order is hereby granted for the limited
purpose of further consideration, and timely-filed rehearing requests will not be deemed denied by operation of law.
(B) Commission staff is hereby directed to convene a technical conference to further explore technical issues regarding the development of a frequency response performance requirement, as discussed in the body of this order.
(C) NERC is hereby directed to submit, within 30 days after the technical conference, a proposed schedule for developing a frequency response requirement, as discussed in the body of this order.
(D) The six month compliance deadline set forth in the March 18 Order is hereby deferred pending further order by the Commission.
By the Commission.
( S E A L )
Kimberly D. Bose,
Secretary.
