UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
)
Mandatory Reliability Standards for the
)
Bulk-Power System
)
)
Facilities Design, Connections and Maintenance )
Reliability Standards
)
)
Docket No. RM06-16-000
Docket No. RM07-3-000
COMMENTS
OF THE NEW YORK TRANSMISSION OWNERS
Pursuant to the Federal Energy Regulatory Commission's (“Commission” or “FERC”)
November 27, 2006 “Notice Granting in Part Motions for Extension of Time to File Comments
and Notice Announcing Rulemaking Proceeding” in the above-captioned proceeding and Rules
211, 212 and 214 of the Commission's Rules of Practice and Procedure (18 C.F.R. §§ 385.211,
385.212 and 385.214), Central Hudson Gas & Electric Corporation, Consolidated Edison
Company of New York, Inc., LIPA, New York Power Authority, New York State Electric & Gas
Corporation (“NYSEG”), Orange and Rockland Utilities, Inc., and Rochester Gas and Electric
Corporation (“RG&E”) (collectively referred to herein as the “New York Transmission
Owners”) hereby submit these comments.1
I.
BACKGROUND
On October 20, 2006, the Commission issued a Notice of Proposed Rulemaking on
Mandatory Reliability Standards for the Bulk-Power System.2 In the NOPR, the Commission,
1
All communications, pleadings, and orders with respect to this proceeding should be sent to the individuals
listed in Attachment A.
2
Mandatory Reliability Standards for the Bulk-Power System, Notice of Proposed Rulemaking, IV FERC Stats.
& Regs. ¶ 32,608 (2006) (“NOPR”).
among other things, proposed to approve 83 of 107 proposed Reliability Standards, including six
of the eight regional differences and a Glossary of Terms Used in Reliability Standards. On
November 15, 2006, the North American Electric Reliability Council, on behalf of its affiliate,
the North American Electric Reliability Corporation (“NERC Corporation,” and collectively,
“NERC”), filed 20 revised proposed Reliability Standards and three new proposed Reliability
Standards for Commission approval. Because of the close relationship of the 20 revised
proposed Reliability Standards and the standards in the NOPR, the Commission has determined
it will address the 20 Reliability Standards as part of the NOPR proceeding. On November 27,
2006, the Commission issued a notice establishing January 3, 2007 as the due date for submitting
comments as to these standards.
II.
COMMENTS
Bulk-Power System v. Bulk Electric System
Discussion in the NOPR
The statutory definition of Bulk-Power System and its relationship to the term bulk
electric system contained in the NERC glossary are discussed in paragraphs 60 through 71 of the
NOPR. In paragraphs 60 through 63 the Commission explains its understanding of the statutory
definition of Bulk-Power System and observes that the definition does not establish threshold
limits on applicable transmission facilities. The Commission then contrasts the statutory
definition of Bulk-Power System with the definition of bulk electric system set forth in the
NERC glossary, which makes a reference to a voltages threshold of facilities generally at
voltages of 100 kV or higher. The Commission notes that under the NERC definition of bulk
2
electric system, regional reliability organizations were required to add specificity to the
definition.
The Commission refers to the concern expressed in the Staff Preliminary Assessment3
that differences between the statutory definition of Bulk-Power System and NERC’s definition
of bulk electric system would create a discrepancy that could result in reliability gaps. The
Commission also refers to staff’s concern that allowing a regional reliability organization to
define what facilities are included in the definition of bulk electric system could result in
conflicting definitions, potentially subjecting or excluding similar facilities from compliance
with Reliability Standards. NOPR at P 64.
The Commission notes that NERC recommends the continued use of NERC’s definition
of bulk electric system for the initial approval of proposed Reliability Standards and, in the
longer term, suggests that change may be appropriate but any global change to the definition at
this juncture will affect many Reliability Standards and is best achieved through the Reliability
Standards development process. NOPR at P 65.
The Commission states that “[w]hile we do not believe that it is appropriate to
categorically exclude any class of facilities from the definition of Bulk-Power System, we
recognize that a particular Reliability Standard may appropriately only need to apply to a subset
3
FERC Staff Preliminary Assessment of the North American Electric Reliability Council's Proposed Mandatory
Reliability Standards, Docket No. RM06-16-000 (May 11, 2006) (“Staff Preliminary Assessment”).
3
of facilities that comprise the Bulk-Power System.” NOPR at P 67. The definition referenced by
the Commission is the statutory definition in the Federal Power Act (“FPA”).4
The Commission expresses its view that the Electric Reliability Organization's (“ERO”)
suggestion that NERC’s definition of bulk electric system be used for the initial approval of the
proposed Reliability Standards is “a sensible transition approach,” and proposes to adopt
NERC’s recommendation. NOPR at P 68. The Commission, however, goes on to state that it
interprets the term “bulk electric system” to apply to all of the 100 kV and above transmission
systems, and any underlying transmission system below 100 kV that “could limit or supplement
the operation of the higher voltage transmission systems” and “transmission to all significant
local distribution systems . . . load centers, and transmission connecting generation that supplies
electric energy to the system.” The Commission further states that “[i]f there is a question
concerning which underlying transmission system limits or supplements the operations of the
higher voltage transmission system, the Commission proposed that the ERO would provide the
final determination on a case by case basis.” Id.
The Commission states that “[c]ontinued reliance on multiple regional interpretations of
the NERC definition of bulk electric system, which omits significant portions of the transmission
system component of the Bulk-Power System that serve critical load centers, is not appropriate,”
and proposes that NERC eventually revise the current definition of bulk electric system to ensure
that all facilities, control systems, and electric energy from generation resources that impact
4
See Energy Policy Act of 2005, Pub. L. No 109-58, Title XII, Subtitle A, 119 Stat. 594, 941 (2005), to be
codified at 16 U.S.C. § 824o.
4
system reliability are included in the scope of applicability, and that NERC’s revision is
consistent with the statutory term Bulk-Power System. NOPR at P 69.
Finally, the Commission states that while its proposed approach “may result initially in a
Reliability Standard applying to a set of Bulk-Power System facilities that is less than that of the
full reach of the Commission’s jurisdiction . . . (the ‘gap’ to which the Staff Preliminary
Assessment referred), we agree with commenters that a wholesale substitution of one term for
another could lead to unintended substantive changes within certain Reliability Standards.”
NOPR at P 70.
Commission Proposal to Adopt NERC Recommendation
The New York Transmission Owner’s strongly support the Commission’s proposal to
adopt NERC’s recommendation to continue to use the NERC definition of bulk electric system
for purposes of the initial approval of the Reliability Standards. We believe that this approach
will facilitate the transition from voluntary to mandatory reliability standards and the effective
enforcement of those standards by the summer of 2007. Adoption of the NERC recommendation
also is consistent with the statutory roles assigned to the ERO and the Commission.
The bulk electric system should be defined in a manner consistent with the statute and
NERC’s proposed Reliability Standards. NERC’s definition of “bulk electric system” provides
guidance – for the application of specific standards – that bulk electric transmission facilities are
facilities that are part of the transmission network generally operated at voltages of 100 kV or
5
higher.5 NERC has drawn on the detailed knowledge of regional reliability organizations
(“RROs”) to determine which facilities are relevant to the bulk electric system, but has not
vested the RROs with complete discretion in that regard.6
NERC’s practice of applying Reliability Standards selectively to transmission facilities is
consistent with Section 215 of the FPA. The statute defines “reliable operation” as “operating
the elements of the bulk power system within equipment and electric system thermal, voltage,
and stability limits so that instability, uncontrolled separation, or cascading failures of such
system will not occur as a result of sudden disturbance.” Id. § 824o(a)(4). The statutory
definition does not establish a bright-line test that would include or exclude any category of
facilities from the scope or application of ERO Reliability Standards. Rather, the statute’s
reliance on a functional definition for “reliable operation” indicates a Congressional intent that
Reliability Standards should apply selectively to facilities within the Bulk-Power System as
necessary to secure the reliability of the system as a whole.
The NERC term, “bulk electric system”, serves a different purpose than does the
definition of Bulk-Power System under Section 215. The Bulk-Power System is comprised of
the facilities whose reliability must be secured. The bulk electric system is a subset of the BulkPower System. It is part of a methodology to identify the Bulk Power System facilities to which
NERC Reliability Standards must apply in order to ensure Bulk Power System reliability.
5
See Comments Of North American Electric Reliability Council And North American Electric Reliability
Corporation On Staff Preliminary Assessment, Docket No. RM06-16-000 (June 26, 2006), at 26 (“NERC June
Comments”).
6
Id. at 27.
6
NERC’s definition and use of “bulk electric system” should not be lightly modified. As
NERC has commented, the term “has long been used in the industry and is a technical term
describing those facilities that must be included in planning models, system studies, and
reliability analyses.”7 As NERC further notes in its comments, the current definition for bulk
electric system has evolved over decades, and comprises a body of determinations made by
industry experts working with NERC and the regional reliability organizations.8 There is no
reason to assume that those determinations are no longer valid, or for the current definition of
bulk electric system to be replaced by a blanket mandate that all ERO Reliability Standards be
applied to all facilities within the broad scope of the statutory definition of the Bulk-Power
System. Furthermore, as NERC has advised the Commission, any change to the application of
ERO Reliability Standards is best achieved through the Reliability Standards development
process in which the implications of expanding the application of Reliability Standards may be
carefully evaluated. NOPR at P 65.
It also is important to note that the blanket application of Reliability Standards to all
facilities within the broad definition of the Bulk-Power System could actually hinder reliability
by requiring operators to focus their attention on facilities that do not have a significant impact
on reliability; placing an unnecessary burden on the enforcement efforts of reliability
organizations; and diverting time and resources that could be more productively employed in
ensuring system reliability. Furthermore, an abrupt change in the applicability of Reliability
Standards would immediately raise questions as to the specific facilities to which the Reliability
7
NERC June Comments at 26.
8
Id. at 27.
7
Standards apply, questions that could not be easily or promptly answered. The Commission’s
proposal to adopt NERC’s recommendation, therefore, is consistent with the Commission’s
objective of having mandatory and enforceable Reliability Standards in place by the summer of
2007.
The Commission’s adoption of the ERO’s proposed definition of bulk-electric system
would be consistent with the statutory roles of the ERO and the Commission. The issue of
applicability is certainly relevant to the Commission in its review of a Reliability Standard and
its determination of whether a standard is “just, reasonable, not unduly discriminatory or
preferential, and in the public interest.”9 If the application of a standard is too narrow to provide
reasonable assurance that the Reliable Operation of the Bulk-Power System would be
maintained, that could be grounds for the Commission’s refusal to approve the standard and
remand it to the ERO for further consideration, pursuant to Section 215(d)(4). Under the statute,
however, the initial determination of the appropriate application of a Reliability Standard in
order to provide for Reliable Operation is properly made by the ERO based on its expertise and
pursuant to its approved Reliability Standards development process.10 The statute also provides
that, in considering the ERO's determinations, the Commission shall give due weight to the
technical expertise of the ERO.11
It is important that the Commission clarify that the discussion of its interpretation of the
NERC definition, set forth in paragraph 68 of the NOPR, is intended to provide guidance to the
9
16 U.S.C. § 824o(d)(2).
10
Id. § 824o(c)(1).
11
Id. § 824o(d)(2).
8
ERO in its consideration of the applicability of ERO Reliability Standards and is not intended to
mandate the application of ERO standards to any facilities to which they do not apply under the
existing definition of bulk electric system. In this regard, we note the Commission's statement
that “[i]f there is a question concerning which underlying transmission system limits or
supplements the operation of the higher voltage transmission system, the Commission proposed
that the ERO would provide the final determination on a case by case basis.” NOPR at P 68. It
is important that all determinations with respect to the application of ERO Reliability Standards
be made by the ERO based on its expertise and the comments of stakeholders in the ERO's
Reliability Standards development process, subject to Commission review.
Furthermore, a mandate by the Commission as to the specific facilities to which a
Reliability Standard would apply in order to achieve Reliable Operation would not be consistent
with the Commission’s proposal to accept the ERO’s recommendation to continue the use of the
existing definition of the bulk electric system for the purposes of initial approval of the ERO
standards, and would necessarily result in significant uncertainty as to the application of the
Reliability Standards. This uncertainty would have an adverse effect on compliance and
enforceability of the Reliability Standards.
In addition, it would be inconsistent with the statutory framework under Section 215,
which requires the ERO to develop Reliability Standards, subject to Commission approval.12 If
the Commission were to find that the current definition of bulk electric system does not meet the
statutory requirements for approval (which it has not done), its recourse would be to remand the
definition to the ERO for further consideration, pursuant to Section 215(d)(4). Under the statute,
12
16 U.S.C. § 824o(a)(2).
9
however, the Commission may not properly impose its own determination with respect to the
application of Reliability Standards necessary to provide for Reliable Operation of the BulkPower System. Revisions to a Reliability Standard remanded to the ERO would have to be
developed under the ERO’s approved Reliability Standard development process.
The Commission’s proposal to allow the current definition of bulk electric system to
apply for the initial approval of ERO Reliability Standards is clearly warranted, and the
Commission should avoid any confusion on that point.
Concerns Expressed By Staff in Its Preliminary Assessment
The NOPR makes reference to the concern expressed in the Staff’s Preliminary
Assessment that the differences in the statutory definition of Bulk-Power System and the NERC
definition of the bulk electric system could result in reliability gaps. As noted, however, the two
terms serve different purposes and need not be co-extensive. The first addresses the broad scope
of facilities whose reliability must be assured; the other is based on a series of expert judgments
as to the specific facilities to which the Reliability Standards should apply in order to ensure
Reliability Operation of the Bulk-Power System.
The NOPR also notes staff’s concern that allowing a regional reliability organization to
define what facilities are included in the bulk electric system could result in conflicting
definitions, potentially subjecting or excluding similar facilities from compliance with Reliability
Standards.13 NERC has previously addressed the Staff’s concern, indicating that the definition
could be modified to incorporate a reliability-impact method:
13
NOPR at P 64.
10
As defined by the Regional Reliability Organization, using a
reliability-impact method approved by the ERO, facilities and
control systems necessary for operating an interconnected electric
energy transmission network (or any portion thereof); and electric
energy from generating facilities needed to maintain transmission
system reliability. The term does not include facilities used in the
local distribution of electric energy.14
With respect to this concern, the New York Transmission Owners support the
Commission’s proposal to request the ERO to “eventually revise the current definition of bulk
electric system to ensure that all facilities, control systems, and electric energy from generation
resources that impact system reliability are included within the scope of applicability, and that
NERC’s revision is consistent with the statutory term Bulk-Power System” NOPR at P 69
(emphasis added).15 The Commission should clarify, however, that it is requesting the ERO to
review the applicability of ERO Reliability Standards to ensure that it is consistent with the
statutory requirement that Reliability Standards provide for Reliable Operation of the BulkPower System, and is not mandating the application of Reliability Standards to any specific
category of Bulk-Power System facilities without consideration of the impact on reliability.
The Commission also states in paragraph 69 of the NOPR that a NERC revision of its
definition of bulk electric system should be consistent with the term Bulk-Power System. The
Commission should clarify that this statement is intended to provide guidance to the ERO that no
category of Bulk-Power System facilities should automatically be excluded from the application
of Reliability Standards when such application is necessary to provide for the Reliable Operation
14
NERC June Comments at 28.
15
The Northeast Power Coordinating Council currently applies a system reliability impact test in determining the
inclusion of facilities in the bulk electric system.
11
of the Bulk-Power System. We agree with the Commission that there should be no bright-line
test for the automatic exclusion or inclusion of any category of bulk power facilities from the
application of Reliability Standards. The statutory objective is to provide for reliable operation
of the Bulk-Power System and the methodology used by the ERO to determine the application of
Reliability Standards should be consistent with the statutory objective.
In its review of the current definition of bulk electric system, the ERO also should
determine whether the adoption of a uniform methodology for the application of Reliability
Standards is appropriate, and what role the Regional Entities should play. It should be noted that
the Regional Entities possess extensive expertise and knowledge of the structure and operating
characteristics of the Bulk-Power System facilities within their regions. This special expertise
and knowledge is particularly relevant with respect to the effective application of Reliability
Standards and should not be lost. The ERO’s consideration of the methodology to determine the
applicability of the Reliability Standards should be conducted pursuant to the ERO’s Reliability
Standards development process.
Approve as Mandatory and Enforceable; and Direct Modification Pursuant to Section
215(d)(5)
In paragraphs 79 through 82 of the NOPR, the Commission discusses the two separate
and distinct actions the Commission would take under the statute. The first would be to approve
a proposed Reliability Standard pursuant to Section 215(d)(2), which would be mandatory and
enforceable upon the effective date of the Final Rule. The second would be to direct the ERO to
submit a modification of the Reliability Standard to address specific issues or concerns identified
by the Commission pursuant to Section 215(d)(5). In paragraph 80, the Commission states that
12
“where appropriate, we propose to approve these Reliability Standards as mandatory and
enforceable, and direct modifications pursuant to section 215(d)(5).”
The NOPR's proposal to require NERC to make significant improvements to most of the
83 Reliability Standards that it proposes to approve might ultimately serve the public interest.
However, putting aside the modifications' merits, the Commission's proposal to mandate
modifications to approximately 70 percent of the Reliability Standards proposed by NERC
would skew the standard-formulation process under Section 215 by effectively nullifying Section
215(d)(4). The Commission's objective in approving and mandating modifications is to establish
enforceable Reliability Standards before the summer of 2007. While commendable, that
objective should be achieved in a manner that is consistent with the intent of the statute. At the
very least, the Commission should clarify that its specified modifications would be considered
through NERC's Commission-approved standard-setting process and that NERC may exercise its
discretion in deciding the specific modifications, if any, it will recommend.16
Local Control Centers
In paragraphs 236 and 237 of the NOPR, the Commission notes that in the context of an
ISO or RTO, while the decision-making portion of the transmission operator or generator
operator typically is completed by the ISO or RTO, the actual implementation may be performed
by either local transmission control centers or independent generation control centers. The
Commission then proposes that all control centers and organizations that are necessary for the
actual implementation of the decisions or are needed for operation and maintenance made by the
ISO or RTO are part of the transmission or generation operator function in the functional model.
16
See 18 C.F.R. § 39.5.
13
The Commission further notes that this proposed definition of responsibility within a function
would apply to other Reliability Standards that address such activities as training, operator
certification, transmission operations, and cyber and physical security.
It is not clear that the telecommunication requirements applicable to an ISO or RTO as
the transmission operator or generator operator under the functional model should also apply to
all entities that assist the ISO or RTO in the implementation of those functions. If the
Commission is concerned that the current application of these requirements to an ISO or RTO is
inadequate, it may direct the ERO to further consider Reliability Standards that address
telecommunications, certification training, operator certification, transmission and cyber and
physical security that apply to the local control centers. Such consideration by the ERO should
be conducted under the ERO’s Reliability Standards development process, in which all interested
stakeholders will have an opportunity to comment. The Commission, however, should not
unilaterally mandate the expansion of requirements to entities when such expansion has not been
proposed or even considered by the ERO.
14
III.
CONCLUSION
The New York Transmission Owners respectfully request that the Commission take
action consistent with the comments provided herein.
Respectfully submitted,
/s/ Raymond B. Wuslich
Central Hudson Gas & Electric Corporation
Donald K. Dankner, Esq.
Raymond B. Wuslich, Esq.
Winston & Strawn LLP
1700 K Street, N.W.
Washington, DC 20006
Email: ddankner@winston.com
rwuslich@winston.com
/s/ Donald J. Stauber
Consolidated Edison Company of New
York, Inc.
Orange and Rockland Utilities, Inc.
Donald J. Stauber, Esq.
Consolidated Edison Co.
of New York, Inc.
Room 1815-s
4 Irving Place
New York, NY 10003
Email: stauberd@coned.com
/s/ David P. Yaffe
LIPA
David P. Yaffe, Esq.
Van Ness Feldman, P.C.
1050 Thomas Jefferson Street, N.W.
7th Floor
Washington, DC 20007
Email: dpy@vnf.com
/s/ Edgar K. Byham
New York Power Authority
Edgar K. Byham, Esq.
New York Power Authority
123 Main Street
White Plains, NY 10601-3170
Email: kim.byham@nypa.gov
Stanley B. Klimberg, Esq.
Roni F. Epstein, Esq.
Long Island Power Authority
333 Earle Ovington Boulevard
Suite 403
Uniondale, NY 11553
Email: sklimberg@lipower.org
repstein@lipower.org
/s/ Hank G. Masti
New York State Electric & Gas Corporation
Rochester Gas and Electric Corporation
Hank G. Masti
New York State Electric & Gas Corporation
18 Link Drive
Binghamton, NY 13902-5224
Email: hgmasti@energyeast.com
Dated: January 3, 2007
15
ATTACHMENT A
Central Hudson Gas & Electric Corporation
Donald K. Dankner, Esq.
Raymond B. Wuslich, Esq.
Winston & Strawn LLP
1700 K Street, N.W.
Washington, DC 20006
Email: ddankner@winston.com
rwuslich@winston.com
Thomas C. Duffy
Manager, Electric System Design &
Central Hudson Gas & Electric
Corporation
284 South Avenue
Poughkeepsie, NY 12601
Email: tduffy@cenhud.com
John W. Watzka
Section Engineer - Transmission Planning & Design
Central Hudson Gas & Electric
Corporation
284 South Avenue
Poughkeepsie, NY 12601
Email: jwatzka@cenhud.com
Consolidated Edison Company of New York, Inc.
Donald J. Stauber, Esq.
Consolidated Edison Co. of New York, Inc.
Room 1815-s
4 Irving Place
New York, NY 10003
Email: stauberd@coned.com
Neil H. Butterklee, Esq.
Consolidated Edison Co. of New York, Inc.
Room 1815-s
4 Irving Place
New York, NY 10003
Email: butterkleen@coned.com
Stuart Nachmias
Director, Energy Markets Policy Group
Consolidated Edison Co. of New York, Inc.
Room 1138
4 Irving Place
New York, NY 10003
Email: nachmiass@coned.com
LIPA
David P. Yaffe, Esq.
Van Ness Feldman, P.C.
1050 Thomas Jefferson Street, N.W.
7th Floor
Washington, DC 20007
Email: DPY@vnf.com
Stanley B. Klimberg, Esq.
Roni F. Epstein, Esq.
Long Island Power Authority
333 Earle Ovington Boulevard
Suite 403
Uniondale, NY 11553
Email: sklimberg@lipower.org
repstein@lipower.org
New York Power Authority
Edgar K. Byham, Esq.
New York Power Authority
123 Main Street
White Plains, NY 10601-3170
Email: kim.byham@nypa.gov
William Palazzo, Manager-NYISO Market Policy
New York Power Authority
123 Main Street
White Plains, NY 10601-3170
Email: palazzo.w@nypa.gov
17
New York State Electric & Gas Corporation
Raymond P. Kinney
New York State Electric & Gas Corporation
Corporate Drive
Kirkwood Industrial Park
P.O. Box 5224
Binghamton, NY 13902-5224
Email: rpkinney@nyseg.com
Orange and Rockland Utilities, Inc.
John D. McMahon, President
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza
Pearl River, NY 10965
Neil H. Butterklee, Esq.
Consolidated Edison Co. of New York, Inc.
Room 1815-s
4 Irving Place
New York, NY 10003
Email: butterkleen@coned.com
Rochester Gas and Electric Corporation
Marjorie Perlman
Rochester Gas and Electric Corporation
89 East Avenue
Rochester, NY 14649-0001
Email: marjorie_perlman@rge.com
18