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Power - Regulatory and
Legal Developments

Incorporating more NAESB
standards into its regulations by reference,
FERC defends process

December 01, 2009 12:14
PM ET
By Glen
Boshart

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Related
Documents

Industry
Document
"Standards for Business
Practices and Communication Protocols for Public
Utilities - Accession No -
20091124-3035"
presented on
11/24/2009

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In
a companion order to one dealing with a proposal
that sparked much broader interest, FERC once
again incorporated by reference certain business
practice standards adopted by the wholesale power
group of the North American Energy Standards
Board, a nonprofit organization that serves as an
industry forum for the development of business
practice standards.

In
issuing the final rule (RM05-5), Order
676-E, FERC said the proposed business
standards are needed to allow utilities to
implement certain requirements of the commission's
open access transmission reform rules, including
standards governing the terms and conditions of a
new "conditional firm" transmission service. The
standards also detail the posting requirements for
available transfer capability, or ATC, its
calculation and other values.

Additionally,
the new standards modify certain timing and
transmission loading relief requirements, and are
intended to clarify and align NAESB's commercial
business standards governing the calculation of
ATC with associated reliability standards adopted
by the North American Electric Reliability Corp.
and approved in a companion order
(RM08-19). Order 676-E also amends the definitions
of certain ancillary services relating to the
inclusion of demand response resources as
potential providers of ancillary
services.

FERC
praised NAESB and the process used to develop the
proposed business standards. "For the most part,
the industry has reached a remarkable level of
consensus on these standards," the order stated.
"We recognize that not every standard enjoys
universal support, and that standardization, by
its very nature, requires the reconciliation of
different interests and needs."

The
commission said that since NAESB's process was
open and fair, giving deference "to the considered
judgment of the consensus of the industry is both
reasonable and appropriate."

Nevertheless,
FERC directed NERC to make certain clarifications,
including that the business standards and NERC's
related reliability standards will have the same
implementation date, i.e., 12 months after
approval of the referenced reliability standards
by all applicable regulatory authorities.
Consistent with that deadline, FERC said utilities
must file a revised tariff no later than 275 days
after all such approvals have been
obtained.

FERC
reiterated a directive in the companion order
stating that transmission providers must, upon
request, "make available all data used to
calculate [available transfer capability] and
[total transfer capability] for any constrained
paths and any system planning studies or specific
network impact studies performed for
customers."

FERC
also clarified certain information posting
requirements, and asked the industry and NAESB to
continue looking at additional business practice
standards to facilitate a transmission provider's
extension of its right to perform a reassessment
of the availability of conditional firm
service.

Are
NEASB documents too
costly?

The
commission defended the NAESB process in response
to complaints
objecting to the commission's approval of
nonpublic, copyrighted standards adopted by NAESB.
According to certain public power groups, FERC
should not include the NAESB standards by
reference in its regulations because doing so
forces transmission customers and others to either
become members of NAESB (for $5,000) or "buy" each
of the standards from NAESB by obtaining the
commission-approved business
practices.

The
NAESB process has saved both FERC and industry
participants a lot of time, the commission
responded. For instance, instead of requiring
entities that wanted their voices to be heard on
technical matters to attend FERC-sponsored
technical conferences and meetings, NAESB's
consensus procedures allow industry interests to
participate either directly or indirectly through
their industry representatives at NAESB.

"From
our experience, the NAESB process is [a] far more
efficient and cost effective method of developing
technical standards for the industries involved
than the use of a notice and comment rulemaking
process involving numerous technical conferences
in Washington that all believe they have to
attend," the commission
maintained.

As
for the various fees NAESB charges, the commission
said they are justified because NAESB uses them to
pay its administrative expenses. "When the
Commission weighed the advantages achieved by the
NAESB standards development process against the
cost to the Commission and the industry of
developing these standards through notice and
comment rulemaking, we found, and continue to
find, that the benefits of having a
well-established, consensus process outweigh
whatever costs non-members may incur in having to
obtain copies of the standards," FERC
stated.

Besides,
the commission said, incorporating NAESB standards
by reference instead of republishing those
standards is allowed under federal statutes when
the referenced material is reasonably available to
the public. That is the case here, FERC
maintained, noting that NAESB's standards are
readily available from NAESB, the commission and
the Office of the Federal Register. In fact, NAESB
makes the standards available for free for a
three-day period, and nonmembers may purchase a
copy of the standards for $900, "which we do not
find prohibitive, given the costs of otherwise
participating in a notice and comment rulemaking
proceeding, including the hiring of legal
counsel."

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