Published Rm12-12-000 (2-27-2013)

Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations
accurate inflation forecasting as a way to
maintain the real value of their
investment portfolios. Accordingly, the
Board is adopting the September 2012
proposal without substantive change.
However, the Board has amended the
language of the section slightly to better
incorporate the amendment into the
existing language of the rule.
B. Does this rule impose any new
regulatory burdens on FCUs?
While the Board believes the
authority to invest in TIPS can be a
valuable part of an effective risk
management program for those FCUs
that understand the risks, TIPS may not
be appropriate for all FCUs. As with any
investment, the decision to purchase
TIPS should be based on sound due
diligence and a demonstrated
effectiveness in managing risk.
However, other than the due diligence
and risk management requirements
already required by NCUA for
investments under § 703.14(a), this final
rule does not impose any new TIPSspecific due diligence or risk
management requirements on FCUs.
This final rule authorizes FCUs to
purchase TIPS only. Other similar
securities based on inflation indices
currently available or available in the
future that are not issued by the United
States Treasury Department are not
authorized by this rule. While several
commenters requested the Board
provide increased flexibility and
additional investment powers to
qualified FCUs, such requests are
outside the scope of this rulemaking and
will be considered separately by the
Board.
C. What happens to the TIPS pilot
program?
The TIPS pilot program will be
terminated as of the effective date of this
final rule.

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IV. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act
requires NCUA to prepare an analysis to
describe any significant economic
impact a rule may have on a substantial
number of small entities (primarily
those under $50 million in assets). This
final rule extends regulatory relief while
maintaining existing safety and
soundness standards. NCUA has
determined this final rule will not have
a significant economic impact on a
substantial number of small credit
unions.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which

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an agency by rule creates a new
paperwork burden on regulated entities
or modifies an existing burden.5 For
purposes of the PRA, a paperwork
burden may take the form of either a
reporting or a recordkeeping
requirement, both referred to as
information collections. As noted above,
this final rule extends regulatory relief
while maintaining existing safety and
soundness standards. NCUA has
determined that the requirements of this
rule do not increase the paperwork
requirements under the Paperwork
Reduction Act of 1995 and regulations
of the Office of Management and
Budget.
Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. NCUA, an
independent regulatory agency as
defined in 44 U.S.C. 3502(5), voluntarily
complies with the executive order to
adhere to fundamental federalism
principles. This final rule will not have
a substantial direct effect on the states,
on the relationship between the national
government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. The rule only
adds to the list of permissible
investments for FCUs. NCUA has
determined that this final rule does not
constitute a policy that has federalism
implications for purposes of the
executive order.
Assessment of Federal Regulations and
Policies on Families
NCUA has determined that this final
rule will not affect family well-being
within the meaning of Section 654 of
the Treasury and General Government
Appropriations Act, 1999.6
Small Business Regulatory Enforcement
Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 7
(SBREFA) provides generally for
congressional review of agency rules. A
reporting requirement is triggered in
instances where NCUA issues a final
rule as defined by Section 551 of the
Administrative Procedure Act.8 The
Office of Management and Budget has
determined that the final rule is not a
‘‘major rule’’ for purposes of SBREFA.
List of Subjects in 12 CFR Part 703
Credit unions, Investments.
5 44

U.S.C. 3507(d); 5 CFR part 1320.
Law 105–277, 112 Stat. 2681 (1998).
7 Public Law 104–121, 110 Stat. 857 (1996).
8 5 U.S.C. 551.
6 Public

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13213

By the National Credit Union
Administration Board on February 21, 2013.
Mary Rupp,
Secretary of the Board.

For the reasons discussed above, the
Board amends 12 CFR part 703 as
follows:
PART 703—INVESTMENT AND
DEPOSIT ACTIVITES
1. The authority citation for part 703
continues to read as follows:

■

Authority: 12 U.S.C. 1757(7), 1757(8),
1757(15).

2. Revise § 703.14(a) to read as
follows:

■

§ 703.14

Permissible investments.

(a) Variable rate investment. A federal
credit union may invest in a variable
rate investment, as long as the index is
tied to domestic interest rates. Except in
the case of Treasury Inflation Protected
Securities, the variable rate investment
cannot, for example, be tied to foreign
currencies, foreign interest rates,
domestic or foreign commodity prices,
equity prices, or inflation rates. For
purposes of this part, the U.S. dollardenominated London Interbank Offered
Rate (LIBOR) is a domestic interest rate.
*
*
*
*
*
[FR Doc. 2013–04619 Filed 2–26–13; 8:45 am]
BILLING CODE 7535–01–P

DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 40
[Docket No. RM12–12–000; Order No. 775]

Regional Reliability Standard PRC–
006–NPCC–1—Automatic
Underfrequency Load Shedding
Federal Energy Regulatory
Commission.
ACTION: Final rule.
AGENCY:

SUMMARY: Under section 215 of the
Federal Power Act (FPA), the Federal
Energy Regulatory Commission
(Commission) approves regional
Reliability Standard PRC–006–NPCC–1
(Automatic Underfrequency Load
Shedding), submitted to the
Commission for approval by the North
American Electric Reliability
Corporation (NERC). Regional
Reliability Standard PRC–006–NPCC–1
applies to generator owners, planning
coordinators, distribution providers,
and transmission owners in the
Northeast Power Coordinating Council

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Region. Regional Reliability Standard
PRC–006–NPCC–1 is designed to ensure
the development of an effective
automatic underfrequency load
shedding (UFLS) program to preserve
the security and integrity of the BulkPower System during declining system
frequency events, in coordination with
the NERC continent-wide UFLS
Reliability Standard PRC–006–1. The
Commission approves the related
violation risk factors, violation severity
levels, implementation plan, and
effective dates proposed by NERC.
Effective Date: This rule will
become effective April 29, 2013.
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.
Matthew Vlissides (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE., Washington, DC
20426, Telephone: (202) 502–8408,
[email protected].
DATES:

SUPPLEMENTARY INFORMATION:

Before Commissioners: Jon Wellinghoff,
Chairman; Philip D. Moeller, John R.
Norris, Cheryl A. LaFleur, and Tony T.
Clark.

Final Rule

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Issued February 21, 2013
1. Under section 215 of the Federal
Power Act (FPA),1 the Commission
approves regional Reliability Standard
PRC–006–NPCC–1 (Automatic
Underfrequency Load Shedding). The
Commission also approves the related
violation risk factors (VRFs), violation
severity levels (VSLs), implementation
plan, and effective dates proposed by
the North American Electric Reliability
Corporation (NERC). NERC submitted
regional Reliability Standard PRC–006–
NPCC–1 to the Commission for
approval. The regional Reliability
Standard applies to generator owners,
planning coordinators, distribution
providers, and transmission owners in
the Northeast Power Coordinating
Council (NPCC) Region and is designed
to ensure the development of an
effective automatic underfrequency load
shedding (UFLS) program to preserve
the security and integrity of the BulkPower System during declining system
frequency events, in coordination with
1 16

U.S.C. 824o (2006).

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NERC’s continent-wide UFLS Reliability
Standard PRC–006–1.
I. Background
A. Mandatory Reliability Standards
2. 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. Once
approved, the Reliability Standards may
be enforced by NERC (the Commissioncertified ERO), subject to Commission
oversight, or by the Commission
independently.2
3. A Regional Entity may develop a
Reliability Standard for Commission
approval to be effective in that region
only.3 In Order No. 672, the
Commission stated that:
As a general matter, we will accept the
following two types of regional differences,
provided they are otherwise just, reasonable,
not unduly discriminatory or preferential and
in the public interest, as required under the
statute: (1) a regional difference that is more
stringent than the continent-wide Reliability
Standard, including a regional difference that
addresses matters that the continent-wide
Reliability Standard does not; and (2) a
regional Reliability Standard that is
necessitated by a physical difference in the
Bulk-Power System.4

4. On April 19, 2007, the Commission
accepted delegation agreements between
NERC and each of the eight Regional
Entities.5 In the order, the Commission
accepted NPCC as a Regional Entity.
5. NERC’s Commission-approved and
currently-effective Reliability Standard
PRC–006–1 establishes continent-wide
design and documentation requirements
for UFLS programs that arrest declining
frequency and assist recovery of
frequency following system events
leading to frequency degradation.
B. NERC Petition
6. On May 4, 2012, NERC petitioned
the Commission to approve regional
Reliability Standard PRC–006–NPCC–1
and the related violation risk factors,
violation severity levels, effective dates,
and implementation plan.6 On August
2 16

U.S.C. 824o(e) (2006).
U.S.C. 824o(e)(4). A Regional Entity is an
entity approved by the Commission to enforce
Reliability Standards under delegated authority
from the ERO. See 16 U.S.C. 824o(a)(7) and (e)(4).
4 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, at P 291 (2006), order on
reh’g, Order No. 672–A, FERC Stats. & Regs.
¶ 31,212 (2006).
5 North American Electric Reliability Corp., 119
FERC ¶ 61,060 (2007), order on reh’g, 120 FERC
¶ 61,260 (2007).
6 Regional Reliability Standard PRC–006–NPCC–
1 is available on the Commission’s eLibrary
3 16

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3, 2012, NERC filed an errata regarding
the proposed implementation plan.
NERC stated that regional Reliability
Standard PRC–006–NPCC–1 is based on
the program characteristics defined
within NPCC Directory #12
Underfrequency Load Shedding
Program Requirements (NPCC Directory
#12), which contains the criteria that
govern the NPCC Automatic UFLS
program that have been in place since
June 26, 2009.7 According to NERC,
regional Reliability Standard PRC–006–
NPCC–1 will achieve a coordinated,
comprehensive UFLS region-wide
consistent program within the NPCC
Region and provides the regional
requirements necessary to achieve and
facilitate the broader program
characteristics contained in the
requirements of the NERC Reliability
Standard PRC–006–1.8 NERC stated that
the regional Reliability Standard adds
specificity not contained in NERC
Reliability Standard PRC–006–1 and is
designed to work in conjunction with
and augment Reliability Standard PRC–
006–1 by mitigating the consequences of
an underfrequency event, while
accommodating differences in system
transmission and distribution topology
among NPCC planning coordinators due
to historical design criteria, makeup of
load demands, and generation
resources.9 NERC further stated that
regional Reliability Standard PRC–006–
NPCC–1 facilitates uniformity and
compliance, and clearly delineates what
the applicable entities’ requirements are
within the NPCC Region to achieve a
robust, reliable and effective UFLS
program.10
7. In the petition, NERC proposed
violation risk factors and violation
severity levels for each requirement of
the regional Reliability Standard, an
implementation plan, and effective
dates. NERC stated that these proposals
were developed and reviewed for
consistency with NERC and
Commission guidelines. NERC proposed
two effective dates for the regional
Reliability Standard. NERC stated that
Requirements R1 through R7 would
become effective on the first day of the
first calendar quarter following
applicable regulatory approval but no
earlier than January 1, 2016. For
Requirements R8 through R23, NERC
stated that they will become effective
the first day of the first calendar quarter
document retrieval system in Docket No. RM12–12–
000 and on the NERC Web site, www.nerc.com.
7 NERC Petition at 11.
8 Id. at 29–30.
9 Id.
10 Id. at 30.

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two years following applicable
regulatory approval.
C. Notice of Proposed Rulemaking
8. On September 20, 2012, the
Commission issued a Notice of
Proposed Rulemaking (NOPR)
proposing to approve regional
Reliability Standard PRC–006–NPCC–1
as just, reasonable, not unduly
discriminatory or preferential, and in
the public interest.11 The Commission
proposed to approve regional Reliability
Standard PRC–006–NPCC–1 because it
is designed to operate in conjunction
with the NERC continent-wide UFLS
Reliability Standard PRC–006–1 by
mitigating the consequences of
underfrequency events, while
accommodating differences in system
transmission and distribution topology
among NPCC planning coordinators due
to historical design criteria, makeup of
load demands, and generation
resources. The NOPR determined that
the regional Reliability Standard
includes requirements that are not
found in the corresponding NERC
Reliability Standard PRC–006–1 and
that are more stringent than Reliability
Standard PRC–006–1.
9. While proposing to approve
regional Reliability Standard PRC–006–
NPCC–1, the NOPR sought comment on
two issues: (1) The technical basis for
the 57.8 Hz maximum tripping limit for
existing nuclear units established in
Requirement R19; and (2) the timeframe for actions that result in changes
to the NPCC UFLS program.
10. In response to the NOPR, initial
comments were filed by NERC, NPCC,
New York Independent System Operator
(NYISO), PSEG Companies (PSEG),12
and Dominion Resources Services, Inc.
(Dominion).13 NERC and NPCC filed
reply comments.
II. Discussion

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11. Pursuant to FPA section 215(d)(2),
we approve regional Reliability
Standard PRC–006–NPCC–1 as just,
reasonable, not unduly discriminatory
or preferential, and in the public
interest. Regional Reliability Standard
PRC–006–NPCC–1 is designed to
11 Regional Reliability Standard PRC–006–NPCC–
1—Automatic Underfrequency Load Shedding,
Notice of Proposed Rulemaking, 77 FR 59,151
(September 26, 2012), FERC Stats. & Regs. ¶ 32,691
(2012).
12 PSEG is comprised of PSEG Power LLC and
PSEG Energy Resources & Trade LLC.
13 Dominion filed comments on behalf of Virginia
Electric and Power Company, Dominion Energy
Kewaunee, Inc., Dominion Nuclear Connecticut,
Inc., Dominion Energy Brayton Point, LLC,
Dominion Energy Manchester Street, Inc., Elwood
Energy, LLC, Kincaid Generation, LLC, and Fairless
Energy, LLC.

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operate in conjunction with the NERC
continent-wide UFLS Reliability
Standard PRC–006–1 by mitigating the
consequences of underfrequency events,
while accommodating differences in
system transmission and distribution
topology among NPCC planning
coordinators. Regional Reliability
Standard PRC–006–NPCC–1 includes
requirements that are not found in the
corresponding NERC Reliability
Standard PRC–006–1 and that are more
stringent than Reliability Standard PRC–
006–1 while accommodating differences
in system transmission and distribution
topology among NPCC planning
coordinators due to historical design
criteria, makeup of load demands, and
generation resources.
12. We address below the following
issues raised in the NOPR and/or
comments: (A) Requirement R19—
nuclear generating plants; (B) Timeframe for completion of actions; (C)
Compensatory load shedding
requirements; and (D) violation risk
factors and violations severity levels.
A. PRC–006–NPCC–1, Requirement R19
13. In the NOPR, the Commission
sought comments on the technical basis
for the 57.8 Hz maximum tripping limit
for existing nuclear units established in
Requirement R19. The NOPR observed
that Requirement R19 provides that:
R19 Each Generator Owner of existing
nuclear generating plants with units
that have underfrequency relay
threshold settings above the Eastern
Interconnection generator tripping
curve in Figure 1, based on their
licensing design basis, shall:
[Violation Risk Factor: High] [Time
Horizon: Long Term Planning]
19.1 Set the underfrequency
protection to operate at as low a
frequency as possible in accordance
with the plant design licensing
limitations but not greater than 57.8
Hz.
19.2 Set the frequency trip setting
upper tolerance to no greater than +
0.1 Hz.
19.3 Transmit the initial frequency
trip setting and any changes to the
setting and the technical basis for
the settings to the Planning
Coordinator.
14. The NOPR stated that the NERC
petition did not explain the technical
basis for establishing 57.8 Hz as the
maximum frequency at which existing
nuclear units may trip pursuant to
Requirement R19.1, other than to state
that the regional Reliability Standard
was based on the work of an NPCC
working group.14 The NOPR stated that
14 NERC

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13215

the NERC petition and its attachments
did not provide any information as to
how the 57.8 Hz limit was developed.
The NOPR sought comment from NPCC,
NERC, and other interested entities
explaining the technical basis for the
57.8 Hz limit established in
Requirement R19.1.
Comments
15. NPCC states that its UFLS program
is designed to arrest frequency decline
at or above 58.0 Hz while incorporating
the performance characteristics of
regional generation. In determining the
57.8 Hz limit for existing nuclear units
within the NPCC Region, NPCC states
that it ‘‘considered the minimum
program frequency of 58.0 Hz, the
existing maximum trip settings of the
nuclear units (gathered through surveys)
within NPCC’s footprint, system
response, and credible islands as
determined by the NPCC Planning
Coordinators.’’ 15 NPCC states that a
maximum frequency threshold trip
setting of 57.8 Hz for existing nuclear
units provides a ‘‘margin of 0.2 Hz
above the highest frequency at which
[the nuclear units in NPCC’s footprint]
are expected to be tripped by low
coolant flow or under frequency
protection and yields acceptable system
performance with minimum changes
required to the nuclear units.’’ 16 NPCC
adds that it considered 0.2 Hz to be a
conservative margin and was developed
in consideration of the typical relay drift
tolerance of ± 0.1 Hz,17 which ensures
the units do not trip above 58.0 Hz.
NPCC states that if existing nuclear
units adhere to the 57.8 Hz maximum
tripping limit requirement, ‘‘islands
with a 25% generation deficiency are
able to survive, maintain automatic
UFLS program requirements, and the
program will achieve satisfactory system
performance.’’ 18
16. NERC states that it supports the
comments submitted by NPCC regarding
the technical basis for the 57.8 Hz limit.
NERC also states that the requirements
in regional Reliability Standard PRC–
006–NPCC–1 are consistent with the
continent-wide UFLS Reliability
Standard PRC–006–1.19
15 NPCC

Initial Comments at 4.
at 5.
17 NPCC states that a relay setting of 57.8 Hz with
a typical relay drift tolerance of ± 0.1 Hz would
result in actual trip bandwidth of between 57.9 Hz
and 57.7 Hz.
18 Id.
19 NYISO supports approval of regional
Reliability Standard PRC–006–NPCC–1 without
modification. NYISO Comments at 2.
16 Id.

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Commission Determination
17. The Commission finds that NPCC
has provided an adequate technical
basis for the 57.8 Hz maximum
frequency threshold trip setting for
existing nuclear units, as set forth in
Requirement R19. As explained by
NPCC, a maximum frequency threshold
trip setting of 57.8 Hz for existing
nuclear units provides a margin of 0.2
Hz above the highest frequency at which
the nuclear units in NPCC’s footprint
are expected to trip by low coolant flow
or underfrequency protection.
Adherence to the 57.8 Hz limit should
also result in islands with a 25%
generation deficiency being able to
survive and maintain automatic UFLS
program requirements.
B. Time-Frame for Completion of
Actions
18. In the NOPR, the Commission
sought comments on the time-frames for
actions that result in changes to the
NPCC UFLS program. The NOPR
observed that NERC’s Reliability
Standard PRC–006–1, Requirement R3,
requires the planning coordinator to set
the schedule for distribution providers
and transmission owners to implement
the UFLS program and that regional
Reliability Standard PRC–006–NPCC–1,
Requirements R5, R16.2, and R19.3,
require distribution providers,
transmission owners, and generator
owners to provide, inform, and transmit
exceptions to the UFLS program and
justifications for the exceptions to the
planning coordinator. The NOPR stated
that these Requirements in regional
Reliability Standard PRC–006–NPCC–1
do not specify a time-frame for the
completion of these actions. The NOPR
indicated that Requirements R5, R16.2,
and R19.3 address actions that can
result in changes to the UFLS program
and should occur before the UFLS
program is implemented, thus making it
necessary for entities to provide the
required information to the planning
coordinator within a specified period of
time. The NOPR further observed that
other Requirements in regional
Reliability Standard PRC–006–NPCC–1
require actions of distribution providers,
transmission owners, and generator
owners that should occur before the
UFLS program is implemented and that
those actions include specific timeframes for completion.20 The NOPR
sought comment on whether
Requirements R5, R16.2, and R19.3
should also specify time-frames for
completion of the required actions and,

if so, the appropriate time-frames for
each.
Comments
19. NPCC states that Requirement R5
addresses a limited set of nonconforming circumstances and places
the burden on entities to demonstrate
that such non-conforming
circumstances do not degrade the
overall performance of the UFLS
program. NPCC states that the absence
of time-frames for completion of the
required actions in Requirement R5
means that responsible entities are
required to notify the NPCC planning
coordinator ‘‘upon identification of any
non-conformance with Requirement
R5.’’ 21 NPCC states that this is the
current practice with respect to
applicable entities. NPCC states that
providing a time-frame would ‘‘result in
delays of the transmittal of critical
information to the Planning Coordinator
which could potentially impact UFLS
system performance.’’ 22
20. NPCC states that Requirement R16
addresses an existing class of nonnuclear units that ‘‘trip above the
threshold curve for setting
underfrequency trip protection for
generators and which already provide
compensatory load shedding in
accordance with existing
procedures.’’ 23 NPCC states that
‘‘Planning Coordinators within NPCC
have information for the class of
existing units for R16, with
underfrequency protection set to trip
above the curve in Figure 1, [and thus]
assigning time-frames is of no benefit to
the program.’’ 24 NPCC states, however,
that Requirement R16.2 also requires
changes to underfrequency settings,
along with the technical basis for those
settings from generators in this class of
units, to be transmitted to the planning
coordinator. NPCC maintains that ‘‘[i]t
is the expectation that in the absence of
a time-frame,’’ in Requirement R16.2
those entities, ‘‘immediately upon
identification of such a change,’’ would
notify the Planning Coordinator.25
21. NPCC states that Requirement
R19.3, similar to the requirements
regarding non-nuclear units in
Requirement R16.2, requires responsible
entities to provide planning
coordinators with the current operating
parameters of an existing class of
nuclear units that trip above the
threshold curve for setting
underfrequency trip protection for
21 NPCC

Initial Comments at 7.

22 Id.
20 See, e.g., Requirements R11, R14, and R23 of
proposed regional Reliability Standard PRC–006–
NPCC–1.

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23 Id.
24 Id.
25 Id.

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at 8.

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generators units. NPCC further states
that like Requirement R16.2,
Requirement 19.3 requires responsible
entities to transmit changes to the
underfrequency settings to the planning
coordinator. NPCC maintains that, in
the absence of time-frames, responsible
entities must notify the planning
coordinator ‘‘immediately upon
identification of such change.’’ 26
22. NPCC also states that there is a
limited number of existing nuclear and
non-nuclear units that trip above the
curve in Figure 1. NPCC notes that
Requirement R15 requires that all new
units conform to the curve in Figure 1.
According to NPCC, the number of units
that must comply with Requirement R16
and Requirement R19 is limited to the
existing set of units described above and
thus the inclusions of time-frames is
unnecessary.
23. NERC states that it supports the
comments submitted by NPCC on this
issue.
Commission Determination
24. The Commission finds that NPCC
has provided adequate justification for
not including specific time-frames in
Requirements R5, R16.2, and R19.3.
NPCC states that these Requirements
apply to a limited number of existing
nuclear and non-nuclear units whose
performance characteristics are already
incorporated in the regional UFLS
program, and that planning coordinators
within NPCC have the existing technical
parameters necessary to incorporate
existing unit attributes and
compensatory load shedding
information into their assessment. NPCC
further states that the absence of specific
time-frames in these Requirements
means that responsible entities must
immediately notify planning
coordinators upon identification of any
non-conformance or changes to
underfrequency settings pursuant to
these Requirements. The Commission
determines that this satisfies the
concern raised in the NOPR.
C. Compensatory Load Shedding
Requirements
25. Reliability Standard PRC–006–
NPCC–1, Requirements R3, R16 and
R18, address compensatory load
shedding.27 In particular, Requirement
R16.3 requires generator owners of
existing non-nuclear units that have
non-conforming underfrequency
26 Id.
27 Compensatory load shedding is automatic
shedding of load adequate to compensate for the
loss of a generator due to the generator tripping
early (i.e., because the generator has
underfrequency protection set to trip above the
curve in Figure 1).

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Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations
protection set points to, among other
things, ‘‘[h]ave compensatory load
shedding, as provided by a Distribution
Provider or Transmission Owner that is
adequate to compensate for the loss of
their generator due to early tripping.’’
Requirement R18 requires that ‘‘[e]ach
Generator Owner, Distribution Provider
or Transmission Owner within the
Planning Coordinator area of ISO–NE or
the New York ISO shall apply the
criteria described in Attachment B to
determine the compensatory load
shedding that is required in
Requirement R16.3 for generating units
in its respective NPCC area.’’
Attachment B, Section 2.5, provides that
the ‘‘amount of compensatory load
shedding shall be equivalent (±5%) to
the average net generator megawatt
output for the prior two calendar years,
as specified by the Planning
Coordinator, plus expected station loads
to be transferred to the system upon loss
of the facility.’’

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Comments
26. Dominion states that there are
technical difficulties associated with
Requirements R16.3 and R18. Dominion
states that shedding additional load
equivalent to a non-conforming
generator would be extremely difficult
to design and coordinate and that the
design would have to account for the
real-time status and output of the
generator. Dominion also states that
Requirements R16.3 and R18 are
unreasonable because they require nonconforming generators to procure
compensatory load shedding service for
which Dominion has found no willing
provider. Dominion maintains that, as a
result, the regional Reliability Standard
cannot be practically implemented and
may have an adverse impact on the
Bulk-Power System. Dominion further
states that NPCC’s assertion that
generators in NPCC are already
following these procedures as part of
NPCC Directory #12 is misleading
because only NPCC Full Members are
required to follow the existing criteria.
Dominion maintains that the regional
Reliability Standard will impact a
number of generators that are not NPCC
Full Members. In addition, Dominion
observes that several entities raised
concerns with the compensatory load
shedding provisions during the regional
Reliability Standard drafting process.
Dominion also maintains that Order No.
763,28 in which the Commission
approved the continent-wide NERC
28 Automatic Underfrequency Load Shedding and
Load Shedding Plans Reliability Standards, Order
No. 763, 139 FERC ¶ 61,098, clarified, 140 FERC
¶ 61,164 (2012).

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UFLS Reliability Standard PRC–006–1,
supports Dominion’s position that it is
inappropriate for the regional Reliability
Standard ‘‘to require a non-conforming
generator to obtain compensating load
shedding as it is ultimately the planning
coordinators responsibility to design the
UFLS system to account for such
generator.’’ 29
27. PSEG states that it is inappropriate
for planning coordinators to assign
responsibility for compensatory load
shedding, asserting that it is
inconsistent with Order No. 763. PSEG
also contends that the regional
Reliability Standard contravenes the
prohibition in FPA section 215 against
setting standards for ‘‘adequacy or safety
of electric facilities or services’’ because
the regional Reliability Standard
requires generator owners with existing
non-conforming units to construct
additional capacity or acquire off-setting
UFLS at their expense.30 PSEG also
states that Requirement R16 imposes
obligations upon generator owners that
are absent from the NERC Reliability
Functional Model.31 PSEG states that
one of the tasks of a generator owner is
to ‘‘[p]rovide verified generating facility
performance characteristics/data,’’ but
that there is no obligation for generators
to compensate other entities for
performance that does not meet a
specific level. PSEG further states that
distribution providers and transmission
owners in NPCC do not have tariffs in
place that would permit them to charge
and/or provide generator owners with
compensatory load shedding.
28. In reply to Dominion’s and PSEG’s
comments, NPCC states that the regional
Reliability Standard drafting team
considered comments regarding the
difficulty of designing and coordinating
the shedding of load equivalent to a
non-conforming generator, but that the
overarching reliability objective of reestablishing a balance between load and
generation during possible islanding
events made shedding additional load
necessary. NPCC states that it is
impractical to expect an exact match
between compensatory load shedding
and unit output but maintains that
29 Dominion

Comments at 8.
U.S.C. 824o(i)(2). PSEG also contends that
the regional Reliability Standard contravenes the
definition of ‘‘Reliability Standard’’ in FPA section
215, which excludes ‘‘any requirement to enlarge
[Bulk-Power System] facilities or to construct new
transmission capacity or generation capacity.’’ 16
U.S.C. 824o(a)(3).
31 The NERC Reliability Functional Model
provides the framework for the development and
applicability of NERC’s Reliability Standards.
NERC, Reliability Functional Model, Version 5 at 7
(approved May 2010), available at http://
www.nerc.com/files/
Functional_Model_V5_Final_2009Dec1.pdf.
30 16

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13217

compensatory load shedding based on
an average megawatt output, as
provided in Attachment B, aligns the
amount of compensatory load shedding
with the unit output most likely to be
lost when the unit trips prematurely.
NPCC further states that requiring
compensatory load shedding based on a
two year average net generator megawatt
output is an effective approach to
integrating small non-conforming
generators into the design of a UFLS
program. In addition, NPCC observes
that that Regional Criteria requiring
non-conforming generation to secure
compensatory load shedding preexist
the development of the regional
Reliability Standard and that it is a cost
effective alternative for generators. With
respect to Order No. 763, NPCC states
that the regional Reliability Standard is
consistent with the Commission’s
determination that it is appropriate for
planning coordinators to consider
generators that trip outside of the UFLS
set points.
29. NPCC maintains that the regional
Reliability Standard Requirements R1
and R3 are ‘‘only intended to
communicate the results of locational
assessments, and there is no obligation
to obtain compensatory load shedding
based solely on this information nor
does the Planning Coordinator
determine whether mitigation is
necessary or who will be responsible for
providing mitigation.’’ 32 NPCC states
that compensatory load shedding is
merely an option to bring nonconforming generators into compliance.
In response to comments regarding the
absence of tariffs that permit for
compensatory load shedding service,
NPCC states that such concerns are
tempered by the fact that all new
generators, going forward, must conform
with the underfrequency trip
performance characteristics in the
regional Reliability Standard and that
compensatory load shedding only
potentially impacts existing, nonconforming, non-nuclear units.
30. NPCC further notes that the
existing compensatory load shedding
requirements are presently contained in
NPCC Directory #12 and ‘‘have been
successfully implemented within the
region * * * and non-conforming
generators that are already
interconnected either have existing
contracts to provide compensatory load
shedding or have mitigated the
conditions that would trip the unit
above the performance curve in order to
comply with the Regional Criteria.’’ 33
32 NPCC
33 Id.

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Reply Comments at 5.
at 6–7.

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NPCC states that the regional Reliability
Standard achieved an 83.5 percent
overall approval ‘‘with a majority of
registered Generator Owners in the
region voting to approve the
standard.’’ 34 With respect to FPA
section 215, NPCC maintains that
compensatory load shedding does not
present a resource adequacy issue but,
instead, addresses a generating unit’s
ability to perform, with the generator
having the option of meeting the
performance curve, mitigating the
operating condition, or obtaining
compensatory load shedding. With
respect to the NERC Reliability
Functional Model, NPCC states that the
absence of a task within the functional
model does not preclude assigning a
new or existing task based on a new or
revised Reliability Standard. NPCC
states that the functional model only
defines the functions that must be
performed to ensure the reliability of the
bulk electric system and should not be
used to restrict a reliability-related
activity or Reliability Standard
requirements.
31. In reply to Dominion’s and PSEG’s
comments, NERC states it never
intended to suggest that it is
inappropriate for planning coordinators
to determine whether mitigation is
necessary and who will provide
mitigation with respect to generators
that trip outside the UFLS set points in
UFLS programs. NERC states that ‘‘[o]n
the contrary, the Planning Coordinator
is one of the functional entities with
responsibility for maintaining the
reliability of the Bulk-Power System.’’ 35
NERC maintains that it has stated that
it is inappropriate for a Reliability
Standard to supplant the planning
coordinator’s role in establishing UFLS
program requirements. However, NERC
states that regional Reliability Standard
PRC–006–NPCC–1 ‘‘reflects the NPCC
Planning Coordinators’ collective
assessment of how to address this
concern.’’ 36
32. Further, NERC claims that the
technical concerns raised in the
comments are overstated. NERC states
that concerns ‘‘regarding potential
overfrequency excursions due to
overcompensating when a generating
unit with non-conforming trip setting is
off-line would be appropriate if
compensatory loadshedding was
applied to large generating units or if
the provision was open-ended with
applicability to future generating units
not studied by the Planning
34 Id.

at 9.
Reply Comments at 2.
36 Id. at 3.
35 NERC

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Coordinator.’’ 37 NERC observes that the
compensatory load shedding provisions
in the regional Reliability Standard, by
contrast, are limited to a ‘‘defined
amount of generating capacity that is
included in Planning Coordinator
assessments, [and] does not jeopardize
reliability of the Bulk-Power System.’’ 38
Commission Determination
33. The Commission rejects the
protests made by Dominion and PSEG
regarding the compensatory load
shedding provisions of regional
Reliability Standard PRC–006–NPCC–1.
Based on the record before us, we are
not persuaded that the compensatory
load shedding option for existing, nonconforming units in Requirement R16
presents a technical barrier to
implementation of the regional
Reliability Standard. NPCC states that
generators already comply with the
compensatory load shedding
requirements in NPCC Directory #12,
which is not disputed by Dominion and
PSEG. While Dominion maintains that
the regional Reliability Standard will
require more generators (i.e., non-NPCC
Full Members) to comply with the
compensatory load shedding
requirement, the fact that there are
generators who do so now refutes the
assertion that the requirement is
technically or practically infeasible.39
Moreover, we agree with NERC that the
concerns regarding overfrequency
excursions due to overcompensating for
loss of off-line units might be valid if
compensatory load shedding was
applied to large generating units or to
new generating units, but that is not the
case here since compensatory load
shedding only applies to existing, nonconforming, non-nuclear units. We also
observe that, according to the
implementation plan, compliance with
Requirements R16.3 and R18 will
become effective the first day of the first
calendar quarter two years following
applicable regulatory approval. Thus,
the implementation plan provides
existing, non-conforming generators a
significant amount of time to prepare for
compliance with the regional Reliability
Standard.
34. We agree with NPCC that the
NERC Reliability Functional Model does
not preclude the assignment of a new or
revised task in a Reliability Standard,
such as to generator owners. The NERC
37 Id.

at 4.

38 Id.
39 We also note NPCC’s statement that the
regional Reliability Standard achieved an 83.5
percent overall approval ‘‘with a majority of
registered Generator Owners in the region voting to
approve the standard.’’ See NPCC Reply Comments
at 9.

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Reliability Functional Model provides
that:
The Model is a guideline for the
development of standards and their
applicability. The Model it [sic] is not
a Standard and does not have
compliance requirements. Standards
developers are not required to include
all tasks envisioned in the model, nor
are the developers precluded from
developing Reliability Standards that
address functions not described in the
model. Where conflicts or inconsistency
exist, the Reliability Standards
requirements take precedence over the
Model.40
35. We disagree with Dominion and
PSEG that the regional Reliability
Standard is inconsistent with Order No.
763. In the context of the rulemaking
addressing the continent-wide UFLS
Reliability Standard PRC–006–1, Order
No. 763 explained that it would be
inappropriate to include in Reliability
Standard PRC–006–1 specific
requirements as to how to mitigate
generators that tripped outside of the
UFLS program (e.g., by procuring load
to shed).41 We agree with NERC that,
while it is inappropriate for a continentwide Reliability Standard to supplant
the planning coordinator’s role in
establishing UFLS program
requirements, the regional Reliability
Standard PRC–006–NPCC–1
incorporates the NPCC’s planning
coordinators’ views and experience.42
Accordingly, we see no inconsistency
between Order No. 763 and our
determination in this Final Rule.
36. Finally, we reject the claim that
the compensatory load shedding
provisions in regional Reliability
Standard PRC–006–NPCC–1 contravene
FPA section 215. As discussed above,
the compensatory load shedding option
for existing, non-conforming, nonnuclear units is one option for such
generators. Generator owners may
instead choose to bring their units into
compliance rather than secure
compensatory load shedding. We do not
find that the regional Reliability
Standard implicates the proscription in
FPA section 215 against ordering the
40 NERC

Reliability Functional Model, Version 5

at 7.
41 Order

No. 763, 139 FERC ¶ 61,098 at P 58.
also note that the Commission granted
clarification of Order No. 763, regarding NERC’s
NOPR comments on compensatory load shedding,
and found that NERC stated that ‘‘it is not
appropriate for the Reliability Standards to
prescribe how a planning coordinator determines
whether mitigation is necessary or who is
responsible for providing mitigation.’’ Automatic
Underfrequency Load Shedding and Load Shedding
Plans Reliability Standards, Order No. 763, 139
FERC ¶ 61,098, clarified, 140 FERC ¶ 61,164, at P
12 (2012).
42 We

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Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations
‘‘construction of additional generation
or transmission capacity or to set and
enforce compliance with standards for
adequacy or safety of electric facilities
or services.’’ The regional Reliability
Standard does not require responsible
entities to construct additional
generation capacity or address the
adequacy of electric facilities services.
Instead, it merely requires generator
owners, if they choose to, to secure
compensatory load shedding to balance
the performance characteristics of their
existing, non-conforming units.
D. Violation Risk Factors, Violation
Severity Levels, Implementation Plan,
and Effective Dates
37. In the NOPR, the Commission
proposed to approve NERC’s proposed
violation risk factors and violation
severity levels for regional Reliability
Standard PRC–006–NPCC–1 as
consistent with the Commission’s
established guidelines.43 In addition,
the Commission proposed to accept the
implementation plan and effective dates
proposed by NERC for regional
Reliability Standard PRC–006–NPCC–1.
Comments
38. No comments were received that
specifically addressed the violation risk
factors, violation severity levels,
implementation plan, and effective
dates proposed by NERC.44
Commission Determination
39. The Commission approves the
violation risk factors, violation severity
levels, implementation plan, and
effective dates proposed by NERC.
III. Information Collection Statement
40. The Office of Management and
Budget (OMB) regulations require that
OMB approve certain reporting and
recordkeeping (collections of
information) imposed by an agency.45

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.
41. The Commission is submitting
these reporting and recordkeeping
requirements to OMB for its review and
approval under section 3507(d) of
Paperwork Reduction Act of 1995. The
Commission solicited comments on the
need for and the purpose of the
information contained in regional
Reliability Standard PRC–006–NPCC–1
and the corresponding burden to
implement the regional Reliability
Standard. The Commission received
comments on specific requirements in
the regional Reliability Standard, which
we address in this Final Rule. However,
the Commission did not receive any
comments on our reporting burden
estimates. The Final Rule approves
regional Reliability Standard PRC–006–
NPCC–1. As noted previously, this is
the first time NERC has requested
Commission approval of regional
Reliability Standard PRC–006–NPCC–1.
Regional Reliability Standard PRC–006–
NPCC–1 is designed to work with and
augment the NERC continent-wide
UFLS Reliability Standard PRC–006–1
by mitigating the consequences of
underfrequency events, while
accommodating differences in system
transmission and distribution topology
among NPCC planning coordinators due
to historical design criteria, makeup of
load demands, and generation
resources. Regional Reliability Standard
PRC–006–NPCC–1 is only applicable to
generator owners, planning
coordinators, distribution providers,
and transmission owners in the NPCC

13219

Region. To properly account for the
burden on respondents, the Commission
will treat the burden resulting from
NERC-approved Reliability Standard
PRC–006–NPCC–1 as pertaining to
entities within the NPCC Region.
42. Public Reporting Burden: Our
estimate below regarding the number of
respondents is based on the NERC
Compliance Registry as of July 24, 2012.
According to the NERC Compliance
Registry, there are 2 planning
coordinators and 135 generator owners
within the United States portion of the
NPCC Region. The individual burden
estimates are based on the time needed
for planning coordinators to
incrementally gather data, run studies,
and analyze study results to design or
update the UFLS programs that are
required in the regional Reliability
Standard in addition to the
requirements of the NERC Reliability
Standard PRC–006–1.46 Additionally,
generator owners must set each
underfrequency trip relay below the
appropriate generator underfrequency
trip protection settings threshold curve
in regional Reliability Standard PRC–
006–NPCC–1, Figure 1 and provide the
generator underfrequency trip setting
and time delay to its planning
coordinator within 45 days of the
planning coordinator’s request. These
burden estimates are consistent with
estimates for similar tasks in other
Commission-approved Reliability
Standards. The following burden
estimates relate to the requirements for
this Final Rule in Docket No. RM12–12–
000 (For Planning Coordinators) and are
in addition to the burden estimates for
the continent-wide Reliability Standard
PRC–006–1, which was approved in
Order No. 763 (approved by OMB
Control No. 1902–0244 on 7/9/2012).

Number of
respondents
annually

Number of
responses per
respondent

Average
burden hours
per response

Total annual
burden hours

(1)

(2)

(3)

(1)×(2)×(3)

PCs*: Design and document Automatic UFLS Program .................................
PCs: Update and Maintain UFLS Program Database .....................................
GOs*: Provide Documentation and Data to the Planning Coordinator ...........
GOs: Record Retention ...................................................................................

2
........................
135
........................

1
........................
1
........................

8
16
16
4

16
32
2160
540

Total ..........................................................................................................

........................

........................

........................

2748

PRC–006–NPCC–1 (FERC–725L) (Automatic Underfrequency Load Shed
ding) 47

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* PC=planning coordinator; GO=generator owner.
43 See North American Electric Reliability Corp.,
135 FERC ¶ 61,166 (2011).
44 Dominion’s comments regarding the technical
and practical feasibility of implementing regional
Reliability Standard PRC–006–NPCC–1 were
addressed in the previous section.

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45 5

CFR 1320.11.
burden estimates for Reliability Standard
PRC–006–1 are included in Order No. 763 and are
not repeated here.
47 Reliability Standard PRC–006–NPCC–1 applies
to planning coordinators, transmission owners,
46 The

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distribution providers and generator owners.
However, the burden associated with the
transmission owners and distribution providers is
not included within this table because the
Commission accounted for it under Commissionapproved Reliability Standards PRC–006–1, PRC–
007–0 and PRC–009–0.

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Federal Register / Vol. 78, No. 39 / Wednesday, February 27, 2013 / Rules and Regulations

Total Annual Hours for Collection:
(Compliance/Documentation) = 2,748
hours.
Total Reporting Cost for planning
coordinators: = 48 hours @ $120/hour =
$5,760.
Total Reporting Cost for generator
owners: = 2,160 hours @ $120/hour =
$259,200.
Total Record Retention Cost for
generator owners: 540 hours @ $28/hour
= $15,120.
Total Annual Cost (Reporting +
Record Retention) 48: = $5,760 +
$259,200 + $15,120 = $280,080.
Title: Mandatory Reliability Standards
for the NPCC Region.
Action: Proposed Collection FERC–
725L.
OMB Control No.: 1902–0261.
Respondents: Businesses or other forprofit institutions; not-for-profit
institutions.
Frequency of Responses: On
Occasion.
Necessity of the Information: This
Final Rule approves regional Reliability
Standard PRC–006–NPCC–1 pertaining
to automatic underfrequency load
shedding. The regional Reliability
Standard helps ensure the development
of an effective UFLS program that
preserves the security and integrity of
the Bulk-Power System during declining
system frequency events in coordination
with the continent-wide Reliability
Standard PRC–006–1 requirements.
Internal Review: The Commission has
reviewed the regional 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 UFLS programs as well
as procedures within the NPCC Region.
43. Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street NE.,
Washington, DC 20426 [Attention: Ellen
Brown, Office of the Executive Director,
email: [email protected], phone:
202–502–8663, fax: 202–273–0873].
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,
48 The Commission bases the hourly reporting
cost on the cost of an engineer to implement the
requirements of the rule. The record retention cost
comes from Commission staff research on record
retention requirements.

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phone: 202–395–4638, fax: 202–395–
7285]. For security reasons, comments
to OMB should be submitted by email
to: [email protected].
Comments submitted to OMB should
include FERC–725L and Docket Number
RM12–12–000.
IV. Environmental Analysis
44. 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.49 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
regulations being amended.50 The
actions proposed here fall within this
categorical exclusion in the
Commission’s regulations.
V. Regulatory Flexibility Act
Certification
45. The Regulatory Flexibility Act of
1980 (RFA) 51 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities. The RFA mandates
consideration of regulatory alternatives
that accomplish the stated objectives of
a proposed rule and that minimize any
significant economic impact on a
substantial number of small entities.
The Small Business Administration’s
(SBA) Office of Size Standards develops
the numerical definition of a small
business.52 The SBA has established a
size standard for electric utilities,
stating that a firm is small if, including
its affiliates, it is primarily engaged in
the transmission, generation and/or
distribution of electric energy for sale
and its total electric output for the
preceding twelve months did not exceed
four million megawatt hours.53
46. Regional Reliability Standard
PRC–006–NPCC–1 establishes a
coordinated, comprehensive UFLS
region-wide consistent program with the
NPCC region to achieve and facilitate
the broader program characteristics
contained in the requirements of the
continent-wide PRC–006–1.54 It will be
49 Regulations Implementing National
Environmental Policy Act of 1969, Order No. 486,
52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.,
Regulations Preambles 1986–1990 ¶ 30,783 (1987).
50 18 CFR 380.4(a)(2)(ii).
51 5 U.S.C. 601–612.
52 13 CFR 121.101.
53 13 CFR 121.201, Sector 22, Utilities & n.1.
54 NERC Petition at 29–30.

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applicable to planning coordinators,
generator owners, transmission owners
and distribution providers. Comparison
of the NERC Compliance Registry with
data submitted to the Energy
Information Administration on Form
EIA–861 indicates that 5 small entities
are registered as generator owners in the
United States portion of the NPCC
Region.55 The Commission estimates
that the small generator owners to
whom the proposed regional Reliability
Standard applies will incur compliance
and record keeping costs of $10,160
($2,032 per generator owner).
Accordingly, regional Reliability
Standard PRC–006–NPCC–1 should not
impose a significant operating cost
increase or decrease on the affected
small entities.
47. Further, NERC explains that the
cost for smaller entities to implement
regional Reliability Standard PRC–006–
NPCC–1 was considered during the
development process. NERC states that
regional Reliability Standard PRC–006–
NPCC–1 provides an opportunity for
smaller entities to aggregate their load
with other such entities in the same
electrical island. This allows each
smaller entity’s respective planning
coordinator to achieve the desired
aggregate outcome within that island
according to program characteristics.56
48. Based on this understanding, the
Commission certifies that the regional
Reliability Standard will not have a
significant economic impact on a
substantial number of small entities.
Accordingly, no regulatory flexibility
analysis is required.
VI. Document Availability
49. 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
FERC’s Home Page (http://www.ferc.gov)
and in FERC’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.
50. From FERC’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 excluding the last three
55 The two planning coordinators in the United
States portion of the NPCC Region are not
considered small entities.
56 NERC Petition at 25.

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digits of this document in the docket
number field.
51. User assistance is available for
eLibrary and the FERC’s Web site during
normal business hours from FERC
Online Support at 202–502–6652 (toll
free at 1–866–208–3676) or email at
[email protected], or the
Public Reference Room at 202–502–
8371, TTY 202–502–8659. Email the
Public Reference Room at
[email protected].
VII. Effective Date and Congressional
Notification
52. These regulations are effective
April 29, 2013. The Commission has
determined, with the concurrence of the
Administrator of the Office of
Information and Regulatory Affairs of
OMB, that this rule is not a ‘‘major rule’’
as defined in section 351 of the Small
Business Regulatory Enforcement
Fairness Act of 1996.
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2013–04430 Filed 2–26–13; 8:45 am]
BILLING CODE 6717–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9613]
RIN 1545–BI67

Reduced 2009 Estimated Income Tax
Payments for Individuals With Small
Business Income
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations and removal of
temporary regulations.

erowe on DSK2VPTVN1PROD with RULES

AGENCY:

SUMMARY: This document contains final
regulations under section 6654 of the
Internal Revenue Code (Code) relating to
reduced estimated income tax payments
for qualified individuals with small
business income for any taxable year
beginning in 2009 and does not apply to
any taxable years beginning before or
after 2009. The final regulations
implement changes to section 6654
made by the American Recovery and
Reinvestment Act of 2009. The final
regulations provide guidance for
qualified individuals with small
business income to certify that they
satisfy the statutory gross income
requirement for purposes of the
reduction in their required 2009
estimated income tax payments.

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Effective Date: These regulations
are effective on February 27, 2013.
Applicability Date: These regulations
apply for any taxable year that begins in
2009.
FOR FURTHER INFORMATION CONTACT:
Janet Engel Kidd at (202) 622–4940 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
DATES:

Background
This document contains final
amendments to the Income Tax
Regulations (26 CFR part 1) under
section 6654(d) of the Code relating to
the addition to tax for failure by an
individual to pay estimated income tax.
Section 6654(d)(1)(D) was added by
section 1212 of Division B of the
American Recovery and Reinvestment
Act of 2009, Public Law 111–5 (123 Stat.
336 (2009)), effective for taxable years
beginning in 2009. It does not apply to
any taxable years beginning before or
after 2009.
Section 6654 imposes an addition to
tax in the case of an individual
taxpayer’s underpayment of estimated
tax. Estimated tax is payable in four
installments throughout the taxable
year, and the amount of each required
installment is generally 25 percent of
the required annual payment of
estimated tax. Under section
6654(d)(1)(B), the required annual
payment is the lesser of (i) 90 percent
of the tax shown on the income tax
return for the taxable year (or, if no
return is filed, 90 percent of the tax for
the year), or (ii) 100 percent of the tax
shown on the taxpayer’s return for the
preceding taxable year (or 110 percent if
the taxpayer’s adjusted gross income for
the preceding taxable year exceeded
$150,000). The provision allowing for
the payment of 100 (or 110) percent of
the tax shown on the taxpayer’s return
for the preceding taxable year does not
apply if the preceding taxable year was
less than 12 months or if the taxpayer
did not file a return for that year.
Section 6654(d)(1)(D) provides a
‘‘[s]pecial rule for 2009.’’ Under this
provision, the applicable percentage of
tax shown on the return for the
preceding taxable year (either 100 or
110 percent) is reduced to 90 percent for
qualified individuals for taxable years
that begin in 2009. In other words, for
taxable years that begin in 2009, a
qualified individual’s annual required
payment of estimated tax is the lesser of
(i) 90 percent of the tax shown on the
return for the 2009 taxable year (or, if
no return is filed, 90 percent of the tax
for the year), or (ii) 90 percent of the tax
shown on the individual’s return for
taxable year 2008.

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To implement the special rule for
2009, the Treasury Department and the
IRS published in the Federal Register
(75 FR 9141) on March 1, 2010, a notice
of proposed rulemaking (REG–117501–
09) proposing amendments to § 1.6654–
2, which provides exceptions to the
addition to tax for an individual’s
failure to pay estimated income tax. The
notice of proposed rulemaking crossreferenced temporary regulations (TD
9480) published in the Federal Register
(75 FR 9101) on the same day.
The IRS received one written public
comment responding to the proposed
regulations. The comment is available
for public inspection at http://
www.regulations.gov or upon request.
The commenter expressed appreciation
for efforts to simplify tax reporting by
small business owners. A public hearing
was not requested or held.
Explanation of Provisions
The final regulations adopt the
proposed regulations without change.
The final regulations explain who is a
qualified individual under section
6654(d)(1)(D) and how a taxpayer
establishes that the taxpayer is a
qualified individual. A qualified
individual is any individual (1) whose
adjusted gross income shown on the
individual’s return for the preceding
taxable year (prior to the taxable year
that begins in 2009) is less than
$500,000, and (2) who certifies that
more than 50 percent of the gross
income shown on that return was
income from a small business. See
section 6654(d)(1)(D)(ii). If an
individual is married within the
meaning of section 7703, and files a
separate return for a taxable year that
begins in 2009, then to qualify, the
individual’s adjusted gross income
shown on the preceding year’s return
must be less than $250,000, rather than
$500,000. See section 6654(d)(1)(D)(iv).
Pursuant to section 6654(d)(1)(D)(ii)(II),
the Secretary shall prescribe by
regulation the form, manner, and time
for filing a certification. Additionally,
section 6654(m) authorizes the Secretary
to prescribe regulations as necessary to
carry out the purposes of section 6654.
Income from a small business is
defined in general terms in section
6654(d)(1)(D)(iii) as income from a trade
or business the average number of
employees of which was less than 500
for calendar year 2008. The final
regulations specify that the trade or
business must be a bona fide trade or
business of which the individual was an
owner. The final regulations provide
that a trade or business may be
organized as, or take the legal form of,
a corporation, partnership, limited

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