FINAL RM05-5-022 NOPR Supporting Statementb

FERC-717A and FERC-516 (1902-0096)

NOPR in Docket No. RM05-5-022 (Issued 7/18/2013)

RIN: 1902-AE76

SUPPORTING STATEMENT FOR

FERC-717A (RM05-5-022, Standards for Business Practices and Communication

Protocols for Public Utilities), and

FERC-516 (Electric Rate Schedule and Tariff Filings)

Notice of Proposed Rulemaking (issued July 18, 2013) in Docket No. RM05-05-022

The Federal Energy Regulatory Commission (Commission or FERC) requests that the Office of Management and Budget (OMB) review FERC-717A (RM05-5-022, Standards for Business Practices and Communication Protocols for Public Utilities)¹ and FERC-516 (Electric Rate Schedule and Tariff Filings). This is a consolidated supporting statement that will be submitted to OMB under two different Information Collection Requests

In this Notice of Proposed Rulemaking (NOPR), the Commission proposes to amend its regulations under the Federal Power Act² to incorporate by reference, with certain exceptions enumerated in the NOPR, the latest version of the Standards for Business Practices and Communication Protocols for Public Utilities (Version 003) adopted by the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards Board (NAESB) and filed with the Commission as a package on September 18, 2012 (September 18 Filing), as modified in a report filed with the Commission on January 30, 2013.

Background on NAESB and the Business Practice Standards in this proceeding

When the Commission developed its Open Access Same-Time Information System (OASIS) program (Regulations, Standards and Communication Protocols, Data Dictionary, and Business Practice Standards), it relied heavily on the assistance provided by all segments of the wholesale electric power industry and its customers in the ad hoc working groups that came together and offered consensus proposals for FERC’s consideration. This process was very successful; however, it became apparent to FERC that issues remained that would be better addressed by an ongoing industry group rather than by continued reliance on an ad hoc approach. It was envisioned that the ongoing industry group would be dedicated to drafting consensus industry standards to implement the FERC’s OASIS-related policies, and policies for other industry business practices, that would benefit from the implementation of generic industry standards.

On December 19, 2001, the Commission issued an order³asking the wholesale electric power industry to develop business practice standards and communication protocols by establishing a single consensus, industry-wide standards organization for the wholesale electric industry, to complement the market design principles the Commission was developing.

In response to FERC’s request, NAESB and the North American Electric Reliability Council (NERC)⁴ filed a joint letter (on December 16, 2002) explaining that both organizations had signed a memorandum of understanding “designed to ensure that the development of wholesale electric business practices and reliability standards are harmonized and that every practicable effort is made to eliminate overlap and duplication of efforts between the two organizations.”⁵

On January 18, 2005, NAESB filed a report with FERC detailing the WEQ’s activities over its first two years. This filing represented NAESB’s first filing with FERC to report on wholesale electric business practices. NAESB reported that the WEQ had adopted business practices standards and communication protocols for the wholesale electric industry. These standards included the following OASIS-related business practice standards and communications protocols: (1) OASIS Business Practice Standards; (2) OASIS Standards and Communication Protocols; and (3) an OASIS Data Dictionary.⁶

These standards established a set of business practice standards and communication protocols for the electric industry to enable industry members to achieve efficiencies by streamlining utility business and transactional processes and communication procedures. The standards replaced, with modifications, the Commission’s existing Business Practice Standards for OASIS Transactions and OASIS Standards and Communication Protocols and Data Dictionary requirements. Adopting these standards established a formal ongoing process for reviewing and upgrading the Commission’s OASIS standards as well as a process for adopting other electric industry business practice standards.

NAESB is a private consensus standards developer that divides its activities among four quadrants, each of which is composed of members from all segments of its respective industry.⁷ NAESB is an accredited standards organization under the auspices of the American National Standards Institute (ANSI). NAESB’s procedures are designed to ensure that all industry members can have input into the development of a standard, whether or not they are members of NAESB, and each wholesale electricity standard that NAESB’s WEQ adopts is supported by a consensus of the seven industry segments: end users, distribution/load serving entities, transmission, generation, marketers/brokers, independent grid operators/planners and technology/services. Under the WEQ process, for a standard to be approved, it must receive a super-majority vote of 67 percent of the members of the WEQ’s Executive Committee, with support from at least 40 percent of each of the seven industry segments.⁸ For final approval, 67 percent of the WEQ’s general membership must ratify the standard.⁹

Proposed Rule in RM05-5-022 (this package)

The Version 003 WEQ business practice standards update earlier versions of these standards that the Commission previously incorporated by reference into its regulations at 18 CFR 38.2. These new and revised standards include modifications to support Order Nos. 890, 890-A, 890-B and 890-C,¹⁰ including the standards to support Network Integration Transmission Service on an Open Access Same-Time Information System (OASIS), Service Across Multiple Transmission Systems (SAMTS), standards to support the Commission’s policy regarding rollover rights for redirects on a firm basis, standards that incorporate the functionality for transmission providers to credit redirect requests with the capacity of the parent reservation and standards modifications to support consistency across the OASIS-related standards.

The Version 003 Standards also include modifications to the OASIS-related standards that NAESB states support Order Nos. 676, 676-A, 676-E and 717 and add consistency.¹¹ In addition, NAESB states that it made modifications to the Coordinate Interchange standards to compliment the updates to the e-Tag specifications,¹² modifications to the Gas/Electric Coordination standards to provide consistency between the two markets¹³ and re-organized and revised definitions to create a standard set of terms, definitions and acronyms applicable to all NAESB WEQ standards.¹⁴ NAESB states that the Version 003 Standards also include standards related to Demand Side Management and Energy Efficiency,¹⁵ which the Commission incorporated by reference in Docket No. RM05-5-020¹⁶ after NAESB filed its Version 003 report, and Smart Grid-related standards that NAESB previously filed with the Commission in Docket No. RM05-5-021.¹⁷

A. JUSTIFICATION

1. CIRCUMSTANCES THAT MAKE THE COLLECTION OF INFORMATION NECESSARY

In general, the Federal Power Act, Section 205, 16 U.S.C. 824d(a) 2006, requires the Federal Energy Regulatory Commission to ensure that the rates and charges for the wholesale sale of electric energy must be just and reasonable. Section 205 also requires that the rules and regulations affecting or pertaining to the rates and charges for the wholesale sale of electric energy be just and reasonable.

Business practice standards help the industry achieve increased levels of efficiency. Version 003 builds on the Commission’s work on preventing undue discrimination and preference in transmission service (Order Nos. 890, 890-A, 890-B and 890-C) and its previous work related to standards for business practices and communication protocols for public utilities (Order Nos. 676, 676-A, 676-E and 717).

In addition, NAESB made modifications to the Coordinate Interchange standards to complement the updates to the e-Tag specifications, modifications to the Gas/Electric Coordination standards to provide consistency between the two markets and re-organized and revised definitions to create a standard set of terms, definitions and acronyms applicable to all NAESB WEQ standards.

The Version 003 Standards also include standards related to Demand Side Management and Energy Efficiency, which the Commission separately acted on in Docket No. RM05-5-020 after NAESB filed its Version 003 report, and Smart Grid-related standards that NAESB previously filed with the Commission in Docket No. RM05-5-021.

2. HOW, BY WHOM AND FOR WHAT PURPOSE, IS THE INFORMATION TO BE USED AND THE CONSEQUENCES OF NOT COLLECTING THE INFORMATION

FERC-516. The proposed rule, if adopted, would require public utilities that own and/or control facilities used for the transmission of electricity in interstate commerce (public utilities) to modify their existing tariffs to reference the standards and state that transactions made under their respective tariffs would be performed in accordance with the Version 003 standards. Tariffs provide the Commission and the public with information regarding a utility’s rates and service conditions. Without tariffs, FERC and the public would not be able to properly evaluate rates.

FERC-717A. The proposed rule, if adopted, would require public utilities to operate in conformance with the WEQ Version 003 business practice standards.

In its Final Rule, Order No. 889, the Commission required public utilities to establish Open Access Same-Time Information System (OASIS) sites to provide transmission customers with equal and timely access to information about transmission and ancillary services provided in the tariffs. This requirement was established because the Commission believes that transmission customers must have simultaneous access to the same information available to the Transmission Provider in order to achieve nondiscriminatory transmission services.

The Commission determined that standardization of business practices and communication processes benefits the electric industry by providing uniform methods for public utilities to conduct business with different transmission providers. Many participants in electric markets conduct business transactions involving a number of different transmission providers. Establishing a uniform set of procedures and communication protocols increases the efficiency of such transactions.

The public utilities subject to this proposed rule will be required to make tariff filings (FERC-516) referencing the Version 003 standards and stating that they will implement their tariff in accordance with the requirements of the WEQ Version 003 standards. Public utilities currently collect and post information on various systems such as OASIS currently in use by the industry. The proposed revisions within these revised NAESB standards may adjust some of the business practices around this information but does not substantially affect the amount or content of the information.

3. DESCRIBE ANY CONSIDERATION OF THE USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN AND THE TECHNICAL OR LEGAL OBSTACLES TO REDUCING BURDEN

FERC has made no significant changes in information technology use for complying with the FERC-516, as these issues were already addressed by FERC in a rule implementing the Commission’s eTariff system (fully implemented in 2010) for the electronic filing of tariffs. Applicable entities also continue to use OASIS (under the FERC-717 collection), providing the public online access to transmission service information.

4. DESCRIBE EFFORTS TO IDENTIFY DUPLICATON AND SHOW SPECIFICALLY WHY ANY SIMILAR INFORMATION ALREADY AVAILABLE CANNOT BE USED OR MODIFIED FOR USE FOR THE PURPOSE(S) DESCRIBED IN INSTRUCTION NO. 2.

FERC rules and data requirements are periodically reviewed in conjunction with OMB clearance expiration dates. This includes a review of FERC's regulations and data requirements to identify duplication. The information to be submitted, generated, kept, or posted, pursuant to this NOPR is not readily available from other sources, and therefore, no use or other modification of the information can be made to perform oversight and review responsibilities under applicable legislation (e.g. Federal Power Act (FPA), Energy Policy Act of 1992 (EPAct)).

5. METHODS USED TO MINIMIZE BURDEN IN COLLECTION OF INFORMATION INVOLVING SMALL ENTITIES

FERC estimates that there are five small public utilities applicable to this rule. FERC considers the impact of the rule to be very minimal. The Commission does consider waivers for small entities, which serves as an option for small entities to reduce their burden. The Commission grants these waivers on a case-by-case basis.

6. CONSEQUENCE TO FEDERAL PROGRAM IF COLLECTION WERE CONDUCTED LESS FREQUENTLY

The Commission promotes an open transmission system through its policies and regulations. The NAESB WEQ Version 003 standards were developed and vetted through an industry consensus process. If the information collection components of the standards were conducted less frequently then the standards would not fully achieve their purpose of promoting efficiency in the wholesale electric industry. Further, anything different from the standards under consideration here would not be in line with what the industry has already vetted and approved in an open consensus building process through NAESB.

7. EXPLAIN ANY SPECIAL CIRCUMSTANCES RELATING TO THE INFORMATION

FERC-717A and FERC-516 are consistent with the guidelines in 5 CFR 1320.5(d).

8. DESCRIBE EFFORTS TO CONSULT OUTSIDE THE AGENCY: SUMMARIZE PUBLIC COMMENTS AND THE AGENCY’S

RESPONSE TO THESE COMMENTS

In the proposed rule, the Commission seeks comment on various aspects of the new business practice standards, including the burden estimates provided. Further, the NAESB WEQ business practice standards are developed and voted on by industry representatives prior to submission to FERC. For final approval, 67 percent of the WEQ’s general membership must ratify the standard. Additionally, the standards have already gained approval among the industry sectors.

9. EXPLAIN ANY PAYMENT OR GIFTS TO RESPONDENTS

There are no payments or gifts to respondents associated with these collections.

10. DESCRIBE ANY ASSURANCE OF CONFIDENTIALITY PROVIDED TO RESPONDENTS

Any data filed are public information and, therefore, not confidential. However, a company may request confidential treatment of some or all parts of the information requirement under the FERC regulations at 18 CFR 388.112. The Commission will review each request for confidential treatment on a case-by-case basis.

11. PROVIDE ADDITIONAL JUSTIFICATION FOR ANY QUESTIONS OF A SENSITIVE NATURE

There are no questions of a sensitive nature in the reporting requirements.

12. ESTIMATED BURDEN COLLECTION OF INFORMATION

The current burden for the FERC-516 is 497,458 hours. The majority of these hours (approximately 400,000) are due to general tariff filings related to the electric utility industry. Respondents make tariff filings anytime they wish to modify existing rates or services, or when the Commission directs. The Commission proposes that the tariff filing to reference the Version 003 standards could be made as part of an unrelated tariff filing, to reduce the burden on filers. The remaining burden hours include a one-time tariff filing requirement, a recent rulemaking (Variable Energy Resources in Docket RM10-11), and the Electric Quarterly Report.¹⁸

The FERC-717A is a new temporary collection to account for the burden necessary to comply with paperwork aspects of the Version 003 standards.

The burden imposed by the NOPR in RM05-5-022 follows.

	Number of Respondents (A)	Annual Number of Responses Per Respondent (B)	Total Number of Responses (A) x(B)=(C)	Average Burden Hours per Response (D)	Estimated Total Annual Burden (C)x(D)
FERC-51619 (tariff filing)	132	1	132	6	792
FERC-717A20 (compliance with standards)	132	1	132	3021	3,960
TOTALS					4,752

13. ESTIMATE OF TOTAL ANNUAL COST OF BURDEN TO RESPONDENTS

There are no non-labor costs currently associated with the either the FERC-516 or the FERC-717A.

All of the costs in the proposed rule are associated with labor and are not shown in ROCIS metadata.

14. ESTIMATED ANNUALIZED COST TO FEDERAL GOVERNMENT

The estimated annualized cost to the Federal Government, for FERC-516 and FERC-717A, as related to the requirements in the NOPR in RM05-5-022 follows:

	Number of Employees (FTEs)22	Estimated Annual Federal Cost23
PRA Administrative Cost24	-	$2,250
FERC-516 Analysis and Processing of filings [$145,818 /year]	2.5	$364,545
FERC-717A Analysis and Processing of filings [$145,818 /year]	.5	$72,909
FERC Total		$439,704

Based on the above table, the total additional Federal Cost for the FERC-516 is $365,670 [($2,250/2) + $364,545=$365,670]; and for the FERC-717A is $74,034 [($2,250/2) + $72,909=$74,034]. These additional costs will be added to the existing Federal costs for a total of $2,432,288 for the FERC-516 and $74,034 for the FERC-717A.

The Commission bases its estimate of the ‘Analysis and Processing of filings’ cost to the Federal Government on salaries and benefits for professional and clerical support. This estimated cost represents staff analysis, decision making, and review of any actual filings made in response to the information collection.

15. REASONS FOR CHANGES IN BURDEN INCLUDING THE NEED FOR ANY INCREASE

The burden for both the FERC-516 and FERC-717A information collections is increasing so that the industry can implement the new and revised business practice standards adopted by NAESB and proposed in the NOPR to be incorporated by reference into FERC’s regulations. For both collections, the burden increase is small and only one-time. FERC assumes that burden associated with implementing the new standards is reduced to zero over time because of the increased efficiencies related to standardization.

The following burden estimate is based on the projected burden for the industry to implement the new and revised business practice standards adopted by NAESB and proposed to be incorporated by reference in this NOPR.

Data Collection	No. of Respondents (1)	No. of Responses Per Respondent (2)	Hours Per Response (3)	Total No. of Hours (1)x(2)x(3)
FERC-516 (tariff filing)	132	1	6	792
FERC-717A (compliance with standards)	132	1	3025	3,960
Totals				4,752

FERC estimates the costs associated with the above burden hours as follows:

• FERC-516: 132 entities * 1 response/entity * (6 hours/response * $72/hour²⁶) = $57,024.

•FERC-717A: 132 entities * 1 response/entity * (30 hours/response * $72/hour) = $285,120.

The following two tables show the total burden hours and costs for each collection and the impact of the changes discussed in detail in item 12 above.

FERC-516	Total Request	Previously Approved	Change due to Adjustment in Estimate	Change Due to Agency Discretion
Annual Number of Responses	5,547	5,415	-	132
Annual Time Burden (Hr)	498,250	497,458	-	792
Annual Cost Burden ($)	-	-	-	-

FERC-717A	Total Request	Previously Approved	Change due to Adjustment in Estimate	Change Due to Agency Discretion
Annual Number of Responses	132	-	-	132
Annual Time Burden (Hr)	3.960	-	-	3,960
Annual Cost Burden ($)	-	-	-	-

16. TIME SCHEDULE FOR PUBLICATION OF DATA

FERC does not publish any data associated with these collections.

17. DISPLAY OF EXPIRATION DATE

It is not appropriate to display the expiration date for OMB approval of the information collected pursuant to this rulemaking affecting FERC-516 and FERC-717A. The substance of the requirements is incorporated by reference into FERC’s regulations at 18 CFR (making the standards mandatory). However the standards themselves are copyrighted by NAESB, so the OMB Control Numbers and expiration dates are not displayed in the standards.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT

There is no stated record retention requirement as part of this collection. Also, the data collected for this reporting requirement are not used for statistical purposes.

1 FERC-717 is the reference given in the proposed rule in RM05-5-022. The FERC-717 control number is affected by a recent Final Rule (in Docket No. RM11-24). For this reason, FERC is submitting this supporting statement, that should be part of the FERC-717 (1902-0173), under a temporary collection number, FERC-717A, in order to submit to OMB for review in a timely manner. FERC plans to submit the Final Rule (when and if one is issued) in this proceeding under FERC-717 (and FERC-516).

2 16 U.S.C. 791a, et seq.

3See Electricity Market Design and Structure, 97 FERC ¶ 61,289 (2001) (December 2001 Order), 99 FERC ¶ 61,171 (May 2002 Order), reh’g denied, 101 FERC ¶ 61,297 (2002) (December 2002 Order).

4 NERC is now the North American Electric Reliability Corporation.

5 The filing is available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=9607888

6 The filing is available at http://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=10369845

7 The four quadrants are the wholesale and retail electric quadrants and the wholesale and retail natural gas quadrants.

8 Under NAESB’s procedures, interested persons may attend and participate in NAESB committee meetings and phone conferences, even if they are not NAESB members.

9 See Report at 2, North American Energy Standards Board, Measurement and Verification of Demand Response Products, Docket No. RM05-5-020 (filed May 3, 2011) (May 3 Report) (providing a status update and description of the proposed standards). In accordance with applicable copyright laws, complete versions of the standards are available from NAESB at 801 Travis Street, Suite 1675, Houston, TX 77002, telephone: (713) 356-0060, http://www.naesb.org, and are available for viewing in the Commission’s Public Reference Room.

10 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, FERC Stats. & Regs. ¶ 31, 241 (2007), order on reh’g, Order No. 890-A, FERC Stats. & Regs. ¶ 31,261 (2007), order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh’g and clarification, Order No. 890-C, 126 FERC ¶ 61,228 (2009) (Order No. 890-C). The Version 002 standards also included revisions made in response to Order No. 890 (see infra P 11).

11 Standards for Business Practices and Communication Protocols for Public Utilities, Order No. 676, FERC Stats. & Regs. ¶ 31,216, (2006), reh’gdenied, Order No. 676-A, 116 FERC ¶ 61,255 (2006), Order No. 676-B, Final Rule, FERC Stats. & Regs. ¶ 31,246 (2007), Order No. 676-C, Final Rule, FERC Stats. & Regs. ¶ 31,274 (2008), Order No. 676-D, order granting clarification and denying reh’g, 124 FERC ¶ 61,317 (2008), Order No. 676-E, Final Rule, FERC Stats. & Regs. ¶ 31,299 (2009) (Order No. 676-E); Standards of Conduct for Transmission Providers, Order No. 717, FERC Stats. & Regs. ¶ 31,280 (2008) (Order No. 717).

12 September 18 Filing, transmittal at 2, citing NAESB WEQ Electronic Tagging – Functional Specifications, Version 1.8.1.

13 Id.

14 Id.

15 Id.

16 Standards for Business Practices and Communication Protocols for Public Utilities, Order No. 676-G, 78 FR 14654 (Mar. 7, 2013), FERC Stats. & Regs. ¶ 31,343 (Feb. 21, 2013). In this rule, the Commission incorporated by reference into its regulations updated business practice standards adopted by NAESB’s WEQ to categorize various products and services for demand response and energy efficiency and to support the measurement and verification of these products and services in organized wholesale electric markets. These same standards are included without revision in the Version 003 standards.

17 These standards were originally included in a NAESB July 2011 report filed with the Commission and were resubmitted as part of WEQ Version 003. See Report of the North American Energy Standards Board on Smart Grid Related Standards, Docket No. RM05-5-021 (filed July 7, 2011); NAESB Sept. 18 Filing at 2.

18 The burden for the Electric Quarterly Report (EQR) is currently double counted in FERC-516 and FERC-920. FERC will be removing the burden hours (approximately 66,000) from the FERC-516 at a future date.

19 “FERC-516” is the Commission’s identifier that corresponds to OMB control no. 1902-0096 which identifies the information collection associated with Electric Rate Schedules and Tariff Filings.

20 In the NOPR document the Commission used “FERC-717”, we are using FERC-717A here as a temporary identifier in order to submit this ICR to OMB in a timely fashion.

21 The 30-hour estimate was developed in Docket No. RM05-5-013, when the Commission prepared its estimate of the scope of work involved in transitioning to the NAESB Version 002.1 Business Practice Standards. See Order No. 676-E, FERC Stats. & Regs. ¶ 31,299 at P 134. We have retained the same estimate here, because the scope of the tasks involved in the transition to Version 003 of the Business Practice Standards is very similar to that for the transition to the Version 002.1 Standards.

22 FTE = Full-Time Equivalent or 2,080 work hours per year.

23 Based on 2013 cost per FTE of $145,818

24 For the data clearance cost, the Commission bases this cost on the activities and efforts of FERC staff to comply with the Paperwork Reduction Act of 1995.

25 The 30-hour estimate was developed in Docket No. RM05-5-013, when the Commission prepared its estimate of the scope of work involved in transitioning to the NAESB Version 002.1 Business Practice Standards. See Order No. 676-E at P 134. We have retained the same estimate here, because the scope of the tasks involved in the transition to Version 003 of the Business Practice Standards is very similar to that for the transition to the Version 002.1 Standards.

26 The estimated hourly loaded cost (salary plus benefits) is a composite estimate that includes legal, technical, and support staff rates, based on data from the Bureau of Labor Statistics at http://bls.gov/oes/current/naics3_221000.htm and. Loaded costs are BLS rates divided by 0.703 and rounded to the nearest dollar. (http://www.bls.gov/news.release/ecec.nr0.htm).

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