NERC Petition BAL and FAC

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

North American Electric Reliability
Corporation

)
)

Docket No. ____________

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF PROPOSED RELIABILITY STANDARDS
BAL-005-1 AND FAC-001-3
Gerald W. Cauley
President and Chief Executive Officer
North American Electric Reliability
Corporation
3353 Peachtree Road, N.E.
Suite 600, North Tower
Atlanta, GA 30326
(404) 446-2560
(404) 446-2595 – facsimile

Charles A. Berardesco
Senior Vice President and General Counsel
Shamai Elstein
Senior Counsel
Candice Castaneda
Counsel
Andrew C. Wills
Associate Counsel
North American Electric Reliability
Corporation
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
[email protected]
[email protected]
[email protected]
[email protected]

Counsel for the North American Electric
Reliability Corporation

April 20, 2016

TABLE OF CONTENTS
I.

EXECUTIVE SUMMARY .................................................................................................... 2

II.

NOTICES AND COMMUNICATIONS ................................................................................ 6

III. BACKGROUND .................................................................................................................... 6
A.

Regulatory Framework ..................................................................................................... 6

B.

NERC Reliability Standards Development Procedure ..................................................... 7

C.

Procedural History............................................................................................................ 8

1.

BAL-005 ....................................................................................................................... 8

2.

FAC-001 ..................................................................................................................... 10

3.

BAL-006 ..................................................................................................................... 10

4.

Project 2010-14.2.1..................................................................................................... 11

IV. JUSTIFICATION FOR APPROVAL................................................................................... 12
A.

Proposed Reliability Standard BAL-005-1 .................................................................... 13

1.

Purpose and Overview of Proposed BAL-005-1 ........................................................ 13

2.

Applicability ............................................................................................................... 14

3.

Requirement-by-Requirement Justification................................................................ 15

B.

Proposed Reliability Standard FAC-001-3 .................................................................... 21

1.

Purpose and Overview of Proposed FAC-001-3 ........................................................ 21

2.

Applicability ............................................................................................................... 22

3.

Requirement-by-Requirement Justification................................................................ 23

C.

Enforceability of Proposed Reliability Standards BAL-005-1 and FAC-001-3 ............ 24

D.

Proposed Retirement of Reliability Standard BAL-006-2 ............................................. 25

1.

Overview .................................................................................................................... 25

2.

Requirement-by-Requirement Retirement Justification ............................................. 28

E.

Proposed NERC Glossary Definitions ........................................................................... 30
1.

Automatic Generation Control ................................................................................... 30

2.

Reporting ACE ........................................................................................................... 31

3.

Components of Reporting ACE .................................................................................. 32

4.

Pseudo-Tie .................................................................................................................. 34

5.

Balancing Authority ................................................................................................... 34

V.

EFFECTIVE DATE .............................................................................................................. 34

VI. CONCLUSION ..................................................................................................................... 36
Exhibit A

Proposed Reliability Standard BAL-005-1

Exhibit B

Proposed Reliability Standard FAC-001-3

Exhibit C

Redline of Reliability Standard BAL-006-2

Exhibit D

Implementation Plan for BAL-005-1

Exhibit E

Implementation Plan for FAC-001-3

Exhibit F

Implementation Plan for Retirement of BAL-006-2

Exhibit G

Analysis of Violation Risk Factors and Violation Severity Levels for BAL-005-1

Exhibit H

Analysis of Violation Risk Factors and Violation Severity Levels for FAC-001-3

Exhibit I

BAL-005-1 Mapping Document

Exhibit J

FAC-001-3 Mapping Document

Exhibit K

BAL-006-2 Mapping Document

Exhibit L

Calculating and Using Reporting ACE in a Tie Line Bias Control Program

Exhibit M

Order No. 672 Criteria

Exhibit N

Summary of Development History and Complete Record of Development

Exhibit O

Standard Drafting Team Roster

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

North American Electric Reliability
Corporation

)
)

Docket No. ____________

PETITION OF THE
NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
FOR APPROVAL OF PROPOSED RELIABILITY STANDARDS
BAL-005-1 AND FAC-001-3
Pursuant to Section 215(d)(1) of the Federal Power Act (“FPA”) 1 and Section 39.5 of the
regulations of the Federal Energy Regulatory Commission (“FERC” or “Commission”), 2 the
North American Electric Reliability Corporation (“NERC”) 3 hereby requests Commission
approval of:
•

proposed Reliability Standards BAL-005-1 (Balancing Authority Control) and FAC-0013 (Facility Interconnection Requirements) (Exhibits A and B),

•

proposed new or revised definitions to be incorporated into the Glossary of Terms Used
in NERC Reliability Standards (“NERC Glossary”) for the following terms: (1) Actual
Frequency, (2) Actual Net Interchange, (3) Scheduled Net Interchange, (4) Interchange
Meter Error, (5) Automatic Time Error Correction, (6) Reporting ACE, (7) Automatic
Generation Control (“AGC”), (8) Pseudo-Tie, and (9) Balancing Authority (“BA”)
(Exhibit D);

•

proposed retirement of currently effective Reliability Standards BAL-005-0.2b, FAC001-2, and BAL-006-2 (proposed retirement of BAL-006-2 is shown in Exhibit C);

•

associated Implementation Plans (Exhibits D, E, and F); and

•

associated Violation Risk Factors (“VRFs”) and Violation Severity Levels (“VSLs”)
(Exhibits G and H) (collectively, “NERC’s Proposal”).

1

16 U.S.C. § 824o (2012).
18 C.F.R. § 39.5 (2014).
3
The Commission certified NERC as the electric reliability organization (“ERO”) in accordance with
Section 215 of the Federal Power Act on July 20, 2006. N. Am. Elec. Reliability Corp., 116 FERC ¶ 61,062 (2006).
Unless otherwise designated herein, all capitalized terms shall have the meaning set forth in the Glossary of Terms
Used in NERC Reliability Standards (“NERC Glossary”), available at http://www.nerc.com/files/Glossary_of_
Terms.pdf.
2

1

NERC’s Proposal reflects revisions developed under Project 2010-14.2.1 Phase 2 of
Balancing Authority Reliability-based Controls (“Project”) to clarify, consolidate, streamline,
and enhance the Reliability Standards addressing frequency control. The NERC Board of
Trustees adopted proposed Reliability Standards BAL-005-1 and FAC-001-3 and related
retirement of BAL-006-2 on February 11, 2016.
NERC requests that the Commission approve NERC’s Proposal as just, reasonable, not
unduly discriminatory or preferential, and in the public interest. As required by Section 39.5(a)
of the Commission’s regulations, 4 this Petition presents the technical basis and purpose of
proposed Reliability Standards BAL-005-1 and FAC-001-3 and proposed retirement of BAL006-2, a summary of the development history and the complete record of development (Exhibit
N), and a demonstration that the proposed Reliability Standards meet the criteria identified by
the Commission in Order No. 672 (Exhibit M). 5
I.

EXECUTIVE SUMMARY
Reliable Operation of the Bulk Power System (“BPS”) depends on maintaining frequency

within predefined boundaries approximating 60 Hertz (“Hz”). Frequency is the speed of rotation
of an Interconnection, measured in cycles per second (or Hz). As a result, multiple NERC
Reliability Standards, such as currently effective Reliability Standard BAL-005-0.2b, operate
together to maintain reliable frequency control. The Project standard drafting team (“SDT”)
proposed revisions to currently effective Reliability Standards BAL-005-0.2b and FAC-001-2,
modifications to several NERC definitions, and the retirement of Reliability Standard BAL-006-

4

18 C.F.R. § 39.5(a) (2014).
The Commission specified in Order No. 672 certain general factors it would consider when assessing
whether a particular Reliability Standard is just and reasonable. See 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 PP 262, 321-37, order on reh’g, Order No. 672-A,
FERC Stats. & Regs. ¶ 31,212 (2006).
5

2

2, to clarify, consolidate, streamline, and enhance the manner in which NERC Reliability
Standards address certain issues related to frequency control. The SDT developed the proposed
modifications after review of Commission directives, Paragraph 81 Criteria, 6 and
recommendations by the periodic review team that examined Reliability Standards BAL-0050.2b and BAL-006-2 in 2013 (“PRT”).
Currently effective Reliability Standard BAL-005-0.2b facilitates efforts to maintain
frequency at 60 Hz by supporting the accurate and consistent calculation of a key frequency
control and reliability indicator – Reporting Area Control Error (“Reporting ACE”). Reporting
ACE represents a Balancing Authority Area’s (“BAA”) Area Control Error (“ACE”) measured
in megawatts (“MW”) as the difference between the BAAs Actual and Scheduled Net
Interchange, plus its Frequency Bias Setting obligation and meter error corrections. 7 Reporting
ACE helps Responsible Entities provide reliable frequency control by indicating the current state
of the entity’s contribution to Reliability. As such, Reporting ACE is a key input to other
frequency related Reliability Standards, such as BAL-001 and BAL-002.
Because Reporting ACE is key measure to maintaining frequency at 60 Hz, Responsible
Entities must accurately calculate Reporting ACE using complete and correct data. NERC’s
Proposal clarifies and refines Requirements for accurate, consistent, and complete Reporting
ACE calculations. The proposed revisions include relocating Requirements to confirm that
interconnecting Facilities are within a BAA’s metered boundary, and thereby captured in the

6

N. Am. Elec. Reliability Corp., 138 FERC ¶ 61,193, at P 81 (“March 2012 Order”), order on reh’g and
clarification, 139 FERC ¶ 61,168 (2012); Petition of the North American Electric Reliability Corporation for
Approval of Retirement of Requirements in Reliability Standards, Docket No. RM13-8-000, at Exhibit A
(“Paragraph 81 Criteria”) (filed Feb. 28, 2013); N. Am. Elec. Reliability Corp., Order No. 788, 145 FERC ¶ 61,147
(2013).
7
As explained in this Petition, NERC’s Proposal includes revising the definition of Reporting ACE to
include Automatic Time Error Correction (“ATEC”) when calculating Reporting ACE in the Western
Interconnection.

3

Reporting ACE calculation, into Reliability Standard FAC-001-3. Similarly, NERC’s Proposal
includes moving Requirement R3 of currently effective Reliability Standard BAL-006-2 into
proposed Reliability Standard BAL-005-1, as this Requirement helps ensure that BAs will use
consistent data sources to calculate Reporting ACE. To support these improvements to
Reporting ACE calculations, NERC’s Proposal would also revise the following definitions:
Actual Frequency, Actual Net Interchange, Scheduled Net Interchange, Interchange Meter Error,
Automatic Time Error Correction, Reporting ACE, Automatic Generation Control (“AGC”),
Pseudo-Tie, and Balancing Authority.
NERC’s Proposal would also retire ineffective or duplicative Requirements that do not
affect reliability (such as commercial calculations). For example, NERC proposes retiring the
remaining Requirements in Reliability Standard BAL-006-2, as they pertain to administrative or
commercial obligations such as the calculation of Inadvertent Interchange. The SDT prepared a
White Paper regarding Inadvertent Interchange accumulations and their associated paybacks to
explain inadvertent interchange calculations. Based on this White Paper, the SDT developed an
Inadvertent Interchange Guideline to help ensure a seamless transition to the proposed integrated
Reliability Standards. The Operating Committee (“OC”) is currently reviewing the draft
Inadvertent Interchange Guideline.
Together, these revisions and enhancements will improve reliability by supporting efforts
to maintain Interconnection frequency at 60 Hz in a manner consistent with Commission
directives, technological developments, and NERC’s current framework of integrated Reliability
Standards. NERC requests that the Commission approve proposed Reliability Standards BAL005-1 and FAC-001-3 effective on the first day of the first calendar quarter that is twelve months
after the effective date of the applicable governmental authority’s order approving the standard,

4

pursuant to the Implementation Plans attached at Exhibit D and E. In addition, NERC requests
that the Commission approve retirement of Reliability Standard BAL-006-2 upon the effective
date of Reliability Standard BAL-005-1 and the OC’s approval of an Inadvertent Interchange
Guideline, per the Implementation Plan attached at Exhibit F. 8 Finally, NERC also requests that
the proposed definitions for Reporting ACE, Actual Frequency, Actual Net Interchange,
Scheduled Net Interchange, Interchange Metter Error, and ATEC become effective immediately
after the July 1, 2016 effective date of Reliability Standard BAL-001-2. 9 Finally, NERC
requests that the proposed definitions for AGC, Pseudo-Tie, and Balancing Authority become
effective upon the effective date of Reliability Standard BAL-005-1. The effective dates
associated with NERC’s Proposal will ensure seamless transition to the improved, integrated
Reliability Standards proposed in this Petition.

8

Reliability guidelines are not binding norms or mandatory requirements.
See, BAL-005-1 Implementation Plan, attached hereto as Exhibit D. The SDT intended that the definition
of “Reporting ACE” approved in Real Power Balancing Control Performance Reliability Standard, Order No. 810,
151 FERC ¶ 61,048 at P 43 (2015) never take effect; however, NERC understands that there may be a period that
the definition of “Reporting ACE” approved in Order No. 810 is in effect while the Commission reviews this
Petition.
9

5

II.

NOTICES AND COMMUNICATIONS
Notices and communications with respect to this filing may be addressed to: 10

Shamai Elstein*
Senior Counsel
Candice Castaneda
Counsel
Andrew C. Wills*
Associate Counsel
North American Electric Reliability Corporation
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
[email protected]
[email protected]
[email protected]
III.

Howard Gugel*
Director of Standards
North American Electric Reliability
Corporation
3353 Peachtree Road, N.E.
Suite 600, North Tower
Atlanta, GA 30326
(404) 446-2560
[email protected]

BACKGROUND
A.

Regulatory Framework

By enacting the Energy Policy Act of 2005, 11 Congress entrusted the Commission with
the duties of approving and enforcing rules to ensure the reliability of the Nation’s Bulk-Power
System, and with the duties of certifying an Electric Reliability Organization (“ERO”) that
would be charged with developing and enforcing mandatory Reliability Standards, subject to
Commission approval. Section 215(b)(1) of the FPA states that all users, owners, and operators
of the Bulk-Power System in the United States will be subject to Commission-approved
Reliability Standards. 12 Section 215(d)(5) of the FPA authorizes the Commission to order the
ERO to submit a new or modified Reliability Standard. 13 Section 39.5(a) of the Commission’s

10

Persons to be included on the Commission’s service list are identified by an asterisk. NERC respectfully
requests a waiver of Rule 203 of the Commission’s regulations, 18 C.F.R. § 385.203 (2014), to allow the inclusion
of more than two persons on the service list in this proceeding.
11
16 U.S.C. § 824o (2012).
12
Id. § 824o(b)(1).
13
Id. § 824o(d)(5).

6

regulations requires the ERO to file with the Commission for its approval each Reliability
Standard that the ERO proposes to become mandatory and enforceable in the United States, and
each modification to a Reliability Standard that the ERO proposes to be made effective. 14
The Commission is vested with the regulatory responsibility to approve Reliability
Standards that protect the reliability of the Bulk-Power System and to ensure that such
Reliability Standards are just, reasonable, not unduly discriminatory or preferential, and in the
public interest. The Commission also exercises oversight regarding proposals to retire Reliability
Standards. 15 Pursuant to Section 215(d)(2) of the FPA 16 and Section 39.5(c) of the
Commission’s regulations, “the Commission will give due weight to the technical expertise of
the Electric Reliability Organization” with respect to the content of a Reliability Standard. 17
B.

NERC Reliability Standards Development Procedure

NERC’s Proposal was developed in an open and fair manner and in accordance with the
Commission-approved Reliability Standard development process. 18 NERC develops Reliability
Standards in accordance with Section 300 (Reliability Standards Development) and Appendix

14

18 C.F.R. § 39.5(a).
See e.g., NERC Standards Processes Manual, at Section 4.19 of the NERC Rules of Procedure, infra n. 19.
16
16 U.S.C. § 824o(d)(2).
17
18 C.F.R. § 39.5(c)(1).
18
Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the
Establishment, Approval, and Enforcement of Electric Reliability Standards, Order No. 672 at P 334, FERC Stats. &
Regs. ¶ 31,204, order on reh’g, Order No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006) (“Further, in considering
whether a proposed Reliability Standard meets the legal standard of review, we will entertain comments about
whether the ERO implemented its Commission-approved Reliability Standard development process for the
development of the particular proposed Reliability Standard in a proper manner, especially whether the process was
open and fair. However, we caution that we will not be sympathetic to arguments by interested parties that choose,
for whatever reason, not to participate in the ERO’s Reliability Standard development process if it is conducted in
good faith in accordance with the procedures approved by FERC.”).
15

7

3D (NERC Standard Processes Manual) of the Commission approved NERC Rules of
Procedure. 19
In its order certifying NERC as the Commission’s ERO, the Commission found that
NERC’s proposed rules provide for reasonable notice and opportunity for public comment, due
process, openness, and a balance of interests in developing Reliability Standards, 20 and thus
satisfy certain of the criteria for approving Reliability Standards. 21 The development process is
open to any person or entity with a legitimate interest in the reliability of the Bulk-Power
System. NERC considers the comments of all stakeholders, and stakeholders must approve, and
the NERC Board of Trustees must adopt a Reliability Standard before the Reliability Standard is
submitted to the Commission for approval.
C.

Procedural History
1.

BAL-005

In Order No. 693, the Commission evaluated 107 Reliability Standards, including
Reliability Standard BAL-005-0 (Automatic Generation Control). 22 In approving BAL-005-0,
the Commission directed NERC to develop modifications to: (i) create a process to calculate the
minimum regulating reserve for a BA with respect to expected load and generation variation and
transactions being ramped into or out of the BA, (ii) revise the title of the Reliability Standard to
be neutral as to the source of regulating reserves and to include technically qualified demandside management (“DSM”) and direct control load management as regulating reserves, (iii)

19

The NERC Rules of Procedure are available at http://www.nerc.com/AboutNERC/Pages/Rules-ofProcedure.aspx. The NERC Standard Processes Manual is available at
http://www.nerc.com/comm/SC/Documents/Appendix_3A_StandardsProcessesManual.pdf.
20
116 FERC ¶ 61,062 at P 250.
21
Order No. 672, supra n. 18, at PP 268, 270.
22
Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, FERC Stats. & Regs. ¶
31,242, order on reh’g, Order No. 693-A, 120 FERC ¶ 61,053 (2007).

8

clarify the required type of transmission or backup plans when receiving regulation from outside
the BA when using non-firm service, (iv) include levels of Non-Compliance and a Measure that
provides for a verification process over the minimum required automatic generation control or
regulating reserves that a BA must maintain, and (v) “consider those [Xcel and FirstEnergy]
suggestions in its Reliability Standards development process.” 23
On December 19, 2007, NERC submitted a formal interpretation request and proposed
that the Commission approve the interpretation as Reliability Standard BAL-005-0a. 24 While
that interpretation was pending with the Commission, NERC withdrew the request and submitted
its second interpretation, titled BAL-005-0b, to amend the proposed interpretation. 25 The
Commission approved the second interpretation on July 21, 2008, in Docket No. RM08-7-000. 26
In 2009 and 2012, NERC filed errata to Reliability Standard BAL-005-0b, thus resulting in
BAL-005-0.1b in 2009 and BAL-005-0.2b in 2012. 27 The Commission approved BAL-005-0.1b
and BAL-005-0.2b on May 13, 2009 and September 13, 2012, respectively. 28 The current
Project addresses remaining Commission’s directives related to BAL-005. See infra, Section
IV.A.

23

Order No. 693, supra n. 22, at PP 397, 418-420.
Petition of the North American Electric Reliability Corporation for Approval of Formal Interpretations to
Reliability Standards, Docket No. RM06-16-000 (filed Dec. 19, 2007) (requesting clarification of Requirement R17
of BAL-005-0).
25
Petition of the North American Electric Reliability Corporation for Approval of Formal Interpretation to
Reliability Standards and Withdrawal of Prior Formal Interpretation (“Interpretation Petition”), Docket No. RM087-000 (filed Apr. 15, 2008) (requesting withdrawal of first interpretation request and approval of a revised
interpretation to clarify Requirement R17 of BAL-005-0).
26
Modification of Interchange and Transmission Loading Relief Reliability Standards; and Electric
Reliability Organization Interpretation of Specific Requirements of Four Reliability Standards, Order No. 713, 124
FERC ¶ 61,071 (2008).
27
See, e.g., North American Electric Reliability Corporation Petition for Approval of Errata Changes to
Seven Reliability Standards, Docket No. RD12-4-000 (filed June 5, 2012).
28
See, e.g., N. Am. Elec. Reliability Corp., Docket No. RD09-2-000 (May 13, 2009) (unpublished letter
order); N. Am. Elec. Reliability Corp., Docket No. RD12-4-000 (Sept. 13, 2012) (unpublished letter order).
24

9

2.

FAC-001

In Order No. 693, the Commission approved Reliability Standard FAC-001-0 with no
directives. 29 On July 30, 2012, NERC submitted Reliability Standard FAC-001-1, along with
several other proposed standards, to revise the applicability of those Reliability Standards to
include generator interconnection Facilities. The Commission approved these standards in Order
No. 785 on September 19, 2013. 30 Finally, on August 22, 2014, NERC submitted a petition for
approval of Reliability Standard FAC-001-2 to “ensure appropriate coordination and
communication regarding the interconnection of Facilities.” 31 The Commission approved FAC001-2 by letter order on November 6, 2014. 32
3.

BAL-006

In Order No. 693, the Commission approved Reliability Standard BAL-006-1
(Inadvertent Interchange). 33 In doing so, the Commission directed NERC to develop
modifications to BAL-006-1 to (i) include Measures concerning the accumulation of large
inadvertent imbalances and additional Levels of Non-Compliance, and (ii) modify the regional
differences to reference only current Reliability Standards. On November 20, 2009, NERC
submitted BAL-006-2, which removed the “RTO Inadvertent Interchange Accounting Waiver”
from BAL-006-1 that was implemented to accommodate Midwest ISO as a multi-BA market. 34

29

Order No. 693, supra n. 22, at P 680.
Generator Requirements at the Transmission Interface, Order No. 785, 144 FERC ¶ 61,221 (2013).
31
Petition of the North American Electric Reliability Corporation for Approval Of Proposed Reliability
Standards for Facility Connection Requirements FAC-001-2 and FAC-002-2, Docket No. RD14-12-000 (filed Aug.
22, 2014).
32
N. Am. Elec. Reliability Corp., Docket No. RD14-12-000 (Nov. 6, 2014) (unpublished letter order).
33
Order No. 693, supra n. 22, at PP 439, 444.
34
Petition of the North American Electric Reliability Corporation for Approval Of Two Reliability Standards
Revisions to Withdraw MISO Waivers, Docket No. RM06-16-000 (filed Nov. 20, 2009).
30

10

Midwest ISO’s eventual transition to a single BA mooted the need for any regional waivers, and
the Commission approved BAL-006-2 on January 6, 2011. 35
4.

Project 2010-14.2.1

The Project resulted from NERC’s efforts over the past several years to address the
directive in Order No. 693 to create a continent-wide Contingency Reserve standard. Over time,
this initiative was separated into two phases. Phase 2 ultimately led to the proposed
modifications described in this Petition. At its genesis, Phase 2 was labeled Project 2010-14.2
and involved BAL-004, 36 BAL-005, and BAL-006. Before work in Phase 2 began, NERC
implemented a number of initiatives to improve Reliability Standards, including retirement of
unnecessary or redundant requirements under Paragraph 81 Criteria, 37 consideration of
Independent Expert Review Panel recommendations, and implementation of results-based
concepts. As such, Project 2010-14.2 evolved into a periodic review, and on September 19,
2013, the Standards Committee (“SC”) appointed the PRT. The PRT presented recommended
revisions to BAL-005-0.2b and BAL-006-2 based on its review of the standards and submitted a
Standard Authorization Request (“SAR”) to the SC for the development of these revisions.
The SDT posted the first draft of proposed Reliability Standards BAL-005-1, BAL-0063, and FAC-001-3 on July 30, 2015. Based on industry feedback, the SDT eventually ceased
development on BAL-006-3, consolidated certain aspects of BAL-006-2 in BAL-005-1, and
proposed retirement of BAL-006-2. The final posting in the Project included proposed

35

Order Approving Revisions to Two Reliability Standards and Directing a Compliance Filing, 134 FERC ¶
61,007 (2011) (directing NERC to submit a compliance filing identifying the entity or entities that are responsible
under Reliability Standard BAL-006-2 for calculating Inadvertent Interchange among the Local Balancing Authority
Areas within the Midwest ISO BAA); N. Am. Elec. Reliability Corp., Docket No. RD10-4-000 (May 16, 2011)
(unpublished letter order) (approving NERC’s February 22, 2011 Compliance Filing explaining that there is only
one Midwest ISO BAA).
36
NERC later separated Reliability Standard BAL-004-0 into an independent project, Project 2010-14.2.2.
37
Paragraph 81 Criteria, supra n. 7.

11

Reliability Standards BAL-005-1 and FAC-001-3, several revised NERC Glossary definitions,
and retirement of Reliability Standard BAL-006-2. Industry approved NERC’s Proposal through
the Commission approved NERC Reliability Standard Development Process set forth in
Appendix 3D of the NERC Rules of Procedure. 38 The development history of Reliability
Standard BAL-005-1, BAL-006-2, and FAC-001-3 is attached as Exhibit N.
IV.

JUSTIFICATION FOR APPROVAL
As described above, NERC’s Proposal represents the technical findings of the SDT based

on its review of the PRT recommendations, as well as stakeholder comments throughout the
Project. NERC’s Proposal is intended to replace and retire currently effective Reliability
Standards BAL-005-0.2b, BAL-006-2, and FAC-001-2. NERC’s Proposal represents substantial
improvements over existing Reliability Standards by helping to support more accurate and
comprehensive calculation of Reporting ACE and satisfying all remaining Commission
directives for Reliability Standards BAL-005 and BAL-006. As discussed below and in Exhibit
M, NERC’s Proposal satisfies the Commission’s criteria in Order No. 672 and is just,
reasonable, not unduly discriminatory or preferential, and in the public interest.
The following subsections provide (i) a description of each proposed Reliability
Standard, its reliability purpose, the applicable entities, and a requirement-by-requirement
justification for each proposed Reliability Standard, (ii) a description of enforceability, (iii)
justification for retirement of Reliability Standard BAL-006-2, and (iv) justification for NERC’s
proposed revised definitions.

38

See infra n. 19.

12

A.

Proposed Reliability Standard BAL-005-1
1.

Purpose and Overview of Proposed BAL-005-1

The purpose of proposed Reliability Standard BAL-005-1 is to establish “requirements
for acquiring data necessary to calculate Reporting Area Control Error (Reporting ACE).” As
further explained in the purpose statement for BAL-005-1, the standard “specifies minimum
periodicity, accuracy, and availability requirement for acquisition of the data and for providing
the information to the System Operator.” Proposed BAL-005-1 is designed to ensure that BAs
properly calculate and communicate Reporting ACE. As explained below, proposed Reliability
Standard BAL-005-1 is an improvement to BAL-005-0.2b, as it consolidates unnecessary or
repetitive Requirements and moves certain metrics for calculating Reporting ACE to the revised,
proposed definition of Reporting ACE. Further, pursuant to a Commission directive in Order
No. 693, the title of the Reliability Standard has been modified to “Balancing Authority Control”
to reflect the connection to Reporting ACE and resource-neutral requirements. 39
As stated above, Reporting ACE is an indicator of operational frequency and helps
Responsible Entities provide reliable frequency control by indicating the current state of the
entity’s contribution to Reliability. Proposed Reliability Standard BAL-005-1 supports system
frequency by requiring entities to properly calculate and communicate Reporting ACE or notify
the Reliability Coordinator (“RC”) when it is not possible to calculate Reporting ACE.
Specifically, the proposed standard requires entities to take measures to obtain requisite data
necessary to calculate Reporting ACE to enable Responsible Entities to balance resources and

39

Order No. 693, supra n. 22, at P 404. In the same paragraph, the Commission directed NERC to “allow the
inclusion of technically qualified DSM and direct control load management as regulating reserves…” NERC notes
that Requirement R2 of BAL-005-0.2b, which required entities to maintain regulating reserves, was retired on
January 21, 2014 (see supra n. 7). Reliability Standard BAL-001-2 and proposed Reliability Standard BAL-002-2
(submitted to the Commission on January 29, 2016 in Docket No. RM16-7-000) allows for the inclusion of DSM.
Finally, the revised definition of Automatic Generation Control, described in this Petition, assures a resource neutral
process for controlling demand and resources. Accordingly, this directive has been addressed.

13

demand under Tie-Line Bias Control. The proposed Requirements of BAL-005-1 will improve
reliability by ensuring that BAs have situational awareness capabilities that support BA decisionmaking responsibilities. These revisions also address all remaining Commission directives, as
discussed below in Section IV.A.3.
2.

Applicability

The Requirements in proposed Reliability Standard BAL-005-1 apply to BAs. NERC’s
Proposal would move Requirements suitable for other Registered Entities to Reliability Standard
FAC-001-3 and retire Requirements that are redundant or ineffective.
As explained in the BAL-005-1 Mapping Document (Exhibit I), the requirements in
Reliability Standard BAL-005-0.2b that apply to Generator Operators (“GOP”) and
Transmission Operators (“TOPs”) have been moved to Requirements R3 and R4 in proposed
Reliability Standard FAC-001-3. NERC proposes to move these requirements to FAC-001-3
because the Facilities Design, Connections, and Maintenance (FAC) Reliability Standard suite is
the appropriate location for a requirement for Transmission Owners (“TOs”) and Generator
Owners (“GO”) to define a process for confirming that interconnecting Facilities are within a
BAA’s metered boundaries. As described in Section IV.B below, Reliability Standard FAC-0013 sets out Interconnection-related requirements. Further, NERC proposes to retire Requirement
R1.3 in existing Reliability Standard BAL-005-0.2b as redundant and unnecessary, consistent
with the Commission’s approval of removal of the Load Serving Entity (“LSE”) functional
registration category from the NERC Compliance Registry and the limited utility of requiring the
LSE to ensure that its loads are included within the metered boundaries of a BAA. 40

40

See, e.g., Petition of the North American Electric Reliability Corporation for Approval of Risk-Based
Registration Initiative Rules of Procedure Revisions, Docket No. RR15-4-000 (filed Dec. 11, 2014); Order on
Electric Reliability Organization Risk Based Registration Initiative and Requiring Compliance Filing, 150 FERC ¶

14

3.

Requirement-by-Requirement Justification

Currently effective Reliability Standard BAL-005-0.2b consists of seventeen
requirements. The SDT determined that Requirements R2, R7, and R15 of currently effective
BAL-005-0.2b are redundant, ineffective, and should be retired based on Commission-approved
Paragraph 81 Criteria. Further, the SDT proposes to incorporate Requirements R9, R10, and
R11 into the proposed definitions used in the calculation of Reporting ACE. NERC proposes to
consolidate the remaining Requirements and related NERC Glossary definitions to improve
clarity and efficiency. As a result, proposed Reliability Standard BAL-005-1 consists of seven
Requirements that address the Commission’s outstanding directives in Order No. 693 41 and
comply with the criteria for standard development in Order No. 672, as further supported in
Exhibit M.
a)

Requirement R1

R1. The Balancing Authority shall use a design scan rate of no more than six seconds in
acquiring data necessary to calculate Reporting ACE. [Violation Risk Factor: Medium]
[Time Horizon: Real-time Operations]
A critical component of the accuracy of Reporting ACE is the timeliness of collection of
sample data used to calculate the Reporting ACE. Proposed Requirement R1 requires BAs to
acquire real-time operation information as it relates to the calculation of Reporting ACE using a
design scan rate of no more than six seconds. By mandating that BAs use a constant design scan
rate for data samples used to calculate Reporting ACE, Requirement R1 will ensure that
information provided to Operators regarding calculation of Reporting ACE exposes real-time

61,213 (2015); Compliance Filing of the North American Electric Reliability Corporation and Petition for Approval
of Rules of Procedure Revisions Compliance Filing, Docket No. RR15-4-001 (filed July 17, 2015); Order on
Compliance Filing, 153 FERC ¶ 61,024 (2015).
41
Order No. 693, supra n. 22, at P 356.

15

conditions and not historical data. A required design scan rate of less than or equal to six
seconds ensures that this information is real-time information, and it limits the latency associated
with data collection. 42 Given the inherent connection between Reporting ACE and frequency,
Requirement R1 will allow operators to maintain reliability using accurate, timely information
about Reporting ACE.
b)

Requirement R2

R2. A Balancing Authority that is unable to calculate Reporting ACE for more than 30consecutive minutes shall notify its Reliability Coordinator within 45 minutes of the
beginning of the inability to calculate Reporting ACE. [Violation Risk Factor: Medium]
[Time Horizon: Real-time Operations]
As the entity responsible for coordinating reliability across a wide area system, the RC
must be aware of instant system conditions in order to assess unintended reliability scenarios.
Proposed Requirement R2 mandates information sharing by requiring BAs to provide RCs with
real-time information regarding the BA’s inability to calculate Reporting ACE. Proposed
Requirement R2 improves upon currently effective Requirement R6 of Reliability Standard
BAL-005-0.2b because it maintains the currently effective 30-minute threshold in between
calculations of Reporting ACE and clarifies the performance expectations for notification from
the BA to the RC of an exceedance of this 30-minute threshold. By requiring BAs to notify the
RC within 15 minutes of the end of the 30-minute period (or 45 minutes of the beginning of an
inability to determine Reporting ACE), proposed Reliability Standard BAL-005-1 ensures that
RCs are constantly apprised of disturbances in Reporting ACE calculations. This assurance
enables the RC to coordinate with member BAs and take action as necessary.

42

See Exhibit L, Calculating and Using Reporting ACE in a Tie Line Bias Control Program at n. 18.

16

c)

Requirement R3

R3. Each Balancing Authority shall use frequency metering equipment for the calculation
of Reporting ACE: [Violation Risk Factor: Medium] [Time Horizon: Real-time
Operations]
3.1. that is available a minimum of 99.95% for each calendar year; and,
3.2. with a minimum accuracy of 0.001 Hz.
Proposed Requirement R3 combines aspects of Requirements R8 and R17 of currently
effective BAL-005-0.2b and sets a standard for frequency metering equipment that ensures that
BAs consistently gather accurate frequency data to support Reporting ACE calculations.
Proposed Requirement R3 also addresses two Commission directives in Order No. 693. In Order
No. 693, the Commission directed NERC “to revise the Violation Risk Factor for BAL-005-0,
Requirement R17 to medium.” 43 The Commission also stated that, “the comments of Xcel and
FirstEnergy should be addressed by the ERO when this Reliability Standard [BAL-005-0] is
revisited as part of the ERO’s Work Plan.” 44 Xcel and FirstEnergy questioned the application of
Requirement R17 to equipment that would require unnecessary costs of compliance for little
reliability benefit. 45
In its Interpretation Petition filed with the Commission on April 15, 2008, NERC
addressed part of FirstEnergy’s concern by clarifying that Requirement R17 of BAL-005-0
applies to devices within operations control rooms and external devices that “transmit said time
error and frequency information from a source remote to the control centers.” 46 As NERC

43

Order No. 693, supra n. 22, at P 58.
Id. at P 415 (directing NERC to consider comments by Xcel and FirstEnergy regarding the applicability of
Requirement R17 of Reliability Standard BAL-005-0).
45
Id. at PP 410-411 (noting Xcel’s comment suggesting that Requirement R17 should be limited only to
equipment necessary for interchange metering in balancing areas where errors in generating metering are critical for
imbalance calculations; also noting FirstEnergy’s comment requesting that the Commission limit the devices
applicable under Requirement R17 to “control center devices” and noted that the term “check” in Requirement R17
should be clarified).
46
Interpretation Petition at p. 8, supra n. 26.
44

17

explained, “time error and frequency devices that serve as input into the reporting or compliance
of the ACE equation…must be annually checked and calibrated.” 47
Proposed Requirement R3 addresses the remainder of the comments of Xcel and
FirstEnergy not addressed in the Interpretation Petition, as NERC proposes to retire part of
currently effective Requirement R17 of BAL-005-0.2b as moot and move part of the existing
Requirement to proposed Requirement R3. Proposed Requirement R3 includes streamlined
obligations to use specific frequency metering equipment that is necessary for operation of AGC
and accurate calculation of Reporting ACE, as this ensures that costs associated with
implementation are commensurate with reliability benefit. Finally, as described below in Section
IV.C, NERC has assigned Requirement R3 a VRF of “Medium” with a Time Horizon of “Realtime Operations” based on Commission-approved guidelines, thus addressing the remaining
Commission directive in Order No. 693. 48
d)

Requirement R4

R4. The Balancing Authority shall make available to the operator information associated
with Reporting ACE including, but not limited to, quality flags indicating missing or
invalid data. [Violation Risk Factor: Medium] [Time Horizon: Real-time Operations]
System Operators use Reporting ACE as a critical input to assess whether and to what
extent actions or operating instructions are necessary to maintain system stability. Proposed
Requirement R4 links Reporting ACE to an entity’s operations by requiring BAs to share
Reporting ACE with System Operators. Thus, proposed Requirement R4 combines elements of
currently effective Requirements R14 and R16 of Reliability Standard BAL-005-0.2b that
require BAs to provide real-time values and Reporting ACE data status to operators. This

47
48

Id.
Order No. 693, supra n. 22, at P 58.

18

consolidation ensures that BAs provide all Reporting ACE data to operators, thereby reducing
the possibility of that undue delay or incorrect data might cause adverse events.
e)

Requirement R5

R5. Each Balancing Authority’s system used to calculate Reporting ACE shall be available a
minimum of 99.5% of each calendar year. [Violation Risk Factor: Medium] [Time Horizon:
Operations Assessment]
Proposed Requirement R5 introduces a new obligation into Reliability Standard BAL005 to assure the availability of a BA’s system used to calculate Reporting ACE. This
Requirement will help ensure that entities can rely on Reporting ACE calculations provided by a
BA. Requirement R5 differs from Requirement R4 because proposed Requirement R4 obligates
entities to provide all data associated with Reporting ACE at a given time, whereas proposed
Requirement R5 establishes constant availability of the system used to calculate Reporting ACE.
f)

Requirement R6

R6. Each Balancing Authority that is within a multiple Balancing Authority Interconnection
shall implement an Operating Process to identify and mitigate errors affecting the accuracy of
scan rate data used in the calculation of Reporting ACE for each Balancing Authority Area.
[Violation Risk Factor: Medium] [Time Horizon: Same-day Operations]
Scan rate data is a critical input in the calculation of Reporting ACE, and inaccurate
Reporting ACE can lead to inappropriate operating decisions. Persistent errors in calculation of
Reporting ACE may cause operators to question Reporting ACE, thus delaying decisions and
causing adverse consequences. To mitigate instances of inaccurate Reporting ACE calculations,
Requirement R6 supports the accurate collection of scan rate data used in calculating the
Reporting ACE by requiring entities to design procedures in an Operating Process to identify and
mitigate errors.
A successful Operating Process should include certain steps to support accurate
Reporting ACE. First, the Operating Process must allow BAAs to agree upon hourly
19

accumulated Tie Line megawatt hours (“MWh”) values to mitigate or avoid errors in calculating
Reporting ACE. Second, the Operating Plan should include the ability to compare the
integration of instantaneous metered values with accumulated MWh values for each BA. Third,
to establish that accumulated MWh metering for one BA is equivalent to accumulated MWh on
Adjacent Balancing Authorities (“ABA”) on the same tie line, the Operating Plan should include
a comparison of a BA’s accumulated MWh value with the accumulated MWh value for its ABA.
If there is a difference between these values, the Operating Process should instruct the BAs to
agree on a common value for the tie lines to accommodate the difference between the
accumulated values or some other method to address the inconsistency. 49
g)

Requirement R7

R7. Each Balancing Authority shall ensure that each Tie Line, Pseudo-Tie, and Dynamic
Schedule with an Adjacent Balancing Authority is equipped with: [Violation Risk Factor:
Medium] [Time Horizon: Operations Planning]
7.1. a common source to provide information to both Balancing Authorities for the scan
rate values used in the calculation of Reporting ACE; and,
7.2. a time synchronized common source to determine hourly megawatt-hour values
agreed-upon to aid in the identification and mitigation of errors under the Operating
Process as developed in Requirement R6.
Because Reporting ACE is an essential measurement of a BA’s contribution to the
reliability of an Interconnection, consistency in the calculation of Reporting ACE across BAs is
important to avoid confusion and delayed or incorrect operator action. The use of common
source data among BAs ensures consistency in the calculation of Reporting ACE. Proposed

49

The SDT developed provisions in the Whitepaper (attached herein as Exhibit L) to cover the practice of
comparing the hourly megawatt-hour values gathered at the end of the hour against the hourly integrated values of
the scan-rate data operated to, in order to determine if significant error exists. See, Periodic Review of BAL-0050.2b – Automatic Generation Control and BAL-006-2 – Inadvertent Interchange (Recommendation to Revise both
Standards), pg. 21 (May 22, 2014), accessible online at http://www.nerc.com/pa/Stand/Project
%20201014%202%20Phase%202%20of%20Balancing%20Authority%20Re/Recommendation_to_Revise_BAL005_and_BAL-006_Clean_BAL_PRT_FINAL_07162014.pdf.

20

Requirement R7 is designed based on Requirement R12, R13, and R14 of currently effective
Reliability Standard BAL-005-0.2b and Requirement R3 of Reliability Standard BAL-006-2 to
address common source data issues for Tie Lines, Pseudo-Ties, and Dynamic Schedules.
Proposed Requirement R7 accomplishes these issues by obligating ABAs to utilize common
source data with respect to scan rate values used when calculating Reporting ACE and a time
synchronized common source when identifying and mitigating errors per the Operating Process
developed under proposed Requirement R6. 50 This will help avoid confusion and inaccuracies
that may arise if ABAs use inconsistent data sources. As recommended by the PRT, proposed
Requirement R7 now includes a requirement for BAs to agree on common values to be used in
real-time.
B.

Proposed Reliability Standard FAC-001-3

Proposed Reliability Standard FAC-001-3 consists of the same four Requirements that
are in currently effective Reliability Standard FAC-001-2, with new Requirement subparts added
to Requirement R3 and Requirement R4 to extend certain obligations to TOs and GOs. As these
new sub-requirements are the only proposed revisions, the justification provided below is limited
to these sub-requirements. As further supported in Exhibit M, the proposed Requirements
outlined below comply with the Commission’s criteria for Reliability Standards set forth in
Order No. 672. Additionally, the transition described below is explained in the FAC-001-3
Mapping Document, attached herein as Exhibit J.
1.

Purpose and Overview of Proposed FAC-001-3

The purpose of proposed Reliability Standard FAC-001-3 is to “avoid adverse impacts on
the reliability of the Bulk Electric System” by requiring TOs and applicable GOs to “document

50

As noted above, NERC’s Proposal would retire current Requirement R7.

21

and make Facility interconnection requirements available so that entities seeking to interconnect
will have the necessary information.” Along with the obligations on TOs and certain GOs to
ensure that all potential interconnecting parties have fair and unrestricted access to relevant
interconnection requirements, proposed Reliability Standard FAC-001-3 also captures a variety
of specific processes to ensure that entities take appropriate steps when interconnecting. For
example, the Reliability Standard requires TOs and GOs to address, in the interconnection
requirements, procedures for studies and analyses of interconnections and communication
regarding each facility interconnection.
Proposed Reliability Standard FAC-001-3 replaces and strengthens currently effective
Reliability Standard FAC-001-2 by moving currently effective Requirement R1 of Reliability
Standard BAL-005-0.2b to proposed FAC-001-3 thus requiring that TO and GO interconnection
requirements include procedures for confirming that new or materially modified Facilities
connecting to the BES are within a BAA’s metered boundaries. These interconnection
requirements should be relocated to Reliability Standard FAC-001-3, as FAC-001-3 establishes
Facility interconnection requirements.
2.

Applicability

The Requirements under proposed Reliability Standard FAC-001-3 continue to apply
only to TOs and Applicable GOs. As defined in Section 4.1 of currently effective FAC-001-2 and
proposed FAC-001-3 (attached as Exhibit B), an Applicable GO is defined as a “Generator
Owner with a fully executed Agreement to conduct a study on the reliability impact of
interconnecting a third party Facility to the Generator Owner’s existing Facility that is used to
interconnect to the Transmission system.”

22

3.

Requirement-by-Requirement Justification

R3. Each Transmission Owner shall address the following items in its Facility interconnection
requirements: [Violation Risk Factor: Lower] [Time Horizon: Long-Term Planning]
3.1. Procedures for coordinated studies of new or materially modified existing
interconnections and their impacts on affected system(s).
3.2. Procedures for notifying those responsible for the reliability of affected system(s) of
new or materially modified existing interconnections.
3.3. Procedures for confirming with those responsible for the reliability of affected
systems that new or materially modified Facilities are within a Balancing Authority
Area’s metered boundaries.
R4. Each applicable Generator Owner shall address the following items in its Facility
interconnection requirements: [Violation Risk Factor: Lower] [Time Horizon: Long-Term
Planning]
4.1. Procedures for coordinated studies of new interconnections and their impacts on
affected system(s).
4.2. Procedures for notifying those responsible for the reliability of affected system(s) of
new interconnections.
4.3. Procedures for confirming with those responsible for the reliability of affected
systems that new or materially modified Facilities are within a Balancing Authority
Area’s metered boundaries.
NERC proposes to consolidate all interconnection requirements by moving Requirement
R1 of currently effective Reliability Standard BAL-005-0.2b to proposed Requirements R3.3 and
R4.4 of proposed FAC-001-3. As the purpose of FAC-001-3 is more commensurate with
interconnection responsibilities, interconnection procedures contained in currently effective
BAL-005-0.2b should be included in proposed Reliability Standard FAC-001-3. These
proposed revisions clarify that responsible entities must have interconnection procedures to
ensure that Facilities are within the metered boundaries of the BAA. Without these
Requirements, Facilities may be connected to the grid outside of a BAA, causing these Facilities
to be outside the scope of a BA’s resource plans, balancing calculations, and frequency control
oversight.
23

C.

Enforceability of Proposed Reliability Standards BAL-005-1 and FAC-001-3

Proposed Reliability Standards BAL-005-1 and FAC-001-3 include Measures to support
each Requirement to clarify necessary evidence or actions for compliance and to help ensure that
the Requirements will be enforced in a clear, consistent, non-preferential manner, and without
prejudice to any party. Proposed Reliability Standard BAL-005-1 includes seven Measures.
Proposed Reliability Standard FAC-001-3 includes four Measures. While inclusion of these
Measures associated with each Reliability Standard is consistent with the elements of a
Reliability Standard, 51 NERC developed the Measures for proposed Reliability Standard BAL005-1 in consideration of the Commission’s directive in Order No. 693 to revise the VRF for
Requirement R17 of BAL-005-0 to “Medium.” 52
Proposed Reliability Standards BAL-005-1 and FAC-001-3 also include VRFs and VSLs
for each Requirement. The VSLs and VRFs are part of several elements used to determine an
appropriate sanction when the associated Requirement is violated and each comports with the
NERC and Commission guidelines relate to their assignment. The VSLs provide guidance on
the way that NERC will enforce the Requirements of the proposed Reliability Standards. The
VRFs assess the impact to reliability of violating a specific Requirement and represent one of
several elements used to determine an appropriate sanction when the associated Requirement is
violated. All of the Requirements in proposed Reliability Standard BAL-005-1 have been
assigned a “Medium” VRF with a Time Horizon criterion of “Real-time Operations.” All of the
Requirements in proposed Reliability Standard FAC-001-3 have been assigned a “Lower” VRF
with a “Long-Term Planning” Time Horizon criterion. Exhibit G includes the detailed analysis

51

See, NERC Rules of Procedure, at Appendix 3A, at Section 2.5.
Order No. 693, supra n. 22, at P 58. NERC notes that, while currently effective Requirement R17 of BAL005-0.2b is proposed to be retired, part of that requirement is located in proposed Requirement R3 of BAL-005-1
and has been assigned a VRF of Medium.
52

24

of the assignment of VRFs and the VSLs for proposed Reliability Standards BAL-005-1 and
FAC-001-3. As described in that document, the VRFs and VSLs for the proposed Reliability
Standard comport with NERC and Commission guidelines. 53
D.

Proposed Retirement of Reliability Standard BAL-006-2

Currently effective Reliability Standard BAL-006-2 consists of five Requirements, each
applicable to BAs. In an ongoing effort to remove unnecessary Reliability Standards from its
suite of Reliability Standards, NERC proposes to retire four Requirements as “administrative in
nature” as defined in the Commission-approved Paragraph 81 Criteria. 54 As provided above,
NERC also proposes to move Requirement R3 to Reliability Standard BAL-005-1 because the
Requirement supports accurate Reporting ACE and falls squarely within the scope of BAL-0051. As NERC proposes to retire or move the Requirements in BAL-006-2 as explained in the
BAL-006-2 Mapping Document (Exhibit K), NERC proposes to retire BAL-006-2 in its
entirety.
1.

Overview

The purpose of currently effective Reliability Standard BAL-006-2 is to define “a process
for monitoring BAs to ensure that, over the long term, BAAs do not excessively depend on other
BAAs in the Interconnection for meeting their demand or Interchange obligations.” Aside from
the obligations in Requirement R3 of BAL-006-2, which have been moved to proposed BAL005-1 as described below, the SDT determined that each of the remaining Requirements in BAL006-2 are energy accounting standards and should be retired as “administrative” pursuant to

53

See, e.g., N. Am. Elec. Reliability Corp., 119 FERC ¶ 61,145, order on reh’g and compliance filing, 120
FERC ¶ 61,145 (2007).
54
Paragraph 81 Criteria, supra n. 7 at Exhibit A (proposing to retire standards as “Administrative” if the
“Reliability Standard requirement requires responsible entities to perform a function that is administrative in nature,
does not support reliability and is needlessly burdensome.”); Order No. 788, supra n. 7.

25

Criteria B1 of the Commission approved Paragraph 81 Criteria. 55 The purpose of BAL-006-2,
excerpted above, describes a commercial practice that addresses inadvertent balances. This
purpose continues to be fulfilled by entities as described in the Inadvertent Interchange
Guideline, currently under review by the NERC OC.
In approving BAL-006 in Order No. 693, the Commission directed NERC “to develop a
modification to BAL-006-1 that adds Measures concerning the accumulation of large inadvertent
imbalances and Levels of Non-Compliance,” because “large imbalances represent dependence
by some balancing authorities on their neighbors and are an indication of less than desirable
balancing of generation with load.” 56 Further, the Commission stated that “large interchange
imbalances are indicative of an underlying problem related to balancing of resources and
demand,” and “[s]ince the ERO indicates that the reliability aspects of this issue will be
addressed in a Reliability Standards filing later this year, the Commission asks the ERO, when
filing the new Reliability Standard, to explain how the new Reliability Standard satisfies the
Commission’s concerns.” 57
The SDT solicited feedback from industry regarding the disposition of BAL-006-2 and
eventually determined that the calculation of Inadvertent Interchange is an accounting process
and is not appropriate for a NERC Reliability Standard. During periods when the Reporting
ACE of a BA is negatively affecting the Interconnection frequency beyond a predefined bound,
Reliability Standard BAL-001-2 requires BAs to maintain its clock-minute ACE within the
Balancing Authority ACE Limit (“BAAL”). Reliability Standard BAL-001-2 also requires
entities to take a rolling 12-month measure of overall control performance using clock-minute

55
56
57

Id.
Order No. 693, supra n. 22, at P 428.
Id. at P 438.

26

performance data. To further support frequency, Reliability Standard BAL-003-1 and proposed
Reliability Standard BAL-002-2 require entities to restore of Reporting ACE within predefined
bounds and to maintain and dispatch Frequency Response, as necessary. 58 These “real-time”
measures of control performance require entities to maintain Interconnection frequency, limiting
operation when it is detrimental to Interconnection frequency and encouraging operation when in
support of Interconnection frequency. Because entities are supporting frequency through this
coordinated suite of reliability standards, entities will not excessively depend on other entities in
the Interconnection such that the purely economic issue that was addressed by BAL-006-2
becomes a reliability issue for a NERC Reliability Standard.
As further support for this retirement, the SDT provided an in-depth justification for why
a NERC Reliability Standard is not necessary for Inadvertent Interchange accounting in its
Inadvertent Interchange White Paper. The Inadvertent Interchange White Paper was posted for
10 days for industry input on September 16, 2015 and was the basis for creation of the
Inadvertent Interchange Guideline. In order to address any remaining or potential concerns with
retirement of BAL-006-2, NERC proposes that the retirement of currently effective BAL-006-2
be effectuated upon the NERC OC approval of the Inadvertent Interchange Guideline. 59

58
See, .e.g, Petition of the North American Electric Reliability Corporation for Approval of Proposed
Reliability Standard BAL-002-2, Docket No. RM16-7-000 (filed Jan. 29, 2016); Clarifying Supplemental
Information for Petition for Approval of BAL-002-2, Docket No. RM16-7-000 (filed Feb. 12, 2016); Supplemental
Information for Petition of the North American Electric Reliability Corporation for Approval Of Proposed
Reliability Standard BAL-002-2, Docket No. RM16-7-000 (filed Mar. 31, 2016).
59
Reliability guidelines are documents that suggest approaches or behavior in a given technical area for the
purpose of improving reliability. Reliability guidelines are not binding norms or mandatory requirements.
Reliability guidelines are usually sponsored by a NERC committee and are made available for industry comment
prior to finalization. The concepts in guidelines may be adopted by a Responsible Entity in accordance with its own
facts and circumstances.

27

2.

Requirement-by-Requirement Retirement Justification
a)

Requirements R1, R2, R4, and R5

The SDT proposes to retire Requirements R1, R2, R4, and R5, as these requirements are
“administrative” in nature based on the Commission-approved Paragraph 81 Criteria B1. 60
However, because large and long-held Inadvertent Interchange accumulations may impact
commercial relationships, and because the related paybacks can create impacts to reliability if
not conducted in an appropriate manner, the SDT also developed an Inadvertent Interchange
White Paper to define typical practices for isolating and eliminating sources of Inadvertent
accounting errors. The SDT and the OC Resources Subcommittee developed the Inadvertent
Interchange Guideline based on the evidence presented in the Inadvertent Interchange White
Paper. As described above, the Inadvertent Interchange Guideline is currently under review by
the OC.
Pursuant to NERC’s Paragraph 81 Criteria, a requirement may be retired if it “requires
responsible entities (“entities”) to conduct an activity or task that does little, if anything, to
benefit or protect the reliable operation of the BES,” and it meets another one of the criteria
described in Criteria B of that document. 61 One of those criteria, Criteria B1 (Administrative),
states that a Reliability Standard requirement may be retired if it “requires responsible entities to
perform a function that is administrative in nature, does not support reliability and is needlessly
burdensome.” 62 Criteria B1 also states that it is
designed to identify requirements that can be retired or modified with little effect on
reliability and whose retirement or modification will result in an increase in the efficiency
of the ERO compliance program…Strictly administrative functions do not inherently
negatively impact reliability directly and, where possible, should be eliminated or
60
61
62

Paragraph 81 Criteria, supra n. 6 at Exhibit A.
Id.
Id.

28

modified for purposes of efficiency and to allow the ERO and entities to appropriately
allocate resources. 63
The draft Inadvertent Interchange Guideline explains the relationship between
Inadvertent Interchange and reliability, current industry account practices to calculate and
compensate for Inadvertent Interchange, and options for potential commercial accounting
standards. As explained in the draft Inadvertent Interchange Guideline, the calculation
requirements in Requirements R1, R2, R4, and R5 of BAL-006-2 are commercial energy
accounting requirements and do not contribute to Reliable Operation of the BES. For example,
Inadvertent Interchange generally occurs because of a variety of factors, including accounting
errors such as bilateral or unilateral Inadvertent payback, false schedules implemented to correct
a perceived metering error, hourly interchange calculations that do not compensate for ramps, or
minor calculation errors. Balancing Authority Areas routinely monitor and account for
Inadvertent Interchange using standard accounting procedures. 64 If the Requirements of
proposed Reliability Standard BAL-005-1 are met, responsible entities will have all data
necessary to calculate Reporting ACE and will avoid potential reliability issues caused by
Inadvertent Interchange. The remaining issues associated with Inadvertent Interchange
accumulations are commercial issues and may be addressed as such. As such, Requirements R1,
R2, R4, and R5 should be retired as administrative under Criteria B1.
a)

Requirement R3

Requirement R3 of currently effective Reliability Standard BAL-006-2 has been moved
to proposed Requirement R7 of BAL-005-1. See supra, discussion at Section IV.A.3.g above.

63

Id.
Certain procedures followed by BAAs may be based on standard accounting practices, compliance with
NAESB Standard WEQ-007 Business Practice Requirements (Inadvertent Interchange Payback) (this standard only
accounts for the payback of Inadvertent Interchange), or other accounting rules.

64

29

E.

Proposed NERC Glossary Definitions

The SDT developed several new and modified NERC Glossary definitions in connection
with proposed Reliability Standards BAL-005-1 and FAC-001-3 to enhance the effectiveness of
those Standards in maintaining reliability. Specifically, NERC proposes new and modified
definitions of the following terms: Automatic Generation Control, Actual Frequency, Actual Net
Interchange, Scheduled Net Interchange, Interchange Meter Error, Automatic Time Error
Correction, Reporting ACE, Pseudo-Tie, and Balancing Authority.
With respect to the Commission’s directive in Order No. 693 regarding modification to
the definition of Operating Reserves, 65 NERC developed Reliability Standard BAL-002-2 and
associated proposed revisions to the definition of Contingency Reserve (now pending before the
Commission) to ensure a continent-wide, technology neutral reserve policy. 66 The proposed
revised definitions below are also technology neutral. NERC has removed the term Operating
Reserve in the BAL Reliability Standards and has developed an Operating Reserve Guideline to
help address any remaining potential concerns. As a result, NERC’s Proposal addresses
remaining directives regarding terms used in the BAL Reliability Standards.
1.

Automatic Generation Control

Automatic Generation Control (AGC): Equipment that automatically adjusts generation
in a Balancing Authority Area from a central location to maintain the Balancing
Authority’s interchange schedule plus Frequency Bias. AGC may also accommodate
automatic inadvertent payback and time error correction. A process designed and used to
automatically adjust a Balancing Authority Areas’ Demand and/or resources to help maintain
the Reporting ACE in that of a Balancing Authority Area within the bounds required by
applicable NERC Reliability Standards.

65
Order No. 693, supra n. 22, at P 1896; see also, id. supra n. 22, at PP 336, 340, 343-344, 405, 1887
(providing additional clarity regarding the directed revisions).
66
Petition of the North American Electric Reliability Corporation for Approval of Proposed Reliability
Standard BAL-002-2, supra n. 57, at pp. 3-4, 15-16, and Contingency Event Standard Background Document (Jan.
29, 2016).

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The definition of Automatic Generation Control describes the process by which an entity
controls its Reporting ACE in Reliability Standard BAL-005-1. This definition has been revised
as shown to reflect modernization of the industry and to set forth a resource-neutral process for
controlling demand and resources. The proposed definition allows the entity the flexibility to
perform necessary reliability functions in the most effective and reliable manner.
2.

Reporting ACE

Reporting ACE: The scan rate values of a Balancing Authority Area’s (BAA) Area
Control Error (ACE) measured in MW includes the difference between the Balancing
Authority Area’s Actual Net Interchange and its Scheduled Net Interchange, plus its
Frequency Bias Setting obligation, plus correction for any known meter error. In the
Western Interconnection, Reporting ACE includes Automatic Time Error Correction
(ATEC).
Reporting ACE is calculated as follows:
Reporting ACE = (NIA − NIS) − 10B (FA − FS) – IME
Reporting ACE is calculated in the Western Interconnection as follows:
Reporting ACE = (NIA − NIS) − 10B (FA − FS) – IME + IATEC
Where:
Actual Net Interchange.
• NIA =
• NIS
=
Scheduled Net Interchange.
• B
=
Frequency Bias Setting.
• FA
=
Actual Frequency.
• FS
=
Scheduled Frequency.
=
Interchange Meter Error.
• IME
• IATEC =
Automatic Time Error Correction.
All NERC Interconnections operate using the principles of Tie Line Bias (TLB) Control
and require the use of an ACE equation similar to the Reporting ACE defined above. Any
modification(s) to this specified Reporting ACE equation that is(are) implemented for all
BAAs on an Interconnection and is(are) consistent with the following four principles of
Tie Line Bias control will provide a valid alternative to this Reporting ACE equation:
1. All portions of the Interconnection are included in exactly one BAA so that the
sum of all BAAs’ generation, load, and loss is the same as total Interconnection
generation, load, and loss;
2. The algebraic sum of all BAAs’ Scheduled Net Interchange is equal to zero at all
times and the sum of all BAAs’ Actual Net Interchange values is equal to zero at
all times;
3. The use of a common Scheduled Frequency FS for all BAAs at all times; and,
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4. Excludes metering or computational errors. (The inclusion and use of the IME term
corrects for known metering or computational errors.)
The currently effective definition of Reporting ACE defines several components used to
calculate Reporting ACE. The revised, proposed definition of Reporting ACE is clearer because
it includes only the Reporting ACE calculation. NERC’s Proposal would separately define each
of the components used to calculate Reporting ACE as discussed immediately below.
3.

Components of Reporting ACE

Actual Frequency (FA): The Interconnection frequency measured in Hertz (Hz).
Actual Net Interchange (NIA): The algebraic sum of actual megawatt transfers across all
Tie Lines, including Pseudo‐Ties, to and from all Adjacent Balancing Authority areas
within the same Interconnection. Actual megawatt transfers on asynchronous DC tie lines
that are directly connected to another Interconnection are excluded from Actual Net
Interchange.
Scheduled Net Interchange (NIS): The algebraic sum of all scheduled megawatt
transfers, including Dynamic Schedules, to and from all Adjacent Balancing Authority
areas within the same Interconnection, including the effect of scheduled ramps.
Scheduled megawatt transfers on asynchronous DC tie lines directly connected to another
Interconnection are excluded from Scheduled Net Interchange.

Interchange Meter Error (IME): A term, normally zero, used in the Reporting ACE
calculation to compensate for data or equipment errors affecting any other components of
the Reporting ACE calculation.
Automatic Time Error Correction (IATEC): The addition of a component to the ACE
equation for the Western Interconnection that modifies the control point for the purpose
of continuously paying back Primary Inadvertent Interchange to correct accumulated time
error. Automatic Time Error Correction is only applicable in the Western
Interconnection.
I𝑨𝑨𝑨𝑨𝑨𝑨𝑨𝑨 =

𝒐𝒐𝒐𝒐⁄𝒐𝒐𝒐𝒐𝒐𝒐 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑

PII𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂
(𝟏𝟏−𝒀𝒀)∗𝑯𝑯

when operating in Automatic Time Error Correction Mode.

The absolute value of IATEC shall not exceed Lmax .
IATEC shall be zero when operating in any other AGC mode.
•
•

Lmax is the maximum value allowed for IATEC set by each BA between 0.2*|Bi|
and L10, 0.2*|Bi|≤ Lmax ≤ L10 .
L10 = 1.65 ∗ ε10 �(−10Bi )(−10BS ) .
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•

•
•
•
•
•
•
•
•
•
•

10 is a constant derived from the targeted frequency bound. It is the targeted
root-mean-square (RMS) value of ten-minute average frequency error based on
frequency performance over a given year. The bound, 1
0, is the same for every
Balancing Authority Area within an Interconnection.
Y = Bi / BS.
H = Number of hours used to payback primary inadvertent interchange energy.
The value of H is set to 3.
Bi = Frequency Bias Setting for the Balancing Authority Area (MW / 0.1 Hz).
BS = Sum of the minimum Frequency Bias Settings for the Interconnection (MW
/ 0.1 Hz).
Primary Inadvertent Interchange (PIIhourly) is (1-Y) * (IIactual - Bi * ΔTE/6)
IIactual is the hourly Inadvertent Interchange for the last hour. ΔTE is the hourly
change in system Time Error as distributed by the Interconnection time
monitor,where:
ΔTE = TEend hour – TEbegin hour – TDadj – (t)*(TEoffset)
TDadj is the Reliability Coordinator adjustment for differences with
Interconnection time monitor control center clocks.
t is the number of minutes of manual Time Error Correction that occurred during
the hour.
TEoffset is 0.000 or +0.020 or -0.020.
PIIaccum is the Balancing Authority Area’s accumulated PIIhourly in MWh. An OnPeak and Off-Peak accumulation accounting is required,
where:
𝒐𝒐𝒐𝒐⁄𝒐𝒐𝒐𝒐𝒐𝒐𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑

PII𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂

𝒐𝒐𝒐𝒐⁄𝒐𝒐𝒐𝒐𝒐𝒐𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑

= 𝒍𝒍𝒍𝒍𝒍𝒍𝒍𝒍 𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒅𝒅′ 𝒔𝒔 PII𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂𝒂

+ PII𝒉𝒉𝒉𝒉𝒉𝒉𝒉𝒉𝒉𝒉𝒉𝒉

As explained above, NERC’s Proposal moves the components of Reporting ACE from
that term to separate NERC Glossary terms. This separation will improve reliability by reducing
potential confusion associated with definitions embedded within a term. The proposed definition
of ATEC also improves the current definition by addressing a Commission directive.
Specifically, the proposed definition addresses the Commission’s directive in Order No. 810 for
NERC to “revise the definition of Reporting ACE to include the ‘Lmax’ upper payback limit and
the bounds of that upper payback limit prior to the effective date of Reliability Standard BAL001-1.” 67 The proposed definition of ATEC, which is incorporated into the proposed definition

67

Order No. 810, supra n. 9. The Commission also explained that the Lmax upper payback limit and the
bounds of that limit were necessary for the Western Interconnection.

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of Reporting ACE (as explained above) and is only applicable in the Western Interconnection,
states that “[t]he absolute value of IATEC shall not exceed Lmax.”
4.

Pseudo-Tie

Pseudo-Tie: A time-varying energy transfer that is updated in Real-time and included in
the Actual Net Interchange term (NIA) in the same manner as a Tie Line in the affected
Balancing Authorities’ control Reporting ACE equation (or alternate control processes).
The proposed definition of the term Pseudo-Tie has been updated to reflect the use of the
term “Reporting ACE” instead of the more general “control ACE.” The proposed definition is
clearer and reduces confusion associated with outdated terminology.
5.

Balancing Authority

Balancing Authority: The responsible entity that integrates resource plans ahead of
time, maintains load-interchange-generation balance Demand and resource balance
within a Balancing Authority Area, and supports Interconnection frequency in real time.
To ensure consistency with the proposed definition of AGC, the SDT revised the
definition of a BA to more accurately describe the BA’s resource demand function. The standard
drafting team for Project 2015-04 (Alignment of Terms) also highlighted inconsistent use of the
term "load-interchange-generation" and recommended that an open BAL Standard project
address the issue. Therefore, the proposed changes promote clarity and consistency with other
definitions and with various Reliability Standards.
V.

EFFECTIVE DATE
NERC respectfully requests that the Commission accept proposed Reliability Standards

BAL-005-1 and FAC-001-3 on the first day of the first calendar quarter that is 12 months after
appropriate governmental approval, pursuant to the respective Implementation Plans in Exhibits
D and E of this Petition. In addition, NERC requests that that the Commission approve
retirement of Reliability Standard BAL-006-2 upon the effective date of Reliability Standard
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BAL-005-1 and the OC’s approval of an Inadvertent Interchange Guideline, as stated in the
Implementation Plan attached at Exhibit F. 68 NERC also requests that the proposed definitions
for the definitions of Reporting ACE, Actual Frequency, Actual Net Interchange, Schedule Net
Interchange, Interchange Meter Error, and ATEC become effective immediately after the July 1,
2016 effective date of Reliability Standard BAL-001-2 to ensure proper coordination the
proposed definitions and Commission approved Reliability Standard BAL-001-2. 69 Finally,
NERC requests that the proposed definitions for AGC, Pseudo-Tie, and Balancing Authority
become effective upon the effective date for Reliability Standard BAL-005-1. These effective
dates will ensure coordinated implementation of NERC’s proposed revisions, avoid reliability
gaps, and effect a seamless transition to NERC’s Proposal.

68

Supra n. 55.
See, BAL-005-1 Implementation Plan, attached hereto as Exhibit D. This Implementation Plan reflects the
SDT’s intent to supersede the “Reporting ACE” definition approved in Order No. 810, supra n. 9, P 43 (2015). As
explained above in note 8, the SDT intended that the definition of “Reporting ACE” approved in Order No. 810
never take effect. The definition of “Reporting ACE” approved in Order No. 810 may, however, be in effect for
some limited period of time while this Petition and the proposed definitions under NERC’s Proposal are pending
Commission review.
69

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VI.

CONCLUSION
For the reasons set forth above, NERC respectfully requests that the Commission approve

NERC’s Proposal regarding (i) proposed Reliability Standards BAL-005-1 and FAC-001-3,
proposed NERC Glossary Definitions, and other associated elements in Exhibits A and B (the
proposed NERC Glossary definitions are set forth in Exhibit D); (ii) the Implementation Plans
for BAL-005-1 and FAC-001-3 in Exhibits D, E, and F; (iii) the VRFs and VSLs in Exhibits G
and H; (iv) and retirement of currently effective Reliability Standards BAL-005-0.2b, FAC-0012, and BAL-006-2 (proposed retirement of BAL-006-2 is shown in Exhibit C).

Respectfully submitted,
/s/ Andrew C. Wills
Charles A. Berardesco
Senior Vice President and General Counsel
Shamai Elstein
Senior Counsel
Candice Castaneda
Counsel
Andrew C. Wills
Associate Counsel
North American Electric Reliability
Corporation
1325 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 400-3000
(202) 644-8099 – facsimile
[email protected]
[email protected]
[email protected]
[email protected]
Counsel for the North American Electric
Reliability Corporation
Date: April 20, 2016

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