RD17-1 Petition

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 RETIREMENT OF RELIABILITY STANDARD BAL-004-0
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
North American Electric Reliability
Corporation
1325 G Street, N.W., Suite 600
Washington, DC 20005
(202) 400-3000
(202) 644-8099 – facsimile
[email protected]
[email protected]
[email protected]

Counsel for the North American Electric
Reliability Corporation

November 10, 2016

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY .................................................................................................... 2
II. NOTICES AND COMMUNICATIONS ................................................................................ 4
III. BACKGROUND .................................................................................................................... 4
A.
Regulatory Framework ..................................................................................................... 4
B.

Paragraph 81 Criteria ....................................................................................................... 5

C.

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

IV. JUSTIFICATION FOR PROPOSED RETIREMENT ........................................................... 7
A.
Reliability Standard BAL-004-0, Proposed For Retirement ............................................ 8
B.

Procedural History............................................................................................................ 8
1. History of Reliability Standard BAL-004-0 ................................................................. 9
2. Projects Resulting in the Proposal to Retire Reliability Standard BAL-004-0........... 10

C.

Justification for Retirement of Reliability Standard BAL-004-0 ................................... 13
1. Reliability Standard BAL-004-0 and Manual TEC Do Not Materially Contribute to
Reliability.................................................................................................................... 14
2. Other Reliability Standards Established Since Order No. 693 Render Reliability
Standard BAL-004-0 Redundant ................................................................................ 15
3. Empirical Data Supports Determinations that Reliability Standard BAL-004-0 Has
Little Effect on Reliability and Has Become Redundant ............................................ 17
4. Retirement Should Not Impact Accumulation of Inadvertent Interchange ................ 17
5. Proposed Retirement is Conditioned on Retirement of the NAESB WEQ-006
Business Practice Standard ......................................................................................... 18

V. EFFECTIVE DATE .............................................................................................................. 20
VI. CONCLUSION ..................................................................................................................... 20
Exhibit A

Paragraph 81 Criteria (as filed in Docket No. RM13-8-000)

Exhibit B

Implementation Plan for Retirement of BAL-004-0

Exhibit C

Supporting Technical Documents

Exhibit D

Exhibit C-1: Time Error Correction and Reliability White Paper
Exhibit C-2: Project 2010-14.2 – Balancing Authority Reliability-based Controls
2 Periodic Review Template: BAL-004-0—Time Error Correction
Exhibit C-3: Manual Time Error Correction Reference Document
Summary of Development History and Complete Record of Development

Exhibit E

Standard Drafting Team Roster

i

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 RETIREMENT OF RELIABILITY STANDARD BAL-004-0
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 respectfully requests Commission
approval for retirement of Reliability Standard BAL-004-0 (Time Error Correction) and the
associated Implementation Plan (Exhibit B). This proposal is consistent with the Commission’s
March 2012 Order and NERC’s resulting Paragraph 81 Criteria (Exhibit A), 4 the 2013 Periodic
Review Team (“PRT”) Recommendations (Exhibit C-2), and the 2013 Independent Expert
Review Report. 5 In particular, NERC’s proposed retirement of BAL-004-0 reflects findings that
Reliability Standard BAL-004-0 has become redundant and ineffective for supporting reliability
of the Bulk-Power System (“BPS”), with more recent Reliability Standards managing continued
adherence to frequency approximating 60 Hertz over long-term averages. As demonstrated in
this Petition, Reliability Standard BAL-004-0 can be retired with little or no effect on reliability

1

16 U.S.C. § 824o (2012).
18 C.F.R. § 39.5 (2016).
3
The Commission certified NERC as the electric reliability organization (“ERO”) in accordance with
Section 215 of the FPA on July 20, 2006. N. Am. Elec. Reliability Corp., 116 FERC ¶ 61,062 (2006).
4
North American Electric Reliability Corporation, 138 FERC ¶ 61,193, at P 81 (“March 2012 Order”),
order on reh’g and clarification, 139 FERC ¶ 61,168 (2012); and 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), attached hereto as Exhibit A.
5
Standards Independent Experts Review Project, An Independent Review by Industry Experts, at p. 26,
Appendix E (“Independent Expert Review Report”) (June 2013), available at,
http://www.nerc.com/pa/Stand/Standards%20Development%20Plan%20Library/Standards_Independent_Experts_R
eview_Project_Report.pdf.
2

1

and with an increase in efficiency in the NERC compliance program. The NERC Board of
Trustees approved the proposal to retire Reliability Standard BAL-004-0 on November 2, 2016.
Consistent with Section 39.5(a) of the Commission’s regulations and March 2012 Order, 6
this petition presents the technical basis for retirement of Reliability Standard BAL-004-0.
Technical documentation includes (i) the Standard Drafting Team (“SDT”) White Paper for
Project No. 2010-14.2.2 Phase 2 of Balancing Authority Reliability-based Controls (Exhibit C1); (ii) the PRT Recommendations for Project 2010-14.2 Periodic Review of BAL Standards
(Exhibit C-2); (iii) the NERC Operating Committee (“OC”) approved Manual Time Error
Correction Reference Document intended to support retirement of BAL-004-0 (Exhibit C-3); and
(iv) a summary of the development history (Exhibit D). NERC requests that the Commission
approve retirement of Reliability Standard BAL-004-0 as just, reasonable, not unduly
discriminatory or preferential, and in the public interest, for the reasons discussed herein.
I.

EXECUTIVE SUMMARY
Reliability Standard BAL-004-0 is intended to ensure that manual Time Error Correction

(“TEC”) helps manually maintain frequency at approximately 60 Hertz in a manner that does not
adversely affect reliability. However, the SDT determined that manual TEC does not materially
support reliability of the BPS and that conducting manual TEC is inconsistent with NERC
Reliability Principle 2 as most recently articulated in the Independent Expert Review Report. 7
The SDT’s conclusions align with the 2013 PRT’s recommendations regarding BAL-004-0 and
the 2013 Independent Expert Review Report examining the standard as part of the Independent
Experts Review Project. In addition, since Reliability Standard BAL-004-0 became effective,

6

18 C.F.R. § 39.5(a) (2016); and March 2012 Order, at P 81.
See, Independent Expert Review Report, at Appendix B (providing the updated list of Reliability
Principles). NERC Reliability Principle 2, states that “frequency and voltage of interconnected bulk power systems
shall be controlled within defined limits through the balancing of real and reactive power supply and demand.”

7

2

improvements have been made to mandatory Reliability Standards (such as the development of
Reliability Standards BAL-003-1.1 and BAL-001-2 and the Interconnection Reliability
Operations and Coordination (“IRO”) Standards) that help ensure continued adherence to
frequency approximating 60 Hertz over long-term averages and make BAL-004-0 redundant. 8
Retiring Reliability Standard BAL-004-0 would, therefore, be “consistent with the Commission’s
policy promoting increased efficiencies in Reliability Standards and reducing requirements that
are either redundant with other currently-effective requirements or have little reliability
benefit.” 9
NERC requests approval to retire Reliability Standard BAL-004-0 effective on the later
of (i) the first day of the first calendar quarter after the effective date of the Commission’s order
approving retirement or (ii) the effective date of retirement/reservation of North American
Energy Standard Board (“NAESB”) WEQ-006 Manual Time Error Correction Business Practice
Standard (“NAESB WEQ-006”) 10 NERC’s proposal is conditioned upon retirement of NAESB
WEQ-006 to avoid uncoordinated manual TEC. NERC understands that NAESB’s effort
regarding proposed retirement of NAESB WEQ-006 is underway and NAESB will make an
informational filing following the completion of its standards development process. The OC
approved reference document (Exhibit C-3) will further help ensure smooth retirement of BAL004-0 and avoid uncoordinated manual TEC. Therefore, NERC respectfully requests that the

8

Time Error is created when an Interconnection operates on the aggregate at a frequency different than the
intended 60 Hertz or cycles. Manual TEC manually places the Interconnection closer to the appropriate frequency
through an offset to the frequency schedule as requested by an Interconnection Time Monitor
9
Transmission Operations Reliability Standards and Interconnection Reliability Operations and
Coordination Reliability Standards, Order No. 817, 153 FERC ¶ 61,178, at P 2 (2015). See also, id. at PP 13-14.
10
The NAESB process uses the term reservation, in lieu of retirement.

3

Commission approve retiring Reliability Standard BAL-004-0 and the related Implementation
Plan as just, reasonable, not unduly discriminatory or preferential, and in the public interest.
II.

NOTICES AND COMMUNICATIONS
Notices and communications with respect to this filing may be addressed to: 11

Shamai Elstein*
Senior Counsel
Candice Castaneda*
Counsel
North American Electric Reliability
Corporation
1325 G Street, N.W., Suite 600
Washington, DC 20005
(202) 400-3000
(202) 644-8099 – facsimile
[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, 12 Congress entrusted the Commission with
the duties of approving and enforcing rules to ensure the reliability of the Nation’s BPS, 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 BPS in the United
States will be subject to Commission-approved Reliability Standards. 13 Section 215(d)(5) of the
FPA authorizes the Commission to order the ERO to submit a new or modified Reliability

11

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 (2016), to allow the inclusion
of more than two persons on the service list in this proceeding.
12
16 U.S.C. § 824o (2012).
13
Id. § 824o(b)(1).

4

Standard. 14 Section 39.5(a) of the Commission’s regulations requires the ERO to file with the
Commission for its approval each Reliability Standard that the ERO proposes should become
mandatory and enforceable in the United States, and each modification to a Reliability Standard
that the ERO proposes should be made effective. 15
The Commission is vested with the regulatory responsibility to approve Reliability
Standards that protect the reliability of the BPS 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 Reliablity Standards. 16
Pursuant to Section 215(d)(2) of the FPA 17 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. 18
B.

Paragraph 81 Criteria

In March of 2012, the Commission stated that, “[i]f NERC believes that specific
Reliability Standards or specific requirements within certain Standards should be revised or
removed, we invite NERC to make specific proposals to the Commission identifying the
Standards or requirements and setting forth in detail the technical basis for its belief.” 19
Consistent with the March 2012 Order, NERC subsequently sought approval to retire 34
requirements within 19 Reliability Standards (the “P 81 Project”). 20 The P 81 Project developed

14

Id. § 824o(d)(5).
18 C.F.R. § 39.5(a) 2016).
16
See e.g., the NERC Standards Processes Manual, at Section 4.19; and Order No. 817.
17
16 U.S.C. § 824o(d)(2) (2012).
18
18 C.F.R. § 39.5(c)(1) (2016).
19
March 2012 Order, at P 81.
20
Petition of the North American Electric Reliability Corporation for Approval of Retirement of
Requirements in Reliability Standards, Docket No. RM13-8-000 (filed Feb. 28, 2013).
15

5

three criteria (comprised of several questions and subcriteria shown in Exhibit A) to help identify
candidates for retirement. The Paragraph 81 Criteria are as follows:
(1) Criterion A: an overarching criteria designed to determine that there is no
reliability gap created by the proposed retirement; (2) Criterion B: consists of
seven separate identifying criteria designed to recognize requirements appropriate
for retirement (administrative; data collection/data retention; documentation;
reporting; periodic updates; commercial or business practice; and redundant); and
(3) Criterion C: consists of seven separate questions designed to assist…an
informed decision whether requirements are appropriate to propose for
retirement. 21
In Order No. 788, approving the retirements proposed under the P 81 Project, the
Commission, “concluded that the requirements identified by NERC for retirement satisfy[ied]
the expectations set forth in the March 2012 Order; namely, the requirements proposed for
retirement either: (1) provide little protection for Bulk-Power System reliability or (2) are
redundant with other aspects of the Reliability Standards.” 22 The Commission added:
We agree with commenters that NERC should continue the process of identifying
additional Reliability Standards and requirements as candidates for retirement or
streamlining. We support NERC’s continuing efforts in this regard. Efficiencies
can be gained from further consolidation or retirement of some requirements or
components of requirements that are justified based on technical analysis of either
existing requirements, new proposed requirements or modifications. Such
analyses would take into account the interrelationship between standards and
among categories of standards, in order to determine that when retirements or
consolidations are made the reliability benefits of the currently effective
requirements would be preserved. 23
As a result, NERC continues to consider the Paragraph 81 Criteria during periodic reviews and
standard development projects.

21

Notice of Proposed Rulemaking Electric Reliability Organization Proposal to Retire Requirements in
Reliability Standards, 143 FERC ¶ 61,251, at P 8 (2013); and id. at P 9 (highlighting the seven questions, including
Question C5: “Is there a possible negative impact on NERC’s published and posted reliability principles?”). See
also, Electric Reliability Organization Proposal to Retire Requirements in Reliability Standards, Order No. 788, 145
FERC ¶ 61,147, at PP 7 and 21 (2013); and Paragraph 81 Criteria, attached hereto as Exhibit A.
22
Order No. 788, at P 18. See also, Transmission Operations Reliability Standards and Interconnection
Reliability Operations and Coordination Reliability Standards, Order No. 817, 153 FERC ¶ 61,178, at P 2 (2015).
23
Order No. 788, at P 20.

6

C.

NERC Reliability Standards Development Procedure

The proposal to retire BAL-004-0 was developed in an open and fair manner and in
accordance with the Commission-approved Reliability Standard development process. 24 NERC
develops Reliability Standards (including modification or retirement of standards) in accordance
with Section 300 (Reliability Standards Development) of its Rules of Procedure and the NERC
Standard Processes Manual. 25 Retirement also considers the Paragraph 81 Criteria discussed
above in Section III.B.
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, 26 and thus
satisfy certain of the criteria for approving Reliability Standards. 27 The development process is
open to any person or entity with a legitimate interest in the reliability of the BPS. NERC
considers the comments of all stakeholders. Pursuant to these procedures, stakeholders and the
NERC Board of Trustees must approve retirement of a Reliability Standard before that
retirement is submitted to the Commission for approval. 28
IV.

JUSTIFICATION FOR PROPOSED RETIREMENT
Below is (a) the text of the Requirements in Reliability Standard BAL-004-0 proposed

for retirement, (b) the procedural history associated with NERC’s proposal to retire the

24

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).
25
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.
26
116 FERC ¶ 61,062 at P 250.
27
Order No. 672 at PP 268, 270.
28
See e.g., the NERC Standards Processes Manual, at Section 4.19.

7

Reliability Standard, and (c) the technical justification to support retirement of Reliability
Standard BAL-004-0.
A.

Reliability Standard BAL-004-0, Proposed For Retirement
R1. Only a Reliability Coordinator shall be eligible to act as Interconnection
Time Monitor. A single Reliability Coordinator in each Interconnection shall be
designated by the NERC Operating Committee to serve as Interconnection Time
Monitor.
R2. The Interconnection Time Monitor shall monitor Time Error and shall
initiate or terminate corrective action orders in accordance with the NAESB Time
Error Correction Procedure.
R3. Each Balancing Authority, when requested, shall participate in a Time Error
Correction by one of the following methods:
R3.1. The Balancing Authority shall offset its frequency schedule by 0.02
Hertz, leaving the Frequency Bias Setting normal; or
R3.2. The Balancing Authority shall offset its Net Interchange Schedule
(MW) by an amount equal to the computed bias contribution during a
0.02 Hertz Frequency Deviation (i.e. 20% of the Frequency Bias
Setting).
R4. Any Reliability Coordinator in an Interconnection shall have the authority
to request the Interconnection Time Monitor to terminate a Time Error
Correction in progress, or a scheduled Time Error Correction that has not begun,
for reliability considerations.
R4.1. Balancing Authorities that have reliability concerns with the execution
of a Time Error Correction shall notify their Reliability Coordinator
and request the termination of a Time Error Correction in progress.

B.

Procedural History

This section summarizes the history of (1) Reliability Standard BAL-004-0 and (2)
projects resulting in NERC’s proposal to retire Reliability Standard BAL-004-0.

8

1.

History of Reliability Standard BAL-004-0

Time Error is created when an Interconnection operates on the aggregate at a frequency
different than the intended 60 Hertz or cycles. 29 Manual TEC manually places the
Interconnection closer to 60 Hertz and to settings for automatic underfrequency load shedding or
generator tripping intended to address frequency deviations (such as declining frequency). 30 As
noted above, NAESB developed a business practice standard to correct for Time Error, and
Interconnection Time Monitors are currently responsible for monitoring Time Error in
accordance with NAESB standards and initiating corrective procedures. Reliability Standard
BAL-004-0 was created to help ensure coordinated manual TEC. At that time, the Reliability
Standards discussed in Section IV.C that manage adeherence to frequency at approximately 60
Hertz were not in effect. 31
As excerpted in Section IV.A above, Reliability Standard BAL-004-0 states that
Balancing Authorities (“BAs”) must offset their frequency schedule, when requested by an
Interconnection Time Monitor. The Reliability Standard provides that only Reliability
Coordinators (“RCs”) may act as Interconnection Time Monitors and that any RC may request
termination of a TEC in progress or scheduled. In Order No. 693, the Commission approved
Reliability Standard BAL-004-0. 32 The Commission also directed NERC to (i) develop
additional Measures and add Levels of Non-Compliance; and (ii) consider alternatives to manual

29

The NERC Glossary defines Time Error as, “The difference between the Interconnection time measured at
the Balancing Authority(ies) and the time specified by the National Institute of Standards and Technology. Time
error is caused by the accumulation of Frequency Error over a given period.”
30
An interconnected electric power system balances load and generation in order to maintain frequency
within a reliable range.
31
The NERC Glossary defines Time Error Corrections as, “An offset to the Interconnection’s scheduled
frequency to return the Interconnection’s Time Error to a predetermined value.”
32
Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, 72 Fed. Reg. 16416, FERC
Stats. & Regs. ¶ 31,242, PP 382-386, order on reh’g, Order No. 693-A, 120 FERC ¶ 61,053 (2007).

9

TEC. 33 As discussed in Section IV.C, retiring BAL-004-0 would address these directives,
through elimination of redundant and inefficient requirements in favor of newer standards.
Reliability Standard BAL-004-0 has been implemented since 2007. 34 After Order No.
693, NERC proposed revisions to Reliability Standard BAL-004-0 but withdrew this proposal
after the Commission’s 2010 NOPR, as further examination determined that the proposed
revisions were unnecessary. 35 Therefore, since 2007, BAL-004-0 continued in effect, subject to
ongoing review under the P 81 Project, Independent Expert Review Project, PRT review in
Project No. 2010-14.2, and Project No. 2010-14.2.2 described immediately below.
2.
Projects Resulting in the Proposal to Retire Reliability Standard
BAL-004-0
a)

Project No. 2010-14.2 – Periodic Review of BAL Standards

Upon NERC’s periodic review of BAL-004-0 under Project 2010-14.2 – Periodic Review
of BAL Standards, the PRT recommended retirement of the standard based on its determination
that manual TEC does not materially support reliability. The PRT explained that during the P 81
Project, the review team received three sets of comments suggesting retirement of Reliability
Standard BAL-004-0. Further, the PRT highlighted that the 2013 Independent Expert Review
Report found that Reliability Standard BAL-004-0 did not support reliability. The PRT

33

See Order No. 693, at PP 382-385.
There is also one Regional Reliability Standard BAL-004-WECC-1 (Automatic Time Error Correction).
This petition does not propose any change to Regional Reliability Standard BAL-004-WECC 1.
35
See, Notice of Withdrawal of the North American Electric Reliability Corporation of BAL-004-1 - Time
Error Correction, Docket No. RM09-13-000, at p. 2 (filed Oct. 24, 2012) (stating, “NERC has determined that these
proposed changes to BAL-004-1 are unnecessary and therefore, NERC is providing notice of its withdrawal of the
Petition for approval of BAL-004-1.”) (withdrawing the earlier March 2009 petition that had led to the Notice of
Proposed Rulemaking re Time Error Correction Reliability Standard, 130 FERC ¶ 61,201 (2010) (“2010 NOPR”)).
Non-utility industry stakeholders also expressed confusion regarding the proposed revisions.
34

10

determined that, “[t]he PRT agrees with the Independent Experts and many stakeholders that
BAL‐004‐0 should be retired under Paragraph 81 criteria.” 36
The PRT Recommendations determined that Reliability Standard BAL-004-0 satisfied
Criteria A of the Paragraph 81 Criteria, “because it does not support reliable operation of the
BES” and that it satisfied Criteria B as manual “TEC is a commercial practice that relates to the
quality of power delivered, not a practice that supports reliability.” 37 The PRT also concluded
that Reliability Standard BAL-004-0 satisfied Criteria C of the Paragraph 81 Criteria, on the
basis that the Reliability Standard (i) was not included in the 2014 Actively Monitored List for
either self-certification or audits; (ii) is inconsistent with NERC’s published and posted
reliability principles (such as Principle 2 that “[t]he frequency and voltage of interconnected bulk
power systems shall be controlled within defined limits through the balancing of real and
reactive power supply and demand”); and (iii) does not promote results or performance-based
Reliability Standards. 38 As a result of its findings in Project No. 2010-14.2, the PRT prepared a
Standard Authorization Request (“SAR”) for retirement. 39
b)

Project No. 2010-14.2.2 Phase 2 of Balancing Authority

36

Project 2010-14.2 – Balancing Authority Reliability-based Controls 2 Periodic Review Template: BAL004-0-Time Error Correction (updated Apr. 28, 2014) (“PRT Recommendations”), attached hereto at Exhibit C-2, at
p. 5 (summarizing, “The Independent Expert Review Report recommended retiring BAL‐004‐0 R1, R2, R3, and R4,
primarily under Paragraph 81 principles.”). See also, Petition of the North American Electric Reliability
Corporation for Approval of Retirement of Requirements in Reliability Standards, Docket No. RM13-8-000, at
Exhibit D (filed Feb. 28, 2013); and Independent Expert Review Report, at p. 26, Appendix E (recommending the
Reliability Standard BAL-004-0 Requirements for Retirement on the basis that each of these Requirements “does
not support a reliability objective as defined by the Reliability Principles.”).
37
Exhibit C-2, PRT Recommendations, at p. 5.
38
Id. (explaining, “BAL‐004‐0 also satisfies Criteria C4, C5, and C7. With respect to C4, the 2014 Actively
Monitored List does not include BAL‐004‐0 for either self‐certification or audits. With respect to C5, there is a
possible negative impact on NERC’s published and posted reliability principles. For instance, slowing the clock for
a manual TEC in the Eastern Interconnection brings the Interconnection slightly closer to the first step of
Underfrequency Load Shedding, which contradicts Principle 2, which states that ‘The frequency and voltage of
interconnected bulk power systems shall be controlled within defined limits through the balancing of real and
reactive power supply and demand.’ Finally, with respect to C7, BAL‐004‐0 does not promote results‐ or
performance‐based Reliability Standards.”).
39
PRT Recommendations.

11

Reliability-based Controls for Retirement of Reliability Standard
BAL-004-0
The PRT Recommendations and SAR led to Project No. 2010-14.2.2, resulting in this
petition. The SAR explained that:
As explained in the Independent Expert Review Project report, the industry and
FERC have expressed concern that a significant number of NERC requirements
do not contribute materially to the reliability of the Bulk-Power System. When
NERC maintains requirements that do not contribute materially to reliability,
registered entities may lose focus on the most critical matters that can adversely
impact reliability and resources are diverted from higher priority activities.
Standards that do not contribute to reliability should be retired. 40
Therefore, the SAR proposed “to retire a standard that does not contribute materially to
reliability.”
Comments on the SAR indicated industry support for retiring BAL-004-0, however it
was unclear whether industry supported maintaining or eliminating manual TEC. 41 The SDT
requested further comment on this issue, as the Commission previously clarified that while TEC
may not be necessary to ensure reliability, if TEC is performed, it is important to ensure that
manual TEC is performed in a way that does not adversely affect reliability. 42 As a result, the
SDT asked whether stakeholders supported either (i) maintaining the ability to implement

40

See, SAR, at p.1-2, attached hereto within Exhibit D.
See, Unofficial Survey Form Project 2010-14.2.2 Phase 2 of Balancing Authority Reliability-based
Controls: Time Error Correction (posted Aug. 12, 2015), available at,
http://www.nerc.com/pa/Stand/Project%2020101422%20Phase%202%20of%20BARC%20%20BAL004%20DL/Un
official_Survey_Form_2010-14_2_2_BAL-004-20150812.docx (“2015 Survey”); and Results, at
http://www.nerc.com/pa/Stand/Project%2020101422%20Phase%202%20of%20BARC%20%20BAL004%20DL/Co
mments_Received_Report_08262015.pdf.
42
Order No. 693, at P 383 (stating, “[m]any commenters aver that the time error correction procedure belongs
within the realm of NAESB and is not a reliability issue. The Commission disagrees, as BAL-004-0 is intended to
ensure that time error corrections are performed in a manner that does not adversely affect the reliability of the
Interconnection.…”); and 2010 NOPR, at PP 25 and 27 (stating, “[i]n Order No. 693, we disagreed with arguments
that Time Error Correction is really more a NAESB business practice. Rather, we stated that the Time Error
Correction Reliability Standard is intended to ensure that Time Error Corrections are performed in a manner that
does not adversely affect reliability, and the technical details, including the means to carry out the procedure, are a
reliability issue.….”).
41

12

manual TEC, or (ii) preferred to eliminate the Reliability Standard and ability to implement
manual TEC. The majority of responses supported retirement of BAL-004-0 and manual TEC.
Through its review, the SDT also affirmed the PRT’s findings that manual TEC would
not support reliability of the BPS and that conducting manual TEC in any form operates in
tension with NERC Reliability Principle 2. 43 Further, the SDT confirmed that current, or soon to
be effective, Reliability Standards would manage continued adherence to a frequency
approximating 60 Hertz over long-term averages. This technical justification is detailed in
Section IV.C below. As a result of its findings, the SDT proposed to retire Reliability Standard
BAL-004-0, conditioned upon retirement of the NAESB WEQ-006. This proposal met with
approximately 98% industry approval. 44
C.

Justification for Retirement of Reliability Standard BAL-004-0

Retiring Reliability Standard BAL-004-0 is just, reasonable, not unduly discriminatory or
preferential, and in the public interest. The purpose of Reliability Standard BAL-004-0 is “to
ensure that Time Error Corrections are conducted in a manner that does not adversely affect the
reliability of the Interconnection.” However, as discussed in in Section IV.B.2 above and
detailed in this Section IV.C, the Independent Expert Review Report, the PRT, and the SDT each
determined that manual TEC does not materially support reliability of the BPS, BAL-004-0 falls
within Paragraph 81 Criteria, and BAL-004-0 has been superseded by newer standards. As a
result, BAL-004-0 should be retired. Moreover, in September 2016, the OC approved a manual

43

See, PRT Recommendations, at p. 5; Standards Announcement, Project 2010-14.2.2 Phase 2 of Balancing
Authority Reliability-based Controls Recommended Retirement of BAL-004-0, available at,
http://www.nerc.com/pa/Stand/Project%2020101422%20Phase%202%20of%20BARC%20%20BAL004%20DL/20
10-14.2.2_Phase_2_of_BARC_CP_BP_IB_Word_Announce_09242015.pdf; and Time Error Correction and
Reliability White Paper, Recommendation of the Balancing Authority Reliability-based Controls 2.2 Standard
Drafting Team to Retire BAL-0004-0 – Time Error Correction, (Sept. 24, 2015) (“White Paper”), attached hereto, as
Exhibit C-1.
44
See, Exhibit D.

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TEC reference document, to ensure that any manual TEC determined necessary is performed in a
coordinated manner and thereby assuage any potential remaining concerns regarding retirement.
1.
Reliability Standard BAL-004-0 and Manual TEC Do Not Materially
Contribute to Reliability
Building on the Independent Expert and PRT analyses, the SDT determined that the
practice of manual TEC does not significantly support or enhance reliability. The SDT instead,
“maintain[ed] that elimination of manual TEC will allow each Interconnection to be operated
closer to the design frequency of 60 Hertz more often, by avoiding the over-corrections that arise
in manual TEC accomplished under BAL-004-0 and NAESB WEQ-006.” 45 Moreover, the SDT
confirmed that conducting manual TEC in any form is inconsistent with NERC Reliability
Principle 2 that “[t]he frequency and voltage of interconnected bulk power systems shall be
controlled within defined limits through the balancing of real and reactive power supply and
demand.” As a result, while the SDT considered alternatives to retirement of BAL-004-0 and
alternative methods of manual TEC, it ultimately found, “that [the alternatives] would not
support reliability of the BPS. Conducting manual TEC in any form directly contradicts NERC
Reliability Principle 2….” 46
The SDT was also concerned that availability of manual TEC under BAL-004-0 and
NAESB WEQ-006 might inadvertently contribute to the hazards of a free rider problem and
excessive over-correction, where multiple BAs might collectively correct Time Error caused by a
single entity. Thus, the SDT affirmed that Reliability Standard BAL-004-0 has a negative
impact on published and posted reliability principles, contrary to Paragraph 81 Criteria. 47

45

Exhibit C-1, White Paper, at Section III.A; and id. at Section III.D.
Exhibit C-1, White Paper, at Section III.F. See also, id. at Appendix II (providing details regarding
concerns that arose during the SDT’s review of alternative methods, such as how they could make performance
measurements that rely on ACE unreliable and ineffectiveness).
47
Supra, n. 5.
46

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2.
Other Reliability Standards Established Since Order No. 693 Render
Reliability Standard BAL-004-0 Redundant
In addition, the SDT confirmed that Reliability Standard developments since Order No.
693 render Reliability Standard BAL-004-0 redundant. In particular, upon retirement of BAL004-0 and NAESB WEQ-006, compliance with the requirements in Reliability Standards BAL003-1.1 and BAL-001-2 would result in continued adherence to a frequency approximating 60
Hertz over long-term averages. 48 This supports retirement and helps ensure that retirement does
not give rise to a gap in Reliability Standards. The SDT’s consideration of alternatives and
newer standards was also consistent with the Commission’s directive in Order No. 693 regarding
consideration of alternatives to BAL-004-0’s manual TEC. 49
As noted above, Reliability Standards BAL-003-1.1 and BAL-001-2 work together to
help ensure that frequency approximates 60 Hertz, consistent with the design of the North
American BPS. Reliability Standard BAL-003-1.1, for example, now requires sufficient
Frequency Response from the BA to maintain Interconnection Frequency within predefined
bounds by arresting frequency deviations and supporting frequency until frequency is restored to
scheduled value. The White Paper explains that this ensures that each Interconnection has
sufficient Frequency Response to guard against underfrequency load shedding due to a credible
event. 50
Reliability Standard BAL-001-2, effective July 1, 2016, applies long-term and short-term
Requirements to control Interconnection Frequency within defined limits. Reliability Standard

48

See, Standards Announcement, Project 2010-14.2.2 Phase 2 of Balancing Authority Reliability-based
Controls Recommended Retirement of BAL-004-0, available at,
http://www.nerc.com/pa/Stand/Project%2020101422%20Phase%202%20of%20BARC%20%20BAL004%20DL/20
10-14.2.2_Phase_2_of_BARC_CP_BP_IB_Word_Announce_09242015.pdf; and Exhibit C-1, White Paper, at
Section III.A. See also, Whitepaper, at Appendix I (demonstrating general decline in manual TECs, which the
Standard Drafting Team interpreted as further demonstration that Reliability Standard BAL-004-0 was redundant).
49
Order No. 693, at PP 382 and 385.
50
Exhibit C-1, White Paper, at Section III.E.

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BAL-001-2 requires BAs to (i) consistently, over time, adjust generation to improve frequency
of an Interconnection, and (ii) operate so that the BA’s clock-minute average of Reporting Area
Control Error (“ACE”) does not exceed its clock minute BA ACE limit for more than 30
consecutive clock-minutes. The White Paper explains that BAL-001-2 combines frequency and
ACE information to provide operators immediate feedback to make corrections to return
frequency within frequency trigger limits. 51 As a result, BAL-003-1.1 and BAL-001-2 would
continue helping to maintain frequency on average at 60 Hertz and sufficient frequency response
to guard against underfrequency load shedding, after retirement of BAL-004-0. This would
prevent any gap in reliability arising from retirement of BAL-004-0 and present effective
alternatives to manual TEC.
As other Reliability Standards modified since Order No. 693 further support frequency at
60 Hertz on average, BAL-004-0 is redundant and appropriate for retirement. For example, RCs
monitor frequency as part of monitoring System Operating Limits (“SOLs”) and Interconnection
Reliability Operating Limits (“IROLs”). 52 The IRO and Transmission Operations (“TOP”)

Reliability Standards are also intended to ensure coordination among RCs. 53 Thus, consistent
with Order No. 788, reliability benefits associated with adherence to frequency approximating 60

51

Id.
See e.g. Reliability Standards IRO-005-3.1a (in effect) and IRO-002-4 (to become effective April 1, 2017)
Transmission Operations Reliability Standards and Interconnection Reliability Operations and Coordination
Reliability Standards, Order No. 817, 153 FERC ¶ 61,178 (2015).
53
See, Transmission Operations Reliability Standards and Interconnection Reliability Operations and
Coordination Reliability Standards, Order No. 817, 153 FERC ¶ 61,178, at P 7 (2015) (discussing NERC’s
explanation of how the IRO and TOP Reliability Standards help ensure reliability coordinators and transmission
operators work together and with other functional entities to operate the BES within SOLs and IROLs and
summarizing that “[t]he proposed IRO Reliability Standards, which complement the proposed TOP Standards, are
designed to ensure that the bulk electric system is planned and operated in a coordinated manner to perform reliably
under normal and abnormal conditions.”).
52

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Hertz will continue upon retirement of BAL-004-0, when taking into account interrelationships
between continuing Reliability Standards and categories of Reliability Standards.
3.
Empirical Data Supports Determinations that Reliability Standard
BAL-004-0 Has Little Effect on Reliability and Has Become Redundant
Data appended to the White Paper demonstrates that the level of manual TEC has fallen
significantly over the past ten years. This may be additional evidence that BAL-004-0 is
redundant and the little effect that BAL-004-0 has on reliability. 54 The SDT also identified that:
[D]ata shows that the one-minute frequency varies from a value of about 59.95 Hz
to 60.05 Hz for the great majority of the time, over 99% of the one-minute
intervals….the Frequency error that the interconnections experience is less than
one tenth of one percent. The elimination of TEC will have no significant effect
on these error distributions, although it will move them slightly right or left so
that the average error is slightly above or below 60 Hz. Time error correction has
historically been implemented by offsetting the scheduled frequency by 0.02 Hz
above or below the normal frequency of 60 Hz. This scheduled offset moves the
distribution closer to the relay limits for the interconnection, thus having a
detrimental effect on reliability. 55
This supports determinations that BAL-004-0 has had little effect in ensuring reliability and that
retirement should have little impact on (and could improve) reliability.
4.
Retirement Should Not Impact Accumulation of Inadvertent
Interchange
Further, the SDT determined that eliminating manual TEC is not expected to impact
accumulation of Inadvertent Interchange, since the two issues are not necessarily linked and each
is influenced by multiple factors. 56 Inadvertent Interchange is an imbalance of scheduled and
actual energy at a BA’s boundary in an Interconnection with other BAs, whereas Time Error
relates to accumulated frequency drift of an Interconnection (related to imbalance between load

54

Exhibit C-1, White Paper, at Section III.B and Appendix I (including graphs that show the reduction in
manual TEC). Other factors contributing to the downward trend could include the national economic environment
and tools that better indicate performance.
55
Id. at Appendix I.
56
This relates to the Commission’s directive regarding consideration of alternative practices by addressing its
question regarding an alternative practice might impact inadvertent interchange. Order No. 693, at P 385.

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and generation). Frequency drift is a result of Inadvertent Interchange. Therefore, BAL-004-0
may be retired without adversely impacting accumulation of Inadvertent Interchange.
5.
Proposed Retirement is Conditioned on Retirement of the NAESB
WEQ-006 Business Practice Standard
NERC emphasizes, however, that both the justification for retirement in this Section IV
and NERC’s proposal to retire BAL-004-0 are conditioned upon simultaneous retirement of
NAESB-WEQ-006. NERC and the SDT have been coordinating with NAESB on this issue and
submitted a request for retirement/reservation of NAESB WEQ-006. Based on discussions with
NAESB, NERC understands that the NAESB standards development process regarding this
request is underway and that the NAESB subcommittee working on the request issued a
recommendation in support on November 9, 2016. Following the completion of NAESB’s
standards development process, NAESB will make an informational filing with the Commission
which will include any applicable modifications to the NAESB WEQ Business Practice
Standards.
Simultaneous retirement of NERC and NAESB’s standards as neccesary to ensure clarity
and to avoid inadvertent, uncoordinated, manual TEC. Such coordinated retirement of the
NERC and NAESB standards would also thereby address the Commission’s concern in Order
No. 693 regarding uncoordinated manual TEC. 57 The NERC OC approved manual TEC
reference document (Exhibit C-3) is also intended to help ease the transition upon retirement of
BAL-004-0 and assure the Commission and potential non-utility industry that if TEC is
determined necessary, it will be performed in a coordinated and reliable manner. 58

57
58

Supra, n. 42.
The reference document was posted for a 45-day comment period and approved by the NERC OC.

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As a result, consistent with the Commission’s March 2012 Order and policy regarding
redundant Reliability Standards, 59 BAL-004-0 should be retired as proposed herein with little to
no effect on reliability. Retirement should increase efficiency within Reliability Standards and
allow Interconnections to be operated more closely to 60 Hertz, by reducing the risk of frequency
over-corrections and inconsistencies of BAL-004-0 with other Reliability Standards managing
frequency at 60 Hertz over long-term averages. Therefore, the Commission should approve
retirement of Reliability Standard BAL-004-0, as proposed herein, as just, reasonable, and in the
public interest.

59

Supra, n. 5-6 and 9.

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V.

EFFECTIVE DATE
NERC respectfully requests that the Commission accept retirement of Reliability

Standard BAL-004-0 and the related Implementation Plan effective on the later of (i) the first
day of the first calendar quarter after the effective date of the Commission’s order approving
retirement or (ii) the effective date of NAESB WEQ-006 retirement. This effective date
recognizes that NERC’s proposal to retire Reliability Standard BAL-004-0 is conditioned on
simultaneous retirement of NAESB WEQ-006.
VI.

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

(i) retirement of Reliability Standard BAL-004-0 as proposed herein; and (ii) the Implementation
Plan for retirement included in Exhibit B.
Respectfully submitted,
/s/ Candice Castaneda
Charles A. Berardesco
Senior Vice President and General Counsel
Shamai Elstein
Senior Counsel
Candice Castaneda
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]
Counsel for the North American Electric
Reliability Corporation
Date: November 10, 2016

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