18 Cfr 35.28

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ELECTRONIC CODE OF FEDERAL REGULATIONS
e-CFR data is current as of September 8, 2020
Title 18 → Chapter I → Subchapter B → Part 35 → Subpart C → §35.28
Title 18: Conservation of Power and Water Resources
PART 35—FILING OF RATE SCHEDULES AND TARIFFS
Subpart C—Other Filing Requirements
§35.28 Non-discriminatory open access transmission tariff.
(a) Applicability. This section applies to any public utility that owns, controls or
operates facilities used for the transmission of electric energy in interstate
commerce and to any non-public utility that seeks voluntary compliance with
jurisdictional transmission tariff reciprocity conditions.
(b) Definitions—(1) Requirements service agreement means a contract or rate
schedule under which a public utility provides any portion of a customer's bundled
wholesale power requirements.
(2) Economy energy coordination agreement means a contract, or service
schedule thereunder, that provides for trading of electric energy on an “if, as and
when available” basis, but does not require either the seller or the buyer to engage
in a particular transaction.
(3) Non-economy energy coordination agreement means any non-requirements
service agreement, except an economy energy coordination agreement as defined
in paragraph (b)(2) of this section.
(4) Demand response means a reduction in the consumption of electric energy
by customers from their expected consumption in response to an increase in the
price of electric energy or to incentive payments designed to induce lower
consumption of electric energy.
(5) Demand response resource means a resource capable of providing demand
response.
(6) An operating reserve shortage means a period when the amount of
available supply falls short of demand plus the operating reserve requirement.
(7) Market Monitoring Unit means the person or entity responsible for carrying
out the market monitoring functions that the Commission has ordered Commission-

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approved independent system operators and regional transmission organizations to
perform.
(8) Market Violation means a tariff violation, violation of a Commissionapproved order, rule or regulation, market manipulation, or inappropriate dispatch
that creates substantial concerns regarding unnecessary market inefficiencies.
(9) Electric storage resource as used in this section means a resource capable
of receiving electric energy from the grid and storing it for later injection of electric
energy back to the grid.
(c) Non-discriminatory open access transmission tariffs. (1) Every public utility
that owns, controls, or operates facilities used for the transmission of electric energy
in interstate commerce must have on file with the Commission an open access
transmission tariff of general applicability for transmission services, including
ancillary services, over such facilities. Such tariff must be the pro forma tariff
promulgated by the Commission, as amended from time to time, or such other tariff
as may be approved by the Commission consistent with the principles set forth in
Commission rulemaking proceedings promulgating and amending the pro forma
tariff.
(i) Subject to the exceptions in paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(iv), and (c)
(1)(v) of this section, the open access transmission tariff, which tariff must be the pro
forma tariff required by Commission rulemaking proceedings promulgating and
amending the pro forma tariff, and accompanying rates must be filed no later than
60 days prior to the date on which a public utility would engage in a sale of electric
energy at wholesale in interstate commerce or in the transmission of electric energy
in interstate commerce.
(ii) If a public utility owns, controls, or operates facilities used for the
transmission of electric energy in interstate commerce, it must file the revisions to its
open access transmission tariff required by Commission rulemaking proceedings
promulgating and amending the pro forma tariff, pursuant to section 206 of the FPA
and accompanying rates pursuant to section 205 of the FPA in accordance with the
procedures set forth in Commission rulemaking proceedings promulgating and
amending the pro forma tariff.
(iii) If a public utility owns, controls, or operates transmission facilities used for
the transmission of electric energy in interstate commerce, such facilities are jointly
owned with a non-public utility, and the joint ownership contract prohibits
transmission service over the facilities to third parties, the public utility with respect
to access over the public utility's share of the jointly owned facilities must file the
revisions to its open access transmission tariff required by Commission rulemaking
proceedings promulgating and amending the pro forma tariff pursuant to section 206
of the FPA and accompanying rates pursuant to section 205 of the FPA in

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accordance with the procedures set forth in Commission rulemaking proceedings
promulgating and amending the pro forma tariff.
(iv) Any public utility whose transmission facilities are under the independent
control of a Commission-approved ISO or RTO may satisfy its obligation under
paragraph (c)(1) of this section, with respect to such facilities, through the open
access transmission tariff filed by the ISO or RTO.
(v) If a public utility obtains a waiver of the tariff requirement pursuant to
paragraph (d) of this section, it does not need to file the open access transmission
tariff required by this section.
(vi) Any public utility that seeks a deviation from the pro forma tariff promulgated
by the Commission, as amended from time to time, must demonstrate that the
deviation is consistent with the principles set forth in Commission rulemaking
proceedings promulgating and amending the pro forma tariff.
(vii) Each public utility's open access transmission tariff must include the
standards incorporated by reference in part 38 of this chapter.
(2) Subject to the exceptions in paragraphs (c)(2)(i) and (c)(3)(iii) of this section,
every public utility that owns, controls, or operates facilities used for the
transmission of electric energy in interstate commerce, and that uses those facilities
to engage in wholesale sales and/or purchases of electric energy, or unbundled
retail sales of electric energy, must take transmission service for such sales and/or
purchases under the open access transmission tariff filed pursuant to this section.
(i) For sales of electric energy pursuant to a requirements service agreement
executed on or before July 9, 1996, this requirement will not apply unless separately
ordered by the Commission. For sales of electric energy pursuant to a bilateral
economy energy coordination agreement executed on or before July 9, 1996, this
requirement is effective on December 31, 1996. For sales of electric energy
pursuant to a bilateral non-economy energy coordination agreement executed on or
before July 9, 1996, this requirement will not apply unless separately ordered by the
Commission.
(ii) [Reserved]
(3) Every public utility that owns, controls, or operates facilities used for the
transmission of electric energy in interstate commerce, and that is a member of a
power pool, public utility holding company, or other multi-lateral trading arrangement
or agreement that contains transmission rates, terms or conditions, must have on
file a joint pool-wide or system-wide open access transmission tariff, which tariff
must be the pro forma tariff promulgated by the Commission, as amended from time
to time, or such other open access transmission tariff as may be approved by the

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Commission consistent with the principles set forth in Commission rulemaking
proceedings promulgating and amending the pro forma tariff.
(i) For any power pool, public utility holding company or other multi-lateral
arrangement or agreement that contains transmission rates, terms or conditions and
that is executed after October 11, 2011, this requirement is effective on the date that
transactions begin under the arrangement or agreement.
(ii) For any power pool, public utility holding company or other multi-lateral
arrangement or agreement that contains transmission rates, terms or conditions and
that is executed on or before May 14, 2007, a public utility member of such power
pool, public utility holding company or other multi-lateral arrangement or agreement
that owns, controls, or operates facilities used for the transmission of electric energy
in interstate commerce must file the revisions to its joint pool-wide or system-wide
open access transmission tariff required by Commission rulemaking proceedings
promulgating and amending the pro forma tariff pursuant to section 206 of the FPA
and accompanying rates pursuant to section 205 of the FPA in accordance with the
procedures set forth in Commission rulemaking proceedings promulgating and
amending the pro forma tariff.
(iii) A public utility member of a power pool, public utility holding company or
other multi-lateral arrangement or agreement that contains transmission rates, terms
or conditions and that is executed on or before July 9, 1996 must take transmission
service under a joint pool-wide or system-wide open access transmission tariff filed
pursuant to this section for wholesale trades among the pool or system members.
(4) Consistent with paragraph (c)(1) of this section, every Commissionapproved ISO or RTO must have on file with the Commission an open access
transmission tariff of general applicability for transmission services, including
ancillary services, over such facilities. Such tariff must be the pro forma tariff
promulgated by the Commission, as amended from time to time, or such other tariff
as may be approved by the Commission consistent with the principles set forth in
Commission rulemaking proceedings promulgating and amending the pro forma
tariff.
(i) Subject to paragraph (c)(4)(ii) of this section, a Commission-approved ISO or
RTO must file the revisions to its open access transmission tariff required by
Commission rulemaking proceedings promulgating and amending the pro forma
tariff pursuant to section 206 of the FPA and accompanying rates pursuant to
section 205 of the FPA in accordance with the procedures set forth in Commission
rulemaking proceedings promulgating and amending the pro forma tariff.
(ii) If a Commission-approved ISO or RTO can demonstrate that its existing
open access transmission tariff is consistent with or superior to the pro forma tariff
promulgated by the Commission, as amended from time to time, the Commissionapproved ISO or RTO may instead set forth such demonstration in its filing pursuant

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to section 206 in accordance with the procedures set forth in Commission
rulemaking proceedings promulgating and amending the pro forma tariff.
(d) Waivers. (1) A public utility subject to the requirements of this section and 18
CFR parts 37 (Open Access Same-Time Information System) and 358 (Standards of
Conduct for Transmission Providers) may file a request for waiver of all or part of
such requirements for good cause shown. Except as provided in paragraph (f) of
this section, an application for waiver must be filed no later than 60 days prior to the
time the public utility would have to comply with the requirement.
(2) The requirements of this section, 18 CFR parts 37 (Open Access SameTime Information System) and 358 (Standards of Conduct for Transmission
Providers) are waived for any public utility that is or becomes subject to such
requirements solely because it owns, controls, or operates Interconnection
Customer's Interconnection Facilities, in whole or in part, as that term is defined in
the standard generator interconnection procedures and agreements referenced in
paragraph (f) of this section, or comparable jurisdictional interconnection facilities
that are the subject of interconnection agreements other than the standard
generator interconnection procedures and agreements referenced in paragraph (f)
of this section, if the entity that owns, operates, or controls such facilities either sells
electric energy, or files a statement with the Commission that it commits to comply
with and be bound by the obligations and procedures applicable to electric utilities
under section 210 of the Federal Power Act.
(i) The waivers referenced in this paragraph (d)(2) shall be deemed to be
revoked as of the date the public utility ceases to satisfy the qualifications of this
paragraph (d)(2), and may be revoked by the Commission if the Commission
determines that it is in the public interest to do so. After revocation of its waivers, the
public utility must comply with the requirements that had been waived within 60 days
of revocation.
(ii) Any eligible entity that seeks interconnection or transmission services with
respect to the interconnection facilities for which a waiver is in effect pursuant to this
paragraph (d)(2) may follow the procedures in sections 210, 211, and 212 of the
Federal Power Act, 18 CFR 2.20, and 18 CFR part 36. In any proceeding pursuant
to this paragraph (d)(2)(ii):
(A) The Commission will consider it to be in the public interest to grant priority
rights to the owner and/or operator of interconnection facilities specified in this
paragraph (d)(2) to use capacity thereon when such owner and/or operator can
demonstrate that it has specific plans with milestones to use such capacity to
interconnect its or its affiliate's future generation projects.
(B) For the first five years after the commercial operation date of the
interconnection facilities specified in this paragraph (d)(2), the Commission will apply
the rebuttable presumption that the owner and/or operator of such facilities has

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definitive plans to use the capacity thereon, and it is thus in the public interest to
grant priority rights to the owner and/or operator of such facilities to use capacity
thereon.
(e) Non-public utility procedures for tariff reciprocity compliance. (1) A nonpublic utility may submit an open access transmission tariff and a request for
declaratory order that its voluntary transmission tariff meets the requirements of
Commission rulemaking proceedings promulgating and amending the pro forma
tariff.
(i) Any submittal and request for declaratory order submitted by a non-public
utility will be provided an NJ (non-jurisdictional) docket designation.
(ii) If the submittal is found to be an acceptable open access transmission tariff,
an applicant in a Federal Power Act (FPA) section 211 or 211A proceeding against
the non-public utility shall have the burden of proof to show why service under the
open access transmission tariff is not sufficient and why a section 211 or 211A order
should be granted.
(2) A non-public utility may file a request for waiver of all or part of the
reciprocity conditions contained in a public utility open access transmission tariff, for
good cause shown. An application for waiver may be filed at any time.
(f) Standard generator interconnection procedures and agreements. (1) Every
public utility that is required to have on file a non-discriminatory open access
transmission tariff under this section must amend such tariff by adding the standard
interconnection procedures and agreement and the standard small generator
interconnection procedures and agreement required by Commission rulemaking
proceedings promulgating and amending such interconnection procedures and
agreements, or such other interconnection procedures and agreements as may be
required by Commission rulemaking proceedings promulgating and amending the
standard interconnection procedures and agreement and the standard small
generator interconnection procedures and agreement.
(i) Any public utility that seeks a deviation from the standard interconnection
procedures and agreement or the standard small generator interconnection
procedures and agreement required by Commission rulemaking proceedings
promulgating and amending such interconnection procedures and agreements, must
demonstrate that the deviation is consistent with the principles set forth in
Commission rulemaking proceedings promulgating and amending such
interconnection procedures and agreements.
(ii)-(iv) [Reserved]

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(2) The non-public utility procedures for tariff reciprocity compliance described
in paragraph (e) of this section are applicable to the standard interconnection
procedures and agreements.
(3) A public utility subject to the requirements of this paragraph (f) may file a
request for waiver of all or part of the requirements of this paragraph (f), for good
cause shown.
(g) Tariffs and operations of Commission-approved independent system
operators and regional transmission organizations—(1) Demand response and
pricing—(i) Ancillary services provided by demand response resources. (A) Every
Commission-approved independent system operator or regional transmission
organization that operates organized markets based on competitive bidding for
energy imbalance, spinning reserves,supplemental reserves, reactive power and
voltage control, or regulation and frequency response ancillary services (or its
functional equivalent in the Commission-approved independent system operator's or
regional transmission organization's tariff) must accept bids from demand response
resources in these markets for that product on a basis comparable to any other
resources, if the demand response resource meets the necessary technical
requirements under the tariff, and submits a bid under the Commission-approved
independent system operator's or regional transmission organization's bidding rules
at or below the market-clearing price, unless not permitted by the laws or regulations
of the relevant electric retail regulatory authority.
(B) Each Commission-approved independent system operator or regional
transmission organization must allow providers of a demand response resource to
specify the following in their bids:
(1) A maximum duration in hours that the demand response resource may be
dispatched;
(2) A maximum number of times that the demand response resource may be
dispatched during a day; and
(3) A maximum amount of electric energy reduction that the demand response
resource may be required to provide either daily or weekly.
(ii) Removal of deviation charges. A Commission-approved independent system
operator or regional transmission organization with a tariff that contains a day-ahead
and a real-time market may not assess charge to a purchaser of electric energy in
its day-ahead market for purchasing less power in the real-time market during a
real-time market period for which the Commission-approved independent system
operator or regional transmission organization declares an operating reserve
shortage or makes a generic request to reduce load to avoid an operating reserve
shortage.

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(iii) Aggregation of retail customers. Each Commission-approved independent
system operator and regional transmission organization must accept bids from an
aggregator of retail customers that aggregates the demand response of the
customers of utilities that distributed more than 4 million megawatt-hours in the
previous fiscal year, and the customers of utilities that distributed 4 million
megawatt-hours or less in the previous fiscal year, where the relevant electric retail
regulatory authority permits such customers' demand response to be bid into
organized markets by an aggregator of retail customers. An independent system
operator or regional transmission organization must not accept bids from an
aggregator of retail customers that aggregates the demand response of the
customers of utilities that distributed more than 4 million megawatt-hours in the
previous fiscal year, where the relevant electric retail regulatory authority prohibits
such customers' demand response to be bid into organized markets by an
aggregator of retail customers, or the customers of utilities that distributed 4 million
megawatt-hours or less in the previous fiscal year, unless the relevant electric retail
regulatory authority permits such customers' demand response to be bid into
organized markets by an aggregator of retail customers.
(iv) Price formation during periods of operating reserve shortage. (A) Each
Commission-approved independent system operator and regional transmission
organization must modify its market rules to allow the market-clearing price during
periods of operating reserve shortage to reach a level that rebalances supply and
demand so as to maintain reliability while providing sufficient provisions for
mitigating market power. Each Commission-approved independent system operator
and regional transmission organization must trigger shortage pricing for any interval
in which a shortage of energy or operating reserves is indicated during the pricing of
resources for that interval.
(B) A Commission-approved independent system operator or regional
transmission organization may phase in this modification of its market rules.
(v) Demand response compensation in energy markets. Each Commissionapproved independent system operator or regional transmission organization that
has a tariff provision permitting demand response resources to participate as a
resource in the energy market by reducing consumption of electric energy from their
expected levels in response to price signals must:
(A) Pay to those demand response resources the market price for energy for
these reductions when these demand response resources have the capability to
balance supply and demand and when payment of the market price for energy to
these resources is cost-effective as determined by a net benefits test accepted by
the Commission;
(B) Allocate the costs associated with demand response compensation
proportionally to all entities that purchase from the relevant energy market in the

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area(s) where the demand response reduces the market price for energy at the time
when the demand response resource is committed or dispatched.
(vi) Settlement intervals. Each Commission-approved independent system
operator and regional transmission organization must settle energy transactions in
its real-time markets at the same time interval it dispatches energy, must settle
operating reserves transactions in its real-time markets at the same time interval it
prices operating reserves, and must settle intertie transactions at the same time
interval it schedules intertie transactions.
(2) Long-term power contracting in organized markets. Each Commissionapproved independent system operator or regional transmission organization must
provide a portion of its Web site for market participants to post offers to buy or sell
power on a long-term basis.
(3) Market monitoring policies. (i) Each Commission-approved independent
system operator or regional transmission organization must modify its tariff
provisions governing its Market Monitoring Unit to reflect the directives provided in
OrderNo. 719, including the following:
(A) Each Commission-approved independent system operator or regional
transmission organization must include in its tariff a provision to provide its Market
Monitoring Unit access to Commission-approved independent system operator and
regional transmission organization market data, resources and personnel to enable
the MarketMonitoring Unit to carry out its functions.
(B) The tariff provision must provide the Market Monitoring Unit complete
access to the Commission-approved independent system operator's and regional
transmission organization's databases of market information.
(C) The tariff provision must provide that any data created by the Market
Monitoring Unit, including, but not limited to, reconfiguring of the Commissionapproved independent system operator's and regional transmission organization's
data, will be kept within the exclusive control of the Market Monitoring Unit.
(D) The Market Monitoring Unit must report to the Commission-approved
independent system operator's or regional transmission organization's board of
directors, with its management members removed, or to an independent committee
of the Commission-approved independent system operator's or regional
transmission organization's board of directors. A Commission-approved independent
system operator or regional transmission organization that has both an internal
Market Monitoring Unit and an external Market Monitoring Unit may permit the
internal Market Monitoring Unit to report to management and the external Market
Monitoring Unit to report to the Commission-approved independent system
operator's or regional transmission organization's board of directors with its
management members removed, or to an independent committee of the

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Commission-approved independent system operator or regional transmission
organization board of directors. If the internal market monitor is responsible for
carrying out any or all of the core Market Monitoring Unit functions identified in
paragraph (g)(3)(ii) of this section, the internal market monitor must report to the
independent system operator's or regional transmission organization's board of
directors.
(E) A Commission-approved independent system operator or regional
transmission organization may not alter the reports generated by the Market
Monitoring Unit, or dictate the conclusions reached by the Market Monitoring Unit.
(F) Each Commission-approved independent system operator or regional
transmission organization must consolidate the core Market Monitoring Unit
provisions into one section of its tariff. Each independent system operator or
regional transmission organization must include a mission statement in the
introduction to the Market Monitoring Unit provisions that identifies the Market
Monitoring Unit's goals, including the protection of consumers and market
participants by the identification and reporting of market design flaws and market
power abuses.
(ii) Core Functions of Market Monitoring Unit. The Market Monitoring Unit must
perform the following core functions:
(A) Evaluate existing and proposed market rules, tariff provisions and market
design elements and recommend proposed rule and tariff changes to the
Commission-approved independent system operator or regional transmission
organization, to the Commission's Office of Energy Market Regulation staff and to
other interested entities such as state commissions and market participants,
provided that:
(1) The Market Monitoring Unit is not to effectuate its proposed market design
itself, and
(2) The Market Monitoring Unit must limit distribution of its identifications and
recommendations to the independent system operator or regional transmission
organization and to Commission staff in the event it believes broader dissemination
could lead to exploitation, with an explanation of why further dissemination should
be avoided at that time.
(B) Review and report on the performance of the wholesale markets to the
Commission-approved independent system operator or regional transmission
organization, the Commission, and other interested entities such as state
commissions and market participants, on at least a quarterly basis and submit a
more comprehensive annual state of the market report. The Market Monitoring Unit
may issue additional reports as necessary.

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(C) Identify and notify the Commission's Office of Enforcement staff of instances
in which a market participant's or the Commission-approved independent system
operator's or regional transmission organization's behavior may require
investigation, including, but not limited to, suspected Market Violations.
(iii) Tariff administration and mitigation (A) A Commission-approved
independent system operator or regional transmission organization may not permit
its Market Monitoring Unit, whether internal or external, to participate in the
administration of the Commission-approved independent system operator's or
regional transmission organization's tariff or, except as provided in paragraph (g)(3)
(iii)(D) of this section, to conduct prospective mitigation.
(B) A Commission-approved independent system operator or regional
transmission organization may permit its Market Monitoring Unit to provide the
inputs required for the Commission-approved independent system operator or
regional transmission organization to conduct prospective mitigation, including, but
not limited to, reference levels, identification of system constraints, and cost
calculations.
(C) A Commission-approved independent system operator or regional
transmission organization may allow its Market Monitoring Unit to conduct
retrospective mitigation.
(D) A Commission-approved independent system operator or regional
transmission organization with a hybrid Market Monitoring Unit structure may permit
its internal market monitor to conduct prospective and/or retrospective mitigation, in
which case it must assign to its external market monitor the responsibility and the
tools to monitor the quality and appropriateness of the mitigation.
(E) Each Commission-approved independent system operator or regional
transmission organization must identify in its tariff the functions the Market
Monitoring Unit will perform and the functions the Commission-approved
independent system operator or regional transmission organization will perform.
(iv) Protocols on Market Monitoring Unit referrals to the Commission of
suspected violations. (A) A Market Monitoring Unit is to make a non-public referral to
the Commission in all instances where the Market Monitoring Unit has reason to
believe that a Market Violation has occurred. While the Market Monitoring Unit need
not be able to prove that a Market Violation has occurred, the Market Monitoring
Unit is to provide sufficient credible information to warrant further investigation by
the Commission. Once the Market Monitoring Unit has obtained sufficient credible
information to warrant referral to the Commission, the Market Monitoring Unit is to
immediately refer the matter to the Commission and desist from independent action
related to the alleged Market Violation. This does not preclude the Market
Monitoring Unit from continuing to monitor for any repeated instances of the activity
by the same or other entities, which would constitute new Market Violations. The

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Market Monitoring Unit is to respond to requests from the Commission for any
additional information in connection with the alleged Market Violation it has referred.
(B) All referrals to the Commission of alleged Market Violations are to be in
writing, whether transmitted electronically, by fax, mail, or courier. The Market
Monitoring Unit may alert the Commission orally in advance of the written referral.
(C) The referral is to be addressed to the Commission's Director of the Office of
Enforcement, with a copy also directed to both the Director of the Office of Energy
Market Regulation and the General Counsel.
(D) The referral is to include, but need not be limited to, the following
information.
(1) The name[s] of and, if possible, the contact information for, the entity[ies]
that allegedly took the action[s] that constituted the alleged Market Violation[s];
(2) The date[s] or time period during which the alleged Market Violation[s]
occurred and whether the alleged wrongful conduct is ongoing;
(3) The specific rule or regulation, and/or tariff provision, that was allegedly
violated, or the nature of any inappropriate dispatch that may have occurred;
(4) The specific act[s] or conduct that allegedly constituted the Market Violation;
(5) The consequences to the market resulting from the acts or conduct,
including, if known, an estimate of economic impact on the market;
(6) If the Market Monitoring Unit believes that the act[s] or conduct constituted a
violation of the anti-manipulation rule of Part 1c, a description of the alleged
manipulative effect on market prices, market conditions, or market rules;
(7) Any other information the Market Monitoring Unit believes is relevant and
may be helpful to the Commission.
(E) Following a referral to the Commission, the Market Monitoring Unit is to
continue to notify and inform the Commission of any information that the Market
Monitoring Unit learns of that may be related to the referral, but the Market
Monitoring Unit is not to undertake any investigative steps regarding the referral
except at the express direction of the Commission or Commission Staff.
(v) Protocols on Market Monitoring Unit Referrals to the Commission of
Perceived Market Design Flaws and Recommended Tariff Changes. (A) A Market
Monitoring Unit is to make a referral to the Commission in all instances where the
Market Monitoring Unit has reason to believe market design flaws exist that it
believes could effectively be remedied by rule or tariff changes. The Market
Monitoring Unit must limit distribution of its identifications and recommendations to

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the independent system operator or regional transmission organization and to the
Commission in the event it believes broader dissemination could lead to exploitation,
with an explanation of why further dissemination should be avoided at that time.
(B) All referrals to the Commission relating to perceived market design flaws
and recommended tariff changes are to be in writing, whether transmitted
electronically, by fax, mail, or courier. The Market Monitoring Unit may alert the
Commission orally in advance of the written referral.
(C) The referral should be addressed to the Commission's Director of the Office
of Energy Market Regulation, with copies directed to both the Director of the Office
of Enforcement and the General Counsel.
(D) The referral is to include, but need not be limited to, the following
information.
(1) A detailed narrative describing the perceived market design flaw[s];
(2) The consequences of the perceived market design flaw[s], including, if
known, an estimate of economic impact on the market;
(3) The rule or tariff change(s) that the Market Monitoring Unit believes could
remedy the perceived market design flaw;
(4) Any other information the Market Monitoring Unit believes is relevant and
may be helpful to the Commission.
(E) Following a referral to the Commission, the Market Monitoring Unit is to
continue to notify and inform the Commission of any additional information regarding
the perceived market design flaw, its effects on the market, any additional or
modified observations concerning the rule or tariff changes that could remedy the
perceived design flaw, any recommendations made by the Market Monitoring Unit to
the regional transmission organization or independent system operator,
stakeholders, market participants or state commissions regarding the perceived
design flaw, and any actions taken by the regional transmission organization or
independent system operator regarding the perceived design flaw.
(vi) Market Monitoring Unit ethics standards. Each Commission-approved
independent system operator or regional transmission organization must include in
its tariff ethical standards for its Market Monitoring Unit and the employees of its
Market Monitoring Unit. At a minimum, the ethics standards must include the
following requirements:
(A) The Market Monitoring Unit and its employees must have no material
affiliation with any market participant or affiliate.

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(B) The Market Monitoring Unit and its employees must not serve as an officer,
employee, or partner of a market participant.
(C) The Market Monitoring Unit and its employees must have no material
financial interest in any market participant or affiliate with potential exceptions for
mutual funds and non-directed investments.
(D) The Market Monitoring Unit and its employees must not engage in any
market transactions other than the performance of their duties under the tariff.
(E) The Market Monitoring Unit and its employees must not be compensated,
other than by the Commission-approved independent system operator or regional
transmission organization that retains or employs it, for any expert witness testimony
or other commercial services, either to the Commission-approved independent
system operator or regional transmission organization or to any other party, in
connection with any legal or regulatory proceeding or commercial transaction
relating to the Commission-approved independent system operator or regional
transmission organization or to the Commission-approved independent system
operator's or regional transmission organization's markets.
(F) The Market Monitoring Unit and its employees may not accept anything of
value from a market participant in excess of a de minimis amount.
(G) The Market Monitoring Unit and its employees must advise a supervisor in
the event they seek employment with a market participant, and must disqualify
themselves from participating in any matter that would have an effect on the
financial interest of the market participant.
(4) Electronic delivery of data. Each Commission-approved regional
transmission organization and independent system operator must electronically
deliver to the Commission, on an ongoing basis and in a form and manner
consistent with its own collection of data and in a form and manner acceptable to the
Commission, data related to the markets that the regional transmission organization
or independent system operator administers.
(5) Offer and bid data. (i) Unless a Commission-approved independent system
operator or regional transmission organization obtains Commission approval for a
different period, each Commission-approved independent system operator and
regional transmission organization must release its offer and bid data within three
months.
(ii) A Commission-approved independent system operator or regional
transmission organization must mask the identity of market participants when
releasing offer and bid data. The Commission-approved independent system
operators and regional transmission organization may propose a time period for
eventual unmasking.

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(6) Responsiveness of Commission-approved independent system operators
and regional transmission organizations. Each Commission-approved independent
system operator or regional transmission organization must adopt business
practices and procedures that achieve Commission-approved independent system
operator and regional transmission organization board of directors' responsiveness
to customers and other stakeholders and satisfy the following criteria:
(i) Inclusiveness. The business practices and procedures must ensure that any
customer or other stakeholder affected by the operation of the Commissionapproved independent system operator or regional transmission organization, or its
representative, is permitted to communicate the customer's or other stakeholder's
views to the independent system operator's or regional transmission organization's
board of directors;
(ii) Fairness in balancing diverse interests. The business practices and
procedures must ensure that the interests of customers or other stakeholders are
equitably considered, and that deliberation and consideration of Commissionapproved independent system operator's and regional transmission organization's
issues are not dominated by any single stakeholder category;
(iii) Representation of minority positions. The business practices and
procedures must ensure that, in instances where stakeholders are not in total
agreement on a particular issue, minority positions are communicated to the
Commission-approved independent system operator's and regional transmission
organization's board of directors at the same time as majority positions; and
(iv) Ongoing responsiveness. The business practices and procedures must
provide for stakeholder input into the Commission-approved independent system
operator's or regional transmission organization's decisions as well as mechanisms
to provide feedback to stakeholders to ensure that information exchange and
communication continue over time.
(7) Compliance filings. All Commission-approved independent system operators
and regional transmission organizations must make a compliance filing with the
Commission as described in Order No. 719 under the following schedule:
(i) The compliance filing addressing the accepting of bids from demand
response resources in markets for ancillary services on a basis comparable to other
resources, removal of deviation charges, aggregation of retail customers, shortage
pricing during periods of operating reserve shortage, long-term power contracting in
organized markets, Market Monitoring Units, Commission-approved independent
system operators' and regional transmission organizations' board of directors'
responsiveness, and reporting on the study of the need for further reforms to
remove barriers to comparable treatment of demand response resources must be
submitted on or before April 28, 2009.

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(ii) A public utility that is approved as a regional transmission organization under
§35.34, or that is not approved but begins to operate regional markets for electric
energy or ancillary services after December 29, 2008, must comply with Order No.
719 and the provisions of paragraphs (g)(1) through (g)(5) of this section before
beginning operations.
(8) Frequency regulation compensation in ancillary services markets. Each
Commission-approved independent system operator or regional transmission
organization that has a tariff that provides for the compensation for frequency
regulation service must provide such compensation based on the actual service
provided, including a capacity payment that includes the marginal unit's opportunity
costs and a payment for performance that reflects the quantity of frequency
regulation service provided by a resource when the resource is accurately following
the dispatch signal.
(9) Electric storage resources. (i) Each Commission-approved independent
system operator and regional transmission organization must have tariff provisions
providing a participation model for electric storage resources that:
(A) Ensures that a resource using the participation model for electric storage
resources in an independent system operator or regional transmission organization
market is eligible to provide all capacity, energy, and ancillary services that it is
technically capable of providing;
(B) Enables a resource using the participation model for electric storage
resources to be dispatched and ensures that such a dispatchable resource can set
the wholesale market clearing price as both a wholesale seller and wholesale buyer
consistent with rules that govern the conditions under which a resource can set the
wholesale price;
(C) Accounts for the physical and operational characteristics of electric storage
resources through bidding parameters or other means; and
(D) Establishes a minimum size requirement for resources using the
participation model for electric storage resources that does not exceed 100 kW.
(ii) The sale of electric energy from an independent system operator or regional
transmission organization market to an electric storage resource that the resource
then resells back to that market must be at the wholesale locational marginal price.
(10) Transparency—(i) Uplift reporting. Each Commission-approved
independent system operator or regional transmission organization must post two
reports, at minimum, regarding uplift on a publicly accessible portion of its website.
First, each Commission-approved independent system operator or regional
transmission organization must post uplift, paid in dollars, and categorized by
transmission zone, day, and uplift category. Transmission zone shall be defined as

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the geographic area that is used for the local allocation of charges. Transmission
zones with fewer than four resources may be aggregated with one or more
neighboring transmission zones, until each aggregated zone contains at least four
resources, and reported collectively. This report shall be posted within 20 calendar
days of the end of each month. Second, each Commission-approved independent
system operator or regional transmission organization must post the resource name
and the total amount of uplift paid in dollars aggregated across the month to each
resource that received uplift payments within the calendar month. This report shall
be posted within 90 calendar days of the end of each month.
(ii) Reporting Operator-Initiated Commitments. Each Commission-approved
independent system operator or regional transmission organization must post a
report of each operator-initiated commitment listing the size of the commitment,
transmission zone, commitment reason, and commitment start time on a publicly
accessible portion of its website within 30 calendar days of the end of each month.
Transmission zone shall be defined as a geographic area that is used for the local
allocation of charges. Commitment reasons shall include, but are not limited to,
system-wide capacity, constraint management, and voltage support.
(iii) Transmission constraint penalty factors. Each Commission-approved
independent system operator or regional transmission organization must include, in
its tariff, its transmission constraint penalty factor values; the circumstances, if any,
under which the transmission constraint penalty factors can set locational marginal
prices; and the procedure, if any, for temporarily changing the transmission
constraint penalty factor values. Any procedure for temporarily changing
transmission constraint penalty factor values must provide for notice of the change
to market participants.
(11) A resource's incremental energy offer must be capped at the higher of
$1,000/MWh or that resource's cost-based incremental energy offer. For the
purpose of calculating Locational Marginal Prices, Regional Transmission
Organizations and Independent System Operators must cap cost-based incremental
energy offers at $2,000/MWh. The actual or expected costs underlying a resource's
cost-based incremental energy offer above $1,000/MWh must be verified before that
offer can be used for purposes of calculating Locational Marginal Prices. If a
resource submits an incremental energy offer above $1,000/MWh and the actual or
expected costs underlying that offer cannot be verified before the market clearing
process begins, that offer may not be used to calculate Locational Marginal Prices
and the resource would be eligible for a make-whole payment if that resource is
dispatched and the resource's actual costs are verified after-the-fact. A resource
would also be eligible for a make-whole payment if it is dispatched and its verified
cost-based incremental energy offer exceeds $2,000/MWh. All resources,
regardless of type, are eligible to submit cost-based incremental energy offers in
excess of $1,000/MWh.
[Order 888, 61 FR 21693, May 10, 1996]

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EDITORIAL NOTE: For FEDERAL REGISTER citations affecting §35.28, see the List of CFR
Sections Affected, which appears in the Finding Aids section of the printed volume and at
www.govinfo.gov.
Need assistance?

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