On May 19, 2016, FERC issued a Notice of Proposed Rulemaking in which it proposed to approve Reliability Standard BAL-002-2, Disturbance Control Standard—Contingency Reserve for Recovery from a Balancing Contingency Event ("May 19 NOPR"). In the May 19 NOPR, FERC described BAL-002-2 as designed to ensure that Registered Entities "are able to recover from system contingencies by deploying adequate reserves to return their Area Control Error to defined values and by replacing the capacity and energy lost due to generation or transmission equipment outages." FERC also proposed in the May 19 NOPR to direct the North American Electric Reliability Corporation ("NERC") to: (i) modify BAL-002-2 to address concerns related to the possible extension or delay of the periods for Area Control Error recovery and contingency reserve restoration; and (ii) address a reliability "gap" associated with NERC's proposed definition of "Reportable Balancing Contingency Event."
On January 29, 2016, NERC filed a petition with FERC, requesting approval of proposed BAL-002-2, eight new or revised definitions to be added to the NERC Glossary, and a corresponding implementation plan. In its petition, NERC explained that BAL-002-2 consolidates six requirements in currently-effective BAL-002-1 into three requirements, and that this consolidation will improve efficiency and clarity by removing "unnecessary entities from compliance to capture only those entities that are vital for reliability." NERC also stated that the proposed Reliability Standard "ensures objectivity of the reserve measurement process by guaranteeing a Commission-sanctioned continent-wide reserve policy," and therefore satisfies an outstanding Order No. 693 directive for uniform elements, definitions and requirements for such a reserve policy. Finally, NERC stated that its proposed revised definition of Contingency Reserve "improves the existing definition by addressing a Commission directive in Order No. 693 to allow demand side management to be used as a resource for contingency reserve when necessary."
In its May 19 NOPR, FERC proposed to approve BAL-002-2, as well as the new and revised definitions. FERC also proposed to approve NERC's implementation plan, which provides for an effective date of the first day of the first calendar quarter, six months after the date of FERC approval, and for the retirement of currently-effective BAL-002-1 immediately before that date.
However, FERC's May 19 NOPR also seeks comment on BAL-002-2's 15-minute Area Control Error recovery period and 90-minute Contingency Reserve Restoration Period. Specifically, FERC expressed concerns regarding implementation of an exemption from BAL-002-2's requirement that a balancing authority or reserve sharing group experiencing a disturbance return to its normal Area Control Error within 15 minutes. Similarly, FERC expressed concerns regarding a "time-reset" component of BAL-002-2's requirement that a balancing authority or reserve sharing group restore its contingency reserves within 90 minutes of a Contingency Event Recovery Period. FERC also sought comment on a reliability "gap" it identified that may occur under BAL-002-2 and under NERC's proposed definition of "Reportable Balancing Contingency Event." FERC's May 19 NOPR noted that this "gap" related to how megawatt losses above the most severe single contingency could impact the applicable scope of BAL-002-2.
Comments in response to the May 19 NOPR are due 60 days after it is published in the Federal Register. A copy of the May 19 NOPR can be found here.
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