FERC Updates Business Practice Standards and Communications Protocols for Public Utilities

February 27, 2020

Federal Energy Regulatory Commission Order No. 676-I, issued Feb. 4, 2020, and effective April 27, 2020, revises the Commission’s Federal Power Act regulations to adopt as mandatory, enforceable requirements certain updated “Standards for Business Practices and Communications Protocols for Public Utilities” of the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards Board (NAESB)(WEQ Standards).

Finding that the updated business practice standards and communication protocols will streamline utility business and transactional processes and communication procedures, the Commission is requiring that public utilities and those entities with reciprocity tariffs submit compliance filings to modify their open-access transmission tariffs to include the updated WEQ Standards by May 25, 2020. Public utilities that previously received waiver of the relevant standards may file a request for waiver of this requirement.

Specifically, Order No. 676-I incorporates by reference, with certain modifications, WEQ Standards WEQ-000, WEQ-001, WEQ-002, WEQ-003, WEQ-004, WEQ-006, WEQ-008, WEQ-012, WEQ-013, WEQ-015, WEQ-022 and portions of WEQ-023. With the exception of WEQ-022 and WEQ-023, these standards update and replace standards the Commission previously incorporated by reference in Order No. 676-H.

Treatment of Requests for Redirect

Order No. 676-I addresses a number of comments regarding its adoption of WEQ-001-9 and WEQ-001-10, which pertain to customer requests for redirect of point-to-point firm transmission service. In 2002, the Commission held that a transmission customer receiving firm transmission service does not lose its rights to its original path until the redirect request satisfies all of the following criteria: (1) it is accepted by the transmission provider; (2) it is confirmed by the transmission customer; and (3) it passes the conditional reservation deadline under Section 13.2 of the transmission provider’s open access transmission tariff (OATT)( Redirect Policy). See Dynegy Power Mktg., Inc., 99 FERC ¶ 61,054, at P 9 (2002). The Redirect Policy was retained and clarified in Entergy Services, Inc., 143 FERC ¶ 61,143, at PP 30-33 (2013).

In Order No. 676-I, the Commission states that it adopted the Redirect Policy out of concern that a redirecting customer would lose its rights to the original parent path upon confirmation of a redirect request and be left with no transmission service during the redirect period if the requested redirect was pre-empted by a competing service request. Based on this concern, the Commission chose to adopt WEQ-001-9 and WEQ-001-10 (with the exception of their preambles), including Standard WEQ 001-9.5.4., which applies the Redirect Policy to redirects from unconditional service. Specifically, Standard WEQ 001-9.5.4. provides for retention of parent transmission rights when the transmission provider confirms a redirect from unconditional firm service but during the period when the redirect remains conditional (i.e., before the conditional deadline under pro forma OATT section 13.2).

The Commission concluded that limiting the Redirect Policy to redirects from unconditional firm service is reasonable, based on several factors. With respect to redirect requests with conditional parent reservations, the Commission noted that, prior to the conditional reservation deadline, there is no guarantee that firm service will be provided to the transmission customer on the original transmission path. It further reasoned that the Redirect Policy was designed to protect a firm transmission customer that requests a redirect from losing its rights on the original path while its redirect request is pending, which is not the same as establishing a right that requires the transmission provider to hold available transfer capability simultaneously on both the original path and the redirect path when the customer has no right to use a path service on either path. The only risk to a customer that requests a redirect for a conditional parent reservation would be the customer losing a right to use a path it does not yet have.

As a result, the Commission stated that it would continue to limit the Redirect Policy to parent reservations that are unconditional, as defined in Section 13.2 of the pro forma OATT, and not extend it to either short-term firm point-to-point transmission service or non-firm transmission service.

Time Error Correction

WEQ-006, “Manual Time Error Correction Business Practice Standards,” outlines the commercial-based procedures for reducing time error to keep the system’s time within acceptable limits of true time. NAESB’s latest version of its Business Practice Standards retires and eliminates the Manual Time Error Correction Business Practice Standards to correspond with the North American Electric Reliability Corporation’s retirement of the Time Error Correction requirements, which the Commission approved in 2017.

Comments to the underlying notice of proposed rulemaking to Order No. 676-I, however, provided significant evidence that Time Error Correction remains an important business practice that requires robust and meaningful business practice standards. As a result, the Commission in Order No. 676-I found that the NAESB had not provided sufficient justification for retiring Time Error Correction as a business standard and decided not to remove the incorporation by reference to NAESB’s latest version of the WEQ-006 Manual Time Error Correction Standards.

Accordingly, the Commission also did not incorporate by reference WEQ-003.2, which eliminates the definitions of “Time Error” and “Time Error Correction,” and instead incorporated by reference the WEQ-006 Version 003.1 Standard for Time Error Correction. It advised public utilities to work through the NAESB business practices development processes to revisit the rationale for removing the Time Error Correction standards to determine whether they should be retained or revised.