TO: Operating Committee

December 6, 2010

TO: Operating Committee

Planning Committee

FROM: Mark Lauby and Andy Rodriquez

Re: Directional topics to be addressed by NERC in response to FERC’s Notice of Proposed Rulemaking (NOPR) on Integration of Variable Energy Resources

Comments Requested by December 20, 2010

The United States Federal Energy Regulatory Commission (FERC) recently released its Notice of Proposed Rulemaking regarding the Integration of Variable Energy Resources.[1] In the NOPR, FERC proposes to “reform the pro forma Open Access Transmission Tariff to remove unduly discriminatory practices and to ensure just and reasonable rates for Commission-jurisdictional services.”[2] NERC staff has begun a review of the NOPR and identified four areas to which NERC intends to respond. Along with the OC/PC, NERC will seek input from the Integration of Variable Resources Task Force (IVGTF) regarding these areas, as well as any other areas that merit consideration.

1.  Review if there is any inconsistency with relevant NERC Reliability Standards and the proposed intra-hour scheduling tariff reform.

Some NERC Reliability Standards (such as those in the MOD, BAL and EOP families) may require modifications to account for intra-hour scheduling. NERC intends to seek clarification on whether FERC is proposing to require only the scheduling of transmission service on an intra-hour basis, or creating a new intra-hour transmission product. The answer to this question may require changes to NERC’s Reliability Standards. For example, the ATC-related MOD Standards require the calculation of hourly ATC. Scheduling of that hourly product may occur on an intra-hour basis, depending on the Transmission Provider’s Tariff. If FERC proposes to require that all Transmission Providers allow intra-hour scheduling of the existing hourly product, no changes to the ATC-related MOD Reliability Standards will be required. However, if FERC is proposing to create a new intra-hour transmission product, the ATC-related MOD Reliability Standards will require changes to accommodate additional calculations, and industry reliability tools (such as the NERC IDC) may be affected.

NERC seeks input on inconsistencies that may arise by either intra-hour scheduling or a new intra-hour transmission product

2.  Review FERC’s definition of Variable Energy Resource.

FERC has proposed a definition for a Variable Energy Resource (VER) as “an energy source that: (1) is renewable; (2) cannot be stored by the facility owner or operator; and (3) has variability that is beyond the control of the facility owner or operator.”[3]

NERC seeks input on whether this definition is sufficient or if there are any concerns the definition may be insufficient.

3.  The use of contingency reserves to manage extreme ramp events of VERs.

FERC has requested comments “on the extent to which some additional type of contingency reserve service (beyond the services provided under Schedule 5 and 6 of the pro forma OATT) would ensure that VERs are integrated into the interstate transmission system in a non-discriminatory manner, while remaining consistent with NERC Reliability Standards.”[4]

NERC seeks input on reliability impacts (if any) that would be created by the use of existing or new ancillary services to address extreme ramp events.

4.  The impact on NERC’s registration, certifications, reliability assessments, and Reliability Standards.

NERC seeks input on the reliability implications associated with adopting the recommendations and proposals set forth in the NOPR and inconsistencies that may arise with respect to NERC’s registration, certification, reliability assessments and Reliability Standards.

FERC has requested comments by January 31, 2011.[5] Please submit your comments by Monday December 20, 2010 to .

If you have any questions or comments on the aforementioned, please do not hesitate to contact us. Before filing, NERC staff’s draft comments will be sent for your consideration one week before the comment due date.

cc: IVGTF Leadership Team

Willie Phillips, Attorney, NERC

[1] Notice of Proposed Rulemaking, “Integration of Variable Energy Resources,” 133 FERC ¶ 61,149 (Nov. 18, 2010) (“NOPR”) (italics added).

[2] NOPR at Summary.

[3] NOPR at P 64 (italics added).

[4] NOPR at P 100 (italics added).

[5] http://frwebgate3.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=5Mix2o/5/2/0&WAISaction=retrieve