Common use of Exhibit C: TRE Reliability Standards Development Clause in Contracts

Exhibit C: TRE Reliability Standards Development. 246. Exhibit C to the TRE Delegation Agreement consists of narrative responses addressing each of NERC’s 34 pro forma Common Attributes addressed above.136 In addition, NERC and TRE reference a TRE draft manual, “The Texas Regional Entity Standards Development Process,” dated October 19, 2006 (TRE Standards Development Manual).137 247. NERC, in its transmittal letter, states that the TRE Standards Development Manual is consistent with the requirements set forth in its 34 pro forma Common Attributes. Specifically, NERC states that it has not identified any substantive differences between the TRE Standards Development Manual and NERC’s 34 Common Attributes. XXXX adds that it has worked closely with each of the Regional Entity candidates, including TRE, to attain a high level of consistency among the proposed Regional Entity standards development procedures. NERC further states that each reliability standard that will be proposed to NERC by TRE will be in the form of a NERC reliability standard and will contain all the same elements as a NERC reliability standard. 135 See 18 C.F.R. §§ 39.1 and 39.10 (2006). See also Order No. 672, FERC Stats. & Regs. ¶ 31,212 at P 113 (“[T]he Rules of the ERO and Regional Entities are the bylaws, rules of procedure and other organizational rules and protocols of the ERO or a Regional Entity, respectively.”). 136 See supra section IV(A). 137 The TRE Standards Development Manual is included in NERC’s filing as supplemental information and is cross-referenced in the narrative responses addressing the 34 pro forma Common Attributes. 248. The TRE Standards Development Manual also addresses procedures for voting on the adoption of a proposed reliability standard.138 Specifically, the TRE Standards Development Manual provides for the establishment of a reliability standards committee comprised of representatives from all market segments.139 The reliability standards committee will receive, consider, and vote on requests for new or revised reliability standards. The reliability standards committee will also consider any requests for reliability standards from parties that are directly and materially affected by the operation of the ERCOT bulk-power system. However, the ERCOT board will have the final vote on proposed reliability standards.140 249. We accept Exhibit C to the TRE Delegation Agreement. First, we agree that the voting procedures applicable to the standards formation process are consistent with the requirements of FPA section 215. We also find that the TRE Standards Development Manual is generally consistent with NERC’s pro forma Common Attributes. We clarify, however, that the TRE Standards Development Manual embodies “rules,” under our regulations, which are subject to NERC approval and, if approved by NERC, Commission approval.141 138 See TRE Standards Development Manual at app. A (addressing stakeholder representation). Each segment will be given one vote, with each voting entity representative of that segment receiving an equal fraction of its segment vote, provided that the consumer segment will be divided into three sub-segments (residential, commercial, and industrial) receiving one-third of the consumer segment vote. Approval of a standard requires 4.67 affirmative votes. Id. at section II.

Exhibit C: TRE Reliability Standards Development. 246. Exhibit C to the TRE Delegation Agreement consists of narrative responses addressing each of NERC’s 34 pro forma Common Attributes addressed above.136 In addition, NERC and TRE reference a TRE draft manual, “The Texas Regional Entity Standards Development Process,” dated October 19, 2006 (TRE Standards Development Manual).137 247. NERC, in its transmittal letter, states that the TRE Standards Development Manual is consistent with the requirements set forth in its 34 pro forma Common Attributes. Specifically, NERC states that it has not identified any substantive differences between the TRE Standards Development Manual and NERC’s 34 Common Attributes. XXXX NERC adds that it has worked closely with each of the Regional Entity candidates, including TRE, to attain a high level of consistency among the proposed Regional Entity standards development procedures. NERC further states that each reliability standard that will be proposed to NERC by TRE will be in the form of a NERC reliability standard and will contain all the same elements as a NERC reliability standard. 135 See 18 C.F.R. §§ 39.1 and 39.10 (2006). See also Order No. 672, FERC Stats. & Regs. ¶ 31,212 at P 113 (“[T]he Rules of the ERO and Regional Entities are the bylaws, rules of procedure and other organizational rules and protocols of the ERO or a Regional Entity, respectively.”). 136 See supra section IV(A). 137 The TRE Standards Development Manual is included in NERC’s filing as supplemental information and is cross-referenced in the narrative responses addressing the 34 pro forma Common Attributes. 248. The TRE Standards Development Manual also addresses procedures for voting on the adoption of a proposed reliability standard.138 Specifically, the TRE Standards Development Manual provides for the establishment of a reliability standards committee comprised of representatives from all market segments.139 The reliability standards committee will receive, consider, and vote on requests for new or revised reliability standards. The reliability standards committee will also consider any requests for reliability standards from parties that are directly and materially affected by the operation of the ERCOT bulk-power system. However, the ERCOT board will have the final vote on proposed reliability standards.140 249. We accept Exhibit C to the TRE Delegation Agreement. First, we agree that the voting procedures applicable to the standards formation process are consistent with the requirements of FPA section 215. We also find that the TRE Standards Development Manual is generally consistent with NERC’s pro forma Common Attributes. We clarify, however, that the TRE Standards Development Manual embodies “rules,” under our regulations, which are subject to NERC approval and, if approved by NERC, Commission approval.141 138 See TRE Standards Development Manual at app. A (addressing stakeholder representation). 139 TRE’s market segments are identified in section V(A)(3) of this order, above. Each segment will be given one vote, with each voting entity representative of that segment receiving an equal fraction of its segment vote, provided that the consumer segment will be divided into three sub-segments (residential, commercial, and industrial) receiving one-third of the consumer segment vote. Approval of a standard requires 4.67 affirmative votes. Id. at section II. 140 Id. See also pro forma base Delegation Agreement at section 5(b): “Pursuant to section 215(d)(3) of the Act, NERC shall rebuttably presume that a proposal from a Regional Entity organized on an interconnection-wide basis for a [regional reliability standard] is just, reasonable, and not unduly discriminatory or preferential, and in the public interest.” 141 See 18 C.F.R. §§ 39.1 and 39.10 (2006). See also Order No. 672, FERC Stats & Regs ¶ 31,204 at P 113.

Exhibit C: TRE Reliability Standards Development. 246. Exhibit C to the TRE Delegation Agreement consists of narrative responses addressing each of NERC’s 34 pro forma Common Attributes addressed above.136 In addition, NERC and TRE reference a TRE draft manual, “The Texas Regional Entity Standards Development Process,” dated October 19, 2006 (TRE Standards Development Manual).137 247. NERC, in its transmittal letter, states that the TRE Standards Development Manual is consistent with the requirements set forth in its 34 pro forma Common Attributes. Specifically, NERC states that it has not identified any substantive differences between the TRE Standards Development Manual and NERC’s 34 Common Attributes. XXXX adds that it has worked closely with each of the Regional Entity candidates, including TRE, to attain a high level of consistency among the proposed Regional Entity standards development procedures. NERC further states that each reliability standard that will be proposed to NERC by TRE will be in the form of a NERC reliability standard and will contain all the same elements as a NERC reliability standard. 135 See 18 C.F.R. §§ 39.1 and 39.10 (2006). See also Order No. 672, FERC Stats. & Regs. ¶ 31,212 at P 113 (“[T]he Rules of the ERO and Regional Entities are the bylaws, rules of procedure and other organizational rules and protocols of the ERO or a Regional Entity, respectively.”). 136 See supra section IV(A). 137 The TRE Standards Development Manual is included in NERC’s filing as supplemental information and is cross-referenced in the narrative responses addressing the 34 pro forma Common Attributes. 248. The TRE Standards Development Manual also addresses procedures for voting on the adoption of a proposed reliability standard.138 Specifically, the TRE Standards Development Manual provides for the establishment of a reliability standards committee comprised of representatives from all market segments.139 The reliability standards committee will receive, consider, and vote on requests for new or revised reliability standards. The reliability standards committee will also consider any requests for reliability standards from parties that are directly and materially affected by the operation of the ERCOT bulk-power system. However, the ERCOT board will have the final vote on proposed reliability standards.140 249. We accept Exhibit C to the TRE Delegation Agreement. First, we agree that the voting procedures applicable to the standards formation process are consistent with the requirements of FPA section 215. We also find that the TRE Standards Development Manual is generally consistent with NERC’s pro forma Common Attributes. We clarify, however, that the TRE Standards Development Manual embodies “rules,” under our regulations, which are subject to NERC approval and, if approved by NERC, Commission approval.141 138 See TRE Standards Development Manual at app. A (addressing stakeholder representation). 139 TRE’s market segments are identified in section V(A)(3) of this order, above. Each segment will be given one vote, with each voting entity representative of that segment receiving an equal fraction of its segment vote, provided that the consumer segment will be divided into three sub-segments (residential, commercial, and industrial) receiving one-third of the consumer segment vote. Approval of a standard requires 4.67 affirmative votes. Id. at section II. 140 Id. See also pro forma base Delegation Agreement at section 5(b): “Pursuant to section 215(d)(3) of the Act, NERC shall rebuttably presume that a proposal from a Regional Entity organized on an interconnection-wide basis for a [regional reliability standard] is just, reasonable, and not unduly discriminatory or preferential, and in the public interest.” 141 See 18 C.F.R. §§ 39.1 and 39.10 (2006). See also Order No. 672, FERC Stats & Regs ¶ 31,204 at P 113.