18 Cfr 35.28

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Displaying title 18, up to date as of 6/20/2024. Title 18 was last amended 6/20/2024.

Title 18 —Conservation of Power and Water Resources
Chapter I —Federal Energy Regulatory Commission, Department of Energy
Subchapter B —Regulations Under the Federal Power Act
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-approved independent system operators and regional transmission
organizations to perform.
(8) Market Violation means a tariff violation, violation of a Commission-approved 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.
(10) Distributed energy resource as used in this section means any resource located on the distribution system, any
subsystem thereof or behind a customer meter.
(11) Distributed energy resource aggregator as used in this section means the entity that aggregates one or more
distributed energy resources for purposes of participation in the capacity, energy and/or ancillary service markets of
the regional transmission organizations and/or independent system operators.
(12) Ambient-adjusted rating means a transmission line rating that applies to a time period of not greater than one hour;
reflects an up-to-date forecast of ambient air temperature across the time period to which the rating applies; reflects
the absence of solar heating during nighttime periods where the local sunrise/sunset times used to determine daytime
and nighttime periods are updated at least monthly, if not more frequently; and is calculated at least each hour, if not
more frequently.
(13) Emergency rating means a transmission line rating that reflects operation for a specified, finite period, rather than
reflecting continuous operation. An emergency rating may assume an acceptable loss of equipment life or other
physical or safety limitations for the equipment involved.

(14) Dynamic line rating means a transmission line rating that applies to a time period of not greater than one hour and
reflects up-to-date forecasts of inputs such as (but not limited to) ambient air temperature, wind, solar heating
intensity, transmission line tension, or transmission line sag.
(15) Energy Management System (EMS) means a computer control system used by electric utility dispatchers to monitor
the real-time performance of the various elements of an electric system and to dispatch, schedule, and/or control
generation and transmission facilities.
(16) Supervisory Control and Data Acquisition (SCADA) means a computer system that allows an electric system operator
to remotely monitor and control elements of an electric system.
(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 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
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 Commission-approved 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 Commission-approved ISO or RTO may instead set forth such demonstration in its filing pursuant to
section 206 in accordance with the procedures set forth in Commission rulemaking proceedings promulgating
and amending the pro forma tariff.
(5) Any public utility that owns transmission facilities that are not under the public utility's control must, consistent with
the pro forma tariff required by paragraph (c)(1) of this section, share with the public utility that controls such facilities
(and its Market Monitoring Unit(s), if applicable):
(i)

Transmission line ratings for each period for which transmission line ratings are calculated for such facilities
(with updated ratings shared each time ratings are calculated); and

(ii) Written transmission line rating methodologies used to calculate the transmission line ratings for such facilities
provided under subparagraph (i).
(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 Same-Time 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 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 non-public 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 (nonjurisdictional) 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) Any public utility that conducts interconnection studies shall be liable for and eligible to appeal certain penalties
under the interconnection procedures and agreements adopted by the Commission-approved independent
system operator or regional transmission organization under paragraph (f)(1) of this section following that public
utility's failure to complete an interconnection study by the appropriate deadline.
(iii)-(iv) [Reserved]

(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 Commissionapproved 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.
(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 Commission-approved 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 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 Commission-approved 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 Order No. 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 Commission-approved 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 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.
(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 Commissionapproved 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 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 antimanipulation 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.
Protocols
on Market Monitoring Unit Referrals to the Commission of Perceived Market Design Flaws and
(v)
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 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.
(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 Commissionapproved 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.
(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 Commission-approved 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
Commission-approved 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.

(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
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.
(12) Distributed energy resource aggregators.
(i)

Each independent system operator and regional transmission organization must have tariff provisions that allow
distributed energy resource aggregations to participate directly in the independent system operator or regional
transmission organization markets.

(ii) Each regional transmission organization and independent system operator, to accommodate the participation of
distributed energy resource aggregations, must establish market rules that address:
(A) Eligibility to participate in the independent system operator or regional transmission organization markets
through a distributed energy resource aggregation;
(B) Locational requirements for distributed energy resource aggregations;
(C) Distribution factors and bidding parameters for distributed energy resource aggregations;
(D) Information and data requirements for distributed energy resource aggregations;
(E) Modification to the list of resources in a distributed energy resource aggregation;
(F) Metering and telemetry system requirements for distributed energy resource aggregations;
(G) Coordination between the regional transmission organization or independent system operator, the
distributed energy resource aggregator, the distribution utility, and the relevant electric retail regulatory
authorities; and
(H) Market participation agreements for distributed energy resource aggregators.
(iii) Each regional transmission organization and independent system operator must establish a minimum size
requirement for distributed energy resource aggregations that does not exceed 100 kW.
(iv) Each regional transmission organization and independent system operator must accept bids from a distributed
energy resource aggregator if its aggregation includes distributed energy resources that are customers of utilities
that distributed more than 4 million megawatt-hours in the previous fiscal year. An independent system operator
or regional transmission organization must not accept bids from a distributed energy resource aggregator if its

aggregation includes distributed energy resources that are 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 to be bid into RTO/ISO markets by a distributed energy resource aggregator.
(13) Transmission line ratings.
(i)

Each Commission-approved independent system operator or regional transmission organization must establish
and maintain systems and procedures necessary to allow any public utility whose transmission facilities are
under the independent control of the independent system operator or regional transmission organization to
electronically update transmission line ratings for such facilities (for each period for which transmission line
ratings are calculated) at least hourly, with such data submitted by those public utility transmission owners
directly into the independent system operator's or regional transmission organization's EMS through SCADA or
related systems.

(ii) [Reserved]
[Order 888, 61 FR 21693, May 10, 1996]
EDITORIAL NOTE

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.