Agenda Operating Committee March 21, p.m. to 5 p.m. March 22, a.m. to noon

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1 Agenda Operating Committee March 21, p.m. to 5 p.m. March 22, a.m. to noon Westin Long Beach 333 East Ocean Boulevard Long Beach, California Item Leader Action 1. Administration Secretary a. Quorum b. Procedures c. New Members d. Introductions e. Agenda Chairman Approve 2. Consent Agenda Chairman Approve 3. For Your Information Secretary a. Balance Resources and Demand Standards, BAL-007 through BAL Reliability Criteria and System Limits Concepts Al Miller Discuss 5. Definition of Adequate Level of Reliability Chairman Discuss 6. Lessons Learned a. 11/4/06 Europe blackout and other studies Bob Cummings Discuss b. Hydro One Capacitor Bank Failure Ajay Garg Discuss 7. Reliability Readiness Evaluation and Improvement Program Richard Schneider and Gerry Adamski Village Boulevard, Princeton, New Jersey Phone: Fax: Approve 8. Electing the OC Members Secretary Approve 9. Real-time Tools Best Practices Jack Kerr Discuss 10. Midwest ISO Balancing Authority Doug Hils Endorse 11. Market Flow Field Test Jim Castle Approve 12. Reliability Coordination Plan Approval Process Jim Castle Approve 13. Frequency Monitoring Terry Bilke Discuss 14. E-tag Version 1.8 John Ciza Discuss 15. Next Meetings

2 Operating Committee Meeting March 21 22, 2007 Item 1. Administration Item 1.a Announcement of Quorum The secretary will announce whether a quorum (two-thirds of the voting members) is in place. NOTE: The committee cannot conduct business without a quorum. Please be prepared to stay for the entire meeting. Item 1.b Procedures The NERC Antitrust Compliance Guidelines, Organization and Procedures Manual, and a summary of Parliamentary Procedures are attached for reference. The secretary will answer questions regarding these procedures. Attachments Antitrust Guidelines Parliamentary Procedures Organization and Procedures Manual for the NERC Standing Committees Action Waiver of Ten-Day Rule The chairman will waive the rule requiring a ten-day posting before an item can be brought to the committee for consideration. (See text at right.) The committee members are free to make any motions they desire. From Organization and Procedure Manual, Notice of Committee Agenda: In general, action may not be brought to a vote of the committee unless it has been noticed in a published agenda or other form of distribution to the committee at least ten (10) business days before the meeting date upon which action is to be voted. This requirement for a 10- day notice may be waived either by the approval of the chair or by a two-thirds affirmative vote of the committee s voting members present at a committee meeting at which a quorum has been established. Item 1.c Introduction of Members and Guests The chairman will ask the committee members and guests to introduce themselves. Attachment Operating Committee roster Item 1.d Approval of Agenda Action Approve meeting agenda. Background The chairman will review the agenda, ask for amendments, and then approval.

3 I. General NERC Antitrust Compliance Guidelines It is NERC s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition. It is the responsibility of every NERC participant and employee who may in any way affect NERC s compliance with the antitrust laws to carry out this commitment. Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC s antitrust compliance policy is implicated in any situation should consult NERC s General Counsel immediately. II. Prohibited Activities Participants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions): Discussions involving pricing information, especially margin (profit) and internal cost information and participants expectations as to their future prices or internal costs. Discussions of a participant s marketing strategies. Discussions regarding how customers and geographical areas are to be divided among competitors. Discussions concerning the exclusion of competitors from markets. Discussions concerning boycotting or group refusals to deal with competitors, vendors or suppliers. III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and Village Boulevard, Princeton, New Jersey Phone: Fax:

4 adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications. You should also ensure that NERC procedures, including those set forth in NERC s Certificate of Incorporation and Bylaws are followed in conducting NERC business. Other NERC procedures that may be applicable to a particular NERC activity include the following: Reliability Standards Process Manual Organization and Procedures Manual for the NERC Standing Committees System Operator Certification Program In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting. No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations. Subject to the foregoing restrictions, participants in NERC activities may discuss: Reliability matters relating to the bulk power system, including operation and planning matters such as establishing or revising reliability standards, special operating procedures, operating transfer capabilities, and plans for new facilities. Matters relating to the impact of reliability standards for the bulk power system on electricity markets, and the impact of electricity market operations on the reliability of the bulk power system. Proposed filings or other communications with state or federal regulatory authorities or other governmental entities. Matters relating to the internal governance, management and operation of NERC, such as nominations for vacant committee positions, budgeting and assessments, and employment matters; and procedural matters such as planning and scheduling meetings. Any other matters that do not clearly fall within these guidelines should be reviewed with NERC s General Counsel before being discussed. NERC Antitrust Compliance Guidelines 2

5 Parliamentary Procedures Based on Robert s Rules of Order, Newly Revised, 10th Edition, plus Organization and Procedures Manual for the NERC Standing Committees Motions Unless noted otherwise, all procedures require a second to enable discussion. When you want to Procedure Debatable Comments Raise an issue for discussion Revise a Motion currently under discussion Reconsider a Motion already approved End debate Record each member s vote on a Motion Postpone discussion until later in the meeting Postpone discussion until a future date Remove the motion for any further consideration Request a review of procedure Move Yes The main action that begins a debate. Amend Yes Takes precedence over discussion of main motion. Motions to amend an amendment are allowed, but not any further. The amendment must be germane to the main motion, and can not reverse the intent of the main motion. Reconsider Yes Allowed only by member who voted on the prevailing side of the original motion. Call for the Question or End Debate Request a Roll Call Vote Yes No If the Chair senses that the committee is ready to vote, he may say if there are no objections, we will now vote on the Motion. Otherwise, this motion is debatable and subject to 2/3 majority approval. Takes precedence over main motion. No debate allowed, but the members must approve by 2/3 majority. Lay on the Table Yes Takes precedence over main motion. Used only to postpone discussion until later in the meeting. Postpone until Yes Takes precedence over main motion. Debatable only regarding the date (and time) at which to bring the Motion back for further discussion. Postpone indefinitely Yes Takes precedence over main motion. Debate can extend to the discussion of the main motion. If approved, it effectively kills the motion. Useful for disposing of a badly chosen motion that can not be adopted or rejected without undesirable consequences. Point of order No Second not required. The Chair or secretary shall review the parliamentary procedure used during the discussion of the Motion. Notes on Motions Seconds. A Motion must have a second to ensure that at least two members wish to discuss the issue. The seconder is not recorded in the minutes. Neither are motions that do not receive a second. Announcement by the Chair. The Chair should announce the Motion before debate begins. This ensures that the wording is understood by the membership. Once the Motion is announced and seconded, the Committee owns the motion, and must deal with it according to parliamentary procedure.

6 Voting Voting Method When Used How Recorded in Minutes Unanimous Consent When the Chair senses that the Committee is substantially in agreement, and the Motion needed little or no debate. No actual vote is taken. The minutes show by unanimous consent. Vote by Voice The standard practice. The minutes show Approved or Not Approved (or Failed). Vote by Show of Hands (tally) Vote by Roll Call To record the number of votes on each side when an issue has engendered substantial debate or appears to be divisive. Also used when a Voice Vote is inconclusive. (The Chair should ask for a Vote by Show of Hands when requested by a member). To record each member s vote. Each member is called upon by the Secretary,, and the member indicates either Yes, No, or Present if abstaining. The minutes show both vote totals, and then Approved or Not Approved (or Failed). The minutes will include the list of members, how each voted or abstained, and the vote totals. Those members for which a Yes, No, or Present is not shown are considered absent for the vote. Notes on Voting (Recommendations from DMB, not necessarily Mr. Robert) Abstentions. When a member abstains, he is not voting on the Motion, and his abstention is not counted in determining the results of the vote. The Chair should not ask for a tally of those who abstained. Determining the results. The results of the vote (other than Unanimous Consent) are determined by dividing the votes in favor by the total votes cast. Abstentions are not counted in the vote and shall not be assumed to be on either side. Unanimous Approval. Can only be determined by a Roll Call vote because the other methods do not determine whether every member attending the meeting was actually present when the vote was taken, or whether there were abstentions. Majorities. Robert s Rules use a simple majority (one more than half) as the default for most motions. NERC uses 2/3 majority for all motions.

7 N ORTH A MERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, Village Boulevard, Princeton, New Jersey Organization and Procedures Manual for NERC Standing Committees Approved by the Board of Trustees on June 15, 2004 Copyright 2004 by the North American Electric Reliability Council. All rights reserved. Phone Fax URL

8 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Table of Contents Table of Contents Table of Contents i Introduction 1 NERC Mission 1 Corporate Overview 1 NERC Organizational Framework 1 Manual Purpose and Applicability 2 Committee Organization 3 Preface 3 Establishment of Committees 3 Committee Scopes 3 Committee Scope Revisions 3 Committee Representation 4 General 4 Standing Committee Memberships 4 Committee Member Terms 5 Prior Chairman 5 Committee Membership 6 Principles 6 Procedure for Appointing Committee Members 6 Procedure for Appointing Committee Officers 6 General Criteria for Membership 7 Replacement of Resigning or Non-participating Members 7 Changes in Member Affiliation 8 Acknowledgement of a Membership Conflict 8 Committee General Procedures 9 Conduct of Meetings 9 Presiding Officer 9 Calling of Meetings 9 Meeting Locations 9 Open Meetings 9 Confidential Sessions 9 Meeting Registration 10 Antitrust 10 Approved by NERC Board of Trustees: June 15, 2004 i

9 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Table of Contents Quorum 10 Voting Procedure 10 Majority and Minority Views 10 Proxies 11 Notice of Committee Agenda 11 Action without a Meeting 11 Meetings by Telephone and Electronic Media 11 Dispute Resolution 12 Responsibilities of Officers, Executives, and Members 13 Committee Chairman and Vice Chairman Responsibilities 13 Secretary Responsibilities 14 Executive Committee Responsibilities 14 Nominating Task Force Responsibilities 15 Committee Member Responsibilities 17 Subordinate Groups 18 Committee Organization Hierarchy 18 Subcommittees 18 Working Groups 18 Task Forces 19 Subgroup Membership and Representation 19 Subgroup Procedures 19 Inter-Committee Coordination 20 Technical Steering Committee 20 Executive Committees in Joint Session 20 Work Plan and Resource Coordination 21 Committees in Joint Session 21 Resolving Differences among Committees 21 Appendix A Revisions to Manual 22 Approved by NERC Board of Trustees: June 15, 2004 ii

10 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Introduction Introduction NERC Mission The North American Electric Reliability Council s (NERC s) mission is to ensure that the bulk electric system in North America is reliable, adequate, and secure. NERC accomplishes this mission by: Setting and enforcing standards for the reliable planning and operation of the bulk electric system. Certifying reliability service organizations and personnel. Assessing the historical and near-term reliability, and future adequacy of the bulk electric system. Providing reliability training and education resources. Facilitating information exchange, system modeling, and analytical methods and tools as needed for reliability. Interfacing with organizations in industry and agencies of the federal, state, and provincial governments in North America on reliability matters. Working with industry and government to coordinate the physical and cyber security of electricity infrastructure. Corporate Overview NERC is a not-for-profit corporation whose owners and members are the ten Regional Reliability Councils (Regional Councils). NERC is governed by an independent Board of Trustees elected by the Stakeholders Committee. The members of the Regional Councils are from all segments of the electric industry including investor-owned, federal, rural electric cooperatives, state, municipal, and provincial systems, exempt wholesale generators (independent power producers), and power marketers. These entities account for virtually all of the electricity supplied in the United States, Canada, and the northern portion of Baja California Norte, Mexico. NERC Organizational Framework The standing committees are one part of the overall NERC organization. An overview is provided below to illustrate how the standing committees fit into the organization and to identify key relationships with other NERC functions. The remaining sections of this manual describe the standing committees in greater detail, addressing committee scopes, organization, and procedures. Additional information regarding the other NERC functions listed below may be found in separate references on the NERC web site at Board of Trustees provides leadership and sets policy for all NERC activities. The Board is comprised of ten independent Trustees, one of whom is the NERC president. Stakeholders Committee is a senior executive group, representing a balance of stakeholder views, whose role is to advise the Board on policy issues. The Stakeholders Committee also Approved by NERC Board of Trustees: June 15,

11 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Introduction serves several corporate governance responsibilities assigned in the NERC Certificate of Incorporation and Bylaws. Standards Authorization Committee manages the development of reliability standards and is elected by and accountable to a registered ballot body of industry stakeholders. The Board provides oversight to ensure the standards process remains open, inclusive, fair and balanced. Compliance and Certification Committee manages the assessment, monitoring, and enforcement of compliance with reliability standards. This committee also manages the certification of reliability service organizations and personnel. Critical Infrastructure Protection Committee advises the Board on matters related to the physical and cyber security of the electricity infrastructure of North America. The Critical Infrastructure Protection Committee develops security guidelines, interfaces with industry and various government agencies on security matters, and advises the operation by NERC of the Electricity Sector Information Sharing and Analysis Center. Standing Committees are comprised of volunteer industry experts in issues impacting reliability. The standing committees support NERC s mission by carrying out the responsibilities stated in their scopes, by executing the policies, directives, and assignments of the Board of Trustees, and by advising the Board on reliability matters. The standing committees also advise the other NERC functions on matters requiring reliability expertise. Manual Purpose and Applicability This manual defines the scope, functions, representation, and procedures of the three NERC standing committees: Operating Committee, Planning Committee, and Market Committee. The manual is a living document that may be updated from time to time by approval of the NERC Board of Trustees. Changes to the manual may be recommended to the NERC Board for approval by any standing committee, with consultation of the other standing committees. The manual also applies to the subordinate groups of the three NERC standing committees. All other NERC committees and their subordinate groups should use this manual as a procedural guide, and apply those sections of this manual that are applicable to their functions and organizational structure. Approved by NERC Board of Trustees: June 15,

12 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Organization Committee Organization Preface One of NERC s most valuable assets is the reliability expertise provided by active participation of industry volunteers in NERC s committees and subordinate groups. Establishment of Committees The NERC Board of Trustees may create committees. In doing do, the Board approves the scope of each committee and assigns specific authorities to each committee necessary to conduct business within that scope. Each committee shall work within its Board-approved scope and shall be accountable to the Board of Trustees for its Board-assigned responsibilities. Committee Scopes NERC has three standing committees: Operating Committee, Planning Committee and Market Committee. The standing committees support the NERC reliability mission by executing the policies, directives, and assignments of the Board of Trustees, and advising the Board on reliability matters. The following functions are representative of the functions of the standing committees. A Board-approved scope outlining the responsibilities of each committee shall be available on the NERC web site. The Board may assign additional functions, as it deems appropriate. The following functions are representative of the functions of the standing committees: Assess resource and transmission adequacy and reliability performance. Provide reliability education and training resources. Coordinate reliability matters with Regional Councils and other organizations. Assess the reliability impacts of standards proposed or set by other organizations. Provide advice and recommendations on reliability applications, data, and services. Facilitate information exchange in support of reliable real-time operations. Assist in the development and the evaluation of the effectiveness of reliability standards. Provide advice and recommendations on the processes for assuring compliance and certification of reliability service organizations and personnel. Assess the impacts of standards and NERC activities on electricity markets and promote market solutions for reliability. Advise the NERC dispute resolution function. Committee Scope Revisions If the members of an existing committee determine that the committee s scope of work should be revised, the committee shall submit recommendations accordingly to the Board of Trustees for approval. Approved by NERC Board of Trustees: June 15,

13 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Representation Committee Representation General Each committee shall have a defined membership composition that is approved by the Board. Membership composition may be unique to each committee. Although NERC committees historically have had fixed memberships, open membership may be appropriate in some cases, with Board approval. Membership composition of committees may evolve to meet changing needs of NERC and reliability stakeholders. Each committee may propose for Board approval revisions to its membership composition. Each committee shall strive to maintain a membership composition that accomplishes two objectives: Balance representation among all stakeholders impacted by the work of the committee, consistent with NERC principles of being open, inclusive, and fair. Balance should include such factors as industry segment, region, Interconnection, and country. No one segment should be able to block or veto committee action, and no two segments should be able to form a sufficient majority to carry a committee motion. Provide expertise sufficiently robust to achieve technical excellence in fulfilling the scope and responsibilities of the committee. The Board of Trustees may modify the committee membership composition or appoint additional voting or non-voting members to a committee, as it deems necessary to achieve these objectives. Standing Committee Memberships The membership composition of the Operating, Planning, and Market Committees is currently defined as follows: Voting Members (35) Chairman (1) and Vice Chairman (1) Regional Reliability Council (RRC) Representatives (13) Eastern Interconnection (9) (Including 1 from Eastern Canada) Western Interconnection/WECC (3) (Including 1 from Western Canada) Texas Interconnection/ERCOT (1) Other At Large Canada Representatives (2) Stakeholder Segment Representatives (18) Independent System Operator/Regional Transmission Operator (2) Investor-Owned Utility (2) Federal (U. S.) (2) Transmission Dependent Utility (2) State/Municipal Utility (2) Cooperative (2) Merchant Electricity Generator (2) Electricity Marketer (2) End-use Electricity Customer (2) Approved by NERC Board of Trustees: June 15,

14 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Representation Non-Voting Members Regulator (State and Provincial) Representatives (4) Western (1) Eastern (1) Texas (1) Canada (1) Regulator (Federal) Representatives (2) U. S. Federal Energy Regulatory Commission (1) Canada National Energy Board (1) Observer Representatives (Same as Board Observers) Committee Secretary (NERC Staff Coordinator) Prior Chairman (ex officio non-voting member, at the discretion of the chairman) Committee Member Terms Unless otherwise stated in the specific requirements of a committee, committee members, including nonvoting members, shall have a term of two years. To assure continuity, terms should be staggered to allow about half of the members terms to expire each year. The terms of committee officers need not be staggered. Prior Chairman At the discretion of the current chairman, the immediately prior chairman may serve ex officio as a nonvoting member of the committee. Approved by NERC Board of Trustees: June 15,

15 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Membership Committee Membership Principles Committee members shall be nominated and selected in a manner that is open, inclusive, and fair. All committee member appointments shall be approved by the Board of Trustees and committee officers shall be appointed by the Board chairman. Procedure for Appointing Committee Members Each committee with a fixed membership composition shall maintain a Nominating Task Force, whose responsibilities are described below and later in this manual. Each committee with a fixed membership shall conduct an open nominations process to receive nominations to fill any membership vacancies. Generally this process will be conducted annually to replace members whose terms are expiring. NERC staff shall, under the oversight of the Technical Steering Committee or a committee chairman, administer the nominations process. The nominations process should be conducted jointly across committees when vacancies are being filled across multiple committees. The Technical Steering Committee, whose responsibilities are defined later in this manual, shall oversee the conduct of the nominations process when more than one committee is involved. The committee chairman shall oversee the conduct of the nominations process when only one committee is involved. A request for nominations should specify the committee positions to be filled, the qualifications for filling each position, and additional considerations in evaluating candidates, such as areas of expertise needed on the committee. Generally a request for nominations should provide a window of at least 30 days for submission of nominations. Shorter nominating periods may be necessary on an exception basis if there is an urgent need in the view of the Technical Steering Committee or committee chairman, as applicable. NERC staff shall forward nominations received to the Nominating Task Force of each respective committee. The Nominating Task Force shall fairly evaluate the nominees using criteria established in the solicitation and the best judgment of the task force on how best to fulfill the membership needs of the committee. The Nominating Task Force shall then prepare its recommended slate of members and indicate the terms of each member and candidate. The Nominating Task Force shall present the recommended committee membership slate to the Board for approval. The Nominating Task Force may present the proposed slate to the committee for information purposes before submitting the slate to the Board, but the committee does not act on the slate. The Board of Trustees, by virtue of approving a committee slate, appoints each voting and non-voting committee member. The Board may also appoint members individually as needed for replacement. Procedure for Appointing Committee Officers The process for appointing committee officers is similar to that previously described for committee members, except for the approval steps. With due consideration of the open nominations process Approved by NERC Board of Trustees: June 15,

16 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Membership described above, the Nominating Task Force shall prepare a slate of officer candidates and present the proposed slate for the committee to consider. The committee shall consider the recommended slate of the Nominating Task Force and any additional nominations the members may offer from the floor, and approve a recommended slate of officers. The committee shall present the slate of committee officers to the chairman of the NERC Board of Trustees, who shall appoint committee officers with due consideration of the committee s recommended slate. General Criteria for Membership The Nominating Task Force shall consider the following general criteria, in addition to specific committee membership requirements, in preparing a recommended slate: Each Regional Council shall appoint committee members that are designated as representing their region. Regional Council representatives should be capable of representing the region in committee activities. The Canadian Electricity Association shall appoint Canadian representatives. Canadian representatives should be capable of representing Canada in committee activities. Industry stakeholder segments may elect their segment representatives through an open process approved by the NERC Board of Trustees, with a balance of Interconnection and geographic considerations as appropriate. Otherwise, the Nominating Task Force may give preference to candidates nominated by organizations representing a broad cross section of an industry segment, such as an industry trade association. No individual may serve concurrently on more than one standing committee. No two individuals from the same organization, or affiliated organizations, may serve concurrently on one standing committee. No more than two individuals from the same organization should serve concurrently on the several standing committees. Replacement of Resigning or Non-participating Members In the event a voting or nonvoting member can no longer serve on the committee, that member shall submit a written resignation to the committee chairman or secretary. The chairman should request any committee member who ceases to participate in the committee, as indicated by not attending or sending a proxy for two consecutive meetings, to submit a resignation or to request continuation of membership with an explanation of extenuating circumstances. If a written response is not received within 30 days of the chairman s request, the lack of response should be considered a resignation. The committee chairman shall refer the vacancy resulting from a resignation to the Nominating Task Force. The nomination and selection of replacement members shall be conducted in an open, inclusive and fair manner, using a process similar to that used for the annual membership solicitation. The Task Force shall request NERC staff to prepare a solicitation for nominations to fill that position. The Nominating Task Force shall follow the previously stated criteria in recommending a replacement. The committee chairman may seek a vote of the committee to allow the proposed replacement member to be seated pending appointment of the replacement at the Board s next scheduled meeting. Approved by NERC Board of Trustees: June 15,

17 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee Membership Changes in Member Affiliation A committee member who moves from one organization to another shall have the option of retaining the membership position if the new organization is in the same constituency (industry segment, region, etc.) and no membership conflicts are created per the General Criteria for Membership. If the new affiliation changes the member s constituency, then the member shall resign from the committee. If the change in affiliation results in two members from the same organization on a committee, or other conflict with membership criteria stated in this manual, those two members should identify who will stay on the committee and who will resign. The committee chairman shall act to address the conflict by removing one of the members from membership, if the members do not resolve the conflict within 30 days. Acknowledgement of a Membership Conflict Any committee member who knows of any form of membership conflict, such as working for an entity affiliated with that of another committee member, shall notify the committee chairman within ten (10) business days of obtaining that knowledge. Approved by NERC Board of Trustees: June 15,

18 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee General Procedures Committee General Procedures Conduct of Meetings In the absence of specific provisions in this manual, all committee meetings shall be conducted in accordance with the most recent edition of Robert s Rules of Order in all cases to which they are applicable. Presiding Officer The committee chairman shall preside at a committee meeting or designate the vice chairman or another committee member to preside. The presiding officer of a meeting is designated below as the chair rather than the chairman, since the presiding officer may or may not be the committee chairman. Calling of Meetings Generally, the standing committees shall conduct three meetings per year, coordinated to be in the same location and to be concurrent or sequential as needed to address common business. Each committee chairman may call for additional meetings as needed to accomplish the assigned responsibilities of the respective committee. Meeting Locations To facilitate travel associated with meetings, all committees and subordinate groups shall exercise good judgment in selecting meeting locations by considering cost, travel time, and convenience for all participating members and observers. Open Meetings NERC committee meetings shall be open to the public, except as noted below under Confidential Sessions. Although meetings are open, action on items before a committee shall be determined only by the voting members of the respective committee. All persons not otherwise affiliated as voting or non-voting members of the committee shall be designated as committee guests. Committee guests shall not be permitted to vote and shall have no bearing on the existence of a quorum. It shall be the chair s prerogative to determine whether and when it is appropriate to include the comments and questions of the committee guests in the proceedings of the committee. Confidential Sessions The chair of a committee may limit attendance at a meeting or portion of a meeting, based on confidentiality of the information to be disclosed at the meeting. Such limitations should be applied sparingly and on a non-discriminatory basis as needed to protect information that is sensitive to one or more parties. A preference, where possible, is to avoid the disclosure of sensitive or confidential information so that meetings may remain open at all times. Confidentiality agreements may also be applied as necessary to protect sensitive information. Approved by NERC Board of Trustees: June 15,

19 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee General Procedures Meeting Registration All committee members, observers, and guests must register in advance for any meeting of the committee for which registrations are required. Advance registration allows preparation of adequate accommodations suitable for conduct of committee business. Antitrust All persons attending or otherwise participating in a NERC committee meeting shall act in accordance with NERC s Antitrust Compliance Guidelines at all times during the meeting. A copy of the NERC antitrust statement shall be included with each meeting agenda. Quorum The quorum necessary to transact business at meetings of a committee shall be two-thirds of the voting members of the committee, excluding any vacant positions. Voting members approved by the committee on an interim basis pending confirmation by the Board shall be counted in the determination of a quorum. If a quorum is not present, then the committee may not take any actions requiring a vote of the committee. However, the chair may, with the consent of the members present, elect to allow discussion of agenda items. Voting Procedure Committee action requires a two-thirds majority of the votes cast at a meeting in which a quorum is present. For the purpose of determining a two-thirds majority, abstentions do not count. Therefore the vote to approve a motion is calculated as the affirmative votes divided by the sum of the affirmative votes and the negative votes. Each voting member of the committee shall have one vote and may not serve as the proxy of another member. The chairman and vice chairman of each committee shall be voting members of their respective committees and may choose, at their discretion, to vote on any action of the committee. Non-voting members, observers, and guests shall not be allowed to vote, unless serving as a proxy for a voting member. Majority and Minority Views Consistent with this manual and Robert s Rules of Order, all members of a committee should be afforded the opportunity to provide alternative views on an issue. The results of committee actions, including recorded minutes, shall reflect the majority as well as any minority views of the committee members. The chairman shall communicate both the majority and any minority views in presenting results to the Board of Trustees. Approved by NERC Board of Trustees: June 15,

20 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee General Procedures Proxies A substitute representative, or proxy, may attend and vote during all or a portion of a committee meeting in lieu of a voting member, provided the absent member notifies the committee chairman, vice chairman, or secretary of the proxy. Such notification shall be in writing (electronic medium is acceptable). The proxy representative and his or her affiliation shall be named in the correspondence. A voting member of a committee may not serve as a proxy for another voting member on the same committee (a member may not carry more than one vote). Notice of Committee Agenda The publication of an agenda of actions to be voted upon by the committee shall include the precise wording of any proposed motion. The sponsor of the motion shall prepare a brief description of the justifications for the motion and other information that would be useful to committee members in considering the motion. In general, action may not be brought to a vote of the committee unless it has been noticed in a published agenda or other form of distribution to the committee at least ten (10) business days before the meeting date upon which action is to be voted. This requirement for a 10-day notice may be waived either by the approval of the chair or by a two-thirds affirmative vote of the committee s voting members present at a committee meeting at which a quorum has been established. Action without a Meeting Any action required or permitted at a meeting of the committee may be taken without a meeting if a twothirds majority of the committee members entitled to vote on the action approves taking the action outside of a meeting. Such action without a meeting shall be performed by mail or electronic ballot (e.g., telephone, facsimile, , or Internet). Written notice to the committee members of the subject matter for action is required not less than ten (10) business days, nor more than sixty (60) calendar days prior to the date on which the action is to be voted. As time permits, members should be allowed a window of ten (10) business days to vote. Committee members shall receive written notice of the results of such an action within ten (10) business days of the close of the voting period. All responses of the committee members shall be filed as a roll call vote with the committee minutes. Such action without a meeting shall not preclude the Executive Committee of a committee from exercising the powers of the committee between meetings of the committee as described later in the section on Executive Committees. Meetings by Telephone and Electronic Media Working groups, task forces, and other small groups are encouraged to use telephone conference calls and electronic media such as the Internet and to conduct their business. These alternatives are particularly suitable when the group size is manageable for the selected medium and when the agenda is simple and only a few actions are anticipated. Approved by NERC Board of Trustees: June 15,

21 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Committee General Procedures Face-to-face meetings are encouraged, however, for larger groups and complex agendas with multiple action items. Meeting in person ensures sufficient opportunity to debate alternative views and resolve issues. In general, standing committee meetings should be conducted in person. Subcommittee meetings should also be conducted in person, unless the agenda is manageable for an alternative medium. For face-to-face meetings, all members are responsible for attending in person or providing a proxy. Participating by telephone in a face-to-face meeting of a committee or subcommittee is discouraged and shall be allowed only at the discretion of the chairman of the committee or subcommittee. Telephonic participation in working group or task force meetings may be practical, but shall be at the discretion of the group chairman. Dispute Resolution Each committee shall strive to resolve any and all disputes that may arise in the conduct of committee business by using the procedures in this manual and in Robert s Rules of Order to resolve such disputes. Any committee member or group of members involved in a dispute shall notify the chairman in writing regarding the specific details of the dispute, including any procedural errors or unfair actions believed to have occurred and any adverse consequences. Each committee member or group of members involved in the dispute shall apply a best effort to resolve the dispute under the guidance of the committee chairman. The dispute may be resolved using whatever methods the chairman may deem appropriate, consistent with this manual and Robert s Rules of Order. If, after notifying the committee chairman of the dispute, a committee member or group of members deems that the dispute cannot be resolved by working further with the chairman, the member or group of members shall have the right to submit a grievance to the NERC General Counsel, requesting action under an applicable NERC dispute resolution program. Approved by NERC Board of Trustees: June 15,

22 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Responsibilities of Officers, Executives, and Members Responsibilities of Officers, Executives, and Members Committee Chairman and Vice Chairman Responsibilities The chairman of the NERC Board of Trustees appoints the chairman and vice chairman of each standing committee, with due consideration of each committee s recommended slate of officers. A committee s chairman and vice chairman are appointed to serve two-year terms and may be reappointed for succeeding terms at the discretion of the Board chairman. The chairman and vice chairman of a standing committee are responsible to the NERC Board of Trustees. They serve at the pleasure of the Board chairman and may be replaced by the Board chairman at any time. Appointment by the Board chairman is intended to ensure the committee chairman and vice chairman are responsive to the Board, including representing both majority and minority views to the Board. If the members of a committee, or a portion thereof, wish to challenge the continued tenure of either or both committee officers, those members may present just cause for termination to the Board for consideration. The vice chairman shall assume the responsibilities of the chairman in the absence of the chairman or if the chairman position is vacated for any reason. A committee vice chairman may succeed to a committee chairman, if so appointed by the Board chairman. Each committee chairman and vice chairman shall be a voting member of their respective committee. However, while acting in any aspect of committee business, they shall strive to not represent specific regions or segments, or any other electric industry entities. The officers shall, as appointees of the Board chairman, fairly represent the views of the committee, including both majority and minority views. In addition to the duties, rights, and privileges discussed above and elsewhere in this manual, the chairman shall have the following responsibilities: Provide general supervision of committee activities. Coordinate the schedule of all committee meetings including approval of meeting duration and location. Develop committee agendas, and rule on any deviation, addition, or deletion from a published agenda. Preside at committee meetings or appoint a presiding officer when not available. As presiding officer, manage the conduct of committee meetings, including the nature and length of discussion, recognition of speakers, motions, and voting. As presiding officer, recognize proxies at committee meetings. Act as spokesperson for the committee at forums within and outside NERC. Serve as a member of the Technical Steering Committee of NERC. Attend meetings of the NERC Board of Trustees and report to the Board on committee activities. Report on both minority and majority opinions on items brought by the committee to the Board for information or action. Approved by NERC Board of Trustees: June 15,

23 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Responsibilities of Officers, Executives, and Members Perform other duties as directed by the NERC Board of Trustees. The vice chairman shall assume the responsibilities of the chairman under the following conditions: a) at the discretion of the chairman (for brief periods of time); b) when the chairman is absent or temporarily unable to perform the chairman s duties; or c) when the chairman is permanently unavailable or unable to perform the chairman s duties. In the case of a permanent change, the vice chairman shall continue to serve until a new chairman is appointed by the chairman of the NERC Board of Trustees. In addition to the duties, rights, and privileges described above and elsewhere in this manual, the vice chairman shall have the following responsibilities: Assist the committee chairman as called upon. Serve as a member of the Technical Steering Committee of NERC. Attend meetings of the Board of Trustees. Secretary Responsibilities At the first regularly scheduled committee meeting following the appointment of a new committee chairman or the reappointment of a committee chairman, the committee shall elect a member of the NERC staff to serve as secretary of the committee. The committee secretary shall not have the power to vote and shall not be counted in determining the existence of a committee quorum. In addition to the duties, rights, and privileges described elsewhere in this manual, the secretary shall have the following responsibilities: Serve under the direction of the committee officers, the committee s Executive Committee, and be guided by the decisions of the committee. Be responsible for the day-to-day operation and business of the committee. Prepare and distribute the notices of the committee meetings, prepare the meeting agenda. Within three weeks of each meeting, prepare and distribute the draft minutes of the meeting. Maintain a general record of all of the proceedings of the committee. Serve as the ex officio, nonvoting secretary of the committee s Executive Committee. Act as the committee s parliamentarian. Executive Committee Responsibilities Each committee shall have an Executive Committee that is comprised of the committee chairman and vice chairman, and a designated number of at-large voting members of the committee. This designated number shall be three (3), unless the committee approves an alternative number. The number of additional committee members on the Executive Committee should be large enough to fairly represent the diverse views of the committee yet small enough to be practical for urgent actions between committee meetings, and shall be a minimum of three (3) additional members. The Secretary shall serve as a nonvoting member of the Executive Committee. Approved by NERC Board of Trustees: June 15,

24 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Responsibilities of Officers, Executives, and Members The committee s Nominating Task Force shall present a slate of candidates to serve as Executive Committee at-large members. The committee shall elect the at-large members of the Executive Committee at the first regularly scheduled committee meeting following the appointment of a new committee chairman or the reappointment of the committee chairman. The Executive Committee of a committee may exercise all the powers of the full committee between meetings of the committee. It is preferred, however, to the extent practical, that the committee assigns an action to the Executive Committee in advance, or that an action is deferred to the committee as a whole. When acting between meetings, Executive Committee members should consult standing committee members as needed to obtain guidance for decisions being considered. The Executive Committee shall notify the committee as soon as possible after the Executive Committee takes any action. The Executive Committee shall at the next full committee meeting submit any actions it has taken for ratification of the committee. If a committee does not ratify an action of the Executive Committee, that action shall nonetheless remain in effect unless and until it is modified or annulled by action of the committee. The Executive Committee shall assist the committee chairman, as requested, in the following activities: Review committee meeting agendas prepared by the secretary. Coordinate committee and subgroup activities. Respond to urgent matters of the committee. Prepare reports to the NERC Board of Trustees. The committee chairman may call for a meeting of the Executive Committee at any time. The chairman may also invite others to meetings of the Executive Committee as needed. An Executive Committee member who is unable to attend a meeting is encouraged to designate a proxy by providing written notice (electronic medium is acceptable) to the chairman, vice chairman, or secretary. A voting member of the Executive Committee may not serve as a proxy for another voting member (a member may not carry more than one vote). Nominating Task Force Responsibilities Each standing committee shall have a Nominating Task Force, whose five members shall be nominated by the committee chairman and approved by the committee, respectively. The committee chairman shall appoint the task force chairman from among the five task force members. In addition to the duties, rights, and privileges described elsewhere in this manual, the Nominating Task Force shall have the following responsibilities: Prepare every two years, or as requested, a proposed slate of committee officers for the committee to consider. The committee s recommended slate of officers shall be provided to the chairman of the NERC Board of Trustees for consideration in appointing the committee chairman and vice chairman. Prepare a slate of three (or an alternative number specified for the committee) voting members of the committee to serve as Executive Committee members, in conjunction with the committee chairman and vice chairman. This slate shall be presented to the committee for election at the first regularly scheduled committee meeting following the appointment of a new committee chairman or the reappointment of the committee chairman. In selecting members of the Executive Committee, the Nominating Task Force should consider rotating the membership of Approved by NERC Board of Trustees: June 15,

25 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Responsibilities of Officers, Executives, and Members the Executive Committee on the basis of industry segment, Regional Council, Interconnection, country, industry segment, and other factors considered in balancing committee membership. Prepare annually, or as requested, a slate of voting and non-voting committee members to fill designated committee vacancies. Approved by NERC Board of Trustees: June 15,

26 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Responsibilities of Officers, Executives, and Members Committee Member Responsibilities Each committee member should strive in all committee activities to represent the interests of the position that member fills, to the best of his or her judgment. Non-voting members shall be full members of their respective committees in every respect, except that they shall not participate in voting, and they shall not be counted in determining a quorum. In addition to the duties, rights, and privileges described elsewhere in this manual, each committee member shall have the following responsibilities: During the conduct of all committee business, act consistently at all times with the procedures in this manual and Robert s Rules of Order. Provide knowledge and expertise in support of committee activities. Seek advice and opinions from constituents represented by the committee position served by the member. Respond in a timely manner to all committee requests, including requests for reviews, comments, and votes on issues before the committee. Arrange for a proxy to attend and vote at committee meetings in the member s absence. Respond in a timely manner to all requests to register for committee meetings. Approved by NERC Board of Trustees: June 15,

27 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Subordinate Groups Subordinate Groups Committee Organization Hierarchy The standing committee organizational structure shall be arranged to support a superior-subordinate hierarchy that is ordered as follows: Committee Subcommittee Working Group Task Force The committee is the superior classification within the hierarchy, other than the NERC Board of Trustees (to which each committee reports). Each committee may establish subcommittees, working groups, and task forces when there is a clear purpose and scope to be fulfilled. The committee chairman may also form any of these subordinate groups on behalf of the committee. Formation of a committee or group requires confirmation of the chairman of the next superior committee or group in the hierarchy. For example, committee formation of a subcommittee shall be confirmed by the NERC chairman, subcommittee formation of a working group shall be confirmed by the committee chairman, and so forth. The committee shall be the responsible sponsor of all subordinate subcommittees, working groups, or task forces it may create, or that its subordinate subcommittees and working groups may create. The committee shall keep the Board of Trustees informed of all groups subordinate to the committee. Subcommittees A standing committee may establish subcommittees to which certain of the committee s broadly defined continuing functions may be delegated. The committee shall approve the scope of each subcommittee it forms. The committee chairman shall appoint the subcommittee officers (typically a chairman and vice chairman) for a specific term (generally two years). The subcommittee officers may be reappointed for additional terms. The subcommittee shall be accountable for the responsibilities assigned to it by the committee and shall at all times work within its assigned scope. Working Groups A committee or any of its subcommittees may delegate specific continuing functions to a working group. The sponsoring committee or subcommittee shall approve the scope of each working group it forms. The chairman of the sponsoring committee or subcommittee shall appoint the working group officers (typically a chairman and vice chairman) for a specific term (generally two years). The working group officers may be reappointed for additional terms. The sponsoring committee or subcommittee shall conduct a sunset review of each working group every two years. The working group shall be accountable for the responsibilities assigned to it by the committee or subcommittee and shall at all times work within its assigned scope. Approved by NERC Board of Trustees: June 15,

28 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Subordinate Groups Task Forces A committee, subcommittee, or working group may assign specific work of a finite duration to a task force. The sponsoring committee, subcommittee, or working group shall approve the scope of each task force it forms. The chairman of the sponsoring committee, subcommittee, or working group shall appoint the task force officers (typically a chairman and vice chairman, but a vice chairman may not be required in all cases). Each task force shall have a finite duration, normally less than one year. The sponsoring group shall review the task force scope at the end of the expected duration and at each subsequent meeting of the sponsoring group after that until the task force is retired. Action of the task force sponsoring group is required to continue the task force past its defined duration. The sponsoring group should consider promoting to a working group any task force that is required to work longer than one year. Subgroup Membership and Representation The membership of each subcommittee, working group and task force should be established to address the needs for expertise and balancing of interests. Each group s membership requirements shall be defined within the group s approved scope. As a general guide, the broader the group s scope, the more emphasis there should be on balancing of interests. Therefore subcommittees would be expected to have a broader representation of industry segments, while a task force may be more focused on simply having the necessary expertise and a working group may be somewhere between. Each member of a subordinate group, and its officers, shall be appointed by the chairman of the sponsoring committee or group. It is desirable for subgroup officers to be members of the sponsoring committee or group. To the extent subgroup membership is of a representative nature, recommendations for staffing of the group should be provided in a manner consistent with the principles outlined in the staffing of a committee, including the use of an open nominations process. Regional Council representatives should be recommended by the Region and Canadian representatives by the Canadian Electricity Association. Preference may also be given to representatives recommended by broadly-based industry associations. To the extent subgroup membership is based on providing requisite expertise, the chairman of the sponsoring committee or group may appoint members based on the relevant technical qualifications. Subgroup Procedures Subcommittees, working groups, and task forces shall conduct business in a manner consistent with all applicable sections of this manual and Robert s Rules of Order. Approved by NERC Board of Trustees: June 15,

29 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Inter-Committee Coordination Inter-Committee Coordination Technical Steering Committee The Technical Steering Committee is a committee comprised of the chairman and vice chairman of each committee (Planning Committee, Operating Committee, Market Committee, Critical Infrastructure Protection Committee, Standards Authorization Committee, and the Compliance and Certification Committee), the chairman of the Regional Managers, and the president and senior vice president of NERC. The NERC president may on occasion invite additional persons to participate in Technical Steering Committee activities. The purpose of the Technical Steering Committee is to facilitate the exchange of information and to coordinate activities among the committees. The Technical Steering Committee has the following functions: Communicate issues among committees. Coordinate work plans and priorities among committees. Coordinate meeting agendas among committees. Coordinate subgroup assignments and efficient allocation resources among committees. Coordinate the joint approval of results when more than one committee is involved. Prepare joint reports to the Board when more than one committee is involved. Identify differences among committees on particular issues and report them to the NERC president. As requested, assist the NERC president in resolving such differences. The NERC president shall serve as chairman of the Technical Steering Committee. Executive Committees in Joint Session The Executive Committees of the committees may have occasion to meet in joint session, at the discretion of the NERC president or the Technical Steering Committee. The Executive Committees may periodically be assigned work by the NERC president or the Technical Steering Committee, such as evaluating proposed revisions to existing NERC planning standards and operating policies, or resolving issues common among the committees. When the Executive Committees meet in joint session, they shall elect a chair to preside over the meeting. When in joint session, each Executive Committee shall be allocated one vote per member or proxy present at the meeting, up to a maximum of five (5) votes per Executive Committee. In the event an Executive Committee has more than five (5) members present, the chairman of that committee shall at the beginning of the meeting designate the voting members for that meeting. The NERC president may appoint adjunct members when the Executive Committees meet in joint session. In this case, each adjunct member carries one vote, up to a maximum of five (5). For example, the NERC president may appoint the chairman of the regional managers or officers of other NERC groups to serve with the Executive Committees in joint session, but in no case shall more than five (5) adjunct voting members be appointed. Approved by NERC Board of Trustees: June 15,

30 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Inter-Committee Coordination Work Plan and Resource Coordination Each committee shall maintain a work plan prioritizing existing and future work of the committee. The plan shall address broad committee functions as well as specific tasks assigned to the committee. The plan shall indicate target schedules for completion of milestones, and how work has been assigned to various resources of the committee. Periodically, but no less than once per year, the Technical Steering Committee shall coordinate the work plans and resource assignments across the committees. The purpose of this review shall be to: Ensure functions and work assignments are properly allocated across the committees, consistent with each committee s scope. Ensure work is being allocated efficiently to subgroups across the committees, with no undue redundancies. Ensure the committees effectively integrate results on jointly shared issues. Each chairman shall keep the committee informed of the work plan and the results of coordination with the other committees. Committees in Joint Session Two or more committees may, at the discretion of their chairmen, meet in a joint session. A joint session among committees may be appropriate when two or more committees need to take action on an issue and joint discussion of that action will be beneficial to the decision. During a joint session, the chairmen involved will agree which among them will chair the joint session. The committee general procedures in this manual and Robert s Rules of Order apply in a joint session of two or more committees. When no actions are to be taken jointly by multiple committees, committees may still meet jointly, out of session, to hear informational presentations or discussions. Resolving Differences among Committees The Board of Trustees has assigned to the NERC president the responsibility for resolving differences among committees and for presenting to the Board both minority and majority views on these differences. In fulfilling this responsibility, the NERC president may enlist the Technical Steering Committee or others to help articulate and resolve differences. Consistent with its scope, each committee reserves the right to review, comment, and make recommendations to the Board regarding the work of other committees. Approved by NERC Board of Trustees: June 15,

31 ORGANIZATION AND PROCEDURES MANUAL FOR NERC STANDING COMMITTEES Appendix A Revisions to Manual Appendix A Revisions to Manual The following list summaries the revisions to this manual from May 1999 forward. May 10, 1999 The Interim Organization and Procedures Manual for the NERC Standing Committees was approved by the NERC Board of Trustees at its May 10, 1999 meeting. The original draft had been prepared by the Standing Committees Task Group of the NERC Board of Trustees. February 7, 2000 An Organization and Procedures Manual for the NERC Standing Committees was approved by the NERC Board of Trustees at its February 7, 2000 meeting. This February 2000 version was based on comments received on the May 1999 interim manual. The revisions included: a procedure for modifying the manual, the addition and formalization of a past committee chairman position and committee secretary position, the addition of guidelines (previously approved by the NERC Board in January 1999 and May 1999) to be considered in the selection or election of committee members, the change in the name of the Security Committee back to the Operating Committee, and some minor modifications and editorial changes for increased clarity and consistency. October 12, 2000 A revised Organization and Procedures Manual for the NERC Standing Committees was approved by the NERC Board of Trustees at its October 12, 2000 meeting. This version included the three NERC committees recommendation to change the term of office of the officers and members of the NERC standing committees from one to two years, beginning July 1, 2001; the NERC Adequacy Committee s recommendation to change its name to the Planning Committee, effective immediately; and the associated conforming changes to the manual. June 10, 2003 The manual was revised to incorporate committee changes resulting from the new NERC reliability standards process, to add a section on inter-committee coordination, to clarify procedural requirements, and otherwise improve the structure and clarity of the manual. June 15, 2004 The manual was revised to accommodate the NERC board s June 10, 2003 approval of the new Compliance and Certification Committee, the board s February 10, 2004 decisions to: 1) change the Critical Infrastructure Protection Advisory Group to the Critical Infrastructure Protection Committee, and 2) add the chairmen and vice chairmen of the Critical Infrastructure Protection Committee, the Standards Authorization Committee, and the Compliance and Certification Committee to the Technical Steering Committee. The associated conforming changes were also made to the manual. Approved by NERC Board of Trustees: June 15,

32 Operating Committee (3/8/07) Chairman Sam R. Jones President and Chief Executive Officer Electric Reliability Council of Texas, Inc Metro Center Dr Austin, Texas (512) (512) Fx Past Chairman Mark E. Fidrych Power Operations Specialist Western Area Power Administration MC J0003 P.O. Box 3700 Loveland, Colorado (970) (970) Fx Vice Chairman Gayle Mayo Vice President Planning and Engineering Indiana Municipal Power Agency N. College Avenue Carmel, Indiana (317) (317) Fx Secretary RRO ERCOT Donald M. Benjamin Vice President and Director of Members' Forums Charles W. Jenkins Vice President, Transmission Operations North American Electric Reliability Corporation Village Boulevard Princeton, New Jersey TXU Electric Delivery Co B Mountain Creek Parkway Dallas, Texas (609) (609) Fx nerc.net (214) (972) Fx txued.com RRO FRCC Ronald L. Donahey Managing Director, Grid Operations Tampa Electric Co. P.O. Box 111 Tampa, Florida (813) (813) Fx tecoenergy.com RRO MRO Lawrence R. Larson Manager, Delivery Operations Otter Tail Power Company 215 South Cascade Street Fergus Falls, Minnesota (218) (218) Fx otpco.com RRO NPCC Michael C. Calimano Vice President - Operations New York Independent System Operator 3890 Carman Rd. Schenectady, New York (518) (518) Fx mcalimano@ nyiso.com RRO RFC James A. Uhrin Compliance Support Manager ReliabilityFirst Corporation 220 Market Avenue S Suite 501 Canton, Ohio (724) (330) Fx jim.uhrin@ rfirst.org RRO SERC J.S. Holeman Manager, System Operating Center Duke Energy 526 South Church Street EC02B Charlotte, North Carolina (704) (704) Fx jsholema@ duke-energy.com RRO SPP Scott P. Moore Vice President, Transmission Operations AEP Service Corp. 1 Riverside Plaza 4th Floor Columbus, Ohio (614) (614) Fx spmoore@aep.com RRO WECC James G. McIntosh Director of Grid Operations California ISO 151 Blue Ravine Road Folsom, California (916) (916) Fx jmcintosh@ caiso.com

33 RRO WECC John R. Powell System Operations Manager Platte River Power Authority 2000 East Horsetooth Rd. Fort Collins, Colorado (970) RRO Canada (East) Derek R. Cowbourne Vice President-Reliability Assurance Independent Electricity System Operator Station A Box 4474 Toronto, Ontario M5W 4E5 (905) (905) Fx derek.cowbourne@ ieso.ca RRO Canada (West) Warren Frost Vice President Operations & Reliability Alberta Electric System Operator 2500, Avenue SW Calgary, Alberta T2P 0L4 (403) (403) Fx warren.frost@ aeso.ca Canada Julien Gagnon Manager, System Control Scheduling Hydro-Quebec TransEnergie Complexe Desjardins 9e Tour Est C.P Montreal, Quebec H5B 1H7 (514) Ext (514) Fx Gagnon.Julien@ hydro.qc.ca Canada Michael D. Penstone Manager, Standards and Policy Hydro One Networks, Inc. 483 Bay Street, NT15 Toronto, Ontario M5G 2P5 (416) (416) Fx mike.penstone@ hydroone.com Cooperative Chris Bolick Manager, Transmission Planning and Operations Associated Electric Cooperative, Inc S. Golden Springfield, Missouri (417) (417) Fx cbolick@aeci.org Cooperative Alan H. Wilkinson Operations Reliability Administrator Southwest Transmission Coop., Inc. P.O. Box 2195 Benson, Arizona (520) (520) Fx awilkinson@ swtransco.coop Customer John A. Anderson President and CEO Electricity Consumers Resource Council 1333 H Street, N.W. 8th Floor, West Tower Washington, D.C (202) (202) Fx janderson@ elcon.org Customer Larry Shi Utility Regulation Engineer Iowa Office of Consumer Advocate 310 Maple Street Des Moines, Iowa (515) (515) Fx Lshi@ mail.oca.state.ia.us Federal Van M. Wardlaw Vice President, Electric System Operations Tennessee Valley Authority 1101 Market Street (MRBA) Chattanooga, Tennessee (423) (423) Fx vmwardlaw@ tva.gov Federal Donald S. Watkins Manager of Technical Operations Bonneville Power Administration P.O. Box 491 Vancouver, Washington (360) dswatkins@ bpa.gov IOU C. Martin Mennes Vice President, Transmission & Substations Florida Power & Light Co West Flagler Street Room 6301 Miami, Florida (305) (305) Fx marty_mennes@ fpl.com IOU Thomas R. Stuchlik Executive Director Transmission Operations Westar Energy, (785) (785) Fx Tom.Stuchlik@ westarenergy.com

34 IPP Dave Abbott, P.E. Production Coordinator, Power Marketing Bruce Power 177 Tie Road Municipality of Kincardine R.R. #2 P.O. Box 3000, B0602 Tiverton, Ontario N0G 2T0 (519) (519) Fx brucepower.com IPP James T. Thompson Vice President Constellation Energy 500 Dallas St. Suite 3015 Houston, Texas (713) constellation.com ISO/RTO Peter Brandien Vice President - Systems Operations ISO New England, Inc. One Sullivan Road Holyoke, Massachusetts (413) pbrandien@ iso-ne.com ISO/RTO Power Marketer William C. Phillips Vice President, Interregional Coordination and Policy Marjorie A. Garbini Senior Power Trading Engineer Midwest ISO, Inc. 701 City Center Drive Carmel, Indiana Conectiv Energy Supply, Inc. P.O. Box 6066 Newark, Delaware (317) (317) Fx wphillips@ midwestiso.org (610) (610) Fx marj.garbini@ conectiv.com State/Municipal Blaine R. Dinwiddie Division Manager Omaha Public Power District 4325 Jones Plaza Omaha, Nebraska (402) (402) Fx bdinwiddie@ oppd.com State/Municipal Bill Hatfield Manager, System Operations Lower Colorado River Authority P.O. Box 220 Austin, Texas (512) bill.hatfield@ lcra.org TDU Kevin J. Conway Public Utility District No. 2 of Grant County, Washington 30 C Street, S.W. P.O. Box 878 Ephrata, Washington (509) (509) Fx kconway@ gcpud.org TDU Steven R. Wallace Director of System Operations Seminole Electric Cooperative, Inc N. Dale Mabry highway Tampa, Florida (813) (813) Fx swallace@ seminoleelectric.com APPA (Non-Voting) Allen Mosher Director of Policy Analysis American Public Power Association 2301 M Street, N.W. Third Floor Washington, D.C (202) (202) Fx amosher@ appanet.org EEI (Non Voting) William Mayer Edison Electric Institute 701 Pennsylvania Ave., NW Washington, D.C (202) wmayer@eei.org EPRI (Non-Voting) Stephen T. Lee Area Manager, Grid Operations & Planning Electric Power Research Institute 3412 Hillview Avenue P.O. Box Palo Alto, California (650) slee@epri.com Observer-EPSA (Non-Voting) Mark E. Bennett Director of Policy Electric Power Supply Association 1401 New York Avenue, NW Washington, D.C (202) (202) Fx MBennett@ epsa.org

35 NRC (Non-Voting) Thomas Koshy Senior Electrical Engineer Nuclear Regulatory Commission NRR/DE/EE1B Washington, D.C (301) NRECA (Non-Voting) I. Paul McCurley Manager, Power Supply National Rural Electric Cooperative Association 4301 Wilson Boulevard MC EP Arlington, Virginia (703) (703) Fx nreca.coop NARUC (Non-Voting) To Be Named Regulator-Federal (Non-Voting) Donald LeKang Office of Markets, Tariff and Rates Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C (202) (202) Fx ferc.gov Regulator-Provincial (Canada) Peter Fraser Special Advisor Ontario Energy Board 2300 Yonge St., 26th Floor Toronto, Ontario M4P 1E4 (416) (416) Fx oeb.gov.on.ca Regulator-State (Eastern) (Non-Voting) Howard A. Tarler Power Systems Specialist 4 New York State Department of Public Service 3 Empire State Plaza Albany, New York (518) (518) Fx howard_tarler@ dps.state.ny.us Regulator/State (Western) (Non-Voting) To Be Named

36 Operating Committee Meeting March 21 22, 2007 Item 2. Consent Agenda The consent agenda allows the Operating Committee to approve routine items that would not normally need discussion. Any OC member may ask the chairman to remove an item from the consent agenda for formal discussion and action. Action Approve the attached documents. Attachment Minutes of December 6 7, 2006 Operating Committee meeting.

37 Minutes Operating Committee Meeting December 6 7, 2006 Houston, Texas Convene A regular meeting of the NERC Operating Committee (OC) was held on December 6 7, 2006 in Houston, Texas. The meeting notice, agenda, and attendance list are affixed as Exhibits A, B, and C, respectively. Individual statements are affixed as Exhibit D and minority opinions as Exhibit E. (None were submitted.) The meeting presentations are posted in a separate file at Operating Committee Vice Chairman Gayle Mayo convened the meeting at 1 p.m. and presided. Secretary Don Benjamin announced that a quorum was present and confirmed the following proxies: Tom Bowe for Mike Kormos PJM Bob Dalrymple for Van Wardlaw Federal Julian Gagnon for Michel Armstrong Canada Carolyn Ingersoll for JT Thompson IPP Derek Cowbourne for Paul Murphy Canada East Eric Senkowicz for Ron Donahey FRCC Paul Kure for Mike Chambliss RFC Peggy Olds for Don Watkins Federal Introductions The committee members introduced themselves around the table. The secretary welcomed Larry Shi from the Iowa State Office of Consumer Advocate as a new member of the committee. Meeting Highlights 1. Approved the definitions of the functions, tasks, entities, and relationships of Version 3 of the Functional Model. 2. Laid the groundwork to become the program committee for the Reliability Readiness Program. 3. Approved the Regional Reliability Plan Guideline. 4. Asked the Operating Reliability Subcommittee to add reliability readiness evaluations to the OC s reliability coordinator plan approval procedure. 5. Discussed system limits concepts in considerable detail, with the plan for a workshop at the March 2007 joint PC/OC meeting. 6. Suggested that the definition of facilities that make up the bulk power (or electric) system should be a reliability-based process. There isn t a bright line between facilities that are part of the BPS and those that aren t. 7. Approved SPP s plan to serve as an Independent Coordinator of Transmission. 8. Discussed backup control requirements that are now being developed into a concepts paper. 9. Discussed frequency excursions, and will suggest the Eastern Interconnection Reliability Assessment Group (ERAG) develop a dynamic model Village Boulevard, Princeton, New Jersey Phone: Fax:

38 Get-well Wishes The committee extended its best wishes to Chairman Sam Jones and to Interchange Subcommittee Chairman Al Boesch for a speedy recovery from their recent illnesses. Consent Agenda The Committee approved the minutes of the September 13 14, 2006 Operating Committee meeting. The secretary noted that Doug Hils submitted a personal statement as an exhibit to the minutes (Exhibit D). On motion by Scott Moore, the committee approved the minutes. Operating Committee Charter Don Benjamin explained that he added the Nominating Subcommittee to the committee s new charter as the committee had agreed in September. The subcommittee will nominate: 1) the committee s officer candidates, and 2) the four at-large members of the Operating Committee Executive Committee. The NERC Board of Trustees will consider all of the standing committee charters at its February 2007 meeting. Readiness Evaluation Program While discussing the charter, Derek Cowbourne suggested the committee consider its possible role in the Readiness Evaluation program. (Secretary s note: please refer to the committee s discussion of this subject in its September 13 14, 2006 meeting minutes.) After further discussion the following morning, the committee generally agreed that it wanted to become the Reliability Readiness Program committee. The committee drafted specific tasks it would add to its charter to serve this role, and the general aspects of the program that the committee wanted to pursue. (Secretary s note: the following lists reflect the general sense of the committee, and are not formal decisions.) Operating Committee Charter change Add a new Section 2, Reliability Readiness Program 1. Provide technical support, guidance, and advice to NERC s Reliability Readiness Program. 2. Review readiness evaluations for trends and approve new or different types of evaluations or changes in processes or metrics, including: a. Guidelines for reporting and disclosure, and b. Guidelines for consistency and relevancy of evaluations: Between comparable entities, and Through time. 3. Identify facilities, tools, processes, and procedures necessary for reliable operations. 4. Review, endorse, and post examples of excellence. 5. Develop criteria for measuring success, and review the Program against those criteria. 2

39 General Aspects of the Reliability Readiness Program 1. Move the program from the Compliance and Certification Committee to the Operating Committee. 2. Consider the merits of classifying the individual Readiness Evaluation reports as confidential, and provide these reports only to the evaluated organizations. (The Operating Committee recognizes the importance of openness and transparency, but also acknowledges that confidentiality brings more openness and candor to the table during the individual evaluations.) 3. Define the Operating Committee s role as the program committee. The committee members generally agree the OC should oversee the Reliability Readiness Program s procedures, as well as the technical aspects of the program. These details would be documented in the program s procedures. Functional Model Version 3 Chair Mayo opened the floor for questions on draft Version 3 of the Functional Model, and Functional Model Working Group Chairman Jim Cyrulewski led the discussion. The Operating Committee spent considerable time discussing the model on both days. The initial discussion centered around the perception of the model as a guideline, or a standard, or an organization model. Bill Phillips then moved to revise the following paragraph in the model as marked. (Page 7) The committee discussed this motion, raising the following points: The concept that responsible entities are solely ( one and only one ) responsible. How, or whether, the model should include references to compliance and certification, and delegating tasks. That NERC should file the model with the Federal Energy Regulatory Commission (FERC) for information only. The merits of approving a snapshot of the model now, considering that the model is always changing. Whether the regional reliability organization should be included as an entity in the Mmodel. The committee did not approve Mr. Phillip s motion. 3

40 John Anderson moved: That the OC ask the Functional Model Working Group to take up the delegation and other issues and report to the OC meeting in March Then Derek Cowbourne moved the following amendment as marked: That the OC endorse (support the concepts of) the functional entity definitions, tasks, and entity relationships in Version 3 and to ask the Functional Model Working Group to take up the delegation and other issues and report to the OC meeting in March After further discussion, the Operating Committee approved Mr. Cowbourne s amendment. Returning the main motion as amended, Charles Jenkins moved to table the motion until the Functional Model Working Group could consider the delegation and other issues and report to the Operating Committee in March. The committee did not approve Mr. Jenkins s motion. The committee then approved the main motion as amended. Chair Mayo asked the committee members to provide the secretary with their specific recommendations to the Functional Model Working Group, and that the committee would review those comments the following day. On Thursday, the committee continued discussing the Functional Model. The secretary briefly reviewed the comments that three committee members provided at the end of the previous day s meeting: Function and Entity Changes Remove Regional Reliability Assurance function. Remove Regional Reliability Organizations entity; they may not continue to exist. Other Changes Delegation File responsibilities and accountabilities with NERC. Don t need to assign to single entity. The delegation agreements are related directly to the Standards, Compliance, and reliability assessments. The model should be an informational filing with FERC; not for Commission approval. Reliability coordinators should develop reliability plans; don t need Regional Reliability Plan. Remove shall and must statements. Remove An organization identified as a Responsible Entity is accountable for 4

41 Review troublesome language: The Guiding Principles are too prescriptive. These details should be covered in the standards. Don t include boundary conditions. Mr. Benjamin noted that the Board of Trustees approved only the definitions of functions and tasks of the original Functional Model. He suggested the Operating Committee follow a similar course, and consider two actions, which Scott Moore offered as the motion below. Tony Jankowski moved to amend the motion as highlighted, to which the committee agreed: The Operating Committee approves the definitions of the functions and entities, their tasks, and their interrelationships contained on pages 13 through 53 of Version 3 of the Functional Model. The material preceding this section explains, among other things, how the model relates to organization responsibilities and task delegation. The Operating Committee recognizes these explanations are important for understanding the theory of the model, but there is disagreement on those parts of the Functional Model, and the OC prefers to take no action on those parts of the Functional Model document. The Operating Committee will, however, review and approve the Regional Reliability Plans, which will detail the actual organization responsibility and delegation arrangements. The committee approved the motion as amended. The committee asked the secretary to provide the motions and recommended changes from both days discussion to the Board of Trustees as part of the board s agenda item to approve the Functional Model next February. Chair Mayo will also convey the Operating Committee s comments and actions to the Functional Model Working Group. Gridwise Architecture Council Alison Silverstein explained the Council s concepts, Architecture and Interoperability: Building a Better Grid. (Presentation 1.) The committee discussed several aspects of the tools needed to improve interoperability as well as the regulatory challenges. 5

42 Blackout Recommendation 13a: Operations Planning Operating Reliability Subcommittee member Dan Boezio reported (Presentation 2.) that: At its November 2006 meeting, the subcommittee concluded that sufficient NERC standards now exist or are under development to address the operating aspects of Blackout Recommendation 13 and, specifically, Recommendation 13a. Furthermore, the reliability coordinators have been discussing ways to improve operations planning (including next-day operations planning) at Reliability Coordinator Working Group meetings, thus furthering the understanding of the NERC standards in this area and helping to ensure the expected practices are sufficient and well understood among the reliability coordinators. In addition, the work of the Operating Limit Definition Task Force, the Real-time Tools Best Practices Task Force, and the Functional Model Working Group are adding clarity and understanding to the reliability criteria. Entry into the mandatory compliance era will also help. Operating Reliability Subcommittee Chairman Jim Castle said the subcommittee is confident the industry is moving in the right direction. Regional Reliability Plan Guideline Jim Cyrulewski briefly reviewed the history of the Regional Reliability Plan Guideline, which the Functional Model Working Group had been assigned to revamp in Kevin Conway moved to approve the guideline. The committee then discussed the following points: The importance of the reliability coordinator plan, which is a subset of the Regional Reliability Plan Guideline. That some regions (either regional entities or regional reliability organizations) are of equal extent or scope as the reliability coordinator; therefore, the reliability coordinator plan would suffice. Some regions do not line up with a reliability coordinator area. That present NERC standards require (at least by implication) the reliability coordinators to have an Operating Committee-approved reliability plan: (IRO-001, R2) 6

43 Whether the Regional Reliability Plan Guideline duplicates the NERC Organization Registration rules of procedure. The committee the approved Mr. Conway s motion. Reliability Coordinator Plans Operating Reliability Subcommittee Chairman Jim Castle explained that the Operating Committee needed to update its procedure for approving reliability coordinator plans to include the necessary Reliability Readiness evaluations. The Operating Committee agreed, and asked the subcommittee to return in March 2007 with the details of the updated procedure. System Limits Operating Limit Definition Task Force (OLDTF) Chairman Al Miller continued the system limits discussion that began at the joint Operating Committee/Planning Committee meeting. Some of the points that surfaced during the discussion included: Real-time operating criteria, operations planning criteria, and planning criteria are not necessarily the same; however, the performance expectations should be. Forced outages that occurred earlier are not contingencies in real time (i.e., the fact that three transmission lines and two generators are out of service does not mean the system operator is now facing an n 5 situation). The feedback of information from the operating time frame to the planning time frame is critical. Assessing stability for the next hour may or may not be possible. The system operator must operate within the boundaries defined by system studies. However, it is impossible to study every condition or situation. Mr. Miller said the Operating Limit Definition Task Force and members of the Planning Committee will hold a workshop at the March 2007 joint Operating Committee/Planning Committee meeting to discuss specific examples and scenarios. 7

44 Definitions of Bulk Electric System and Bulk Power System The recent FERC notice of proposed rulemaking on NERC s reliability standards noted that the Federal Power Act defined Bulk Power System, while NERC defined Bulk Electric System, and that the two definitions are not the same 1. The Commission prefers the definition in the Federal Power Act. The two definitions are shown side by side below, with key phrases highlighted. The committee believes neither definition is proper. Instead, determining the facilities that make up the bulk power (or electric) system should be a reliability-based process. There is not a bright line between facilities that are part of the bulk power system and those that are not. E-tag Update Interchange Subcommittee member Jeremy West presented several changes to the E-tag functional specifications. (Presentation 3.) Reliability Coordinator and Market Operations Plans Jim Castle reported that the Operating Reliability Subcommittee completed its review of the Southwest Power Pool s plan to provide the services as an independent coordinator of transmission (ICT), and recommends the Operating Committee approve the SPP plan. On motion by Scott Moore, the committee approved SPP s ICT plan. 1 The Operating Committee first discussed this topic in its June 2006 meeting as part of its review of the Federal Energy Regulatory Commission s staff assessment of the NERC Reliability Standards. 8

45 Mr. Castle also reported that the subcommittee approved Southwest Power Pool s market operations plan, various reliability coordinator footprint changes, and the Midwest ISO s responsibilities as a balancing authority. The Operating Committee will hear the MISO balancing authority plan in March. Backup Control Concepts Sam Holeman, who chairs the committee task force on backup control concepts, reviewed the group s initial efforts at creating a concepts document on the facilities or services necessary for backup control. The working definition of backup control is in the box on the right, and the elements of backup control concepts are listed in Mr. Holeman s presentation. (Presentation 4.) Mr. Holeman asked the committee a number of rhetorical questions, including: Does a backup control facility have to meet all NERC reliability standards? Just the critical standards? Which entities must have backup control capability? And who decides this? What do you do when the backup facilities fail? The task force will return to the committee in March 2007 with more details. Interconnection Frequency: Letter from NYISO Mike Calimano introduced the subject, noting that the Operating Committee has been discussing frequency excursions for several years. Harvey Happ, a member of the New York Public Service Commission staff, explained the frustrations when not being able to pinpoint the origin of frequency excursions, and the Interconnection s vulnerability when frequency excursions happen. Mr. Happ explained that currently each region looks only at its own worst contingency, and studies do not consider multiple contingencies in other regions. Further, he noted that automatic generation control kicks in after about 40 seconds while stability studies are only looking out 20 seconds instead of the five minutes forward look that should be analyzed with AGC represented. He also pointed out that voltage collapse can occur even without significant prior frequency deviations. Mr. Happ suggested the Eastern Interconnection build a dynamic model to 1) understand the possible consequences of frequency excursions, and 2) provide the basis for reliability standards. The committee then discussed the following: NERC may need a concepts document on frequency. The Eastern Interconnection, being so large, is quite resilient to large generation failures. We need the hourly area interchange error survey tool. 9

46 Some regions are already using interchange schedule comparison software to help eliminate schedule mismatches. Correcting fast time error drives frequency lower. Mr. Calimano summarized the committee s discussion and offered the following opinions and suggestions: 1. The Eastern Interconnection Reliability Assessment Group could develop the dynamic models that Mr. Happ referred to. 2. The Operating Committee should follow up on the frequency response draft standard. 3. The Operating Reliability Subcommittee should review the communications protocols to pinpoint the causes of frequency excursions. Departing Members The Operating Committee applauded Scott Moore for his participation over many years. Mr. Moore will be leaving the committee as he takes on additional duties at American Electric Power. Adjourn There being no further business, the chair adjourned the meeting. Donald M. Benjamin Operating Committee Secretary 0

47 Item 3. For Your Information The committee doesn t need to take any action on these items. They are presented here for information and discussion as the members may wish. Item 3.a Operating Committee Meeting March 21 22, 2007 Balance Resources and Demand Standards, BAL-007 through BAL-011 February 15 March 16, 2007: 30 Day Pre-ballot Review March 19 30, 2007: Ballot Window More information is attached.

48 Balance Resources and Demand Standards, BAL-007 through BAL Day Pre-ballot Review: February 15 March 16, 2007 Ballot Window: March 19 March 30, 2007 Operating Committee Meeting Minutes, September 13-14, 2006 OC Opinions on Standards Posted for Pre-ballot Review, BAL-007 through -011, Balance Resources and Demand Discussion Standard drafting team member Doug Hils presented the latest results of the field trial in which many utilities in the Eastern Interconnection have been participating. This evoked considerable discussion within the committee. Most of the comments focused on the planned retirement of standard BAL-002, also known as the Disturbance Control Standard (DCS), within 18 months of the implementation of the new Balancing Area ACE Limits (BAAL) standards. Retiring the DCS effectively extends the recovery time for generation loss to 30 minutes because the BAAL standards do not distinguish generation loss from other events that result in a large area control error. Some committee members were concerned that allowing balancing authorities more leeway in controlling their ACE when the Interconnection frequency error was low could result in more unscheduled interchange, and increased line loading. Mr. Hils noted that, so far, the field trial has not turned up this problem. Opinion The Operating Committee believes BAL-007 through -011 should be approved. Eastern Interconnection frequency performance has been consistent with previous years or improved since the field trials began. The standard considers Interconnection frequency error and requires balancing authorities to take action as the frequency approaches specified high or low limits. The committee believes the Disturbance Control Standard should remain in effect and be eliminated only after satisfactory field trials. Approved by show of hands: 23 in favor and 4 opposed. Balance Resources and Demand Standard Drafting Team Action The standard drafting team evaluated the industry comments and the Operating Committee opinion regarding the retirement of BAL-002, Disturbance Control Standard, and modified the implementation plan so that it does not include the retirement of BAL-002. The draft standards were posted for 30 days, January 2 through January 30, 2007 and most commenters indicated support of this change to the implementation plan. The Standards Committee Announces Pre-ballot and Ballot Pool for Balance Resources and Demand Standards, February 15, Village Boulevard, Princeton, New Jersey Phone: Fax:

49 The following Balance Resources and Demand standards are posted for a 30 day pre ballot review: BAL-007 BAL-008 BAL-009 BAL-010 BAL-011 Balance of Resources and Demand Frequency and Area Control Error Actions to Return Frequency to within Frequency Trigger Limits Frequency Bias Settings Frequency Limits The ballot for the above set of standards also includes the Balance Resources and Demand Implementation Plan. These standards require entities to maintain interconnection scheduled frequency within a predefined frequency profile under all conditions (ie., normal and abnormal) to prevent unwarranted load shedding and to prevent frequency-related cascading collapse of the interconnected grid. The initial ballot for this set of standards will be conducted from 8 a.m. (EST) on Monday, March 19 through 8 p.m. (EST) on Friday, March 30, For additional Balance Resources and Demand standard information please see:

50 Item 4. Action Discussion. Operating Committee Meeting March 21 22, 2007 Reliability Criteria and System Limits Concepts We are providing additional time here for the committee to discuss the reliability and system limits concepts, which was the main topic of the joint meeting that morning. It s important for the committee to understand the reliability criteria concepts, how we propose to define System Operating Limit and Interconnection Reliability Operating Limit, and how all this ties into the definition of adequate level of reliability. (Item 5).

51 Item 5. Action Discussion. Operating Committee Meeting March 21 22, 2007 Definition of Adequate Level of Reliability Attachment Draft of NERC Compliance Filing of the North American Electric Reliability Corporation in Response to January 18, 2007 Order, Item 16. Background The attachment (still a working draft ) explains that the NERC Operating Committee and Planning Committee will lead the effort to define an Adequate Level of Reliability. Thoughts from the OC secretary The definition of an adequate level of reliability is neither a yardstick nor metric per se. Rather, it is based on the ability to meet NERC s planning and operating reliability criteria. These criteria are, in the most general terms, that we plan and operate the interconnections so that credible contingencies result in acceptable performance. While simply stated, these criteria are based on at least six concepts, all of which need the Operating Committee s and Planning Committee s thoughts, ideas, and discussion. These concepts are: 1. Acceptable risk the chance an event will jeopardize reliability, and the consequences if it does 2. Credible contingencies the events that we learn from experience are more or less likely to happen 3. Acceptable performance how we want the interconnection to perform after a credible contingency 4. Boundary conditions what was studied in the planning and operations planning time frames 5. System operating limits where the system operator must be in real time to ensure that credible contingences result in acceptable performance 6. Time frames how boundary conditions and limits are calculated in the planning, operations planning, and real-time operations periods The Operating Limit Definition Task Force is working on these concepts, and discussed some of these at the Operating Committee and Planning Committee December 2006 joint meeting. We will cover more of them in considerable depth at this joint meeting.

52 Finally, when you read the Planning Committee s agenda, you will find an item called the Adequate Bulk Power System Planning Committee Adequacy Sub-Team. This is a project the Planning Committee started several months ago, before the FERC asked NERC to define adequate level of reliability. The topics and issues the PC s sub-team has raised are very similar to the reliability criteria concepts listed above. Operating Committee Meeting March 21 22, 2007

53 Procedure (Appendix 3 to its October 18 Filing), which includes numerous revisions that were not directed pursuant to the Certification Order. NERC does not identify or explain the reason for the revisions in its transmittal letter. Moreover, while NERC has submitted a redline version of the document (Appendix 3A), NERC has failed to identify many of the revisions in the redline version, making it difficult to determine all of the changes that NERC has made. Accordingly, we direct NERC to refile its Reliability Standards Development Procedure and accurately identify and explain all proposed revisions. NERC Response: NERC has attached complete redline versions of its Rules of Procedure (Attachment 1) and Appendix 3A: Reliability Standards Development Procedure (v. 6) (Attachment 2) that identify all changes made to these documents as originally filed on April 4, 2006 with NERC s application for certification as the ERO. For each change a highlighted yellow comment box in the footnote section indicates whether NERC initiated the change or the change is made in response to a directive in the ERO Certification Order; and provides the reason for each change that NERC initiated. Adequate Level of Reliability January 18 Order, 16 On the issue of defining an adequate level of reliability, the Commission accepts the ERO s proposal to establish a stakeholder process to achieve this important goal. While Alcoa is correct that NERC s proposal defers the definition of adequate reliability, NERC s stakeholder process provides a ready means to fairly define adequate reliability and at the same time provide stakeholders with input to the process. Moreover, the technical details and development of metrics that will be required to complete the complex task of defining an adequate level of reliability will necessarily take some time. Even so, we agree with Alcoa that the initiation of this process should not be deferred and must proceed on a set schedule. The ERO must address the issue of whether an adequate level of reliability can be defined to partly or wholly apply to all Reliability Standards, whether it can be defined for certain sets of Reliability Standards (BAL, FAC etc.), or whether, in some instances, it must be tailored to each individual Commission directs NERC to continue to make necessary corrections to the remaining drafting errors and to ensure that consistent terms are used throughout the Rules of Procedure. In the subsequent compliance filing, we direct NERC to submit a redline version of the Rules of Procedure showing the drafting errors and their corrections. NERC Response to January 18 Order 4 WORKING DRAFT March 7, 2007

54 Reliability Standard. The ERO must consider opportunities to develop and apply metrics that can form the basis for broadly defining an adequate level of reliability, such as the creation of a precisely defined set of system operating states. 5 NERC should explore this and other possibilities and continue to develop metrics that will help determine compliance with Reliability Standards and better measure whether compliance with Reliability Standards assures an adequate level of reliability. We therefore direct the ERO to develop a work plan to propose a continuing improvement process to consider adequate level of reliability when developing new or modified Reliability Standards. If the Commission decides in the Final Rule to require NERC to submit a workplan as proposed in the Reliability Standards NOPR, it would be appropriate to include NERC s plan for considering adequate level of reliability with the workplan proposed by the Commission in the Reliability Standards NOPR. NERC Response: NERC agrees with the Commission that there should be a work plan for continuously improving NERC s reliability standards. On December 1, 2006, NERC submitted to the Commission, as an informational filing, NERC s Reliability Standards Development Plan: Volume I- Work Plan and Schedule. However, NERC understands from the January 18 Order the Commission s desire to more fully integrate the concept of adequate level of reliability into the work plan. NERC has developed the following plan to achieve this objective. Specifically, NERC has begun the process to define an adequate level of reliability through a stakeholder process led by the NERC Planning Committee and the NERC Operating Committee. As NERC explained in its application for certification as the ERO: These two general technical integration committees and their subgroups provide technical advice and subject matter expert support to each of the NERC program areas; serve as forums for technical discussion and integration of the outputs of each NERC program area; and provide expert technical opinions on reliability matters to the board. f.n See, e.g. Mandatory Reliability Standards for the Bulk-Power System, Notice of Proposed Rulemaking, FERC Stats. & Regs., Vol. IV, Proposed Regulations, 32,608 at 32,911 33,097 at P 275 (2006) (Reliability Standards NOPR). NERC Response to January 18 Order 5 WORKING DRAFT March 7, 2007

55 In this process, NERC will consider the development of a definition of adequate level of reliability and its application partially or wholly to all Reliability Standards or on an individual standard basis. NERC will also consider the appropriateness of developing metrics measuring adequate level of reliability to be used for guidance in standards development and in compliance monitoring and enforcement. NERC has placed the item of developing a definition for adequate level of reliability on both committees March 2007 meeting agendas. 6 Once these committees agree on a straw man definition, NERC will engage a wider audience of stakeholders, including NERC s other technical committees and the industry in general, to comment and propose modifications or alternative definitions. Additionally, NERC will request Commission staff s direct participation in these technical discussions and will otherwise coordinate with Commission staff at periodic intervals throughout this process to obtain input and gauge conformance to Commission expectations. The Planning Committee and Operating Committee will continue to review the comments and opinions from the audience of stakeholders, and will propose a definition by December 31, A recommendation will then be presented for NERC board approval in February 2008, with subsequent filing with the Commission and applicable regulatory authorities in Canada. NERC will then integrate the approved definition into its three-year standards work plan and standards development process, as well as its compliance monitoring and enforcement program as appropriate. January 18 Order, 18 We note that a supermajority affirmative vote requirement 6 The Planning Committee and the Operating Committee are scheduled to meet on March 21-22, NERC Response to January 18 Order 6 WORKING DRAFT March 7, 2007

56 Operating Committee Meeting March 21 22, 2007 Item 6. Discussion items. Item 6.a Lessons Learned November 4, 2006 Europe blackout and other studies This item is closely tied to Item 4, Reliability Criteria and System Limits Concepts. From NERC Newsletter, February, The Union for the Coordination of Transmission of Electricity (UCTE), an association of Transmission System Operators (TSOs) in continental Europe, issued its Final Report, entitled System Disturbance on 4 November On that date, a severe frequency drop in the Western part of continental Europe s grid interrupted the electricity supply for more than 15 million households. The disturbance, resulting from the tripping of a number of high voltage lines in northern Germany, triggering a split of the system into 3 areas. The two under-frequency areas (West and South-East) had sufficient generation reserves and load shedding for the system to Map from UCTE report that shows how the interconnection split during the November 4, 2006 disturbance. be restored within 20 minutes. In the over-frequency area (North-East) insufficient control of generation on the distribution network (dispersed generation, mainly wind and combined-heat-and-power) complicated the process of restoration, which was completed 38 minutes. UCTE s press release, presentation and report provide a detailed description of the sequence of events, an analysis of main causes and critical factors and the formulation of precise recommendations (highlighted items relate to reliability concepts and system limits): Main causes Nonfulfillment of the n-1 reliability criterion Insufficient inter-tso coordination Critical factors TSOs did not have access to real-time data of the generating units connected to the distribution grids (mainly wind and combinedheat-and-power). Limited range of actions available to dispatchers for handling grid congestions

57 Operating Committee Meeting March 21 22, 2007 TSO/Distribution Service Operators (DSO) lacked operational coordination for operations and restoration plans TSOs lacked coordination with other TSOs during resynchronization procedures Training of dispatchers for inter-control area events Recommendations Review the application of the n-1 criterion in the rules of the UCTE Operation Handbook. Extend the rules on emergency operations with a Master Plan defining principles of operation and TSOs responsibilities to manage UCTE-wide or regional disturbances. Develop standard criteria for a regional and an interregional TSO coordination aimed at improving the regional reliability management (from planning to real time). Provide an information platform so TSOs can observe, in real time, the state of the UCTE system and enable quick reaction during large disturbances. Adapt the regulatory or legal framework regarding control over generation output, requirements to be fulfilled by generators connected to the distribution grid, schedules and schedule changes, and access to online data of generators connected to the distribution grid. UCTE will issue a second report at the end of 2007 about the implementation of these recommendations.

58 Operating Committee Meeting March 21 22, 2007 Item 6.b Hydro One Capacitor Bank Failure Ajay Garg from Hydro One will discuss the January 30, 2007 capacitor bank failure at Richview Transformer Station, located just outside Toronto. (See Hydro One press release) This event is a notable occurrence for a number of reasons: It is the first catastrophic failure of an HV capacitor bank in the Hydro One system. (The initiating cause of the phase-to-phase fault remains unknown.) Both primary and backup capacitor bank breakers (connected in series) failed to clear during the fault. Bus fault protection eventually cleared the fault 287 ms after inception. The delayed clearance resulted in prolonged voltage dips across the southern part of the province and caused 1,700 MW of voltagesensitive load to be shaken off. Subsequent examination and modeling of the event revealed a previously unknown (to Hydro One) risk in capacitor bank installations that employ a series reactor. Hydro One s investigation identified that, although the contacts of both breakers opened, the arc re-ignited due to excessive RRRV (Rate of Rise of Recovery Voltage). This effect was caused by fault current flowing through a series reactor located electrically adjacent to the faulted capacitor. (See explanation at right.) In light of the findings and the potential consequences of such a fault, Hydro One would like to raise the awareness of other utilities to this risk (which may not be widely known).

59 Item 7. Program Operating Committee Meeting March 21 22, 2007 Reliability Readiness Evaluation and Improvement Action Approve addition of the Reliability Readiness Evaluation and Improvement Program to the Operating Committee s charter. Once the Operating Committee has approved this change, we will bring the committee s charter to the NERC Board of Trustees for approval. NERC will also need to revise its Rules of Procedure, Appendix 7, as follows: Attachments Operating Committee Charter Version 2 NERC Rules of Procedure, Section 700 Reliability Readiness Evaluation and Improvement. NERC Rules of Procedure Appendix 7, Reliability Readiness Evaluation and Improvement Program Procedure. Background Reliability Readiness Evaluation and Improvement Program director Rich Schneider, along with former program director Gerry Adamski (who now heads NERC s standards program), will lead this discussion.

60 Version 2 Draft 1 March 6, 2007 Adds Reliability Readiness Program Operating Committee Charter Approved by the Operating Committee: Approved by the Board of Trustees: Operating Committee Charter 1

61 Table of Contents Section 1. Purpose... 4 Section 2. Functions General Functions Support to the Reliability Readiness Program Support for other programs Approve the following documents and procedures: Opinions and interpretations Section 3. Membership Goals Expectations Representation Selection Terms Resignations, Vacancies, and Non-participation... 7 Section 4. Proxies Sector representation Notification Voting Section 5. Meetings Quorum Voting Antitrust Guidelines Open Meetings Confidential Sessions Section 6. Officers Terms and conditions Selection... 8 Section 7. Subcommittees Appointing subgroups Nominating subcommittee Section 8. Executive Committee Membership Election Process Terms Operating Committee Charter 2

62 Appendix 1 Committee Representatives Appendix 2 Meeting Procedures Section 1. Voting Procedures for Motions Section 2. Minutes Section 3. Minority Opinions Section 4. Personal Statements Operating Committee Charter 3

63 Section 1. Purpose The Operating Committee s mission is to provide the ERO (stakeholders, board of trustees, and staff) with the collective and diverse opinions from the experts in interconnected systems operation to help the industry arrive at informed decisions. Section 2. Functions 1. General Functions a. Provide a general forum for aggregating ideas and interests on interconnected systems operation. b. Provide advice and recommendations to the board with respect to interconnected systems operation. c. Develop and document the concepts and philosophies of interconnected systems operation to serve as the technical foundations for NERC s reliability standards and compliance measures. 2. Support to the Reliability Readiness Program. Provide technical support, guidance, and advice to NERC s Reliability Readiness Program (see also NERC Rules of Procedure, Section 700, Reliability Readiness Evaluation and Improvement program, and Appendix 7, Reliability Readiness Evaluation and Improvement Program Procedure. ) a. General Develop criteria for measuring program success, and review the program against those criteria. Recommend actions to other NERC programs (standards, compliance, assessments, training, etc.) based on lessons learned and trends from readiness evaluations and examples of excellence b. Readiness Evaluations Review readiness evaluations for trends and recommend new or different types of evaluations or changes in processes or metrics, including: o Readiness criteria o Guidelines for reporting and disclosure, and o Guidelines for consistency and relevancy of evaluations: Between comparable entities, and Through time Provide guidance to the readiness evaluations process c. Examples of Excellence Review and discuss the examples of excellence for lessons learned New Section Operating Committee Charter 4

64 Support information exchange within the industry on examples of excellence 3. Support for other programs.provide technical advice and subject matter expert support to each of the NERC program areas, and serve as a forum to integrate the outputs of each NERC program area. a. Standards. Provide opinions. Provide the committee s majority and minority opinions to the industry on NERC s standards as those standards are drafted, posted for ballot, and presented to the board of trustees for implementation. Help prioritize standards. Help the Standards Committee prioritize those standards that are in the drafting queue. b. Compliance. Review quarterly and annual compliance reports for trends and suggest new or different types of compliance monitoring based on a technical review of system performance trends or as a result of compliance investigations. c. d. Reliability assessments and performance analysis. Review reliability assessments and recommend topics that need additional investigation. These include: Future adequacy Event analysis Benchmarking e. Personnel training and certification. Recommend to the Personnel Certification Governance Committee the types of operating personnel that should be certified. f. Situation awareness. Review and recommend control, monitoring, and visualization tools for system operators. 4. Approve the following documents and procedures: a. Reliability Coordinator plans. b. Market operations plans that are a part of the Reliability Coordinator plans. c. Field test procedures, and the commencement and end of field tests to make sure those tests are safe and effective. d. NERC Reliability Functional Model. 5. Opinions and interpretations.provide technical opinions at the industry stakeholders request on operating reliability concepts, philosophies, and standards. Deleted: Readiness. Review readiness audits for trends and suggest new or different types of readiness audits or changes in audit processes or metrics. Section 3. Membership 1. GoalsThe Operating Committee provides for balanced decision making by bringing together a wide diversity of opinions from industry experts with outstanding technical knowledge and experience in the area of interconnected systems operation reliability. Sector representation will naturally bring a wide diversity of expertise to the table. The committee Operating Committee Charter 5

65 generally expects its members to express those technical interests (as opposed to NERC policies or business practices) that will foster NERC's mission to improve the reliability of the bulk electric system. 2. Expectations.Operating Committee voting members are expected to: a. Bring subject matter expertise to the Operating Committee b. Be responsible for operating reliability within their organization c. Attend and participate in all Operating Committee meetings d. Express their own opinions at committee meetings e. Discuss and debate interests rather than positions f. Complete committee assignments 3. Representation.See appendix 1, Committee Representatives The Operating Committee shall consist of: a. Two representatives from each sector except the government representative sector, b. The chairman and vice chairman of the Committee, c. Any additional Canadian representatives as are needed so that the Canadian voting representatives is equal to the percentage of the NEL of Canada to the total NEL of the United States and Canada, times the total number of voting members on the Committee, rounded up to the next whole number, and d. The following representatives of the government representatives sector, each of whom is a non-voting member: One representative of the United States federal government, One representative of the Canadian federal government, One representatives of state governments, and One representative of a provincial governments e. The chairmen of the technical subcommittees, each of whom is a non-voting member. 4. Selection.The sectors and regional entities will appoint their representatives to the Operating Committee for two-year terms. a. Each sector will establish its own selection process, and provide the committee secretary with How the sector selects its representatives, and The sector contact. b. Each sector and regional entity will, by April 30, provide the secretary with the sector and regional representatives who will serve from July 1 through June 30 of the following year. Operating Committee Charter 6

66 c. Members may not represent more than one sector. d. A particular organization may have no more than one representative on the Committee. e. The secretary will monitor committee membership and consult with the sector contact or regional staff if adjustments are needed to stay within the membership specifications. f. The secretary will send the committee membership list to the board for its approval at the board s next regular meeting. 5. Terms a. Membership is staggered, with one-half of the members' terms expiring each year. b. Members may be re-elected for subsequent terms. 6. Resignations, Vacancies, and Non-participation a. The secretary will notify the sector contact or regional council to replace members who resign or are not participating for the time remaining in the member s term. b. The secretary will submit the new member s name to the board for approval at the board s next regular meeting. The Committee may approve the new member on an interim basis at the Committee s next meeting. c. The secretary will remove from the committee roster those members who no longer work for an organization within the member's sector. d. The committee chairman will notify any member who has missed two consecutive meetings (even if the member has sent a proxy) to seek a commitment to actively participate or resign from the committee. Section 4. Proxies 1. Sector representation.a member of the Committee may give a proxy only to a person who is a member registered in the same sector. 2. Notification.The member must provide the proxy s name and organization to the secretary in writing ( is acceptable) before the meeting begins. 3. Voting.Each voting member of the Committee shall have one vote on any matter coming before the Committee that requires a vote. Section 5. Meetings See Appendix 2, Meeting Procedures Unless stated otherwise, the Operating Committee will follow Roberts Rules of Order, Newly Revised. 1. Quorum.The quorum necessary for the transaction of business (i.e., formal actions) at meetings of the Committee is two-thirds of the voting members currently on the committee Operating Committee Charter 7

67 roster (i.e., does not count vacancies). The committee may engage in discussions without a quorum present. 2. Voting.Actions by members of the Committee shall be approved upon receipt of the affirmative vote of 2/3 of the voting members of the Committee present and voting, in person or by proxy, at any meeting at which a quorum is present. The chairman and vice-chairman may vote. Additional voting guidelines are in Appendix Antitrust Guidelines.All persons attending or otherwise participating in the Committee meeting shall act in accordance with NERC s Antitrust Compliance Guidelines at all times during the meeting. A copy of the NERC antitrust statement shall be included with each meeting agenda. 4. Open Meetings.NERC committee meetings shall be open to the public, except as noted below under Confidential Sessions. Although meetings are open, only voting members may offer and act on motions. 5. Confidential Sessions.The chair of a committee may limit attendance at a meeting or portion of a meeting, based on confidentiality of the information to be disclosed at the meeting. Such limitations should be applied sparingly and on a non-discriminatory basis as needed to protect information that is sensitive to one or more parties. A preference, where possible, is to avoid the disclosure of sensitive or confidential information so that meetings may remain open at all times. Confidentiality agreements may also be applied as necessary to protect sensitive information. Section 6. Officers 1. Terms and conditions.at its March meeting the Committee shall select a chairman and vice chairman from among its voting members by majority vote of the members of the Committee to serve during the period July 1 through June 30 of the following two years, provided that: a. The newly selected chairman and vice chairman shall not have been representatives of the same sector. b. The chairman and vice chairman, upon assuming such positions, shall cease to act as representatives of the sectors that elected them as representatives to the Committee and shall thereafter be responsible for acting in the best interests of the members as a whole. c. The secretary will submit the elected officers to the chairman of the board for approval. 2. Selection.The Committee selects officers using the following process. The chairman is selected first, followed by the vice-chairman. The nominating subcommittee will present its recommended candidate. The chairman opens the floor for nominations. Operating Committee Charter 8

68 After hearing no further nominations, the chairman closes the nominating process. The Committee will then vote on the candidate recommended by the nominating subcommittee, followed by the candidates nominated from the floor in the order in which they were nominated. The first candidate to garner the majority of the Committee s votes will be selected. If the Committee nominates one person, that person is automatically selected as the next chairman. If the Committee nominates two or more persons, and none receive a majority of the Committee s votes, then the secretary will distribute paper ballots for the members to mark their preference. The secretary will collect the ballots. If the Committee nominates three or more candidates, then the winner will be selected using the Instant Runoff Process. (Explained in Roberts Rules of Order) Section 7. Subcommittees 1. Appointing subgroups.the Operating Committee may appoint technical subcommittees, task forces, and working groups as needed. 2. Nominating subcommittee.at the first regular meeting following the selection of a new committee chairman, the chairman will nominate, for the committee s approval, a slate of five committee members from different sectors to serve as a nominating subcommittee. The subcommittee will: a. Recommend candidates for the committee s chairman and vice chairman, and b. Recommend candidates for the executive committee s four at large members. Section 8. Executive Committee. The executive committee is authorized to act between regular meetings of its parent committee. However, the executive committees may not reverse its parent committee s decisions. 1. Membership.The Committee will elect an executive committee of six members, all from different sectors, as follows: Chairman Vice-chairman Four at-large members from different sectors nominated by the nominating subcommittee. Operating Committee Charter 9

69 2. Election Process. The Nominating Subcommittee will present its slate of candidates for the four at large members. The chairman opens the floor for additional nominations. If the Committee members nominate additional candidates, then the secretary will distribute paper ballots for the members to list their top four candidates. The four candidates who receive the most votes will be elected, provided that no two candidates may be from the same sector. 3. Terms.The executive committee is replaced when a new committee chairman is elected, which is usually every two years. Operating Committee Charter 10

70 Appendix 1 Committee Representatives This sector list and definitions are found in the Bylaws, Article II, Section 4. Name Definition Members Voting Members Investor-owned utility State/municipal utility Cooperative utility Federal or provincial utility/federal Power Marketing Administration Transmission-dependent utility Merchant electricity generator Electricity marketer This sector includes any investor-owned entity with substantial business interest in ownership and/or operation in any of the asset categories of generation, transmission or distribution. This sector also includes organizations that represent the interests of such entities. This sector includes any entity owned by or subject to the governmental authority of a state or municipality, that is engaged in the generation, delivery, and/or sale of electric power to end-use customers primarily within the political boundaries of the state or municipality; and any entity, whose members are municipalities, formed under state law for the purpose of generating, transmitting, or purchasing electricity for sale at wholesale to their members. This sector also includes organizations that represent the interests of such entities. This sector includes any non-governmental entity that is incorporated under the laws of the state in which it operates, is owned by and provides electric service to end-use customers at cost, and is governed by a board of directors that is elected by the membership of the entity; and any non-governmental entity owned by and which provides generation and/or transmission service to such entities. This sector also includes organizations that represent the interests of such entities. This sector includes any U.S. federal, Canadian provincial, or Mexican entity that owns and/or operates electric facilities in any of the asset categories of generation, transmission, or distribution; or that functions as a power marketer or power marketing administrator. This sector also includes organizations that represent the interests of such entities. This sector includes any entity with a regulatory, contractual, or other legal obligation to serve wholesale aggregators or customers or end-use customers and that depends primarily on the transmission systems of third parties to provide this service. This sector also includes organizations that represent the interests of such entities. This sector includes any entity that owns or operates an electricity generating facility that is not included in an investor-owned utility s rate base and that does not otherwise fall within any of sectors (i) through (v). This sector includes but is not limited to cogenerators, small power producers, and all other nonutility electricity producers such as exempt wholesale generators who sell electricity at wholesale. This sector also includes organizations that represent the interests of such entities. This sector includes any entity that is engaged in the activity of buying and selling of wholesale electric power in North America on a physical or financial basis. This sector also includes organizations that represent the interests of such entities Operating Committee Charter 11

71 Name Definition Members Voting Members Large end-use electricity customer Small end-use electricity customer Independent system operator/regional transmission organization Regional reliability organization This sector includes any entity in North America with at least one service delivery taken at 50 kv or higher (radial supply or facilities dedicated to serve customers) that is not purchased for resale; and any single end-use customer with an average aggregated service load (not purchased for resale) of at least 50,000 MWh annually, excluding cogeneration or other back feed to the serving utility. This sector also includes organizations that represent the interests of such entities. This sector includes any person or entity within North America that takes service below 50 kv; and any single enduse customer with an average aggregated service load (not purchased for resale) of less than 50,000 MWh annually, excluding cogeneration or other back feed to the serving utility. This sector also includes organizations (including state consumer advocates) that represent the interests of such entities. This sector includes any entity authorized by the Commission to function as an independent transmission system operator, a regional transmission organization, or a similar organization; comparable entities in Canada and Mexico; and the Electric Reliability Council of Texas or its successor. This sector also includes organizations that represent the interests of such entities. This sector includes any regional reliability organization as defined in Article I, Section 1, of the Bylaws of the corporation Officers Chairman and Vice Chairman 2 Total Voting Members (will be adjusted as necessary to ensure sufficient Canadian representation) 24 Non-Voting Members Government representatives This sector includes any federal, state, or provincial government department or agency in North America having a regulatory and/or policy interest in wholesale electricity. Entities with regulatory oversight over the Corporation or any regional entity, including U.S., Canadian, and Mexican federal agencies and any provincial entity in Canada having statutory oversight over the Corporation or a regional entity with respect to the approval and/or enforcement of reliability standards, may be nonvoting members of this sector. United States federal government 1 0 Regional reliability organizations Canadian federal government 1 State government 1 Provincial government 1 The remaining RROs that are not RRO sector voting members. Subcommittee Chairmen ORS, RS, IS, PS 4 Total Committee Members 38 6 Operating Committee Charter 12

72 Appendix 2 Meeting Procedures Section 1. Voting Procedures for Motions 1. The default procedure is a voice vote. 2. If the chairman believes the voice vote is not conclusive, he may call for a show of hands. 3. The chairman will not specifically ask those who are abstaining to identify themselves when voting by voice or a show of hands. 4. The committee may conduct a roll-call vote in those situations that need a record of each member's vote. The committee must approve conducting a roll call vote for the motion. The secretary will call each member's name. Members answer "yes," "no," or "present" if they wish to abstain from voting. Section 2. Minutes 1. Meeting minutes are a record of what the committee did, not what its members said. 2. Minutes should list discussion points where appropriate, but should usually not attribute comments to individuals. It is acceptable to cite the chairman's directions, summaries, and assignments. 3. Do not list the person who seconds a motion. 4. Do not record (or even ask for) abstentions. Section 3. Minority Opinions All Committees members are afforded the opportunity to provide alternative views on an issue. The meeting minutes will provide an exhibit to record minority opinions. The chairman shall report both the majority and any minority views in presenting results to the Board of Trustees. Section 4. Personal Statements The minutes will also provide an exhibit to record personal statements. Operating Committee Charter 13

73 Rules of Procedure of the North American Electric Reliability Corporation SECTION 700 RELIABILITY READINESS EVALUATION AND IMPROVEMENT 701. Scope of the Reliability Readiness Evaluation and Improvement Program The readiness evaluations are designed to ensure that operators of the bulk electric system have the facilities, tools, processes, and procedures in place to operate reliably under future conditions. The evaluations help balancing authorities, transmission operators, reliability coordinators, and others that provide support to these operators recognize and assess their reliability responsibilities and evaluate how their operations support those responsibilities. The evaluation team may also evaluate transmission planner and transmission owner functions in concert with the evaluation of reliability coordinators, balancing authorities, and transmission operators NERC uses the results of these evaluations to champion the changes required to improve the reliability performance of these entities and achieve excellence in the assigned reliability functions and responsibilities. A companion goal of the program is to identify and promote examples of excellence within the industry. Monitoring compliance with reliability standards provides only a historical perspective by determining if a registered entity has complied with the NERC reliability standards over some prescribed period in the past. An effective ERO will also recognize that monitoring compliance absent a system emergency or disturbance does not effectively preserve reliability or ensure the ability to perform and achieve excellence during a system emergency or disturbance. NERC identifies those entities with primary reliability responsibilities and provides guidance to help them achieve operational excellence through the Reliability Readiness Evaluation and Improvement Program. This program recognizes that standards cannot prescribe all aspects of reliable operations and that NERC standards present a threshold, not a target, for performance and excellence in the industry. Balancing authorities, transmission operators, reliability coordinators, and others that provide support to these operators must be ready to perform under emergency conditions while striving for excellence in their assigned reliability functions and responsibilities. NERC maintains a reliability readiness evaluation and improvement program for the purpose of promoting compliance with reliability standards and enhancing the reliability of the bulk power system. The program assesses the reliability readiness of reliability coordinators, balancing authorities, transmission operators, and others performing delegated tasks for these operators to operate the bulk power system reliably, and to identify opportunities for improvement. NERC may also create sector forums (see section 712) to enhance the reliability of the bulk power system by providing a mechanism for members of a particular industry sector, using peer review and mutual assistance, to identify best practices in the safety and reliability of the bulk power system, to disseminate lessons learned from disturbances, near misses, and other events, and to encourage all members of the sector to implement those practices and lessons on a timely basis. The Reliability Readiness Evaluation and Improvement Program will coordinate with the sector forums as appropriate to provide input from the readiness evaluations. 55 of 87

74 Rules of Procedure of the North American Electric Reliability Corporation 702. Structure of the Reliability Readiness Evaluation and Improvement Program 1. NERC shall have overall responsibility for coordinating readiness evaluations in accordance with the NERC Readiness Evaluation Procedure, the current version of which is incorporated into these rules as Appendix 7. These rules of procedure take precedence for any conflicts or inconsistencies that exist with the NERC Readiness Evaluation Procedure. 2. NERC staff shall have the primary responsibility for executing the following procedural steps: (1) development of the overall schedule in conjunction with the appropriate regional entity to coordinate evaluation activities; (2) initiation of the evaluation process for each entity; (3) provision of evaluation questionnaires, processes, data requests, documentation, and criteria; (4) identification of readiness evaluation team members; (5) coordination of evaluated entity and neighboring entity questionnaires; and (6) publication of findings. 3. The NERC evaluation team shall perform the following functions: (1) review the entity s questionnaire responses and documentation and research any issues or events identified; (2) perform the on-site evaluations; and (3) prepare a report of findings Scheduling of Readiness Evaluations 1. NERC staff in conjunction with the regional entities shall prepare a three-year cycle of readiness evaluations that will be updated annually by a date specified by NERC. 2. NERC shall obtain from the regional entity the identity of a contact person at each entity to be evaluated. 3. Readiness evaluations and compliance audits shall be conducted with separate processes, but may occur concurrently if separate personnel are used Resources for Readiness Evaluations 1. NERC shall select an evaluation team in advance of each evaluation according to a schedule specified by NERC. 2. The evaluation team shall consist of members possessing expertise and experience specified by NERC. 3. The evaluation team shall be of a size and composition specified by NERC. 4. If an entity to be evaluated raises an objection to an evaluation team member s participation, it must do so in writing to NERC stating clearly the basis for the objection. Upon receipt of such objection, the Director of NERC s Readiness Evaluation and Improvement program will attempt to resolve the issue to the mutual agreement of the entity being evaluated and the individual and/or entity for whom the individual is employed, utilizing guidance from the regional entities 56 of 87

75 Rules of Procedure of the North American Electric Reliability Corporation as appropriate. If this process does not result in a mutually acceptable agreement, the Director will resolve the objection based on the following factors: a. Team member was previously employed by entity to be evaluated within the previous three years; b. Team member was previously employed by entity to be evaluated and whose employment ended unfavorably; c. Team member is in active litigation with the entity to be evaluated; d. Team member has a direct financial interest in the entity to be evaluated; e. Team member is employed in a company under the same corporate umbrella as the entity to be evaluated; f. The team member s employer and the entity to be evaluated are engaged in active litigation; and g. Other matters that may interfere with the exercise of independent judgment. 5. NERC shall develop and provide training in evaluation skills to all individuals who participate in readiness evaluations. Training for NERC evaluation team leaders and regional entity personnel shall be more comprehensive than training given to industry experts and regional members. 6. All team members and observers shall sign and abide by a NERC confidentiality agreement prior to participating in any of the evaluation activities unless bound by NERC or other codes of conduct acknowledged by NERC to be acceptable. Copies of the signed confidentiality agreements shall be maintained by NERC and be available upon request by the evaluated entity. 7. To maintain the focus and size of the evaluation team, the use of observers will be limited. Observers must be expressly agreed upon by both NERC and the entity being evaluated. The role of observers is limited to observing the process. Observers shall not participate in the creation and editing of the report or its findings, or interfere with the evaluation process. The team leader may remove any observer from the evaluation who is not abiding by these criteria Pre-Readiness Evaluation Activities NERC will require certain information to perform readiness evaluations of operating entities. These entities shall provide to NERC such information as is necessary to conduct the readiness evaluations. 1. Prior to an evaluation, NERC shall provide the entity a request for information and a questionnaire. The entity shall return the requested information and the completed questionnaire according to a schedule specified by NERC. In its 57 of 87

76 Rules of Procedure of the North American Electric Reliability Corporation submission to the request for information, the entity to be evaluated shall identify all tasks that have been delegated to another entity. 2. NERC shall provide a questionnaire to neighboring operating entities with which the evaluated entity routinely interacts. The neighboring operating entities shall return the completed questionnaires within a period of time specified by NERC. 3. Prior to the evaluation, NERC shall provide an evaluation agenda to the entity to be evaluated. 4. The evaluation team will receive the following information upon receipt of a signed confidentiality agreement according to a schedule specified by NERC. a. The evaluated entity s completed questionnaire and supporting documentation; b. The neighboring operating entities completed questionnaires; and c. The on-site agenda. 5. The evaluation team will coordinate before the on-site evaluation begins to review questionnaire responses, identify areas requiring further investigation, discuss concerns, coordinate the interview process, and assign responsibilities during the on-site visit On-Site Activities for the Readiness Evaluation 1. The evaluation team will meet on-site for a period defined by NERC to conduct the readiness evaluation according to the agenda provided in advance. The team will conduct interviews with personnel, review documentation, and make observations about the entity s tools, facilities, and processes. 2. The team s findings shall be based on data collected from the entity s questionnaire and documentation, neighboring operating entities questionnaires, and observations and information collected during the on-site visit. 3. Evidence of possible noncompliance with a reliability standard shall be reported to NERC and to the applicable regional entity for resolution through the applicable Compliance Monitoring and Enforcement Program. If the issue is judged to be an immediate threat to reliability, the notification to NERC and the regional entity shall be made within 24 hours of discovery. Possible noncompliance with a NERC reliability standard will not be identified in the readiness evaluation report. 4. Upon completion of the on-site evaluation, the team shall make a presentation to the evaluated entity of preliminary findings and recommendations that will be included in the final report. 58 of 87

77 Rules of Procedure of the North American Electric Reliability Corporation 707. Preparation and Posting of the Final Report 1. The evaluation team leaders shall prepare a draft report. The report will be sent to the team for review, within a period of time after the evaluation specified by NERC. 2. The evaluation team shall have a period of time specified by NERC to respond to the draft report. If a team member does not respond within the allotted time, such non-response shall be considered agreement with the contents of the report. 3. The draft report shall then be sent to the evaluated entity for its review to ensure that there are no factual errors in the report. The entity shall respond within a period of time specified by NERC. If the entity does not respond within the specified time, such non-response shall be considered agreement with the content of the report. The entity may provide feedback in the form of corrections and clarifications that will be considered by the evaluation team for inclusion in the final report. 4. After agreeing on any final corrections, the evaluation team may elect to provide the evaluated entity the opportunity to review the changes if deemed significant. The team shall then post the final report on the NERC Web site within a period of time from the on-site evaluation specified by NERC. Information deemed to be confidential information shall be redacted prior to posting. The entity will make the determination about what information will be redacted. 5. Should the entity wish to provide comments regarding the final report, evaluation processes, or findings, the entity may provide a statement in writing that will be posted on the NERC Web site in conjunction with the final report. 6. In response to the posted evaluation report and within a period of time after the posting specified by NERC, the entity shall provide a response plan to NERC addressing the report recommendations, including a timeline for implementation. The response plan shall be published on the NERC Web site when submitted by the entity. If the entity requests, NERC will offer assistance in developing a suitable response plan to address the report s recommendations. The entity shall notify NERC of its request for assistance. 7. NERC may direct that a mid-cycle follow-up evaluation be scheduled 708. Monitoring Recommendation Implementation 1. Evaluated entities may implement actions based on the recommendation or may review the recommendation and determine that no action is warranted or necessary and provide documentation on their decisions as well as the response plan. 2. NERC shall monitor the evaluated entity s implementation of the recommendations in the final report and the entity s response plan, and shall report progress to the board. NERC may elect to use the regional entities to 59 of 87

78 Rules of Procedure of the North American Electric Reliability Corporation coordinate the request for updated recommendation status for members within its area of oversight Examples of Excellence NERC shall identify and publish examples of excellence identified during the course of readiness evaluations. Examples of excellence are practices utilized by owners, operators and users of the bulk power system that are identified as being exceptionally effective in ensuring and protecting the reliability of the bulk power system. These examples of excellence may be identified through a readiness evaluation or submitted to NERC for an on-site evaluation Confidentiality Requirements for Readiness Evaluations and Evaluation Team Members 1. All information made available or created during the course of the evaluation including, but not limited to, data, documents, observations and notes, shall be maintained as confidential by all evaluation team members, in accordance with the requirements of Section Evaluation team members are obligated to destroy all confidential evaluation notes following the posting of the final report. 3. NERC will retain evaluation-related documentation, notes, and materials for a period of time as defined by NERC. 60 of 87

79 Rules of Procedure of the North American Electric Reliability Corporation 711. Independent Audit of the Reliability Readiness Evaluation and Improvement Program 1. NERC shall provide for an independent audit of its reliability readiness evaluation and improvement program at least once every three years or more frequently as determined by the board. The audit shall be conducted by independent expert auditors as selected by the board. 2. The audit shall evaluate the success and effectiveness of the NERC reliability readiness evaluation and improvement program in achieving its mission. 3. If the audit report includes recommendations to improve the reliability readiness evaluation and improvement program, the administrators of the program shall provide a written response and plan to the board within 30 days of the final report. 4. The final report shall be posted by NERC for public viewing on its Web site. Confidential information shall be redacted according to NERC procedures and not released publicly Formation of Sector Forum 1. NERC will form a sector forum at the request of any five members of NERC that share a common interest in the safety and reliability of the bulk power system. The members of sector forum may invite such others of the members of NERC to join the sector forum as the sector forum deems appropriate. 2. The request to form a sector forum must include a proposed charter for the sector forum. The board must approve the charter. 3. NERC will provide notification of the formation of a sector forum to its membership roster. Notices and agendas of meetings shall be posted on NERC s Web site. 4. A sector forum may make recommendations to any of the NERC committees and may submit a standards authorization request to the NERC Reliability Standards Development Procedure. 61 of 87

80 3. After agreeing on any final corrections, the team may elect to provide the entity the opportunity to review the changes if deemed significant. Otherwise, the final report will be posted on the NERC Web site within sixty calendar days of the completion of the evaluation. Information deemed to be critical or sensitive to electrical infrastructure will be redacted before posting. The entity will make the determination about what information will be redacted. Should the entity wish to provide comments regarding the final report, evaluation processes, findings, etc., the entity may provide a statement in writing that will be posted on the NERC Web site in conjunction with the final report. 4. In response to the posted report and within forty-five calendar days of the date of posting, the entity will supply a response plan to NERC addressing the report recommendations, including a timeline for implementation. This response plan will be published on the NERC Web site when submitted by the entity. a. If the entity requests, NERC will offer assistance in developing a suitable response plan to address the report s recommendations. The entity should notify NERC of its request for assistance. E. Monitoring Recommendation Implementation 1. Entities may implement actions based on the recommendation or may review the recommendation and determine that no action is warranted or necessary and provide documentation on their decisions as well as the response plan. 2. NERC shall monitor the entity s implementation of the recommendations in the final report and the entity s response plan, and shall report progress to the board. NERC may elect to use the regional entities to coordinate the request for updated recommendation status for members within its area of oversight. F. Examples of Excellence 1. NERC shall identify and publish examples of excellence identified during the course of readiness evaluations. Examples of excellence are practices utilized by owners, operators and users of the bulk power system that are identified as being exceptionally effective in ensuring and protecting the reliability of the bulk power system. These examples of excellence may be identified through a readiness evaluation or submitted to NERC for an on-site evaluation. Reliability Readiness Evaluation and Improvement Program 5

81 Appendix 7 Reliability Readiness Evaluation and Improvement Program Procedure Effective January 18, Village Boulevard, Princeton, New Jersey Phone: Fax:

82 Table of Contents Table of Contents Executive Summary...1 A. Scheduling...2 B. Pre-Evaluation...3 C. On-Site Evaluation...4 D. Preparation and Posting of the Final Report...4 E. Monitoring Recommendation Implementation...5 F. Examples of Excellence...5 Reliability Readiness Evaluation and Improvement Program i

83 Executive Summary This document sets forth the procedure NERC has adopted for use in its Reliability Readiness Evaluation and Improvement Program. The goal of the program is to assess the readiness of reliability coordinators (RC), balancing authorities (BA), transmission operators (TOP), and others performing delegated tasks for these operators to operate the bulk power system reliably, identify and promote examples of excellence, and identify opportunities for improvement in the pursuit of operational excellence. It is not a part of the compliance enforcement program. The evaluation team may also evaluate transmission planner and transmission owner functions in concert with the evaluation of RCs, BAs, and TOPs. This procedure is to be applied using NERC reliability standards as a foundation, supplemented by other reference documents and evaluation criteria. As with all NERC reliability standards, the NERC regions may adopt specific requirements and guidelines to be used in conjunction with but not in place of these procedures. In choosing to do so, however, the regions cannot lessen the NERC-established procedure and requirements without formal approval from NERC. RCs, BAs, and TOPs may delegate reliability tasks to other entities in carrying out their functions, while retaining overall responsibility for the reliability requirements. NERC may perform evaluations of these entities to ensure the delegation supports reliable operation of the bulk power system. The NERC staff shall have overall responsibility for coordinating readiness evaluations in accordance with the following Readiness Evaluation Procedure as approved by the NERC Compliance and Certification Committee (CCC). NERC shall have the primary responsibility for executing the steps in this procedure. The steps are summarized as follows: Development of overall evaluation schedule Initiation of evaluation process for an entity Provision of criteria and documentation Identification of readiness evaluation team members Coordination of entity to be evaluated and neighboring entity questionnaires Publication of findings The evaluation team is tasked with reviewing an entity s questionnaire responses and documentation, performing the on-site evaluation, and preparing a report of its findings. Reliability Readiness Evaluation and Improvement Program 1

84 A. Scheduling 1. NERC staff in conjunction with the regional entities shall prepare a three-year cycle of readiness evaluations that will be updated by June 30 of each year. a. RCs, BAs, TOPs, and other entities will be scheduled throughout the year according to a mutually agreed-upon schedule developed by NERC and the regional entities. 2. The regional entities will identify a contact person at each entity to be evaluated who shall be responsible for coordinating the on-site evaluation. 3. Readiness evaluations and compliance audits shall be conducted with separate processes, but may occur concurrently if separate personnel are used. 4. An evaluation team (the team ) will be selected sixty days in advance of the evaluation. The team evaluating a balancing authority shall minimally consist of a balancing authority and its reliability coordinator; the team evaluating a reliability coordinator shall minimally consist of a reliability coordinator, one of its balancing authorities, and one of its transmission operators; and the team evaluating a transmission operator shall minimally consist of a transmission operator and reliability coordinator. Within this framework, the team will consist of the following members selected by the entity identified in parentheses: a. One co-team leader (NERC staff) b. One co-team leader - compliance manager/representative or designated alternate from region in which the entity being evaluated is located (regional entity) c. One compliance manager/representative or designated alternate from another Interconnection (other regional entities) d. Up to two representatives from different operating entities within the same region (region) e. One representative from another region (other region) f. One CCC representative not associated with the RC to serve on the RC readiness evaluation (CCC) g. Up to two representatives from regulatory agencies with jurisdiction over the entity (United States, Canada, or Mexico government regulatory agencies) h. Optional: One individual with operational and/or longer-term planning expertise if this experience is not available through other selected representatives. If no other team representative is NERC-certified, up to two NERC-certified shift operators at a level at least equivalent to the functions being performed by the entity being evaluated (regions) The selected team should possess a good cross-section of operating and planning expertise with each member having at least five years of industry experience. Reliability Readiness Evaluation and Improvement Program 2

85 5. If an entity to be evaluated raises an objection to a team member s participation, it must do so in writing to NERC stating clearly the basis for the objection. Upon such receipt, NERC will attempt to resolve the issue to the mutual agreement of the entity being evaluated and the individual and/or entity for whom the individual is employed, utilizing guidance from the regional entities as appropriate. If this process does not result in a mutually acceptable agreement, NERC will make a final determination using the following guidelines as a basis for supporting the objection: Team member was previously employed by entity to be evaluated within the previous three years. Team member was previously employed by entity to be evaluated and whose employment ended unfavorably. Team member is in active litigation with the entity to be evaluated. Team member has a direct financial interest in the entity to be evaluated. Team member is employed in a company under the same corporate umbrella as the entity to be evaluated. The team member s employer and the entity to be evaluated are engaged in active litigation. Other matters that may interfere with the exercise of independent judgment. 6. NERC shall develop and provide training in evaluation skills to all individuals who participate in readiness evaluations. Training for NERC team leaders and regional entity personnel shall be more comprehensive than training given to industry experts and regional members. 7. To maintain the focus and size of the evaluation team, the use of observers will be limited. Observers must be expressly agreed upon by both NERC and the entity being evaluated. The role of observers is limited to observing the process. Observers shall not participate in the creation and editing of the report or its findings, or interfere with the evaluation process. The team leader may remove any observer from the evaluation who is not abiding by these criteria. B. Pre-Evaluation 1. An initial letter will be sent to the entity being evaluated at least sixty calendar days prior to the evaluation and will include a request for information and a questionnaire. The entity will have seven calendar days to provide the requested information, and must submit the completed questionnaire no later than thirty calendar days prior to the evaluation. In its submission to the request for information, the entity to be evaluated shall identify all tasks that have been delegated to another entity. 2. After receiving the initial request for information, and fifty calendar days prior to the evaluation, a questionnaire will be sent to the neighboring operating entities with whom the evaluated entity routinely interacts. These questionnaires are to be completed and returned within fourteen calendar days of receipt, and no later than thirty calendar days prior to the evaluation. 3. All team members and observers shall sign and abide by a NERC confidentiality agreement prior to participating in any of the evaluation activities unless bound by NERC or other codes Reliability Readiness Evaluation and Improvement Program 3

86 of conduct acknowledged by NERC to be acceptable. Copies of the signed confidentiality agreements shall be maintained by NERC and be available upon request by the evaluated entity. 4. The team will receive the following information upon receipt of the signed confidentiality agreements, and at least twenty-one calendar days prior to the evaluation: a. The entity s completed questionnaire and electronic versions of any supporting documents sent by the entity to be evaluated b. The neighboring operating entities completed questionnaires c. The on-site agenda. 5. Prior to the evaluation, NERC shall provide an agenda to the entity to be evaluated. 6. The team will coordinate before the on-site evaluation begins to review questionnaire responses, identify areas requiring further investigation, discuss concerns, coordinate the interview process, and assign responsibilities during the on-site visit. C. On-Site Evaluation 1. The team will meet on-site to conduct the readiness evaluation according to the agenda provided in advance. The team will conduct interviews with personnel, review documentation, and make observations about the entity s tools, facilities, and processes. 2. The team s findings will be based on data collected from the entity s questionnaire and documentation, neighboring operating entity questionnaires, and from observations, interview notes, and information collected during the on-site visit. 3. Evidence of possible noncompliance with a reliability standard shall be reported to NERC for resolution through the applicable compliance enforcement program. If the issue is judged to be an immediate threat to reliability, the notification to NERC and the regional entity shall be made within 24 hours of discovery. Possible noncompliance with a NERC standard will not be identified in the final readiness report. 4. Upon completion of the on-site evaluation, the team will give the entity a presentation of preliminary findings and recommendations that will be included in the final report. D. Preparation and Posting of the Final Report 1. The draft report will be completed by the team co-leaders, and will be sent to the team for review within fourteen calendar days of the on-site evaluation. The team will then have seven calendar days to respond to the draft report. If a team member does not respond within that time, such nonresponse will be considered agreement with the content of the report. 2. The draft report will then be sent to the entity for its review to ensure that there are no mistakes in the report. The entity will have twenty-one calendar days to respond to the draft report. If the entity does not respond within that time, such nonresponse will be considered agreement with the content of the report. The entity may provide feedback in the form of corrections and clarifications that will be considered by the team for inclusion in the final report. Reliability Readiness Evaluation and Improvement Program 4

87 3. After agreeing on any final corrections, the team may elect to provide the entity the opportunity to review the changes if deemed significant. Otherwise, the final report will be posted on the NERC Web site within sixty calendar days of the completion of the evaluation. Information deemed to be critical or sensitive to electrical infrastructure will be redacted before posting. The entity will make the determination about what information will be redacted. Should the entity wish to provide comments regarding the final report, evaluation processes, findings, etc., the entity may provide a statement in writing that will be posted on the NERC Web site in conjunction with the final report. 4. In response to the posted report and within forty-five calendar days of the date of posting, the entity will supply a response plan to NERC addressing the report recommendations, including a timeline for implementation. This response plan will be published on the NERC Web site when submitted by the entity. a. If the entity requests, NERC will offer assistance in developing a suitable response plan to address the report s recommendations. The entity should notify NERC of its request for assistance. E. Monitoring Recommendation Implementation 1. Entities may implement actions based on the recommendation or may review the recommendation and determine that no action is warranted or necessary and provide documentation on their decisions as well as the response plan. 2. NERC shall monitor the entity s implementation of the recommendations in the final report and the entity s response plan, and shall report progress to the board. NERC may elect to use the regional entities to coordinate the request for updated recommendation status for members within its area of oversight. F. Examples of Excellence 1. NERC shall identify and publish examples of excellence identified during the course of readiness evaluations. Examples of excellence are practices utilized by owners, operators and users of the bulk power system that are identified as being exceptionally effective in ensuring and protecting the reliability of the bulk power system. These examples of excellence may be identified through a readiness evaluation or submitted to NERC for an on-site evaluation. Reliability Readiness Evaluation and Improvement Program 5

88 Item 8. Electing the Operating Committee Members Action Approve member election process. We will begin this discussion at the joint meeting. Attachment Procedure for Electing Members to the Operating Committee and Planning Committee (Will be sent separately). Background Section 3 of the Operating Committee charter explains the membership selection procedure (see excerpt at right). The charter allows each sector to establish its own selection process, similar to the Member Representatives Committee. But we (NERC staff) ended up managing the nomination and balloting process for all the sectors, which worked well. In fact, it s a very good way to ensure we don t have one organization providing more than one representative. And it keeps the process open and inclusive. We suggest doing the same for the Operating Committee and Planning Committee. This involves: 7. Announcing the nomination periods and providing nomination forms. 8. Posting nominations on the NERC Web site. 9. Announcing balloting periods and providing balloting forms. 10. Posting the ballot results on the NERC Web site. All of these procedures and forms are already set up. John Seelke and Don Benjamin are working on a procedures document similar to the Plan for Creating the Member Representatives Committee. It s not ready yet, but we will send it to the OC and PC once we have a working plan. Operating Committee Meeting March 21 22, 2007

89 Item 9. Action Discussion. Real-time Tools Best Practices Jack Kerr, chairman of the Real-time Tools Best Practices Task Force, will provide a summary of the task force s findings, conclusions, and recommendations for reliability standards and operating guides development. This will be a rather in-depth presentation. Report status The task force is working on its final report (about 400 pages!). We will forward the executive summary to the Operating Committee as soon as it is ready. Background Note: The following are excerpts from the 2003 blackout final report and NERC recommendations. The task force referenced below is the U.S.-Canada Power System Outage Task Force. U.S.-Canada Power System Outage Task Force Recommendation 22 Evaluate and adopt better real-time tools for operation and reliability coordination NERC s requirements of February 10, 2004 direct its Operating Committee to evaluate within one year the real-time operating tools necessary for reliability operation and reliability coordination, including backup capabilities. The committee s report is to address both minimum acceptable capabilities for critical reliability functions and a guide to best practices. The task force supports these requirements strongly. It recommends that NERC require the committee to: Give particular attention in its report to the development of guidance to control areas and reliability coordinators on the use of automated wide-area situation visualization display systems and the integrity of data used in those systems. Prepare its report in consultation with FERC, the appropriate authorities in Canada, DOE, and the regional reliability councils. The report should also describe actions by FERC and Canadian government agencies to establish minimum functional requirements for control area operators and reliability coordinators. The task force also recommends that FERC, DHS, and appropriate authorities in Canada should require annual independent testing and certification of industry EMS and SCADA systems to ensure that they meet the minimum requirements envisioned in Recommendation 3. Operating Committee Meeting March 21 22, 2007

90 Operating Committee Meeting March 21 22, 2007 Additional Background Material from the U.S.-Canada Power System Outage Task Force Report A principal cause of the August 14 blackout was a lack of situational awareness, which was in turn the result of inadequate reliability tools and backup capabilities. In addition, the failure of FE s control computers and alarm system contributed directly to the lack of situational awareness. Likewise, MISO s incomplete tool set and the failure to supply its state estimator with correct system data on August 14 contributed to the lack of situational awareness. The need for improved visualization capabilities over a wide geographic area has been a recurrent theme in blackout investigations. Some wide-area tools to aid situational awareness (e.g., real-time phasor measurement systems) have been tested in some regions but are not yet in general use. Improvements in this area will require significant new investments involving existing or emerging technologies. The investigation of the August 14 blackout revealed that there has been no consistent means across the Eastern Interconnection to provide an understanding of the status of the power grid outside of a control area. Improved visibility of the status of the grid beyond an operator s own area of control would aid the operator in making adjustments in its operations to mitigate potential problems. The expanded view advocated above would also enable facilities to be more proactive in operations and contingency planning. Annual testing and certification by independent, qualified parties is needed because EMS and SCADA systems are the nerve centers of bulk electric networks. Ensuring that these systems are functioning properly is critical to sound and reliable operation of the networks. NERC Recommendation 10 Establish Guideline for Real- Time Operating Tools The August 14 blackout was caused by a lack of situational awareness that was in turn the result of inadequate reliability tools and backup capabilities. Additionally, the failure of FE s control computers and alarm system contributed directly to the lack of situational awareness. Likewise, MISO s incomplete tool set and the failure of its state estimator to work effectively on August 14 contributed to the lack of situational awareness. Recommendation 10: The Operating Committee shall within one year evaluate the real-time operating tools necessary for reliable operation and reliability coordination, including backup capabilities. The Operating Committee is directed to report both minimum acceptable capabilities for critical reliability functions and a guide of best practices. This evaluation should include consideration of the following:

91 Operating Committee Meeting March 21 22, 2007 Modeling requirements, such as model size and fidelity, real and reactive load modeling, sensitivity analyses, accuracy analyses, validation, measurement, observability, update procedures, and procedures for the timely exchange of modeling data. State estimation requirements, such as periodicity of execution, monitoring external facilities, solution quality, topology error and measurement error detection, failure rates including times between failures, presentation of solution results including alarms, and troubleshooting procedures. Real-time contingency analysis requirements, such as contingency definition, periodicity of execution, monitoring external facilities, solution quality, post-contingency automatic actions, failure rates including mean/maximum times between failures, reporting of results, presentation of solution results including alarms, and troubleshooting procedures including procedures for investigating unsolvable contingencies.

92 Operating Committee Meeting March 21 22, 2007 Item 10. Midwest ISO Balancing Authority Action Endorse the Operating Reliability Subcommittee s conclusions regarding the creation of the MISO balancing area. Doug Hils will lead this discussion. Attachment Excerpt from MISO white paper, The Midwest ISO and Balancing Authority Functional Alignment White Paper, Version 1.0. Background The Midwest ISO is preparing to consolidate balancing authority tasks within its market area. MISO will become a NERC-certified balancing authority for this area that will be directly responsible for majority of the balancing authority tasks. Responsibility for the remaining few tasks will be retained with the local balancing authorities. MISO brought this proposal to the Operating Reliability Subcommittee, and the ORS approved the following motion at its February 15, 2007 meeting: Given that the Midwest ISO Balancing Authorities propose to create a single balancing area within the Midwest ISO Market Area, the Operating Reliability Subcommittee (ORS) reviewed the technical aspects of the proposal and did not find any reliability concerns. The ORS recognizes that other OC subcommittee reviews may be necessary, and that the proposed MISO BA will be subject to a Regional BA certification.

93 The Midwest ISO and Balancing Authority Functional Alignment White Paper Version 1.0

94 TABLE OF CONTENTS 1 BACKGROUND AND INTRODUCTION DEFINITIONS KEY ASSUMPTIONS NERC FUNCTIONAL MODEL AND NERC STANDARDS BALANCING FUNCTION TASK ASSIGNMENTS: BALANCING AUTHORITY RELATIONSHIPS WITH OTHER RESPONSIBLE ENTITIES NERC RELIABILITY STANDARDS CONCLUSION... 8 ATTACHMENT A... 1 ATTACHMENT B

95 1 Background and Introduction This Midwest ISO and Balancing Authority Functional Alignment White Paper describes the North American Electric Reliability Council ( NERC ) Balancing Functions that are necessary to transfer to the Midwest ISO in order to implement the Midwest ISO Ancillary Service Market, which consists of Operating Reserves: Regulation, Contingency-Spin and Contingency-Supplemental. This white paper is intended to delineate the roles and responsibilities as set forth in the NERC Functional 1 Model and the currently approved NERC Reliability Standards relating to the Balancing Authority responsibilities. This white paper documents the post-ancillary service market relationship between the 2 Midwest ISO and the current member Balancing Authorities in its market footprint. Attachment A of this white paper contains a list of the currently approved NERC Reliability Standards relating to the Balancing Authority (BA). It identifies the entity responsible for compliance to each requirement of the Standards at the start of the Midwest ISO Ancillary Service Market. This white paper along with Attachment A will be the framework for changes needed to the Balancing Authority Agreement. Attachment B is the current Balancing Authority Agreement. 2 Definitions Local Balancing Area ( LBA ) An operational entity responsible for compliance to a defined subset of NERC Balancing Authority Reliability Standards for their local area within the Midwest ISO Balancing Authority Area ( MBAA ). Local Reliability Center ( LRC ) An operational entity responsible for compliance to any NERC Reliability Standards associated with the Balancing Authority and/or Transmission Operator Functions, subject to the FERC Standards of Conduct and any applicable confidentiality agreements. Midwest ISO Balancing Authority Area ( MBAA ) The Midwest ISO Market footprint. Unaccounted for Energy/Residual Load ( UFE/RLA ) Unaccounted for Energy/Residual Load Account in accordance with the Midwest ISO EMT. 3 Key Assumptions x The Midwest ISO Market footprint will be one new, unique Balancing Authority Area. 1 White paper is based on the NERC Functional Model Version 3 2 Including members that operate pseudo Balancing Authorities 1

96 x x x x x x x x x x x x x The Midwest ISO will become a NERC Certified Balancing Authority. The NERC Balancing Function tasks will be assigned to either the MBAA or the LBA. The MBAA and the LBA will be the responsible entities for compliance withtheir assigned requirements of NERC Standards. The LRC responsible for coordinating and/or implementing black start and system restoration must maintain such capabilities. Day 1 Inadvertent payback accounts are settled. The Midwest ISO will use the existing infrastructure of the current Balancing Authorities to the extent practical. The Midwest ISO will assume responsibility for all aspects of providing Schedules 3, 5 and 6 for the Midwest ISO Market Footprint. The existing Ancillary Tariffs for The Midwest ISO members will be superseded and terminated by the Ancillary Service Market. The Midwest ISO may participate in a Reserve Sharing Group. Simultaneous co-optimization of the Energy and Ancillary Service Markets. All generators, load and transmission within the MBAA (including pseudo ties) will be assigned to an LBA which has the metered boundaries as required by Balancing Authorities in the NERC Standards. UFE/RLA calculations performed by The Midwest ISO will still be dependent on data supplied by LBAs. Each function for which The Midwest ISO has responsibility (the RC, BA, Market Operator, TP, etc.) will have defined requirements, procedures and protocols for communication in place. During an agreed upon transition/reversion period, the legacy Balancing Authorities will maintain their current operational capabilities. After this transition/reversion period, the Midwest ISO will not possess the ability to go back to individual legacy BA operations. 4 NERC Functional Model and NERC Standards The NERC Functional Model defines in general terms each function and the relationships between the entities that are responsible for performing the tasks within the functions. The framework for developing the function definitions is: a. The responsibility for a function should not be split by organizations, b. The functions are independent of the organization structure performing the function, and c. The functions provide flexibility to accommodate the range of presently conceivable organization structures. Attachment A provides a detailed list of the NERC Standards requirements applicable to the Balancing Function and assigns responsibility for those requirements to the Midwest ISO and/or the LBAs. 2

97 4.1 Balancing Function Task Assignments: NERC defines the following as tasks for the Balancing Function: 1. Must have control of any of the following combinations within a Balancing Authority Area: a. Load and generation (an isolated system) b. Load and scheduled interchange c. Generation and scheduled interchange d. Generation, load and scheduled interchange The Midwest ISO BA shall have control over the generation and scheduled interchange as describe in c. above. The Midwest ISO BA will control generation either directly or through LBA facilities. The Midwest ISO BA will not have direct control over load. 2. Calculate area control error within the Balancing Authority Area. The Midwest ISO BA shall calculate the area control error for the Midwest ISO Balancing Authority Area. The LBAs with external interconnections will provide to the Midwest ISO BA the accurate real-time net of its external tie-line values (including pseudo ties) for actual interchange calculation and any associated meter error correction factor. The Midwest ISO BA will provide its own frequency metering, bias determination, and scheduled interchange values. 3. Operate its Balancing Authority Area to maintain load-interchange generation balance. The Midwest ISO BA shall operate its Balancing Authority Area to maintain load-interchange-generation balance. 4. Review generation commitments, dispatch, and load forecasts. The Midwest ISO BA will be solely responsible for generation commitment, dispatch and load forecast review. 5. Formulate an operation plan (generation commitment, outage, etc.) for reliability evaluation. The Midwest ISO BA will solely perform this function. 6. Approve interchange transactions for ramping ability perspective. The Midwest ISO BA will solely perform this function. 3

98 7. Implement interchange schedules by incorporating those schedules into its ACE calculation. The Midwest ISO BA will solely perform this function. 8. Support Interconnection frequency. The Midwest ISO BA will solely perform this function. 9. Monitor and report control performance and disturbance recovery. The Midwest ISO BA will solely perform this function. 10. Provide balancing and energy accounting (including hourly checkout of interchange schedules and actual interchange), and administer inadvertent energy paybacks. The Midwest ISO BA shall perform the checkout of interchange schedules and administer inadvertent energy paybacks. The LBAs with external interconnections will checkout actual interchange with external BAs and provide such data to the Midwest ISO BA for inadvertent interchange accounting. 11. Determine needs for reliability-related services. The Midwest ISO BA will determine needs and implementation of the following reliability services: regulation service, operating reserves-spinning, and operating reserves-supplemental. 12. Deploy reliability-related services. The Midwest ISO BA will be responsible to deploy the services indicated in Implement emergency procedures. The Midwest ISO BA will be responsible for identifying emergency conditions and implementing emergency procedures with the support of LBAs. 4.2 Balancing Authority Relationships with Other Responsible Entities NERC lists the following as relationships with other responsible entities: Ahead of Time: 1. Receives operational plans and commitments from Generator Operators within the Balancing Authority Area. 4

99 The Midwest ISO BA will solely perform this function. 2. Receives evaluations from the Reliability Coordinator. The Midwest ISO BA will solely perform this function. 3. Receives approved, valid, and balanced interchange schedules from the Interchange Authorities. The Midwest ISO BA will solely perform this function. 4. Compiles load forecasts from Load-Serving Entities. The Midwest ISO BA will solely perform this function. 5. Develops agreements with adjacent Balancing Authorities for ACE calculation parameters. The LBAs involved with external physical ties are responsible for the agreements with adjacent BAs. The Midwest ISO BA may need a service agreement with those LBAs. 6. Determines amount required and deploys reliability-related services to ensure balance (e.g., amount of operating reserve, load following, frequency response). The Midwest ISO BA will solely perform this function. 7. Submits integrated operational plans to the Reliability Coordinator for reliability evaluation and provide balancing information to the Reliability Coordinator for monitoring. The Midwest ISO BA will solely perform this function. 8. Confirms interchange schedules with Interchange Authorities. The Midwest ISO BA will solely perform this function. 9. Confirms ramping capability with Interchange Authorities. The Midwest ISO BA will solely perform this function. 10. Implements generator commitment and dispatch schedules from the Load- Serving Entities and Generator Operators who have arranged for generation within the Balancing Authority Area. 5

100 The Midwest ISO BA will solely perform this function. 11. Acquires reliability-related services from Generator Owners. Real Time: The Midwest ISO BA will solely perform this function. 12. Coordinates use of controllable loads with Load-Serving Entities (i.e., interruptible load that has been bid in as a reliability-related service). The Midwest ISO BA will solely perform this function. 13. Receives loss allocation from Transmission Service Providers (for repayment with in-kind losses). The Midwest ISO BA will solely perform this function. 14. Receives real-time operating information from the Transmission Operator, adjacent Balancing Authorities and Generator Operators. The Midwest ISO BA will receive real-time operating information from the Transmission Operator, adjacent Balancing Authorities, Generator Operators and LBAs. LBAs will receive operating information from the Transmission Operator, adjacent Balancing Authorities, adjacent LBAs, and Generator Operators to the extent necessary for accurately providing operating information to the Midwest ISO BA and performing reliability monitoring functions to support implementation of emergency procedures. 15. Receives operating information from Generator Operators. The Midwest ISO BA will receive real-time operating information from the Transmission Operator, adjacent Balancing Authorities, Generator Operators and LBAs. LBAs will receive operating information from the Transmission Operator, adjacent Balancing Authorities, adjacent LBAs, and Generator Operators to the extent necessary for accurately providing operating information to the Midwest ISO BA and performing reliability monitoring functions to support implementation of emergency procedures. 16. Provides real-time operational information for Reliability Coordinator monitoring. 6

101 The Midwest ISO BA will solely perform this function Complies with reliability requirements specified by Reliability Coordinator. The Midwest ISO BA will solely perform this function. 18. Verifies implementation of emergency procedures to Reliability Coordinator. The Midwest ISO BA will solely perform this function. 19. Informs Reliability Coordinator and Interchange Authorities of interchange schedule interruptions (e.g., due to generation or load interruptions) within its Balancing Authority Area. The Midwest ISO BA will solely perform this function. 20. Directs resources (Generator Operators and Load-Serving Entities) to take action to ensure balance in real time. The Midwest ISO BA will solely perform this function. 21. Directs Transmission Operator (or Distribution Provider) to reduce voltage or shed load if needed to ensure balance within its Balancing Authority Area. The Midwest ISO BA will solely perform this function. 22. Directs Generator Operators to implement redispatch for congestion management as directed by the Reliability Coordinator. The Midwest ISO BA will solely perform this function. 23. Implements emergency procedures as directed by the Reliability Coordinator. This will be dual implementation by the Midwest ISO BA and LBAs. 24. Implements system restoration plans as directed by the Transmission Operator. The LBAs will perform this function. After the hour 25. Confirms interchange schedules with Interchange Authorities after the hour for checkout. 7

102 The Midwest ISO BA will solely perform this function. 26. Confirms interchange with adjacent Balancing Authorities after the hour for checkout. The LBAs will perform this function. 4.3 NERC Reliability Standards There are 389 requirements in current NERC Reliability Standards that apply to the Balancing Authority entity. Of those 389 requirements, the Midwest ISO BA and the LBAs will both be required to comply with 246 requirements. (Critical Infrastructure Protection ( CIP ) requirements in Version 1 increased 171 for a total of 175 requirements.) The Midwest ISO BA will be solely responsible for 135 and the LBAs will be solely responsible for 8. Attachment A contains the details of these requirements and ownership of them. The Midwest ISO, along with its members, will work with NERC staff and the Regional Reliability Organizations in the following areas: 1. Ensure that the concept described in Attachment A is considered feasible by NERC and the RE Compliance Programs. Recognizing potential timing issues with the transition to the Midwest ISO BAA, request reasonable accommodations related to compliance monitoring. 2. Designation of an RRO to certify the Midwest ISO BA, ensuring only 1 certification audit. 5 Conclusion There are many details that are not included in this White Paper that will need to be addressed either in the revision of the BA Agreement, new Contract Agreements, or revised or newly written Business Practice Manuals and procedures. Some of these details are: x x x x ISN Data and Back-up Data Retention Data needed by the Midwest ISO, LRCs or LBAs to operate reliably Operator Training The Midwest ISO and the legacy BAs will work together to draft detailed processes and procedures needed to ensure the transition is conducted in a safe and reliability manner. 8

103 Operating Committee Meeting March 21 22, 2007 Item 11. Market Flow Field Test Action Approve market flow field test (trial) procedures. Operating Reliability Subcommittee Chairman Jim Castle will lead this discussion. Attachment Market Flow Field Trial Monitoring Procedure Background The excerpt below from the December 14, 2006 Standards Committee meeting explains the purpose of the field test. The Operating Reliability Subcommittee is monitoring the progress of the test. Secretary s note The Operating Committee approves field tests as a part of its charter responsibilities.

104 MARKET FLOW FIELD TRIAL MONITORING PROCEDURE Background During the field trial for 3% market flow threshold, the IDC will report instances where market entities do not achieve required market relief. Procedure 1. OATI (IDC) will send a report whenever market flow relief obligations have not been met. These reports will be sent to NERC, the issuing RC, MISO, PJM, and SPP. Each entity will designate its own recipient(s). 2. The RC that issued the TLR will review the OATI report and report whether or not there was a reliability issue (i.e., violation > 30 minutes). a. If there is a perceived reliability issue related to the field trial and TLR Level 5 actions have been exhausted excluding load shedding, the market flow providers under the field trial will endeavor to remove non-firm flows down to 0% impact if more relief is needed. The RC that issued the TLR should then convene a conference call with management from the RC(s) that did not meet market flow relief obligations in order to resolve the issue if possible. 3. Each market flow deficient entity, that did not meet relief obligations, will review and evaluate: a. Cause for failure to meet obligation b. Threshold for market flow reporting calculation i. If 0%, would obligation have been met under 3% calculation c. Highest TLR level where obligation not met d. Extenuating circumstances, if any 4. After-the-fact reviews will be sent to the NERC Operating Reliability Subcommittee (ORS) Task Force by the market flow deficient entity. 5. The ORS Task Force will review the reports and send a summary of them to the ORS and the TLR Standards Drafting Team. 6. If any Reliability Coordinator believes that reliability is jeopardized by the field trial, that entity will contact the Chairman of the ORS and request a conference call of the ORS or the ORS Executive Committee to discuss possible termination of the field trial. 7. ORS or the ORS Executive Committee has the authority to suspend the field trial if reliable operations are being jeopardized as a direct result of the field trial. The ORS may resume the field trial after deliberation. 8. In the event that the field trial is suspended, the market flow providers under the field trial will endeavor to remove non-firm flows down to 0% impact if Page 1 of 2 2/15/07

105 MARKET FLOW FIELD TRIAL MONITORING PROCEDURE more relieve is needed and other non-firm impacts have been removed via TLR. Page 2 of 2 2/15/07

106 Operating Committee Meeting March 21 22, 2007 Item 12. Reliability Coordination Plan Approval Process Action Approve the Guideline for Approving Regional and Reliability Coordinator Reliability Plans, Version 1. Jim Castle will lead this discussion. Attachment Guideline for Approving Regional and Reliability Coordinator Reliability Plans Background The OC reviews (with help from the Operating Reliability Subcommittee) and formally approves reliability coordination plans. These plans are submitted to the Operating Committee either by the regional councils (examples: WECC and NPCC) or by the reliability coordinators themselves (examples: PJM and MISO). Over the last few years (beginning with the creation of the PJM market), the OC has asked NERC to conduct a pre-operation readiness review of each new reliability coordinator (RC) to ensure the RC has the ability to carry out its responsibilities, and, for those RCs in the Eastern Interconnection, has the tools to interface with the Interchange Distribution Calculator and System Data Exchange database. The OC has also asked NERC to conduct market readiness audits for those market operators who have implemented particular features of the IDC to accommodate their market flow calculations. The Operating Reliability Subcommittee has prepared a single document that explains this procedure. Secretary s Note re: Regional Reliability Plan Guidelines At their December 2006 meetings, the Operating Committee and Planning Committee approved a Regional Reliability Plan Guideline that includes the reliability coordination plan, as well as plans for coordinating system planning and operations in general. Before we can implement those guidelines, however, we need to sort out at least two other things: 1) how the guideline fits within the regional entities delegation agreements, and 2) the final disposition of the compliance registry that identifies which organizations are responsible for which functions. At this point, it is most important to have up-to-date reliability coordination plans, so the OC needs to approve the procedures the Operating Reliability Subcommittee is bringing to the table.

107 Guideline for Approving Regional and Reliability Coordinator Reliability Plans The framework for approving Regional and Reliability Coordinator Reliability Plans Version 1 Approved by the Operating Committee: Prepared by the Operating Reliability Subcommittee Draft March 2,

108 Guideline for Approving Regional and Reliability Coordinator Reliability Plans Introduction The Regional Reliability Plan Guideline provides a framework for the Regional Reliability Organization to use when developing its regional reliability plan (RRP). This guideline document outlines the process to be followed by the Regional Reliability Organization or by a Reliability Coordinator for submitting its RRP or Reliability Coordinator reliability plan (RCP) to NERC for approval. The Regional Reliability Organization will submit its RRP or the Reliability Coordinator will submit its RCP to NERC for review and acceptance. The NERC Operating Committee will review for acceptance the operating section of the RRP and the RCP and the NERC Planning Committee will review for acceptance the planning sections. This process for the standing committees will focus on the completeness, feasibility, and adequacy of the Regional Reliability Organization s or Reliability Coordinator s reliability plan. Draft March 2,

109 Guideline for Approving Regional and Reliability Coordinator Reliability Plans Approval Process Each Regional Reliability Organization or Reliability Coordination will submit its respective RRP or RCP to the Operating Committee s Operating Reliability Subcommittee (ORS) for initial review and approval. The ORS shall follow the process as outlined below and as illustrated in the Approval Process Flow Chart section when reviewing a RRP or a RCP: 1. Regional Reliability Organization Review and Approval of RRP or RCP. The Regional Reliability Organization (RRO) shall review and approve its Regional Reliability Plan before it is submitted to NERC for review and approval. The Reliability Coordinator shall submit its Reliability Plan to all Regional Reliability Organizations within which it operates for their respective review and approval before such plan is submitted to NERC for review and approval. 2. ORS Review. ORS endorsement of the RRP or RCP is based upon its assessment of the Regional Reliability Organization s or the Reliability Coordinator s ability to meet NERC reliability standards. To aid in this assessment, the ORS may request an operational review (reliability readiness evaluation) of the Reliability Coordinator. 3. Reliability Readiness Evaluation. At the request of the ORS, NERC will conduct a reliability readiness evaluation of an existing or prospective Reliability Coordinator. The reliability readiness evaluation may contain recommendations which the RC must implement prior to the Reliability Coordinator beginning operations. In this instance the Reliability Coordinator will develop a mitigation plan that addresses the recommendations. The reliability readiness evaluation team will present the evaluation and mitigation plan, if any, to the ORS. 4. ORS Endorsement of RRP or RCP. Following its review of the RRP or RCP (and the reliability readiness evaluation), the ORS will decide whether to endorse the RRP or RCP for presentation to the Operating Committee. If the ORS cannot endorse the RRP or RCP, the subcommittee will indicate its objections to the Regional Reliability Organization or the Reliability Coordinator. 5. Operating Committee Approval of RRP or RCP. The ORS will present its endorsement of the RRP or RCP to the Operating Committee for action. 6. Approval of Minor Revisions to a RRP or RCP. The Operating Committee delegates the approval of minor revisions to a RRP or RCP (e.g., reliability plan footprint change) to the ORS. 7. Posting of an Approved RRP or RCP. NERC shall post approved Regional Reliability Plans and Reliability Coordinator Reliability Plans on its Web site. 8. Access to NERC Reliability Tools. Reliability Coordinators are required to sign the Reliability Coordinator Standards of Conduct and the Confidentiality Agreement for Electric System Operating Reliability Data before NERC can grant access to the Reliability Coordinator reliability tools. Furthermore, NERC shall not grant access to some reliability Draft March 2,

110 Guideline for Approving Regional and Reliability Coordinator Reliability Plans tools (e.g., the Interchange Distribution Calculator), with the exception of granting access to the training environment of such tools, until the Reliability Coordinator receives approval to begin operation. 9. RRP or RCP Periodic Review. The Regional Reliability Organization or Reliability Coordinator shall review its respective RRP or RCP at least every three years and notify the ORS of the results of such review. Draft March 2,

111 Guideline for Approving Regional and Reliability Coordinator Reliability Plans Approval Process Flow Chart The Operating Committee (OC) and Operating Reliability Subcommittee (ORS) shall follow the process flow diagram detailed below when reviewing a Regional Reliability Organization Reliability Plan or a Reliability Coordinator Reliability Plan. Draft March 2,

112 Operating Committee Meeting March 21 22, 2007 Item 13. Frequency Monitoring Action Terry Bilke will lead this discussion. Background Terry will discuss the Resources Subcommittee s latest efforts at understanding and managing frequency excursions, and suggest where the Operating Committee can help: Support Frequency Response SAR and Standard Encourage use of intelligent alarms (see sample at right) Short excursions are alerts (learn from patterns; don t implement investigations) Longer deeper excursions merit review and lessons learned Support improved time and inadvertent management procedure Continue to support the Resources Subcommittee-CERTS projects

113 Operating Committee Meeting March 21 22, 2007 Item 14. E-tag Version 1.8 Action Discussion. Interchange Subcommittee member John Ciza will lead this discussion. Background This latest update to the e-tag specification was driven by changes in both NERC reliability standards and complementary NAESB business practices. The NAESB Executive Committee and the NERC Interchange Subcommittee assigned the e-tag update to the NERC/NAESB Joint Interchange Scheduling Group (JISWG). The JISWG reviewed both the e-tag schema (see marginal note at right) and specifications and determined that modifications were required for both. Changes to the schema require months of development effort by all e-tag vendors, interoperability testing, and changes to downstream software used by electric industry participants. Modifications were therefore split into two categories: 1) changes that would allow compliance with the Coordinate Interchange Standards effective January 1, 2007 without requiring schema changes, and 2) changes that require schema changes. Changes in the first category were made to the specification and released as version This version was implemented January 3, The transition went smoothly. Implementation of version 1.8 is expected in late It should be noted that implementation targets will be driven by successful achievement of milestones such as incorporation of industry comments, interoperability testing, and the amount of time required by industry participants to modify downstream software. The improvements in e-tag 1.8 include: 1. Full implementation of Coordinate Interchange standards 2. Alignment with the NERC functional model 3. Cleanup of unnecessary sections of the specification 4. Cleanup of unused sections of the schema and specification 5. Addition of missing requirements that have led to implementation variances (such as rounding and ramping) 6. Leveraging of the e-tag infrastructure to allow entities to utilize the e-tag as their primary form of communication 7. Automation of validations required by NERC/NAESB standards 8. Addition of new features requested by industry participants Schema Typically, a large, complex standard that has two parts. One part specifies structure relationships. (This is the largest and most complex part.) The other part specifies mechanisms for validating the content of simple XML elements by specifying a data type for each element.

114 9. Addition of security based on NAESB PKI standards Specifically, e-tag changes include: 1. Removing Background section 2. Adding reference to default ramp rate definitions 3. Adding new final states and their definitions 4. Adding rounding definition 5. Adding ramp rate validation 6. Identifying physical segment in curtailment (for proper MWh accounting when in-kind losses are used) 7. Modifying in-kind loss calculations 8. Defining which Functional Model entities can be scheduling entities (BA) 9. Removing Appendix A 10. Removing portions of erroneous current level warning 11. Carbon copy list (no approval, sent copies of e-tag) 12. Calculation of ActOnByTime 13. Adding TimeClassification (Late, OnTime, ATF) 14. Revising NERC Web site to Electric Industry Registry Web site 15. Adding TerminateRequest,, DistributeTerminate, and DistributeCancel methods. 16. Simplifying the Recovery function 17. Allowing ATF e-tags to be terminated 18. Allowing Source or Sink to modify DYNAMIC e-tag with actual data 19. Specifying that the transmission allocation must be greater than the energy profile 20. Requiring that validations in INT R1.1, 1.2, and 1.3 are performed by the agent and authority 21. Adding SSL (secure socket layer) via HTTPS (secure HTTP) and client certificate requirement based on NAESB PKI standard Operating Committee Meeting March 21 22, 2007

115 Operating Committee Meeting March 21 22, 2007 Item 15. Next Meetings Subsequent OC meetings will be at hotels near hub airports. We are working on the September and December meeting locations.