N ORTH A MERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, Village Boulevard, Princeton, New Jersey

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1 N ORTH A MERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, Village Boulevard, Princeton, New Jersey JOINT AC/OC/MIC MEETING Tuesday, March 28, to 5 p.m. Crowne Plaza Downtown Phoenix Phoenix, Arizona AGENDA 1. Introductions Dottie Anderson, MIC Chairman 2. American Superconductor Greg Yurek (Attached separately) 3. Procedure for Developing Standards Dottie Anderson a) Policy 3 update John Pope b) Status of CBM, TRM, TTC, and ATC Standards Armie Perez (See Item 6 in Adequacy Committee Agenda) c) Standards pilot with IEEE Don Volzka and Ron Niebo 4. NERC Policy or Standard Interpretation Procedure Don Benjamin 5. NERC Phase II Compliance Program Dave Hilt 6. Project Management (SPSSTF Proposal) Bob Cummings 7. Flow-Based Analysis Task Force Harry Terhune 8. Status of Policy 10 Scott Henry (See Item 10 in Operating Committee Agenda) 9. EPRI Collaboration with NERC on Power Delivery Reliability Initiative Stephen Lee 10. Long-Term Solutions to Market-Reliability Interface Issues Gerry Cauley and Dottie Anderson 11. Electronic Scheduling Task Force Gordon Scott TUESDAY, MARCH 28, 2000 Evening Reception 6 to 7 p.m. Background material attached. Phone Fax URL

2 Item 3. Procedure for Developing Standards At its January 20 21, 2000 meeting, the MIC passed the following resolution: Request NERC Board approval granting the MIC equal opportunity and responsibility for initiating any new policies, recommending changes to existing policies, and approving all NERC policies. Until the Board reviews the present approval process, the MIC determines that NERC Operating Policies 3, 9, and 10 have such overriding importance to the marketplace, therefore, the MIC recommends that the Board require definitive action by MIC before any changes to Policies 3, 9, and 10 are considered by the Board for approval or implemented on an interim basis. This resolution was presented in the MIC report to the Board of Trustees on February 7, 2000, under the Board consent agenda, and was accepted by the Board with the consent agenda items. On February 17, 2000, a joint meeting was held in Princeton of the Executive Committees of each standing committee. The discussions at this meeting led to a greater understanding of the MIC issues related to NERC policy development and approval. Several concepts were suggested at this meeting for further consideration: Proposed and new policies and standards are to be considered by each standing committee and its comments provided in a timely manner in accordance with the Standards Development procedure. Policy and standard development and approval procedures should consider an up front assessment of the need and priority of any new or proposed revisions. A template could be developed to facilitate the up front assessment. The template may include, for example, a brief description of the proposed or new policies and standards, justification of need, assignment of responsibilities, and a schedule for development, review, and implementation. This up front assessment could be reviewed by all standing committee(s). The standing committees will continue to coordinate on their shared responsibility for the standards development and approval process. Consideration should be given to a possible NERC staff position of a Standards Coordinator. In addition, the Operating Committee in setting up its subgroup structure in response to the resolution that the NERC staff carry out the directives and decisions of the OC and its subgroups recommended a proposed new balanced voting membership of nine provider and nine customer representatives. The OC also requested the MIC to assist in the staffing of these subcommittees. This joint group will reconvene to complete its discussions and to formalize recommendations to the standing committees for action at the July meetings.

3 b. Status of CBM, TRM, TTC, and ATC Standards The Adequacy Committee over the last year has been moving forward with a number of initiatives to develop solutions to issues surrounding the determination of available transfer capability (ATC). More recently, the NERC Board of Trustees at its September 1999 meeting, expressed a desire to see prompt solutions to ATC and related problems. It specifically asked the AC to report by February 2000 on its plans and timeframe for achieving solutions that will yield ATC values that are fair, coordinated, and verifiable. The availability of revised CBM, TRM, TTC, and ATC Standards are intended to provide a major contribution to meeting the Board s ATC objective. The Planning Standards Subcommittee and the ATC Working Group have coordinated since July 1999 on the development of revised CBM, TRM, TTC, and ATC Standards, and are continuing to coordinate on this effort using the NERC Standards Development Process. Item 6 of the AC s March 29 30, 2000 meeting agenda provides additional background material on the status of development of these Standards. Armando J. Perez, Chairman of PSS, will provide an overview of the status of this development with particular focus on the schedule to ensure that revised CBM, TRM, TTC, and ATC Standards will be available for consideration and approval by the Board at its June 2000 meeting.

4 c. Working with IEEE Don Volzka, President of the IEEE Power Engineering Society (PES) and member of the NERC Adequacy Committee, will make a presentation outlining a test case to determine if the standards development procedures of IEEE and NERC can be combined for standards of mutual interest to both organizations. Mrs. Terry decourcelle, Director for Standards Process Support at IEEE Standards Activities, Ron Niebo of the NERC staff, and Mr. Volzka will answer questions. The purpose of the presentation will be to advise the AC/OC/MIC of the scope of this test case. A single NERC standard was selected for this test case Policy 8B, Training of Policy 8, Operating Personnel and Training. During the test case, the standards development procedure will be evaluated and a report will be presented to the AC/OC/MIC. At the conclusion of the evaluation, any recommendation will be brought to the Committees at a future meeting. The combination of these two processes was explored prior to this test case. Improvements in the timeliness of the IEEE procedure and NERC transition to NAERO prompted the NERC staff to again consider combining these processes. Each offers favorable features, but combining them would require changes in the current NERC procedures. The test case will identify if the merger is feasible and what individual organization procedures must change to result in a combined procedure. Anticipated benefits of the new standards development procedure are: limiting the joint process for those standards of mutual North American Electric Reliability Council and IEEE interest, eliminating duplicate industry activities, utilizing existing acceptance by regulators of the IEEE standards process (necessary in the transition from NERC to NAERO), providing a structured style to all NERC standards, developing a process that includes all industry sectors, maintaining the technical focus of planning-operational standards at NERC, providing adequate input on all standards by North American Electric Reliability Council s Standing Committees, utilizing established procedures for responding to comments and attaching interpretation addenda, defining a balloting pool that includes all sectors, assuring that the balloting pool is mutually defined by NERC and IEEE, and out-sourcing the management of all standards to the IEEE. Until now, all work has been exploratory. This is the first opportunity to present this matter to the Committees. A review of the actions taken thus far is shown in Enclosure A. An outline of the overall process being explored for the test case is shown in Enclosure B.

5 Attachment A NERC-IEEE Test Case Development History July 1999 Concept discussed by NERC and IEEE August-September 1999 NERC reviews methods for combining procedures October 1999 Potential test case identified NERC Policy 8B (SOS scheduled Policy 8B for review in 2000 and anticipates BOT approval in 2001.) November 1999 Nov. 18 NERC-IEEE-SOS test case scope development meeting December 1999 NERC and IEEE staff coordination review January 2000 NERC-IEEE staffs refine process IEEE PES agrees to fund IEEE participation in test case (unprecedented) Anticipated NERC-IEEE working meeting deferred to March. March 2000 March 8 first NERC-SOS-IEEE standards meeting March 28 presentation before Joint AC/OC/MIC meeting April 2000 to December 2001 Development of Joint standard Evaluation of Joint procedure March 2001 Standard to OC May June 2001 Standard approved by NERC Board of Trustees

6 Attachment B Process for Developing and Approving NERC-IEEE Standards North American Electric Reliability Council Institute for Electrical and Electronic Engineers January 26, 2000

7 DRAFT: Process for Developing and Approving NERC Standards Process for Developing and Approving NERC-IEEE Standards Introduction This document explains the process NERC and IEEE shall use for announcing, developing, revising, and approving Joint NERC IEEE Standards. The process involves several Steps that include: Step 1 Request to Develop or Revise a Standard Step 2 Subgroup Assignment and Evaluation Step 3 Draft Standard and Post for Comment Step 4 Subgroup Deliberates on Comments Step 5 Standards Balloting Step 6 Implementation and Adoption Step 7 Distribution and Copyright Terms Standards Development Committee The Standards Development Committee, also known as a Standards Writing Committee or Standing Committee within NERC or a Sponsoring Committee within IEEE, shall be responsible for initiating the development of a new or revised Joint NERC-IEEE Standard. Standards Balloting Pool One Standards Balloting Pool shall exist and shall be referred to as the Joint NERC-IEEE Standards Balloting Pool. It shall serve as the industry-public consensus body for the balloting of any Joint NERC-IEEE Standards. The Pool shall consist of representatives from two areas. The first shall be IEEE-SA members who have an interest in the Joint NERC-IEEE Standard. The other will consist of as many as nine invited Pool members, if they currently are not IEEE-SA members. These members are the Chairman, Vice-Chairman, and NERC Staff Coordinator from each of the following NERC Committees Adequacy, Security, and Market Interface. Subgroup A subcommittee, working group or task force jointly established by NERC and IEEE for the purposes of developing a Joint NERC IEEE Standard. Appeals Committee The procedures established by both NERC and IEEE shall apply.

8 Process for Developing and Approving Joint NERC-IEEE Standards Steps The NERC Staff Coordinator, the IEEE Standards Activities department, and the affected NERC and IEEE Standards Development Committees shall monitor the procedures followed by the Subgroup. Any of these entities may, at any time, request that the process be evaluated to determine that all procedures were adequately adhered to. Step 1 Request to Develop or Revise a Standard Requests to develop or revise a Standard may be submitted by any NERC or IEEE member, or any organization or individual. Requests are to be written and submitted to any Standards Development Committee member that is responsible for the Standards in the area covered by the request. The affected NERC and IEEE Standards Development Committees shall work cooperatively and notify the other when a request is received. An initial review of the proposal by both the Chairmen of the NERC and IEEE Standards Development Committees shall determine if the request has reasonable merit and should be evaluated. If there is mutual agreement between the two Chairmen that the request has merit, then the request shall proceed to Step 2. If the request has no merit, then the Chairman of the Standards Developing Committee that received the request shall release that decision and the reason(s) for its denial to the initiator of the request. In cases where one Chairman s decision differs from the other, the Standard may still be developed, but it will not be identified as a Joint NERC-IEEE Standard and shall not be developed using these procedures. The IEEE Standards Activities department and the NERC Staff Coordinator shall be kept informed of any proposed new or revised Standards, as well as any decision to proceed or not to proceed. Step 2 Subgroup Assignment and Evaluation The affected NERC and IEEE Standards Development Committee Chairmen shall collectively identify a Joint NERC-IEEE Subgroup, hereafter referred to as the Subgroup, to evaluate the request. If a Subgroup does not exist, a temporary-subgroup may be requested to evaluate the request. The temporary-subgroup shall be the existing NERC Subcommittee, Working Group, or Task Force responsible for the area covered by the proposed new or revised Standard. The Subgroup, or temporary-subgroup, shall be assigned the task of evaluating the request and recommending 1 to the affected NERC-IEEE Standards Development Committee if a new or revised Standard is required. Any Subgroup recommendation shall be forwarded to the affected NERC and IEEE Standards Development Committee Chairmen. In addition to the proceed/not proceed recommendation, the affected industry groups that should be represented on both the Subgroup and the Joint NERC-IEEE Standard Balloting Committee shall be recommended. Where a Joint NERC-IEEE Subgroup does not exist, the affected NERC and IEEE Standards Development Chairman shall create such a Subgroup. The affected NERC and 1 Robert s Rules of Order shall apply unless specifically revised by either NERC or IEEE DRAFT 7 January 26, 2000

9 Process for Developing and Approving Joint NERC-IEEE Standards IEEE Standards Development Chairmen shall jointly select the Chairman(s) of the Subgroup. The selected Subgroup Chairman(s) shall satisfy two conditions IEEE SA membership and NERC membership. This may result in cases where the Subgroup has Co Chairman. If a decision to proceed is recommended, a Subgroup has been created, and the Subgroup Chairman has been identified, several additional actions shall take place. These include: 1. An IEEE Project Authorization Request (PAR) shall be developed and forwarded to the IEEE Standards Development Committee. 2. The PAR shall be approved by the IEEE Standards Development Committee and forwarded to the IEEE Standards Advisory Board and NesCom for approval. 3. NERC Board of Trustees shall be notified that a Standards development process has been initiated. 4. An announcement of the changes to be made shall be posted in appropriate NERC and IEEE publications and web sites. 5. All persons affected by the Standard shall be invited to participate in the development of the Standard. 6. The NERC and IEEE Standards Developing Committees, working with the NERC and IEEE staffs, shall identify the participants who will be invited to participate in the Joint NERC Standards Balloting Pool. 7. The Subgroup Chairman(s) shall send a notification to the person who made the requests indicating that the request will be evaluated. Subgroup membership shall be open to all NERC and IEEE members. The Subgroup Chairman(s) may invite non-nerc and non-ieee participants. Participation in the Subgroup shall have two categories regular membership or corresponding membership. Regular membership shall be granted to all NERC or IEEE members who attend scheduled meetings where the draft Standard is deliberated. Regular membership shall include voting privileges. The Chairman(s) of the Subgroup shall withhold regular membership to those unable to attend less than one-in-three (rolling basis) authorized Subgroup meetings. All others shall be listed as corresponding members. Corresponding members shall receive all Subgroup minutes, but shall not participate in any voting. In all cases, the number of regular and corresponding members shall have balanced representation from all affected industry segments listed in the PAR. If the Subgroups recommendation is that work is not to proceed, the Subgroup shall so notify the affected NERC and IEEE Standards Developing Committee Chairmen. The notification shall include a recommendation describing why it should not proceed. The Standards Developing Committee that received the request shall review the recommendation and either appoint a new Subgroup to evaluate the request or shall notify the person who initiated the request of the decision not to proceed and the reasons for that decision. The IEEE Standards Activities department and the NERC staff coordinator shall be kept informed of any Standards requests, as well as any decision to proceed or not to proceed. DRAFT 7 January 26, 2000

10 Process for Developing and Approving Joint NERC-IEEE Standards Step 3 Draft Standard and Post for Comment The Subgroup shall draft the new or revised Standard and provide a recommendation of any specific measurements for determining compliance. Regular and corresponding Subgroup members may offer comments on the draft that the Subgroup must respond to. Comments from non-members shall be acknowledged and distributed to the regular and corresponding members for consideration. No formal response need be issued for public comments received prior to the draft Standard being posted. The draft Standard should be developed using the guidelines stated in the IEEE Standards Style Manual. As appropriate, drafts of the Standard and the reasons for each revision shall be reported to all the affected NERC and IEEE Standards Development Committees. Once the draft Standard is voted upon by the regular members as being acceptable for posting, the draft Standard shall be electronically posted for a period of 45-days for public comment. An notice of this shall be issued to all NERC and IEEE Standards Development Committee members. Comments from affected individuals or organizations are to be forwarded to the Subgroup for review, resolution, and response. Only electronic comments will be accepted. Comments must be submitted in a format defined by NERC and IEEE. Responses to all comments shall be electronically posted. Step 4 Subgroup Deliberates on Comments Using the comments received, the Subgroup will revise the draft Standard as necessary. The Subgroup will document the disposition of all comments received, and electronically post the comments and resolutions for public review. If the requested changes do not significantly alter the draft Standard, in the opinion of the Subgroup Chairman(s), then the Standard shall be voted upon by the Subgroup. If approved, the Subgroup shall recommend that the draft Standard be balloted by the Joint NERC-IEEE Standards Balloting Pool. The draft Standard shall also be posted and an announcing its balloting status forwarded to all NERC and IEEE Standards Development Committee members. The Subgroups recommendation shall include any unresolved comments. If the comments received result in significant changes to the draft Standard, then Step 3 shall be repeated. The Subgroup Chairman shall determine if a change is significant and warrants repeated posting for public comment. Only those sections of the draft Standard that contain areas where significant changes were made must be issued for public comment. During secondary public comment periods, the number of review days shall be determined by a vote of the Subgroup and may be as few as 30 days. When the secondary reviews are completed, the Subgroup members shall vote on whether or not the draft Standard may be released for balloting. If approved, the draft Standard shall be forwarded to the Joint NERC-IEEE Balloting Pool for balloting. The draft Standard shall also be posted and an announcing its balloting status forwarded to all NERC and IEEE Standards Development Committee members. The Subgroups recommendation shall include any unresolved comments. The IEEE Standards Activities department and the NERC Staff Coordinator shall be kept informed of any proposed new or revised Standards, as well as any decision to proceed or not to proceed. DRAFT 7 January 26, 2000

11 Process for Developing and Approving Joint NERC-IEEE Standards Step 5 Standards Balloting The Joint NERC-IEEE Standards Balloting Pool shall ballot the draft Standard recommended by the Subgroup. The Pool shall serve as the industry-public consensus body for balloting Joint NERC-IEEE Standards. The Pool shall consist of representatives from two areas. The first shall be IEEE-SA members, identified in Step 2, as having an interest in the Joint NERC-IEEE Standard. The other may consist of as many as nine invited non-ieee-sa members, if they currently are not IEEE-SA members. These members are the Chairman, Vice- Chairman, and NERC Staff Coordinator from each of the following NERC Committees Adequacy, Security, and Market Interface. These nine NERC members shall be responsible for forwarding all NERC member comments from members who may or may not be IEEE-SA members. The draft Standard shall be posted for at least a 30-day ballot review period. During this period, members of the Joint NERC-IEEE Standards Balloting Pool may complete their individual electronic ballots or may meet to collectively ballot the draft Standard. In either event, the result of each individual ballot shall be duly recorded. Any negative ballot must contain a statement describing the reason for the negative ballot and how that concern might be resolved. Negative ballots that do not contain a corrective statement shall not be considered in the final ballot summary. At least three-quarters of the ballots received must be returned to establish a valid vote. For the successful passage of a draft Standard, three-quarters of the ballots received must approve the draft Standard. The Subgroup shall be responsible for modifying the draft Standard, as appropriate, to resolve any negative comments. The voting shall be monitored by the Subgroup and reports shall be provided to the affected NERC and IEEE Standards Development Committees. The NERC Staff Coordinator and the IEEE Standard Activities department shall be kept informed of all ballot summaries and the resolution of all comments. If the Subgroup chooses to modify the Standard to resolve negative ballot(s), the Chairman of the Subgroup shall determine if the modifications are significant. If the changes are not significant, the revised Standard shall be recommended for approval. Modifications made as the result of balloting that result in a significant change(s), in the opinion of the Subgroup Chairman(s) shall cause the draft Standard to be re-balloted. The re-ballot shall note all changes and any unresolved negative concerns raised during the ballot. The period for reballoting shall be determined by the Subgroup Chairman(s) and may be no less than 10-days in duration. Step 5 shall repeat itself until a successful ballot is achieved. If in the final vote summary compiled by the Subgroup, less than 25% of the final ballots are negative, the Chairman(s) of the Subgroup may recommend that the Standard be adopted. Or, the Chairman(s) may recommend that the Subgroup re-evaluate the Standard and ballot the standard again to reduce the percentage of negative ballots. If, after reviewing the ballot summary, the Subgroup is unable to resolve the negative ballots, the Subgroup shall refer the draft Standard to the affected NERC and IEEE Standards Developing Committee. The returned draft Standard shall list the negative ballots received and the reasons why they could not be resolved. The affected NERC and IEEE Standards Developing Committee shall determine if the process should be halted or referred to a new DRAFT 7 January 26, 2000

12 Process for Developing and Approving Joint NERC-IEEE Standards Subgroup. If the process is halted, then the Standards Developing Committee that received the request shall notify the initiator of the original request. Step 6 Implementation and Adoption Once the ballot is complete, the Subgroup shall recommend the balloted Standard be approved for adoption and implementation. The recommendation shall include the ballot summary and any unresolved negative comments. The balloted Standard shall be presented for acceptance to the affected NERC and IEEE Standards Development Committees. The review by both Committees shall be limited to determining if the balloted Standard should be forwarded to the NERC Board of Trustees and the IEEE Standards Approval Board for approval and implementation. If either Standards Development Committee does not approve the draft Standard, the reasons for the disapproval and the corrective change(s) shall be forwarded to the Subgroup and to the other Standards Development Committee. The Subgroup shall then review these comments and resubmit the draft Standard for balloting by the Joint NERC-IEEE Standards Balloting Pool. Draft Standards that are not approved by the affected NERC and IEEE Standards Developing Committees shall not be forwarded to their respective Boards (NERC Board of Trustees and IEEE Standards Advisory Board) as Joint NERC-IEEE Standards. Such draft Standards shall be identified as either NERC Standards or IEEE Standards until such time as both Boards approve the same Standard. Where there is agreement between the affected NERC and IEEE Standards Developing Committees, the draft Standards shall be forwarded to their respective Boards for approval and implementation. Step 7 Distribution and Copyright The Standards shall be made available to all members and non-member of NERC and IEEE. IEEE shall hold the copyright to any Joint NERC-IEEE standard. Through a license agreement, NERC shall have the right to distribute all Joint NERC-IEEE standards to NERC members and to post them for downloading on NERC s web site or to include them in any NERC authorize publication. All Joint NERC-IEEE standards released by NERC shall bear an appropriate heading identifying the joint ownership of the document and the IEEE s copyright authority. DRAFT 7 January 26, 2000

13 Request Received NERC Std. Comm. IEEE Sponsoring Committee Joint NERC-IEEE Subgroup IEEE SA AC/SC/MIC Input Reiterate Public Drafts 45 Days: Initial Review 30 Days: Re-Drafts AC/SC/MIC Input 30 Day Review Final Draft for Balloting Joint NERC-IEEE Ballot Pool Reiterate Ballots 10 Days Min. (each) NERC and IEEE to mutually define Ballot Pool. IEEE to invite Chair, Vice Chair, and NERC Staff Coordinator of all NERC Standing Committees (AC/SC/MIC) to participate in Joint Ballot Pool. NERC Std. Comm. Ballot (Joint or NERC) NERC & IEEE Staffs to Coordinate IEEE SA Approval NERC BOT Approval PROCESS TYPE NERC IEEE Joint

14 N ORTH A MERICAN E LECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, Village Boulevard, Princeton, New Jersey TO: ADEQUACY COMMITTEE OPERATING COMMITTEE MARKET INTERFACE COMMITTEE Improvements to the NERC Dispute Resolution Process March 4, 2000 When the NERC Board of Trustees established its Policy Interpretation Task Force, one issue the Board asked the Task Force to address was improvements to the NERC dispute resolution process. The PITF expects to take recommendations to the Board of Trustees at its June 2000 meeting and has asked the NERC staff to develop alternatives for consideration by the PITF. Attached for comment is a straw man for one such alternative. One kind of dispute that NERC is beginning to see is requests for interpretation of current Policies, where the specific question may not be explicitly addressed in the Policies and Standards. Sometimes these questions can be dealt with easily; other times, the questions may be more difficult or may affect more than one party. One solution might be to propose a revision to the standard, to specifically deal with the question asked. That process, however, can be time-consuming due to the posting and comment periods required in our Standards Development Process. It would be useful for NERC to have a policy interpretation mechanism in place that is responsive to these requests. The criteria for evaluating such a mechanism would include the following: Timeliness of response; Involvement of subcommittee with technical expertise; Opportunity for other interested entities to be heard; Fairness and balance in the decisional process; Means of incorporating interpretation into the Standards or Policies; and Opportunity for review by higher authority. The NERC staff has prepared a draft Policy Interpretation Procedure that attempts to include these criteria, and is seeking your comments. Please send comments to me by April 15, This will give each committee an opportunity to discuss this as a group at its meeting in March. Your comments will be used by the NERC staff in developing materials for consideration by the PITF and Board of Trustees. Committee members are also requested to suggest revisions to the criteria as well as other mechanisms that may be useful. Sincerely, David N. Cook NERC General Counsel Phone Fax URL

15 NERC Policy or Standard Interpretation Procedure Version 1, Draft 3 Introduction NERC expects that entities such as Control Areas, Transmission Providers, Generators, Load-Serving Entities, and Purchasing-Selling Entities may from time to time request an interpretation of a NERC Operating Policy or Planning Standard for various reasons, such as: The Entity finds that a Policy or Standard is ambiguous or unclear, or The Entity has been challenged that its operating practices are not compliant with NERC Policies or Standards, or A Policy or Standard is silent on how certain situations are to be handled, or A Policy or Standard does not adequately explain other entities responsibilities. Comments due to David Cook by April 15, dcook@nerc.com In these situations, an Entity may request from the Operating Committee or Adequacy Committee an interpretation of an Operating Policy or a Planning Standard. The following section explains the Policy or Standard interpretation procedure. The requesting Entity should expect a response within one month. Interpretation Request 1. Interpretation request. The entity shall send its request to the secretary of the appropriate standing committee (either the Operating Committee or the Adequacy Committee), preferably as an with attachments as necessary Specific Policy or Standard. The request must include the specific Operating Policy or Planning Standard, including its name and reference number Details of request. The Entity shall include an explanation of the situation(s) it is facing and how the Policy or Standard fails to provide clear direction Explanation for Interpretation Request. The Entity shall explain the reasons for requesting the interpretation. These might include: Ambiguity or lack of clarity. The Entity finds that the Policy or Standard has multiple interpretations or does not explain what the Entity is supposed to do, or what other entities are supposed to do in certain situations Compliance challenges. Another entity claims that the Entity requesting the interpretation is not following one or more NERC Policies or Standards Missing steps. The Entity finds that the Policy or Standard is incomplete Other affected entities. The Entity shall send a copy of its request to other entities that it knows may be directly affected by the interpretation and identify those other entities in its request Proposed Interpretation. The Entity may include its proposed interpretation and the supporting rationale, with specific reference to applicable provisions of the Policy or Standard. 2. Staff drafts interpretation. The NERC staff will prepare a draft interpretation for consideration by the Subcommittee responsible for the Policy or Standard. (Time: 1 week) Version Draft 3: March 4, 2000

16 NERC Policy or Standard Interpretation Procedure 3. Subcommittee consideration. The Subcommittee will provide comments to the NERC staff within one week. (Time: 1 week) 3.1. Conference call. The NERC staff will hold a conference call with the Subcommittee and requesting Entity as well as those known to be affected by the interpretation to review the details of the response. 4. Provide Subcommittee s interpretation to Operating Committee or Adequacy Committee and Market Interface Committee. The NERC staff will send the Subcommittee s interpretation to the full Operating Committee or Adequacy Committee and the Market Interface Committee as well as their respective Executive Committees for comments. (Time: 1 week) The staff will also post the draft on NERC s web site for comment. The staff will notify the industry via NERC s list servers. All comments are due within two weeks of notification. 5. Executive Committee conference call. The Executive Committee will hold a conference call, review the comments, and agree on an interpretation. The requesting entity, as well as those known to be affected by the interpretation, will be invited to participate Decision on Policy or Standard revision. The Executive Committee will also decide whether a Policy or Standard revision is necessary to support the interpretation. If a revision is necessary, the Executive Committee will recommend this to the Subcommittee responsible for the Policy or Standard. The Subcommittee will consider this request at its next regular meeting. 6. Ratification. The question of ratification of the Executive Committee s decision will be on the agenda of the next regular meeting of the Operating Committee or Adequacy Committee. If ratification is needed sooner, then the NERC staff will poll the Operating Committee or Adequacy Committee for a vote via . The full committee shall consider any objections to the decision submitted by the requesting entity or other entities affected by the interpretation Effective dates. The interpretation shall be effective from the time of the Executive Committee s decision until the next revision of the Policy or Standard. 7. Notification and Posting. Following ratification, the NERC staff will notify the industry of the interpretation via NERC s list servers. The staff will also post the interpretation on the NERC Standards web site, and will include it in the Operating Manual or Planning Standards. Version Draft 3: March 4, 2000

17 Item 5. NERC Phase II Compliance Program The NERC Compliance Program, as approved by the Board of Directors, has entered the second phase of a four-phase project. The first phase, often referred to as the Pilot Program, is complete and the final report is available on the NERC web site. The goal of the program is to ensure compliance with NERC Policies and Standards to preserve the reliability of the electric supply to North America. The goal of the program is not to collect fines or levy penalties for noncompliance. Instead, it is to encourage compliance with NERC Policies and Standards by all users of the electric systems in North America to preserve reliability through self-assessments, periodic reviews, and investigations for compliance. In Phase I of the Pilot Program, 22 measurements, comprised of 16 based on Planning Standards and 6 based on Operating Policies, were implemented for field trials. The compliance process includes the collection of pertinent data, the review and assessment of compliance to a given Standard and measurement, and enforcement and mitigation (where warranted). These Standards and measurements are now being revised based on the lessons learned and comments received in Phase I and will be submitted through the NERC Standards Development Process for public comment. Once the public reviews are completed, these revised Phase I Standards and measurements will be presented to the appropriate Standing Committee for approval and then to the NERC Board for approval. This is expected to occur during the summer of Following Board approval, formal reviews for compliance will begin in the latter part of 2000 and beyond. The Pilot Program performed the function intended and was a learning experience. It tested the compliance review processes and procedures as well as the Standards, measurements, and compliance templates. It also identified some areas of non-compliance within and among the Regions and their members. Lessons learned from each phase of the program will be incorporated into the subsequent phases of the program. One example of the value of the program was related to lessons learned in the field trial of one measurement regarding Policy 7, Telecommunications. This measurement was removed from the program on the basis that the Policy had not kept pace with technology and that the Policy needed revision. For Phase II of the Compliance Program, in addition to the Phase I measurements (with the exception of the one Policy 7 measurement) 23 Planning Standard Templates and 16 Operating Standard Templates will be included in the field trials. If development and approvals are achieved as scheduled, the revised CBM, TRM, TTC, and ATC Standards will also enter the Phase II program during the second half of Each of the ten NERC Regions held its Compliance Program Seminars to initiate the 2000 Compliance (Phase II) Program, and each seminar was well attended. The NERC Compliance Subcommittee (OC) and Compliance Review Working Group (AC) are satisfied that the Pilot Program has demonstrated that the appropriate compliance review mechanisms are in place in the Regions and NERC to assess and enforce compliance to the NERC Standards and measurements. However, the Pilot Program identified a need for improved coordination, consistency and communications among the various Subcommittees, Task Forces and Committees involved in the development of NERC Standards and Policies. The Compliance Program requires that NERC Policies, Standards, and measurements be clearly stated and defined including who is to comply with these Standards. The work of the Control Area Criteria Task Force is expected to play an important role in determining who must comply with which Policies, Standards and measurements. This work will likely apply not only to the Operating Policies but

18 to the Planning Standards and users of the transmission systems. Both the Adequacy Committee and the Market Interface Committee should monitor and participate in the Task Force s activities. Also, the Compliance Program must be considered with any change in the Process for Developing and Approving NERC Standards as it will impact and play an important role in the future of the Compliance Program. Activities are now being initiated to prepare for the Phase III (and beyond) Compliance Program. Work will be underway shortly to review and refine, as appropriate, the next group of Compliance Templates. Also an investigation of the development of appropriate databases that may be required in response to the Planning Standards and Operating Policies continues in progress.

19 Item 6. Project Management (SPSSTF Proposal) Mr. Robert W. Cummings, Director Transmission Services, will update the Standing Committees on NERC projects that are underway and pending. Mr. Cummings will also highlight the changes that have been made in NERC project management, in keeping with the resolutions passed by the Committees in November, and an overview of the expected Life of a NERC Project from inception to completion under the new project management philosophy.

20 Item 9. EPRI Collaboration with NERC on Power Delivery Reliability Initiative Mr. Stephen Lee, EPRI s Area Manager of Grid Operations and Planning, will present an overview of the collaborative efforts between NERC and EPRI for the upcoming summer and the projects that are slated for the summer of Mr. Lee will explain the EPRI Power Delivery Reliability Initiative, and the projects it encompasses. Among those being done in conjunction with NERC are the Real-Time Security Data Display (RSDD), augmented tag dump software, assistance in IDC Study Mode development, and development of Common Information Model (CIM) reliability tools.

21 Item 10. Long-Term Solutions to Market-Reliability Interface Issues Background The North American Electric Reliability Council (NERC) Board of Trustees on February 8, 2000 approved an initiative to conduct a planning process to develop long term, market-oriented alternatives to address market-reliability interface issues. The Board-approved scope of work for the planning process, and other supporting references, are available at (select Planning Process). Scope The initial motivation for this planning process stems from the impacts on the electricity market of various congestion management techniques in use today. NERC expects that one of the outcomes will be market-oriented solutions for congestion management. Recognizing a need for a broad approach to defining market-interface issues and alternatives, the following questions are the focus of the planning process: What is our vision for the market-reliability interface in 2005 to enable mutual achievement of reliability and market objectives? How do we get there and how do we overcome barriers along the way? Planning Principles Long-term options must not be constrained by present concepts and legacy systems. The planning process is open and adaptive and encourages the bringing forward and evaluation of new alternatives and concepts. The planning process fosters broad-based participation and responsibility for implementation by stakeholders in the bulk electric power industry of North America. The planning process seeks executive commitment across all key sectors and institutions in the North American electric industry. Regional differences in operations, market practices and regulatory rules need to be clearly understood and evaluated as alternatives to addressing transmission access and congestion management. Deliverable The deliverable of the planning process is a report to the NERC Board of Trustees in October This report will provide: A desired vision of the market-reliability interface in An action plan in the form of recommendations to achieve that vision. The report will recommend assignments of responsibility and a schedule for implementation. Strategies for overcoming known barriers to reaching the vision and a continuing process to actively adapt the long term plan as needed to achieve desired outcomes. Planning Process The planning process will use a collaborative model called the Search Conference and is managed by a consultant with expertise in this method. A total of six Search Conferences will be completed, with up to 40 participants each. Search Conferences will each use a similar process to develop an industry vision and action plan. A Search Conference begins with an assessment of the environment that will affect the future of the bulk electric power industry in North America. The participants will then identify the most likely future of the industry (if coordinated change is not initiated) and a desired future. The desired

22 future is the vision or end point for Next, barriers or constraints to achieving that vision are identified and strategies are developed for overcoming such constraints. Finally, an iterative process is used to ensure the stated vision is practical considering the known barriers and strategies. The Search Conference process focuses on reaching agreement among the participants, and where agreement cannot be reached, identifying areas of disagreement. The product of each Search Conference is an interim report identifying specific objectives. 5-7 delegates from each Search Conference will then participate in an integration session to pull the results together into a single plan and report for the Board of Trustees. Selection of Search Conference Participants Participation in the Search Conferences is based on criteria that have been carefully chosen by a Process Design Team. The selection criteria include: representation by direct stakeholders in bulk electric systems (users, owners, operators, producers, regulators, and policy-makers), regional representation, requisite knowledge and competencies, and personal traits suitable for innovative planning. Participants are selected using a referencing method by which qualified nominees are recommended by others in the industry. NERC has issued a public announcement soliciting nominations. Nominations are being received in an electronic form at (in the grey box select link to Nominations). A nominator may enter a nomination for each person that he or she believes meets the qualifications. In an iterative process, those who are nominated will be requested to submit additional nominations. The Process Design Team, working with the external contractor, will coordinate the assignment of participants to the six Search Conferences in accordance with the criteria listed above. Attendance at each conference is restricted to the invitees in order to assure a manageable process. Executive Team and Process Design Team An Executive Team has been formed, consisting of executives from key industry sectors and organizations. A core of the Executive Team consists of members of the NERC Board of Trustees assigned by Chairman Gary Neale on February 8, 2000 to guide this effort on behalf of the Board. The Executive Team is tasked with enabling and guiding the planning process. A Process Design Team is coordinating the implementation of the planning initiative. The Process Design Team was assembled in December 1999 from members of the NERC standing committees and others who are interesteder (-) Tj3ugltthe plannin Tc tivefore in

23 Table 1 Action Plan and Schedule Who What When NERC Board Approve planning initiative 2/8/00 NERC PM Public announcement and press release 2/14/00 Contractor Electronic template for nominations available 2/14/00 NERC PM Public solicitation for nominations to NERC lists 2/18/00 NERC PM Letters requesting nominations from regions and 2/22/00 associations and other key organizations TBD FERC briefing on planning process TBD Design Team Conference call planning and preparations 2/24/00 Executive Team Conference call planning and preparations 2/24/00 NERC PM Post Search Conference references 2/29/00 Executive and Meeting to review Search Conference scope and 3/7/00 Design Teams plans, nomination process Industry Closure of nomination period 3/10/00 NERC PM Announce Search Conference participants 3/17/00 Contractor Draft materials for Search Conferences 3/22/00 Design Team Conference call review draft SC materials 3/24/00 Executive Team Conference call progress report 3/28/00 NERC PM Progress report to MIC/SC/AC 3/27-29/00 Contractor Final Search Conference materials 4/4/00 Contractor Search Conference 1 Atlanta 4/12-14/00 Contractor Search Conference 2 Philadelphia 4/17-19/00 Contractor Search Conference 3 Dallas 4/25-27/00 Design Team Conference call progress report 4/28/00 Executive Team Conference call progress report 4/28/00 Contractor Search Conference 4 Chicago 5/2-4/00 Contractor Search Conference 5 San Francisco 5/9-11/00 Contractor Search Conference 6 Toronto 5/31-6/2/00 Executive and Meeting to review progress and direction for 6/6/00 Design Teams integration process Contractor Agenda and materials for Integrating Conference 6/20/00 Contractor Integration Conference Las Vegas 6/26-27/00 Contractor Draft report 7/21/00 Executive and Meeting for review of final report 8/1/00 Design Teams Contractor Final report 8/15/00 Executive and Develop implementation recommendations for 9/15/00 Design Teams presentation to NERC Board Chair, Ex. Team Presentation of long term plan to NERC Board 10/12-13/00

24 Table 2 Executive Team and Process Design Team Executive Team Company Representing 1. John Q. Anderson Media One NERC Independent Board Member 2. Paul Barber Citizens Power Marketer/NERC Board Member 3. Richard Bulley MAIN MAIN Regional Executive 4. Lynne Church EPSA EPSA/Power Producers/Marketers 5. Jack Davis Arizona Public S. WSCC/NERC Board Member 6. Brant Eldridge ECAR ECAR Regional Executive 7. Dennis Eyre WSCC WSCC Regional Executive 8. Kellan Fluckiger V.P. Operations California ISO 9. Don Furman PacificCorp PacificCorp 10. Michehl Gent NERC President NERC President and Board Member 11. Jim Goodrich (Chair) Independent NERC Independent Board Member 12. David Goulding IEMO Canada/NERC Board Member 13. Mike Greene TXU Electric ERCOT/NERC Board Member 14. Carol Guthrie Chevron Customer/NERC Board Member 15. Phillip Harris PJM Interconnection MAAC/NERC Board Member 16. Richard Midulla Seminole Electric FRCC/Co-ops/NERC Board Member 17. Sharon Nelson Independent NERC Independent Board Member 18. Phil Pellegrino New England ISO New England ISO 19. Richard Sherrill Duke Energy N. A. IPP 20. Ken Wiley FRCC FRCC Regional Executive 21. Fred Williams Southern Company SERC Table 3 Process Design Team Process Design Team Company Representing 1. Bill Boyd Ontario Power Gen Canada 2. Jim Byrne WSCC WSCC 3. Ed Davis Entergy SERC 4. Bob Harris WAPA MAPP 5. Ken Laughlin PJM Interconnection MAAC/MIC 6. Steve Lee EPRI EPRI 7. Laura Manz PSE&G MAAC 8. Mike McClenahan Southern Energy Mkt Power Marketer 9. Carol McMillan Reliant Energy ERCOT 10. Marty Mennes FPL FRCC/MIC 11. Phil Park BC Hydro WSCC/Canada 12. Harlow Peterson SRP AC/WSCC 13. Bill Phillips MISO OC/ECAR 14. Van Prater Dynegy Power Marketer 15. Barbara Rehman Bonneville Power WSCC/MIC 16. Ralph Samuelson Automated PX Power Exchange 17. Ed Schwerdt NPCC NPCC 18. Ron Smith General Motors Industrial Customer 19. Charles Yeung ENRON Power Marketer/MIC Table 4 Process Design Team Managers Gerry Cauley NERC NERC Project Manager Dottie Anderson ERCOT/MIC MIC Chair/Project Advisor Joel Diemer New Mexico State U. Lead Contractor Rossana Alvarez New Mexico State U. Contractor Sheldon Bartel New Mexico State U. Contractor