Minutes Member Representatives Committee

Transcription

1 Minutes Member Representatives Committee February 11, p.m. Arizona Grand Resort 8000 South Arizona Grand Parkway Phoenix, Arizona Member Representatives Committee Chair Steve Hickok called to order a duly noticed meeting of the North American Electric Reliability Corporation Member Representatives Committee on February 11, 2008 at 1 p.m., local time, and a quorum was declared present. The meeting announcement, agenda, and list of attendees are attached as Exhibits A, B, and C, respectively. NERC Antitrust Compliance Guidelines David Cook, vice president and general counsel, called attention to the NERC Antitrust Compliance Guidelines distributed with the agenda. Minutes The Member Representatives Committee approved the draft minutes of the October 22, 2007 meeting (Exhibit D). Future Meetings The Member Representatives Committee approved February 9 10, 2008 in San Diego, California as a future meeting date and location. Introductions and Chairman s Remarks Steve Hickok welcomed and introduced the new members on the MRC. He informed everyone that the cyber security data item was removed from the agenda. He also explained that Terry Boston was elected to represent sector 4 and then moved to another organization which made him ineligible to represent sector 4. That vacancy and others would be filled through a special election (see next agenda item). Elections Chairman Hickok noted the certification of election of members of the MRC in the agenda packet. Further, he noted that vacancies exist in sectors 4, 7 and 12 of the MRC. NERC will conduct a special election to fill the vacancies. The plan will be to open the Village Blvd. Princeton, NJ

2 nominations process promptly, and work to have the election completed before the MRC conference call anticipated for early April. President Rick Sergel noted that the ISO/RTO sector had raised a concern that allowing non-iso/rto members such as vendors to join the sector created a possibility of the sector being represented by someone who was not from an ISO/RTO. Mr. Sergel explained that, although the bylaws permitted a vendor or consultant to join NERC in a sector to which it provides services, the purpose for which the sectors were created balanced membership among stakeholder sectors could be undermined if persons from entities not in the named sectors were nominated as representatives to the MRC. He assured the MRC that NERC would monitor the sector representation and would act so as to not let non-iso/rto members represent the ISO/RTO sector, and more generally provided the same assurance for all sectors. Tom Berry, chairman of the Board of Trustees Nominating Committee presented the report of the committee to the MRC (Exhibit E). The committee nominated Paul Barber, Janice Case, Jim Goodrich, and Fred Gorbet to serve three-year terms as independent trustees. The MRC unanimously elected the four trustees. Definition of Adequate Level of Reliability David Whiteley, executive vice president, reported on the status of the efforts to develop a definition of adequate level of reliability (ALR) (Exhibit F). The Board of Trustees will consider the definition of ALR as developed by the PC and OC at its February 12 meeting. Mr. Whiteley reported that, if it is approved, NERC s intention is to submit the definition to FERC and governmental authorities in Canada as part of an informational filing that will include the status of the integration efforts presently underway in the standards area. Compliance Registry David Hilt, vice president and director of compliance, provided an update on NERC s Compliance Registry (Exhibit G) and explained that the regional entities and NERC are striving to achieve consistency across all regions. The MRC also discussed the appeals process if an entity believes it should not have been included on the Compliance Registry. Organization Certification David Hilt presented a report on the status of work to revise how NERC deals with organization certification issues (Exhibit H). TAPS Letter Regarding Transmission Owners and Operators Forum Chairman Hickok asked Bill Gallagher to open the discussion of the letter from the Transmission Access Policy Study Group to Rick Sergel and the NERC Board regarding the Transmission Owners and Operators Forum. MRC Draft Meeting Minutes February 11,

3 Bill Gallagher explained his advocacy that the Transmission Forum be opened to observers from other stakeholder groups, believing that its current closed meetings and membership (excluding all but transmission owners and operators) is inconsistent with NERC s broad operating principles of openness and inclusiveness. Chairman Hickok asked David Cook to speak on the matter of consistency with NERC s Rules of Procedure. Mr. Cook explained that, when the board approved the charter for the Transmission Forum, it considered the matter of the membership restrictions, and concluded they were appropriate. Creation of the Transmission Forum is authorized by Rule 712 of the Rules of Procedure, and NERC included the Transmission Forum charter as part of its July 20, 2007 compliance filing in response to FERC s ERO certification order. On November 2, 2007, FERC approved the compliance filing without discussing this specific issue. Members of the MRC and observers presented various views on who should be allowed to attend Transmission Forum meetings and whether the Forum should continue to operate under the NERC umbrella or operate completely on its own. Discussion of NERC Priorities and Emphasis in 2008 Chairman Hickok initiated the discussion of NERC priorities and emphasis for The discussion focused on five topics, with NERC staff members presenting a brief introduction to each (Exhibit I). 1. Reliability standards development 2. Compliance monitoring and enforcement 3. Short and long range adequacy assessments 4. Adequacy and reliability levels 5. NERC-FERC-Provinces relationship David Taylor, manager of standards development, began the discussion of reliability standards development. Joe McClelland, Director of the Office of Electric Reliability of the Federal Regulatory Commission, and Robert Snow, a senior engineer in the Office of Electric Reliability, made a presentation on the subject (Exhibit J). Thereafter, Armando Perez and Scott Helyer led the MRC in a discussion of the issues. David Hilt, vice president and director of compliance, began the discussion of compliance monitoring and enforcement. Thereafter, Paul Murphy and Scott Moore led the MRC in a discussion of the issues. David Nevius, senior vice president and director of reliability assessment and performance analysis, began the discussion of short and long range adequacy assessments. Thereafter, Steve Naumann and Mike Smith led the MRC in a discussion of the issues. MRC Draft Meeting Minutes February 11,

4 David Nevius also began the discussion of adequacy and reliability levels. Thereafter, Stewart Ramsay led the MRC in a discussion of the issues. David Cook began the discussion of the relationships among NERC, FERC, and the Provinces. Thereafter, Bill Gallagher and Carmine Marcello led the MRC in a discussion of the issues. Comments by Observers Eli Turk (Canadian Electricity Association) stated that CEA is pleased that Ric Cameron is working with NERC as Canadian Affairs Representative. CEA strongly supports the work NERC is doing. Jim Fama (Edison Electric Institute) appreciated the discussion on long term reliability. He stated the long-term reliability assessment is an important document, and that the rollout of the document went very well. He further expressed appreciation for the excellent job done by Rick Sergel and the degree of credibility in the document. The document is the state of union on resource adequacy. David Mohre (National Rural Electric Cooperatives Association) agreed with Jim Fama, and reiterated kudos to Rick. He expressed that many of the state leaders went for it. He asked that everybody read section 215 of the Federal Power Act again and develop appropriate rules of engagement. Upcoming Issues for Member Representatives Committee Chairman Hickok forecast some of the items that are expected for the May 6, 2008 MRC meeting agenda, including the summer reliability assessment, issues for next long term reliability assessment, and the first draft of the business plan and budget for He will schedule a conference call in early April to preview the May 6 agenda. Adjournment There being no further business, Chairman Hickok adjourned the meeting at 5:30 p.m. Submitted by, David Whiteley Secretary MRC Draft Meeting Minutes February 11,

5 Exhibit A Please respond by January 17, 2008 to Kathie Potts phone: fax: TO: MEMBER REPRESENTATIVES COMMITTEE Ladies and Gentlemen: Member Representatives Committee and Board of Trustees Meetings Announcement and Registration February 11 12, 2008 Phoenix, Arizona December 14, 2007 The Annual NERC Member Representatives Committee and Board of Trustees meetings will be held on February 11 12, 2008 at the Arizona Grand Resort, 8000 S. Arizona Grand Parkway, Phoenix, Arizona. The hotel is 6 miles from the Sky Harbor International Airport. All Trans shuttle service to the hotel costs $15/person. Taxis cost $ You can also use a courtesy phone (located in the baggage claim area) to call for complimentary pick-up 24 hours a day. To make your room reservation, call the hotel directly (602) The room block is listed under NERC, and the rate is $249 single/double occupancy plus a $10 resort service fee. The hotel has set Thursday, January 17, 2008 as the cut-off for room reservations. To register for the meeting, fill out the form below and or fax the completed form to Kathie Potts (kathie.potts@nerc.net). February 11, 2008 Yes No Board of Trustees Committee Meetings 7:30 a.m. 1 p.m. Buffet Lunch 1 1:30 p.m. Member Representatives Committee Meeting 1:30 5:30 p.m. Group Reception and Dinner 6 9 p.m. February 12, 2008 Board of Trustees Meeting 8 a.m. 1 p.m. Dinner Selections Fish Pan-Seared Cajun Snapper on Pancetta Potato Risotto Beef Mushroom Stuffed Aged Prime Beef Top Sirloin Steak, Smoked Garlic Demi Self: Beef Fish Guest: Beef Fish Dress is business casual for all meetings and the reception and dinner. Name: Title: Company: Telephone: Name of Guest: cc: NERC Roster Meeting Guests Village Boulevard, Princeton, New Jersey Phone: Fax:

6 Exhibit B Agenda Member Representatives Committee February 11, p.m. Arizona Grand Resort 8000 South Arizona Grand Parkway Phoenix, Arizona Introductions and Chairman s Remarks Antitrust Compliance Guidelines 1. Minutes October 22, 2007 Meeting *2. Future Meetings Regular Agenda *3. Elections Approval a. New Members of MRC b. Election of Trustees *4. Definition of Adequate Level of Reliability Discussion *5. Compliance Registry Discussion *6. Organization Certification Discussion *7. TAPS Letter Regarding Transmission Owners and Operators Forum Discussion *8. Discussion of NERC Priorities and Emphasis in 2008 Discussion 9. Comments by Observers 10. Upcoming Issues for Member Representatives Committee a. Preview of May 6, 2008 MRC Meeting Agenda Village Blvd. Princeton, NJ

7 11. Other Business Information Only No Planned Discussion *12. Wind Generation Integration *13. Reliability Assessment and Performance Analysis *14. Reliability Readiness Evaluation and Improvement a. Lessons Learned from Examples of Excellence *15. Training, Education, and Personnel Certification *16. Situation Awareness and Infrastructure Security * Background material included MRC Meeting Agenda February 11,

8 Exhibit C Chairman Vice Chairman Secretary Investor Owned Utility Investor Owned Utility State/Municipal Cooperative Cooperative Federal/Provincial Federal/Provincial Transmission Dependent Utility Transmission Dependent Utility Merchant Electricity Generator Merchant Electricity Generator Electricity Marketer Large End-use Electricity Marketer Small End-use Electricity Marketer Small End-use Electricity Marketer ISO/RTO ISO/RTO RRO RRO RRO RRO RRO RRO State Government Canadian Federal Canadian Provincial U.S. Federal U.S. Federal Secretary List of Attendees Member Representatives Committee Meeting February 11, 2008 Member Representatives Committee Steve Hickok Steve Naumann David Whiteley Scott Moore Doug Jaeger Richard Bolbrock Michael H. Core Michael L. Smith Ken Tennenhouse Carmine Marcello William Gallagher Ronald Earl Scott M. Helyer William J. Taylor Murray Margolis Irv Kowenski Stephen Ahearn Mary Healy Paul M. Murphy Armando Perez Michael Desselle Terry Bundy Kevin Wailes Charles White Dave Goulding James Keller Thomas Dvorsky Tab Gangopadhyay Jean-Paul Theoret Kevin Kolevar Joseph H. McClelland David Whiteley Chairman Board of Trustees Richard Drouin 1

9 John Q. Anderson Paul Barber Tom Berry Janice Case Fred Gorbet James M. Goodrich Sharon L. Nelson Ken Peterson Bruce A. Scherr Rick Sergel ERCOT FRCC MRO NPCC RFC RFC SPP WECC EEI EEI Entergy Ameren FRCC NAESB RFC RFC Northeast Utilities Pepco Holdings, Inc. NRECA NRECA WAPA Florida Power & Light CCC Chairman CCC Vice Chairman SAC Chairman SAC Vice Chairman OC Chairman Guests Larry Grimm Sarah Rogers Dan Skaar Edward A. Schwerdt Larry Bugh Ray Palmieri Charles H. Yeung Louise McCarren Jim Fama David Dworzak Ed Davis Maureen Borkawski Kevin Wailes Rae McQuade Ray Palmieri Stan Szwed Dave Boguslawski Richard Kafka Barry Lawson Patti Metro Mark Fidrych Marty Mennes Ted Hobson Tom Abrams Linda Campbell Scott Henry Gayle Mayo List of Attendees 2 Member Representatives Committee Meeting October 2007

10 PC Chairman Quebec Energy Board Quebec Energy Board ISO New England CEATI National Grid National Grid AEP BC Transmission Corporation Arizona Public Service Company Arizona Public Service Company Arizona Public Service Company Constellation Energy IESO Dominion Resources Dominion Resources General Electric US DOE PJM PJM Pepco Holdings, Inc. Pepco Holdings, Inc. PSE&G APPA APPA American Transmission Sassafras River Association Southern Company Southern Company CASIO CEA EPRI ERCOT Midwest ISO MRO MRO MRO NPCC Scott Helyer Caroline Dupuis Gilbert Neveu Matthew Goldberg Jacob Roiz Herb Schraysheun Vicki O Leary Scott Moore Julius Patkay Tom Glock Jane VanNexx Jane Daly Michael Gildea Stuart Brindley Harold Adams Lou Oberski A. Benjamin Richardson Michael Brairton Terry Boston Tom Bowe Tsion Messick Wally Johnson Jeffrey Mueller Sue Kelly Allen Mosher Carol Chinn Roberta Brown William Ball Mark Butts Jim McIntosh Eli Turk Stephen Lee William Bojorquez Bill Phillips Dan Schoenecker Wayne VonOsdol Terry Bundy Jennifer Budd Mattiello NPCC David Goulding List of Attendees 3 Member Representatives Committee Meeting October 2007

11 SPP WAPA Xcel Energy/MRO Board Xcel Energy Xcel Energy WIRAB WECC WECC WECC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC NERC Alison Hayes Tony Montoya Doug Jaeger Terri Eaton Leo Ganser Doug Larson Mark Maher Steve Rueckert Steve McCoy David Cook Bruce Walenczyk David W. Hilt Stan Johnson Julie Morgan Lynn Costantini Karen Spolar Julia Souder Dave Taylor Kathie Potts Rebecca Michael David Nevius Joe Conner Susan Morris Mark Lauby List of Attendees 4 Member Representatives Committee Meeting October 2007

12 Exhibit D Member Representatives Committee Meeting October 22, p.m. Marriott Dallas-Fort Worth Airport North 8440 Freeport Parkway Irving, Texas Draft Minutes Member Representatives Committee Chair Billy Ball called to order a duly noticed meeting of the North American Electric Reliability Corporation Member Representatives Committee on October 22, 2007 at 1 p.m., CDT, and a quorum was declared present. The meeting announcement, agenda, and list of attendees are attached as Exhibits A, B, and C, respectively. NERC Antitrust Compliance Guidelines David Cook, vice president and general counsel, called attention to the NERC Antitrust Compliance Guidelines distributed with the agenda. Minutes The Member Representatives Committee approved the draft minutes of the June 28, 2007 conference call, July 31, 2007 meeting, and September 26, 2007 conference call (Exhibit D). Future Meetings The Member Representatives Committee approved October 28 29, 2008 in Washington, DC as a future meeting date and location. Elections David Cook summarized the procedures for election of MRC officers for As previously determined by the MRC, the period for nominations closed in mid- September. Steve Hickok was the only nominee for chair and Steve Naumann was the only nominee for vice chair. Michael Desselle moved to elect Steve Hickok as MRC chair for 2008 and Steve Naumann as MRC vice chair for The committee approved the motion. David Cook summarized the procedures for election of members of the MRC whose terms expire at the end of the current year. The period for nominations will remain open through November 9 and the election will be handled electronically in the same manner as in 2006, with balloting from December 10 through December 19. Mr. Ball offered to hold an MRC 101 seminar on the morning of the 2008 annual meeting for anyone who is newly elected Village Blvd. Princeton, NJ

13 NERC Strategic Plan David Whiteley presented the draft NERC Strategic Plan (Exhibit E). On August 15 the Board of Trustees and stakeholder committee chairs held a one-day workshop to review and update the earlier strategic plan considering, among other things, the passage of reliability legislation in the United States, NERC being certified as the ERO, and mandatory reliability standards taking effect in the United States. NERC will accept comments on the draft strategic plan through October 26. The board is expected to consider approval of the final strategic plan during a conference call in early November. Definition of Adequate Level of Reliability David Whiteley reported on the status of development of a definition of adequate level of reliability (Exhibit F). As described in NERC s March 19, 2007 compliance filing, NERC has been using a stakeholder process, initially the Operating Committee (OC) and Planning Committee (PC), to ensure broad stakeholder input. The OC and PC will revise the definition based on comments received during the October posting period plus comments from the MRC. The OC and PC will again discuss the draft definition at their December 2007 meetings, The draft definition will be submitted to the Board of Trustees for approval at its February 2008 meeting. Update on Regulatory Matters David Cook briefed the MRC on the FERC orders issued and the NERC filings made since the last MRC meeting, as well as the upcoming filings NERC expected to make. He responded to questions from various committee members. Chairman Ball asked if there where any follow-up items from the recent hearing before a subcommittee of the House Committee on Homeland Security. David Cook called on Stan Johnson, who reported that a question was raised as to whether the cyber standards deal with all of the recommendations on cyber security contained in the task force report on the August 2003 outage. The Critical Infrastructure Protection Committee is in the process of matching the standards to each of the recommendations. Reliability Assessment and Performance Analysis Dave Nevius reported on the status of the 2007/2008 Winter Assessment, Events Analysis and Information Exchange, Reliability Metrics and Benchmarking, and 2007 Survey of Reliability Issues (Exhibit G). NERC is preparing its 2007/2008 winter assessment report, which it will release in mid- November. The regions submitted data and regional self-assessments to NERC in late September for use in preparing the assessment. The NERC Planning Committee will review a draft of the report in late October, and the board of trustees will consider the final report in early November. Security Guidelines Process Stuart Brindley, CIPC Chairman, reviewed the security guideline development process (Exhibit H). NERC Compliance Registry David Hilt, Vice President and Director of Compliance, gave a status report on the NERC compliance registry and the implementation plan. MRC members discussed various aspects of the compliance registry and the registration process. Committee members expressed a concern that registration be handled in a consistent manner across the regions. -2-

14 Comments by Observers CEA Eli Turk congratulated Steve Hickok and Steve Naumann for their election as chair and vice chair for Regarding the strategic plan issues, he believed things can be worked out in Canada. NEB Tab Gangopadhyay expressed a need for timelines on event analysis matters. APPA Allen Mosher thanked NERC for all of the work it does and will continue to do. Upcoming Issues for Member Representatives Committee Steve Hickok gave a brief overview of what he expects to see on the agenda for the February 2008 meeting, including the election of trustees and a focus on the plans and priorities for implementing the strategic plan. Appreciation for Service On behalf of the entire MRC, Steve Naumann thanked Billy Ball for his service as the first Chairman of the MRC. Adjournment There being no further business, Chairman Ball adjourned the meeting at 5:30 p.m. Submitted by, David Cook Secretary -3-

15 Exhibit E Report to the Member Representatives Committee From The Board of Trustees Nominating Committee December 19, 2007 The Nominating Committee of the Board of Trustees for the North American Electric Reliability Corporation ( NERC ) recommends the following slate of nominees for election to the NERC Board of Trustees at the Annual Meeting of the Member Representatives Committee on February 11, 2008: Class of 2011 (three-year terms): Paul F. Barber Janice B. Case James M. Goodrich Frederick W. Gorbet This report includes a brief biography of each nominee. Members of Nominating Committee The Nominating Committee includes independent trustees Tom Berry (Chair), John Anderson, Sharon Nelson, Ken Peterson, Bruce Scherr, and NERC Chairman Richard Drouin (ex officio); as well as Mike Core (Big Rivers Electric), Bill Gallagher (Transmission Access Policy Study Group), Steve Hickok (MRC Vice Chair), Steve Naumann (Exelon), and Jean-Paul Theorêt (Québec Régie de l énergie), representing the Member Representatives Committee. Background Article III of NERC s Bylaws establishes the qualifications and sets the nomination and election procedures for members of NERC s Board of Trustees. NERC s independent trustees serve staggered three-year terms, and an election of trustees occurs at the Annual Meeting of the Member Representatives Committee each year. Any vacancy that arises during the year is filled by the Member Representatives Committee, either in a special election or at the next succeeding Annual Meeting. The initial two-year term of Fred Gorbet 1 and the three-year terms of Paul Barber, Jim Goodrich, and Don Hodel expire in February Accordingly, the Member Representatives Committee must elect four independent trustees at its February 2008 Annual Meeting, for three-year terms ending February Committee Process The Nominating Committee evaluated the work and contributions of the incumbent independent trustees and consulted with many stakeholders. As directed by the Bylaws, on September 21, 1 Mr. Gorbet was first elected to the NERC Board of Trustees in February He was initially elected for a two-year term to create staggered terms among the Canadian members of the board Village Blvd. Princeton, NJ

16 2007, the Nominating Committee provided an opportunity for stakeholders to suggest candidates for the board. The Committee included the following discussion in its letter: The independent trustees whose terms expire at the 2008 annual meeting are Paul Barber, Jim Goodrich, Fred Gorbet, and Don Hodel. Mr. Hodel has informed the committee that he does not wish to stand for re-election. The committee has determined that [the remaining three] trustees are willing and interested to serve an additional term. The committee has made a preliminary determination that unless it receives substantial indication of dissatisfaction with one or more of these trustees or there is strong indication that stakeholders wish to alter the makeup of the board, it will re-nominate Messrs. Barber, Goodrich, and Gorbet for re-election. The committee thus expects to include one new nominee on its proposed slate. The incumbents generally received high marks from all those consulted, and the committee heard no suggestion of a desire to alter the makeup of the board. Therefore, the committee is renominating Messrs. Barber, Goodrich, and Gorbet. The committee retained the services of Russell Reynolds to assist in the search and evaluation of candidates to fill the fourth position. The committee received many excellent suggestions and was pleased to have a stellar list of candidates to choose from. The Nominating Committee unanimously recommends the election of the four nominees submitted in this report. Trustee Succession The Board of Trustees has adopted a policy statement on trustee succession, and the Nominating Committee has followed that policy in making the nominations. The policy statement directs the Nominating Committee to observe the following guidelines 2 in proposing nominees to serve as independent trustees: Each year the Nominating Committee should include in its report to the Member Representatives Committee a calculation of the average tenure of the independent trustees. The Nominating Committee should endeavor to keep the average tenure of independent trustees below six years. To the extent feasible, the Nominating Committee should determine prior to soliciting suggestions for candidates whether the committee expects that one or more incumbent trustees will not be re-nominated. No independent trustee may be re-nominated or reappointed after he or she has served on the board for twelve consecutive years, unless at least one year has elapsed between the end of service on the board and the subsequent re-nomination or reappointment. As of February 2008, Mr. Barber will have three years of service on the NERC board; Mr. Goodrich, nine years; and Mr. Gorbet, two years. As of February 2008, with the addition of Mrs. Case as a new trustee, the average tenure of all independent trustees will be 5.4 years. 2 The calculations also include service on the board of the North American Electric Reliability Council. -2-

17 Biographies of the Nominees Paul F. Barber Paul F. Barber is a senior executive with extensive technical knowledge and leadership experience in the electric power industry. He is currently the principal of Barber Energy and serves on the Industry Advisory Board of the Consortium for Electric Reliability Technology Solutions. Mr. Barber served on the Executive Committee of the Northeast Power Coordinating Council and held senior executive positions with Edison Mission Marketing and Trading and Citizens Power and its predecessors. He was a career officer in the U.S. Army Corps of Engineers, including service for 12 years on the electrical engineering faculty of the United States Military Academy at West Point. He has held numerous leadership positions for NERC and several regional reliability councils (ERCOT, MAAC, NPCC, and WSCC), as well as for other electric industry organizations. He served as facilitator for the NERC Steering Group as it led the investigation of the August 14, 2003, power outage. Dr. Barber holds degrees from the United States Military Academy, BS (1965); University of Illinois, MS in Civil Engineering (1974), and MS in Electrical Engineering (1974); and Rensselaer Polytechnic Institute, PhD in Electric Power Engineering (1988). He has been a member of the Institute of Electrical and Electronics Engineers since Mr. Barber was first elected to the Board of Trustees of NERC s predecessor, the North American Electric Reliability Council, in Janice B. Case Janice B. Case was employed by Florida Power Corporation/Florida Progress Corporation for nearly 25 years in a series of increasingly responsible management positions. Her executive level roles included five years as Senior Vice President reporting to the CEO/President, as a member of the Senior Strategic Leadership Team, and as the head of the Energy Solutions Strategic Business Unit. In that role she was accountable for the company s 1.3 million residential, commercial and industrial customers. For the six years prior to that she was Vice President of the Suncoast Florida Region with distribution operating responsibility for the two most populated counties of the FPC service territory. She served her company and industry in national and state leadership roles on EEI, EPRI, the Marketing Executive Committee and Florida s Conservation Steering Group Committee. Since leaving full-time corporate employment, Mrs. Case has served on numerous corporate and not-for-profit boards. She was elected in 2002 to the Board of Directors of Central Vermont Public Service Corporation, an electric utility in Vermont, and serves as a member of the Audit Committee. 3 Mrs. Case was elected as one of seven Non-Affiliated Directors of the Western Electricity Coordinating Council at its formation in 2002, has served as the Chairman of the Human Resource and Compensation Committee of the WECC Board since its inception, and is currently serving on the Strategic Planning Committee. 4 Mrs. Case has also served for six years 3 Mrs. Case has committed to resign from the Central Vermont Public Service Company board and committees prior to the February 11, 2008, annual meeting of the Member Representatives Committee. 4 Mrs. Case has committed to resign from the Western Electricity Coordinating Council board and committees prior to the February 11, 2008, annual meeting of the Member Representatives Committee. -3-

18 as a Director/Trustee for three mutual funds managed by Aegon/Transamerica Fund Advisors, Inc. She has served as Chairman of the Compensation Committee and as a member of the Governance/Nominating, Contract Review and Proxy Voting committees for these funds totaling $34 billion in assets. Mrs. Case served for 10 years as an Advisory Director for AmSouth Bank, served in numerous leadership positions with community organizations and currently provides leadership to not for profit organizations in Clearwater, Florida, and Whitefish, Montana. Mrs. Case holds a B.A. in Economics from Rhodes College and an M.B.A. in Finance from the University of Mississippi. Mrs. Case is a new nominee to the NERC board. James M. Goodrich James M. Goodrich founded Energy Management Associates (EMA) in 1975 and served as its Executive Vice President until the sale of the company in EMA provided operations and financial planning software and related consulting services to the electric and gas utility industries. In addition to working on consulting projects for over 100 utility clients, Dr. Goodrich appeared as an expert witness before numerous state utility regulatory commissions, as well as FERC. Following his graduation from Stanford University, he served as an officer in the U.S. Navy, assigned to the Atomic Energy Commission on the staff of Admiral Hyman Rickover. While in the Navy he earned a MS degree from George Washington University and later returned to Stanford University, where he received MS and PhD degrees in engineering. Dr. Goodrich was first elected to the Board of Trustees of NERC s predecessor, the North American Electric Reliability Council, in Frederick W. Gorbet Frederick W. Gorbet is a Principal with Strategy Solutions, a public policy consulting company, and is also the CIT Chair in Financial Services and Associate Director, Financial Services Program for the Schulich School of Business, York University. His previous positions include Senior Vice President with Manulife Financial, President and Chief Operating Officer with North American Life Assurance Co., and Deputy Minister of Finance with the Government of Canada. He was the founding chair of the Market Surveillance Panel for the deregulated Ontario electricity market and served in that position from He currently serves on the boards of Assuris, Alterna Savings Credit Union, Alterna Bank, Lawyers Professional Indemnity Corporation and Credit Union Central of Ontario. He holds a PhD in Economics from Duke University, and a BA in Economics from York University. He is a Member of the Order of Canada. Mr. Gorbet was first elected to the NERC Board of Trustees in

19 Exhibit F Definition of Adequate Level of Reliability David Whiteley Member Representatives Committee February 11, 2008

20 History Section 215(c)(1) of the Federal Power Act requires NERC s Reliability Standards to provide for an adequate level of reliability (ALR) for the Bulk-Power System FERC directed NERC to develop a definition of ALR (January 18, 2007 Order on Compliance Filing) OC and PC officers and NERC staff developed a strawman for review at the September 2007 meeting Definition posted for comment on October 1, 2007

21 History (cont d) 44 companies/individuals commented Comments and responses are posted Definition was reviewed with Member Representatives Committee on October 22, 2007 Definition was modified based on all comments OC and PC approved the revised definition at their December meeting

22 Characteristics of ALR NERC proposed a definition that described the characteristics of a bulk power system that has an adequate level of reliability October 1 definition had five characteristics revised definition added a sixth Sixth characteristic addresses adequacy NERC cannot set standards that require a level of adequacy; but NERC is required to assess adequacy

23 The Characteristics of a System with an ALR October 1 version in black; revised version in red 1. The System remains within acceptable limits. The System is controlled to stay within acceptable limits during normal conditions. 2. The System performs acceptably after credible contingencies. The System performs acceptably after credible Contingencies. 3. The System limits instability and cascading outages. The System limits the impact and scope of instability and Cascading Outages when they occur.

24 The Characteristics of a System with an ALR 4. The System s facilities are protected from severe damage. The System s Facilities are protected from unacceptable damage by operating them within Facility Ratings. 5. The System s integrity can be restored if it is lost. The System s integrity can be restored promptly if it is lost. 6. The System has the ability to supply the aggregate electric power and energy requirements of the electricity consumers at all times, taking into account scheduled and reasonably expected unscheduled outages of system components. From the Adequacy definition in NERC s Glossary of Terms

25 Common Comments/Responses BPS vs. BES BPS is used because Reliability Standards are to provide for an ALR for the BPS per Section 215 Include an adequacy characteristic We did Cost-effectiveness Many agreed it s implicit in the standards approval process; others wanted a statement on cost-effectiveness in the definition FERC said a cost-benefit analysis of each standard would drag out the Reliability Standards approval process. Ultimately, cost-effectiveness was not included in the six characteristics in the definition, but is discussed in the definition document Specific proposal on alternative language from several sector representatives with a minority view (attached to background material)

26 Common Comments/Responses (cont d) Need performance metrics for each characteristic They will be developed by a new Reliability Metrics Working Group being formed Bulk-Power System Characteristics of ALR Performance metrics Standards Standards Process

27 Common Comments/Responses (cont d) Terms in characteristics are too vague Meaning of terms like credible or acceptable performance will be defined in standards Integrating the definition into the Reliability Standards process Standards Committee is presently considering this issue Assigned to SC Process Subcommittee to integrate into standards activities

28 Next Steps Included on the agenda for tomorrow s Board of Trustees meeting Request for approval and direction to submit the definition to FERC and applicable governmental authorities in Canada as part of an informational filing that will include the status of the integration efforts presently underway in the standards area. NERC will not be asking FERC to adjudicate the definition and will make that clear in the filing cover letter. Related activities: Metrics Working Group established by PC will work closely with OC Reliability Fundamentals Working Group being formed to continue to develop the Reliability Concepts reference document

29 Exhibit G Compliance Registry Update David Hilt Member Representatives Committee February 11, 2008

30 Compliance Registration Results Region Number of Entities Total Functions FRCC MRO NPCC RFC SERC RCs 23 BAs TOPs PAs TSPs RSGs SPP TRE WECC 510 1,333 Totals 1,869 4,512 RPs TPs TOs GOs GOPs PSEs DPs 567 LSEs 488 As of February 6, 2008

31 Other Registration Matters Interchange Authority Registration Statement of Compliance Registry Criteria Version 4 FERC Approved 2/5/2008 Registration will now begin Load serving entity FERC order on appeal of three entities overturned NERC decision Recognized potential reliability gap due to ruling Directed NERC to develop plan to address gap in 75 days

32 Load Serving Entity Proposal Short term to address gap Clarify Statement of Compliance Registry Criteria Schedule Add sub classification of LSE and identify subset of standards applicable to those with responsibility for loads who may not own power system assets Post for comment in February (45-day comment period) Revised draft provided in advance of May meetings Board action in May File revised Statement of Compliance Registry Criteria with FERC

33 Load Serving Entity Proposal Long Term Hold NERC Standards Conference March Discuss issues with Load Serving Entities Identify possible solutions Functional entity types Standard modifications Registration criteria changes Develop work plan that feeds into the general standards work plan Report on progress at May board meeting

34 Exhibit H Registered Entity Certification Process Revision Project Update David Hilt Member Representatives Committee February 11, 2008

35 Rules of Procedure Section 500 Rules Currently Require Certification of RCs, BAs, and TOPs Detailed certification process in Appendix 5 Initial Certification Transitional Certification of existing RCs, BAs, and TOPs Entity affidavit of self certification 3 person review team Table-top or on-site audit Currently 305 such entities

36 Reasons for Revision Issues Current RoP certification audits are duplicative Proposed certification standards under development Question of enforceability Agreement by CCC and SC to terminate their development Current evaluation activities for RCs, BAs, and TOPs every three years Readiness evaluation every three years Compliance audits every three years

37 Project Proposal Revise certification process Set out fair and transparent process for certification Establish criteria for when certification is required Entity has never performed function(s) Material change to operation/footprint of a currently certified entity Re-certification not required Ongoing verification of registered RC, BA, and TOP accomplished through three-year Readiness Evaluation and Compliance programs

38 Project Proposal (Continued) Replace Transitional Certification with Provisional Certification Provisional Certification Existing RCs, BAs, and TOPs Based on regional entity compliance audits and readiness evaluations in lieu of duplicative certification audits Successful completion required during period 1/1/07 through 12/31/09 Certification granted upon completion

39 Revision Project Accomplishments to Date September 2007 Revision Project assigned to CCC Organization Registration and Certification Subcommittee (ORCS) October 2007 Developed 1 st draft of RoP 500, Appendix 5, and questionnaires October 25, 2007 Solicitation for informal comments (30 Days) December 2007 Review stakeholder comments Incorporate comments and develop first draft

40 Revision Project Proposed Timeline to Completion February 2008 Present draft to CCC for review and endorsement to seek initiation of required 45 day public comment period February 2008 NERC management and legal review February 2008 Post for public comment per NERC Bylaws, Section II April 2008 Review and incorporate public comments as appropriate May 2008 Present final package to the board for consideration May 2008 Submit RoP changes to FERC for consideration

41 Exhibit I Discussion on NERC Priorities and Emphasis in 2008 Member Representatives Committee February 11, 2008

42 Reliability Standards Development Current Program Status 126 board-approved standards 118 NERC-continent wide 8 WECC regional standards U.S. Status 102 mandatory in U.S. 94 NERC-continent-wide 8 WECC regional 24 pending fill-in-the-blank Proposed for regulatory approval 6 revised and 1 new standard 3 interpretations Canadian status depends on jurisdiction Active development projects 29 standards projects 8 formal interpretations

43 Reliability Standards Development Challenges for 2008 Increase feedback from stakeholders Increase clarity of roles and expectations in standards development process Integrate ALR into standards development process Deliver standards to meet regulatory expectations VSLs by March 1 st ATC by May 9 th Address FERC directives

44 Discussion

45 Compliance Monitoring and Enforcement Current Program Status Pre-June 18 Over 5,000 possible violations Over 1,000 dismissed Mitigation plans to FERC and tracking Post-June possible violations 137 dismissed Moving through the process Vegetation management and system protection maintenance and testing

46 Compliance Monitoring and Enforcement Challenges for 2008 Uniform implementation of registration, monitoring, and enforcement Canadian implementation Priorities for improving reliability Input to the standards process Sharing knowledge Application of the standards

47 Discussion

48 Short and Long Range Adequacy Assessments Looking Forward Long-Term Reliability Assessment annual 10- year assessment of adequacy and reliability, including emerging issues and scenario analyses Summer/Winter Assessments near-term electric supply adequacy Interdependency Studies e.g., gas/electric interdependency Special Assessments e.g., fuel shortages, droughts, etc.

49 Short and Long Range Adequacy Assessments Challenges for 2008 Ensuring transparency of analysis and common reporting of resource adequacy results Launch TADS and begin to capture value from data Continuous cycle of improvement events analysis, metrics and benchmarking, standards, monitor compliance

50 Discussion

51 Adequacy and Reliability Levels Looking Back Monitor all BPS events customer outages; frequency excursions; relay misoperations; transmission and generation equipment performance; etc. Investigate significant events NERC Blackout and Disturbance Response Procedures Identify root causes of major events Communicate lessons learned to industry [Alerts] Make recommendations for reliability improvements standards; real-time tools; system modeling and analysis capability; etc.

52 Adequacy and Reliability Levels Reliability Metrics and Benchmarking measuring how we are doing Establish and track key reliability metrics and leading system performance indicators Dynamic performance (Reliability) Steady state performance (Adequacy) Violations Develop benchmarks against which to judge reliability improvements

53 Discussion

54 NERC-FERC-Provinces Relationship Current Status CIP Rule FERC said use the NERC standards development process to address the needed changes FERC, provinces, NEB, and CRE meet 3 4 times per year (NERC joins for part) MOUs in place with Ontario, Nova Scotia, Québec, and NEB Revised MOUs under discussion with Nova Scotia and Québec MOUs under discussion with Manitoba, New Brunswick, and Saskatchewan

55 NERC-FERC-Provinces Relationship Challenges for 2008 Achieve mandatory and enforceable standards in all jurisdictions Increased coordination among regulators Effective dates for standards Remands of standards Priorities for standards Increased focus on events analysis

56 Discussion

57 Exhibit J Incorporation of Commission Directives: Preliminary Staff Insights Robert Snow, P.E. Senior Electrical Engineer Office of Electric Reliability Division of Reliability Standards The following are my preliminary technical views and not those of the Commission

58 Transmission Planning Technically Sound with Clear Requirements Sensitivity Studies and critical system conditions In first draft Event Vs. element based contingencies In first draft Achieve Reliability Goal Effectively and Efficiently Incorporate spare equipment strategy In first draft Future resources used in models Parking lot Involvement and data of neighboring entities sharing but not approval Definition and documentation of proxies Parking lot Multiple contingencies and extreme events work in progress Team has moved forward using team as representative sample- In first draft Avoid Lowest Common Denominator No Curtailment of firm transfers In first draft Consequential load loss definition In first draft No tripping of generation after a single contingency work in progress Magnitude of load loss for comparability In first draft

59 Personnel Training Technically Sound with Clear Requirements? SAT methodology (individual training needs) subject to interpretation Local Control Center personnel not included Generation Operators Deferred to 2010 start Operations Planning / EMS personnel Deferred to 2010 start Achieve Reliability Goal Effectively and Efficiently? Training simulators for significant entities Generic simulator (not the system being operated) No criteria defining significant entities Metrics measuring the training results Vs. the process

60 Relay Loadability Blackout Report Recommendation 21 Zone 3 backup and lessons learned not included Avoid contributing to cascading outages by addressing power swings not included Coordination of all protective systems not included Commission Staff Provided Feedback Examples of impact using disturbances Generator Owners consistency Requirements that would avoid cascading when using Zone 3 as remote backup protection Coordination with other Reliability Standards on loop flow

61 Interpretations Physical Security of Critical Assets Frequency Response BAs must employ generation to achieve a frequency response of approximately 1% or ERCOT Regional Difference in BAL-001. Issue is fundamental to avoiding predictions of widespread firm load loss Time Error Monitor Appears to create a hole in implementation of Reliability Goal Critical System Conditions PA and TP must demonstrate deliverability through critical conditions Impact of Maintenance Outages Demonstrates that facilities can be maintained while achieving performance identified in Table 1 Technical Basis for Reactive Requirements Transmission Operator must have realistic technical justification to show they have acquired sufficient reactive to protect voltage levels