agenda board of trustees minutes and highlights dl/2012/0-bot08... · may 24, 2012 whereas, the...

Agenda

Board of Trustees August 16, 2012 | 8:00 a.m.-Noon Eastern Hilton Quebec 1100, Rene-Levesque Blvd East Quebec, QC Canada G1R 4P3 418-647-6500 Introductions and Chair’s Remarks NERC Antitrust Compliance Guidelines and Public Announcement Consent Agenda — Approve

1. Minutes*

a. July 23, 2012 Action Without a Meeting

b. June 20, 2012 Action Without a Meeting

c. May 24, 2012 Conference Call

d. May 18, 2012 Action Without a Meeting

e. May 17, 2012 Action Without a Meeting

f. May 9, 2012 Meeting

2. Committee Membership Appointments and Charter Amendments *

a. Electricity Sub-Sector Coordinating Council (ESCC) Charter Amendments

b. Operating Committee Membership Changes Regular Agenda

3. Remarks by Richard Drouin

4. Remarks by Commissioner Norris

5. Remarks by Commissioner LaFleur

6. President’s Report

7. Standards*

a. VAR-002-2b — Generator Operation for Maintaining Network Voltage Schedules ― Adopt

b. IRO-001-3 — Reliability Coordination — Responsibilities and Authorities ― Adopt

c. Section 1600 Data Request in Response to Order No. 754 ― Approve

Board of Trustees Agenda August 16, 2012

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d. Retirement of the BAL-004-1 — Time Error Correction ― Rescind Approval

8. NERC and Regional Entity Proposed 2013 Business Plans and Budgets and Associated Assessments ― Approve

9. Report on Rules of Procedure Process Improvements* — Approve

10. Standards Process Input Group (SPIG) Recommendations*

a. Reliability Issues Steering Committee (RISC) Charter and Initial Slate to the RISC (Recommendation 2) ― Approve

b. Status of Other Recommendations ― Discussion

i. Standards Committee Report (Recommendations 1, 4, and 5)

ii. Management Report (Recommendation 3)

11. Follow-up on Southwest Outage Actions (NERC and WECC) — Information

12. Critical Infrastructure Update — Information

a. Cyber Security Risk Maturity Model

b. Electricity Sector Information Sharing and Analysis Center (ES-ISAC)

c. Electricity Sub-Sector Cyber Security Risk Management Process Guideline

d. High-Impact, Low-Frequency (HILF) – Coordinated Action Plan – Phase II

13. External Affairs Update: Canadian Affairs* — Information Committee Reports* (Item 14)

a. Operating Committee

b. Planning Committee

c. Critical Infrastructure Protection Committee

d. Member Representatives Committee

e. Personnel Certification Governance Committee

f. Standards Committee

g. Compliance and Certification Committee

h. Electricity Sub-Sector Coordinating Council Forum and Group Reports* (Item 15)

a. North American Energy Standards Board

b. Regional Entity Management Group

c. North American Transmission Forum

d. North American Generator Forum

Board of Trustees Agenda August 16, 2012

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Board Committee Reports

16. Corporate Governance and Human Resources

17. Compliance

18. Finance and Audit

a. Second Quarter Statement of Activities — Accept

b. Working Capital and Operating Reserve Policy —Approve

19. Nominating

20. Standards Oversight and Technology

*Background materials included.

Draft Minutes Board of Trustees July 26, 2012 Action Without a Meeting

On July 26, 2012 the members of the Board of Trustees of the North American Electric Reliability Corporation consented in writing and took action on the following:

1. Authorized NERC staff to issue a Section 1600 Request for Data or Information regarding TPL-002-0b Table 1, footnote b.

2. Approved NERC’s request to submit to FERC modifications to certain Violation Severity Levels (“VSLs”) and Violation Risk Factors (“VRFs”) of Reliability Standard PRC-006-1.

Attached to these minutes is the memorandum from the General Counsel requesting the actions, an explanatory memorandum by Mike Walker, and the written votes of the trustees as Exhibits A and B respectively. Submitted by,

Charles A. Berardesco Secretary

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Agenda 1a Board of Trustees Meeting August 16, 2012

Draft Minutes Board of Trustees June 25, 2012 Action Without a Meeting

On June 25, 2012 the members of the Board of Trustees of the North American Electric Reliability Corporation consented in writing and approved a banking resolution in connection with an amendment to NERC’s line of credit with PNC Bank. Attached to these minutes is the memorandum from the General Counsel requesting the actions, an explanatory memorandum by Mike Walker, and the written votes of the trustees as Exhibits A, B, and C respectively. Submitted by,

David Cook Secretary

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Agenda 1b Board of Trustees Meeting August 16, 2012

Draft Minutes Board of Trustees May 24, 2012 | 2:00-3:30 p.m. Eastern Conference Call Chair John Q. Anderson convened a duly noticed open meeting by conference call of the Board of Trustees of the North American Electric Reliability Corporation on May 24, 2012 at 2:00 p.m. Eastern. As required by the bylaws of the Corporation, dial-in listen-only access was provided to members of the Corporation and the public for the meeting. The agenda is attached as Exhibit A. Trustees present on the call in addition to Chair Anderson were Vicky Bailey, Paul Barber, Tom Berry, Fred Gorbet, Ken Peterson, Jan Schori, Roy Thilly, Janice Case, Bruce Scherr and President and CEO Gerry Cauley. Additional attendees are listed in Exhibit B. Antitrust Compliance Guidelines David Cook, vice president and general counsel, directed the participants’ attention to the NERC Antitrust Compliance Guidelines. NERC Summer Reliability Assessment John Moura reviewed the highlights of the draft report. Chair Anderson led the board through a section-by-section discussion of the report. Individual trustees raised questions and suggested clarifying edits and revisions. Following extended discussion, on motion of Paul Barber, the board approved the draft 2012 Summer Assessment for publication, subject to the edits and clarifications discussed during the course of the conference call. Chair Anderson expressed the appreciation of the board for the outstanding work of the Reliability Assessment Subcommittee and NERC staff in developing the report. ReliabilityFirst Corporation Regional Standards Development Procedure and Amended and Restated Bylaws Mr. Cook presented the proposed Regional Standards Development Procedure and Amended and Restated Bylaws for ReliabilityFirst and after discussion by the Trustees and on motion of Ken Peterson the board approved the following resolution:

WHEREAS, ReliabilityFirst Corporation (“ReliabilityFirst “) has requested that NERC approve certain amendments to its bylaws and certificate of incorporation and related amendments to the ReliabilityFirst regional standards development procedure, as set forth in Exhibit A to this resolution, which are Exhibits B and C to the Amended and Restated Delegation Agreement Between NERC and ReliabilityFirst, (collectively, the “Amendments”), and file them with the Federal Energy Regulatory Commission (“the Commission”) for approval; and

WHEREAS, on December 1, 2011 the Members of the Board of Directors of ReliabilityFirst approved the Amendments; and

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Agenda 1c Board of Trustees Meeting August 16, 2012

Board of Trustees Minutes May 24, 2012

WHEREAS, the NERC Board of Trustees finds that ReliabilityFirst followed appropriate procedures in adopting the Amendments and that the Amendments are consistent with ReliabilityFirst’s obligations and responsibilities under the delegation agreement between NERC and ReliabilityFirst and otherwise meet the requirements set forth in 18 C.F.R. §39.10 of the Commission’s regulations;

RESOLVED, that the NERC Board of Trustees approves the Amendments and directs that they be filed with the Commission for approval.

Project 2009-26 ― Interpretation of CIP-004-1 for WECC Steve Noess presented the CIP-004-1 Interpretation and requested the board adopt interpretation of Requirements R2, R3, and R4 of CIP-004-x (Cyber Security — Personnel and Training) for WECC. On motion of Bruce Scherr, the board approved the following resolution:

RESOLVED, that the board approves the proposed interpretation of requirements R2, R3, and R4 of CIP-004-x — Cyber Security — Personnel and Training.

FURTHER RESOLVED, that NERC Staff shall make the appropriate filings with ERO governmental authorities.

Member Representatives Committee Members to the Board of Trustees Nominating Committee Rebecca Michael reported that Scott Helyer, MRC Chair, recommended the following Member Representatives Committee members for appointment to the NERC Board of Trustees Nominating Committee:

• Scott Helyer (MRC Chair)

• Carol Chinn (MRC Vice Chairman)

• Sylvain Clermont – Federal/Provincial Sector

• Terry Boston – ISO/RTO Sector

• John A. Anderson – Large End-Use Electricity Customer Sector On motion by Ken Peterson, the board approved the appointment of the recommended MRC slate to the Board Nominating Committee. There being no further business, the call was terminated at 2:50 p.m. Submitted by,

David N. Cook Secretary

Draft Minutes Board of Trustees May 18, 2012 Action Without a Meeting

On May 18, 2012 the members of the Board of Trustees of the North American Electric Reliability Corporation consented in writing and approved NERC seeking Reconsideration, or in the Alternative Rehearing, of FERC’s Order No. 762 for the limited purpose of requesting FERC to reconsider its directive to formally invoke the Expedited Standards Development Process and instead allow NERC to develop a response to Order No. 762 using the regular standards development process. The board further directed NERC Staff to file the Request for Reconsideration, or in the Alternative Rehearing, with the Commission by April 21, 2012. Attached to these minutes is the memorandum from the General Counsel requesting the actions and the written votes of the trustees as Exhibits A and B respectively. Submitted by,


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Agenda 1d Board of Trustees Meeting August 16, 2012

Draft Minutes Board of Trustees May 17, 2012 Action Without a Meeting

On May 17, 2012 the members of the Board of Trustees of the North American Electric Reliability Corporation consented in writing and appointed Charles Berardesco of Washington, D.C. to be Senior Vice President, General Counsel, and Corporate Secretary of the Corporation, effective July 2, 2012. Attached to these minutes is the memorandum from the General Counsel requesting the actions and the written votes of the trustees as Exhibits A and B respectively.

Submitted by,


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Agenda 1e Board of Trustees Meeting August 16, 2012

Draft Minutes Board of Trustees May 9, 2012 | 8:00 a.m.-12:00 p.m. Eastern Westin Arlington Gateway 801 North Glebe Road Arlington, VA 22203 703-717-6200

Chair John Q. Anderson called to order a duly noticed meeting of the North American Electric Reliability Corporation Board of Trustees on May 9, 2012 at 8 a.m., local time, and a quorum was declared present. The Agenda and list of attendees are attached as Exhibits A and B, respectively. NERC Antitrust Compliance Guidelines David Cook, senior vice president and general counsel, directed participants’ attention to the NERC Antitrust Compliance Guidelines included in the agenda. Executive Session Chairman Anderson reported that, as is its custom, the board met in executive session before the open meeting, without the chief executive officer present, to review management activities. Consent Agenda On motion of President and CEO Gerry Cauley, the board approved the consent agenda, as follows: Minutes The board approved the following draft minutes (Exhibit C):

• March 14, 2012 Conference Call

• February 23, 2012 Conference Call

• February 9, 2012 Meeting

Committee Membership Appointments and Charter Changes The board approved the proposed nominations to the membership of the Compliance and Certification, and Personnel Certification Governance Committee committees (Exhibit D). Commissioners’ Remarks Mr. Cauley welcomed Commissioners Norris and LaFleur to the meeting. Commissioner LaFleur referenced the NERC Audit and her statement posted on the FERC website and that while she has a high degree of confidence in the FERC audit staff she believes the audit report as presented by staff should have been subject to a vote of the full Commission prior to its issuance. Ms. LaFleur commented on the Southwest Outage Report and the collaboration between NERC, FERC, and all others involved in producing a very good report. She would recommend that the lessons learned are widely applied and not just focused in the incident areas.

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Agenda 1f Board of Trustees Meeting August 16, 2012

Board of Trustees Draft Minutes – May 9, 2012

Concluding, Ms. LaFleur stated that she was particularly interested in the Standards Process Improvement Group (SPIG) presentation and the focus on two dimensions: 1) improving quality first and 2) timeliness of standards and noted that the timeliness of standards speaks to everyone and would support the continued focus in this area. In his remarks, Commissioner Norris also offered his pleasure on the work completed by the SPIG believing that the SPIG is the maturation process and believes it will allow the ERO to accomplish its goals. Mr. Norris continued offering his praise regarding the Southwest Outage Report and the collaboration between and NERC and FERC and reaffirming the end goal is to make the system more reliable. Mr. Norris concluded his remarks with comment to the FERC Audit, noting that he has great respect for the work the FERC Audit Staff completes and that audits are never fun to go through but assured the Board of Trustees, NERC Management, and the audience that he fully supports NERC leadership and supports the continued relationship between NERC and FERC (as in the Southwest Outage Event)and encouraged anyone that has concerns to bring them to the hearing and he would ensure that all receive a fair review. President’s Report Mr. Cauley opened his remarks echoing those of Commissioners Norris and LaFleur on the Southwest Outage Report. Mr. Cauley stated that NERC will be continuing to work with Mark Maher, WECC CEO on the findings looking beyond interconnection time and taking an introspective look at all areas of effort: standards, auditing, compliance and seek to determine the underlying issues that may exist before an event occurs. Part of that solution is a risk-based approach: testing risk, evaluating risk, and determining how to ensure programs are working ahead of time. Mr. Cauley concluded his report highlighting three strategic milestones achieved to date in 2012 by the electric reliability organization (ERO): Standards Process Input Group. The high-level Member Representatives Committee working group was formed to provide policy input and recommendations on key issues in the standards area, including quality of process and product, timeliness, efficiency and effectiveness, and significance of American National Standards Institute requirements. State of Reliability Report. This report follows the 2011 foundational report that reviews and assesses the state of reliability based on trends identified through data combined with root cause analysis of events. The key findings serve as technical input to NERC’s Reliability Standards and project prioritization, compliance process improvements, event analysis, reliability assessment and critical infrastructure protection. Severe Impact Resilience and Cyber Attack Task Force Reports. These two reports are the final of four task force reports that address high-impact, low-frequency events. The reports provide guidance to industry on enhancing and protecting the resilience of the bulk power system against debilitating grid events. Previous task force reports addressed geomagnetic disturbances and spare equipment.


Standards Herb Schrayshuen, vice president of standards and training, gave a presentation on the Reliability Standards Program (Exhibit E) and presented the following items for board action.

FAC-003-3 – Transmission Vegetation Management Program and PRC-005-1.1b – Transmission and Generation Protection System Maintenance and Testing Following discussion among the trustees, on motion of Paul Barber, the board approved the following resolutions:

WHEREAS, the currently-effective FAC-003-1 Reliability Standard was approved by the board on February 7, 2006 and approved by the Federal Energy Regulatory Commission (“FERC”) on April 7, 2006; WHEREAS, on November 3, 2011, the board approved a revised FAC-003-2 standard, which was filed with FERC for approval on December 21, 2011; WHEREAS, FERC has not yet acted on NERC’s proposed FAC-003-2 Reliability Standard; WHERAS, NERC is presenting a revised FAC-003-3 standard to the board for approval, which adds Generator Owners and Generator Operators to the list of applicable entities subject to compliance with the Reliability Standard; WHERAS, NERC is presenting PRC-005-1.1b – Transmission and Generation Protection System Maintenance and Testing and the associated Implementation Plan, which clarifies that generator interconnection Facilities are within the scope of the standard; RESOLVED, that the board approves the proposed Reliability Standard FAC-003-3 – Facility Connection Requirements and the associated Violation Risk Factors (VRFs), Violation Severity Levels (VSLs) and implementation plan for FAC-003-3; FURTHER RESOLVED, that the board approves the retirement of FAC-003-1 – Transmission Vegetation Management Program at midnight on the day immediately prior to the effective date of FAC-003-3, on the condition that the FAC-003-1 standard is still effective and has not been superseded by FERC’s approval of the FAC-003-2 standard; FURTHER RESOLVED, that if the FAC-003-2 Reliability Standard has been approved by FERC before FERC acts on NERC’s FAC-003-3 petition, the board approves the retirement of FAC-003-2 at midnight on the day immediately prior to the effective date of FAC-003-2; FURTHER RESOLVED, that the Board approves the PRC-005-1.1b – Transmission and Generation Protection System Maintenance and Testing and the associated Implementation Plan;


FURTHER RESOLVED, that the board approves the retirement of the PRC-005-1b—Transmision and Generation Protection System Maintenance and Testing Reliability Standard at midnight on the day immediately prior to the effective date of the PRC-005-1.1b standard; FURTHER RESOLVED, that the board directs NERC staff to file the FAC-003-3 – Transmission Vegetation Management standard and the PRC-005-1.1b – Transmission and Generation Protection System Maintenance and Testing standard together with the FAC-001-1 – Facility Connection Requirements and PRC-004-2.1a – Analysis and Mitigation of Transmission and Generation Protection System Misoperations Reliability Standards approved by the board at its February 9, 2012 meeting, to the appropriate ERO governmental authorities (Exhibit F).

TOP-001-2-Transmission Operations; TOP-002-3-Operations Planning; and TOP-003-2- Operational Reliability Data—Real-Time Operations Following discussion among the trustees, on motion of Fred Gorbet, the board approved the following resolutions:

RESOLVED, that the board approves the following proposed reliability standards and Implementation Plan for Project 2007-03:

• Reliability Standard TOP-001-2 Transmission Operations, effective consistent with the Implementation Plan for Project 2007-03;

• Reliability Standard TOP-002-3 Operations Planning, effective consistent with the Implementation Plan for Project 2007-03;

• Reliability Standard TOP-003-2 Operational Reliability Data, effective consistent with the Implementation Plan for Project 2007-03;

FURTHER RESOLVED, that the board approves the associated Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs) for TOP-001-2, TOP-002-3, and TOP-003-2; FURTHER RESOLVED, that the board approves the retirement of the following standards at midnight on the day immediately prior to the effective date of the TOP-001-2, TOP-002-3, and TOP-003-2 standards:

• TOP-001-1a

• TOP-002-2b

• TOP-003-1

• TOP-004-2—Real-Time Transmission Operations

• TOP-005-2—Operational Reliability Data

• TOP-006-1—Monitoring System Conditions

• TOP-007-0—Reporting System Operating Limits (SOL) and Interconnection Reliability Operating Limit (IROL) Violations


• TOP-008-1—Response to Transmission Limit Violations

• PRC-001-2—System Protection Coordination, Requirements R2, R5, and R6 FURTHER RESOLVED, that NERC Staff shall make the appropriate filings with ERO governmental authorities (Exhibit F).

Interpretation 2010-05 of CIP-002-1 for Duke Energy Following discussion among the trustees, on motion of Paul Barber, the board approved the following resolutions:

RESOLVED, that the board approves the proposed interpretation of requirement R3 of CIP-002-1 – Cyber Security — Critical Cyber Asset Identification;

FURTHER RESOLVED, that NERC Staff shall make the appropriate filings with ERO governmental authorities (Exhibit G).

Western Electricity Coordinating Council Regional Variance On motion of Ken Peterson, the board approved the following resolutions:

RESOLVED, that the board approved the proposed WECC Variance to Reliability Standard VAR-001-3 – Voltage and Reactive Control;

FURTHER RESOLVED, that the board approves the associated Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs) for the WECC variance to VAR-001-3 FURTHER RESOLVED, that the board approves the Implementation Plan for VAR-001-3, which includes an effective date of the first day of the first calendar quarter six months after applicable regulatory approval, or in those jurisdictions where no regulatory approval is required, the first day of the first calendar quarter six months after NERC Board of Trustees’ approval; FURTHER RESOLVED, that the board approves the retirement of the VAR-001-2 – Voltage and Reactive Control Reliability Standard at midnight of the day immediately prior to the effective date of the VAR-001-3 standard; FURTHER RESOLVED, that NERC Staff shall make the appropriate filings with ERO governmental authorities (Exhibit H).


Request to Shorten Comment Period for Proposed Data Request under Section 1606 of the NERC Rules of Procedure On motion of Fred Gorbet, the board approved the following resolution:

WHEREAS, on April 19, 2012, FERC remanded NERC’s proposed TPL-002-2b standard (“Remand Order”), which includes a provision that allows for planned load shed in a single contingency provided that the plan is documented and alternatives are considered in an open and transparent stakeholder process (footnote b); WHERAS, the Remand Order directed NERC to identify the specific instances of any planned interruptions of Firm Demand under footnote b and how frequently the provision had been used, using its Section 1600 Rules of Procedure authority to develop a data request; WHEREAS, given FERC’s directive, NERC has a need to gather information from the industry to support NERC’s development of its response to the Remand Order; WHEREAS, in order for the standards drafting team to be able to make use of the information to help shape the proposed response to the Remand Order, such information must be collected on an expedited basis; and WHEREAS, Rule 1606 of NERC’s Rules of Procedure permits the Board of Trustees to shorten the comment period on proposed data collections where circumstances so warrant;

RESOLVED, that the NERC Board of Trustees approves posting the draft request for data or information to NERC registered entities on an expedited schedule in accordance with Rule 1606 of the NERC Rules of Procedure, shortening the comment on the draft request for data or information to twenty-one (21) days (Exhibit I). Proposed Amendments to Delegation Agreement with Midwest Reliability Organization (MRO) –Amended Exhibit B (MRO Bylaws) Rebecca Michael, associate general counsel, presented a proposal for approval of amendments to Delegation Agreement with Midwest Reliability Organization (MRO) and amended Exhibit B (MRO Bylaws). On motion of Paul Barber, the board approved the following resolutions:

WHEREAS, on December 15, 2011, the MRO Board of Directors unanimously approved the proposed changes to the MRO Bylaws, as set forth in Agenda Item 7 of the NERC Board of Trustees agenda for its May 9, 2012 meeting (the “Amendments”); WHEREAS, on March 14, 2012, the members of MRO approved the Amendments; WHEREAS, on April 3, 2012, MRO requested that NERC approve the Amendments and file them with the Federal Energy Regulatory Commission for approval; and


WHEREAS, the NERC Board of Trustees finds that MRO followed appropriate procedures in adopting the Amendments and that the Amendments are consistent with MRO’s obligations and responsibilities under the delegation agreement between NERC and MRO and otherwise meet the requirements set forth in 18 C.F.R. §39.10 of the Commission’s regulations; and WHEREAS, the Amendments will constitute amendments to the Amended and Restated Delegation Agreement between NERC and MRO, in the form of amendments to Exhibit ___– the MRO Bylaws, RESOLVED, that the Board approves the proposed amendments to the Amended and Restated Delegation Agreement between NERC and MRO; FURTHER RESOLVED, that NERC staff shall make the appropriate filings with the Federal Energy Regulatory Commission (Exhibit J).

Proposed Renewal Agreement Between SERC Reliability Corporation and Florida Reliability Coordinating Council and Between SERC Reliability Corporation and Southwest Power Pool, Inc. Ms. Michael presented the proposed renewal agreement between SERC and FRCC and between SERC and SPP. On motion of Bruce Scherr, the board approved the following resolutions:

WHEREAS, FERC’s July 12, 2010 Order approved agreements between SERC and FRCC and between SERC and SPP whereby SERC would assume the Compliance Enforcement Authority responsibility for certain registered functions of FRCC and SPP, as well as related amendments to the Revised Delegation Agreements that NERC has entered into with SERC, FRCC, and SPP, on condition that certain changes be made in those agreements; and WHEREAS, on February 17, 2011, the board approved the revised Agreement between SERC Reliability Corporation and Florida Reliability Coordinating Council concerning Compliance Monitoring and Enforcement of FRCC Registered Functions; and WHEREAS, the board finds that SERC has performed its role as Compliance Enforcement Authority for the FRCC-registered functions and the SPP-registered functions in an effective manner and that the board is not aware of any drawbacks from SERC’s performing this function; and WHEREAS, on February 17, 2011, the board approved the revised Agreement between SERC Reliability Corporation and Southwest Power Pool Regional Entity concerning Compliance Monitoring and Enforcement of SPP, Inc. Registered Functions; and WHEREAS, the board finds that SERC has performed its role as Compliance Enforcement Authority for the FRCC and SPP registered functions in an effective manner and that the board is not aware of any drawbacks to SERC’s performing this function;


RESOLVED, that the NERC Board of Trustees approves the following:

(1) the Renewal Agreement Between SERC Reliability Corporation and Florida Reliability Coordinating Council Concerning Compliance Monitoring and Enforcement of FRCC Registered Functions;

(2) the revised Agreement Between SERC Reliability Corporation and Southwest Power Pool Regional Entity Concerning Compliance Monitoring and Enforcement of SPP, Inc. Registered Functions; and

(3) conforming amendments to Exhibit A to the NERC-FRCC Delegation Agreement and Exhibit A to the NERC-SPP Delegation Agreement, respectively, to reference the SERC-FRCC and SERC-SPP renewal CEA Agreements.

FURTHER RESOLVED, that NERC staff shall make the appropriate filings with the Federal Energy Regulatory Commission (Exhibit K).

Report of the Standards Process Improvement Group Mr. Cauley and Scott Helyer, Chair, Member Representatives Committee (MRC) offered remarks with regard to the work of the SPIG and the recommendations for moving forward. Upon further discussion by the Trustees and on motion of Gerry Cauley, the board adopted the following resolution: WHEREAS, the board finds it is important for all participants in the ERO enterprise take

responsibility for improving the effectiveness and efficiency of the NERC standards development process;

WHEREAS, the board finds that the report of the Standards Process Improvement Group

established by the Member Representatives Committee (“Report”) makes a significant contribution to that effort;

RESOLVED,

(1) that the board accepts the Report and endorses its recommendations; (2) that the board requests the Standards Process Improvement Group to continue its work

to develop a scope document for the Reliability Issues Steering Committee and report to the August 2012 board meeting;

(3) that the board requests the Standards Committee to implement recommendations #1,

#4 and #5 from the Report and report to the August 2012 board meeting; (4) that the board assigns recommendation #3 from the Report to management to develop

an implementation plan and report to the August 2012 board meeting;


(5) that all involved accord a high priority to these items, with the goal that implementation

be completed by year-end 2012. 2012 State of Reliability Report Mark Lauby and Bill Adams provided an overview of the 2012 State of Reliability Report (presentation is attached as Exhibit L). Upon discussion by the Trustees, most noting the exceptional work, and on motion of Paul Barber, the board approved the following resolution:

RESOLVED, that the Board accepts the proposed 2012 State of Reliability Report, that the Board approves the release of the report, and that the Board endorses the recommendations in the report (Exhibit M).

Severe Impact Resilience: Considerations and Recommendations Report Tom Bowe, Operating Committee chair presented the Severe Impact Resilience: Considerations and Recommendations Report to the board for approval highlighting points from his presentation attached hereto as (Exhibit N). The Trustees again commented to the exception work and on motion of Paul Barber, the board approved the following resolution:

RESOLVED, that the Board accepts the proposed Severe Impact Resilience: Considerations and Recommendations Report, that the Board approves the release of the report, and that the Board endorses the recommendations in the report (Exhibit O).

Cyber Attack Task Force Report Mark Engels, Dominion presented the Cyber Attack Task Force Report to the board for approval. His full presentation is attached as Exhibit P. Once again the Trustees discussed and reference the exception work contained in this report and on motion Jan Schori, the board approved the following resolution:

RESOLVED, that the Board accepts the proposed Cyber Attack Task Force Report, that the Board approves the release of the report, and that the Board endorses the recommendations in the report (Exhibit Q).

Electricity Sector Information Sharing and Analysis Center (ES-ISAC) Update: Enhancing Capability Tim Roxey, chief cyber security officer, provided a report on the status of the ES-ISAC, the lead information sharing and analysis nexus for the sector. Mr. Roxey reviewed the areas for improvement and milestones for 2012. The full presentation is attached as Exhibit R. Government Relations Update Janet Sena, vice president and director of policy and external affairs made a brief presentation updating the board on certain matters of particular importance to NERC’s relationships with governmental entities. (Exhibit S)


Standing Committee Reports Operating Committee Tom Bowe, chair, highlighted items from the committee’s written report to the board (Exhibit T). At the conclusion of the report, Mr. Cauley referenced tension of communications between the OC and Standards and in that Mr. Cauley values the opinion of the OC requested the committee highlight what it feels is an appropriate framework of the requirements. Contrast what pieces of the framework would be part of the requirement and the distinction between the guidelines. Mr. Bowe welcomed the opportunity and stated the committee would work with Mr. Allen Mosher, Standards Committee chair and the Standards Committee to provide that information. Planning Committee Jeff Mitchell, chair, highlighted the accomplishments of 2011 and goals for 2012 as contained in his written report to the board (Exhibit U). Critical Infrastructure Protection Committee Chuck Abell, chair, highlighted items from the committee’s written report to the board (Exhibit V). Mr. Abell, further reviewed and presented the Critical Infrastructure Protection Committee Strategic Plan for acceptance and on motion of Gerry Cauley, the board accepted the strategic plan. Member Representatives Committee Scott Helyer, chair, noted the very beneficial discussion held during the MRC meeting the previous day, most notably the work of the SPIG and looking forward to continuing the next phase of the process. Personnel Certification Governance Committee The committee’s written report to the board is attached as Exhibit W. Standards Committee Allen Mosher, chair, referred to the highlighted items from the committee’s written report to the board (Exhibit X) and further commented on the work of the SPIG and the Standards Committee commitment to follow up on recommendations 1, 4, and 5. Compliance and Certification Committee Clay Smith, chair provided the Compliance and Certification Committee (CCC) report highlighting key activities from his written report (Exhibit Y). Electricity Sub-Sector Coordinating Council Mr. Cauley presented the report for the ESCC acknowledging the retiring members and nominating two new members, as well as acknowledging those members that agreed to stay on for an additional term. Mr. Helyer, MRC chair, then reviewed the process for nomination and election of the new members and advised that further information would be distributed in upcoming weeks.


Forum and Group Reports Regional Entity Management Group Tim Gallagher highlighted recent activities of the key multi-Regional groups, noting detailed summaries are contained in the full report, attached as (Exhibit Z). North American Transmission Forum In an effort of saving time, Tom Galloway referred to the Forum’s written report to the board (Exhibit AA). North American Generator Forum Mark Bennett reviewed his report (Exhibit AB) highlighting specifically that the Generator Forum’s Dues Proposal will be going out to vote, as well as the Forum will be conducting a vote on new members to the Steering Committee, advancing from 10 to 14 members. Board Committee Reports Corporate Governance and Human Resources Chair Janice Case provided a summary report of the Corporate Governance and Human Resources Committee (CGHRC) open meeting. Chair Case reviewed and requested board approval of the amendments to NERC’s Savings and Investment Plan.

On Ms. Case’s motion and the recommendation of the Corporate Governance and Human Resources Committee, the board approved the following resolution:

WHEREAS, the North American Electric Reliability Corporation (the “Company”) desires to amend the Adoption Agreement for the North American Electric Reliability Corporation Savings and Investment Plan (the “Plan”) in order to change the manner in which the defined contribution portion (referred to in the Plan as the “Employer Profit Sharing Contribution”) of the Plan is determined and to change the definition of Compensation with respect to the defined contribution portion of the Plan; and WHEREAS, the Plan provides in Section 14.1(b), that the Company may amend any elective or optional provision of the Adoption Agreement by delivering an executed copy of the amendment to the Prototype Plan Sponsor; and WHEREAS, the Board agrees to amend the Plan accordingly; NOW THEREFORE, BE IT RESOLVED, that on recommendation of the Corporate Governance and Human Resources Committee, the Plan Adoption Agreement is hereby amended to provide:

(1) In Section Three, Part D, paragraph 2, to elect Option 1, Discretionary Formula, in place of Option 2, Fixed Formula 10 %.


(2) In Section Six, Part A, paragraph 4, to exclude bonuses from the definition of Compensation for purposes of calculating the Employer Profit Sharing Contribution portion of the Plan.

BE IT FURTHER RESOLVED, that the amendments to the Plan shall take effect as of January 1, 2012; BE IT FURTHER RESOLVED, that in all other respects the Plan shall not be changed; BE IT FURTHER RESOLVED, that management is authorized and directed to take such actions as may be necessary or appropriate to implement these amendments to the Plan.

Ms. Case further reviewed and recommended for board approval the Risk Management and Internal Controls Subcommittee Mandate. On motion by Chair Gorbet and the recommendation of the Finance and Audit Committee and the Corporate Governance and Human Resources Committee, the board adopted the following resolution:

RESOLVED, that the board approves the mandate of the Risk Management and Internal Controls Subcommittee (Exhibit AC).

Compliance Committee Chair Bruce Scherr provided a brief summary of the Compliance Open meeting from the previous day highlighting the update provided by NERC staff on the Compliance Enforcement Initiative, including Find, Fix, Track, and Report, and the update on the filing of the six-month report. Mr. Scherr further spoke to the NERC staff update on the Risk-Based Compliance Monitoring and Entity Assessments Initiative, as well as an update on the 2011 CMEP Annual and the CIP-005 Compliance Analysis Reports. Finance and Audit Committee Chair Fred Gorbet reported that the committee met in closed session to review the audit report, as well as the performance of the auditor and NERC Management with regard to the audit. Mr. Gorbet further reviewed the 2011 Audited Financial Statements and the First Quarter Statement of Activities. Following discussion by Trustees and on motion of Mr. Gorbet, the board adopted the following resolution:

RESOLVED, that the board approves accepts the NERC 2011 year-end audited financial statements, subject to the receipt of a final report from the corporation’s independent auditor, substantially in the form presented at the FAC meeting and included in the FAC and BOT materials (Exhibit AD).

And on motion of Fred Gorbet, the board accepts the NERC 2011 first quarter unaudited financial statements (Exhibit AE).


Standards Oversight and Technology Committee Chair Peterson provided a brief review of the actions of the committee the day prior. Closing Chair Anderson requested any final comment from Commissioners LaFleur. Commissioner LaFleur found the meeting to be very valuable noting one specific item that stayed with her during the meeting, Mr. Cauley’s comments regarding the role of the ERO and focusing on what can be done to improve the grid, not just respond to events or orders. Ms. LaFleur fully supports that direction and reiterated the need for continued collaboration between NERC and FERC to accomplish continued reliability. Chair Anderson agreed that the two days provided an excellent set of meetings; an excellent set of materials and reports focused on reliability. Mr. Anderson thanked the industry for their attendance and their continued support. He reconfirmed that the policy input is beneficial to the board and requests that the industry members continue to submit their comments. Adjournment There being no further business, Chair Anderson terminated the meeting at 11:55 a.m. Submitted by,

David N. Cook Corporate Secretary

Agenda Item 2a Board of Trustees Meeting August 16, 2012

Electricity Sub-Sector Coordinating Council (ESCC) Charter Amendments Action Approve proposed revisions to ESCC Charter. Summary These proposed changes to the ESCC charter are responding to the request from Scott Helyer, chair of the Member Representatives Committee, to adjust the timing for selecting the CEO-level executives for ESCC membership. The changes move the start date of the selection process earlier and allow for a more deliberative process. The changes also clarify some ambiguities in the administration of the process. The ESCC approved the proposed changes on July 17, 2012.

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Board Approved: May 12, 2010 Amended and Board Approved: __________

July 17, 2012 - DRAFT

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Electricity Sub-Sector Coordinating Council Charter

Electricity Sub-Sector Coordinating Council Approved: May 12, 2010; Proposed Amendments: July 17,2012 2

TTaabbllee ooff CCoonntteennttss SECTION 1. NAME ............................................................................................................ 3

Name .................................................................................................................................................................... 3

SECTION 2. PURPOSE AND SCOPE ............................................................................. 3

Purpose of the Electricity Sub-Sector Coordinating Council ............................................................................... 3

SECTION 3. MEMBERSHIP.............................................................................................. 4

ESCC Membership .............................................................................................................................................. 4 1. Members ..................................................................................................................................................... 4 2. Qualifications for the CEO-level Executives .............................................................................................. 4 3. Process to Select the CEO-level Executives ............................................................................................... 4 4. Criteria for Selecting a Slate of CEO-level Executive Members ................................................................ 5 5. Terms of CEO-level Executive Members ................................................................................................... 5 6. Resignations, Vacancies, and Nonparticipation.......................................................................................... 5 7. Member Functions ...................................................................................................................................... 5 8. Support Functions ....................................................................................................................................... 6

SECTION 4. GOVERNANCE ............................................................................................ 6

1. ESCC Officers ............................................................................................................................................ 6 2. Vice Chairman Election .............................................................................................................................. 6 3. Terms of Officers ...................................................................................................................................... 6 4. Duties of Officers ...................................................................................................................................... 7

SECTION 5. MEETINGS ................................................................................................... 7

1. Meetings of the ESCC ................................................................................................................................ 7 2. Quorum ....................................................................................................................................................... 7

SECTION 6. WORKING GROUPS ................................................................................... 7

1. Working Groups ......................................................................................................................................... 7 2. Working Group Chairman .......................................................................................................................... 8 3. Experts ........................................................................................................................................................ 8

SECTION 7. PARLIAMENTARY AUTHORITY ................................................................ 8

SECTION 8. AMENDMENTS ............................................................................................ 8

Amendment of this Document ............................................................................................................................. 8



Section 1. Name Name This organization shall be known as the Electricity Sub-Sector Coordinating Council, abbreviated as “ESCC.” Section 2. Purpose and Scope Purpose of the Electricity Sub-Sector Coordinating Council The purpose of the ESCC is to foster and facilitate the coordination of sector-wide, policy-related activities and initiatives designed to improve the reliability and resilience of the electricity sector, including physical and cyber security infrastructure. The basis for this coordinated, sector council approach can be found in Annex 2 of Homeland Security Presidential Directive-7 (HSPD-7). This approach is described in the Sector Partnership Framework Model of the National Infrastructure Protection Plan. The ESCC represents the electricity sector as described in the Energy Sector Specific Plan, which includes bulk power system entities defined by Section 215 of the Federal Power Act. Responsibilities include, but are not limited to, the following:

1. Assist in explaining the electricity sector’s unique characteristics and operating model to enhance Critical Infrastructure Protection (CIP) or Critical Infrastructure/Key Resources (CI/KR), as defined in the Homeland Security Act of 2002 and HSPD-7, expanded to include all elements of the bulk power systems for North America.

2. Coordination of the electricity sector CIP (CI/KR) policy developments with other industry sectors.

3. Representing the electricity sector within cross-sector/interdependency matters, and providing representation to such activities that include the ANSI Homeland Security Standards Panel, the Critical Infrastructure Partnership Advisory Council, National Infrastructure Advisory Council Working Groups, the Partnership for Critical Infrastructure Security, and the Industrial Control Systems Joint Working Group.

4. Improving timely and actionable information sharing among and between the electricity sector, sector members, government entities, and other industry sectors.

5. Reviewing of, and commenting on, CIP (CI/KR)-related plans and policies.

6. Coordination between and among the sector’s policy-focused and operations-focused mechanisms and the government, with regard to:

a. Development of sector recommendations for preparedness and incident response and recovery plans based on the experience of sector members.

b. Participation in the development and sharing of best practices and lessons learned associated with CIP (CI/KR) activities or incidents.

c. Identification of, or participation in, activities involving vulnerabilities, interdependencies, risk assessments, and risk management methodologies (including vulnerability remediation and policy enforcement) with respect to CIP (CI/KR).



7. Such additional purposes as the ESCC may recommend, or the NERC Board of Trustees may direct, consistent with the foregoing purposes.

Definition of the Electricity Sector The energy sector is comprised of two energy sector coordinating councils — one for electricity and one for oil and natural gas — and a government coordinating council (GCC) composed of members from all levels of government concerned with maintaining energy security. The electricity portion of the energy sector includes the generation, transmission, and distribution electricity assets. Section 3. Membership ESCC Membership 1. Members

The voting members of the ESCC are:

a. One member from the NERC Board of Trustees appointed by the board chairman

b. The NERC CEO

c. Five CEO-level executives from NERC member organizations

d. The chairman of the NERC Critical Infrastructure Protection Committee (CIPC)

2. Qualifications for the CEO-level Executives

a. Should hold the highest executive-level position at a NERC member entity that owns and/or operates electricity industry assets.

b. A background in electricity industry operations is strongly preferred. In addition, experience with related assets, such as telecommunications, nuclear generation, hydroelectric dams, and oil and gas pipelines and distribution, will be helpful.

3. Process to Select the CEO-level Executives

a. Annually, starting Jduring the period une March 1 through March 31, the NERC Members or rRepresentatives Committee (MRC) will acceptof NERC Members may submit nominations for three weeks ending June 21 (or the next business day), for qualified individuals to serve as executive members on the ESCC.

b. Nominations should be sent to the MRC chairman, MRC vice chairman, NERC CEO, and NERC staff secretary for the MRC. The NERC staff secretary for the MRC will be responsible for issuing an annual notice of the nomination period and for working with the MRC chairman and vice chairman in facilitating the selection process.

c. Nominations must include the candidate’s name, title, entity affiliation, and a brief (one or two paragraph) statement describing how the nominee would contribute to the ESCC and meets the criteria contained in number Section 23, Item 2, above, and how the individual would contribute to meeting the criteria in Section 3, Item 4, below.

d. The MRC chairman and vice chairman will review the nominees and assemble a proposed slate of candidates reflecting the qualifications set out in this Section 3, Item



2 above. The proposed slate will be submitted to the MRC for its approval. (All nominations will accompany the transmittal of the proposed slate to the MRC.)

e. The MRC approval may occur by conference call, e-mail vote, or at a regularly scheduled meeting in accordance with the NERC By-laws. If the MRC does not approve the proposed slate, the MRC chairman and vice chairman will submit revised slates until one is approved by the MRC.

f. If an insufficient pool of nominations has been received from which to populate an ESCC executive member slate that meets the selection criteria, the MRC chairman may reach out to MRC members for further assistance in identifying additional nominees.

g. Once the MRC has approved the proposed slate, the NERC staff secretary to the MRC will notify the NERC CEO and the NERC board. f.

4. Criteria for Selecting a Slate of CEO-level Executive Members

The MRC will consider the following criteria to select ESCC executive members that are broadly reflective of operating environments and business models that make up the electricity industry.

a. Asset Type Diversity — ESCC CEO-level executive membership should reflect a diversity of types of assets owned or operated, including transmission, distribution, and various types of generation.

b. Geographic Diversity — ESCC CEO-level executive membership should reflect a broad geographic diversity, including international.

c. Business Model Diversity — ESCC CEO-level executive membership should reflect ownership or operation of assets under diverse business models and regulatory requirements.

5. Terms of CEO-level Executive Members

The term for ESCC CEO-level executive members will be two years. They may be re-elected for subsequent terms. Consideration should be given to providing for overlapping terms in order to avoid replacing all five members in a given year if possible.

6. Resignations, Vacancies, and Nonparticipation

An ESCC CEO-level executive member who resigns before the end of their term may be replaced by appointment of the MRC chairman for the time remaining in the resigning executive’s term. CEO-level executive membership is vested in the individual, not his or her organization.

7. Member Functions

The ESCC members will perform the following functions:

a. Manage, with the assistance of NERC staff, the administrative and coordinating functions of the ESCC;

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b. Represent the ESCC with regard to public and private interfaces;

c. Communicate decisions of the ESCC to external public and private entities;

d. Recommend the delegation of matters to working groups;

e. Recommend the creation of working groups and appoint initial working group chairmen (if a chairman is chosen from outside ESCC membership, an ESCC member will be the sponsor for the working group);

f. Plan meetings;

g. Ensure decision making is equitable and accessible to all sector stakeholders (e.g., by polling and/or communicating with members who were not available for deliberations);

h. Provide strategic direction to NERC in its role as the operator of the Electricity Sector Information Sharing and Analysis Center; and

i. Provide policy guidance to the U.S. Department of Energy as the government sector-specific agency under the sector partnership framework as defined by, but not limited to, the National Infrastructure Protection Plan.

8. Support Functions

The NERC CEO and CIPC chairman shall provide staff and industry resources needed to support ESCC activities:

a. Subject matter expertise to support the activities of the members.

b. Working groups as requested to facilitate ESCC work product development.

c. Engaging with NERC standing committees and other external entities. Section 4. Governance 1. ESCC Officers

The ESCC is led by a chairman and vice chairman, and supported by a secretary. The affairs of the ESCC will be coordinated by the officers of the ESCC. Officers are:

a. The NERC Chief Executive Officer will serve as the chairman of the ESCC.

b. The ESCC vice chairman is selected from the MRC-selected executive members of the ESCC.

c. The ESCC secretary is a staff function provided by NERC and shall be the NERC Chief Security Officer or an alternate appointed by the NERC CEO.

2. Vice Chairman Election

The vice chairman shall be elected by a simple majority vote of the executive members at a duly constituted ESCC meeting based on a nominations process. ESCC vice chairman participation shall not be vested in the member company or organization, but rather in the individual member.

3. Terms of Officers



a. The ESCC vice chairman shall serve a term of two years. If the vice chairman leaves the position before the end of the elected term, a special vote shall be held to elect an individual to fulfill the remainder of that term.

b. There are no term limits to serving as the vice chairman.

c. No two or more offices may be held by the same person. 4. Duties of Officers

a. The chairman and the other officers shall have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as may be delegated to them from time to time by the executive members. The chairman, if present, shall preside over all meetings of the members.

b. The vice chairman shall act as chairman in the absence of the chairman.

c. The secretary shall have the responsibility of supporting the chairman and vice chairman by preparing (or having prepared) and maintaining custody of minutes of the meetings and authenticating records of the ESCC.

Section 5. Meetings 1. Meetings of the ESCC

The ESCC will meet no fewer than two times each year, including annually, with the Energy GCC. ESCC meetings will be noticed to members in writing (electronic transmittal is acceptable) ten (10) or more business days in advance if possible.

2. Quorum A duly constituted meeting of the ESCC shall require a quorum of 60 percent of all active members. Members must be personally present (physically or telephonically) or notify the ESCC secretary of their intention to participate and vote by remote means, in advance of a properly noticed meeting at which a vote is taken. The vote of a majority, to be cast by the members so present at a meeting in which a quorum is present, shall be necessary for the adoption of any matter voted upon by the members, unless a different proportion is required by this charter.

Proxies will be provided in writing to the ESCC secretary ahead of any meeting that will include a vote.

Section 6. Working Groups 1. Working Groups

The ESCC may form working groups as needed.

a. Working groups may be made up of any combination of ESCC member representatives and industry experts or other persons outside of the ESCC. Working group members will have an identified ESCC member as a sponsor.



b. ESCC members may join working groups without limit.

c. Members will appoint working group chairmen and establish procedures consistent with this charter for the operation of the working group.

d. Working group meetings may be held depending on need.

e. Reports and recommendations from working groups will be presented at ESCC meetings for approval as appropriate.

2. Working Group Chairman A chairman for each working group will be chosen by a vote of the ESCC to take responsibility for coordinating the group, leading working group meetings, and communicating with the full ESCC.

3. Experts

A working group may call upon ESCC member and non-member participants to assist in its efforts.

Section 7. Parliamentary Authority Parliamentary Authority Conduct of the affairs of the ESCC shall follow the rules contained in the current edition of Robert’s Rules of Order in all cases in which they are applicable and in which they are not inconsistent with this operating charter or any special rules of order the ESCC may adopt. Section 8. Amendments Amendment of this Document This document may be amended upon two-thirds majority vote of the ESCC members in a regular meeting, or in a properly noticed special meeting constituted for the purpose. Changes so approved would become effective upon approval by the NERC Board of Trustees.

Agenda Item 2b Board of Trustees Meeting August 16, 2012

Standing Committee Membership Changes

Action Approve the following committee membership appointments and changes. Operating Committee Election Results — Term 2012–2014

Sector Elected

Members Company

1. Investor-owned utility Paul Johnson American Electric Power

2. State/municipal utility No nominations received

3. Cooperative utility Chris Bolick Associated Electric Cooperative, Inc.

4. Federal or provincial utility/Federal Power Marketing Administration

Martin Huang BC Hydro

5. Transmission dependent utility Ray Phillips Alabama Municipal Electric Authority

6. Merchant electricity generator No nominations received

7. Electricity marketer No nominations received

8. Large end-use electricity customer No nominations received

9. Small end-use electricity customer Kevin Conway Intellibind, LLC

10. Independent system operator/regional transmission organization

David Zwergel Midwest ISO

12. State government Jerome Murray Oregon Public Utility Commission

Agenda Item 7 Board of Trustees Meeting August 16, 2012

Standards

Action Adopt or discuss reliability standards, interpretations, and procedures as follows:

a. VAR-002-2b — Generator Operation for Maintaining Network Voltage Schedules ― Adopt

b. IRO-001-3 — Reliability Coordination — Responsibilities and Authorities ― Adopt

c. Section 1600 Data Request in Response to Order No. 754 ― Approve

d. Retirement of BAL-004-1 — Time Error Correction ― Rescind Approval

7a. VAR-002-2b — Generator Operation for Maintaining Network Voltage Schedules

Action Adopt the following standards documents and direct staff to file with applicable regulatory authorities:

• Reliability Standard VAR-002-2b — Generator Operation for Maintaining Network Voltage Schedules, consistent with the Implementation Plan for VAR-002-2b

[VAR-002-2b-clean] [VAR-002-2b-redline to last approval]

• Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs) for VAR-002-2b

[VRFs and VSLs]

• Implementation Plan for VAR-002-2b [Implementation Plan]

The modifications do not change the scope or intent of the previously approved standard, therefore the implementation plan proposes that the new standard become effective on the first day of the first calendar quarter after applicable regulatory approval or where no regulatory approval is required, on the first day of the first calendar quarter after Board approval.

• Retirements Retire the following standards midnight of the day immediately prior to the effective date of VAR-002-2b:

VAR-002-1.1b - Generator Operation for Maintaining Network Voltage Schedules

Retire CAN-022 VAR-002 R1 and R3, Generator AVR Operation in Alternative Mode

Background In January 2012, Constellation Power Generation requested an interpretation of VAR-002-1.1b, Requirement R1. The request seeks clarification regarding whether a communication must be conducted between a Generator Operator (GOP) and a Transmission Operator (TOP) during start up or shut down of a generator, when the unit is not stable and is not counted upon for real or reactive power by the Balancing Authority and TOP at that time. A team was assembled from several members of the Project 2008-01 drafting team to develop a revision to the standard to address the request. At its January 2012 meeting, the Standards Committee considered the request and decided (with Constellation’s consent) to move forward using a rapid revision process to address the request. Members of the project 2008-01 standard drafting team (Voltage and Reactive Planning and Control, currently in informal development) were asked to submit both a Standards Authorization Request (SAR) and proposed revisions to VAR-002-1b addressing the issue raised in Constellation’s request. Requirement R1 was revised to add two bullets to clarify that a communication between a GOP and a TOP is not necessary during start-up or shut down of a generator. Two footnotes were added to clarify the drafting team’s intent with respect to start-up and shutdown.

http://www.nerc.com/docs/standards/sar/VAR-002-2b_clean_20120522.pdf�

http://www.nerc.com/docs/standards/sar/VAR-002-2b_redline_to_last_approved_version.pdf�

http://www.nerc.com/docs/standards/sar/VAR-002-2b_2012July09_clean_final.pdf�

http://www.nerc.com/docs/standards/sar/VAR-002-2b_Implementation_Plan_clean_20120522.pdf�

The approved VRFs and VSLs for each requirement were also incorporated into the standard during this revision. These approved compliance elements were not included in the previously approved and posted version of the standard. Based on stakeholder comments received during the initial ballot, minor revisions were made to Requirement R2 and its VSLs. The SDT revised VAR-002-2b, R2 to change the word “output” to “schedule” to reflect the link between VAR-001-2, R4 and VAR-002-2b, R2. The SDT also added a revised version of a footnote to VAR-002-2b, R2. Additionally, the VSL was modified based on how long a generator is operated outside the voltage or reactive power schedule. Standard Development Process The standard and SAR were posted for a parallel comment period and initial ballot on February 8, 2012, with the ballot conducted March 14–23, 2012. The ballot achieved a 63 percent approval, with a quorum of 87 percent. The drafting team considered the comments received on the standard and requested that the Standards Committee approve a scope revision to address Requirement R2 and its VSLs. This scope revision request was approved by the Standards Committee at its April 2012 meeting. The standard was posted for a parallel comment period and successive ballot on May 22, 2012, with the ballot conducted June 18-27, 2012. The ballot achieved a 68 percent approval, with a quorum of 86 percent. A recirculation ballot was conducted from July 18-27, 2012. Results from this ballot will be provided at the August NERC Board of Trustees meeting. Proposed VRFs and VSLs Results from the non-binding poll of VRFs and VSLs will also be provided at the August Board of Trustees meeting. A link to the project history and files is included here for reference: http://www.nerc.com/filez/standards/Project 2011-INT-02_Rapid_Revision_of_VAR-002_to_address_Constellation_Request_for_Interpretation.html If trustees have questions or need additional information, they may contact Herb Schrayshuen, vice president and director of standards and training, at [email protected].

http://www.nerc.com/filez/standards/Project%202011-INT-02%20Rapid%20Revision%20of%20VAR-002%20to%20address%20Constellation%20Request%20for%20Interpretation.html�

http://www.nerc.com/filez/standards/Project%202011-INT-02%20Rapid%20Revision%20of%20VAR-002%20to%20address%20Constellation%20Request%20for%20Interpretation.html�

mailto:[email protected]�

7b. IRO-001-3 — Reliability Coordination — Responsibilities and Authorities Action Adopt the following standards documents and direct staff to file with applicable regulatory authorities:

• Reliability Standard IRO-001-3 — Reliability Coordination – Responsibilities and Authorities, consistent with the Implementation Plan for IRO-001-3

[IRO-001-3-clean] [IRO-001-3-redline to last approval]

• Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs) for IRO-001-3

[VRFs and VSLs]

• Implementation Plan for IRO-001-3 [Implementation Plan]

The first day of the second calendar quarter beyond the date that this standard is approved by applicable regulatory authorities, or in those jurisdictions where regulatory approval is not required, the standard becomes effective on the first day of the first calendar quarter beyond the date this standard is approved by the NERC Board of Trustees, or as otherwise made effective pursuant to the laws applicable to such ERO governmental authorities.

• Definitions The Reliability Coordination Standard Drafting Team (SDT) proposes the following new definition:

Reliability Directive: A communication initiated by a Reliability Coordinator, Transmission Operator, or Balancing Authority where action by the recipient is necessary to address an Emergency or Adverse Reliability Impact. This defined term is contained in draft COM-002-3 and IRO-001-3.

As a reference, we have included the existing definition of Emergency and the Board of Trustees’ approved definition of Adverse Reliability Impact:

Emergency: Any abnormal system condition that requires automatic or immediate manual action to prevent or limit the failure of transmission facilities or generation supply that could adversely affect the reliability of the Bulk Electric System.

Adverse Reliability Impact: The impact of an event that results in Bulk Electric System instability or cascading.

• Retirements Retire the following standards midnight of the day immediately prior to the effective date of IRO-001-3

IRO-001-1.1 — Reliability Coordination – Responsibilities and Authorities Rescind approval of the following standard that has previously been approved by the Board, but not yet filed, to be superseded by IRO-001-3.

IRO-001-2 — Reliability Coordination - Responsibilities and Authorities

http://www.nerc.com/docs/standards/dt/IRO_001_3_20120713_Clean.pdf�

http://www.nerc.com/docs/standards/dt/IRO-001-3_Redline_to_last_approved_version.pdf�

http://www.nerc.com/docs/standards/sar/IRO-001-3_VRF_VSL_Justifications_20120604_Clean.pdf�

http://www.nerc.com/docs/standards/dt/IRO_001_3_Implementation_Plan_20120713.pdf�

Background Project 2006-06 was established to improve several standards. IRO-001-3 reduced eight requirements to three, removed lower level facilitating requirements and clarified the authority of the Reliability Coordinator. Additionally, the proposed standard clarifies the Transmission Operator, Balancing Authority, Generator Operator and Distribution Providers’ obligation to comply with the Reliability Coordinator’s direction and to notify the Reliability Coordinator of its inability to perform. Many of the requirements in this project’s set of standards were translated from Operating Policies as part of the Version 0 process. There have been a number of suggestions, as well as FERC directives from Order No. 693, regarding ways in which the standards’ requirements could be improved. Three of the standards, IRO-002, IRO-005, and IRO-014 were approved by the NERC Board of Trustees at their August 4, 2011 meeting. The proposed IRO-001-3 reduces the nine requirements from IRO-001-1.1 into a more concise reliability standard. Requirement Action R1 Will be retired: It is addressed in the NERC

Rules of Procedure, Section 501 and 503. R2 Proposed for retirement: It is a documentation

requirement that provides no reliability benefit.

R3 Will become the new Requirement R1, the authority to act and direct others to act, which may include Reliability Directives.

R4 Proposed for retirement: It is redundant with the NERC Rules of Procedure, Sections 501 and 508.

R5 Proposed for retirement: It is a documentation requirement that provides no reliability benefit.

R6 Proposed for retirement: PER-003-0 provides the necessary reliability replacement with no gap in reliability.

R7 Proposed for retirement: IRO-014-2 R1 provides the necessary reliability replacement with no gap in reliability.

R8 Proposed for replacement by the new IRO-001-3 Requirement R2 and R3.

R9 Proposed for retirement: because it is redundant with other requirements and it is covered under the Reliability Coordinator’s Standard of Conduct.

In total, the project addresses 15 FERC directives. This standard addresses approximately six of the 15, either in whole or in part, due to the interrelated nature of some directives.

` The version 1 Standard Authorization Request (SAR) was posted for comments from January 15, 2007 through February 14, 2007, followed by a version 2 SAR, which was posted for comments from March 19, 2007 through April 17, 2007. Nominations for the drafting team were accepted from May 14, 2007 through May 25, 2007. The first draft of the standard was posted for an initial comment period from August 5, 2008 through September 16, 2008; a second comment period from July 10, 2009 through August 9, 2009 and a third comment period from January 4, 2010 through February 18, 2010. A parallel formal comment period and initial ballot was conducted from January 18, 2011 through March 7, 2011, with the ballot period running from February 25, 2011 through March 7, 2011. The ballot achieved a 50 percent approval, with a quorum of 87 percent. A parallel successive ballot and comment period and non-binding poll was conducted from January 9, 2012 through February 9, 2012, with the ballot period running from January 30, 2012 through February 9, 2012. The ballot achieved an 80 percent approval, with a quorum of 82 percent. A recirculation ballot was conducted from June 27, 2012 through July 6, 2012. The standard was approved by stakeholders, achieving an 81 percent approval with a quorum of 85 percent. Proposed VRFs and VSLs The non-binding poll of VRFs and VSLs achieved a quorum with 80 percent of those who registered to participate providing an opinion, and 85 percent of those who provided an opinion indicating support for the VRFs and VSLs that were proposed. A link to the project history and files is included here for reference: http://www.nerc.com/filez/standards/Reliability_Coordination_Project_2006-6.html If trustees have questions or need additional information, they may contact Herb Schrayshuen, vice president and director of standards and training, at [email protected].

http://www.nerc.com/filez/standards/Reliability_Coordination_Project_2006-6.html�


7c. Section 1600 Data Request in Response to Order No. 754

Action Approve the Order No. 754 Data Request pursuant to Section 1600 of the NERC Rules of Procedure. Background In September 2011, the Federal Energy Regulatory Commission (FERC or the Commission) issued Order No. 754, approving an interpretation of Transmission Planning Standard TPL-002-1, R1.3.10, in which FERC directed NERC and FERC staff to initiate a process to identify any reliability issues associated with the interpretation. In that order FERC expressed a concern regarding the study of non-operation of non-redundant primary protection systems, i.e., a single point of failure on protection systems. Additionally, the Commission directed FERC staff to hold a Technical Conference with NERC and appropriate subject matter experts to explore this reliability concern, including where it can best be addressed, and to identify any additional actions to address the matter. At the October 24-25, 2011 Technical Conference, five single point of failure events were discussed, including the “Westwing Outage” that occurred in 2004 on the Western Interconnection. Attendees reached consensus that the issue of single point of failure events must be addressed. NERC staff determined that the best method of addressing this issue is to first discover the extent of and risk involved with potential single points of failure on protection systems. Accordingly, NERC staff seeks approval, pursuant to Section 1600 of the NERC Rules of Procedure of this Data Request to determine the risks to the Bulk Electric System posed by single points of failure on protection systems. Collecting this data will allow NERC to respond appropriately to the issue. Members of the System Analysis and Modeling Subcommittee (SAMS) and the System Protection and Control Subcommittee (SPCS) met jointly on December 6-8, 2011 and reviewed this proposed data request. Both subcommittees support the data request and approved its posting for a 45-day public comment period, as required in Section 1600 of the Rules of Procedure. The first draft of the data request and an associated data reporting template were posted for industry comment from December 22, 2011, through February 6, 2012. Based on the comments received, the following changes were made:

• The data request was revised to clarify that responding to the data request is not mandatory for registered entities in Canada, but Canadian entities will be strongly encouraged to submit data so that decisions regarding the concern stated in Order No. 754 can be based on complete data across North America;

• The data request was updated to include estimates for the amount of applied time (engineer-hours) that may be necessary for Transmission Planners, Generator Owners, Transmission Owners, and Distribution Providers to provide the required data. The estimates are based on the method included in the data request that entities may follow for developing responses. However, the data request was also modified to emphasize that entities may use an alternate method to the one identified, and that they may use

http://www.nerc.com/docs/standards/dt/Order_754_Data_Request_20120816_Final.pdf�

information from existing studies and existing assessments of protection systems in developing responses to the data request, so long as the data provided is consistent with the data (in form and substance) that would be developed by using the method in the data request;

• In consideration of comments on the burden to entities, the data request was revised to extend the schedule from 12 months to 24 months with a staged approach for reporting information. This longer time for completion considers the burden associated with this data request, while the staged approach (with reporting for buses operated at 300 kV or higher due in 12 months) recognizes the need for timely reporting of data;

• Several terms were clarified or modified, several additional improvements and enhancements were added, and a number of additional questions were responded to outside the language of the data request.

A second draft of the data request and an associated data reporting template were posted for industry comment from May 11 through June 25, 2012. Based on the comments received, the following changes were made:

• Added rationale for the modeled fault location and fault clearing;

• Expanded the description of the iterative approach the Transmission Planner and asset owners use to evaluate buses and the asset owners’ protection system reviews;

• Clarified that the data request does not include buses operated below 100 kV and the system representation (base cases) used by the Transmission Planner; and

• Modified the description of DC control circuitry and station DC supply for clarity and to avoid skewing the results.

On July 19, 2012, the SAMS and SPCS endorsed the final recommendations and report for consideration and endorsement by NERC’s Board of Trustees. Summary NERC staff believes discovering the extent of and risk involved with potential single points of failure on protection systems is an important first step in addressing the Commission’s request to study single points of failure on protection systems. Accordingly, NERC management recommends approval of this Section 1600 Data Request to become mandatory and enforceable upon NERC Board of Trustees’ approval. A link to the project history and files is included here for reference: http://www.nerc.com/filez/standards/order_754.html If trustees have questions or need additional information, they may contact Herb Schrayshuen, vice president and director of standards and training, at [email protected].

http://www.nerc.com/filez/standards/order_754.html�


7d. Retirement of BAL-004-1 — Time Error Correction

Action Rescind Board of Trustee approval of BAL-004-1 and direct NERC staff to withdraw the petition requesting approval of BAL-004-1. Background In July of 2007, the NERC Operating Committee (OC) submitted a Standards Authorization Request (SAR) requesting that Urgent Action procedures be invoked to revise BAL-004-0. The SAR proposed to:

• Remove inappropriate compliance requirements on Reliability Coordinators who voluntarily agree to serve as Interconnection Time Monitors. This was to help ensure that Reliability Coordinators continue to provide this voluntary service.

• Remove inappropriate compliance requirements on the OC, which is not a user, owner, or operator.

• Remove requirements to follow NAESB business practices, which were perceived to be inappropriate.

A revised standard was developed to address the above concerns, and industry voted in support of the standard with a 94 percent approval and a 97 percent quorum. The NERC Board of Trustees approved the standard on March 26, 2008, and NERC filed a petition for Commission approval of the revised Time Error Correction Reliability Standard (designated BAL-004-1) on March 11, 2009. On March 18, 2010, FERC issued a Notice of Proposed Rulemaking (NOPR), proposing to remand BAL-004-1 with specific instructions to address alleged deficiencies FERC identified in the standard. On April 28, 2010, NERC responded to the NOPR, advising FERC that NERC was exploring the possible elimination of the practice of Manual Time Error Corrections entirely, which would eliminate the need for the standard altogether. On August 20, 2010, NERC submitted a Motion to Defer Action on BAL-004-1, citing the ongoing efforts to evaluate whether elimination of the practice (and associated standard) was feasible. NERC and its stakeholders performed significant outreach to entities both inside and outside the electric utility industry to determine if Manual Time Error Correction could be eliminated with minimal harm. While it was clear that eliminating Time Error Corrections would likely have no negative impact on reliability that was insurmountable, it also became clear that the potential for other problems was largely undefined and not well understood. Following exhaustive discussion and debate over several months, it was ultimately determined by the OC at their March 6-7, 2012 meeting that NERC should discontinue its pursuit of the elimination of Manual Time Error Corrections. As such, there remains the outstanding BAL-004-1 and the associated NOPR. Because NERC is no longer proposing to eliminate Manual Time Error Corrections, there is no longer any reason for FERC to continue to defer action on the standard. Such action could include issuing a Final Rule remanding the standard.

When considering the original reasons enumerated above for creating the Urgent Action effort, those concerns may no longer be as acute as originally envisioned.

• To date, no Interconnection Time Monitor has incurred a violation of BAL-004-0. The need to modify the standard to address this concern would appear to be less than originally envisioned.

• Upon further review, because the OC is not a registered entity, there is no potential for compliance actions against the OC. As such, the statement regarding the role of the OC in selecting the Interconnection Time Monitor should be considered as information only. There is no need to change the standard to address this concern, other than for purposes of clarification.

• FERC has indicated through its prior approval of the standard that it does not see a conflict with requiring that entities adhere to the NAESB business practices associated with Time Error Correction. In the proceedings under FERC Docket RM06-16-000 (Order 693), no entities expressed objection to Requirement 2. While elimination of the reference to NAESB business practices may still be considered, this alone is not sufficient cause to pursue a change to the standard at this time.

Additionally:

• BAL-004-0 remains in effect, and has been since 2007.

• Manual Time Error Correction is no longer expected to be eliminated.

• The Reliability Standards Development Plan already includes a project to address modifications of BAL-004. Based on the prioritization established during the development of the 2012-2014 Reliability Standards Development Plan, Project 2010-14.2 Phase 2 of Balancing Authority Reliability-based Controls: Time Error, AGC, and Inadvertent, is expected to begin in 2013.

Summary A remand of BAL-004-1 and the associated directives likely to accompany such a remand would distract the ERO from more pressing reliability needs. The current BAL-004-0 standard has remained in effect throughout the past years while the elimination of Time Error Corrections was considered. As such, any reliability concerns (actual or perceived) associated with Time Error Corrections have been and continue to be addressed by the existing standard. Given the above, NERC management recommends that the Board of Trustees rescind approval of BAL-004-1, and withdraw it from regulatory consideration. If trustees have questions or need additional information, they may contact Herb Schrayshuen, vice president and director of standards and training, at [email protected].



NERC and Regional Entity Proposed 2013 Business Plans and Budgets and Associated Assessments

Action Approve the NERC and Regional Entities 2013 Business Plans and Budgets and associated assessments. The following are links to the respective files: NERC 2013 Business Plan and Budget and Corresponding Documents Regional Entities Business Plans and Budgets

http://www.nerc.com/filez/business_plan_2013.html�

http://www.nerc.com/filez/regional_entity_business_plan_2013.html�


Report on Rules of Procedure Process Improvements

Action Approve the attached report and associated recommendations (Attachment 1) from NERC staff on revisions to the processes for developing, obtaining stakeholder input on, and obtaining Board of Trustees (the Board) approval for revisions to the NERC Rules of Procedure (ROP); and direct NERC staff to implement the recommendations in the report. Background During 2011, NERC developed and posted for comment numerous proposed revisions to its ROP. As the result of this effort, the Board approved a set of revisions to the ROP on March 14, 2012, and the proposed revisions were filed with FERC for approval on May 7, 2012. During the process of obtaining stakeholder comment on the proposed ROP revisions, NERC received a large number of comments concerning the processes by which the proposed revisions were developed, posted for comment, and approved. Some stakeholders also submitted comments on this topic to the Federal Energy Regulatory Commission (FERC) during the comment period provided by FERC after the proposed ROP revisions were filed for approval. NERC filed an answer to these comments with FERC on June 7, 2012 stating that in light of the comments that were received concerning the processes for developing and obtaining approval for revisions to the ROP:

“NERC staff is reviewing those processes and whether any changes or enhancements to the processes are needed. NERC staff intends to present a report on this topic to the NERC Member Representatives Committee and Board of Trustees at their respective meetings in August 2012, and to provide for discussion on this topic at those meetings. The staff report will identify recommended changes or enhancements to the processes to be followed in developing and obtaining approval for revisions to the ROP. Further, if any of the recommended changes that are endorsed by the Board require revisions or additions to NERC’s existing ROP, NERC will seek formal adoption of those ROP revisions through the stakeholder posting and comment process, NERC Board approval and a filing for Commission approval.”

The attached report summarizes NERC staff’s review of the processes for developing, obtaining stakeholder input on, and obtaining Board approval for revisions to the ROP, including the stakeholder comments that were received on this topic. The report contains a list of changes and enhancements to these processes which NERC staff recommends should be implemented for future ROP revisions. NERC staff believes that implementing the recommended changes and enhancements does not require amendments to NERC’s Bylaws or ROP. The report and recommendations will be discussed in the Member Representatives Committee meeting on August 15, and NERC staff will summarize those discussions for the Board during the August 16 Board meeting.

Agenda Item 9 Attachment 1 Board of Trustees Meeting August 16, 2012

Report on Rules of Procedure Process Improvements

Background During 2011 and the first quarter of 2012, the North American Electric Reliability Corporation (NERC) developed numerous revisions to its Rules of Procedure (ROP), including to Appendices 2, 3C, 4B, 4C, 5A, 5B, 6 and 8. The proposed revisions came from numerous sources, including: (1) a working group of NERC and Regional Entity Legal & Regulatory staff members, (2) a working group of NERC and Regional Entity Compliance Program staff members, and (3) NERC staff members in functional departments (Standards, Organization Registration and Certification, Compliance, Event Analysis, Operator Certification). A set of proposed revisions was initially posted for stakeholder comment from July 1 to August 15, 2011. A webinar was held shortly after the posting. Numerous stakeholder comments on the proposed revisions were received. A second posting of revisions for stakeholder comment occurred from November 7 to December 22, 2011. Again, numerous stakeholder comments were received. The proposed revisions were also discussed at the Member Representatives Committee (MRC) meetings on November 2, 2011 and February 8, 2012. Following the February 9, 2012 Board meeting, a short period for additional comments was provided. The Board approved a set of proposed revisions to the ROP in a meeting by conference call on March 14, 2012, and the revisions were filed with the Federal Energy Regulatory Commission (FERC) on May 7, 2012.1 During the stakeholder comment period at NERC, and in the comment period that the FERC provided after the revisions were filed for approval, a number of stakeholders submitted comments concerning the process by which the proposed ROP revisions had been developed, posted for comment, and approved (in addition to comments on the substance of the proposed revisions). In light of the extent of the comments received on the process, NERC staff has undertaken a review of the process used to obtain feedback on and approval of ROP revisions, and the possibility of revising or enhancing the process.

Current Provisions in the ERO Rules on Revisions to the ROP The Bylaws (Article XI, section 2) specify the following process:

Adoption, Amendment, and Repeal of Rules of Procedure Except as provided in Section 2 of Article XII, all Rules of Procedure, amendments thereto and repeals thereof shall be approved by the board. Proposals to adopt new Rules of Procedure or to amend or repeal existing Rules of Procedure may be submitted by (i) the Member Representatives Committee, (ii) any fifty (50) members of the Corporation, which number shall include members in at least three sectors, (iii) a committee of the Corporation to whose purpose and functions the Rule of Procedure pertains, or (iv) an officer of the Corporation. Unless the board determines that exigent conditions exist requiring adoption of a new Rule of Procedure or amendment or repeal of an existing Rule of Procedure in a shorter time, all proposals for adoption, amendment and repeal of Rules of Procedure shall be posted on the Corporation’s Web site and subject to public comment for a minimum of forty-five

1 The proposed revisions approved by the Board and filed with FERC did not include revisions to Appendices 5A (Organization Registration and Certification Manual) and 8 (NERC Blackout and Disturbance Response Procedures), which were withdrawn from consideration for further work with the possibility of future submittal. The proposed revisions include the deletion of Appendices 3C and 6, with the substantive content of Appendix 6 (System Operator Certification Program Manual) moved to ROP §600.

(45) days prior to action by the board. All Rules of Procedure and amendments to and repeals of Rules of Procedure approved by the board shall be submitted to the Commission and to other applicable governmental authorities for approval, and shall not be effective in the United States until approved by the Commission or in Canada or Mexico until approval is obtained from any governmental authority from which approval is required in those countries and subject to any conditions, limitations, or modifications required by the Commission or other governmental authority. (Emphasis added.)

Additionally, ROP §1402, Approval or Amendment or Repeal of the Rules of Procedure, states:

Amendment to or repeal of Rules of Procedure shall be approved by the Board after public notice and opportunity for comment in accordance with the Bylaws of NERC. In approving changes to the Rules of Procedure, the Board shall consider the inputs of the Member Representatives Committee, other ERO committees affected by the particular changes to the Rules of Procedure, and other stakeholders as appropriate. After Board approval, the amendment or repeal shall be submitted to the Applicable Governmental Authorities for approval, where authorized by legislation or agreement. No amendment to or repeal of the Rules of Procedure shall be effective until it has been approved by the Applicable Governmental Authorities.

Stakeholder Comments on Process The following points summarize the principal comments submitted by one or more stakeholders concerning the process followed in developing and obtaining feedback on and approval of the pending set of ROP revisions that were developed in 2011-2012.

• Although some postings included redlines of the ROP showing the proposed revisions and a summary of the revisions, the summary frequently only identified the revision, but did not explain the basis and purpose of the revision. Merely identifying the revision and stating what it is does not inform stakeholders as to the reason for the revision, and therefore does not enable stakeholders to comment on the reason for the revision.

• The postings of the proposed revisions for stakeholder comments were not adequately publicized.

• Although NERC conducted Webinars in connection with the posting of the proposed revisions, the Webinar presentations were very high level in nature, failing to provide specific reasons for revisions.

• Given the nature and scope/extent of the proposed revisions, a longer period than the minimum 45 days specified in the Bylaws should have been provided for stakeholder review and comment.

• When the proposed revisions were posted for a second time and when they were submitted to the Board, a document should have been issued stating how each stakeholder comment was addressed, including explaining why the comment was rejected, if it was rejected.

• When proposed revisions are to be presented to the MRC for approval and to the Board for approval, they should be published for stakeholder review farther in advance of the meeting than is currently the case. This will provide stakeholders adequate time to prepare comments for discussion or submittal at the MRC and/or Board meeting. (Thirty days in advance of the meeting was suggested. Board agenda materials typically are posted on the

NERC website approximately two weeks in advance of a meeting.) The ROP revision process should be made like the standards development process, including formation of a “standards committee,” submission of a “SAR” to initiate proposed revisions that is approved by the committee and posted for comments, appointment of a development team, balloting of the revisions with 67% approval required, and explanation of how each comment was addressed.

NERC staff does not believe all of these comments accurately reflect the process by which the pending set of ROP revisions were developed and presented for stakeholder comment. However, staff has considered the issues raised by all these comments in evaluating whether process changes or enhancements are needed, and has addressed concerns as listed below. Process Changes and Enhancements Based on consideration of the processes that were followed in developing and presenting the most recent set of ROP revisions, and of the “process” comments submitted by stakeholders, NERC staff recommends that the following steps should be observed in the future in the development of proposed ROP revisions. However, these steps would be modified if needed to develop and obtain approval of a revision in a constrained time frame, e.g., due to a time-specific regulatory directive or other exigent circumstance. (Note that Bylaws Article XI, §2, quoted above, provides that the Board can direct a shorter comment period than 45 days if required by “exigent conditions.”)

1. As done in the past, NERC will continue posting each set of proposed ROP revisions should include a redline of the ROP sections and/or Appendices to which the revisions are proposed (unless the proposal is for complete deletion of an entire section or Appendix without replacement).

2. A concise statement of the basis and purpose and rationale for each proposed revision will be provided when proposed ROP revisions are posted for comment. This would be posted in a separate, narrative document from the redline(s).

3. Notice (via “blast” e-mail) advising stakeholders of the posting, will provide a link or direction to the posting on the NERC website, will be sent to the NERC Roster, to all NERC Members, and to Registered Entities’ designated compliance contacts.

4. Because certain proposed ROP revisions may affect the obligations of Regional Entities under the regional delegation agreements, prior to such proposed ROP revisions being posted for stakeholder comment, NERC staff should review the proposed revisions with Regional Entity management. In addition, Regional Entity management should continue to be consulted during the process if additional changes are proposed, in response to comments, which affect the obligations of Regional Entities under the regional delegation agreements.

5. Where significant or substantial amendments are being proposed, NERC staff should engage in outreach with stakeholder groups, such as trade associations, to explain why the revisions are being proposed, for example by holding meetings and workshops with representatives of stakeholder groups and other interested parties. In appropriate situations, such outreach meetings could be conducted prior to the start of the posting period, and/or a summary document, describing the areas of proposed revisions could be prepared and distributed before posting specific revisions. 6. Judgment should be exercised to provide for a longer comment period than 45 days

where the posting involves a large number of proposed revisions and/or revisions to numerous different ROP provisions or Appendices.

7. If there has been significant stakeholder comment to the original posting and/or significant changes are being made to the proposed revisions following the initial posting period, judgment should be exercised as to whether a second posting should occur to allow opportunity for comment on the “further revised” ROP provisions. However, consideration can be given to providing a shorter period (e.g., 30 days) for a second posting.

8. If significant changes are being made to the proposed revisions following the posting period, redlines should be prepared and posted reflecting the ROP provisions or Appendices to which significant further revisions are made. The redlines should allow the reader to see both the original proposed revisions and the additional revisions. (Such redline(s) would be in addition to the redline(s) that would be prepared and posted, and provided to the Board in the case of submission for approval, showing the “final” proposed revisions to the currently effective ROP text.)

9 If there is a second posting, or if no second posting, when the proposed revisions are submitted to the Board for approval, a document should be prepared and posted summarizing the comments that were received on the posting(s) and what action was taken in response to the comment, including, if no action was taken, why it was determined that additional revisions (or withdrawal of revisions) were not warranted by the comment.

10. Proposed ROP revisions that are being submitted to the Board for consideration and/or approval should be posted on the NERC Website at least 15 days prior to the date of the Board meeting or other event, even if this necessitates posting in advance of the remainder of the agenda.

11. NERC staff should prepare a matrix for the Board that includes: (a) a description of the proposed revision, (b) a summary of the comments received, and (c) NERC’s response to the comments.

The process for revising the ROP should not be like the standards development process. The steps in the standards development process are necessary for that process to meet ANSI requirements for ANSI accreditation of the process. The ROP are not standards and do not require the same development and review processes as standards. Further, although implementation of the process steps listed above will lengthen the time required to process ROP revisions (in non-exigent circumstances), the ROP revision process does not need to be as time-consuming as the standards development process. These practices and procedures can be implemented immediately, within the framework of the existing provisions of the Bylaws and Rules of Procedure. NERC staff proposes to do so in the form of a memorandum to the staff from the NERC General Counsel that designates the practices and procedures to be followed in considering proposed revisions to NERC’s Rules of Procedure.


Standards Process Input Group (SPIG) Recommendations

Action This item contains the following attachments as part of the update on the recommendations of the Standards Process Input Group (SPIG), as assigned by the Board of Trustees (Board) at its May 2012 meeting, including several action items: Agenda Item 10a Draft Charter for the Reliability Issues Steering Committee (RISC) and proposed slate of initial RISC members to address Recommendation 2 of the SPIG.

• Exhibit 1 – Draft Charter of the RISC ― Approve

• Exhibit 2 – Initial Slate of Members to the RISC, to be provided under separate email cover on or about August 13, 2012 ― Approve

Agenda Item 10b.i Update of the Standards Committee’s activities to implement Recommendations 1, 4, and 5 of the SPIG ― No Action Agenda Item 10b.ii Update on NERC management’s activities to address Recommendation 3 of the SPIG ― No Action

• Exhibit 3 – Draft Annual Reliability Priorities Planning Process


Reliability Issues Steering Committee (RISC) Charter and

Initial Slate to the RISC (Recommendation 2)

Action Approve the Reliability Issues Steering Committee (RISC) Charter and initial slate of members. Background On May 9, the Board of Trustees (Board) accepted the SPIG report, endorsed its five recommendations, and tasked the SPIG to develop a charter for the RISC – SPIG Recommendation 2. Recommendation 2: Reliability Issues Steering Committee — The NERC Board is encouraged to form a RISC to conduct front-end, high level review of nominated reliability issues and direct the initiation of standards projects or other solutions that will address the reliability issues. Status The draft RISC Charter (Exhibit 1) addresses the overall function and responsibilities of the RISC as well as its membership and accountability to the Board. The primary function of the RISC is to address, at a high level, a wide range of potential reliability issues, and to make recommendations on “if” and “how” NERC should address them. As such, the RISC is not solely focused on standards-driven solutions to these issues, but rather on whatever solution or set of solutions best addresses the reliability risks created by these issues. The SPIG recognizes that, in most cases, the Board will direct actions based on the recommendations provided by the RISC; therefore, the charter is not intended to prescribe details regarding interaction with the various standing committees. However, in cases where the RISC and a particular standing committee(s) are in full agreement with the recommendation, the Board will be informed and the committee(s) will proceed with its implementation. In July 2012, Member Representatives Committee (MRC) Chair Scott Helyer announced to the MRC the opportunity to nominate candidates for initial membership to the RISC. A nomination procedure was developed to clarify how the initial slate of members would be selected by the SPIG and proposed to the MRC and Board for approval at the August 15 and 16 meetings. A draft RISC Charter was developed by the SPIG and distributed to the MRC for comment in mid-June. The SPIG reviewed the comments received and developed the current version, with a slate of 12 proposed members to the RISC (Exhibit 2-to be distributed under separate cover). During the development of the RISC Charter, the SPIG tried to address the following:

• Allocation of membership to include stakeholder and committee-based participation and support from NERC senior staff;

• A broad range of industry and stakeholder input and support;

• A function for the analysis of performance gaps, technical viability, reliability benefit, cost impact/justification, clarity of scope, etc.;

• A process for recommending to the board any key initiatives and priorities regarding Electric Reliability Organization (ERO) strategic priorities, standards projects, and/or alternate solutions; and

• Milestones and timelines for standards projects and alternate solutions. If NERC Board members have questions or need additional information, they may contact Scott Helyer, chair of the MRC and SPIG, at [email protected] or Holly Mann, MRC secretary and associate director of member and regional relations, at [email protected].



Reliability Issues Steering Committee Charter July 21, 2012

Purpose

The Reliability Issues Steering Committee (RISC) is an advisory committee that reports directly to the NERC Board of Trustees (the Board) and triages and provides front-end, high-level leadership and accountability for nominated issues of strategic importance to bulk power system (BPS) reliability. The RISC assists the Board, NERC standing committees, NERC staff, regulators, Regional Entities, and industry stakeholders in establishing a common understanding of the scope, priority, and goals for the development of solutions to address these issues. In doing so, the RISC provides a framework for steering, developing, formalizing, and organizing recommendations to help NERC and the industry effectively focus their resources on the critical issues needed to best improve the reliability of the BPS. Benefits of the RISC include improved efficiency of the NERC standards program. In some cases, that includes recommending reliability solutions other than the development of new or revised standards and offering high-level stakeholder leadership engagement and input on issues that enter the standards process. Overview and Functions

1. The RISC is responsible for evaluating reliability issues and risks identified by stakeholders, regulators, and the Board that are within the scope and jurisdiction of the Electric Reliability Organization (ERO). In general, it is expected that a reliability issue or risk is:

a. Based on previous documentation;

b. Not sufficiently covered by a current reliability standard to mitigate the reliability issue or risk; or

c. Linked to actual events that provide an example of the reliability issue or risk.

2. In order for the RISC to reasonably and efficiently perform its function, RISC will request that any person or entity identifying a reliability issue or risk provide the following information when a reliability issue or risk is identified for consideration:

a. Information to provide a technical understanding/description of the reliability issue or risk;

b. Studies, analyses, and data necessary to support the development of a standard or other action (lessons learned, alert, technical paper, etc.);

c. Recommended reliability performance results required/expected by the standard or other action;

d. Suggestions for how reliability performance would be evaluated; and

e. A justification or proposal for assessing reliability benefits and cost impacts.

mcclellant

Text Box

Agenda 10a Exhibit 1 Board of Trustees Meeting August 16, 2012

Reliability Issues Steering Committee Charter 2

3. The RISC shall triage and evaluate reliability issues and risks by:

a. Seeking assistance and requesting that additional work be performed by the standing committees or the Member Representatives Committee (MRC), if that is the consensus of the RISC members, or requesting the Board to assign that work to the appropriate standing committee. If requested by the RISC, standing committees shall provide a work product back to the RISC that assists the RISC in making a comprehensive and informed recommendation.

b. Requesting the Board to provide additional non-NERC resources and expertise, as needed, to assist with the development of recommendations, risk project assignments, and follow-up assessments to the Board.

c. Encouraging open dialogue and sharing of information among the Board, NERC standing committees, the MRC, NERC staff, regulators, Regional Entities, and industry stakeholders needed to recommend project timelines necessary to accomplish an achievable solution.

d. Considering findings from recent system events, lessons learned, and outcomes of risk trends and indices.

e. Requesting additional information from the nominee, if necessary.

4. Upon the completion of its triage and evaluation of each reliability issue and risk, the RISC:

a. Reports its findings to the Board, NERC Management, and affected standing committees and recommends:

i. A NERC program, committee, or other entity to undertake a specific action that could include, but not be limited to, the development of reliability standards, guidelines, bulletins, lessons learned, or other technical documents;

ii. The reliability issue be tabled until more information is provided for necessary clarification; or

iii. No new or additional action is taken.

b. Develops and submits a Reliability Risk Statement to accompany recommendations for specific actions that includes a full description of the risk issue, including the urgency and priority of recommended remedial measures and other initiatives/activities recommended by the RISC, and a preliminary assessment of the costs and benefits associated with the risk issue and proposed remedial measures.

c. Identifies any recommendations that are contingent upon changes to NERC policies or material changes to the NERC business plan that must be approved by the Board prior to implementation.

d. Reinforces that any recommendation of the RISC can be appealed first to the RISC and then to the Board.


5. The RISC also:

a. Responds to the Board’s decision to accept, reject, or remand the recommendation for further clarification.

b. Updates the Board no less than quarterly and at such other times as deemed necessary by the RISC chair, or as requested by the NERC Board chair.

c. Prepares recommendations to the Board on the relative priority and resources that should be allocated to various emerging and continuing reliability risk issues of strategic importance to BPS reliability.

d. Performs such other functions that may, from time to time, be delegated or assigned by the Board.

e. Monitors the execution of any recommendations and provides the Board with updates on the progress of such recommendations.

f. Reviews and provides recommendations to the Board, NERC Staff, and Standards Committee of any SAR, interpretation request, guideline, CAN, RSAW, standard, or other technical document nominated for review by the RISC. The RISC’s review of such items can include the priority, scope, cost benefit, and content.

g. Reviews and provides recommendations to the Board, NERC Staff, and the various standing committees regarding reliability risk issues and their priorities as necessary for the ERO to establish a three-year plan to improve the reliability of the BPS.

Membership

6. The RISC shall be comprised of no less than 12 members, typically of the following allocation:

a. Six (6) stakeholder-based― four (4) from the MRC and at least two (2) at-large members (not members of the MRC);

b. Five (5) committee-based―one (1) from each of the standing committees: Standards (SC), Operating (OC), Planning (PC), Critical Infrastructure Protection (CIPC), and Compliance and Certification (CCC). These members will be the chair or vice chair unless otherwise recommended by the standing committee and be subject to NERC Board approval; and

c. One (1) NERC Staff―senior NERC staff recommended by the NERC CEO as a non-voting member.

7. In advance of their annual May meetings, the NERC Board and the MRC will form a nominating committee to solicit a pool of candidates who meet the following general criteria:

a. Geographic and International diversity, including international, such that Eastern, Western, and Texas Interconnections, along with Canada are represented on the RISC;

b. Sector, size, and asset (transmission, distribution, load, generation, etc.) diversity;

c. High-level understanding and perspective on reliability risks;


d. Experience in a leadership role or background in an executive-level position is strongly preferred; and

e. Balanced consideration of these criteria, across the entire membership of the RISC.

8. At its May meeting each year, the MRC shall review and recommend to the Board a slate of stakeholder-based members to the RISC. The Board will be responsible for appointing the committee-based members to the RISC. All RISC members will be appointed by the Board to serve for two-year terms, where half of the terms will be staggered.

9. The Board shall appoint a chair of the RISC (from the member slate and as provided above) to serve a two-year term and direct the activities of the RISC, and work toward reaching consensus on all recommendations and actions.

Meetings

10. The RISC meets based on the frequency and rate that reliability issue nominations are received. Meetings shall occur at least once every quarter and can be in person or by conference call as determined by the chair. All meetings of the RISC will be open (except as noted in the paragraph below for confidential sessions). Confidential Sessions. The chair of the RISC may limit attendance at a meeting or portion of a meeting, based on confidentiality of the information to be disclosed at the meeting. Such limitations will be applied sparingly and on a nondiscriminatory basis as needed to protect critical energy infrastructure information and other information that is sensitive to one or more parties. Confidentiality agreements may also be applied as necessary to protect sensitive information.

Charter Review

11. At the first anniversary of the RISC formation and every third year thereafter, a review of the RISC Charter shall be performed by the MRC to determine whether any changes are needed to the RISC Charter. Any changes identified by the MRC would be presented to the NERC Board for approval.

Agenda Item 10b.i Board of Trustees Meeting August 16, 2012

Standards Committee Report (Recommendations 1, 4, and 5)

Action None Background This report provides highlights of the Standards Committee’s (SC) activities to implement recommendations 1, 4, and 5 of the Standards Process Input Group (SPIG). Recommendation 1: NERC should continue to meet the minimum requirements of the American National Standards Institute (ANSI) process to preserve ANSI accreditation. Status A draft set of proposed revisions to the Standard Processes Manual (SPM) was developed by the SC and Standards Committee Process Subcommittee (SCPS) and posted for stakeholder comment in mid-June. The SC plans to review stakeholder comments and post a second draft of the revisions to the SPM in August. During the development of the proposed revisions, the SC scrutinized each of the proposed revisions against ANSI Essential Requirements and, in several cases when clarification was needed to ensure that the proposed revisions were consistent with maintaining ANSI accreditation, asked NERC staff to consult with ANSI. Recommendation 4: The Board of Trustees (Board) is encouraged to require that the standards development process address the following four sub-parts to Recommendation 4:

• 4.1 – The use of Results-Based Standards (RBS);

• 4.2 – Cost effectiveness of standards and standards development;

• 4.3 – Alignment of standards requirements/measures with Reliability Standards Audit Worksheets (RSAWs); and

• 4.4 – The retirement of standards that are no longer needed to meet an adequate level of reliability.

Status

• 4.1 – Use of Results-Based Standards (RBS). No change to the standards process is required to encourage the use of a results-based approach to drafting standards. However, one process revision included in the draft revisions posted for stakeholdercomment would force drafting teams to think about the results-based model by assigning a results-based category to each requirement. Although the proposal is in a rough draft stage and needs further refinement to ensure that the needs of all stakeholders, including Electric Reliability Organization (ERO) compliance enforcement staff, are met with the new approach, the purpose of assigning a results-

based category to each requirement is to assist in assigning a starting point for determining sanctions in the case of a violation, and has the added benefit of ensuring that drafting teams are considering the results-based model.

• 4.2 – Cost effectiveness of standards and standards development. The SC posted for stakeholder comment a proposed guideline for an approach to considering cost at two stages of the standards process: 1) prior to initiating development of a standard, and 2) after a drafting team has developed draft requirements. A group of volunteers from the SCPS plans to review stakeholder comments and revise the guideline so that it can be posted for a second time, concurrent with the second posting of revisions to the SPM. The SC plans to pilot the process in the guideline during the second half of 2012 in order to gain experience in gathering stakeholder input on cost effectiveness.

• 4.3 – Alignment of standards requirements/measures with Reliability Standards Audit Worksheets (RSAWs). The SC is working with ERO compliance staff to develop procedures for developing RSAWs in parallel with standards development. The SC has identified two standards, PRC-027 and COM-003, as candidates for development and posting of an RSAW in parallel with the development of the standard, with technical input from the standard drafting team (SDT). In addition, the proposed revisions to the SPM, if supported by stakeholders, adopted by the Board, and approved by regulators, would move the compliance information that is currently housed in a standard, including measures, into the RSAW and would replace certain compliance elements (Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs)) with a much-streamlined reference to a results-based requirement category. This streamlining of the standard, combined with enhanced RSAWs developed and posted in parallel with the standard, is intended to increase the clarity of the reliability objectives of the standard as well as compliance obligations.

• 4.4 – The retirement of standards that are no longer needed to meet an adequate level of reliability. The SC, at its July 2012 meeting, moved forward with a project to address retirement of requirements that do not contribute to reliability by authorizing the posting of a draft Standards Authorization Request (SAR) that proposes an initial set of such requirements, and appointing a drafting team to respond to stakeholder comments on the SAR. The initial set of requirements proposed for retirement is intended to be limited to those requirements where retirement will be non-controversial. A subsequent phase of the project is planned to address standards and/or requirements that require further study to determine whether they are necessary to meet an adequate level of reliability.

Recommendation 5: The Board is encouraged to require the standards development process be revised to improve timely, stakeholder consensus in support of new or revised reliability standards. The Board is also encouraged to require standard development resources to achieve and address:

• Formal and consistent project management; and

• Efficient formation and composition of SDTs.

Status The proposed revisions to the SPM include a number of changes intended to facilitate the timely development of stakeholder consensus while making efficient use of drafting team resources. The proposed revisions would streamline the commenting and balloting process by eliminating the initial formal comment period in favor of enhanced informal outreach to develop early support for an approach before the drafting team begins formally posting its work. Under the proposed revisions, a drafting team would not be required to respond to comments until a standard was a “final draft.” In order to ensure that stakeholders who ballot standards are accountable for assisting drafting teams in developing a consensus standard, the proposed revisions would essentially require that balloters casting a negative ballot provide a reason for their dissent. Other elements of Recommendation 5 can be implemented without revisions to the SPM. For example, the SC has been working with NERC staff to implement a formal and consistent approach to managing standards development projects. In addition, the SC has recognized the value of forming drafting teams that include a variety of skill sets to supplement the requisite technical expertise. Since the Board approved the SPIG recommendations, the SC has appointed only one drafting team, for the Paragraph 81 project. Consistent with the SPIG recommendations, this team includes members with facilitation, legal, compliance, and project management expertise in addition to technical experts. If NERC Board members have questions or need additional information, they may contact Allen Mosher, chair of the Standards Committee, at [email protected] or Herb Schrayshuen, vice president and director of standards and training, at [email protected].


Agenda Item 10b.ii Board of Trustees Meeting August 16, 2012

Management Report (Recommendation 3)

Action None Background NERC management was assigned to address SPIG Recommendation 3.

Recommendation 3: The Board is encouraged to task NERC management, working with a broad array of Electric Reliability Organization (ERO) resources (e.g., MRC, technical committees, Regional Entities, trade associations, etc.) to develop a strategy for improving the communication and awareness of effective reliability risk controls which increases input and alignment with state, federal, and provincial authorities.

• 3.1 ― Interface with governmental authorities to align priorities and timing of reliability initiatives. Establish and align priorities early on during the nomination of the reliability issue

• 3.2 ― Develop methods to effectively communicate progress and manage expectations

• 3.3 ― Promote effective rules of engagement of state, federal, and provincial regulatory staff in accordance with jurisdictional requirements

• 3.4 ― Following successful ballot of standard and approval by the Board, pre-filing meetings will be held with FERC staff and individual Commissioners to help ensure FERC approval without conditions; similar efforts will apply with governmental authorities in Canada

• 3.5 ― Responsibility for managing the details above, concerning progress and expectations

• 3.6 ― Encourage regulatory authorities to permit staff to submit written comments to the drafting team during informal and formal comment periods

Status The key objective of this recommendation is to gain regulatory support for the ERO, its priorities and reliability risk mitigation initiatives.

As a general matter, the final disposition of Recommendations 1, 4 and 5 will determine the outreach and communication effort needed. A number of the initiatives called for are underway. The thrust of this recommendation is to gain regulatory support in Canada and the U.S. for the strategic direction of NERC.

The specific actions include:

• A1 ― Strategic planning outreach with the Canadian Provincial Regulators and thought leaders. Linked to SPIG Recommendations 3.1, 3.2 and 3.3.

• A2 ― Strategic planning outreach with the U.S. Federal Regulator. Linked to SPIG Recommendation 3.1, 3.2 and 3.3.

• A3 ― Expand outreach to the Trades and other industry groups. Linked to SPIG Recommendation 3.2.

• A4 ― Development of an annual open industry and regulator conference, scheduled to provide timely input and influence for the ERO budget preparation. Linked to SPIG Recommendation 3.1.

• A5 ― Accountability has been assigned to Janet Sena and Charlie Berardesco. Linked to SPIG Recommendation 3.5.

• A6 ― NERC Legal Department has taken initial steps with the U.S. Federal Regulator to obtain support for obtaining regulatory input, in writing, to the standards development process. Linked to SPIG Recommendation 3.6.

Enclosed is a draft annual reliability priorities planning process, which proposes a timeline and process for engaging a wide array of input and alignment for planning, communicating, and managing reliability priorities and risk controls among policymakers, industry and other stakeholders (Exhibit 3). If NERC Board members have questions or need additional information, they may contact Janet Sena, vice president and director of policy and external affairs at [email protected].


Annual Reliability Priorities Planning Process Draft July 27, 2012

Background The Standards Process Input Group (SPIG) issued policy recommendations intended to improve the priority, product, and process for developing NERC Reliability Standards and offer alternate solutions to address identified risks to the Bulk Power System (BPS). In an effort to better understand, articulate and incorporate, into the standards development process, the appropriate accountabilities, one of the group’s recommendations identified the need to specifically outline NERC reliability priorities with state, federal, and provincial regulators. The following proposal is suggested to the Board of Trustees (the Board) for consideration and endorsement for planning, communicating, and managing reliability priorities and risk controls among policymakers, industry and other stakeholders. SPIG Recommendation Interface with Regulatory and Governmental Authorities - The Board is encouraged to task NERC management, working with a broad array of ERO resources (e.g., MRC, technical committees, Regional Entities, trade associations, etc.) to develop a strategy for improving the communication and awareness of effective reliability risk controls which increases input and alignment with state, federal, and provincial authorities. NERC Management Proposal NERC management recognizes there are opportunities, existing and new, to improve the communication and awareness of reliability priorities and risk controls by engaging policymakers who have interest in the outcome of Reliability Standards or other solutions. Obtaining input on the ERO risk priorities and controls can be achieved through increased communication of reliability objectives, an understanding of the benefit(s) to be gained from a standard or alternate solution and awareness of federal, provincial and state policymakers’ issues and concerns related to reliability of the bulk power system. The following timeline and process are proposed for engaging a wide array of input and alignment for the development of priorities and vetting of reliability issues. Third Quarter (July – September 2012)

• Seek MRC discussion and Board endorsement of the Annual Reliability Priorities Planning Process to engage state, federal and provincial authorities in developing reliability priorities and risk controls to the BPS.

• Initiate meetings with the appropriate policymakers, FERC Commissioners and Canadian authorities, to receive input on reliability priorities and risk control process in accordance with jurisdictional requirements

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Text Box

Agenda 10b.ii Exhibit 3 Board of Trustees Meeting August 16, 2012

Annual Reliability Priorities Process - DRAFT 2

• Identify specific reliability priorities and risk controls policymakers would like to see or not see addressed for 2013. This information will be used as input into the Annual Reliability Technical Roundtable.

Fourth Quarter (October – December 2012)

• NERC management will conduct a Reliability Technical Roundtable, to engage industry and stakeholders, FERC and other policymakers to further identify and discuss 2013 reliability priorities and risk controls.

• NERC will conduct follow-on meetings with the Regional Entities staff, standing committees, the Reliability Issues Steering Committee (RISC), etc. to increase awareness and familiarity with the select priorities and risk control initiatives/activities for 2013.

First Quarter (January – March 2013) • NERC and FERC staffs engage in meetings to reaffirm the 2013 priorities and timing of reliability

initiatives/activities anticipated for the year.

• NERC will communicate 2013 priorities to Canadian regulators through CAMPUT, trilateral and meetings with Canadian industry and policymakers

• NERC management will communicate 2013 priorities to industry trade association CEOs.

• NERC will communicate 2013 priorities to policy decision makers and other attendees at Reliability Technical Roundtable.

• Seek Board approval of the final Annual Reliability Priorities Planning Process.

Second Quarter (April – June 2013)

• NERC completes an annual capstone report that accompanies the State of Reliability Report and reflects the status of accomplishments, to-date, for priorities and risk controls activities.

• As progress on priorities and risk initiatives occur, pre-filing meetings will be held between NERC and FERC staffs and with individual Commissioners on an as needed basis, to provide information and receive feedback on reliability priority initiatives to facilitate awareness and lay the groundwork for FERC approval without conditions; similar communication efforts will also apply with governmental authorities in Canada.

Third Quarter (July – September 2013)

• Initiate meetings with the appropriate policymakers, to include FERC Commissioners and Canadian authorities, to identify reliability priorities and risks controls for 2014.

• Identify specific reliability priorities and risk controls policymakers would like to see or not see addressed for 2013. This information will be used as input into the Annual Reliability Technical Conference.


Cyber Security Risk Maturity Model

Action None Background NERC’s Cyber Risk Preparedness Assessment (CRPA) is a tabletop cybersecurity incident response exercise that utilizes current day threats and vulnerabilities. The CRPA is designed to assess bulk power system entities’ cyber resiliency capabilities and the adequacy of existing reliability mechanisms related to cyber threats. The CRPA objectives include: educating participants on cyber and physical threats; observing current procedures and practices entities use to deter, defend, detect, respond to, and recover from cyber attacks; identifying best practices; and identifying areas for improvement. The Electricity Sub-Sector Cyber Security Capability Maturity Model (ES-C2M2) is a White House initiative led by the Department of Energy. The model identifies 10 domains of cyber security practices and uses a survey tool to measure entities’ risk preparedness. Measurements are used to support benchmarking for the Electricity Sub-Sector’s cyber security capabilities. The ES-C2M2’s objectives include: strengthening cyber security capabilities; enabling consistent evaluation and benchmarking of cyber security capabilities; sharing knowledge and best practices; and enabling prioritized actions and cyber security investments. Integration of ES-C2M2 and CRPA The ES-ISAC intends to embed the ES-C2M2 model into the CRPA methodology using a simplified version of the ES-C2M2 survey tool. This integration will produce more informative results that will facilitate development of entity business plans and strategies. The entities can then use these plans and strategies to implement mitigation efforts to address any issues identified in the exercise. The desired end goal of integrating CRPA and ES-C2M2 is to strengthen cyber security capabilities of bulk power system entities through identifying issues and prioritizing mitigation efforts. Through this integration, the ES-ISAC will gain understandings of what actual entity resiliency strategies are, as showcased in the stress test of a facilitated exercise. These resiliency best practices will then be captured in the annual CRPA report to Industry, and targeted for release in the first quarter of 2013.


Electricity Sector Information Sharing and Analysis Center (ES-ISAC)

Action None

Background This report summarizes the ES-ISAC’s key activities in support of NERC’s mission and corporate goals related to critical infrastructure and reliability. The ES-ISAC’s mission is to improve the security and reliability of the North American bulk power system (BPS) by facilitating the sharing and analysis of security-related information across the electricity industry and with government. The ES-ISAC develops and disseminates authoritative guidance regarding cyber, physical, and all-hazards threats to BPS reliability. The ES-ISAC depends on the information it receives from entity owners and operators, U.S. and Canadian government sources, and other critical infrastructure sector ISACs.

As reported in the previous NERC Board of Trustees report, the ES-ISAC is enhancing the capability of its two primary functions: information sharing and information analysis. Recent ES-ISAC Information Sharing Activities Since the last NERC Board of Trustees report, ES-ISAC staff has continued to build out the secure ES-ISAC members-only portal. Approximately 35 percent of all registered entities have access to the ES-ISAC portal. Indicators of Compromise (IOC) notices, which contain specific and actionable indicators of intrusions, are being provided on a regular basis and are posted within hours of an incident or report within the electricity industry. Additionally, ES-ISAC staff has started to incorporate the Critical Infrastructure Protection Committee task force sites into the secure portal. Recent ES-ISAC Information Analysis Activities The ES-ISAC is engaged in several initiatives to enhance its ability to analyze threats and their potential impact on BPS reliability. Some initiatives include:

• Subscribing to Looking Glass Cyber Intelligence to monitor real-time cyber threats that potentially affect asset owners’ and operators’ industrial control systems.

• Developing comprehensive Attack Tree models to help analysts assess the real risks of new and evolving threats to reliability.

• Implementing a comprehensive Analyst Workbench with the tools needed to analyze malicious software of particular interest to BPS entities.

Goals for 2012

• Continue build-out of the ES-ISAC members-only portal.

• Achieve portal membership for more than 50 percent of the registered entities by year end.

• Complete initial phases of ES-ISAC operations center integration with Situation Awareness for FERC, NERC, and the Regional Entities (SAFNR), Looking Glass, and other analytical tools.

Agenda Item 12c Board of Trustees Meeting August 16, 2012

Electricity Sub-Sector Cyber Security Risk Management Process Guideline

Action Discuss and maintain awareness on the cybersecurity Risk Management Process (RMP) as published in the Electricity Sub-Sector Cyber Security Risk Management Process Guideline and discuss next steps. Background NERC authored the Electricity Sub-Sector Cyber Security Risk Management Process Guideline (DOE/OE-0003) in May 2012 to describe a cyber security RMP that is tuned to the specific needs of Electricity Sub-Sector organizations, the U.S. Department of Energy (DOE), and the National Institute of Standards and Technology (NIST). The NIST Special Publication 800-39, Managing Information Security Risk, provided the foundational methodology for this document, which was further refined by the NIST Interagency Report (NISTIR) 7628, Guidelines for Smart Grid Cyber Security, NERC Critical Infrastructure Protection (CIP) standards, as well as regulatory requirements from the Nuclear Regulatory Commission (NRC) and many other federal and state requirements. Since reliability of cyber systems can have a direct effect on the North American economy and national security interests, the RMP is built on the premise that managing the cyber security risk is critical to the reliable generation and delivery of electric power. The RMP was written to provide a consistent and scalable risk management process specific to the risks inherent in operating information technology (IT) and industrial control systems (ICS), which are vulnerable to malicious attacks and misuse. The voluntary RMP guideline complements a robust CIP compliance program. The risk management model used in the RMP is a three-tiered structure to provide a comprehensive view of an electricity sub-sector organization, regardless of size or operations. The three tiers of the risk management model are:

• Tier 1: Organization

• Tier 2: Mission and Business Processes

• Tier 3: Information Technology and Industrial Control Systems

The RMP integrates a continuous and iterative risk management cycle at each business tier to frame, assess, respond and monitor the changing risk landscape as well as utilize updates to organizational priorities and any functional changes. The goals are to improve risk assessment, awareness, and develop a culture of cybersecurity at all levels of an organization.

Risk Management Process Pilot Exercise To test implementation and effectiveness of the RMP, NERC will observe a volunteering registered entity that would fully implement the RMP from the corporate strategy/policy inputs utilized at Tier 1, creating actionable policy and procedure, guidance and constraints at Tier 2, as well as results, feedback and any implementation issues at Tier 3. Additionally, NERC will examine how the RMP framework integrates with the CIP Standards and mandatory compliance to build a stronger security program. Through this exercise, NERC will capture generic lessons learned from the organization’s operational use of the guidelines in the DOE document in the “real world”, specific improvements for future updates to the document, as well as common informational resources that could be shared throughout the bulk power system (BPS). These outputs from the exercise will facilitate voluntary BPS-wide implementation of the RMP that would be timely yet not overly burdensome at all organizational levels. NERC will continue to collaborate with DOE to ensure wide reaching guideline dissemination. Summary A pilot exercise of the processes described in the Electricity Sub-Sector Cyber Security Risk Management Process Guideline document will examine how a registered entity implemented the RMP and how it coincides with mandatory NERC Reliability Standards to ensure the proper management of cyber risk. As observers to an organization’s implementation of the RMP, resource requirements of NERC will be minimal. Additionally, best practices obtained during execution of the RMP could be gauged against existing CIP Standards and other guidance or initiatives, such as NISTIR 7628 and the recent Electricity Sub-Sector Cyber Security Capability Maturity Model (ES-C2M2).

Agenda Item 12d Board of Trustees Meeting August 16, 2012

High-Impact, Low-Frequency (HILF) Coordinated Action Plan – Phase II

Action None Background During 2011 and early 2012, the NERC Board of Trustees endorsed the reports prepared by four Task Forces under the direction of the NERC Technical Committees; Operating Committee (OC), Planning Committee (PC), and Critical Infrastructure Protection Committee (CIPC).

Task Force Report

Geomagnetic Disturbance Task Force

Interim Report: Effects of Geomagnetic Disturbances in the Bulk Power System

Spare Equipment Database Task Force

Spare Equipment Database Report

Cyber Attack Task Force Cyber Attack Task Force – Final Report

Severe Impact Resilience Task Force

Severe Impact Resilience: Considerations and Recommendations

Summary Each of the Task Force reports identifies a number of recommendations for industry to consider and act upon. While many of the more than 50 recommendations are intended for individual entities to implement (i.e., asset owner/operators), other recommendations suggest further study by NERC and the Technical Committees is required.

In general:

• The Planning Committee is considering the recommendations related to the Geomagnetic Disturbance Task Force and the Spare Equipment Database Task Force;

• The Operating Committee is considering the recommendations related to the Severe Impact Resilience Task Force; and

• The Critical Infrastructure Protection Committee is considering the recommendations related to the Cyber Attack Task Force.

However, there is a need for each of the committees to provide advice and support for the initiatives they are not leading.

The status of these efforts was discussed during the Electricity Sub-Sector Coordinating Council’s (ESCC) Closed conference call on the July 17, 2012. ESCC members urged that the Technical Committees consider other industry forums that may be in a better position to take on or contribute to these efforts (e.g., North American Transmission Forum, North American Generator Forum, EPRI, and the Department of Energy).

http://www.nerc.com/files/2012GMD.pdf�


http://www.nerc.com/docs/pc/sedtf/SEDTF_Special_Report_October_2011.pdf�

http://www.nerc.com/docs/cip/catf/12-CATF_Final_Report_BOT_clean_Mar_26_2012-Board%20Accepted%200521.pdf�

http://www.nerc.com/docs/oc/sirtf/SIRTF_Final_May_9_2012-Board_Accepted.pdf�

Reliability in Canada A Short History and Update Ric Cameron, Canadian Affairs Representative Board of Trustees Meeting August 16, 2012

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Text Box


2 RELIABILITY | ACCOUNTABILITY

Electric Reliability in Canada

• Constitutional authorities Ensures no one dominant/authority perspective

• History of the industry

• Structure and characteristics

• A long history of reliability

• Commitment to, and expectations of, an international ERO

• Ongoing cross-border support and assistance in times of need


A Reliability Assurance Mosaic

• Nine (9) jurisdictions with reliability authority Each has its own regime

All committed to working with the ERO

• Some “mature” but all evolving Changes in policies, structures and practices with

implications for how reliability is managed

• Compliance oversight and enforcement coming to the fore


(NERC in) Canada (in NERC)

• Canadian participation is formally integrated in NERC’s foundation documents But limited Canadian membership/registration in ERO

• Strong, positive engagement with Canadian jurisdictions and stakeholders FPT reliability working group

CAMPUT

Key federal departments and agencies (including S&I)

CEA

• Regular activities in Canada


Building on our strengths

• Focus areas for NERC in Canada 2012-2013 include: Confirmation of arrangements with jurisdictional authorities o Memorandums of Understanding, information flows, priority setting,

data sharing etc.

Strengthening compliance oversight o Training of auditors and compliance officials

o Access to lessons learned

Deepened ties with IP/security partners o Data sharing between ES-ISAC and CCIRC and other necessary players

o Continuing joint exercises


Operating Committee Report

Action None Background This report provides a summary of the key activities of the Operating Committee (OC) and its associated subcommittees, all of which support the NERC or OC mission and corporate goals. The June 2012 OC meeting minutes are posted at OC June 2012 Meeting Minutes Link. Status of Operating Committee’s Major Initiatives for 2012

1. Event Analysis Working Group (EAWG) work and lessons learned:

a. Links to NERC Top Priority Issues #1 (Misoperations of relay protection and control systems) and #2 (Human errors by field personnel).

b. The OC has approved the scope of an Event Analysis Subcommittee (EAS); which should better enable the OC to support the ERO and industry in rapidly identifying reliability gaps and potential mitigations.

c. The OC has appointed Sam Holman (Duke) and Hassan Hamdar (FRCC) as Chair and Vice Chair, respectively.

d. Mr. Todd Lucas, Southern Company, provided an overview of a Southern Company energy management system event and the resultant lessons learned. The EMS event began with a scheduled network modification that resulted in excessive data flow volume on the EMS network.

2. Geomagnetic Disturbance and Severe Impact Resilience Task Forces (SIRTF):

a. Links to NERC Top Priority Issue #7 (Preparedness for high-impact, low-frequency events).

b. OC to address selected SIRTF recommendations in its 2012-2013 work plan. At its September meeting the OC intends to plan its work on those selected priorities.

3. Human performance and field personnel:

a. Links to Top Priority Issues #1 (Misoperations of relay protection and control systems) and #2 (Human errors by field personnel).

b. The OC approved a Reliability Guideline: System Operator Verbal Communication – Current Industry Practices, which was requested by the Board of Trustees (BOT) at its February 2012 meeting. The Reliability Guideline is currently posted for industry comment.

c. OC discussed the possibility of a Human Performance Subcommittee or working group based on the interest expressed by a number of people who attended NERC’s Human Performance Seminar.

http://www.nerc.com/docs/docs/oc/Operating_Committee_Meeting_Minutes_Jun_19-20_2012.pdf�

Significant Discussion Topics at the June 2012 OC Meeting: Southwest Outage Report Recommendations – The OC focused its discussion of the Southwest Outage Report by addressing the following questions in four breakout sessions.

1. Which of the report’s recommendations is your organization focused on and what are you doing internally to address it?

2. What should the OC be focusing on? What are the top two or three recommendations that the OC should be specifically addressing?

The committee identified several potential opportunities to enhance Bulk Electric System (BES) reliability which are 1) conducting focused workshops (e.g., day-ahead operational planning), 2) developing Reliability Guidelines and 3) continuing its practice of conducting roundtable discussion of operating policies and procedures. The OC will incorporate the results of its review into its Strategic Plan and associated annual work plan. Recovery from Losses Greater Than Most Severe Single Contingency within 15-Minutes The OC discussed FERC’s Order Approving Stipulation and Consent Agreement in Docket No. IN11-6-000 (PacifiCorp), dated December 1, 2011. The OC believes the industry response to the FERC Orders needs to be coordinated to ensure reliable and compliant operation. The OC was informed that the Reliability Standards Projects 2009-19 ― Interpretation of BAL-002-0 R4 and R5 by NWPP Reserve Sharing Group and Project 2010-14.1 ― Phase one of Balancing Authority Reliability-based Controls: Reserves are addressing the issues identified in the FERC Orders.

The OC noted an unintended consequence (i.e., the shedding of firm load) by some balancing authorities to avoid violating the Disturbance Control Standard. Actions from the June 2012 OC Meeting OC Comments on COM-003 (Operating Personnel Communications Protocols) – Granted Chair Bowe the authority to draft comments, reflective of the committee’s discussion related to COM-003-1, for submission to the standard drafting team. Operating State Alert Levels Pilot Program – Approved terminating the Operating State Alert Levels Pilot Program, which was developed in response to a recommendation from the 2003 Blackout report. Midwest ISO Reliability Plan – Approved the Midwest Independent Transmission System Operator Regional Transmission Organization Reliability Plan, dated November 19, 2012, which includes transitioning Entergy into the MISO reliability footprint. Geomagnetic Disturbance Task Force Phase 2 Work Plan – Endorsed the GMDTF Phase two work plan. Process for Maintaining Operating Committee Priorities – Approved a Process for Maintaining OC Priorities, which will become an appendix to the committee’s Strategic Plan.

http://www.nerc.com/filez/standards/Project2009-19_Interpretation_BAL-002-0_NWPP.html�

http://www.nerc.com/filez/standards/Project2009-19_Interpretation_BAL-002-0_NWPP.html�

http://www.nerc.com/filez/standards/Project2010-14.1_Phase_1_of_Balancing_Authority_RBC.html�

http://www.nerc.com/filez/standards/Project2010-14.1_Phase_1_of_Balancing_Authority_RBC.html�

Performance Analysis Subcommittee – Endorsed the Standards Driven Index (SDI) white paper and the following review process: 1) collaborate with the Compliance and Certification Committee (CCC) to validate SDI trends and 2) consult with CCC on composition of SDI standard requirements as standards development evolves; however, the OC strongly suggests that the Performance Analysis Subcommittee (PAS) consider revising the title of the document.


Planning Committee Report

Action None Status Report Along with producing the annual seasonal/long-term reliability assessments, performance analysis reports, system analysis, and special assessments, the NERC Planning Committee (PC) is actively engaged in a number of areas important to the reliability of the North American Bulk Power System and took action at its June 19-20, 2012 meeting in Toronto, ON, Canada as noted below.1

Approval of 2012 Probabilistic Pilot Report and Recommendations The 2012 Probabilistic Report was developed to enhance the understanding of resource adequacy documented in NERC’s Long-Term Reliability Assessment. Traditionally, NERC has gauged resource adequacy through the use of a deterministic assessment metric—Planning Reserve Margin. This report also contained a number of recommendations that were approved by the PC including:

1. The format and structure of reliability assessment results for future years’ analyses.

2. Full Regional Entity participation in the next Probabilistic Assessment Report (to be completed in 2014).

3. The Reliability Assessment Subcommittee was directed to complete Probabilistic assessments on a biennial basis.

Approval of Geomagnetic Disturbance Task Force Phase 2 Work Plan Based on the results of the NERC Geomagnetic Disturbance (GMD) interim report, the plan for next phase of the work was approved by the PC. The primary goal of the GMD Task Force (GMDTF) in phase 22

will be to complete a high level risk assessment and detailed analysis of GMD effects on the bulk power system. This work plan will require close coordination with the ongoing collaborative efforts of the Electric Power Research Institute (EPRI) along with governmental and private sector efforts, including the North American Transmission Forum (NATF).

Approval of Recommendation for Reporting Protection System Operations The NERC System Protection and Control Subcommittee (SPCS) recommended a revision to the protection system misoperation reporting template to include the number of protection system operations. This information would provide a basis for the calculation of NERC’s reliability metric ALR4-1, Automatic Transmission Outages Caused by Protection System Misoperations, which is a percentage of misoperations relative to the total number of protection system operations.

1 The draft minutes are posted at http://www.nerc.com/filez/pcmin.html . 2 Geomagnetic Disturbance Task Force Phase 2 Work plan

http://www.nerc.com/files/2012_ProbA.pdf�

http://www.nerc.com/docs/pc/gmdtf/GMD_Phase_2_Project_Plan_APPROVED.pdf�

http://www.nerc.com/filez/pcmin.html�

http://www.nerc.com/docs/pc/gmdtf/GMD_Phase_2_Project_Plan_APPROVED.pdf�

Other key items addressed at the June 2012 meeting were approval of the:

• Spare Equipment Data Working Group (transitioning from the Spare Equipment Data Task Force)

• Reliability Assessment Guidebook, version 3.1

• Standards Driven Index Whitepaper Open Projects with 2012 Deliverables The following projects are in progress with an expected deliverable to the PC by the end of 2012.

1. Natural Gas-Electric Interdependency Phase 2 Report ― December 2012

2. 2012 Long Term Reliability Assessment ― October 2012

3. 2012/2013 Winter Reliability Assessment ― November 2012

4. 2012 Special Assessment: Technical Justification of BES Definition Thresholds ― December 2012

5. The Reliability Role of Primary Frequency Response Report

6. Demand Response Availability Data System report on first year’s results

7. IVGTF Reports Task 1.3, Interconnection Requirements for Variable Generation and Task 1.6, Probabilistic Methods for Variable Generation

Completed 2012 Projects The following projects have been completed by the PC in 2012 as defined in their strategic plan:

1. 2012 State of Reliability Report

2. 2012 Special Assessment: Effects of Geomagnetic Disturbances on the Bulk Power System

3. 2012 Summer Reliability Assessment

4. Protection System Misoperations Task Force

5. Event Driven Index Whitepaper Future Meetings The PC future meetings are scheduled as follows:

• September 18-19, 2012 – Saint Louis, Missouri

• October TBD, 2012 – Long-Term Reliability Assessment webinar

• October 30, 2012 – Winter Reliability Assessment webinar

• December 12-13, 2012 – Atlanta, Georgia

http://www.nerc.com/docs/pc/ragtf/Reliability%20Assessment%20Guidebook%203%201.pdf�

http://www.nerc.com/docs/pc/rmwg/pas/index_team/SDI_Whitepaper.pdf�

http://www.nerc.com/files/2012_SOR.pdf�



http://www.nerc.com/files/2012SRA.pdf�

http://www.nerc.com/docs/pc/psmtf/DRAFT%20Scope_Protection%20System%20Misoperations%20Task%20Force%20(PSMTF)_Posted.pdf�

http://www.nerc.com/docs/pc/rmwg/pas/Mar_2012_OCPC/EDI_Whitepaper.pdf�

Agenda Item 14c Board of Trustees Meeting August 16, 2012

Critical Infrastructure Protection Committee Report

Action None Background In 2012, the Critical Infrastructure Protection Committee (CIPC) Executive Committee conducted a comprehensive review of work activities and deliverables the CIPC subcommittees would produce, and developed a CIPC work plan as a guide for members. The Electricity Sub-Sector Coordinating Council (ESCC) endorsed the CIPC Strategic Plan on March 15, 2012 followed by the NERC Board of Trustees approval on May 9, 2012. The CIPC Strategic Plan outlines the committee’s commitment to reliability of the bulk power system and to advance the physical and cyber security posture of critical electricity infrastructure of North America. The CIPC fosters information sharing, provides industry leadership, and a forum for exchanging ideas pertaining to CIP security. Below is a summary update of progress made with the CIPC Strategic Plan.

Progress on 2012 Goals and Objectives 1. Completed and approved:

• Cyber Attack Task Force Report (Completed)

• Physical Security Guideline (Completed)

• Protecting Sensitive Information Guideline (Completed)

2. Initiatives underway:

• Reorganize and expand the CIPC structure to fully support security and reliability initiatives. This will include establishing new subcommittees in areas such as physical security and cyber security that will provide oversight for specific task force and working group efforts as well as creating new task forces and working groups to address the new initiative requests from the NERC CEO and Board of Trustees. Five of the six new task forces and working groups slated to start up in 2012, have already been formed and begun work.

• Develop benchmark recommendations for Bulk Electric System (BES) Security metrics. This subject is being addressed by the BES Security Metrics Working Group chaired by Jamie Sample of PG&E. This group is staffed and actively working towards completion of their goals.

• Develop recommendations for CIPC and the ESCC on security clearances: This subject is being addressed by the Personnel Security Clearance Task Force chaired by Jim Brenton of ERCOT. This group is staffed and actively working towards completion of their goals. DHS and DOE have representation on the task force. Cathy Eade of DHS serves as vice chair.

• Identify and research the existing information sharing structures, methods and requirements, and search for efficiencies and alternatives to improve or recommend changes in protocols: this subject is being addressed by the Electricity Sector Information Sharing Task Force chaired by Stephen Diebold of KCP&L. This group is staffed and actively working towards completion of their goals.

3. Other new groups

• HILF Implementation Task Force: Chaired by Bill Muston of Oncor. The task force has reviewed the Coordinated Action Plan and endorsed assignments of tasks for CIPC to either lead or play a supporting role for the Operating Committee or Planning Committee assignments.

• Cyber Attack Tree Task Force: Formed and chaired by Mark Engels of Dominion/VA Power.

• Physical Security Analysis Working Group: Formed and chaired by Ross Johnson of Capital Power (Canada).

• Compliance and Enforcement Input Working Group: Slated to begin in 2013, is now being activated and staffed in 2012 to support NERC staff Compliance Application Notice (CAN) development activities.

4. CIPC Strategic Plan status:

• Status of work plan activities for 2012 (See table below).

• Obstacles to any work plan tasks or efforts: The biggest challenge in 2012 will be to continue enlisting CIP Subject Matter Experts on the various new task forces and working groups and ensure that all are actively engaged and progressing toward their milestones. At the June CIPC meeting, charters for six of the new groups were presented and approved by the CIPC members. The progress they have already made to date is very encouraging and indicate successful, on time completion of 2012 work plan objectives.

TABLE: 2012 CIPC Status of Work Plan Activities

Activity No. CIPC Area CIPC Activity Why is the activity required? Deliverable and Schedule

1

Advisory Panel to Board of Trustees

Provide reports of CIPC activities at the BOT meeting.

Chair will serve as an active member of the ESCC contributing expertise on CIP matters.

Chair will serve on the Standing Committee Coordination Group (SCCG).

Chair will serve as a CIPC point of contact to the ES-ISAC requests for input and assistance.

Coordinate across all NERC committees and working groups to assure the highest degree of collaboration possible.

All are required by CIPC Charter Section 2.1

August BOT meeting

Attended ESCC calls and in-person meetings

Attended all meetings to date in person in 2012

Continuing

Continuing through SCCG

2 NERC Industry Alerts CIPC will continue to support the coordinated action of NERC’s technical committees (Operating Committee, Planning Committee, and CIPC) for pending NERC Alerts.

NERC President’s Top Priorities and Issues: Goal 8, CIPC Charter Sections 2.2 and 2.4

Established listing of CIPC SMEs from voting members and Alternates with all contact information.

3 Cyber and Physical Security Guidelines

Assist in the development and implementation of NERC standards.

Identify the need for new or revised critical infrastructure protection standards and initiate standards actions by submitting standards authorization requests.

Assist the standards process by providing expert resources in support of the development of critical infrastructure protection standards authorization requests and standards.

NERC President’s Top Priorities Issues: Goal 8 and CIPC Charter Section 2.5

CIPC members & Alternates are on SDTs

Established Compliance & Enforcement Input WG

CIPC members & Alternates as SMEs on SDTs

Assist the standards process by providing a forum for education, sharing of views, and informed debate of critical infrastructure protection standards.

Review draft critical infrastructure protection standards authorization requests and standards and provide comments.

Facilitate the implementation of critical infrastructure protection standards by developing reference documents and performing other activities.

Provide requested support to SDTs upon direction by NERC or the Standards Committee.

Contribute to standards work with the Operating and Planning Committees.

Initiated CIPC Workshops for Cyber & Physical Security

CIPC members are engaged and informed at all CIPC meetings of current status for CIPC and industry Comment periods

Physical, Cyber, Operating & Policy Subcommittees have been established and charters developed

CIPC members and Alternates were advised of SME needs and have populated SDTs

CIPC members and CIPC were asked and provided comments on all documents from OC and PC

3 Compliance and Enforcement Input

CIPC will create a Compliance and Enforcement Input Working Group.

Support the Compliance Application Notice (CAN) initiative at NERC by providing timely topical expertise on matters related to cyber and physical security and prioritization of CANs under development.

Utilize the CIPC face-to-face meetings to allow discourse on CAN topic areas and encourage registered entity involvement in commenting.

Provide fact-based feedback to NERC on the effectiveness of the CAN process.

CIPC EC will solicit members to serve in a

NERC President’s Top Priorities and Issues: Goal 7

Working Group approved by CIPC, March 2012, assigned to Policy Subcommittee

CIPC provided input to CAN Prioritization Listing (1/19/12), PER-005 RSAW (3/26/12) and CIP-005 Compliance Report (3/15/12)

Compliance Dept has been added as a permanent agenda item going forward

CIPC is informed and asked to actively participate in an open and transparent CANs process

On-going

consultative or advisory role to NERC staff.

4 Bulk Electric System Security Metrics CIPC will create a Bulk Electric System Security Metrics working group to develop benchmark recommendations for Bulk Electric System Security metrics to include cyber and physical controls.

Align security performance metrics with the Standards Committee Reliability Principals.

Align the development of integrated security performance metrics with the Adequate Level of Reliability definition.

Developing the Security Risk Matrix/Curve.

CIPC and NERC Staff will contribute to the development of an “Annual Security Assessment” report based upon work done by the Bulk Electric System Security Metrics working group.

NERC President’s Top Priorities Issues Goal 8 and ERO Strategic Goal 3

BES Security Metrics Group approved by CIPC, March 7th, solicited and obtained CIPC, Industry volunteers & NERC SMEs, completed Charter for work to include deliverables and schedule. Charter approved by CIPC, work is underway.

On-going

On-going

On-going

On-going

5 Electric Sector Security Clearances

CIPC will create and assign a Personnel Security Clearance TF to include industry and government members.

The TF will examine protocols in place for granting private sector clearances as well as the government’s legal and policy requirements of the industry.

The TF will research ongoing needs of industry for access to actionable and information.

The TF will report and make recommendations to CIPC and the ESCC on security clearances.

The TF will develop a model for industry use

NERC President’s Top Priorities Issues - Goal 7 and CIPC Charter Section 3

CIPC approved, March 7th, assigned to Policy Subcommittee, chair and vice chair selected, solicited CIPC members, industry SMEs and NERC Staff support. Charter approved by CIPC, work is underway.

Ongoing

On-going

Presentation to CIPC EC in 3rd Qtr, CIPC presentation and approval September CIPC meeting

On-going

to determine which for personnel should seek a security clearance from government.

6 Public-Private Partnership for Information Sharing

CIPC will create an Information Sharing task force to study present protocols existing between industry and government.

The task force will detail and document information-sharing requirements.

Identify and research the existing information sharing structures, methods and requirements, and search for efficiencies and alternatives to improve or recommend changes in protocols.

Propose solutions that will build on practices and tools already in place.

Develop a process for secure information sharing with other entities and government partners.

Develop a method to communicate lessons learned to other entities with the minimum amount of security classification.

NERC President’s Top Priorities Issues Goal 7 and CIPC Section 3a

CIPC approved, March 7th, assigned to Operation Security Subcommittee, Chair selected, soliciting CIPC members, industry SMEs and NERC Staff support. Charter approved by CIPC, work is underway.

7 Support to Energy Sector Control Systems Working Group “Roadmap to achieve energy delivery systems cyber security”.

CIPC will continue support of “The Roadmap to Achieve Energy Delivery Systems Cyber Security” prepared by the Energy Sector Control Systems Working Group (ESCS WG).

The Cyber Attack Task Force’s report will highlight areas of greatest value to enhance detection and response capability, and this may help prioritize initiatives coming out of the Roadmap.

CIPC will update the ESCC on progress implementing recommendations found in the roadmap.

Encourage and solicit CIPC engagement and assist ESCC as appropriate.

NERC President’s Top Priorities Issues Goal 7 and 8

On-going

8 Emerging Issues

HILF

CIPC will create a HILF Implementation task force to develop recommendations for actions identified in the Coordinated Action Plan.

The task force will review the various task force reports and address the appropriate CIPC related recommendations and propose suggested responses to CIPC for action and implementation.

NERC President’s Top Priorities Issues Goal 7 and 8

CIPC approved, March 7th, assigned to the Operating Subcommittee, Chair selected, soliciting CIPC members, industry SMEs and NERC Staff support. Charter approved by CIPC, work is underway.

9 Focus on Balanced Approach in Cyber and Physical Security

The CIPC EC will review rosters to ensure that working groups and task forces have a balance of expertise.

The CIPC EC and Physical Security and Cyber Security Subcommittees will coordinate and consult to ensure expertise of the CIPC Members.

CIPC Alternates and Observers are engaged with task forces and working groups tasked with projects and deliver recommendations to the CIPC.

NERC President’s Top Priorities Issues: Goals 7 and 8

On-going

CIPC approved, March 7th, assigned to the Cyber and Physical Subcommittee, Chair selected, soliciting CIPC members, industry SMEs and NERC Staff support.

On-going

10 Analysis of CIP Related Incidents in Coordination with OC and PC

CIPC will create two working groups:

• Physical Security Analysis Working Group

• Cyber Security Analysis Working Group

These working groups will research and recommend activities to improve the security of Bulk Electric System facilities.

Develop Cyber and Physical expertise liaisons to coordinate expertise and assist the Joint Event Analysis Working Group as requested.

Develop a mechanism for evaluating malicious events while maintaining confidentiality of the compromised entity.

NERC President’s Top Priorities Issues: Goals 7 and 8

CIPC approved, March 7th, assigned to Cyber and Physical Subcommittee. Charter approved by CIPC, work is underway.

11 CIP Training and Educational Outreach CIPC will create two working groups. (Physical Security Training Working Group and Cyber Security Training Working Group)

The working groups will identify and prioritize current topics related to the scope of CIPC.

These working groups will coordinate with each other and request NERC resources, if necessary, to support their activities for the forums and workshops.

The working groups will report their recommendations at the CIPC meetings.

The CIPC will schedule Bulk Electric System security training and education at CIPC meetings.

NERC President’s Top Priorities Issues Goal 7, CIPC Charter Section 2.7 and

ERO Strategic Goal 2

CIPC approved, March 7th, assigned to Cyber and Physical Subcommittee, Cyber Security Training Charter approved by CIPC.

12 Support Board of Trustees/ESCC/Standing Committees Coordination Group (SCCG) CIPC Charter Sections 2.1-2.2

Strengthening and supporting the CIPC relationship with the Board of Trustees, ESCC and SCCG through the CIPC Chair reporting to the Board of Trustees and participation on ESCC through more detailed reporting and increased involvement.

Providing technical and other support as needed on CIP matters.

CIPC Charter Sections 2.1-2.2

On-going

13 CIPC Member and Industry Observer involvement

Encouraging and engaging CIPC Voting member active participation.

Encouraging and engaging CIPC Alternate members as active participants.

Encouraging and engaging industry Observers as active participants.

CIPC EC will identify potential leadership

CIPC Charter Section 4.2 On-going

candidates for subgroups.

CIPC subcommittees will review task force and working group rosters to identify gaps in expertise.

CIPC subcommittees will review task force and working group deliverables.

CIPC EC will encourage, recognize, and reward excellence.

Agenda Item 14e Board of Trustees Meeting August 16, 2012

Personnel Certification Governance Committee Report

Action None Background This report highlights the key activities of the Personnel Certification Governance Committee (PCGC). The PCGC meets four times a year in addition to conducting task force meetings as needed. The meeting minutes are posted at http://www.nerc.com/filez/pcgcmin.html. Accomplishments The PCGC has completed the NERC System Operator Certification program budget evaluation for 2013-2015. PCGC approved a reduction in the examination fee from $700 to $600 and in the credential renewal fee from $600 to $300, effective January 1, 2013. The PCGC has approved upgrades to the System Operator Certification and Continuing Education Database (SOCCED). Completion of the first phase of the project is scheduled for December 2012. The Examination Working Group (EWG) has completed the publishing of all versions of the new certification exams for each of the four credentials, including the French Canadian version. Future Tasks The committee does not expect to propose changes to the certification program that would require posting for comments. The PCGC continues to work on documentation and improvements of the credential establishment process, performance metric tracking, and evaluating the certification program and demographic data. The PCGC is in the process of updating the PCGC charter for review in fourth quarter 2012.

http://www.nerc.com/filez/pcgcmin.html�

Status Report NERC Certification Examination Pass Rate The overall pass rate has been stable the past two years. In February 2012, new exams were published and the pass rate has declined. The table below shows that the number of exams taken is decreasing. Year # of Exams Taken # of Exams Passed Pass Percent 2009 1,005 652 64.8 % 2010 914 638 69.8 % 2011 874 607 69.5 % 2012* 425 283 66.7 %

Credential Maintenance The table below shows the number of credentials maintained using Continuing Education Hours are increasing.

Year Credentials Renewed 2009 1,200 2010 1,597 2011 1,691 2012* 689

Exams Taken and Credentials Maintained The graph below shows the number of exams taken annually is declining while the number of credentials maintained is increasing.

*Through June 30, 2012

1200

1597 1691

689

1005 914 874

425

0 200 400 600 800

1000 1200 1400 1600 1800

2009 2010 2011 2012*

Certification Credentials

Renewals Exams Taken

Certified Operator Population The total number of certified system operators with active credentials is 6,443. The operator population continues to increase slowly. System Operator Demographics After three full years of data collection, which began in early 2009, all system operators have provided demographic information. This information combines system operators taking their initial exams with those who renewed their credentials through continuing education. The following figures show current trends that are obtained from the demographics collected, preliminary metrics for average age of system operators and experience in system operations. Figure 1 – Operator Population Age

The above chart shows 54 percent of system operators are over 45 years old with the largest percentage of system operators in the 46–55 age bracket.

219

1,347

1,611

2,348

1,289

3.2% 19.8% 23.6% 34.5% 18.9% 0

500

1000

1500

2000

2500

25 & younger 26-35 36-45 46-55 56 or older

Ope

rato

rs

Operators by Age Bracket

Figure 2 – Experience in System Operations

Approximately 60 percent of the certified system operators have 10 years or less experience in system operations. The average experience remains stable at 11.0 years. Additional data indicates 66 percent of the certified system operator population (which includes support personnel) have five years or less experience in their current position with 50 percent of the population having three years or less experience performing their current position.

0

100

200

300

400

500

600

700

800 0 1 2 3 4 5 6 7 8 9 10

11

12

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vg

# of

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Experience in System Operations

Agenda Item 14f Board of Trustees Meeting August 16, 2012

Standards Committee Report

Action None Background This report highlights some of the key activities of the Standards Committee (SC) in support of ERO Enterprise goals. The SC meets monthly and posts its meeting minutes at http://www.nerc.com/filez/scmin.html. Progress in Meeting Major Goals for 2012 The SC identified three major goals for 2012: developing revisions to the standards development process; completing high priority standards associated with topics most critical to bulk power system reliability; and continued refinement of the definition of Bulk Electric System. Highlights of progress toward accomplishing each of these goals through the second quarter of 2012 is included below. Goal 1: Revisions to standards development process Following Board of Trustees (the Board) approval of the recommendations of the Standards Process Input Group (SPIG), the SC developed a plan for implementing the recommendations, including an analysis of which changes would require revisions to the Standard Processes Manual (SPM). A project leadership team composed of the chair and vice-chair of the SC, NERC legal staff, and NERC standards staff is steering the effort with a goal of bring substantive changes to the Board for approval by year-end.

• Draft SPM Revisions developed and posted for stakeholder comment. Because SPM revisions must be balloted, the SC determined that it would be necessary to post draft revisions for stakeholder comment no later than June. A large number of volunteers from the SC and SC Process Subcommittee worked with NERC staff to develop an initial draft of revisions to the SPM that are responsive to the SPIG recommendations. In addition to revisions to implement specific SPIG recommendations, the proposed revisions also provide greater flexibility to allow the SC to be responsive to reliability needs and regulatory directives. The draft revisions were posted for stakeholder comment through mid-July.

• Extensive stakeholder outreach and communication plan developed. The SC Communications and Planning Subcommittee developed a robust communication plan to explain proposed SPM revisions and solicit stakeholder feedback. The communication plan included presenting the changes to stakeholders in a webinar as well as presentations by SC and subcommittee volunteers at various industry meetings. The communication plan may serve as a model for a communication plan to solicit

http://www.nerc.com/filez/scmin.html�

informal feedback on a standard, potentially enabling drafting teams to reach industry consensus sooner and with fewer postings of the standard.

• Development of Reliability Standards Audit Worksheets (RSAWs) in parallel with standards development. The SC has identified two standards, PRC-027 and COM-003, as candidates for development and posting of RSAWs in parallel with the development of the standards, with technical input from the standard drafting teams. The SC will be working with ERO Compliance staff to develop an efficient approach to RSAW development that improves transparency, leverages the technical input of drafting teams, and may shorten standard development time by increasing industry understanding of how compliance with the standard would be monitored.

Goal 2: Complete high priority standards associated with topics most critical to bulk power system reliability

• Protection Systems (PRC-001, PRC-005, PRC-019, PRC-024, PRC-027)

PRC-001 – Protection System Coordination – The drafting team posted its second draft of the revised standard (now PRC-001 and PRC-027) for a formal comment period and initial ballot.

PRC-005 – Protection System Maintenance and Testing – The drafting team received technical input on station battery maintenance from an IEEE working group and made revisions to the standard to be responsive to this input. The standard will be posted for an additional successive ballot in the third quarter. It is anticipated that a recirculation ballot will also be completed in the third quarter.

PRC-019 – Coordination of Generating Unit or Plant Capabilities, Voltage Regulating Controls – The drafting team working on this standard has revised the standard in response to feedback from an initial ballot and will be posting a third draft for a successive ballot in the third quarter.

PRC-024 – Generator Performance during Frequency and Voltage Excursions – The drafting team working on this standard has revised the standard in response to feedback from a successive ballot and will be posting a fourth draft for a successive ballot in the third quarter.

• Real-time System Operator Communications (COM-002, COM-003)

COM-002 – Communication and Coordination - The drafting team working on COM-002 completed a recirculation ballot that achieved an 82 percent approval in July 2012. This version of the standard includes the use of three-part communication when issuing/receiving a Reliability Directive where the term, “Reliability Directive” is defined as: A communication initiated by a Reliability Coordinator, Transmission Operator or Balancing Authority where action by the recipient is necessary to address an Emergency or Adverse Reliability Impact.

COM-003 – Operating Personnel Communication Protocols - The drafting team working on COM-003 posted the standard for comment and an initial ballot ending in June 2012. The team is revising the standard and is expected to post a revised draft for comment and successive ballot in the third quarter.

• Cyber Security (CIP-002 through CIP-011, Version 5)

The Cyber Security drafting team posted 10 standards for comment and a successive ballot in the second quarter of 2012. The drafting team is expected to post the standards for a second successive ballot in September 2012.

• Frequency Response (BAL-003)

The Frequency Response drafting team conducted two technical conferences to facilitate technical consensus around significant technical issues associated with the proposed measures. The team is working to redesign its proposed requirements and is anticipated to post a revised draft for comment/ballot in the third quarter.

Goal 3: Continue refinement of the Definition of Bulk Electric System (BES) through Phase 2 as a high priority project The drafting team working on the definition of BES posted a final SAR and is working to develop a guidance document for posting for stakeholder comment in the third quarter 2012. If trustees have questions or need additional information, they may contact Allen Mosher, chair of the Standards Committee, at [email protected] or Herb Schrayshuen, vice president and director of standards and training, at [email protected].



Agenda Item 14g NERC BOT Meeting August 16, 2012

Compliance and Certification Committee Report

Action None

Background This report summarizes the Compliance and Certification Committee’s (CCC) recent and upcoming activities. A year-end report will be provided at the Board of Trustees (the Board) November meeting. Minutes and agendas for the CCC can be found on the NERC website. Highlights

• As requested by the Board, the CCC’s ERO Monitoring Subcommittee (EROMS) identified the five key issues in the 2011 Stakeholder Perception Survey. (See final section of this report.)

• Worked with NERC staff and TalentQuest to develop the 2012 Stakeholder Perception Survey, which is targeted to be disseminated August 22.

• Self-certifications were sent to NERC staff for the 2011 calendar year for:

Standards applicable to NERC;

Conformance to the Rules of Procedure (ROP) regarding the:

o Standard Processes Manual (SPM);

o Compliance Monitoring and Enforcement Program (CMEP); and

o Organization Registration and Certification Procedure (ORCP).

• Worked with NERC Legal on proposed changes to Rules of Procedure Section 500 and Appendix 5A.

• Provided NERC comments on the application of controls evaluation as part of the audit process.

• Initiated a roundtable process at the CCC to gather early intelligence on emerging compliance and enforcement issues, inconsistencies.

• Provided initial comments and quality reviews of Compliance Application Notices (CANs), specifically CAN-0033, CAN-0037, CAN-0041, CAN-0042, and CAN-0044.

• The CCC’s Risk-Based Reliability Compliance Working Group (RBRCWG) has completed all deliverables in its charter. The CCC has reached out to NERC staff for other deliverables to support NERC’s compliance enforcement initiative.

• Developing the CCC’s 2013 Annual Work Plan. Reached out to NERC Compliance Operations, Compliance Enforcement as well as the Board Compliance Committee to offer assistance.

http://www.nerc.com/filez/cccmin.html�

Upcoming Items

• The CCC executive committee will work with the Board Risk Management and Internal Controls Subcommittee (RMICS) to identify an independent contractor for the 2012 audit of NERC.

• The CCC’s EROMS will work with NERC’s recently-hired Internal Auditor to support the Board’s RMICS Mandate and Work Plan.

• Work with TalentQuest to conduct and assemble the 2012 Stakeholder Perception Survey.

• Work with NERC staff on the proposed “compliance trial” process.

• Work to complete remaining items on the CCC’s 2012 Annual Work Plan. Prepare a year-end report on activities and achievements.

• The next CCC meeting will be September 12-13, 2012 at NERC’s offices in Atlanta, GA. 2011 Stakeholder Perception Survey Recommendations As requested by the Board, the following are the five most significant themes in the 2011 Stakeholder Perception Survey. The CCC is confident that implementation of the following recommendations will positively impact compliance, reliability, and future stakeholder perceptions.

• The primary issue identified by the survey is the return on investment, or cost benefit question. Comment analysis identifies that many stakeholders are not convinced that their present cost of compliance is justified by improved reliability. NERC can address this by:

Completing the work on the definition of adequate reliability.

Quickly developing an accepted reliability metric.

Linking and moving forward the Standards Committee’s cost effectiveness proposal and the Standards Process Input Group (SPIG’s) Reliability Issues Steering Committee (RISC) concepts.

Communicating these achievements in reliability and standards effectiveness to the stakeholders on a timely and frequent basis.

• NERC should decrease the number of requirements on a regular audit cycle (the Actively Monitored List), focusing on those that have the greatest impact on reliability and removing those that are best addressed on a complaint basis, or that are focused only on administrative elements. Additionally, NERC and the Regions should continue to streamline the enforcement process. This should significantly reduce the amount of administrative effort by the registered entities, NERC and the Regional Entities.

• NERC should move rapidly to both communicate the new Bulk Electric System (BES) definition and to align registrations and registration processes accordingly. Additionally, NERC should begin a review of functional model mapping to ensure there are no gaps or overlaps in registration coverage of the newly defined BES.

http://www.nerc.com/docs/compliance/ccc/2012_NERC_CCC_Annual_Work_Plan_FINAL.pdf�

• NERC should provide greater transparency of the penalty process to specifically include the review with the registered entity of all factors considered, and the evaluation of those factors when developing the base penalty for a (each) specific violation. This will contribute to increased understanding of the importance of internal compliance programs and continue to build a culture of compliance.

• NERC should move forward expeditiously with the multi-Regional Registered Entity (MRRE) process as this will increase efficiency for multi-regional entities and improve consistency across regions for all entities.

Agenda Item 14h Board of Trustees Meeting August 16, 2012

Electricity Sub-Sector Coordinating Council (ESCC) Report

Action None Background This report summarizes key activities of the Electricity Sub-Sector Coordinating Council (ESCC) in support of the NERC mission and corporate goals related to critical infrastructure. The ESCC is chaired by NERC’s CEO and includes a NERC Board of Trustees member, five CEO-level executives appointed by the Member Representatives Committee, the chair of the NERC Critical Infrastructure Protection Committee (CIPC), and NERC’s director of Critical Infrastructure Protection. The ESCC fosters and facilitates the development of policy-related initiatives to improve the reliability and resilience of the electricity sector, including physical and cyber security. ESCC open meeting minutes are posted at: http://www.nerc.com/filez/escc.html.

Summary ESCC Member Term Renewal Effective July 1, 2012, and as approved by the Member Representatives Committee, two new CEO-level executive ESCC members have been appointed for two-year terms replacing members who had served for several years. CEO-level executive member terms are now staggered to provide continuity going forward. 2012 Executive Membership

Name Organization Term

Paul Murphy President and CEO, Independent Electricity System Operator

Subsequent term expires June 2013

Jim Torgerson President and CEO, UIL Holdings Corporation


John Procario President and CEO, American Transmission Company, LLC


Kevin Wailes Administrator and CEO, Lincoln Electric System

Initial term that expires 2014

Duane Highley President and CEO, Arkansas Electric Cooperatives, Inc.

Initial term that expires 2014

Recent ESCC Activities Since the previous NERC Board of Trustees report, the ESCC held:

• An Open conference call on April 17, 2012

• A Closed conference call on July 17, 2012

http://www.nerc.com/filez/escc.html�

Amendment to ESCC Charter During its July 17, 2012 Closed conference call, the ESCC approved procedural changes to the ESCC Charter that will improve coordination between the Member Representatives Committee and the Board of Trustees when appointing new CEO-level executive members. The Board will consider the revised ESCC Charter for approval during its August 16, 2012 meeting. Involvement in Government Partnership Initiatives The ESCC is supporting a number of initiatives in collaboration with government officials.

• During the ESCC’s March 15, 2012, government officials asked if the electricity sub-sector could perform an impact assessment in the event of a loss of global positioning system (GPS) signals used for time synchronization. In response, NERC and the Planning Committee developed a “Preliminary Assessment – Bulk Power System Impact of Loss of Global Positioning Systems.”

• The ESCC is considering conducting a tabletop exercise with government officials to better understand critical interdependencies with other sectors and the policy-level issues and decisions that would be required to respond to a catastrophic emergency event lasting weeks or months.

• The Cybersecurity Risk Management Process Guideline has been completed and is publicly available.

• The Electricity Sector Cybersecurity Capabilities Maturity Model has been completed and is publicly available.

Coordinated Action Plan – Phase 2 On May 9, 2012, the NERC Board of Trustees endorsed the last two of four reports prepared by the Task Forces established under the NERC Technical Committees to address High-Impact, Low Frequency (HILF) risks. The reports identify a number of recommendations for further study and during their June 2012 meetings the Technical Committees discussed the scope of work and resources needed. The ESCC supported proceeding to define the scope of work, and how best to reach out across NERC and the industry to involve the right resources (e.g., North American Transmission Forum, North American Generator Forum, EPRI, and the Department of Energy.) NERC Critical Infrastructure Updates The ESCC discussed a number of security-related matters, including:

• ES-ISAC update, including the ES-ISAC Policy Statement, and encouraging more entities to enroll in the new ES-ISAC web portal

• Cyber Security threats (i.e., Flame malware)

• External affairs update, including pending legislation

• NERC CIP cyber security standards Version 4 and Version 5 development

• Grid Security Conference 2013 (GridSecCon 2013)

http://energy.gov/sites/prod/files/Cybersecurity%20Risk%20Management%20Process%20Guideline%20-%20Final%20-%20May%202012.pdf�

http://energy.gov/sites/prod/files/Electricity%20Subsector%20Cybersecurity%20Capabilities%20Maturity%20Model%20(ES-C2M2)%20-%20May%202012.pdf�

Future ESCC Meetings

Thursday September 27, 2012 8:00 a.m.–2:00 p.m.

2:00–3:00 p.m.

CLOSED All day in-person meeting, Washington, D.C.

OPEN conference call

Tuesday November 27, 2012 2:00–4:00 p.m. CLOSED conference call

**All times Eastern

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R E M G REGIONAL ENTITY MANAGEMENT GROUP

STACY DOCHODA – FRCC ED SCHWERDT – NPCC SCOTT HENRY – SERC LANE LANFORD – TRE

DAN SKAAR – MRO TIM GALLAGHER – RFC RON CIESIEL – SPP MARK MAHER – WECC

Date: July 26, 2012 Memo to: NERC Board of Trustees From: Tim Gallagher, REMG Chair Subject: Regional Entity Report for the August Board Meeting Dear Chairman Anderson: ERO NERC - Regional Entity Work Groups All of the Regional Entities take seriously our need to be as consistent as possible in discharging our delegated responsibilities. A key activity toward meeting this objective is our constant collaboration and interaction with each other and NERC. Below are summaries of recent activities of some of the key multi-Regional groups. ERO Compliance and Enforcement Management Group (ECEMG)

The ECEMG’s purpose is to provide operational and day-to-day guidance in the execution of the Regional Entity delegation agreements and the NERC Rules of Procedure, specifically as they pertain to executing the Compliance Monitoring and Enforcement Program (CMEP) and the Organization Registration and Certification Program. The primary initiative of ECEMG is to obtain consistency and uniformity where appropriate, across the ERO enterprise (NERC and the Regional Entities), while ensuring efficient and effective use of resources in executing the statutory responsibilities of the ERO. Status of current high priority work items: 1. Compliance Reviews: The ERO Compliance and Enforcement Management Group drafted a

process for the Regional Entity review of registered entity compliance assessments after events and disturbances. In February 2012 the NERC Board of Trustees approved the ERO Event Analysis Process, which is intended to promote a structured and consistent approach to performing event analyses in North America. Through the event analysis process, the ERO strives to develop a culture of reliability excellence that promotes aggressive self-critical review and analysis of operations, planning, and critical infrastructure protection (CIP) processes. A complementary process where registered entities conduct compliance assessments and share reports with the Regional Entities is also critical to reliability and the accompanying desire to demonstrate a culture of compliance. Registered entities are encouraged to conduct compliance assessments for all Category 2 events and higher. The compliance review process will be detailed in future versions of the ERO Annual CMEP Implementation Plan.

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2. Compliance Enforcement Authority (CEA) Staff Training: Consistent, standardized, and effective training for compliance staff continues to be a priority. NERC and the Regions are improving training for CEA staff. The second of two 2012 staff training workshops will be conducted in September; the first was held in February. Following the ERO staff training, a workshop for registered entities on auditor training to facilitate better preparation and understanding of the audit process will be conducted. NERC has also conducted an intensive one week Certified Government Auditing Professional education session July 30 – August 3 with 15 slots for NERC staff and 15 for Regional Entity staff.

3. Risk Based Reliability Monitoring: The ECEMG has spent a significant amount of time discussing

and identifying the various aspects of this initiative. Several regions are already conducting entity risk assessments and working with registered entities as part of their pilot programs. These efforts are providing a basic understanding of what a risk assessment could be providing with regards to the effective scope of compliance monitoring.

The NERC Compliance and Certification Committee (CCC) established a workgroup to gather industry input and perspective on a risk based assessment process and significant progress has been made. ERO focus groups with registered entity representatives by registered function (BA/RC, TO/TOP, GO/GOP and Small Entity) began in mid-April to gather the various attributes of a sound risk assessment approach to monitoring with a focus on reliability metrics. Industry participation, with 68 registered entity representatives from 64 entities, was exceptional and the candid conversation and suggestions will be utilized. The CCC work group and the industry focus group efforts will continue and be melded together to develop a draft entity assessment template that will be posted for industry comment by mid-August for a 45 day industry comment period.

4. FFT Development: The group continues to work with NERC legal on developing training for

auditors and field staff and providing information to support the 12 month report and compliance filing as directed in the Federal Energy Regulatory Commission (FERC) Compliance Enforcement Initiative (CEI) order approving the Find, Fix, and Track (FFT) mechanism. This will include further refining the various aspects of the next phase of the FFT process and how auditors will be involved in this effort. There are many facets of this effort involving participation by various working groups, along with NERC staff.

5. Paragraph 81 of the FERC CEI Order: The group provided several representatives to support

the collaborative effort of the joint NERC, RE, and Industry team to develop screening criteria, identification, and technical justification of requirements proposed for retirement.

“The Commission notes that NERC’s FFT initiative is predicated on the view that many violations of requirements currently included in Reliability Standards pose lesser risk to the Bulk-Power System. If so, some current requirements likely provide little protection for Bulk-Power System reliability or may be redundant. The Commission is interested in obtaining views on whether such requirements could be removed from the Reliability Standards with little effect on reliability and an increase in efficiency of the ERO compliance program. If NERC believes that specific Reliability Standards or specific requirements within certain Standards should be revised or removed, we invite NERC to make specific proposals to the Commission identifying the Standards or requirements and setting forth in detail the technical basis for its belief. In addition, or in the alternative, we invite NERC, the Regional Entities and other interested entities to propose appropriate mechanisms to identify and remove from the Commission-approved Reliability Standards unnecessary or redundant requirements. We will not impose a deadline

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on when these comments should be submitted, but ask that to the extent such comments are submitted NERC, the Regional Entities, and interested entities coordinate to submit their respective comments concurrently.”

The joint team provided a list of proposed standards with technical justification and a proposed Standard Authorization Request to the NERC Standards Committee (SC). The SC accepted the SAR and a Standard Drafting Team will be formed.

Subgroup: ERO - Regional Standards Group (RSG) 1. RSG Meetings – The RSG meets on a monthly basis and has held six meetings this year, either

in-person or by phone. The Regions have worked with NERC staff to perform quality reviews, post Regional Standards to the NERC website, and file Regional Standards and variances with FERC. In addition, the RSG has developed a whitepaper that helps define the differences between Regional Standards and Regional Variances. The RSG also contributed input to the standards section of the Business Plan and Budget Common Assumptions for 2013.

2. Status of Regional UFLS standards – On November 4, 2010, the NERC BOT adopted PRC-006-1

Automatic Underfrequency Load Shedding and directed NERC staff to file the standard with FERC. Included in PRC-006-1 are Interconnection-wide variances for Quebec and WECC. Concurrent with the development of PRC-006-1, several Regions were developing Regional Underfrequency Load Shedding standards based on historical documents and practices. Two of those Regions, SERC and NPCC, subsequently submitted those Regional Standards for adoption by the NERC BOT, and they were approved with their associated filings either completed or under development. SPP RE has developed its Regional Standard with stakeholder consensus and is expecting to present the standard at an upcoming Regional Entity Trustees meeting for action. MRO and TRE have evaluated the continent-wide standard and have determined that it provides sufficient reliability coverage in their respective Regions. FRCC is currently performing a comparison between the NERC BOT approved continent-wide standard and the FRCC Underfrequency Program to determine if there are any reliability gaps that would require further action in the form of a Regional Standard or a Regional Variance to the continent-wide standard. Finally, RFC has suspended the current RFC UFLS standard drafting efforts indefinitely until such time the associated NERC standard (PRC-006-1) is enforced and effective. At such time, RFC will re-evaluate if any reliability gaps exist which would facilitate further action.

3. Status of Efforts to Address Version 0 (Fill-In-The-Blank) Standards – The RSG issued a report in October of 2006 establishing a systematic methodology for resolving the potential issues surrounding the existing NERC Reliability Standards that contain "fill-in-the-blank" characteristics. The Report identified 31 continent-wide standards that needed to be addressed and established a work plan to meet the needs identified. Of the 31 fill-in-the-blank standards identified in that 2006 report, revisions to ten standards have been completed; seven are scheduled to be completed in 2012, two in 2014, one in 2015, nine in 2016, and the last two in 2017. A draft report was circulated to the ERO/EMG members.

4. Paragraph 81 of FERC FFT Order – As part of the FFT Order and associated NERC Paragraph 81 project, RSG members have provided regional standards program area input. This input has been considered in the development of a draft list of FERC approved standards requirement candidates proposed for withdrawal. Also, coordinated input was provided to the development of a draft SAR to initiate the project for requirement withdrawal and also a set of criteria for candidate selection.

Subgroup: ERO - Enforcement Sanction Mitigation Working Group (ESMWG)

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The ESMWG supports the ERO-Compliance and Enforcement Management Group (ECEMG), Regional Compliance and Enforcement Staffs and NERC in developing, evaluating, promoting, endorsing and implementing processes, tools and approaches necessary to ensure a reasonably consistent and an optimally efficient application and administration of all compliance enforcement actions by and among the Regional Entities.

1. Reliability Risk Assessments – In January 2012, each Region shared its approach to risk assessment. In June 2012, NERC Enforcement presented findings regarding the risk assessment determinations for CIP violations. ESMWG will review the analysis, schedule a call to discuss, and develop an action plan to address issues.

2. Enforcement Metrics – Ad hoc group from ESMWG working under direction of Ken Lotterhos reached agreement on a set of metrics to include in reports to BOTCC. A strawman proposal has been drafted with examples for each agreed upon metric. It is anticipated that these enforcement metrics will be presented to the BOTCC in August.

3. FFT Processing – There is continued discussion and review of FFT processing across the Regions. Discussions relate to identification of candidates, review of sample FFTs from each Region, and NERC oversight of FFT process. In preparation for the 12 month CEI filing, NERC plans to conduct sampling of Regional records supporting FFT determination and processing. It is anticipated that the Regions will receive the sample request in the September/October timeframe.

4. Notice of Penalty (NOP) Processing – Regions discussed strategies to improve NOP processing. Transparency in processing of CIP NOPs continues to be a concern for FERC. While there is not consensus among the Regions with regard to the need to change the manner in which CIP violations are processed, ESMWG and NERC are working on options for addressing this concern raised by FERC.

Subgroup: ERO - Training and Education Group (TEG) 1. The ERO Training and Education Group (TEG) is focused on coordination of training projects

and priorities for the ERO and stakeholders, and consistent with the charter, is providing a forum for communication and information exchange among NERC staff and the Regional Entity training representatives. The TEG is working to identify opportunities for coordinating training materials and expenses among NERC and Regional Entities, and is developing a process for NERC and Regional Entity training and stakeholder education coordination. The processes will be developed to promote efficient and effective use of training resources.

2. The TEG is focused on two primary training needs, those being auditor training and development of training on reliability standards for both the ERO staff and industry entities. Auditor training focus includes updating existing auditor and audit team leader training content and delivery, auditor workshops, and training for the implementation of the Compliance Enforcement Initiative. The second priority is developing the methods and training materials for selected reliability standards application guidance for ERO staff and auditors. This guidance and training material would also be shared with the industry in an efficient manner. The TEG will continue to collaborate and provide regional entity input for the training development process.

Subgroup: ERO - Compliance Information Management Group (CIMG) The CIMG is working with NERC to improve the two-way compliance data transfer between NERC and the Regions, to allow for implementation of new business rules defined by other Regional

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working group efforts. This includes real-time status of violations, Mitigation Plan information, and metadata associated to Regional filings.

1. The CIMG and CRWG will continue its efforts to accommodate the transfer of open enforcement actions from one entity (deregistered entity) to another entity within the Regional systems. The CIMG and CRWG are also working to document the expectations for Regions to collect and submit registration change information to NERC for analysis as well as working together to create a common form to capture registration requests and changes. The CIMG and CRWG will be meeting in October to discuss progress made and next steps.

3. The CIMG also continues to define data management methods and tools to support Compliance Monitoring and Enforcement processes.

Subgroup: ERO-Reliability Assessments and Performance Analysis Group (ERO-RAPA) SPS/RAS update – ERO RAPA initiated an effort to evaluate alignment of regions’ special protection systems (SPS’s) and remedial action schemes (RAS’s). Surveys indicated some differences in regional procedures. ERO-RAPA solicited assistance from the NERC Planning Committee (PC) via the system protection and control subcommittee (SPCS) and the system analysis and modeling subcommittee (SAMS) to develop guidelines for addressing SPS/RAS consistently across NERC. A white paper (due to NERC PC in September 2012) will be leveraged in phase 2 of the new PRC-004 standard, addressing SPS’s.

ERO- RAPA, if directed by the ERO-EMG, will consider developing consistent regional procedures, based on the whitepaper, prior to establishment of an associated SDT. ERO-RAPA has provided a preliminary project plan to the REMG.

1. Protection System Misoperations Update – ERO-RAPA has approved an SPCS recommended

revision of the misoperations template. This revision is primarily to clarify existing data entry and is in response to industry comments. ERO-RAPA has also endorsed an SPCS recommendation that, under the template, the total protection system “operations” be collected to facilitate the calculation of ALR 4-1 (performance measure - a ratio of misoperations to total operations). The enhanced template will become effective starting the fourth quarter of 2012. An industry webinar is scheduled in August to roll out the template. ERO-RAPA continues interfacing between the SPCS, the PRC-004-3 SDT and the newly formed PSMTF to effectively communicate/integrate misoperation developments across the regions. The PSMTF is currently doing a detailed regional analysis of misoperations prior to the 2011 use of the NERC template. ERO-RAPA generally supports a continued linkage of misoperations data to the TADS data base (events ID) but will review its value as other enhancements are made.

2. Generating Availability Data System (GADS)

– ERO-RAPA is leading the first ERO mandatory data collection of conventional generator performance data starting the first quarter of 2012. A web-based tool was launched on April 24, 2012 for Generator Owners (GOs) to enter generator outages each quarter.

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3. Spare Equipment Database (SED)

– As a part of ESCC’s critical infrastructure strategic plan, a web-based Spare Equipment Database (SED) tool was released for GOs and TOs to use on May 22, 2012.

4. TADS Quarterly Reporting

– ERO-RAPA discussed the need to change TADS reporting period from an annual basis to a quarterly basis. The following issues were identified with the current annual reporting timeline:

Not able to correlate event and TADS associated contributing factor(s) quarterly Not able to identify risk trending timely Not enough time to submit, vet and/or analyze 12-month data by Registered Entities,

Regional Entities and NERC within first quarter of next year Difficult for Registered Entities/Regional Entities/NERC to correct reporting errors for

earlier quarter records Not consistent with GADS and metrics reporting period

The Group agreed that quarterly reporting could provide more timely trending and improve data quality. The incremental reporting effort from registered entities appears reasonable (e.g., 3 more logins and uploads). The ERO-RAPA plans to work with the PC through TADSWG and PAS to propose the reporting period change in next couple of months.

5. Transmission inventory data collection – ERO-RAPA explored the value of collecting

transmission inventory data (e.g. element identifier, line mileage, in-service date, and retirement date). Such information could reduce double reporting of elements and allow trending on a more granular level.

WECC has been collecting the inventory data set since 2007, including conductors per phase, insulation type, structure type, etc. The ERO-RAPA is reviewing the WECC’s 2011 transmission performance analysis results and its regional system performance criterion (TPL-001-WECC-CRT-2). The group plans to discuss reliability benefits and pros/cons of this data set collection in next couple of months. Subgroup: ERO - Legal Group (EROLG) The EROLG’s purpose is to provide a forum for discussing legal issues involving NERC and Regional Entity activities, especially focusing on the internal and corporate issues germane to the functioning of the ERO. The group meets weekly via telephone and quarterly via face-to-face meetings. The following are recent activities in which the EROLG is involved:

Review Commission orders regarding development of revised language for TPL standard Footnote B language for EROEMG;

Ongoing development and retention of a pool of potential Hearing Officer candidates;

Update and development of Regional Entity training programs;

Review of proposed changes to the Rules of Procedure;

Provide feedback to NERC on development of an internal review standard and process to create better structure and organization for future proposed revisions to the Rules of Procedure or its Appendices; and

Ongoing review of implications of relevant Commission Orders.

Subgroup – ERO – Information Technology Steering Group (ITSG)

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1. CRATS – Due to some inconsistencies with data driven from the existing Compliance Reporting and Tracking System (CRATS), webCDMS+ was developed as a means to consolidate violation data into a new application hosted by OATI. The new application “webCDMS+” is online and data from all eight (8) Regions is being backfilled into that database. Parallel work continues with NERC Compliance and Enforcement and all eight (8) regions to identify discrepancies and reconcile issues associated with violation data. NERC, in collaboration with the Regions, has developed a process using SharePoint 2010 for document synchronization that has been tested by SERC and WECC in the Quality Assurance environment. Further testing with all Regions is anticipated to occur in August 2012, with production deployment targeted prior to the end of Q3.

2. Events Analysis – The Events Analysis project requirements have been gathered for

NERC, Reliability Assessment and Performance Analysis (RAPA) and Reliability Risk Management (RRM) teams. A meeting was held in July 2012 with the Regions to begin requirements gathering in order to create the necessary components of a Request for Proposal (RFP) to source vendors to create and enterprise application.

3. Bulk Electric System Definition – Initial requirements gathering has been conducted in

collaboration with the BES Working Group in order to establish baseline requirements. Continued work with the BES Working Group, in addition to members of the ITSG, will be ongoing in order to establish a core set of information designed to create an application for BES Exception reporting.

4. Reliability Assessment Database – A member of the NERC Project Management Office

(PMO) met with the Reliability Assessment Data Working Group (RADWG) in Washington DC in June to begin initial requirements gathering. Ongoing work will continue over the coming months to ensure requirements have been gathered and validated with the RADWG, in addition to input from the ITSG around application design requirements in line with long term strategy.

5. SharePoint – A SharePoint Conference will be held in August at the NERC Corporate

Headquarters with the Regions (ITSG) to share best practices, strategy and discuss ways to leverage SharePoint across the ERO for greater productivity and efficiency. Vendors will augment the meetings with discussion and presentation of tools and technology that can be adopted by the ERO allowing more collaboration and sharing of ideas.

Subgroup: ERO - Compliance Monitoring Process Working Group (CMPWG) The Compliance Monitoring Process Working Group (CMPWG) has been working to improve the consistency of regional monitoring programs by working on the projects identified below and continual sharing of experiences in the performance of monitoring of the Registered Entities. The following are recent activities in which the CMPWG is involved:

Review of Sampling Methodology and Samples developed for requirements by each region to improve consistency in sampling practices between the regions

Development of Audit Approaches of 693 Standards Review RSAWs for the standards identified as Tier I standards in the 2013 Implementation

Plan Review standards under development by the SDT focusing on RSAWs and Audit

Approaches developed by the SDT

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Subgroup: ERO - Certification and Registration Working Group (CRWG) In the meeting at WECC offices in SLC on April 24 and 25th, the CRWG existing work plan was revised to align with the latest ECEMG and NERC ERO goals (Reliability, Assurance, Learning, and Risk-based approach) and selected top five projects. The champion of each project was requested to submit their project scope. The five project scopes were collected and work has begun on: 1. Certification Documentation – In order to improve consistency and ensure transparency, the

CRWG is reviewing and updating the certification templates to be sent to CCC’s subcommittee ORCS for consideration and will be posted on NERC website.

2. Common Registration Application – In order to improve consistency in entity registration, the CRWG has created a common registration application prototype so that entities can use within the ERO regions to manage their registration activities. This application will also enable/help new entities determine what function(s) their organization should be registered for through an automated questionnaire section, which requires the entity to review each function to determine if it applies to their operation.

3. Functional and Facility Mapping of all Registered Entities – Recognizing the importance to the reliability of the BPS, the CRWG deemed it is important to supplement their present mapping of the RC/BA/TOP functions and to map all functions and facilities in order to ensure no gaps or duplication of coverage in NERC compliance registry.

4. Transfer of Assets – CRWG is working to provide clarification to the process of transferring assets in order to address issues which arise from these transfers. This document will clarify and supplement the existing NERC bulletin by addressing various compliance monitoring processes which can be impacted by transfers.

5. Certification and Registration Training Program – A basic Training Plan has been developed to facilitate understanding of the Registration and Certification process among the entities, the regions, the regulatory bodies, and industry as a whole. CRWG will work with NERC training staff to share the documents ERO wide.

Subgroup: ERO – CIP Compliance Working Group (CCWG) 1. The CCWG developed positions on the use of guidance documents, CIP v3 to v4 transition, CIP

auditor training and certification, and revising the approach to TFE amendments. 2. The CCWG supported the development of the Compliance Analysis Report for CIP-005-3 and

has provided substantive revision recommendations to CAN-0024. 3. The CCWG will continue to follow and support, as appropriate, the development of the CIP v5

standards and Compliance Application Notices. 4. The CCWG is concerned about conflicts between certain Compliance Application Notices and

the strict language of the corresponding CIP standards and has brought those concerns to the attention of the ECEMG and REMG.

5. The CCWG is also concerned about recent difficulties with obtaining access to CIP-sensitive information for offsite pre-audit review and post-audit evidence retention. This concern has also been brought to the attention of the ECEMG and REMG.